Electrolux Professional AB (publ)

Welcome to Electrolux Professional Q1 result presentation. My name is Jakob Rubai. I'm Head of Investor Relations here at Electrolux Professional. With me today, I have Alberto Zanatta, President and CEO, and also Fabio Sarpellon, CFO. And I start with handing over to Alberto. Please go ahead, Alberto.

Thank you, Jakob. Good morning to everybody. We closed Q1 with the several highlights and several things happening to this company. The first one is that we completed the listing clearly. We completed the listing according to the time and since March the 23rd we are listed at the Nasdaq in Stockholm. The second one, important, is despite all the things happening during the last month of the quarter, all of our operations are up and running. We are able to operate in all our factories, the ones in Italy, the ones in France, in the United States, in Asia. Not all of them are currently operating at full capacity, but we are in the condition to produce, develop, produce, and ship the products. Key things, key highlights in this quarter. The first one, the comment about the development of the sales. The market is clearly affected by the spread of the coronavirus, in particular, starting from the end of February, March, clearly. And our sales organically went down 13.7%. We have also to consider that the comparison is done with the first quarter of 2019 when we had the subway rollout in the same period. And the difference between the two is roughly a third. So a third of this gap is because of the subway rollout. The other one is related to the decline of the demand that increased the speed or the magnitude of this decline increased clearly during the month of March. The second element is the margin, the profit. The missing volume determined a decline of the margin. We have been able to compensate this decline of the margin and the the full impact of the corporate cost that we had in Q1 with activities on cost. We've been able to mitigate this negative impact, not completely eliminating it. Thanks to this, the EBITDA is still over 10%. The third element is the cash flow. Cash flow in the quarter is 16 million SEC. is lower compared to the first quarter of last year, in particular because of two elements, the increase of credits and the increase of the inventory. The increase of inventory is something that we consciously did, decided to have, because we decided to increase the inventory in particular in the satellite warehouse to make available product for the replacement business. The increase of the credit is related to the fact that, in many cases, customers had to postpone not only the delivery of the product, the shipment of the product, but also the payment. These are things that we are managing. Cash is king these days, so we are daily managing the relation with the customer, staying close to them, helping them, and clearly looking and monitoring how this element is developing. As I mentioned, the market is affected by the COVID and is in particularly affected the segment related to restaurants and hotels. That is accounting for roughly 50% of our business. We see that other customers, they are suffering much less. In particular, I'm saying the hospital, the care segment, in general, the operations where we sell laundry appliances. This is the reason why, when we will see food and beverage businesses, we will see that the decline of the business is more evident with the food and beverage segment than the laundry one. I already mentioned that all our operations are up and running, and this is also related to the fact that we took, already in February, actions to ensure the safety and the health of all our people. In all our operations around the world, we had less than 10 people infected. We have in place a crisis team to make sure that we guarantee continuity, in particular for what concerns the supply chain that is currently working and providing the condition to operate to all our factories. As I mentioned, the decline of the sales accelerated during the month of March and during that month the decline accounted for roughly 25% less sales compared to the same month of last year. The general market, the uncertainty is so high in the general market, so significant that it is not possible to make a forecast for the financial development. Also because we do not have clear indication of how the pandemic will continue when the lockdown will be lifted and so on. If we look at the geographies before talking about the segments, the area, the most affected area is North America where we had both laundry and food businesses down food and beverage and laundry business is down, also because last year, in particular for food and beverage, we were comparing the current performance with the performance of last year when we had the subway rollout. Also, in the Asia-Pac region, we have a decline of sales of both laundry and food, and in this case, it's because of the impact of the spread of the coronavirus came first and in particular affected the countries like Japan, Korea, where we have a large presence in the laundry segment. In Europe, that is, as you all know, two-thirds of our business, food and beverage was down while laundry in the quarter was up. Now, a couple of words about the businesses in food and beverage and in laundry. Starting from food and beverage, sales were down close to 15%, 14.6% to be precise, and the margin went down. And here, clearly, again, we have the comparison with the rollout that we had last year on one side. On the other side, Organically, we were even more than 14.6 because we are 20.4 down because we reported the sales of the unique company that we acquired in the second quarter of 2019. The decline of the margin is mainly related to the missing volumes in our factories. If we move to laundry, The picture here is different because you see that the net sales are basically flat. In Europe, we said we had an increase of sales, a small decline in the US, while the decline is also substantial in the APAC region because of the spread of the virus affected the first of those countries. The margin in this case is higher than the one reported in the first quarter of last year. It's above 17%. And this is related to the fact that the impact of the volume, clearly we don't have it laundry or marginally. But at the same time, The actions to reduce costs that we put in place for the entire company clearly had a positive effect on the laundry business. At the same time, in the first quarter of last year, we had the peak of investment to introduce the new product, the Line 6000, that we didn't have discussed in the first quarter of this year. Having said so, I will let Fabio comment more on the financials.

