Electrolux Professional AB (publ)

Good morning and welcome to Electronics Professional Group and our first quarter of 2024 result presentation. My name is Jakob Rubai, I'm heading up corporate communication and investor relations and with me as always I have Fabio Sarpellon our CFO and Alberto Zanatta our CEO. I leave the word for you Alberto, please go ahead.

Thank you Jakob and good morning to everybody. Three highlights from Q1. The first one is that the comparable profit increased. If we exclude the integration related cost for TOSE, the margin improved sequentially. I would say we are constantly improving the margin. And this is coming because this is a quarter where we have not an easy comparison with the last one. Many things have been different. The first one, obviously, and the large one is the acquisition of Tosei. As you know, we acquired Tosei in January, so we have a full quarter of contribution both in sales and in earnings in profit and this has been a positive contribution because we added roughly 7% in sales and the margin of the business generated by TOSE was higher than the average of the entire group. But at the same time, we had the acquisition related cost. And in this case, clearly the contribution was negative. The 38 million SEC contributed negatively to the overall result. The other thing to be said in the difficult comparison is that we reported a decline of organic sales. So this decline contributed negatively to the result. But it is a decline that has also to be seen in lieu of the fact that we were ahead of last year until February. in terms of organic development and then the gap was created in March and March last year was an extraordinary strong month with between 10 to 15 more working days than March of this year. So comparable profit increased. The second highlight of the quarter is that we clearly see sign of recovery in the U.S. Still sales in the U.S. are down compared to Q1 last year, but the order intake is higher. The pipeline with the chain business is increasing. So we see sign of recovery in the U.S., The third highlight is about laundry. In laundry, we decline volume and we decline margin. Besides the fact that in laundry, the majority of the integrated related costs for Tosai are in laundry, in any case also excluding this cost, the margin decline, and this is mainly because of the missing volume. Same comments I made in relation to the overall picture of the group. Until February we were ahead of last year, then in March we created a gap. That in laundry was even larger than for the food and beverage business. because we had some delays in delivery of some specific product. Not months of delays, there have been some days or weeks of delays, but enough to create the gap in the month of March. Last things, as in the past quarter, we had a strong cash generation. comment about the sales I already made it so organic sales as I said are down they've been down mainly in the month of March I would I would like just to underline one area, that is Europe food and beverage, because whatever I said about working days, about the length of the month of March is valid, obviously, also for food and beverage and Europe. But in this part of the world, we have been flat. compared to last year and this is a remarkable performance also because we were expecting a decline business in Europe because of the missing incentives from governments in reality the business is holding very very well in all this area despite the decline of the business order intake is up compared to last year now let's have a deep dive on food and beverage food and beverage also in this case comparable business the margin is up in this case it is up even considering the acquisition cost so it is sequential improvement of the profitability of this part of the business. It is a good one. Europe is the one performing strongly, but also the other two parts of the business, the United States and the Asia-Pac, have improved the margin compared to last year. You know that we have a lot of focus on improving the margin and this is proved by what is performing in food and beverage. The order intake is higher than what it was last year across the different regions and in particular we are seeing in North America. Laundry is the area where we had a decline of the sales and a decline of the margin, independently from the negative contribution of TOSE. And this is explained mainly because of the missing delivery during the month of March. As I said, it is related to some products, specifically our semi-professional products and some products coming from the LUMBI factory that, by the way, are the high margin products, but it is the lace that we already recovered. So it is not something that has to worry us in the coming future. The order intake is significantly higher than a year ago. With this said, I would let Fabio comment the financials.

Thank you, Alberto, and good morning to everybody. As anticipated by Alberto, quarter one was an important quarter for the electricity profession, where from one side we have finalized another important acquisition with TOSE in Japan, but also we have been able to further strengthen the comparable profitability before the integration cost. Thanks to TOSEI, the top line has been increased by 2.9%, compensating the organic decline of the traditional business, or roughly 4%. Reportable profitability was 10.7% in the quarter and this amount includes from one side 6 million acquisition costs and then the one-time event when you run an acquisition that was 32 million sec of cost in terms of inventory step-up. Without this, let me say one time cost, the comparable profitability was 364 million, 11.9%. Let me say 0.5 percentage points better than quarter one last year and plus 7% in value. To be noted that the improvement of the comparable margin came both from TOSEI, that was in Q1 creative for the group profitability, but also in the remaining part of the business, where despite the decline in sales, primarily in US and in London, profitability improved. Positive contributions continue to come from price, more than compensating the inflationary items like the labour cost, but also from a lower direct material cost. Customer care that grew significantly last year continues to grow also in the quarter. Also on the positive side, currency transactions that, if you remember, negatively affected the profit and the profitability of this group, in particular in the second part of last year, positively contributed this quarter. A few words then about the impact of TOSEI on the group. As I mentioned earlier, the contribution was positive and accretive in terms of margin in quarter one. To be said that historically, in terms of seasonality, mainly related to the business of laundry of TOSEI, quarter one and quarter three are the largest quarter in terms of sales and therefore the most profitable quarter within a year. But also I believe that is remarkable the rebalance of the group thanks to TOSEI from a geographical and business perspective. Meaning, if you look into the performance of the quarter in terms of sales, currently the dependence in Europe is below 60% and the remaining 40% are equally split between Americas and APAC and MEA. So definitely a much better balance from a geographical perspective. But also remarkable is the weight of laundry business that is now close to 40% of total group sales. Still in the quarter, despite the higher borrowing, we have been able to reduce the finance net to 32 million sec. 38 was spent last year, thanks to a reduced funding structure. Tax rate for the quarter was 28%, slightly above the historical average, mainly related to country mix. Earning per share reduces year on year, but this is only due to the one-time cost related to ZEI. As anticipated by Alberto and this graph is showing really the consistent delivery on the cash flow. Operating cash flow was over 180 million in the quarter and also to say acquired company contributed positively to the cash generation. When it comes to the balance sheet structure, first, all this data for this year include also TOSEI. Overall, starting from the operating working capital, the rolling 12-month operating working capital on sales reached 17.7% in the quarter, down to over 18% that was already at the end of last year. The major part of the improvement came from inventory where, as we anticipated during the previous call, the action we put in place to reduce inventory and the inventory weight on sales are really now paying off. Our finance position also after the acquisition today remains, I would say, pretty strong with a ratio net debt on EBITDA at 1.9 times and the group at the end of March had cash available close to 900 million SEC. Last event related to TOSEI acquisition on the funding side was the launch in March, the successful launch of an MTM program in the Swedish debt capital market. The overall frame was 5 billion SEC. We got a pretty good response from the market and we issued 900 million sacks part of three years and five years duration and this successful response was shown by an order book that was three times the available issuance we put in place. Definitely with this program, we provide an additional diversification of our funding sources. We increase our refinancing capacity, strengthening our credit profile. So overall, even after this recent acquisition, thanks to a pretty solid balance sheet, consistent cash generation, this diversified funding, we have the structure and the means to continue to support the organic and inorganic development of this group and with this back to you alberto thank you fabio few words about jose