Amplifon S.p.A. (AMP) Earnings Call Transcript & Summary

Good afternoon or good morning to everyone, and welcome to Amplifon's Capital Markets Day. I am Francesca Rambaudi, Investor Relations and Sustainability Senior Director here at Amplifon. Given the current coverage situation, we felt that the safest way was to call our CMD virtually, but we still have a truly exciting program for you. Before we start, a few practical notes. Earlier today, we issued a press release related to this event, and this presentation is posted on our website. The event can be accessed via webcast and conference call, and dial-in details are on Amplifon's website. Next, I have to bring your attention to the disclaimer on Slide 2 as some of the statements made during this call may be considered forward-looking statements. Our Capital Markets this year is focused on how Amplifon will innovate around the customers to fuel profitable growth. The team talking to you today are Enrico Vita, Amplifon's CEO; Giuseppe Vironda, Chief Marketing Officer; Alessandro Bonacina, Executive Vice President, Americas, who is connected from our U.S. headquarter in Minneapolis; Anthea Muir, Executive Vice President APAC, connected from Singapore; Iacopo Pazzi, Executive Vice President, EMEA; and Gabriele Galli, our CFO. So let's now see together what we have planned for you today. First, Enrico will share with you our next journey of sustainable profitable growth. Then Giuseppe will deep dive on how we will deliver a unique and a matchable value proposition to all our customers, followed by Alessandro, who will share with you our new ambitions for the U.S. Anthea will deep dive on 2 other major growth opportunities, Australia and China. Gabriele will then bring it all together in financial terms to include our 2023 targets and Enrico will finish with the closing remarks. At the end of the presentation, we look forward to your questions, and we have set aside one hour for it. [Operator Instructions] With that, I am now pleased to introduce Amplifon's CEO, Enrico Vita.

Good afternoon, everyone. Thanks for attending our Capital Markets Day, and I look forward to meeting you again in person soon. Today, we are presenting the plan for the next stage of our continued journey of sustainable and profitable growth centered at around our customers. Our plan starts from very solid foundations. After a very challenging 2020, a year which was also a year of reset and many learnings for us, we are now approaching the end of another very intense and also very rewarding year for us. In fact 2021 will be once again a record year full of important milestones and achievements. And I'm very pleased to say that everyone on all the 3 regions and all the corporate functions contributed to these results with no exceptions. Now I believe that 2021 is going to be an important year for us and also for our industry. It will be a year that I'm pretty sure we will see the best players emerge stronger from the pandemic and the weakest get weaker. In other words, I expect the consolidation of our industry to further accelerate in the next years. Clearly, we feel we are very well positioned, and we wanted to take advantage of this situation. We wanted to continue to play a leading role in this process. And today, we will share some of the initiatives that will drive this. The key pillars of our strategy, as you know, are very simple, and they are not going to change. First of all, let me say that the key word is focus. Then from 1 side, our model of growth made of organic growth and acquisitions. We aim to strengthen our leadership in all the core markets where we are already leader and reach the leadership in those few markets where we are not leader yet. At the center of our strategy, as always, there is our customer. We will step up our effort to create an unique and matchable proposition, able to deliver the best results to our customers. A proposition made of 3 key elements. First, our brands. Throughout the year, we have built the clear leading brands in our sector, #1 in awareness in many core markets even synonymous of the category in some of them, like Italy, Spain or New Zealand, for example. We will continue to invest heavily in our brands also in the next years, conscious of the importance for our customers to rely on a very well-known and trusted brand. Then the second element, which is about a superior customer knowledge deriving from the matchable set of data we can count on. In the last few years, we have invested in competencies, talents, leading digital technologies to leverage this asset in order to build the best in size about our customers and best serve them through a 360-degree customer-centric model. Lastly, the third element, an innovative experience able to deliver the best results to our customers where the digital technologies play a key role in enriching the experience and improving the protocols in the store and also plays a fundamental role outside the store from the first contact to the after sale. Giuseppe will take you through our key initiatives and plan on all the key elements in his presentation. Finally, the last pillar of our strategy, which is represented by our people in our stores and in our offices. Our most valuable asset, the asset that made the real difference in recent years, and I'm pretty confident will continue to do so also in the future. As you will see in the next part of the presentation, all the 3 pillars will be underpinned by significant resources. So let's now move to the next chart. Brand, superior customer knowledge, innovative customer experience represent our engines to boost organic growth, but we still have many sizable opportunities to be exploited also from a geographical viewpoint. These opportunities will represent our next waves of growth in the short, medium and long term. First, we still have sizable room for growth in Europe and, in particular, in France and Germany, 2 amongst the top 3 markets in the world where our share is still far below our potential. Then the U.S., the biggest market in the world. With the acquisition of PJC Hearing and the exit from the wholesale business, we have begun a transformational journey, which, ultimately, aims to own direct relationship with end consumers and to capture a larger part of the value chain. And Alessandro will take you through this exciting journey that will accelerate our growth in the U.S. Finally, let's move to APAC. In Australia, with the acquisition of Bay Audio, another key milestone in the history of our company, we have the opportunity to create a fantastic platform to boost growth and profitability and win in this core market. Then China, where we are building a presence, which represents an important investment and growth opportunity for the future. We have been the first entrant in the country. In July, we completed our second JV, and we feel we are already well ahead in the learning curve to become a truly domestic player. Now our plan is to accelerate the expansion fast, to be the leading presence in this not easy, but high potential market. And Anthea will take you through our plans in these 2 strategic markets afterwards. So let's move to the next chart to see our financial targets to 2023. Starting from the 2021 guidance that we gave you at the end of July, on the same consolidation basis, we envisage an ambitious high single-digit compounded growth rate in sales in '22 and '23, as a result of a healthy combination of organic growth and small acquisitions, well balanced across regions and core markets. Then, in addition to this, we will have the contribution from Bay Audio, which will be worth about EUR 100 million in 2023. At the same time, with regard to profitability, on top of the significant step-up that we are expecting to deliver this year, capitalizing on all the work done during 2020, we expect to further increase our EBITDA margin to at least 25.5%. This is the net result of improving operating leverage and increasing investments in our brands, in innovation, of customer experience, in key competencies and capabilities, hence, on what is really crucial for the medium and long-term growth of our company. In fact, you will appreciate from Gabriele presentation that this is also a plan made of significant investments. We are accelerating our investments as I strongly believe this is the right time to be bolder than ever and to take advantage of the current situation and further increase our competitive advantage versus our competitors. Finally, for the first time, we are also committing to a more inclusive and sustainable future for our society. In fact, as you know, last March, we published our sustainability plan within our 2020 consolidated nonfinancial statement. This is an important step within an organic path to sustainability that is focused on listening to our main stakeholders. Our customers and their needs, all employees and collaborators, the local communities and future generations, the definition of our sustainability plan allow us to put into practice the commitments defined in our sustainability policy. Thanks to objectives consistent within our business strategy and aligned with the United Nations 2030 agenda for sustainable development. The plan focuses on the 4 areas of commitment of the group sustainability policy, product and service stewardship, people empowerment, community impact and ethical behavior. For each of the 4 areas, our sustainability plan envisage ambitious objectives that materialize through the achievement of specific targets to be measured against in the 3 years period '21-'23. These include the fight against the stigmatization of hearing care through awareness campaigns and the promotion of accessibility and technological innovation of hearing services to the older generations [indiscernible]. Our sustainability plan also focuses on the announcement of all the employees worldwide through the development of talents in terms of skills, professional growth, involvement as well as on the promotion of equal opportunities. There are also initiatives that promote social inclusion, among people in situation of fragility and marginalization and the awareness of young people on hearing prevention and well-being, thanks to projects with a high social value in favor of future generations and the community. Particular attention is also paid to promoting responsible and sustainable practices along the value chain and reducing the environment impact of business activities. For example, by reducing the use of batteries, thanks to the use of rechargeable hearing devices. Aware of the active role that we play in society and the importance of listening to all our stakeholders, we are proud to undertake a path that will lead us to pursue ambitious and significant objectives for our growth, while providing a tangible contribution to a more inclusive and sustainable future. In conclusion, we are going to leverage the solid base that we have built to continue growing profitably and also with the sustainability at the core. We will strengthen our leadership position by doing what we are doing well and investing more where it really matters to deliver the best experience to our customers. With this, I now hand over to my colleagues and to Giuseppe first.