Thank you, Alberto, and good morning to everybody. Let me start with the sales bridge. As you see in the slides, sales overall declined 9% in the quarter. Currency translation had a positive effect, roughly close to 3% point due to the weakening of spec versus most of our sales currency, in particular US dollar and Euro. Acquisition contributed close to 2% and it refers to the UNIQ, the coffee espresso company we bought in April last year. Organically, the business declined close to 14% over roughly 330 million SEC. Laundry, as anticipated by Alberto, was slightly declined 2% compared to quarter one 2019. And so far, somehow confirming the larger resilience of the customer segment served by our laundry segment. And this is somehow good news, because as you have seen, laundry in quarter one was back to the historical good level of profitability. 17.7% was the margin in quarter one. In food and beverage, the decline was close to 20%, and as Alberto mentioned, roughly one-third was related to the large subway rollout in quarter one last year. If we exclude this larger rollout, when we look into the geography, U.S. was somehow flattish on quarter one last year. Whilst Europe and APAC declined, somehow APAC faster than Europe because starting from China, it was earlier affected by the coronavirus business consequences. When it comes to the financial overview, we reported 10.6% EBITDA margin in the quarter, roughly 100 million SEC below last year. The main driver, as Alberto anticipated, was due to lower sales and production volumes that accounted roughly for 170 million SEC in EBITDA. The efficiency measure that we put in place compensated this lower contribution from sales and production for roughly one-third. And we find this benefit both in reduction of the lending cost, but also reduction of SG&A. And this overall one-third of cost mitigation is including also the additional cost of to operate as a standalone company. But let me also take the opportunity to give you an update about two pillars of our margin expansion. First, the restructuring plan that we launched in September last year is proceeding according to plan and as anticipated during previous investor call, we expect that in quarter three this year, the benefit from the restructuring will fully compensate the emerging cost to operate as a standalone company. On the continuous improvement, when we focus into January and February, definitely we have been able to deliver according to plan on the productivity in our factories as well as on the direct material cost reduction. R&D, Alberto already mentioned, we had a peak last year due to the large effort to introduce new products in the market and we have seen a considerable reduction along the full order. Additional measures have also put in place within the product cost, but also as G&A to reduce the running cost, both for what concerns the labor cost, releasing temporary people, canceling overtime, asking the people to consume previous year holidays, as much as putting on hold all or majority, I would say, of the external spending. Overall, in the quarter, currency contributed positively, both translation and the translation in the comparison. When it comes to operating working capital, reported operating working capital increased roughly 5% year on year. This increase is due mainly to about two facts. First, the weakening of SEC boosts in SEC the value of operating working capital. And secondly, we have in the perimeter this year unique. The coffee beverage company we acquired in April last year. Incomparable perimeter, meaning excluding from one side the currency translation impact and unique impact. operating working capital in absolute terms at the end of March was roughly 9% below the same level of March 2019. When it comes to average of operating working capital sales, instead it increased to 18.2% at the end of March, and this is due to the combination of the acquired businesses that have higher operating working capital weight on sales, and overall an increase of the average inventory, due in particular last year to the overlapping of the phasing and phase-out of new products. Lower sales, also in Q1, negatively affected the EPI. On a net debt, we have reached 1,088 million SEC at the end of March, roughly 60 million SEC higher than December, ending up to one with a ratio net debt on EBITDA below one, confirming a strong point of the company that we are a pretty low leverage company. In Q1, as anticipated, we have put in place a long-term loan for 600 million SEC and a revolving credit facility for 250 million euro. We have repaid the loan to Electrolux Group, the financial loan, for roughly 1.2 billion SEC And at the end of March, Electros Professional Group had in cash 643 million SEC and additional available revolving credit facility for 190 million euro. Cash flow in quarter one was 16 million SEC roughly 200 million below last year. Alberto touched already about EBITDA, that was the first ingredient, roughly 100 million lower than quarter one last year. He mentioned already about the development of inventory. Let me elaborate more around CAPEX. CAPEX in the quarter was 70%. was 100 million SEC. 70 million is referring to the finalization of the acquisition of the production site of SPM. SPM is the cold beverage company that we bought in 2018, and in quarter one, we finalized the acquisition of the real estate that we consider a key location for the future development of the cold beverage within the group. When it comes to the investment in Thailand, it's continuing according to plan. The Thai investment is a major investment that we are running this year. It's about the build-up of a new production facility in Thailand where we are going to consolidate the existing manufacture operation of laundry and beverage into a unique site where we are going to implement the state of art for what concerns manufacturing with clear expected benefit both in terms of service level to the customer and reducing the running cost. The project as anticipated is a proceeding according to plan and is expected to be finalized in quarter one next year. Once this project is completed, we expect that the level of capex on sales will be back at the historical level. Having said so, let me also touch about specification that we are taking in this moment to preserve the balance sheet and cash in this difficult environment. As I've already mentioned about what we are doing on receivables, we are strictly monitoring the development of the receivables both for what concerns the collection activities as much as continuing to review our customer assessment. We are reviewing the planning for what concerns the inventory level to secure from one side the prontal availability of the products, but also monitoring the development and driving the development of the inventory value. Last but not least, we are taking action to reduce not only the running cost, but also the level of capex for this year. And management has decided to keep few strategic projects. One is the ones related to Thailand and a few selected development projects. This is key for us because we want at the same time to preserve at best cash short time because cash is really important short time and also continue to invest on few selected strategic initiatives for the future. Thank you, Fabio.

