Seb Sa Unsp/Adr

Welcome to the group's first half 2025 sales and results presentation. My name is Alan and I will be your coordinator for today's event. Please note this call is being recorded and for the duration your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any time, please press star zero and you'll be connected to an operator. Today we will be joined by Stanislas Dougramon, CEO and Olivier Casanova, Executive VP and CFO. I will now hand you over to your host Stanislas Dougramon to begin today's conference. Thank you.

Thank you very much, Alain. Good afternoon, everyone. Welcome to this first half results call. I will cover the presentation together with Olivier Casanova, our Chief Financial Officer. And of course, after as I said, we will answer your questions. Starting with the first half highlights, it's been a pretty busy and in many terms positive quarter for us and half year. We've seen in particular in the second quarter an acceleration of our sales in Western Europe. We've seen continued growth in Asia, and that's a very reassuring fact. We've seen a return to growth in the professional business in the second quarter, although half one is still negative, as it was expected. And of course, all this has been pretty glad by, let's call it, a series of uncertainties and right at sea attitudes Related to the US tariffs and a consequence of that strong currency volatility that has impacted in parts of sales and more importantly, our bottom line. During this first half, we've done a few transformational things for the group. We've acquired La Brigade de Bouillier in premium and professional cookware. We've issued, in May, a 500 million bond with a five-year maturity. We've inaugurated our new European logistic platform for cookware in Burgundy in France. We've opened our first European refurbishment center in France and we've launched our first recycling programs for used pans using waste collection areas and lately La Poste, which is a French post office. The last collection scheme. Now back to the numbers for the first half. We see first half sales slightly growing 0.6% like for like versus 2024. 1Q2 is in fact growing 1.9% versus 2024. We've seen our first offer at €119 million versus €244 million last year, with €69 million in second quarter against €133 million last year. Our net financial debt stands at €2.658 billion at the end of June 2025, of which €190 million of the French competition authority fine, which means for an increase of 46 million euros versus June 2024. If we start, of course, we will analyze in detail all these numbers in the next few minutes, myself and Olivier. Starting with the sales increase, as I said, 0.6% organic growth in half one. We have a negative currency effect of 1.7%, 64 million euros, a scope effect of 1.3%, leading to 3.748 billion euros in sales. The second quarter has been slightly better in organic growth, 1.9%, with a slightly worse currency effect at 57 million negative, 3.1%, a scope effect of 17 million leading to 1 billion 842 million euros in sales in Q2. Now currencies have been extremely volatile during this semester in particular and also during the second quarter. In fact, the first half is impacted for 64 million negative currency impact on sales with 7 million in Q1 and 57 million in Q2. Now that's a strong acceleration in Q2. Yet pretty contained versus 2024 half one, which was 127 million euros, negative currency impact on sales. When you look at the split of the business between consumer and professional, starting with consumer, I'll go with professionals right away, we see consumer business in first half, 2.2% like for sales growth. when the professional business post 0.3% reported and minus 9.6% like for like. And I'd like to elaborate immediately on the professional business. Yes, first half is still negative 10% like for like, but the second quarter is 3.5% positive like for like, 10.7% growth in reporting, which is in line with our expectations. We've said in the last four quarters that professional would be suffering comps between the last quarter of 24 and the first quarter in 25. And in fact, we see that as of Q2 25, we are back to positive territories in like for like sales growth. This graph shows the quarterly sales growth year on year and it's pretty, it's visual that Q3, Q4, 24, Q1, 25 were negatively impacted by the base, and Q2 is a positive 4% against a positive 4% last year. Now, if we go into the details of what this is made of, I've talked about the comps. We see that excluding these large deals in China, we have approximately 10% growth year on year in the second quarter, that is great. This is driven by services and new contracts with a good contribution of tea chains in China and good rollouts in Eastern Europe and in the rest of Asia. We've acquired in the end of Q1 a company called Tasty in China that allows us to expand and deepen our service offering to coffee chains and tea chains, thus increasing our customers penetration and further enhancing loyalty of those customers. And we confirm that we expect a return to growth of the coffee division and professional coffee in the second half of this year, which is going to be a key element of difference in financial performance year on year. This quarter, this half year, we've also seen the first half year of conciliation of La Brigade du Bué that was acquired in January. So far sales and profit contributions are positive. Moving on to consumers. So consumers, we started the year with a slight growth. We put a first half at 2.2% life for life growth. of which 1.6% in the second quarter. We see a very complex situation in the second quarter. Good acceleration in Europe in Q2 with markets which are still resilient. We confirmed the return to growth in Asia, especially in China. We have an unfavorable comparison base in South America that is already starting to ease at the end of the second quarter. We have big uncertainties about US tariffs with a very marked Wait and see attitude from retailers in North America. And last, high currency volatility with a