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

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Amplifon Fourth Quarter and Full Year 2024 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Francesca Rambaudi, Investor Relations and Sustainability Senior Director of Amplifon. Please go ahead, madam.

Thank you. Good afternoon, and welcome to Amplifon's conference call on fourth quarter and full year 2024 results. Before we start, a few logistic comments. Earlier today, we issued a press release related to our results, and this presentation is posted on our website in the Investors section. The call can be accessed also via webcast, and dial-in details are on Amplifon's website as well as on the press release. 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. With that, I'm now pleased to turn the call over to Amplifon's CEO, Enrico Vita.

Thank you, Francesca. Good afternoon, everyone. Thank you all for joining us. So let's begin with some comments on the year that just ended, which was more complex than we initially thought, especially and once again because of the development of the European market. In fact, while we saw the U.S. market continue to grow strongly and in line with our expectations at circa 6%, Europe, our core geography was definitely weaker than we initially expected mainly because of the negative performance of France. Q4 also was below expectations. We again estimate only flattish, slightly positive demand not only for France, which was again negative, but also for the Spanish market, which contracted sharply in November, hence in the quarter, due to the DANA storm. Unfortunately, it has been 3 years now that the European market has remained muted after the strong growth seen in 2021. And it is also in light of this and the anticipated growth of the French market that we expect a better 2025. But I will come back to this at the end of the presentation. In this overall context, also in 2024, we grew strongly, around 7% constant exchange rates. And I see this as an achievement considering our geographical mix, which is, as you know, still more skewed towards Europe, even if the U.S. grew exceptionally well in 2024. And in this regard, I would like to highlight another important achievement of last year: the United States has finally become our largest market. Regarding profitability, we had some dilution, making 2024 a year of significant investments to prepare us in the best way possible ahead of 2025 and beyond. I refer to the investment in audiologist capacity in France during the second half of the year, ahead of the RAC zero reform anniversary, as well as the significant investment for the launch of the new TV campaign in Italy and Spain in Q4, which already had a positive effect on all our brand KPIs. Additionally, as you know, we are building scale in strategic markets such as the U.S. and China. This has a dilutive effect on margin in the short term, but we are confident it will return higher profitability in the medium and long term. In fact, in China, as anticipated, we now can count on more than 500 stores, and we are also running fast in our direct store network in the U.S., where we now have around 400 stores. All in all, we are proceeding at full speed following our strategic priorities, and I'm optimistic that all these initiatives will yield medium- and long-term benefits. Finally, we proposed a EUR 0.29 dividend, maintaining last year's level. With this, I now leave the floor to Gabriele, who will give you more details about our performance. Please, Gabriele.