And before summarizing the point that we presented during this call and opening for question, let me talk about also the opportunity that we have as a company, not only to get business, but also to contribute positively to what is happening around us all around the world. In particular, I would focus on the laundry solution that we already offer, but we are also developing to address the increasing demand of hygiene, sanitization. We find clearly in the healthcare segment, in the hospital, but not only. This is going to happen everywhere. You already saw that the laundry business during the first quarter was flat-ish compared to last year. And this is because we have been able to react very quickly to the increased demand coming from hospital for solution for providing laundry installation with a high level of hygiene. Here I'm giving you a couple of example, Moscow and Turkey. Montenegro in France, Germany, Dominican Republic. So as you see, basically all around the world, we're in a very short time. Typically, an hospital project has a layout of some months. Here, we receive the request and we deliver. We answer to the request in some weeks. This is also because of the increase of the availability of product that I mentioned at the beginning. This is, again, I said, is a business. In the case of laundry, it's also a profitable business. But it's also a way to help all these operations to address in an efficient way a problem that is clearly affecting all of us. So, summary. During the first quarter, we experienced a decline of the sales. Decline accelerated during the month of March. Decline that initially touched the Asian region, the APAC region, but then basically spread all around the world. The two segments were affected differently. Because of the customers that are using this product, laundry was stable compared to the first quarter of last year. Wild food, also because of a tough comparison with a quarter where we had the subway rollout, but declined around 20% organically. Laundry not only was stable in sales but also improved the margin thanks to the volume that we had but also to the fact that the cost to launch the new product that we had last year were not present in the first quarter of this year. Action to strictly control the cost are in place. We control the cost, all the discretionary spending, all the investments, and clearly we are strictly monitoring the cash, both for what concerns the outstanding credits, but also for the incoming orders that we receive. The fourth point is that the uncertainty in the market is high. There are signs that are showing that the lockdown is going to be lifted, but the uncertainty remains. And for this reason, we don't see it possible to make a financial result, a financial focus. The last point that was underlined by Fabio, we have a strong financial position that I think is very relevant these days that can give us the possibility to handle a longer period of downturn. With this said, Jakob, I would turn to you again to open for Q&A.