Thank you, Enrico, and good morning, everyone. I'm Giuseppe Vironda, Chief Marketing Officer. I joined Amplifon 18 months ago, attracted by the tremendous opportunities that our brand can express, driven by my passion for digital and customer experience. Today, I'm going to share how we are building the next wave of differentiation and growth. At Amplifon, we are obsessed with building a unique and unmatchable customer proposition, leveraging on our 3 distinctive assets, top of mind brand, superior customer knowledge, leading innovation in customer experience. Let me take you through each of these in terms of where we are today, and how we are evolving. Let's start from the brand. We are all proud that our brands stand out globally as the destination for premium hearing care, customer devotion and expertise, an equity built through decades of work reaching millions of customers. Let me bring this to life through a brief video. [Presentation]

We are the global brand platform of hearing care retail. You all know how important it is to be top of mind in our market. Consumers know 1.3 hearing care brands versus the average 4 of most of retail industry categories. If you think of soft drinks, for instance, I'm sure all of you can come up with at least 4; Coca-Cola, 7UP, Sprite, Pepsi, same would be with car manufacturers. When it comes to hearing aids, consumers only know 1.3. We are the undisputed #1 top-of-mind brand in Italy, Spain, U.S., Netherlands and New Zealand, and on the podium in other 3 markets. Our communication campaigns reach more than 350 million people worldwide every year. We work with the best-of-breed global agencies on scalable formats and productions and adapt the messages to local nuances. For instance, our real testimonial platform Smile is evolving into the third phase with new local characters and exploring with success a popular TV presenter as endorser in Portugal. We continuously monitor the ROI of all channels, giving us confidence to further accelerate the investments. This year, we are reaching the all-time high investments in awareness TV in the U.S., reopened campaigns in Germany and successfully launched the Amplifon brand in Australia, growing by more than 50 points in brand awareness. We will pass the EUR 200 million marketing investments landmark by 2023, growing in line with revenues, delivering the higher ROI. The leadership position of our brands is well reflected in the digital space. Our website has become the destination address in hearing care. Amplifon.com is the #1 website by organic visits in 7 core markets. Traffic has grown by 170% in 3 years, passing 13 million visits in H1 '21. Those milestones are the result of the strong work on search engine optimization and of the off-line investments in awareness, creating a virtus circle. And we are also achieving excellent digital performance on paid channels. We have scaled a central digital center of excellence, attracting top talents from agencies and digital native enterprises working with a grow hacking mindset. Our website and landing pages are continuously changed and optimized, experimenting different messages and call to actions in a relentless effort to maximize ROI. The internal content factory as well as the campaign managers enable quick execution and steep learning curve. In less than 3 years, we grew digital leads by 44%, whilst reducing the cost per acquisition. Digital leads now represent more than 1/4 of all leads, and our digital efforts in communication expand beyond the Amplifon brand. We have built an unbranded platform Earpros.com to reach all consumers that prefer to start their journey understanding more about hearing loss and all the possible solutions. Earpros.com educate users on hearing care and drive them to an expert consultancy in 1 of our Amplifon shops. It allow us to honor an additional understanding of the consumers' behavior on digital channels. Earpros.com enable us to reach an additional audience of 5.4 million users in the first half of 2021 compared to the first half of 2020. And even more importantly, it allows us to reach an audience that is 4 years younger than Amplifon properties, extending our reach on the consideration funnel. We are live now in 7 markets, including the U.S., Italy, Spain, and we are scaling to [ 13th ] markets by the end of 2022. Now that we have worked through our brand and our ability to reach consumers, let's look at our crucial capabilities in understanding customers and leveraging our superior data. As global leaders, we hold a unique data lake made of more than 10 million customers and 35 million feedbacks per year. We have built a customer-centric model, which puts together demographic, product usage, audiological profiles, channel interactions, campaign feedbacks and third-party data. We invested heavily in leading-edge technology, and most important, we have built a data-first mindset across all the organization, embedding data scientist teams in all the commercial functions close to the customer, coordinated and grown by a central center of excellence. To guarantee a constant focus on innovation, we have also sponsored the Amplifon sharing customer science at one of the leading Italian universities, University Bocconi (sic) [ Bocconi University ] which will use textual analysis, computer vision and audio analytics techniques to create a unique customer understanding. This chair is also giving us access to an amazing pool of talent to strengthen our data capabilities. Superior customer knowledge enables personalized life cycle management. We have deployed an advanced attitudinal segmentation growing the number of segments from 3 to more than 20. For each segment, automated campaigns have been designed and deployed, involving different channels based on customer preferences. For instance, we're able to predict, given the shape of the audiological curve, the future deterioration of hearing loss, and therefore, they spend most relevant time to activate a new hearing check campaign. The message will be personalized based on the lifestyle habits that customer share with us and sent through his or her preferred channel. The analysis of audiological profiles, product usage, lifestyle habits allow to fine-tune the best contact strategy with the aim to reduce the frequency of interactions while increasing the relevance with the ultimate benefits of increasing ROI. The impact on growth is significant. The redemption of CRM campaigns is increasing double digit, and the CRM-driven revenues grew 2.7x faster than non-CRM ones on existing customers. Data is the fuel of relevant customer experience, while it's an engaging customer experience, it's enabler to enrich customer data in a virtual circle. So let me now move to the third pillar, leading the innovation in customer experience. The Amplifon product experience is the first landmark of our capacity to reshape hearing care retail around the customer. AP has significantly scale up globally. It now represents around 45% of sales and 85% of the addressable market, which is made mainly by the private and top-up cluster. AP will be available in 11 countries by the end of the year across all of our footprint by 2023. The uniqueness and premiumness of the experience has translated into 2, 3 points increase in ASP in each market. The Amplifon app is also growing consistently. Penetration has reached 17% overall, passing 40% in more digitalized markets. And even more important, ratings on both iOS and Android app stores are the highest in hearing care, approved the approach we first took with a human center design is paying off very well. So what's next in innovation and customer experience. Today, We are proud to share with you Ampli-care, our platform to completely reshape and elevate the audiological care experience, putting the customer at the center. Ampli-care will amplify the expertise and empathy of our audiologists, enable a seamless experience across channels, and empower all the people involved in the audiological care journey with the objective to deliver a unique and memorable experience. Let me show you video to bring this to live for you. [Presentation]

