Electrolux Professional AB (publ)

Good morning and welcome to Electrolux Professional Group third quarter result presentation. My name is Jacob Broberg. I'm heading up investor relations and corporate communication. And as before, I have Paolo Schira, our president CEO with me and also Fabio Zarpellon, our CFO. And as always, we start with you, Paolo, please go ahead.

Thank you, Jacob. And good morning. Good afternoon, everybody. I'm happy to present the Quater 3 results. It has been a good quarter for Electrolux Professional because both the reported segments are presenting a growth as well as the different geographies are showing organic growth. The number is 3.4% and it is supported by price, volume and customer care development. So, positive start for this quarter. Profitability has improved as well. Thank you very much. Cash flow returned to the historical high level. So compared to prior year, quarter three cash is higher, slightly higher. Even more important, the comparison with the quarter two, where actually there is a material improvement. Thanks to the good cash generation, we can see that our leverage net debt on the BTA is returned back to one, which is positive. This is also remarkable considering that during the year we had some cash out related to the efficiency program as well as beginning of the year we did an acquisition. So historical strength of the cash flow for Retros Professional is confirmed. Looking at the quarter, the quarter 3, we have seen a bit of acceleration towards September that has been a very good month and overall for the group the order intake is up. Looking now at the geographies, and I mentioned earlier this is a positive situation we have seen in Q3 because the three macro regions, Europe, Americas and APAC-MEI has been delivering growth with different dynamics. So in Europe, the main driver has been food and beverage. In America's main driver, laundry. In Apamea, actually, both of the reported segments had a positive evolution. Now, let me give you a quick perspective on the two reported segments, starting with the food and beverage and then moving to laundry. Food and beverage organic growth 2.3%, different dynamics between the regions. Europe continues with several months of good trajectory of growth, whereas America still has a little bit of difficulty in the quarter. Having said so, we do see actually a decrease of the decline in quarter three, especially in September. And in terms of dynamics within the American market, we do see the institutional, the general market doing fairly well for us. It's in the chains where we had a little bit of missing rollouts in the quarter. But the activity level is on a good level. APACMEA reported a very good growth of 8% I think you recall in the previous quarter I mentioned that we had some postponed deliveries from quarter 2 so a part of this growth you see the 8% on APACMEA is due to actually the postponed deliveries a part of it is actually genuine new orders we have taken the order intake is fairly flat or slightly positive The margins improved organically. In specific case of food and beverage, the impact on U.S. refund for tariffs has been 17 million SEC. We go to laundry. Very good quarter for laundry with strong evolution on profitable growth. So organic growth robust at 5.2% and margins at 18.1%. Growth delivered significantly from North America. For full transparency last year in quarter three, we had a relatively weaker quarter because of anticipation to the tariffs impact. So we had good orders and deliveries in quarter two. By even removing this effect, I would say America's performance has been very positive. APAC-MEA, very positive. A little bit softer on the Europe side due to central and northern Europe, but if I were to take a longer horizon than the quarter, I would say Europe has been this year delivering fairly well. Or the intake positive in laundry across the different territories. Profitability, as I mentioned, has been developing well. Also in the case of laundry we had a tariff refund in this case roughly 9 million SEK but also here same reasoning as for the other reported segment the baseline profitability has been improving. In a few minutes I will give you some some color but also noticeable to mention that we launched now recently the first part of the range of line 7000 the new range of laundry machines. I think having said so is a good time to give the words to our CFO Fabio to give us a bit more details on the numbers.

Thank you Paolo and good morning, good afternoon to everybody. Paolo went through the business dynamic in Q3. I will first give you some more insight into our P&L development. Just to do some order on the table, let me remind everybody that last year, quarter three was affected by 235 million SEC restructuring cost, parting gross margin 133 million. and 102 million in SDNA. That is the reason why the comparison on reported figures is somehow misleading as is. But I will develop on it in a second. AB margin last year without item effect comparability was 11.6%. A few words then to dig into the figures. In the quarter, we had a positive contribution from currency translation, both on top line and somehow minor on the bottom line, but the margin as such was not influenced. In the quarter, as Paolo anticipated, we improved the margin and this gross margin expansion was driven by a gross margin expansion that you see reached 36.1% versus like-for-like excluding item and factory comparability of 34.8% of last year. This margin expansion was a combination of different factors. The tariffs that Paolo mentioned, we had also in the quarter positive currency transactional effect of roughly 10 million SEC. At the same time, we face important increasing input cost, in particular on transportation cost that affected significantly the cost in the quarter. Direct material had some negative effect, not really material so far in the quarter, but more is expected to start hitting our profit and loss already in quarter four. On the positive side, positive impact from volume growth, price sticking and contributing to offset the inflationary item, and last but not least, the contribution as expected of the restructuring program implementation. Restructuring program that is proceeding according to plan. We have already commented the closure of the coffee facility and the move of the production in the existing facility In France, the move of production from Suzette down to Italy is proceeding according to plan and overall this plan is confirming the yearly positive contribution 85 million SEC on a full year base. To give you a flavor, the contribution in the quarter was in an area of roughly 25 million SEC. Thank you very much. Thank you very much. APS, as a consequence of the stronger BIT performance and the lower funding cost, increased to 0.74 SEC per share. Cash flow, as you have seen, we are returning to solid cash generation. The cash generated in the quarter was over 400 million SEC despite the cash out that we had for the structuring problem in area of 35 million SEC and the continuing investment that we are doing in particular in the product development side. Operating working capital will end up over 17% at the end of the quarter. It is higher than the level it was last year, the same period. I would say two major ingredients behind this development. Thank you very much. Structurally, we have a longer payment term. It's a country mix, no tension, no highlights in terms of quality of the receiver that remains absolutely at a good level. The second piece is related to inventories, and this is because of decisions we have taken. We have taken decisions to close a couple of operations, as you know, and this has created temporary increase of inventory, as well as some additional inventory due to phasing and phase-out of new products. The combat power that Paolo mentioned earlier is one example of it. and these are more internal factors of our decision. At the same time, and if you remember we already reported in the previous couple of calls, we were sitting on a higher than normal Finnish good inventory because of... Customer postponing deliveries. We start to see a decrease of the impact of this item, but being this a rolling 12-month indicator, it still suffers from the pile-up of inventory that were booked due to customer postponement. When it comes to our financial position, it remains pretty strong. We are now at one in terms of ratio net debt on EBITDA. It is lower than September last year, in line with December. Along this journey, I believe a lot happened in the sense that we have been running acquisitions, have a significant payout related to the restructuring program, we pay dividends and we continue to finance our organic growth. So I would say remarkable improvement and we are entering quarter four definitely with a pretty strong balance sheet. And with that, back to you, Paolo.