Thanks, Enrico, and good afternoon, everybody. Moving to Slide #4, we have a look at our financial performance in full year '24. Revenues, as already commented by Enrico, reached another record level of EUR 2.41 billion, up 7% at constant FX versus '23, driven by a strong and above-market organic growth at 3.4% in a 2-speed market environment with Europe softer than expected and U.S. growing very healthily over a challenging comparison base of 8% organic growth in '23 versus '22. M&A contribution was a remarkable 3.6%, thanks to the acquisition of around 400 points of sales mainly in our core markets, France, Germany, the U.S. and China. The FX impact was slightly negative for 0.4%, easing at the end compared to the first 9 months of the year due to the annualization of the Argentine peso sharp devaluation back in December 2023. EBITDA recurring amounted to EUR 568 million, up 4.8% versus full year '23, with margin at 23.6% compared to 24% in full year '23 due to the lower operating leverage in EMEA attributable to market softness, the dilution effect of the Miracle-Ear direct retail network accelerated growth in the United States as well as the strong investments we sustained during the year ahead of 2025. Moving to Slide #5, we have a look at the group financial performance in Q4, which posted a revenue growth of 8% at current exchange rates and 4.5% at constant exchange rates. The organic performance was slightly below 1% reflecting the following 3 main effects: first, the annualization of the strong devaluation of the peso carried out by the Argentinian government in December 2023, which inverted the negative impact on the exchange rate effect in the first 9 months to positive and the positive impact on revenue at constant FX and consequently on organic growth in the first 9 months to negative; second, the softer-than-expected European market; third, the extremely challenging comparison base with organic growth in the fourth quarter of 2023 at a record 9%. The bolt-on M&A acceleration contributed for 3.7% to the top line growth. FX was positive for 3.5% primarily due to the normalization of the strong devaluation of the Argentine peso. More in detail, being Argentina affected by hyperinflation, the group needs to apply the inflation accounting principle, adjusting local financial statements with a price index, and then translating the adjusted local financial statements into euro at December 31 exchange rate versus the usually applied average FX for the period. The sharp peso devaluation executed in December '23 is now annualized. So the effect for the full year is offset, but it's pretty evident in Q4 when the FX effect is particularly positive, given that the last quarter of the year is calculated as the difference between the full year when the FX effect is slightly negative and the first 9 months of the year when the FX was strongly negative. As a consequence, in Q4, reported sales accelerated with the FX effect reversing to positive with a negative impact on sales at constant FX and consequently, a negative impact on organic growth as well. EBITDA recurring came in at around EUR 155 million, in line with 2023, with margin at 23.4% compared to 25.3% in the previous year, primarily due to the lower operating leverage in EMEA attributable to a softer-than-expected European market, the significant marketing investment in Italy and Spain for the launch of the new advertising campaign and the strengthening of the audiologist capacity in France to prepare for 2025 expected market growth related to RAC zero anniversary as well as to the dilution effect due to the Miracle-Ear direct retail network accelerated growth with integration of the 100 points of sales acquired during the year. Moving to Slide 6, we have a look at EMEA performance. Revenue growth at constant FX was around 3% versus Q4 '23 with organic performance reflecting the flattish and softer-than-expected market environment, especially in France, the largest market in the region, as well as a very soft market performance in Spain in November due to the strong DANA floods in November, which also severely compromised operations in more than 50 of our stores. M&A contribution in France and Germany was 2.4%. EBITDA amounted to EUR 180 million with margin at 25.1% versus 28.4% in Q4 last year primarily due to the lower operating leverage in a softer-than-expected market, the significant marketing investment in Italy and Spain for the launch of the new adv campaign and the strengthening of the audiologist capacity in France to prepare for 2025 expected market growth. In the full year, revenue growth at constant FX was 3% with a positive organic growth in a flattish market environment, and M&A contribution was at 2.1%. EBITDA amounted to EUR 417 million with margin at 27.2% versus 28.2% last year for the reasons just mentioned. Moving to Slide #7, we have a look at the excellent performance of Americas. The organic performance in Q4 was plus 1.7% reflecting the extremely challenging comparison base with Q4 last year having an organic growth of 26% versus Q4 '22 and above all, the already mentioned annualization of the strong devaluation of the peso in December '23, which inverted the negative impact on the exchange rate effect seen in the first 9 months of the year to positive with a negative effect on the organic performance. It's worth noticing that the United States recorded a well above market double-digit organic growth also in the fourth quarter, thanks to the performance of both Miracle-Ear direct retail, which today has a network of 400 points of sales, and Amplifon Hearing Health Care. The FX impact was positive for 19.5% due to the exceptional and already commented Argentine peso devaluation in December 2023. The significant M&A contribution related to the U.S., Canada and Uruguay was 9.7%. EBITDA came in at EUR 38.6 million with margin at 27.4% compared to 28.8% last year due to the dilution effect of the Miracle-Ear direct retail network accelerated growth and the integration of the 100 points of sales acquired during the year. In the full year, revenues were up around 20% at constant FX despite the '23 very strong comparison base with a 10.6% organic component. EBITDA amounted to around EUR 130 million, up 12.7% versus '23, with margin at 25.5% compared to 26.8% in '23. Moving to Slide #8, we have a look at Asia Pac. Revenues were up over 5% mainly driven by a solid and above-market organic growth of 2.3% versus a remarkable comparison base of around 12% organic growth in Q4 '23 versus Q4 '22. Despite a very tough macro environment, also, China posted a solid organic growth in the quarter. M&A contribution was 2.6% related to China's sanction, which led our network today to over 500 points of sale. FX was a slight tailwind of 0.3% reversing compared to the first 9 months of the year. EBITDA was EUR 23.8 million with margin of 25.3% compared to 26.2% in Q4 last year due to the fast growth of China, where we acquired around 110 points of sale during the year. In the full year, revenue were up 8.4% at constant FX driven by a strong organic growth of 5% and M&A of 3.4%. EBITDA amounted to almost EUR 97 million, up 7.8% versus '23, with the margin stable at 26.1%. Moving to Slide #9, we see the profit and loss evolution. Total revenues increased by 6.6% at current FX and 7% at constant FX to EUR 2.41 billion. Recurring EBITDA increased by 4.8% to EUR 568 million, with margin at 23.6% versus 24% last year, reflecting the softer-than-expected market in Europe, the strong investments and the accelerated M&A. D&A, including PPA, increased by around EUR 35 million, leading the recurring EBIT to EUR 265 million versus EUR 274 million last year. Net financial expenses accounted for EUR 60 million primarily due to the higher net financial debt, including higher lease liabilities, following the strong M&A activity and related network expansion, coupled with the refinancing of expiring loans mainly subscribed in 2020 at current market condition, leading profit before tax to EUR 205 million versus around EUR 225 million last year. Tax rate ended at 25.9% with an improvement of 30 basis points versus 2023 and leading the recurring net profit to around EUR 152 million versus around EUR 166 million last year. Net profit as reported was EUR 145 million versus EUR 155 million reported in '23. Moving to Slide 10, we appreciate the Q4 profit and loss. In the quarter, total revenue increased by 8% at current FX to EUR 665 million and at 4.5% at constant FX in light of the above mentioned reversal of the Argentine peso. EBITDA recurring came in at EUR 155 million, in line with 2023, with margin at 23.4%, around 190 bps below Q4 last year. D&A, including PPA, grew by EUR 8 million last year in light of the significant M&A acceleration and the strong investment in network, IT infrastructure and innovation, leading the recurring EBIT to EUR 73 million versus EUR 81 million in Q4 '23. Net financial expenses amounted to EUR 16 million versus EUR 13 million in Q4 last year in light of the previously mentioned reasons. Tax rate ended at 21.5% versus 22.8% in Q4 last year, leading recurring net profit at EUR 44.4 million versus EUR 53 million last year. Moving to Slide #10, we appreciate the cash revolution. The operating cash flow after repayment of lease liabilities posted a very strong increase in the year ending at EUR 321 million versus EUR 300 million in '23 despite higher lease liabilities of around EUR 13 million for the strong network expansion and the higher financial expenses for the accelerated M&A activity. Net CapEx increased by EUR 5 million versus prior year at EUR 145 million, leading free cash flow to EUR 176 million versus EUR 160 million in '23, a remarkable 10% increase versus last year. Net cash out for M&A was EUR 193 million, around 80% higher than 2023, following the significant acceleration of bolt-on M&A with around 400 shops acquired in 2024, primarily in France, Germany, U.S. and China. NFP ended at around EUR 960 million, posting around EUR 110 million increase versus December 2023 after a very strong investment for around EUR 430 million in CapEx, M&A, dividends and share buybacks. Moving to Slide 11, we have a look at the debt profile trend and the key financial ratios. As mentioned, the net financial debt closed at around EUR 960 million with liquidity and short debt accounting for around EUR 290 million, respectively, and medium/long-term debt accounting for around EUR 960 million. In October and December, we announced 3 new sustainability-linked credit facilities for a total amount of EUR 325 million. These credit lines, linked to specific targets of our sustainability plan, allow us to further optimize our financial structure, diversifying our sources of funding and extending the average debt maturity. Following the IFRS 16 application, lease liability amounted to around EUR 515 million, leading the sum of the net financial debt and lease liabilities to around EUR 1.48 billion. Equity ended up at around EUR 1.15 billion. Looking at financial ratios, net debt over EBITDA ended at 1.63x, slightly increasing versus 1.5x at December last year after the strong investments in CapEx, M&A, dividend and share [ buyback ]. Net debt over equity ended at 0.84x. I will now hand over to Enrico.