Now let me take you through each of the 3 pillars that will make Ampli-care unique, starting with our stores. Our stores are a key touch point of the journey. Our customers are looking for a comfortable and advanced experience, providing a differential value compared to medical visits and experience rather than a medical test. To enable new dimensions of interactions, we will keep our solution rooms with proprietary technology, iOS-based developed internally to perform all the tests in a unique way. Our technology will enable enhanced touch base experiences, decoupling completely the more technical view of the audiologist from a friendly and engaging customer-focused view. The user feedbacks will also enable future out of store visits and follow-up. The second pillar is about hyper- personalized solutions. Ampli-care will also enhance the expertise of our 9,000 audiologists in finding the best solution for each of our customers. Our solution builder engine, powered by our unique data lake, will propose the most appropriate product and service offering and fitting given the audiological and lifestyle profile collected during the visit. The experience will be highly intuitive, again, a human center design just like the app. Our customer insights are very vocal about the need to understand solution benefits without being overwhelmed with complex information. Customers want to feel part of the process, but with minimal cognitive effort. The experience of the new audiological protocol aims to be -- is engaging, let me say, as a Tesla configurator, compared to all the paperwork still used by many retailers. The solution builder will also lead to more productivity, driving an increase in conversion. Last but not least, Ampli-care will call to action all the people involved in supporting our customers. The expertise of our audiologists will always be available 24/7. During store opening hours, customers will be able to easily book an online appointment via app and receive a better consultation with the personal audiologist with guided troubleshooting journeys. A centralized pool of exports will cover the remaining hours to never leave the customer alone. The caregiver will also play a more active role. We know that they represent a crucial influencer in the journey. For this reason, we will offer a dedicated profile on the app, with the aim to coach and support the more dedicated customers in the first weeks of usage. Caregivers could also become the recipients of carrying campaigns to unload the customers from cognitive load and receive support from their closest relatives. Ampli-care will also represent the platform to close the loop with the ENT community and created the most comprehensive medical and audiological care ecosystem. On customers' request, we will share audiological data and usage with their ENTs, including file accessible line. In conclusion, I am very excited by the opportunities we have ahead of us. We are reinforcing our unique and unmatchable customer proposition, leveraging 3 distinctive assets of ours, top of mind brand, superior customer knowledge, leading innovation in customer experience. We have the talent, the vision and the ambition to accelerate our positioning as a global leader in audiological care and generate further growth opportunities, one of the biggest of which will be in the U.S. Alessandro, over to you.

Good morning, everyone. I'm Alessandro Bonacina, Executive Vice President of Amplifon America. Today, I would like to share with you our new ambition for the U.S., which represents the start of a completely new story, a deep transformation that will leverage Amplifon's winning DNA to accelerate our growth in the U.S. U.S. is our key growth engine for the future. It is by far the largest market in the world, accounting for more than 40% of the global retail value. And even more importantly, the U.S. has a huge growth potential. The baby boomers are on the rise as the population of over 65 is growing at a fast pace from being 10% of total population in 2010 to almost 25% in 2030. And the hearing aid penetration is continuously increasing, proving that there is less stigma and more openness to seek proper hearing care. And there are 2 key healthy and growing consumer segments that we want to focus on. The first is the private retail chain segment that includes national specialty chains and big box. This accounts for over 40% of the market. And the second segment is the managed care. And this accounts for around 30% of the market. Both of these segments are growing fast, high single-digit the first and over 10% the second, representing a huge opportunity to be captured. But before we deep dive into our strategy, let me first talk to you about one of the topics that are currently under discussion in the U.S. 2022 will likely see the introduction in the market of OTC devices. The OTC regulation is expected to be out for comment in November. And then following the traditional FDA steps the first product will be in the market as early as the second half of 2022. OTC must be looked at through the lenses consumers, and not just through technology. As you know, hearing loss is a complex pathology, with the purchase process driven by consumer and their journey. And today, there are 2 key consumer segments that are interested in hearing care, and that can we map against the hearing loss severity, the trusted guidance seekers and the do-it-yourself. This new consumer has significantly different demographic, significantly different usage attitudes and different needs. First is the trusted guidance seekers. They have moderate to severe or profound hearing loss, with significant need for brain rehab that typically requires adaptation, repeated adjustment and counseling. They are on average over 65, 75. The biggest barrier for their adoption and even more for their usage and satisfaction is resumed in 1 question, will hearing aids work for me? Thus, implying a long journey of trust generation, a long journey of satisfaction building that cannot be done online or on shelf. The second segment is the do-it-yourself. They have mild to moderate hearing loss. They are, on average, much younger than 70, and typically look for convenience and value. This segment is clearly underpenetrated, only around 16% because the biggest barrier for them is, "I do not need them yet." We do not expect OTC to have a direct impact on the market we currently serve. The opportunity for OTC is that it might potentially enlarge the market for the do-it-yourself segment, but we will need to see how it plays out. And should this opportunity arise, we will be ready to capture it, but only if it will allow us to guarantee to our end consumers a safe, effective and high-quality service. And now let's move to look at our new U.S. strategy that we have just started to deploy. Our goal is to win in the 2 fastest-growing consumer segments, private retail and managed care. And we are starting from a solid base, leveraging our unique assets and brands, Miracle-Ear and Amplifon Hearing Health Care. Miracle-Ear is the leading brand in the U.S. A unique asset that we will strengthen even further, with an heritage that has been built over 70 years, creating the largest haring care retail network in the U.S. And we all know that the key drivers choice in hearing care for consumers are exactly those 2, brands and proximity. Amplifon Hearing Health Care is our business unit to serve insured customers, retailers and health plans. We have a solid base of over 50 agreements in the commercial managed care segment and a huge network of affiliated retailers, with more than 5,000 point of sales, a fantastic platform to capitalize on for our acceleration. So let me walk you through how we will transform Amplifon U.S. 2021 is the start of a completely new story that will allow us to accelerate our growth in the U.S., becoming the undisputed leader. And there are 3 pillars of our transformation. The first is differentiating our value proposition to become unique in the market. The second is devoting M&A investment in the U.S. for the first time to expand our reach to become even bigger. And the third is transforming our go-to-market to capture all segment opportunities, exiting the wholesale business with the wind-down of elite, launching the direct retail model and transforming our access to managed care. So how we will make Miracle-Ear unique? By launching a new value proposition, the Miracle-Ear Advantage, by further expanding the already largest distribution network in the U.S., widen the gap versus competitor and to be closer to more and more consumers. And we will take advantage of the launch of the direct retail model to create a winning complementary mix of franchise and corporate stores. We will also step change our strategy for Amplifon Hearing Health Care to significantly widen our market access. We will launch the Amplifon product experience, which will make us truly unique. We will be at the forefront of innovation, launching our own yield platform to connect insurance, retailers and consumers. And we will expand our reach by moving from being focused only on the commercial segment today to serve all insurance segment in the future. Let me now share more color on each of these. For Miracle-Ear, which is the leading brand in the U.S., we will enrich it with innovative, personalized and amazing customer experience to create an unmatchable value proposition that will elevate hearing care standards. We will lead innovation in customer experience by offering to U.S. consumers, immersive store and audiological experience, leveraging on our proprietary technology built to offer unique hearing care. Then the Miracle-Ear Product Experience and revolved combination of our digital ecosystem, the Miracle-Ear app and the ecosystem control center, which will allow continuous interaction between consumer and hearing care professional, offering high adherence and maximizing satisfaction. And lastly, it is all about personalized after care with a data-driven CRM program to accompany each customer and in end on their journey towards better hearing. This innovation will be amplified in the market, leveraging our Miracle-Ear leading brand and a giant leap in marketing investment. We will lead to the TV space with a new media agency and a brand-new TV campaign capitalizing on Miracle-Ear advantage on air since June this year. We will accelerate on digital, leveraging the Earpros recently launched in the U.S. and aiming at doubling our digital lead, and significantly increasing our marketing investment by 50% by 2023. So you can understand we are blending the leading brand with an amazing customer experience in order to elevate the hearing care standard in the U.S. And we have a clear ambition for Miracle-Ear to become the largest in every state, further expanding our reach and leveraging a winning complementary mix of franchise and direct retail. We just started with the U.S. transformation by revolutionize our distribution model, launching direct retail in the U.S., which we aim to further scale up in order to achieve 3 clear goals. The first is to deliver a superior proposition to our end customers. We will leverage a fast innovation engine in order to launch and test new marketing and sales capability, forcing excellence and innovation in customer experience, lift of the whole network. For example, we will be able to invest in audiological tool, machine learning to optimize marketing investment and retail productivity, and we will do this faster and more efficiently being completely under our control and subsequently deploy this to the entire Miracle-Ear franchise network. Second, we will be able to capture the full value of the value chain, quickly accelerating our revenues. And third, this will represent a fast expansion platform focused on the U.S. largest state. We will start for the first time to invest in M&A in the U.S., allowing us to grow faster and faster. And today, we have already a solid base of around 200 stores, and we are very, very pleased with our initial results. We delivered over 40% organic growth in H1 versus the same period of 2019, outpacing the market big time. Concluding, we have big expansion plans with franchisees as well as with our direct retail arm, a completely new chapter to accelerate revenue growth and capture all the value of the value chain just started. And now let's turn the page and have a quick look at the second pillar of our transformation, the managed care segment. Managed care is a key segment of the U.S. hearing care. It accounts for around 30% of its total value and is the fastest growing at more than 10% per year. Managed care is mainly divided in 3 clusters; commercial that allows consumers to take advantage from access to hearing care, thanks to employers paying for their benefit. And it accounts for around 30% of the insurance hearing care market. The second is Medicare Advantage. This is the biggest and fastest-growing cluster. It's made of consumers that have access to Medicare and that are paying an additional cost in order to access additional benefits, including hearing care. It accounts for half of the managed care market and shows the highest penetration amongst health plans and utilization amongst consumers. The third segment is others, including mainly Medicaid. Amplifon has access today mainly to the commercial segment, and going forward, that is set to change as we are ready to expand and serve all managed care segment, unlocking an opportunity worth around EUR 1 billion. And after many months of work and investment, we are ready to capture the world managed care potential. We have built a unique value proposition for health plans, retailers and consumers. This is built on 4 key pillars: First, coverage. We expanded, and we will continue to expand our retail network. And today, we have already achieved more than 90% coverage of the national Medicare Advantage member, and there is more to come. Second, top-notch technology. We launched our third-party administrator platform that will allow us to elevate the experience of health plans and retailers to collect more data to optimize the customer journey and to streamline our cost to serve. Third, distinctive capabilities. We achieved and we will continue to achieve distinctive accreditations, testifying to our leading skill and optimized process to grant an impeccable experience. And lastly, unique experience. We are working to launch customer experience innovation for our customers with the Amplifon product line, the digital ecosystem and our e-health platform powered by proprietary technology. This value proposition will enable consumers to receive the best continuous care with significant benefit for health plan. Let me give you an example. Via our ECC, Ecosystem Control Center, we will empower our plans to monitor and foster hearing solution utilization, so helping consumers to make the most out of the benefit they pay for. In conclusion, a deep transformation of Amplifon in the U.S. has started, capitalizing on the ideal platform of Miracle-Ear and Amplifon Hearing Health Care, and driving a huge step change, leveraging on 3 new pillars, a unique value proposition, a brand-new expansion ambition and a transformational enhancement of our distribution model, for the first time entering broadly in the direct retail and adding access to the entire managed care market. We are ready to lead a new chapter of growth. I will now leave the floor to Anthea.

