Electrolux Professional AB (publ)

Good morning and welcome to Electrolux Professional Q3 result presentation. My name is Jakob Brubai, Head of Investor Relations. With me, I have Alberto Zanatta, President and CEO of Electrolux Professional, and Fabio Saplon, CFO. So I will start with handing over to you, Alberto. Please go ahead.

We close the quarter with declining sales still affected by the pandemic. but much less affected compared to the second quarter. So sales declined 16%, 16.1% compared to the same quarter of last year, showing a recovery of the market that improved steadily from June. We closed the quarter with an everyday margin that improved significantly versus the breakeven in Q2, reporting a 9.9% EBITDA margin without item affecting comparability. And we will come back about this subject. Such a result has been achieved thanks to, one, volumes, so the sales that declined less compared to the previous quarter. The continued action on cost, we reduced cost less than in Q2, but still significantly compared to last year. Third, a better mix, mix coming from the new product that we introduced in 2019 during the second part of 2019 and during the first part of this year. the laundry product, the laundry sales that declined less than the food and beverage. An additional word about the cost, so the continued action on cost. We reduced cost, but differently from Q2, close to half of the savings that we generated in Q3 are structural savings. So these are savings that we will continue to enjoy in Q4 and along next year. Let's go back to the sales development because we said that the first element giving us the possibility to deliver the EBITDA margin close to 10%. was the recovery of the business, recovery of the market, and the recovering of our sales. We experienced a recovery, I would say, all across the regions. Europe, that also in Q2 was the best performing region. In Europe, sales declined roughly 10%, with a clear difference between the Nordic countries, and the South European countries. Italy in particular was down 25%, while in average in the Nordic countries, so Sweden, Denmark, Finland, Norway, we delivered basically the same turnover that we delivered last year in Q3. In some cases, for instance, Russia, I mentioned Russia, we had... significantly increase of sales during the quarter. I think the significant change is also in the Americas. Americas overall were down 30%, but in U.S. sales were down 15%. I have to say that in September, sales in U.S. were even positive compared to last year. So a recovery of the situation, considering that the In Q2, the sales in North America were 65% down. And this is coming from food and beverage business, but also from the laundry business, where during the first part of the year we had the, or during the second quarter of this year, we had the distributor who was the stocking, because he created a large stock at the beginning of the year, and then We had, together with him, we had to use that stock. Now, in September, he restarted creating again, bringing product to North America. The Asia Pacific market region is reporting a 25% decline. That is better than what we reported in Q2, but it's a mixed situation where we have some regions significantly down in particular the south south east european markets that were already down that were also down in q2 while there are some countries for instance in new zealand where we are reporting even a growth of the sales so what we experience in q3 is recovery of the market. In particular, the recovery was good in September. In September, we reported a 10% decline of sales compared to last year, a recovery that continued also into October. In this case, today is the last day of October, so the trend is similar, but we have also to say that The last days of October showed a weakening of the demand. That is easy to be explained with the situation in the European markets, particularly in Italy, France, Spain, Germany and the UK. One note also about the sales trend in Q3 is that we have been suffering quite a lot for what concerns the spare parts, the parts, the accessories, the customer care business. So parts, accessories, and consumables. Because during Q2, we were not allowed to serve our customer. We were not allowed to enter the site in Q3. we reported a recovery of this business. We can say that during the Q3 sales of parts, accessories and consumables, they were declining slightly less than the sales of products. So, clear improvement month after month during the quarter. A couple of words about the two specific segments, the food and beverage and the laundry. As well as in Q2, also in Q3, food and beverage suffered more than the laundry business. This is something that we have been repeating since the beginning, saying that the laundry business is more resilient than the food and beverage. And also the Q3, when the market recovered, We see that food and beverage decline close to 20%, 15% in Europe, still Europe in some way less affected, 30% in the Americas and Asia-Pacific. But as I said, also in the Americas, there is a clear difference between North America and Latin America, with North America more positive. In September, U.S. in particular was even positive on the same level of last year in terms of sales. We had also other regions that had been performing relatively well considering the context. Middle East and Africa was unchanged compared to last year. The EBIT margin without item affecting comparability was on 9% in the quarter for food and beverage, while the operating margin was more or less on the same level of last year. In this case, in particular for food and beverage, but also for laundry, during the quarter, during Q3, we have been invoicing a lot of the projects that we had in order stock. So a contribution of the good sales performance, I'm mentioning this now because we were commenting Middle East and Africa, that is exactly an area where we invoice some large projects I think already in Q2 we mentioned the fact that we did not experience order cancellation but postponement on orders and this is exactly confirmed by the result in Q3 where we have been able to start invoicing the order stock that we had.

Going into the laundry.