Thank you, Alberto. Now we open up for questions. You can ask questions via the phone, but you can also ask questions via our web by typing in your questions there. So I leave it to the operator. Please go ahead, operator.

All right.

All right. Thank you.

If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw a question, you may do so by pressing 02 to cancel. There will be a brief pause when questions are being registered. So our first question, Lucy Corrier from Morgan Stanley. Please proceed.

Good morning, gentlemen. Thanks for taking my question. I have a couple. I will go one at a time. The first one is around the current trading. Thanks for providing us with the 25% number for March. Are you able to maybe qualify a little bit how that 25% was split between laundry and food and beverage? And more specifically, as we were in April and we just ended the month of April, can you maybe quantify or at least comment qualitatively on how April has compared versus March. So that's my first question.

As we said, due to the uncertainty that is in the market, we do not provide any focus related to the quarter, to the coming quarter, to the quarter two. For what concerns March, the acceleration of the decline with different levels, with different effects, but affected all the geographies and all the businesses.

Okay. All right. Well, I was asking about April because this is already behind us, but fair enough if you cannot provide an indication. On the savings side of things, you said that you've started different measures in terms of cost savings last September. Can you maybe help us to understand which magnitude of savings you are targeting? What's the cadence in terms of the savings to come through? And are you able to provide how much savings you benefited from in the first quarter, please?

Fabio speaking. First of all, let's distinguish two lines of action. The first one is about the benefit of the restructuring plan that we launched in September last year that was foreseen a reduction in the group of over 130 people. As I mentioned earlier, the The execution is going according to plan. For overall this year, we expected close to 100 million SEC benefit coming out from this plan. And as I mentioned, from quarter three, we expect the benefit to compensate the additional cost as a standalone company. Secondly, For what concerns the other action that management is taking to reduce the running costs, we already provided earlier an order of magnitude. Out of 170 million SEC lower contribution for volumes in quarter one, roughly one-third has been compensated through reduction of running costs. either related to labor costs or related to external spending.

Thank you. Can you, maybe then in this case, can you remind us the overall size of the program that you said you provided data for earlier?

You mean about the restructuring program?

I mean about the newly launched initiative to compensate from the effect of COVID and so on?

Okay. I mean, the initiative that we put in place to compensate the impact of the COVID-19 refers to running cost and refers to liquidity. On the running cost, we act on the labor cost, meaning We release temporary people. We stop overtime. We ask the people to consume holidays. So to reduce the running labor cost. We have an iron freeze in place. For what concerns the external spending, we put on hold the majority of marketing external spending. We have... stop consultancy activities, so we work also on this line. The second layer is about the balance sheet and the cash flow, and here I mentioned before the activities that we are doing focus on credit collection as well as we resize capex. When it comes to amount, as I mentioned, In quarter one, overall these activities for the P&L had impact roughly around 60-70 million SAC. And we find it both in the lending cost and in the SEA.