Thank you, Alessandro, and good afternoon, everybody. I'm Anthea Muir, the Executive Vice President of the Amplifon Asia Pacific region. I'm delighted to talk to you about 2 exciting growth opportunities in the APAC region, Australia and China. These are 2 very different countries, with 2 very different opportunities. Australia is an opportunity to grow our market share by leveraging our brand portfolio. In China, it's really a story of expansion. So let's start with my home country, Australia. Australia is a very important and attractive market for Amplifon. Today, it's the 10th largest hearing care market in the world. Australians are aging, but on a world scale, they're still quite young. We have a high standard of living and the economy is growing steadily, meaning that older Australians expect a high standard of health care in their latter years and the government supports this need with a high-quality scheme. All of this means the hearing aid penetration in Australia is high and it's increasing, giving Amplifon a significant opportunity for further growth. As you know, we've recently acquired Bay Audio in Australia, and we expect to close this transaction in quarter 4 this year. With the addition of Bay Audio, we, today, have 3 very strong brands that we will leverage to start an exciting new chapter of growth. The 3 brands perfectly complement each other, giving Australians a choice of where, when and how they choose to shop for hearing care products and services. The Amplifon brand, formerly known as National Hearing Care, it's a nationwide brand. It's located primarily in strip more locations. And today, we have over 200 points of sale, plus over 100 visiting clinics. Amplifon generates most of its leads via its call center model, digital marketing channels, and more recently, TV. We have invested heavily in marketing this year and successfully established a strong location. The 100 Bay Audio clinics, they're all located on the Eastern Seaboard of Australia. They differentiate their offering by locating the clinics in premium shopping malls, using parking foot traffic to kind of drive customers into the clinics for screening. This gives the customer the convenience of 7-day shopping and walk-in appointment availability. Attune business, it's based primarily in the northern part of Australia in Queensland. This business relies on its strong relationships with doctors and ENT specialists to send their patients to Attune for a full suite of hearing care services. Most of these 50 clinics are located in medical precincts, or within medical specialty practices. So altogether, we are now the clear #1 in Australia with these 3 brands working together, and we still have room to grow. So let me tell you a little bit about how. The Amplifon brand, it's nationally distributed and still has room to further grow. In the last few years, we developed a market-leading customer value proposition, which includes Amplifon 360 audiologic protocol and the Amplifon product experience. This unique proposition has given us the platform to invest in TV and digital channels, accelerating our growth in the private market segment. If we look to Bay Audio, this business has an incredible opportunity for us to expand the network across the country using its innovative business model to attract customers when they're in the busy shopping malls across Australia. And with Attune business, we can really leverage the medical relationships we have and the high quality of care to expand the model in other geographical regions as well as to expand the services that we provide within these clinics. So in conclusion, we have a great opportunity ahead of us in Australia. But now I want to turn your attention to China. It's a super exciting market, and we're really starting to make some great progress. China market has the largest population in the world, but today, it's the sixth largest market in the hearing care world. The thing that gets me excited is the opportunity that we have ahead of us. The penetration of hearing aids is still very low. The prevalence of hearing loss is high and the population is aging, providing an enormous opportunity for growth. The market is, in fact, expected to grow over 10% every year. In addition, the economy is booming, the market is highly fragmented, so this opens an opportunity for Amplifon to invest and grow and take the #1 market position. So how are we going to maximize on this opportunity? First, we need to create a national network stores in all major cities across China via both M&A and greenfield clinics. To become the #1 premium retailer, we will apply and scale our proven commercial model. We have the know-how of Amplifon. We have a tried and tested model, and we know how to provide the best customer experience that will raise the service standards in the Chinese market. And then we will tell the story and back it up with marketing investments. To do this, of course, we need the best people. Leveraging Amplifon's training programs and tools with the best people, we can deliver an improved quality of hearing care to China. I'm pleased to tell you we've now opened Amplifon Greater China headquarters in Shanghai. So if we look this year, we have already grown from our first JV in Beijing, spreading across 4 more provinces with the Sound Bridge JV headquartered in Hangzhou in the Zhejiang province. In addition, I'm pleased to show you we've started our greenfield strategy in Shanghai, and we will be opening our first clinics in the coming months. By the end of this year, we will have over 100 clinics across 7 provinces and growing. Our revenue run rate for 2021 is over EUR 15 million, with double-digit EBITDA, but this is really just a start of a full board expansion strategy that I look forward to updating you on in the future. So to conclude, the APAC region is growing both organically and inorganically, and the opportunity in front of us is exciting, and we have the know-how and the people to bring it to life. Thank you very much, and I'll now leave the floor to Gabriele.