Thank you, Gabriele. Now let's discuss our further significant step-up in our sustainability journey. First, in 2024, we strongly accelerated our environmental responsibility. We reduced our GHG emissions, in particular, Scope 3, increased the share of renewable energy from 74% to 80% and launched a new reusable packaging for all the Amplifon-branded products primarily made of recycled materials. Second, we continued delivering on the social front, first of all, helping more and more people to rediscover the emotions of sound by offering free hearing tests and delivering around EUR 200 million in saving to customers. We also provided almost 600,000 hours of training to our employees and maintained a 47% women representation in managerial roles. We were recognized as top employer for the fifth consecutive year. In addition, this year, we rolled out the EcoVadis platform, enabling us to conduct ESG assessments on both direct and indirect suppliers and signed 3 new ESG-linked credit lines for over EUR 300 million. Finally, the score we obtained in the CDP questionnaire as well as the recognition for the fourth year in a row as a Standard & Poor's Yearbook member are testaments of our increasing transparency and focus on environmental and sustainability topics. Hence, we look forward with real excitement to our journey towards an even more sustainable company. Let's now move to the following chart, the chart of the outlook, which is the last chart of today's presentation and where you can find our key comment regarding 2025. Firstly, after a softer 2024, we are positive about the European market coming back to solid growth, first of all, because of the anticipated growth of the French market, but also because it has been growing well below its historical levels for 3 years in a row now. Then we also expect the U.S. market to continue to grow healthily despite a pretty challenging comparison base. Hence, we see a more balanced global market growing next year by around 4%. Considering these market developments, we aim to achieve a mid- to high single-digit growth at constant exchange rates, which means growth between 5% and 9% at constant exchange rates driven by organic growth above the market and our M&A bolt-ons at circa 2%. We expect revenue growth to accelerate particularly after Q1 driven by the anticipated recovery of the French market from Q2 onwards and because of the exceptionally strong Q1 last year, which also had circa 1.5 days more working days than Q1 this year. Finally, we aim to grow our profitability beyond 24% driven by a more supportive market environment. And in particular, we see improved operating leverage in the EMEA region, which will contribute positively to our overall performance. With this, we thank you for your attention, and we look forward to taking your questions. Francesca, over to you.

