Electrolux Professional AB (publ)

Good morning and welcome to Electrolux Professional Group Q2 presentation. My name is Jakob Rubai. I'm heading up investor relations. As always, I have Alberto Zanatta, CEO, and Fabio Salperon, CFO, with me. And as always, we start with Alberto. Please go ahead, Alberto.

Thank you, Jakob, and good morning to everybody. Pleased to report the Q2 results that are showing, as we said in the highlight, another step towards our margin target. It is a quarter where organically we declined, slightly declined 0.7, that if you compare with the first quarter is showing a a sequential improvement of the business across the different businesses. Total sales were up, thanks in particular to the acquisition of Tosei, even if the second quarter is the weakest quarter along the year, and slightly also thanks to the contribution of Adventis, the new company, the French company, technology company that we acquired in April this year. We improved in the sales, but we also improved in the profitability. I would say that this is even more remarkable because the EBITDA in absolute value increased, including also the acquisition cost, so moving from the 385 million to the 410 million Swedish krona. This is despite the acquisition-related cost for Adventis and Tosei that amounted to roughly 8 million SEK. This improvement connected with the development of sales is also resulting in improved EBITDA margins. EBITDA margins that move from 12.2% to 12.5% if I exclude the integration related cost is even close to 13%, so 12.8%. The other financial, important financial, obviously, that we follow up is the operating cash flow. Also, in this case, it's lower than what it was in the second quarter of last year, but in any case, it's a solid operating cash flow that is including the payout of the dividends and is including also significant investment that we are starting to do to prepare for the new lines that are going to be launched during the coming years. Last comment about the quarter is that we confirm an increasing order intake. So order intake, the collection of order is still growing compared to the same period of last year. Last comment on this first slide, the overall one, is that in the quarter we have been we deliver sales above the 3.2 billion SEC, that is the highest quarter that we reported. Indeed, if I go to the rolling 12 months, we are, for the first time, above the 12 billion SEC in sales. Geographically, you see that Europe is up, flattish in food and beverage growing in laundry america is just minus one percent with the with the laundry well up. Remember also that the laundry in the US, we have this large distributor, so it is more related also to the shipment that we are doing and the different dynamics, including the stocks. And in the APAC, we are down both in laundry and food and beverage, but we will comment later that it's mainly related to one distribution, region of the APAC or APACMEA region that is related to the Middle East and Africa in particular. If we go specifically to food and beverage, food and beverage Organically, we decreased by 4.3%, but it's important to see that the decline is limited to some specific area of business. Because in reality, we have been quite flat in Europe, and Europe had a super strong first half last year. To be on the same level, I would say that is a good achievement, also because the order intake is very strong in Europe, so quite promising. And Europe is our second largest business after the laundry. We have been growing the U.S. chains, and it is a sequential improvement because we have been growing... in the month, in the quarter, and in the first half of the year. So we see clearly, and we always said that the chains, we had a long pipeline of tests with the chains in the United States, and it seems that gradually they are now unlocking the orders, and we are starting to get the benefit. We have been growing also in Southeast Asia, in India, in beverage in general. the decline is limited basically to two areas, Middle East and Africa, and the US, the so-called general market or institutional market. So they are two areas. I don't want to neglect the importance, but they are two limited areas where we have a decline of the business. EBITDA we improved the margin from 12.2 to 12.3 without the integration related cost it moved to 12.7 so also in this case also EBITDA in absolute value was down compared to the same quarter of last year but without the integration related cost it present an improvement also in this area Last comment is that also in this case the order intake is up compared to the same period of last year. Let's move to laundry. I think also in laundry we have to underline because we have an organic growth of 6.7. Now laundry in the quarter is above 1.2 billion sec. That is 50% higher than what it was in the pre-COVID. And we know that in laundry we even suffer less than food during the COVID period. So laundry is really developing well. It's growing rapidly. in Europe, in the Americas, slightly declining in the APE region, as I said, specifically related to the situation that there is in the region of the Middle East and Africa. With the growth, we are also improving the EBITDA in absolute term. Also in this time, we are for the first time above the 200 million SEC in a quarter. So we are improving the EBITDA that is now at 16.5, but that is including the EBITDA the cost so excluding the the cost it would be above 17 percent for laundry Also, the order intake for laundry is higher. One comment about the order intake for both food and beverage and laundry. We are now at more or less two-thirds of July, and I can report that the trend of the order intake that we saw during Q2 is still positive. It's still holding also during the month of July. With this said, I believe we can enter the financial comment and I leave it to you, Fabio.

Thank you, Alberto, and good morning to everybody. As anticipated by Alberto, quarter two was another step toward our margin expansion. EBITDA margin moved from 12.2% to 12.5%. To be said that the underlying margin before the acquisition integration cost of TOSEI for roughly 8 million SEC reached the 12.8% close to the 13% plus 8% in value. The improved margin is came mainly from an increased gross margin thanks to the contribution from pricing, more than compensating inflationary items like the labor cost and lower material cost. Remarkable was in the quarter the contribution for laundry. Laundry business grew close to 7% organically compared to already a strong quarter of 2023 when, if you remember, laundry grew 28% compared to 2022. So the comparable was stronger and we delivered even higher sales, generating overall more than 80% in EBITDA compared to quarter to 2023. Overall currency transaction that was an offender for last year, overall positive contribute in the quarter. This margin expansion was delivered despite the fact that in the quarter the acquired companies had a dilutive effect of margin. TOSEI, as anticipated during the previous call, have in Q2 and Q4 the seasonally weakest quarter in terms of sales and therefore lower in margin. Adventis, the professional induction cooking company, was acquired in April and contributed in terms of sales and profit only two months in the quarterly data. The overall impact in terms of EBITDA was negative, and this because of the acquisition and integration cost. To be said and confirmed, the underlying profitability, meaning excluding the acquisition and setup cost, is confirmed very good and higher than the group margin. FinanceNet in the quarter was 40 million SEC higher than last year in quarter 1 and this is due to the additional borrowing we had for the acquisition. Few words about the tax rate. You see somehow an increase in the quarter to roughly 27%, and this is due to a country mix. Overall, the earning per share was 0.86 sec per share, somehow below last year, and this was driven by higher interest costs and taxes. When it comes to cash flow generation, we generate close to 400 million seconds operating cash flow, confirming somehow the strong cash generation power of this group. And this remarkable result has been delivered despite an increase of capital expenditure related to innovation projects scheduled to be launched in the incoming years. When it comes to the asset management, happy to report that the rolling 12-month operating working capital on sales is now reduced to 17.4% on sales, lower than December, lower than March this year. And improvement came mainly from inventory, where, as anticipated, the action we put in place to bring down the inventory value are definitely paying off we are very proud of this achievement because also in this area not only in terms of margin expansion but also in terms of asset management we are step by step moving our towards our financial target Our financial position, even after the acquisition of Tosei Adventis, remains strong, with a ratio net debt on EBITDA of 1.9 times. That is exactly in line also with the level we had at the end of March. I'm very proud also of this achievement because we were able to keep the ratio equal to March, despite in the quarter we paid the dividend for 230 million and we have 240 million payment related to advantage acquisition so overall also from a balance sheet perspective cash flow generation we are entering the second half of a year with a very solid situation with the means to support the sales and the margin expansion of this group and with that back to you alberto thank you fabio