Seb Sa Unsp/Adr

Welcome to the Group SEB 2025 Third Quarter Sales Presentation. Today's conference will be hosted by Stanislas DeGraw-Mong, Chief Executive Officer, and Olivier Casanova, Senior Executive Vice President and Chief Financial Officer. For the first part of the conference call, the participants will be on listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Good afternoon, ladies and gentlemen. Thank you for being with us tonight. As discussed, we'll be with Olivier Casanova, managing this results presentation. We're talking about the first nine months and third quarter key figures, sales and profits for group sales, and we will review also the 2025 outlook. Now, when we look at the numbers at the end of September 2025, We are posting a flat like-for-like sales growth at 5.66 billion euros, converting into 267 million ORFA for the first nine months. In the third quarter, sales are 1.9 billion euros, minus 1.2% like-for-like, posting an ORFA performance at 148 million euros, down 52 million versus 2024. Now I think it's worth starting this conversation by commenting on the revised 2025 outlook that we posted on the 6th of October. Starting with the sales outlook, we were talking in July about the full year organic sales growth between 2.2 and 4%, that we've moved to stable to slightly positive sales growth forecast on the 6th of October. Now, when we look at what has changed between July and October 1st, We had a softer than expected Q3 activity, especially in September, which is the start of the high season. We have, and that was planned or expected, a continued wait-and-see attitude among customers in North America. We will come back to that. We've seen European markets less buoyant than anticipated, which hides two realities. We have several, if not many, of our European markets that are posting very healthy growth. But at the same time, some of our key bigger markets have had a stagnant third quarter. We continue to see positive growth in Asia, albeit lower than expected outside of China. China posts a very consistent growth path between S1 and Q3, around 3.5%. We did see some recovery in South America, albeit lower than expected. And we have, and that's good news, growth in professional coffee, but this wasn't as good as we expected, tempered in particular by the US market. And overall, what drives also our guidance is we're still in a pretty uncertain and volatile environment and a more cautious approach for year-end. So that's on the sales front. On the offer front, we've revised our full year offer from between 700 and 750 million euros to 500 to 600 million euros. Now, where does that come from? Well, primarily from softer than expected sales growth expectation in second half. I won't come back to that, but that's clear. And in particular, the less accretion of results from processional markets in Europe. We see a lower than expected offsetting of our currency effects which is due to the appreciation of the Euro. We see a lower than expected compensation through price in emerging markets of the Euro revaluation against these volatile currencies. And last, we see that's confirmed continued pretty strict discipline in managing operating expenses. So this is what drives the revision of our guidance. Now, I leave it up to Olivier to take you through Thank you Stanislas and good evening to you all.

So starting with our nine months organic sales as you can see organic growth is flat in fact compared to last year. We have a negative currency effect and I'll come back to that in a second. and a slight 1.1% point perimeter effect, which is both the consolidation of La Brigade de Billets since the beginning of this year, but also the fact that we consolidated SOFILAC only from the second quarter onwards last year, and therefore we have one quarter this year of perimeter effect. Moving on to the performance in the third quarter, You can see that we have a slight negative growth of minus 1.2% and a currency effect of minus 3 and a slight scope effect. Let's address straight away the currency effect on the following slide. So you can see that we've had a continuation of the negative impact in Q3 of minus 60 million compared to minus 57 in Q2 and only minus 7 in Q1. Of course, we highlight here on this slide the effect on the US dollar and the CNY, even though the year-on-year decrease is only a moderate 3%. Of course, they represent a significant portion of our sales and therefore they lead to a significant currency impact. The other significant deviations concern emerging market currencies, the Turkish Lira, the Mexican Peso, the Brazilian Real to name the top three. And there the fluctuation versus last year is very significant. In particular, for example, for the Turkish Lira, it's depreciated year on year by 22%. So moving on to the breakdown by division, you can see that the minus 1.2% in Q3 breaks down into minus 4.1% in professional and minus 0.8% in consumer and I will dive into professional straight away. So here on the professional, the first thing to note is that on the nine month basis we are down around 45 million versus last year and it's all due to the delta of sales in China versus last year. The second thing to note is that in Q3, we are, let's say, showing a negative like-for-like sales of minus 4.1%, but it includes an unfavorable, let's say, accounting effect, which is that last year in the third quarter, we consolidated the first six months of SOFILAC after the acquisition in April. We're not ready to consolidate in the second quarter, and therefore we consolidated six months into one quarter, which of course distorts the basis of comparison. And if you remove this SOFILAC effect, the like-for-like sales growth is 2.4%. And this is due in particular to a return to growth as expected, as announced in professional coffee, which grew 3% on a like-for-like basis. So it's very good news and of course we expect this trend to continue in the fourth quarter. This is due to a dynamic core business in Germany, also renewed growth in China, but also significant, let's say, continued momentum in Southeast Asia, in the Middle East and in North and Eastern Europe. We're also reinforcing, strengthening our offer of services with recruitment of service technicians in Germany. And as you know, we also announced a small acquisition, but quite sort of strategic, with Tasty in China, which provides us with a basis to provide services to our customers in the country. And then finally, let's say, Slide negative in the quarter is the decline in sales in the United States, which reflects, in fact, the weight and the attitude, which we will see in a second in consumer goods, which is also impacting, of course, the professional sales in the country. And we've seen a couple of deals delayed into next year because of the current situation in the US. On the next page, one, let's say, important milestone which was passed in the third quarter of this year. We have reached over 100,000 machines on each of our two, let's say, star models, which is the Scherer Sol-C and the WMF 1100S. And in total, since the launch of these two machines, they represent over €1 billion of cumulative sales So clearly a star product in the market of professional coffee machine in full auto coffee