Thank you. I will kindly ask the operator to open up for Q&A session. [Operator Instructions] Now I turn the call over to Judith in order to open for Q&A. Thanks.

[Operator Instructions] The first question is from Hassan Al-Wakeel, Barclays.

I have 2, please. So firstly, on growth, given your mid-single to high single-digit guide and at least 2% coming from M&A, how should we think about the composition of mid-single-digit organic growth across geographies? And what about the risk that M&A growth is actually higher than 2% given 3.6% contribution from M&A in 2024? And secondly, on margins, can you talk a bit about the key drivers of the 40 basis point margin expansion target for 2025? Given the softer European performance and what that did to the margin in 2024, how are you thinking about the risk that this doesn't come through in 2025? And I guess what other than this is giving you the confidence in margin expansion for 2025?

Sure. Thank you for your question. So with regards about the first question and about how we built our guidance, so we are guiding in terms of revenue growth at constant exchange rate mid- to high single digit, which means between 5% and 9%. Then if you just take the middle of this range, we are in the region of about 7%. And basically, we have built this kind of range in consideration of our estimation for the market growth at global level in the region of 4%. And as you know, we always aim to grow faster than the market at, I would say, something in the region of 1%. And then we have also added a couple of points in order to reflect our normal contribution coming from M&A. What I mean is that we have said many times actually that 2024 was an exceptional year in terms of M&A activity. We have invested about EUR 200 million in 2024, which is exactly the double of our, let me say, recent historical levels. So for the time being, of course, M&A is something that you can't predict in detail. But I mean we are planning at the moment to come back to our historical level of investments for bolt-on M&As in the region of EUR 100 million. And therefore, we have estimated consequently the contribution coming from M&A in the region of 2%. With regards to the growth -- the expected growth by region, of course, I can't really give you details for each region. But what I can tell you is that we see a more balanced growth than in 2024 simply because we see a better European market in 2025 than in 2024, whilst in the U.S., we need to take into consideration the fact that the U.S. market in the last 2 years has grown extremely fast. As far as I remember, in 2023, the U.S. market grew double digit, around 10%. Last year grew something above 6%, so that we cannot say that the U.S. market will continue to grow so fast forever. So we estimate a growth of the U.S. market in the mid-single-digit -- mid-digit -- single-mid-digit range. So we see a more balanced growth in terms of market and therefore, in terms of our performance across the 3 different regions. Then with regards to the second part of your question and therefore, margins, well, the main contributor to the margin improvement of next year, we think, will be the EMEA region, also in consideration of the fact that we see a better operating leverage coming from the fact that we estimate a more favorable market in 2025.