Shall we assume that the 60-70 million savings is a reasonable run rate for for the rest of the year in terms of the savings?

I mean, we are not going to give a forward look about the saving on the quarters to come. It's clear that in the current environment, management is taking action that has at best compensating the impact on the volume. But we are not going to disclose how much are the expectations for post-reduction on the coming quarters. What I can confirm is that the action that we have put in place in quarter one will continue until we see a recovery in the market.

Okay, thank you very much. And my last question, I guess, was around the receivables. And I understand that there are some pressure here. I'm assuming mostly coming maybe from your food and beverage customer. How, I mean, can you maybe comment on what are the leverage you have to actually get paid and how much visibility you have on the credit situation of your customer, whether this is the distributors, maybe, or some of your largest customers in the food and beverage sector?

Okay. Let me say, I believe that, first of all, it's somehow pretty early to judge customer behaviors. But what we started already to see in March and somehow also in April, is that customers are asking for adding prolonged payment terms. This is somehow the learning that we are having so far. We are considering the request for customers. We are reviewing and assessing case-by-case new payment conditions. At best, continue to protect the balance sheet and the guarantee that we have in place. Let me add in this respect that historically, the electric professional has a large majority of the receivable that has some sort of protection. What I mean is that we have in most of our countries the credit insurance in place and part of our customer base is government or state related. So in terms of impact in the P&L of the situation, we may have some attention, but I would repeat that a large portion of our receivable is protected.

Thank you very much.

Jakob Reba here. I have two questions from the web. The first one is from John Eliasson at Kepler Chevro. It's on second-hand market. How much of our sales and competition will be the second-hand market? And how do you think this will play out in the coming years? I mean, when products might be flooding the market of used products. That's the first question. The second, I guess I fell back to the second one is on administrative expenses that are up 46 million year on year. What is driving the increase of administrative expenses? Is there any one-offs in relation to the listing? And when should we expect the costs for the new corporate functions to be fully offset? Those were the two questions from the web.

Okay, so I can take the first one. We hear a lot about this second-hand market issue. or lightly used appliances that should flood the market. Our experience is that, in general, the second-hand market is relatively limited because of the use that is made of the appliances. Normally, if there is an operation going out of business or a restaurant operation, closing and not reopening, the new operator is taking over the appliances that are there. If you want to consider this a second-hand market, yes, there is. How we can work on this one? The thing that we are doing is to be prepared, for instance, for what concerns the customer care business. element of our business, both in terms of sales and in terms of margin. During the past weeks, the locations were locked down, so there was not even the possibility to access this location. But we are expecting that with the reopening of the activities, there will be an increased maintenance service repair and other things even more in case these appliances are used by others customers than the original owners we are preparing a specific program that is offered to everybody for what concern exactly the restart of the different operations fabio yes one when it comes to the development

of the administrative expenses year over year. First, from a representation as on sales, also here we have an impact of the currency translation, but let me park it for a while. The majority of this 46 million SAC increase is related to the standalone cost as a corporation, meaning we have creating new functions that we did not have before, like, for example, legal, investor relation, tax that we were receiving from the group. Then a second piece of the increase is related to UNIC that was not part of the perimeter of Electrolux Professional in the first quarter of last year. When it comes, you ask about any specific cost related to the quotation. Yes, there are some, but I will say it's not really material into that increase.

Okay, then we open up for more questions from, please go ahead, operator.

All right, sure. Next question from Matthias Horner by B&B Markets. Sorry, some problem. Next question from Christian Sensen from SAB.

Gustav Sensen with SAB. What is my question there?

Okay, so this is Gustav Sanson with SCB. I have a few questions, if I may. Firstly, if you could give us a reminder about the facing of the subway contract into Q2, about an indication of roughly share of sales last year for food and beverage would be very helpful. Thank you.

You want to answer immediately, or do you want to make all your questions?

No, let's start with this one.