Thank you, Anthea, and good afternoon to everybody. Let's now deep dive on how our strategy and the key initiative you have been hearing about translating to strong financial targets in terms of top line growth, high profitability and strong cash flow generation. For the next 3 years, we defined a clear set of priority to deliver great returns to our shareholders; healthy sales growth outpacing the market as we have successfully done in the past, continued EBITDA expansion, EPS acceleration, and strong cash flow generation to finance our strong plan of investments and ensure a solid balance sheet to capture any further potential opportunity. Starting from top line, our growth will be fueled by organic growth and acquisitions. The strong organic growth will be supported by both market growth and market share gains. Our reference market, after the strong rebound in 2021 following the COVID outbreak, is, in fact, expected to go back to the usual historical growth rates sustained by demographic trends and increasing penetration of hearing aids. We also aim to gain market share, mainly by leveraging our unique value proposition fostered by our significant investment plan. Very importantly, we also expect this growth to be well balanced across the 3 regions and the core markets. M&A will also contribute and will be primarily focused on the core selected countries where we aim to consolidate our leadership position. To be specific, France, Germany, U.S. and China. Let me also remind you that large acquisitions have always been a key contributor to our growth story as demonstrated by guidance in Bay Audio. Large acquisitions, obviously, are not factored in today's plan, being opportunistic and dependent on asset availability. But should this opportunity arise, we will be ready to capture them, thanks to our solid balance sheet. The 2 sales drivers, organic and M&A will allow us to target a high single-digit revenue annual growth at constant currency in the 2021, '23 period for Amplifon on current consolidation basis. In addition, Bay Audio will provide around EUR 100 million revenue contribution in 2023. Moving to profitability. EBITDA margin expansion will be underpinned by 3 levers. First, increased productivity. In fact, thanks to the lessons learned during the pandemic, and the action implemented starting from Q2 2020, we will continue to benefit from productivity enhancement and efficiencies in labor, marketing and SG&A. Positive impacts will also continue to derive from the renegotiation of agreements with direct and the indirect suppliers. Second, significant synergies coming from GAES integration. In fact, the initial 2021 target of EUR 25 million synergies at the EBITDA level was already achieved in 2020. So 1 year ahead of our plan. In the 2021, '23 period, we intend to further unlock GAES full potential, thanks to effective marketing into our unique offering differentiation, the Amplifon product experience. The APE rollout will take place in Q4 2021, and we expect great results given that Spain is a predominantly private market and our brand is very well recognized. Our ambition for GAES is clear, become one of the group's best-in-class companies, growing fast and reaching top range EBITDA margin at the same level of or even better than Italy. Third, increased scale, both at global and local level, allowing to spread fixed cost over significantly higher revenues. The expected increase in profitability is sizable. And of course, as we have done in the past, we will reinvest part of the profitability in the business to further enlarge the gap versus the competition. The main area of investment will be people, our most valuable asset and the real driver of our outstanding performance. Marketing, plan to grow in line with the revenues at around 9% of sales, while delivering a higher ROI, thanks to the renegotiation done with the marketing suppliers. Corporate investment to further strengthen our global centers of excellence and our strategic initiatives. Higher productivity, GAES synergies and increased scale will more than compensate the higher investments, allowing Amplifon to reach a recurring EBITDA margin of at least 25.5% after the sizable step-up achieved in 2021. Our solid performance on EBITDA will be coupled with a continued focus on D&A, financial expenses and taxes, enabling us to deliver a steady EPS growth. D&A are expected to remain stable as ratio on sales following the increased CapEx plan and PPA-related amortization for our sustained M&A activity, including Bay Audio. Moving to financial expenses. The successful refinancing executed last year resulted in cost of debt lower than 1.5%, an extension of debt maturities and a significant increase of the financial headroom, which will enable us to execute any potential large M&A. For the period '21, '23, we expect around EUR 30 million of financial expenses, including both interest on financial debt and interest on lease liabilities following the IFRS 16. Moving to tax, we continue to expect a tax rate in line with the recent years, thus below 30%. Also taking into account the potential negative impact stemming from the possible U.S. tax reform. The strong improvement of financial performance, coupled with the strict management of working capital after the excellent improvement achieved in 2020, will support a solid operating cash flow generation amounting in the 3 years to over EUR 1 billion. The increased operating cash flow generation will finance our strong CapEx and the M&A plan. CapEx will amount to over EUR 300 million and will be mainly devoted to network refurbishment and development, investment in IT, mainly for the innovation program and the customer data infrastructure described earlier by Giuseppe, and for our overall group backbone transformation to ensure higher effectiveness and efficiency to our global processes. M&A activity will also continue at a sustained pace in selected core countries, mainly in France, Germany, U.S. and China, with accumulated cash out of around EUR 300 million, in addition, of course, to the EUR 340 million cash out for Bay Audio. The strong cash flow generation will support this bold CapEx and M&A plan as well as an attractive dividend payout, while allowing a further deleverage from the around 1.8 net debt over EBITDA pro forma ratio at the end of 2021, including Bay Audio acquisition, to around 1.2 at the end of 2023, ensuring, therefore, a significant financial flexibility for potential large acquisitions. So in conclusion, we have a clear commitment for 2023. We are increasing our financial ambitions, whilst continuing to invest to further strengthen our platform for long-term sustained growth. In particular, we are targeting high single-digit sales growth rate from 2021 guidance for Amplifon perimeter pre-Bay Audio consolidation driven by strong organic growth and M&A, well balanced across regions and the core markets. Bay Audio will contribute to the 2023 revenues with additional around EUR 100 million. At the same time, thanks to better operating leverage, we expect to further increase our recurring EBITDA margin from the around 24.8% expected in 2021 to at least 25.5% in 2023, even after increased investment in all our core capabilities, including marketing, people, network and IT infrastructure. I now hand over to Enrico for his closing remarks.