machines. Moving on to the consumer segment. So the first thing is that in the quarter, we report minus 0.8% like for like growth. Last year, we had a significant loyalty program in the second half, which is therefore distorting the basis of comparison. If you exclude this, we are slightly up at 0.5%. As Stanislas indicated, the activity in the third quarter in our consumer business has been softer than expected. In particular, less buoyant markets in Europe, notably in France and Germany, and in the US, the continuation, but that was largely expected, the continuation of the wait-and-see attitude from our customers. However, there are some noteworthy achievements which are worth pointing out. The first thing is that if you exclude LP and North America in the rest of the business, we grew 3% organically in the third quarter. This is due in particular to the success of recent launches, and Stanislas will come back on this with washers, spot cleaners, and Versatiles. It's also due to continued strong sales momentum in Southern Europe, in Eastern Europe, and in Northern Europe, including the UK, and that's worthwhile to note. And then finally, the continuation of a solid growth in China. So let's take a look at the global picture here, starting with the nine months. You can see the very, let's say, different dynamic in our three major, let's say, geographic areas. In America, a decrease of 7.3% versus nine months last year, whereas in EMEA and Asia, we had a growth of 3.5%, excluding LP in EMEA, and 3.6% in Asia. More specifically, in the third quarter, as Stanislas indicated, We had a slightly more negative dynamic in the US and North America than expected with minus 14.4%. So instead of a slight improvement versus the dynamic in Q2, we had a slight worsening. We also had a softer market conditions in South America, other EMEA and other Asian countries. Two of those are positive and in particular, South America turned back to a positive territory. a slightly more modest than initially expected. And then on a more positive note, we can see that EMEA Western Europe is growing at 4.3% excluding LP and China continues its solid trajectory at 3.5% growth. So let's now focus on the first geographic area, Americas. You can see that we are down, as I said, 14.4%, which is largely reflecting the wait-and-see attitude from customers, which are, let's say, lowering their inventory level, which are shortening their replenishment cycle. There has been also a significant change in, let's say, the import patterns. There was a substantial part of our business which was direct import, and this is now moved to delivered in the US. This obviously creates a lag effect on sales, a couple of weeks of delay, basically, in the recognition of turnover. The sell-out, however, is proving to be quite resilient in cookware and linen care. We are, in fact, up on last year, and we're consolidating our leadership positions in these categories. In Mexico, we are continuing to grow despite reductions in retailers' inventories. A word on South America. We have a very strong performance in Colombia, with sharp increases in many categories. But the region is impacted by the continuous, let's say, unfavorable climate or weather climate in Brazil, which has delayed, unfortunately, the start of the fan seasons, which we were expecting initially in the third quarter. And unfortunately, there is still a high level of inventory. and therefore delaying, let's say, the replenishment of funds at retail. Let's now, let's say, focus on the US tariff situation. First, to note that it's still, as you know, a very moving target and there is almost a continuous flow of news in this regard. There has been a change in the section 232 which is applicable for aluminium and steel and their derivatives and therefore concerns cookware. The percentage applicable has moved from 25% to 50% but it's not the same basis of calculation. The first one was on the entire, let's say, cost of the product whereas the 50% is only applicable on the raw material portion. Therefore, in total, it is marginally higher than before, but not very significantly. We are obviously continuing with speed on the implementation of the measures to offset this tariff increase. As we mentioned in July, it's both, of course, the increase in our local production capacity in Olclad in Cannonsburg, It's also the relocation of our cookware production in support from China to support in Vietnam. It's also supplier diversification and renegotiation with our Chinese suppliers and also relocation or move of transfer of production to supplier facilities outside of China. Our action plan also includes the increase of selling prices. As we said, we started in May and June and continued over the summer, so we have only, let's say, a partial offset at this stage, but still it is starting to show. And finally, we are also implementing some measures to mitigate the impact on the professional segment. So all in all, the conclusion is that our measures are being increasingly effective, but this does not compensate, of course, the wait-and-see attitude of retailers. Moving to Asia, in China we see a moderate but solid growth, still at 3.5%, 3.6% for the whole region and 3.5% for China, which is, of course, reflecting the strength of support in digital activation in particular. As you know, social commerce is becoming a big thing in China and support is very agile and very efficient in those new channels. In this context, we are consolidating our global leadership, in particular on cookware, and on kitchen electrics. In cookware, the works are still very important, particularly titanium non-stick work. And in electrical cooking, we can note the successes in rice cookers and oil-less fryers. In the rest of Asia, we have a contrasted performance, very strong performance in Southeast Asia with expansion of retail distribution network and development of new categories. We have unfortunately, as you know, a weak situation in Japan and South Korea, in particular impacted by weak consumer spending, but also the depreciation of the currency, which has increased in the third quarter. And in Australia, we have a continued product expansion, including with the recent launch of ice cream maker Dolce, but in a competitive environment. Moving to EMEA. In Western Europe, as I mentioned, we have a positive performance, 1% like for like, excluding LP, we're at plus 4.3%. However, it is a little bit softer than anticipated. It is driven by double digit growth in cookware, but also floor care and linen care, continuing the trend that we saw in H1. We noted that our performance was Weaker than expected in France and Germany, in particular because we are suffering on some of our historic electrical cooking core categories, but we still see a very positive momentum in southern and northern Europe, fueled by our innovation success, including on washers and versatile and OLS triers, for example. On other EMEA countries, the trend remains very positive in Eastern Europe, driven by Poland, but we are also experiencing more difficulties, more issues in Africa and the Middle East related in particular to the geopolitical environment. With that, I hand over now to Stanislas for the remainder of the presentation.