That's very helpful, Enrico. If I could just follow up, how is Q1 trending in line with that guidance, please?

No. We refrained recently actually to give you indication about the trend of the current quarter. And this is also particularly true for Q1 because Q1 is by far the smallest quarter of the year and also January is by far the smallest month of the year. So the result of Q1 will be basically related to the result, let me say -- let me simplify, to the result of March, which has just started. March, I think, accounts for something like 40% of the total quarter. So I prefer not to give you this kind of indication. However, while we are not providing this, I mean, indication in terms of revenue growth for January and February, what I can tell you is that, as I said also during the presentation, the French market is anticipated to gain momentum from Q2 onwards. And this is, as you know, the key driver for the European market to return to solid growth. I would like also -- as we put also in our chart that Q1 '24, as you may remember, was by far the best quarter of last year, both in terms of top line with a growth of circa 9% last year. But also in terms of profitability, we posted a record increase of EBITDA margin by more than 100 basis points. And also, we needed to take into consideration that Q1 this year, unfortunately, has on average, something in the region of 1.5 trading day less than Q1 2024. Say that -- as I said, I think that -- I mean, we are positive about the European market to going back to solid growth, in particular, I mean, starting from Q2 onwards.

The next question is from Niccolò Storer, Kepler.

The first one, again, on your guidance. I was trying to figure out which assumptions on France are, let's say, included in your mid- to high single-digit organic growth. Should we stick to your previous views of double-digit growth for France, so 10%, 15% or 20% or maybe you have moderated a bit your stance? And maybe related to that, if you can tell us, if you have these numbers in mind, how much of the extra sales from 2021, so from the start of the reform where sales were basically -- people didn't have to pay for the hearing aids and how much were, on the other hand, sales where people had to top up, let's say. My second question is on distribution of EssilorLuxottica and Nuance Audio. The product now has been launched in the U.S., in Italy. And apparently, some of your competitors are already distributing it. So the fact that we haven't heard anything from you means that you are out of this game or that decisions still have to be taken?

So with regards to France, no, our view about the growth of the French market has not changed. We said that we were expecting a growth this year of the French market in the region of 4% -- sorry, in the region of 10%. This was [indiscernible] -- in the region of 10% and we are still there. What I mean is that we do not see any reason why we should change our view about the growth of the French market. Then, of course, as we always said, behind this kind of estimation, there are a number of different assumptions. And there is a lot of modeling. Then to say if it will be 9% or 11%, it is very difficult to say at this stage. We need to see, I think, in the next couple of quarters if our assumptions are correct or not. With regards to the split between zero payout, top-up, et cetera, we can't give you this kind of information. With regard to the second part of the question and therefore Nuance Audio, we are working with EssilorLuxottica on a pilot in the U.S. As you know, we are always open to evaluating any opportunity that could benefit our patients. So we are working on this with them at the moment. I can't really comment about competitors, et cetera, et cetera.

The next question is from Anchal Verma, JPMorgan.

I have 2, please. Firstly, when trying to extrapolate the bridge from EBITDA to EPS, could you please help provide some guidance on below the EBITDA level figures, specifically for D&A, interest and tax? Any color would be helpful. And then the second one is just a follow-up on France. What have you seen through January and February in terms of lead generations and renewal volumes that give you confidence in your 10% plus market growth, especially as your peers have been a bit more conservative on that front?

No -- I will start with the second question, and then I will leave the word to Gabriele for the first one. No, actually, for the time being, as I said also earlier on, we are not changing our view on the French market. Actually, if we believe that -- we believe that the growth of the French market will represent an important driver for the growth of the entire EMEA market. And therefore, we see -- we confirm our view of the growth of the French market next year in the region of about -- this year, actually, in the region of about 10%. As I said, at the moment, we do not see anything that should tell us that our view should be changed. So this kind of assumption is still valid at the moment. Of course, we will see the ramp-up of the growth starting from April, May, June. So after, let's say, the second quarter, I think that we will have more elements to confirm, to improve or to review our estimation for the growth of the French market. Saying that, I would leave the first question to Gabriele.

