Electrolux Professional AB (publ)

professional Q4 presentation. My name is Jakob Brubai. I'm head of investor relations. We have Alberto Zanatta, CEO, and Fabio Sarpellon, the CFO. We now leave the floor to Alberto. Please go ahead, Alberto.

Good morning. Thank you, Jakob, and good morning to everybody. Q4, I would summarize the quarter saying that the Along the quarter, we had a strong cash flow generation despite the turbulent times that we've been facing during the last part of the quarter. Sales declined by 13.2% with an EBIT margin stable compared to last year. Considering the situation, we have also to say that the board proposed to pay no dividend. And we have also the other highlight that I want to write in the quarter is the fact that we continue in our strategic initiatives. Strategic initiatives in particular, the factor in Rayong, the 28th of February, we will complete, the factory will be completed, and there will be the final handover to give us the possibility to start moving into the factory, and the digital investments, investments in product, but also in digitalizing our company. But let's start from the market. As I said, a turbulent time. And also here we see two different dynamics. First, clearly, the most affected segments are the hospitality ones or restaurant, hotel, bars, and this is reflected on the performance of the food and beverage segment. The second is the geography and the meaning that the second wave and in particular Europe, so in particular the south part of Europe. And also this one will be reflected on the performance considering the presence and the market share that we have in the south European market in particular for what the beverage is concerned. At the same time, we experienced a recovery of the business U.S., with the laundry growing and food basically flat, food and beverage basically flat. And in particular, in some part of Asia, China, and Oceania, so Australia and New Zealand. In Asia, in particular, the Southeast Asia, if the countries that are still suffering, considering the dependency of the business, of the hospitality business, on the tourism, and considering that those countries are still in a lockdown mode. So, as I said, since everything passed by the second wave, customers reacted differently compared to the first one because they were more prepared. so restaurants, hotels, are already ready to face this kind of challenge, but safe decline, in particular during the second part of the quarter. This kind of trend is still going on also in January. The sales again are mainly impacting the food and beverage business. Food and beverage business decline close to 21% and between food and beverage, beverage is suffering much more than food. Beverage is suffering much more than food for two reasons. The first one is the type of business and the meaning of that while many restaurants adapted that to delivery, to take away. This is more difficult for the bar, the pubs, the cafe. And secondly, the geography, because our large part of our beverage business is developing countries that are heavily affected. Italy, just to mention, France, where there are the two companies that we recently acquired, but also the business of our US operation in Mexico that is heavily affected by the lockdowns. In the food and beverage scenario, the positive element is the US, that after quite negative development during the summer and early fall, recovered and declined between brackets only 5%. So, this steep decline of the volume impacted negatively the habitat. That was around 1%. The other element is that Our costs are lower, but the savings are less than before because many activities that have been put on hold during the second quarter, in particular, so the really negative period of the pandemic, we restarted. And in particular, I'm talking about the product development. that is preparing us for a lot of very interesting and hopefully successful launches during the quarter we are in right now. As it has been all along the year, the dynamics of laundry are different. Laundry was basically flat compared to last year, Q4. Growing in Europe particularly the northern part of Europe, and growing also in the U.S. So a couple of words about U.S. because during Q2 and Q3 we have been always commenting the decline of the sales to U.S. and explaining them because they were building the stock. They've been building the stock in Q1. and then depleting or using the products that were stocked in the U.S. by our distributor to generate the sales, the low sales that there were during the Q2 and Q3. When the stock was over, they restarted the ordering and we restarted building the stock with good results as you can see. This year we will face the opposite because this was last year, the quarter when we have been building the stock that was used in Q2 and Q3. Another element about the laundry business that's very positive is the EBITDA that with fresh results thanks to the cost efficiency activities. thanks to all we did with the new product brought to market, the EVTA improved. This is quite significant and quite remarkable. Let's move now, Fabio, to the financials.

Thank you, Alberto. Good morning to everybody. As anticipated by Alberto, Habitat margin in the quarter was 7.3%, close to the ones we delivered in Q4 2019, but down 40 million SEK in value. We have reported a pretty different dynamic between two segments. Laundry was up 30 million. SEC in the quarter and we delivered strong profitability, really close to 17%. While in food and beverage, at the time value declined 17 million SEC compared to same quarter of 2019. No material change we had in the group common cost. When it comes to the dynamic of the profitability, we had two main factors that reduced the EBITDA value, sales and production volume, and negative currency impact. On the other side, we continued to report a positive contribution from price, direct material cost reduction, and the impact of the cost measure. that in the quarter compensates roughly 80% of the impact of the low volumes. When reading through the P&L, we see a decline of roughly a couple of points in the gross margin, and this is mainly related to the lower volumes and the negative impact of the currency transaction. As I mentioned earlier, price, direct material, and production efficiency, in particular in laundry, have positively contributed to sustain the margin. Selling administrative expenses decline, both in value and also in weight on sales. Let me at this point take the opportunity also to give you an update on the cost reduction initiative that generated also in this quarter a pretty remarkable contribution to the profitability, around roughly 90 million SEC. This initiative can be clustered in three main buckets. Around 30 mSEC are what we call the structural ones, coming from the two restructuring plans, the ones that we launched in September 2019 and now are fully executed, and the ones we launched in September last year that are under execution. The sectoral plan that we anticipated during the last call is expected to generate around 110 million SEC already from the second quarter of this year, plus an additional 20 million from the second quarter of 2022. Second bucket is coming from government subsidies, mainly related to two countries, Italy and France, and the remaining 40 million the third bucket is coming from the reduction of the discretionary spending. To be considered that in this third bucket last year we had one time cost, one time cost related to separation that represented more or less 30 million CEC. These cost measures are not over. We are continuing with this core measure also in this first part of 2021. Benefits are expected to come, but on lower scales than the previous quarter. And this is because, as Alberto mentioned a while ago, we are increasing the investment in our strategic initiative. The digital product and solution but also we will have in quarter one and somehow in quarter two some specific one-time cost related to the consolidation of our operation in Thailand that Alberto will develop in a while. Happy to report that in Q4 we have further strengthened our balance sheet. At the end of December, operating working capital was down 23% in same currency compared to December 2019 and down 28% compared to the level we had in September, where we started also to revert the trend of average operating working capital sales. Receivable is significantly down. but also inventory has been progressively reduced in Q3 and then in Q4. And I believe that this is a pretty good achievement because we have reduced significantly the operating working capital whilst at the same time increasing the service and the delivery to our customer, in particular our replacement sales. We close the year with even a stronger finance position. That, as you see from the reporting, has been reduced to half a billion SEC, half of the level we had in December 2019. And after December, we have liquid fund for 810 million SEC and revolving credit facility available for additional 210 million. Our net debt on EBITDA ratio is below 1 at 0.8. So, significant improvement to what we reported in quarter three and quarter four. So, pretty strong finance position. This strong finance position has been achieved Thanks to very strong cash flow in quarter four, we reported 460 million cash flow generation and overall for the full year 2020, 570 million. Operating working capital reduction represented the major contribution in the cash flow generation. CAPEX in the quarter was close to 70 million, with the majority of it, 50 million, is related to the construction of the new operation in Thailand. That confirms our focus on delivery, on the strategic priority, whilst maintaining great focus on cash flow generation and sustaining profitability in the short term. Now, Alberto, back to you. Thank you, Fabio.