Thanks. I can take it. I mean, subway rollout actually started in quarter three 2018 and ended up in quarter two 2019. In quarter one last year, subway rollout was in order of magnitude around 100 million sec. And it was completed in quarter two last year. And the impact in quarter two was somehow lower than quarter one.

Thank you. That's very helpful. And also, if you could give us a rough indication of the organic decline you saw in March, 25%, to what extent that relates to price mix or if it relates to volume. Thank you.

I can take it. I mean, I would say that majority, I would say the decline is related to volumes. So far, we have been able to continue to stick on the pricing overall. And if I look into the quarter one, price to customer positive contributed to the development of the EBITDA.

Okay. And alluding to a previous question, the 25% decline in March, is it a fair assumption that it was a bit stronger in the beginning of March rather than the end when there was more of a full close down in your key markets?

I would say that when we look into the development of the month of March, somehow we saw an acceleration of the sales decline in the second part of the month. due to what is happening in the major countries where the lockdown was extensive to more and more countries in a much more stricter way.

Great. So would you say that sort of the first half of March was more similar to the first month of the quarter and the main share of that drop related to Q2 or second half, or was it more of a smooth transition between the weeks in March?

Let's say that it changed geography by geography, the meaning that at the end of February, we already had the impact in China during the month of January. During the month of February, we have an acceleration of the decline in Japan, Korea, that are important markets for us. particularly on the London side. Then at the end of the month of February, beginning of March, we had the South European countries. Then gradually, the spread of the virus and the initiative to lock down operations was extended to all the European countries and also in the United States. So it was a gradual acceleration of the decline, of the demand, related also to the evolution of the pandemic. At the same time, in March, we already started to experience a reopening of some operations in China. So they've been clearly... It's hard to compensate the situation in the European market with what was happening in China. But the dynamics are so different in the different geographies, and they are changing really by the day. That's the reason at the end where we decided not to provide any focus in some way.

Okay, that's very helpful. Lastly, from me, on the inventory side, a bit higher in the quarter, but could you also remind us to what extent there are additional intermediate inventory in channels outside of your balance sheet at suppliers or dealers or similar entities, and if you could assess how big of a share they are of the total sort of market inventory and the development of those in the quarter?

No, but in general, nowadays the dealer, in particular the dealer of Europe in the large market where we have a really local presence with our organization, with the local warehouses and so on, they don't hold product in stock. So they rely on the stock that is managed by the operators. That is the reason why at the beginning I said we moved, we took the conscious decision already in February to move from the two central labs that we have in Italy and Sweden, at least in Europe because then we have the one in the United States and one in Asia, But out of the two European hubs, we decided consciously to move to the local warehouses most of this product. To be present, to be local, to be close to them. We have the two hubs in North America and Asia that are obviously relevant. And I would say a significant inventory that is held by... not by us, but by our partner, is the one of Laundrie in North America, where we are working with the Laundrie partnership with a company, and that company in that case is holding the stock for the local market. The increase of the inventory, if I can elaborate a little bit more, is related to, one, the conscious decision that we took to make the product available, this so-called Class A product, the product that is normally used for replacement. But secondly, also, because we started to receive, beginning of March and of February, a lot of requests of postponement of projects and delivery. And that is clearly related to the to the decision that the government were taking to lock down operations. So as a consequence, we couldn't deliver the product or our customer were clearly not able to receive the product, but they had to postpone the delivery. And in this case, in a scenario where clearly we don't know so much, at least the things that I can say is that we did not receive order cancellation of any significance. So the order, at least until now, orders have not been canceled. Some, yes, but in a very limited amount. But they've been postponed.

Okay. Thank you for taking all my questions.

Thank you. All right. Next question from Mattias from B&B Markets.