We are at the end of our presentation of today. We are all very excited about the next stage of our journey of sustainable, profitable growth, and I'm very confident of delivering our ambitious plan. My confidence is high, especially because we can count on a talented, motivated, ambitious group of people, fully committed to deliver outstanding results bonded by a culture, which puts our customers first, a culture based on passion for excellence and also based on accountability and keeping promises but above all, a culture based on the team. Thank you for your attention. And now I hand over to Francesca.

[Operator Instructions] Thank you. [Presentation]

[Operator Instructions] We will pause for a moment while participants join the queue. The first question is from Dubajova Veronika (sic) [ Veronika Dubajova ] with Goldman Sachs.

I will keep it to 2, please. My first 1 is just on the Ampli-care initiative, and I guess 2 parts here. One, I would love to understand how you're thinking about what this translates into in terms of ASPs? Is this a tool for improved pricing? Or is this more about a better customer experience, higher retention and repurchases? And then, two, really intrigued to see you develop your own proprietary diagnostics. Is this completely stand-alone? Or are you bringing in some tech from someone else? And I guess, what's the implication from this of your desire to kind of start developing proprietary technologies across the board, not just for diagnostics, but also more broadly going forward? And then my second question, apologies, Gabriele, it's very technical, but I'm a bit surprised to see guide to a stable D&A as a percentage of sales, especially given that -- fact that significant proportion of your depreciation is currently being driven by leases. And I would have expected that you can see some operating leverage on those. So can you just help us understand why you would expect D&A to remain stable as a percentage of sales through the next couple of years?

Thank you, Veronika, and welcome to our conference call. I would ask Giuseppe to answer the first part of your question about Ampli-care. Giuseppe, to you.

Thank you, Veronika, for your question. The first 1 was about the ASP impact or the customer experience impact. Well, obviously, we expect an impact especially on conversion. We think it's a bit too early to express a number, but the name of the game also is clearly to increase customer differentiation, and therefore, also returning customers. The second piece on Ampli-care, if I'm incorrect, was about our proprietary technology. We are very happy to say that we developed this technology internally, also through internal capabilities, which we acquired a couple of years ago through the acquisition of a start-up, Otohub, therefore, it's let's say, an IP developed through internal capabilities. It is, as of now, focused on diagnostic technology and on, let's say, the audiological digital protocol that gets live in the solution room. Regarding developing technology in other areas, I don't think we have nothing to comment at the moment. We are focused on improving the audiological experience in our solution rooms, leveraging this mix of proprietary, let's say, software on a scalable hardware.

Gabriele?

Yes, in terms of D&A, Veronika, of course, we have 3 components. So the D&A coming from CapEx, the D&A coming from rents and then the D&A coming from acquisition. So as you saw, we have a board plan of CapEx and a plan of M&A, but we are following the recent acquisition of Bay Audio. So Bay Audio will increase the depreciation charge in terms of PPA. So everything included, there will be some components decreasing, for example, rents, some other component increasing a little bit. So all in all, we expect something, which is aligned to the current percentage.

The next question is from Metzger Oliver (sic) [ Oliver Metzger ] with ODDO.

I will also start with 2 questions. First 1 is on the ASP increase of your own brands. So you named a 2% to 3% initial effect, which, in my view, is -- happens primarily in the first year. So in some countries, we are now year 2 or even year 3. So could you elaborate about the underlying price dynamics after the first year has passed? And my second question is on the U.S. So you have quite strong ambitions, which look great. But could you elaborate about the time line? When do you expect to see the first results to become visible?

Thank you, Oliver, for your questions. So with regards to the first part, which is about the ASP increase that we have seen since the launch of our APE products. I can confirm that, that is the range of the ASP increase that we have delivered in those countries where we have already launched our APE program. Of course, we are still in the middle of the rollout in all the different countries. You know very well that's still a big market like Spain is still missing, and we will launch the APE at the end of this year. So we still have room for further improvement going forward. In the countries where now APE is already live since 1 or 2 years, let's say that for sure, what we have seen is no price erosion. Actually, we were able actually to keep the kind of improved ASP that we delivered at the start -- since the start and since the beginning of the launch. With regards to the second part of the question, I would hand over to Alessandro.

Thanks, Enrico, and thanks for the question. Yes, for sure, we have big ambition for the U.S. And for what concerns the time line, I can tell you that this has just started. As I was telling some minutes ago, 2021, with our direct retailer, with the franchisee unit is seeing very much faster than the market growth. So this is just the start. The ambition will continue and be accelerated along the plan considering that with Amplifon Hearing Health Care, we plan to launch our customer experience differentiation next year. And our M&A ambition will grow faster and faster along the plan.

The next question is from Ghilotti Domenico (sic) [ Domenico Ghilotti] with Equita.

I have 2 questions related to the U.S. market. The first is on the M&A strategies. I'm trying to understand how much are you relying on the vertical integration, so the opportunity to purchase and have a direct presence in your retail -- in the market? And how much is really network expansion? And how do you see, let's say, the 2 opportunities? And the second question still on the U.S. market. So on the managed care, so it's something that you are now sharing with us a lot of details. But can you say really give the sense of what is the competitive advantage that is driving the target for 2023 or the competitive environment? So a bit of more color on that.

Absolutely. And I would ask Alessandro to answer the 2 questions on the U.S.

Sure. For what concerns, the first question, so our ambition of inorganic growth, I think it will be mainly focused through competitive acquisition. I think that our model that meaningly blends franchisee and direct retail will continue. So we will have a healthy percentage of franchisee and direct retail, and, at the same time, we will accelerate on competitive acquisition. For what concern, the second question on managed care. So let's talk with market landscape. I can tell you that there are now more or less 5 players at national level, so with national scale, of which one -- Amplifon Hearing Health Care is one of these. Plus there are many others that are playing at local and regional level. For what concerns our competitive advantage, it's like I was saying during the presentation, build of many pillars. The first of all is network that we are continuing and continuing to expand. Now we are at 5,000 point-of-sales, and our ride is continuing. We are increasingly fast our network because this means proximity to consumers and as well for Medicare, it's very -- Medicare Advantage is very important to have a wider network that cover all the [indiscernible]. For what concerns our PPA, we just launched them. We just launched our third-party administration platform. And this will enable us to provide better service to consumers and to health plan. And by the way, we just add 2 important accreditation that's very few in the market as -- and this can grant really our impeccable experience that we want to offer to health plans, consumer and retailer. And last, but not least, is our customer experience. And for what concern our customer experience, we are still working to our innovation plan. So these will be unleashed reasonably half of next year. And this will encompass many pillars. First of all, the Amplifon product experience; second, the ecosystem control center; and last, but not least, our ES platform. I think this combination will be unique in the market and will be launched around the half of next year.

Thank you, Alessandro. And perhaps I would like -- with regards to the first part of the question, I would like also to add that since the acquisition, we are extremely happy about the performance of PJC Hearing combined with our corporate stores. I think that the direct managed stores have been a big boost to our performance in the U.S. So the experience that we had with this very first large acquisition in the U.S. was extremely positive. We are very happy about our corporate stores in the U.S. are performing. So, if in the future, there will be other opportunities, for sure, we will look at them, and we will also be ready to capture if possible.

The next question is from Noor Aisyah (sic) [ Aisyah Noor ] with Morgan Stanley.