Yes. So [indiscernible] you want to comment on the '24 or expectation on '25?

For '25, please, any color.

Very clear. So starting from D&A, in 2024, we reached EUR 302 million. Moving forward, I mean, we expect some increase, less than proportional to the increase in terms of sales but some increase because, I mean, we are going on investing, opening stores and making M&A. So for next year, a higher level compared to this year, but less than the growth of the revenue. So some lower contribution in percentage terms. Moving to financial expenses. This year, we reached EUR 60 million. Next year, there will be several effects. So on the one side we will need to renegotiate some of the expiring lines with the current interest rate. On the other side, on the short-term debt, we can also benefit of some reduction compared to what we paid back in 2024. There will be also some increase in component due to the extension of our network of shops in application of IFRS 16. All in all, we expect a slight increase, so a few million compared to the EUR 60 million this year. Tax rate, we are very much stable, around 26%, decreasing 5, 10, 20 basis points per year. So I do not expect any major change, maybe some slight improvement.

Perfect. I just have one quick follow-up on France. Where are you on the investments needed for building up the capacity? Is that all done now or can we expect incremental -- more investments through 2025 in terms of audiology capacity?

No, no, we are already done. What I mean is that if I had to look to the development of the French market of last year, we had to make our capacity more efficient. We didn't do that in preparation of 2025. It's a decision that we have taken quite consciously. So for now, we are absolutely fine. We are ready, and we are confident that this will allow us to exploit in the best way possible what will be the growth of the French market this year and also in part next year.

The next question is from Hugo Solvet, BNP Paribas.

I have 2, please. First on the guidance, the margin guidance of 40 bps margin expansion, which will primarily come from EMEA. Just a quick clarification. Would you expect most, if not all, of the margin expansion to come from France or would you also expect margin expansion in other European countries? That would be the first question. And second, in terms of the phasing of the renewals in France, would you expect the bulk of it to be done in 12 months, so from Q2 2025 to Q2 2026? Or would you expect them to be spread over a longer period of time and possibly support 2026 onward?

Thank you for your questions. No, with regards to margin expansion, for sure, we expect the contribution from France. But also, we are aiming to have better profitability in many other markets actually, also because -- I mean, we had several markets which have performed in recent years below their historical levels. So we expect actually to gain some operating leverage also in other markets like Spain, Germany, et cetera, et cetera. So it will not come only from France. With regard to the renewals, of course, there will be a curve. It will not just be [indiscernible] in terms of growth of the French market. So we think that there will be a positive effect on the growth of the market starting from Q2 this year and will continue also in the first part of next year. To tell you in which quarter exactly will this, let's say, end in 2026, honestly, it's very difficult, and I can't really say a precise date. But definitely, there will be some carryover effect also in 2026.

The next question is from Giang Nguyen of Citi.

I also have 2, please. The first one is back to the point on M&A. I understand you -- in your answer earlier, you said that the contribution will be balanced. But I just wanted to understand, when you think of Americas, in particular, after having done quite a lot of acquisitions in 2024, do you expect M&A in America to stay within the group guidance range of 200 basis points? And out of your franchisee network, how far along are you in terms of acquiring them into your direct retail network? So that's my question number one. And then on question number two, I just wanted to understand, when it comes to the floods in Spain in November, with more than 50 shops compromised, have they all reopened normally now that we are at the beginning of Q1?

Thank you for your questions. So starting from this second question, I must say that Q4 last year for Spain was pretty negative and not only because of the direct impact on the 50 stores, which were affected by -- directly by the storm. But as you may recall, I mean, there were also alerts in that period in Barcelona area, et cetera, et cetera, Q4 market in general terms. And I think mainly because of this reason actually in Spain last year was pretty negative. And this is, of course, something that we were not expecting at all. No, for sure -- I mean, we were able actually to restore the operations in our store network in Spain pretty soon. But I would like to underline that it was not just a matter of 50 stores, but we saw a significant slowdown in the market demand in Spain during all November. With regards instead our outlook for what regards M&A, we estimate 2% at group level, for sure, which means basically to come back to our historical level of M&A bolt-on. At the moment, we are not planning the same kind of acceleration that we had in 2024. Of course, M&A also is something that we must evaluate always in an opportunistic way, which means that, of course, if any interesting opportunity will arise, we will be there. But the plan is to go back to our average of activity in terms of bolt-on M&A. With regards to the U.S., for sure, the U.S. will continue to be our priority also in terms of M&A. But I must also say that 2024 was a particularly strong and active year also for the U.S. itself.