Please proceed. Hello. Can you hear me this time? Yes. Perfect. So I actually just have one question on the laundry segment where you mentioned in the report that mobility restrictions in Japan and South Korea in particular had a negative impact on the consumer-operated laundries. So just looking at your laundry business in Europe and North America, I'm curious if the consumer-operated loan rates is not a significant part of the mix here, or how would you explain that you didn't see the same phenomenon in these regions? Thank you.

Okay, so let's divide in Europe A significant part of our laundry business is the multi-housing, more than the consumer-operated installations. The multi-housing are the laundry operations that you can find in the basement of an apartment house, and as a consequence, it is not related to the limitation of the boom as such. In the United States, the large portion of our business, of our laundry business, is in the consumer-operated installation, the coin shops or laundromats. The limitation of the freedom to move clearly impacted also these operations. The lockdown clearly impacted this business in the meaning that our customers didn't operate their operations, their shops. But it's also true that this is a business that we believe could recover relatively quickly as soon as the lockdown is lifted because it is a business that's generating cash, meaning that when the customer, they go there, they pay immediately. And secondly, the investment for whoever is opening a coin shop is normally a very good investment because the return of investment is relatively short.

Thank you.

You're welcome.

All right. Next question from Yvonne Allison, Capital Share Broker.

Yes, hi, this is Johan Elias of Capuchin Reue. Just coming back to this question about the second-hand market, when we look at the financial crisis a decade ago, you showed negative organic growth for the initial year, but then also for a consecutive three years. Was that because you saw some impact from second-hand taking away your opportunity, or was it just that there were fewer opportunities sort of projects available for your project business at that time. Secondly, also taking some lessons from that time, you actually managed to see a pretty decent margin development during this year with negative organic growth. Were there any specific actions you took at the time? to make sure that your margin stayed this solid and input on that would be very appreciated. Thank you.

Yeah. So obviously we are trying to learn as much as possible from the past in the meaning that that was the previous period, the previous cycle when we experienced a decline. Even if it is a quite different situation in the meaning that at that time it was financially driven. Here it is driven by people's behavior, I would say. So we have also to regain the confidence of the people to go out or to travel and to do all these kind of things. But let me answer to your question. First one, we had a decline in 2009, like probably every company around the world. Then in 2010 we had a rebounce, and this rebounce was driven by the incentives that all the countries gave to the operators to restart businesses. Then we reported again a couple of years, consecutive years of decline. Differently, for instance, from what other companies in other geographies like the United States because of the financial situation of the European markets and in particular the South European markets. That was a financial crisis that affected in particular some countries and Europe in general much more than other geographies. So that is the reason why over the years. For surely not the second-hand market. If I think about what happened during this year and I try to replicate this experience, in this one I would say that the second-hand market did not significantly impact our business. The second question was about the margin. And in this case, I would say it's very similar to what we are currently doing. So during those years, we immediately put in place actions to reduce the spendings, the daily spendings, the run rate spendings, in the same way that Fabio described. We also reprioritize the investments, giving priority to the projects that can deliver short-term return, but also the strategic one, never stopping strategic activities because otherwise they are blocking when everything restarts. I would say that we are replicating the same actions here. In addition to that, we are clearly also preparing, as we did, by the way, on that time, even for the worst, in the meaning that the current activities, they have an impact, immediate impact, and you saw this, Fabio was mentioning, the 60 to 70 million SAC of savings generated in the quarter, but we are also preparing for, to make sure that we are preparing for the worst.

Good. Just coming back to your comment about the reason for the weak growth was that Europe remained lower for longer. I mean, your German competitor, Rational, also saw a drop in 2008-2009, but then saw positive organic growth, and I think they had a pretty big European exposure as well. I understand they are claiming that there was a penetration game going on for them with their combi steam oven taking share from traditional ovens, which allowed them to have an organic growth also during this period. Do you see any sort of drivers similar to that one that could be a sort of offsetting factor for you in the coming years? Some sort of technology that could imply that your new products will be in demand over old products? And then secondly, in the financial crisis, your focus was clearly not on acquisitions. You only really started the acquisition game in 2015 and forward. How do you consider M&A right now? Obviously, time being, cash preservation is the key. But in a year's time, do you think there will be an acceleration of M&A potential for you?