I have 2, please. The first is on the managed care business in the U.S. What's the profitability of that business today? And what's your expectations for the profitability of that business going forward? And then the second one is on Ampli-care. Just 2 very quick ones. When do you expect to launch this? Or is this already launched? And I noticed that the audiometric functionality of that app appears to be more sophisticated than the stand-alone that we have in the iOS today. Is it your intention to address the OTC market with this given that you've got a big slide on OTC in the markets there?

Thank you for the question. With regards to the first one, of course, we cannot give you details about the profitability of single business unit. But what I can tell you is definitely that is a good -- Amplifon Hearing Health Care has a good profitability, and we aim, also, to improve the profitability of Amplifon Hearing Health Care going forward, also thanks to all the initiatives that Alessandro was mentioning before. With regards to the second part of the question in the Ampli-care, I would hand over to Giuseppe Vironda.

Thank you, Aisyah. I understand the first part on Ampli-care is about the launch plan. So I can tell you that we are starting to roll out the audiometers in Q4 in Italy and Spain and to roll it out in the other core markets in 2022 gradually. The solution builder will be deployed, therefore, the digital audiological protocol will be deployed in Spain in H1 '22 and deployed in all core markets in the following 3 years. And the ENT caregiver journeys will be introduced in 2023. If I understood well, you were asking whether we will use Ampli-care capabilities on the OTC market eventually. I can tell you that Ampli-care is focused on our core proposition, on APE, and our core offer.

The next question is a follow-up from Dubajova Veronika with Goldman Sachs.

And 2 questions from me, please, if I can, on the sort of regulatory changes potentially, happening in the U.S. One, sort of slightly intrigued, it seems to me like your commentary on OTC has evolved slightly. And I'm just kind of curious if you're willing to share what would be the conditions under which you would consider participating in the market. I think there was a slight hint that there might be certain scenarios under which you would think about that. So I'd love to kind of hear you articulate that. And second question is on the pending discussion in the U.S. around Medicare covering hearing health care, which is being discussed as part of the reconciliation bill. I guess 2 parts here. One, obviously, your thoughts on what that coverage could look like and what that would mean for the U.S. hearing market both from a volume and a price perspective; and two, slightly [ less field ], but I guess if we do move to Medicare covering hearing health, I suspect that diminishes some of the reasons for managed care to offer hearing health benefit. And so that actually could have some downside risks for the Amplifon Hearing Health Care business. So just curious kind of how you're thinking about the pluses and minuses on that, both from a market perspective but more specifically for you guys, given the importance that Hearing Health Care has in terms of your midterm growth ambitions.

Sure. Thank you. Thank you, Veronika, again, and I would hand over to Alessandro for the 2 questions related to U.S.

Sure. Starting from OTC. I think that to answer this it's always very important to consider what we were saying before. So in our industry, what drives at the end, utilization, adoption, purchase lies really in consumer behavior. So how any player or any industry phenomena is capable to understand the consumer needs and consumer behavior more than technology? So that's why we don't see any particular things that can happen from the OTC provision. And for what concern our intention to enter the market and which will be the condition, we are working on that. No decision has taken yet, but I can tell you 2 things. So the first condition for us to entering the market will be that the product, the service and the regulation will allow to really offer something that from a consumer perspective, quality, customer experience will be very useful for the consumer. And secondly, if we would like, we would, at the end, enter in the market, I think that we have important assets to win as well in this market, our brands, our capability in marketing, our capability in customer experience. For what concern the second point or the second question about managed care, I can tell you that now managed care already covers hearing exams. It doesn't cover hearing aid. In previous years, many Congress has tried to introduce ancillary benefits, so hearing aid, dental, vision, but they failed. As we know now, the current Congress is very on it, it is a very important priority for the current Congress. I will tell you that considering that as well, you may have heard all the news about the $3.5 trillion package and all the great scrutiny that is on it. It will not have an easy path at the end. But let's say, if it will go through, our position is, for sure, we are supportive on any regulatory changes that could help open and widen the market. It will be very important to give something that could grant access and quality of care to consumers. And for what concern the interrelation with Medicare Advantage, I don't think that, first of all, this reform will cover any kind of hearing loss and any kind of value tier. And so there will be always opportunity for the Medicare Advantage to offer further service to consumers.

Okay. So is it fair to say that the guidance does not contemplate changes to hearing aid coverage at the moment? And I guess you'll have to evaluate what these look like both to the upside and the downside once we get there?

Correct. Correct. Absolutely.

The next question is from Leth Niels with Carnegie.

This is Niels Granholm-Leth from Carnegie Bank. So my first question would be on the so-called MEMSI contract. Could you just remind us when is the MEMSI contract up for renewal?

Yes. The contract related to the supply to Miracle-Ear will expire at the end of 2022. And today, we have an exclusive agreement with WSA.

And then a follow-up, if I may. So your strategic supplier for this contract would also happen to be a major player, actually, the biggest player in managed care in the U.S. So how do you kind of contemplate that you would be competing against a strategic supplier when it comes to managed care in the U.S.?

Not sure that I understood your question. So if you please could say again.

Yes. So when it comes to your strategy to enter the -- or to become a bigger player in managed care in the U.S., you would here be competing against your biggest supplier of products in the U.S. So how do you keep those things separated?

Well, I don't see it as an issue, to be honest with you. We compete with all the different players in the U.S. market, also in the managed care arena. So to be honest, I don't see it as an issue at all.

Okay. Great. And then a question on China. How many stores would be required to cover the Chinese -- the entire Chinese country?

Well, China, of course, it's a very big country. It's a very big market. It's a market that will grow significantly in the next few years. We are just at the start of our journey, but also, we are very well determined to accelerate our expansion in the country. So perhaps Anthea, you'd want to add something about our plans -- future plans in China?

Thanks for the question. It's -- we haven't put a number on the number of stores that we would need. Obviously, a lot of it has to do with the size and location of stores, just the same in any other country that we operate. But what I can tell you is we've really just started. So we have 100 point of sales today. And we are really just started in 7 provinces. As we know, China is a very large market with an enormous opportunity, and we have great intention to grow both organically and inorganically. So I don't have a number. We don't have yet a 3-year full guidance on that as we have obviously a lot of opportunity, but it's certainly going to be many, many more than we have today.

Great. And then my final question as regards to Page 32 in your slide deck and the scale-up of direct retail in the U.S. So would that also include the acquisitions of existing Miracle-Ear stores?

Includes -- say, again, the acquisition of?

So would your scaleup of direct retailing in the U.S. also include acquisitions of existing Miracle-Ear stores?

Possibly, yes, of course, absolutely. So the next question, please.

The next question is from Metzger Oliver with ODDO.

I have basically 2 questions and one -- one question just for clarification. It's about the implementation of the OTC legislative. I understood you expect in H2 '22. Can you just confirm that? And then move over to my other 2 questions. You highlighted at the end of your presentation that people are a very important area for investment. Could you elaborate about the shortage of audiologists? How you see that developing? And which underlying increase of salaries do you expect for the next year? Potentially also in the context of which opportunities do you see to use digital equipment to improve the productivity of employees within the store? And the other question is about your lead generation. So you mentioned about, I think it's almost 40 million visits on your company website, and that 1/4 of all leads are generated online. So how should we think about the online lead generation?