negative impact on sales increased in the second quarter. Now, if I elaborate on each of those points, first, graphically, you see what we say, which is the Americas are in negative territory in sales. South America Q1, Q2. North America an inversion between Q1 and Q2, plus 4.9 becoming minus 11.5. We see EMEA hitting just 3.5% in the first semester, with a good second quarter in Western Europe, plus 6.8%, and that is great. I'll come to that in a second. And other EMEA countries also, I will explain what's going on. It's a bit of a conjunctural drop in sales, but I'll explain that further. And as we said, China and Asia hold a good growth rate, plus 3.9% in Asia, of which plus 3.2% in China, consistent with a Q1 of plus 3.5%. Now, moving on to consumer in Western Europe. We see a marked acceleration in growth between Q1 and Q2. Q2 is at plus 6.8, half one is at plus 3.4. There is a double-digit growth in floor care, in cookware, and in linear care. We see the effect and the impact of our marketing investments and the success of recent launches in floor washers, in garment steamers, in wireless dryers, in blenders. And we mentioned back in the end of Q1 some dis-alignment between sell-in and sell-out when in fact this was course corrected compared to Q1 in particular in France and that supports also the improvement of the sell-out in the second quarter. So a pretty good first quarter driven by what is probably the bigger or the more important pillar for growth of the group which is innovation. Other countries show a very contrasting situation. So numbers first. First half is 3.6% like-for-like growth, with the second quarter barely flat, slightly negative. And in fact, we have some great and some not so great in this first half. The first thing is the half one last year was a very high comp basis. I think high double-digit growth. The positive is a very Impactful roll-out of innovations and double-digit growth in categories such as oil-less fryers, full-autocoffee machines, or cookware. We see positive momentum in Eastern Europe and Turkey. We have suffered some geopolitical disturbances which have negatively impacted our business in some countries in the region. Romania, a big political turmoil. from April all the way through to the end of June and carries on so far. The Middle East, which no need to say has been pretty badly impacted by the events in the Gulf and in Iran. And Algeria, which has stopped allowing or reduced substantially the ability to import products in this country against a pretty robust historical number last year. Not so great in terms of numbers, but we see that the reasons are well understood and can be recovered. North America. North America has been bad, has been bad. We sell down 11.5% in the second quarter. That was after a 5% growth in Q1. We have uncertainties regarding the U.S. tariffs and much higher than expected, and in fact, I remember answering a question back in April about what was our scenario, and our scenario was a median scenario. Well, in fact, what we have now is we don't have a scenario yet. We have uncertainties. We have a lack of visibility of what's going on, and that is lasting much longer and much deeper than we would ever have expected that to last. A direct consequence of that is that the selling is heavily impacted by American retailers' latency attitudes, that's one. And also some turmoil in import patterns. Some customers are moving from direct imports where the sales are materialized from China and they take care of the imports into a direct selling business in the United States that creates a lag in the selling timing that creates uncertainty in who pays what tariffs. So there's a lot of turmoil in the import patterns in North America and the US in particular, which have a pretty bad effect on our sales and our performance. We don't see at this stage that these disturbances should stop in the second half, in fact. when we all read the same press articles and the same newspapers, with the good news one day, bad news the next day, uncertainty anyway through the period. Whilst in terms of our mitigation plans that we are talking and commenting, excuse me, back in April, they are currently being implemented with new pricing hitting the market. South America is a bit simpler to understand. starts and stops with the comparison base, which was still high in the second quarter. Half one sales were comparing to particularly high level of sales in 2024. We've talked at length about the La Niña climate phenomenon in 2024, where we saw sales grow or surge by 29% versus previous year. And today we are in La Niña phenomenon, which is a colder, and therefore we are comparing against the very high sales level last year with negative weather effect. Excluding fans, we see our sales are growing nicely, particularly in Colombia and we see that this seasonal effect or this comps effect is fading away at the end of the first half with more positive trends expected in the second half. So summary in Europe and North America, Americas are bad, Europe is good, much better in Q2, especially in Western Europe. Now moving into a second engine of the group which is China. China is holding up pretty well with 3.4%, 3.2% like for a growth in Q2, very comparable to 3.4% like for a growth in Q1. you see the effect on the devaluation of the Chinese, devaluation, on the strengthening or weakening of the Chinese yuan against the euro with a four point difference in the reported sales between Q1 and Q2, the first half, sorry. And the story is pretty much always the same. We are consolidating our market shares and our leadership both in cookware and in kitchen electrics. We've been successful in Q2 on recent product launches, some water dispensers, some blenders. We see that there is some limiting impact on our sales of the stimulus programs that are more focused on large kitchen appliances. And we maintain a positive outlook for the full year. So the second growth engine of the year, the group China, is holding up quite well.

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