If I could quickly follow up on the point in Spain. Are you expecting there to be any sort of pent-up demand as a result of the flood in November?

Very, very difficult to say this. Usually -- I mean, the demand is never -- does not -- has never disappeared. But now to say if it will come back or not and when, it's almost impossible, I would say.

The next question is from Domenico Ghilotti, Equita.

My first question is on any kind of evidence for traction on appointments or traffic in the store, well, in France, but also in the markets where you launched also the advertising campaign in Q4, so the extra investments that you did in Spain and Italy in particular. The second question is a follow-up on the M&A. I'm trying to understand, how is the pipeline today compared to 1 year ago? I would have expected maybe the market could have been more, say, supportive for M&A transaction in general. And so I wonder if the 2% is just, let's say, an assumption in the business plan, but I would be interested in your pipeline.

Thank you, Domenico. So with regards to the first question, so actually, I would say that this first part of the year, so January, February, we have not seen yet the kind of -- I mean, growth related, and I wanted to be very specific on that, the kind of growth related to the renewal coming from 2021 related to the RAC zero reform yet. But this actually could have not been possible because as you may recall, actually, we started to see in 2021 the first -- also given the length of the funnel, et cetera, et cetera, the first uptake in 2021 starting from March 2021. So for sure, I mean, we were not expecting to see anything related to that specific element in January, February this year. As I said, I think that we will have more precise elements during Q2 and, I would say, after Q2. With regards to our advertising campaigns in Spain and Italy, we are, I must say, very happy. It has been received very, very well from consumers. I must say that we track also all our brand KPIs, and the campaign had a very strong impact on our brands' KPIs. So we are very confident that this will definitely deliver and pay dividends going forward. With regard to M&A, you are right. I mean, actually, we should see a more supportive environment. At the moment, as I said, our assumption is to go back to the historical level. But again, in this case, I mean, M&A is more an opportunistic activity. So if there will be interesting targets, definitely we will be there as always.

Okay. Can you just remind me how much was the investment -- the extra investment in marketing that you were flagging in Q4 in EMEA, broadly speaking?

Let me say that in general, in Q4, our marketing investments were -- you may recall that in the past, we were -- we said that our marketing investments were growing more or less in line with revenues, slightly below revenues. Instead in Q4, actually, what I can tell you is that our marketing investments grew a bit faster than our revenues because of the launch of the campaign.

At global level, at group level.

Yes.

The next question is from Niels Leth, Carnegie.

First question is about your Amplifon Hearing Health Care business, your managed care business in the U.S. that you called out as a growth driver for quarter 4. Could you talk about your expectations for this business going into the next year or a couple of years, if this remains a business that would grow beyond the overall market? And then secondly, you mentioned that you will pilot the EssilorLuxottica products in the U.S. So would you expect those products to be complementary or supplementary to your conventional hearing aid sales?

Thank you for the questions. So with regards to the first one, managed care and Amplifon Hearing Health Care, so over the last years, you know that the managed care segment as a market grew at a faster rate compared to the private market, basically for 2 reasons. One is that there has been an increase in penetration of hearing benefits within the Medicare Advantage formularies, which is now above 85%, 90%. So we do not expect this effect going forward anymore. And also, Medicare Advantage enrollment increased over the last years from, I think, 20 million in 2018 to 30-plus million in 2024. So also in this case, we do not expect significant growth going forward. So while we remain positive on this market segment, which is strategic, of course, for us, we do not expect this segment growing as fast as in the past years, probably will grow slower -- at a slower rate than in the past for the comments that we just discussed. With regards to the second question, absolutely. I mean we see eventually as -- the opportunity to sell the EssilorLuxottica products in our stores as an opportunity to complement our offering, so something which could complement our core business at the moment.

And would you expect your retail price to mirror the price on the Internet, so $1,100, $1,200?