Okay, first question, without doing any comparison with other companies, obviously, but I can tell you that in those years, the percentage of sales coming from Europe was much higher than what it is right now. Already now, we have 66% of our sales coming from Europe. At that time, it was much larger than what it is today, and as a consequence, we were really unbalanced toward Europe. towards this part, this large, our home in some way. The second one, product-wise, for sure on that time, the segment, the specific segment of the coffee oven was unsaturated. There were markets where there were many kitchens without those products and that gradually replaced the other products. let me say, older technology with News One because of the efficiency. We also participated in this. We enjoyed this change of the market because we are one of the leading companies also with this kind of technology. But to see a technology today that could have a similar impact, I would say in the laundry world, We see that there is an increased demand of appliances that can guarantee hygienic solution, also in the kitchen, by the way. So this is very, very important. We see an increased demand, for instance, of dishwashers, because clearly you can guarantee a better sanitization of the items that are used in the restaurants today. thanks to well-operated dishwasher. This for sure with the restart of reopening of the operation will increase. In terms of new technology, we are studying and monitoring what is happening. For instance, there is a significant increase of restaurants who converted themselves to takeaway activities so restaurants that never had or never provided takeaway services or delivery services that are now doing this together with this increased option that they are giving to the customer there are also the famous or fashion ghost kitchens so the kitchens that are used by the delivery operators that are growing significantly In this case, probably different technology. We know that different technologies are used. They are more based on high frequency instead of batch productions. And as a consequence, our product ranges has to adapt and to evolve in that direction. The last part was about acquisitions. So the The third part of your question is about acquisition. Acquisition are still part of our strategy. The strategic pillar, the strategic direction are not changing. Whatever we said in terms of priority for us to grow the business, we believe are still the same. It's still valid. The customer care is still valid. The innovation, the technology is still valid. The expansion, the geographical expansion to rebalance our presence is And clearly, it is still valid that the acquisitions can help to accelerate our growth. During these days, it's difficult, honestly, to talk about acquisitions because of the valuation of the company. But for sure, the subject is on the table, and we will be ready if there are opportunities.

Okay, thank you.

I think we'll take the last question now for today. It's from the web. It's Stefan Scharnholm from Nordea. He says, can you give some color to your service business? I mean, I guess customer care, how that developed in Q1. And he also says that I understand that you do not want to give any figures for April, but your competitor Rational stated their order intake was down 30% in March and 60% lower in April. Have you seen the same kind of month-over-month drop? Those were the two final questions for the call today.

Okay, so the first one is about the service. The second is about April. Again, I repeat what I said, we don't give guidance for what concerns the quarter. I will not comment on that one. If I comment about service, service during the month of March presented several challenges. New challenges for us, honestly. During the crisis, one of you was mentioning or comparing the present time with 2008 or 2009. During those years, service went up significantly because people are trying to repair products and keep them going. In the month of March, in many cases, we were not even allowed to enter the site. So, we put in place actions like remote monitoring of the appliances, thanks to the fact that a large portion of our appliances is connected. We put in place what we call a double pair of eyes. So, this means that in many installations like hospital or in case large installation, they have internal technicians and we have been able to guide them with our expert working remotely. I think I mentioned that we are expecting that as soon as the lockdown is lifted, many customers will need to have the product, let me say, maintained and put in place, put in action again. But that was pretty new for us in March, and it is also explaining why the two kinds of crises are pretty different and difficult to compare one with the other.

Thank you, Alberto and Fabio. With that, I would like to round off today's call. Thank you for listening in. This will also be available as a recorded version on our website afterwards. So thank you for today and speak to you next time. Thank you and goodbye.