Thank you for your questions. So I will take the one related to people and in particular, to possible shortage of audiologists or wage inflation. So what I can tell you is that in most of the countries where we operate, Amplifon is considered the employer of choice. So we believe that the best audiologists actually aim to work for Amplifon. So I can't really tell you that overall, there is an issue for us, at least in terms of shortage of audiologist. There are a few exceptions, of course, which are also related to very contingent issues like, for example, in Australia, clearly, today, the borders are closed. And there is an issue related to wage inflation, but it's not related just to audiologists. This is a much broader issue related to the situation now in Australia. But overall, I don't see it as an issue for Amplifon, for our company. And you are absolutely right through digital technologies, also, we aim to improve the productivity of our workforce, dedicating the work of the audiologists to the high-added value activities and taking out from their duties those activities that have a much lower value. With regards to the time line related to OTC, I would ask Alessandro to answer the question. Alessandro?

Yes, you're exactly right. H2 2022 is the timing in which we expect the regulatory process will be over and the market could start.

Thank you, Alessandro. And then with regards to the third part of the question and the lead generation, Giuseppe?

Sure. You were asking some more colors on the 13 million visits. This is organic and direct traffic, obviously, which makes it more comparable and steady, and we're very proud of the number and is the result of strong work on search engine optimization. We are increasing our digital leads, always looking, obviously, at the ROI. As you know, digital leads are converted through call center or online bookings. And we see, obviously, an increase of that and people then with a strong intention to drive to the stores to have a consultancy. We added also an unbranded lead generation Earpros to further expand our capabilities to attract different type of traffic.

The next question is from Ghilotti Domenico with Equita.

I have 2 very quick follow-ups. The first is on your top line guidance. Looking at your CapEx for M&A embedded in the guidance, I presume that the contribution from piecemeal acquisitions should be still in the range of 2%, 3%. So I wanted to check this number. So the remaining part is coming from the organic contribution? And the second, well, is a comment on the current thing you are referring to in Australia for different reasons, but we have seen clearly lockdowns here and there. We see the Delta variant. And so I wanted to have your comment on what's going on from -- say from -- in the second half of this year.

Yes. Thank you. Thank you, Domenico, again, for your questions. So with regards to the guidance, the assumption with -- related to the bolt-on acquisitions, and therefore, the contribution from M&A, excluding, of course, the big M&A that are not included in the plan, the assumption is about 2% of our growth will come in the next years coming from M&A, from small, bolt-on acquisitions, also in consideration of the fact that compared to the past, the base is much larger. So we will continue at the same -- more or less at the same pace that we were used to in the past. With regards to the second part of the question, and therefore, the current trading, yes, we have some lockdowns here and there, as you see, both in Australia and New Zealand. Nothing so far really to be concerned. We will manage that. And of course, they are not -- we believe that they are not going to affect materially our performance for the remainder part -- remaining part of the year. So nothing to be overly concerned as of today.

The next question is from Ouaddour Julien with BNP.

So my first question is on profitability. Is it possible maybe to give us some kind of breakdown for the EBITDA margin improvements from 2021 to 2023, 70 bps? And it seems that you have, I would say, multiple leverages to increase it with GAES, with economy of scale, with Australia, U.S., the APE rollout, et cetera. So just to have some brain -- breakdown, sorry, about it. And is it fair to think that, I would say, without heavy investment into the business, you could have probably achieved a sort of higher profitability? So that's my first question. My second is about China. You mentioned, I would say, in the past that you expect China probably to reach something around 10% of group sales in the mid- to long term. Is it still a valid soft guidance for the country?

Thank you, thank you so much for the very interesting questions. So for the second part of your question about China, yes, absolutely, I confirm that our medium-term goal for China is to make China represent about our fair share, I would say, of the market, so something in the region of 10%, 11%. So definitely, this is the plan. We are very determined to achieve this target in the medium term. And I think that we are also really structuring our presence in the Chinese market in order to achieve these very interesting and very important goal for us. With regards to the first part -- sorry.

Yes. No. Just if I may, maybe I misunderstood, but is it 10% of your group sales or 10% of market share for China?

Yes. Well, at the end of the day, they are more or less the same. We want to achieve 10% of the share of the market and therefore, which translates more or less in 10% of our revenue. So the target is definitely that one. With regards to the first part of the question, before leaving to Gabriele, I want to definitely to underline what you said about the fact that this is also a plan of important investments. As I stated in my presentation, we believe that now it's the right moment really to invest in order to take advantage of the current environment in order to strengthen our leadership position in the market to even enlarge, let's say, our competitive advantage versus our competition. So for sure, we are investing a lot in order to guarantee to all of us the sustainability of the performance in the medium, long term. Without those kind of investments, like those ones that you have seen in terms of innovation, in terms of marketing in order to strengthen even further our brands, et cetera, et cetera, definitely the profitability would have been much higher than that. But in order to give some more colors about our target on EBITDA, I would leave it to Gabriele.

Yes. Thank you, Julien, for the question. First of all, I would like to make a point about the profitability improvement from '21 to '23. So we are seeing at least 70 basis points in 2 years. What should be noted is that this profitability is post IFRS 16. And since measuring with this accounting principle, you don't have the scale on the rent reflected in the EBITDA margin improvement. If you make, I mean, the same measurement pre IFRS 16, these say, at least a 70 basis point in the 2 year would have been at least 30 to 40 basis points more because I mean IFRS 16, as I was commenting, is dilutive. So we are pretty, I mean, happy about this improvement. Then I mean Enrico was commenting about the investment. So of course, when you look at the single contribution of the 3 main factors, each one of them is contributing much more than the -- at least 70 basis points in total. And the 3 big items are basically the implementation of the measure identified and started to implement during the COVID. So basically, productivity, meaning productivity on labor cost, productivity on all the main processes. Then scale, of course, is the second contributor, of course. We have a lot of operating leverage. Our sales are growing at a fast pace, so the contribution is significant. And finally, the integration of GAES and Bay Audio because I mean for GAES, we did a lot. There is still the last -- I mean, part of the job to be done, and Bay Audio, we are just at the beginning. So difficult to say whether it is 1/3, 1/3, 1/3, but definitely, a fair assumption, again, delivering much more and then reinvesting in the business.

Next question, please?

[Operator Instructions] The next question is a follow-up from Ouaddour Julien with BNP.

So I have just one follow-up, maybe regarding the pent-up demand. So you have some competitors that they are saying that basically pent-up demand will continue and gradually maybe in 2022, in 2023, and we should probably see, I would say, higher market growth rates this year. You should -- you seem to assume that the market will be back, I would say, to normal growth rate from next year, from 2022. So is it maybe because you have a different, I would say, kind of underlying market because this comment came from, I would say, like a manufacturer with exposure to public market and maybe more to emerging countries? So is it because of your geographical mix?

I cannot comment on the assumption of other competitors or other manufacturers. What I can tell you is that our assumption with regards to the market growth is the following: We estimate the market to go back to the historical, let's say, growth rate, which is in the region of 4%, starting from next year. And on top of that, we also estimate a certain contribution coming from pent-up demand that we estimate in the region of 1%, 1.5%. So in our estimation with regards to market growth for '22 and '23 is something in between 5% and 6%, 5.5%.

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

So this concludes today's event. Thank you all for taking part to our Capital Markets Day and for your interest in Amplifon. Obviously, should you have further questions, the IR team is available for you. So thanks, again, and we now kindly ask operator to disconnect. Thank you.

Thank you, everyone. Thank you.

Thanks.

Thank you.