Too early to say. As I said, I mean, we are working on a pilot in the U.S., which will happen if everything goes well in Q2.

The next question is from Javier Lodeiro, LLB.

Just 2 questions, if I may. Maybe can you walk us a little bit about the potential impact of the U.S. tariffs and especially going more into detail how much of your U.S. revenues you are actually producing in the States? And then the second one, on the European revenue base, I'm hearing a lot of France, which I believe is realistic. I hear a lot about Spain and [ Sedona ], that's as well realistic. But besides these, are there any other triggers which will push actually the European revenues?

Yes. So thank you for the questions. With regards to U.S. tariffs, let me -- of course, I think that no one can predict at the moment anything on this regard. But what I can tell you is that in the U.S., we already leverage on a diversified sourcing, having supply agreements with all 5 global manufacturers in the U.S. Also, I would add that these 5 manufacturers have also a pretty diversified supply chain and also have been implementing flexible global supply chain strategy to diversify their production and mitigate the risk. So we are not particularly worried about tariffs for the U.S. With regards to the second question -- I don't recall the second question. What's about?

Other European market...

It was about...

All right. Yes. No, well, sorry -- I mean, of course, we expect the main growth coming from France. But also, as I said also during the presentation, we expect also other markets actually to perform better in consideration of the fact that now it has been 3 years in a row after the significant growth of the European market in 2021 that the European market has been slow. So we expect some pent-up demand coming back this year. So we expect definitely France to perform much better, but also we see more positive also other markets.

The next question is from Giorgio Tavolini, Intermonte.

We have been navigating a very volatile market environment in the last couple of days in the U.S. and Europe. So given this, I was wondering if you expect further decline in consumer confidence in the EMEA region due to the higher public spending, extra deficit, in particular in Germany. And I was wondering if you can confirm whether Germany still contribute around 10% of the group top line. Similarly, regarding the French market, do you see a risk that the French government's increased military spending could lead to some reduction or constraints in public subsidy for hearing devices replacements that were foreseen by the Macron reform in 2021? And the third one, if we should expect a Capital Market Day to provide a midterm outlook later this year in the second part, I don't know.

Thank you for the questions. So with regards to the last question, Capital Market Day, of course, we are definitely very willing actually to share with you our plans for the future. I must say that we would like to do that when we see a more, let me say, less volatile environment, but definitely something that we wanted to do as soon as possible. With regards to the second question, which was about France and therefore, the spending for our sector from the government, I can't really make any comment on that. I don't have the answer. With regards to Germany, your estimation in terms of weight of the German market in terms of sales is pretty correct, I would say. And that's it.

The last question is from Julien Ouaddour, Bank of America.

And I have just one quick just for the like midterm guidance. I mean now you're talking about mid- to high single-digit growth for the top line. You used to talk about high single-digit. How should we see beyond 2025? I mean do you aim to return at the high single-digit only or mid- to high is probably like the norm for the future?

No, thank you for this question because I think this is a very important question, actually. So we are guiding mid- to high single-digit, which means between 5% and 9%, especially for the following reasons. First one is because of the lower M&A contribution. I mean if you compare -- if you take actually the mid of the range, which is 7%, and if you compare actually it with what we did in 2024, we grew 7%, but with higher contribution for M&A. So 7% is incorporating a contribution from M&A this year, which is lower than that. I'm taking the middle of the range, of course. So circa 2% in 2025 versus 3.6% in 2024. Then we are also expecting actually the U.S. market to continue to grow healthily. But it's difficult to think that the U.S. market will continue to grow so like in 2023 and -- which grew -- when it grew by 10%. Also this year was very positive. So we see a more balanced growth across regions. In the U.S., we estimate a growth in the region of mid-single digits. And then if you want, in our guidance, the upper limit of the guidance is the same, while the lower limit of the guidance is a bit lower because it's between 5% and 9%. In a way, I think that it's also reflecting the macro and the geopolitical environment in which we are living in, which makes us also a bit more prudent because we know very well that the volatility -- and things actually change every single day. And therefore, we wanted to be a bit more prudent taking -- in order to take into consideration the volatility of the environment in which we are living in.

Thank you. So thanks, everybody, for the call. I leave it to Judith in order to close the call. Thanks again.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.