Amplifon S.p.A. ($AMP)

Thank you. Good afternoon, and welcome to Amplifon's Conference Call on First Quarter 2026 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 the 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, and thank you for joining us also today. I'm very pleased to share our first quarter results, which show a strong performance, and we believe a clear inflection point for the business. In fact, we have returned to solid organic growth and significantly improve the profitability across all our 3 regions. What is particularly rewarding for us is seeing our work actions and investments over the past year come together to deliver tangible results. Even more promising is the momentum that we observed throughout the quarter. Organic growth progressively strengthened and had a very positive start in April, reinforcing our confidence that the direction that we have taken is the right one and is now starting to deliver the outcomes that we expected. But let me begin with a brief overview of the global market environment where we are also seeing a positive and promising developments. In the U.S., the market grew by approximately 3%, a material improvement in comparison with the last quarter, especially because supported by a solid private pay segment at circa plus 6%, which more than offset the continued softness in the insurance channel at circa minus 6%. I -- also in Europe, we are seeing the positive and encouraging market development. Importantly, in our core markets like Italy and Spain, we are now seeing clear and strengthening signs of improvement. As we have consistently indicated, we expect the European market to gain momentum aggressively supported by solid underlying demand drivers and the normalization of market conditions. As you know, we also believe that the relatively muted performance seen in recent years compared with historical levels has led to a degree of pent-up demand that is probably now beginning to materialize. In APAC, based on our estimates, all the markets in which we operate delivered overall a more positive dynamics with also China showing gradually improving trends. Overall, we estimate that the global market grew in units by a solid and encouraging a plus 3% in the first quarter in line with our expectations. In this backdrop, we have outperformed in most of our key markets, including, in particular, the U.S., Italy, Spain and Australia. Turning to revenues. Organic growth was at plus 2.2%, representing a solid performance with a clear acceleration throughout the quarter. particularly visible in the EMEA region. The impact of our Fit4Growth program, our revenues in the quarter was approximately minus EUR 2.4 million mainly reflecting our portfolio optimization actions, including the clinic closures the U.K. divestures completed in early March and the termination of a managed care agreement in the U.S. at the end of 2025. In addition, M&A contributed by plus 1% and primarily driven by the carryover effect from acquisitions completed last year. Turning then to profitability, we achieved our highest-ever first quarter adjusted EBITDA margin with an increase of 60 basis points compared to last year supported by operating leverage and also by the early results of our Fit4Growth program. This increase is particularly noteworthy given the Q1 -- that Q1 2025 had already set a very strong benchmark in terms of profitability. Overall, we are certainly satisfied with our results delivered in the quarter. They confirm the strength and the validity of our initiatives and the investments made last year, and they give us confidence in our outlook for the remainder of the year. With that, I will now hand it over to Gabriele, who will walk through the financials more in detail.

Thanks, Enrico, and good evening to everybody. Turning to Slide #4, we have a lot at our financial performance in Q1 2016. Revenues were up 2% at constant FX versus Q1 25 with a solid organic growth of 2.2%, improving 160 basis points over Q4 2025. And I'm glad to say that all regions posted a positive organic performance in the quarter. The bolt-on M&A made primarily in 2025, contributed 1% to top line growth. Fit4Growth had an impact of around minus 2.4%, following the closure of around 190 nonperforming clinics since the launch of the program [indiscernible] during Q1. The divestiture of the U.K. business in early March, the termination of a managed care agreement in the U.S. from January 1st and the rationalization of the wholesale business in China since Q1 last year. FX was a headwind of minus 2.2%. Adjusted EBITDA was EUR 142 million, with a record Q1 margin of 24.5%. And an expansion of 60 basis points over the high comps of Q1 '25, which was 20 bps above Q1 '24. This improvement was driven also by the earlier results of the Fit4Growth program and after ongoing investment in marketing to further strengthen the company's distinctive assets. Here, again, all the regions contributed to this very performance. Moving to Slide 5. We have a look at EMEA performance. In the quarter, revenues were flattish at constant effects with a positive organic growth at plus 0.3%, which accelerated throughout the quarter with strong momentum building in our core markets, Italy and Spain. The bolt-on M&A made primarily in 2025, contributed for 0.7% to top line growth. [Technical Difficulty]

Ladies and gentleman, please hold the line the conference will resume shortly. This is the operator. The line is now connected.

Okay. Thank you. So we shall start again from the beginning of Slide #5, not sure when we were disconnected.

Okay. Starting from Slide 5, we have a look at the near performance. In the quarter, revenues were at constant effects with a positive organic performance of plus 0.3%, which accelerated throughout the quarter with strong momentum building in our core markets, Italy, and Spain. We bolt-on M&A, primarily in 2025 contributed for 0.7% to top line growth. Fit4Growth had an impact of minus 1.1% following the closure of 25 clinics and the carryover from the clinics closed in 2025 and following the divestiture of the U.K. business in early March. FX was a slight tailwind of plus 0.2%. Adjusted EBITDA was EUR 116 million with margin at 30.3%, 90 basis points above the record level of Q1 '25, which was 40 bps higher compared to 2024. And this was also thanks to Fit4Growth after the ongoing investment in our distinctive assets. Moving to Chart 6, we have a look at the performance of Americas, Revenue growth in the quarter was 1.1% at constant FX, while FX headwind was at minus 9.7%. Organic growth was a super positive, well above market, 6.7%, thanks to the strong broad-based performance recorded in all the markets and businesses in the region with significant market share gains. The bolt-on M&A made primarily in 2025, contributed for 1.9% to top line growth. Fit4Growth had an impact of minus 7.5% following the termination and managed care agreement in the U.S. from January 1, and the closure of 3 clinics in Q1, together with the carryover from the clinics closed in 2025. Adjusted EBITDA was EUR 25.2 million, with margin up 80 basis points to 23.3% versus 22.5% last year. also thanks to the early results of Fit4Growth growth and after the ongoing investment in our distinctive assets. Moving to Chart 7. We have a look at the Asia-Pac performance. In the quarter, revenue performance was plus 4.6% at constant FX, driven by strong organic growth of 4.8%, improving 40 basis points over Q4 '25, thanks to the broad-based contribution of all markets across the region. The bolt-on M&A made primarily in 2025 contributed 0.8% to top line growth. Fit4Growth had an impact of minus 1%, following the closure of 2 clinics in Q1, together with the carryover from the clinics closed in 2025 and the rationalization of the wholesale business in China since Q1 last year. Adjusted EBITDA reached EUR 24.2 million with margin at 27.7%, 50 basis points higher than the 27.2% recorded in Q1 also thanks to Fit4Growth and even after the fast growth in China. Moving to Slide #8. We appreciate the income statement. In Q1, total revenues came to EUR 580 million, an increase of 0.8% at constant FX versus prior year. Adjusted EBITDA was EUR 142 million, with a record margin of 24.5%, 60 basis points above last year, also thanks to the early contribution of Fit4Growth, G&A, excluding PPA, were a EUR 64 million decreasing by over EUR 2 million versus EUR 6 million in Q1 '25. This led the adjusted EBIT to EUR 78 million versus EUR 74 million last year. Net financial expenses amounted to EUR 14.8 million, slightly below the EUR 15.1 million in Q1 '25. Tax rate was flat year-on-year at 29%, leading to an increase of around 7% in adjusted net profit from EUR 41.6 million last year to EUR 44.4 million in '26. Moving to Slide 9. We appreciate the cash flow evolution. Adjusted operating cash flow after lease liability was in the period equal to EUR 44.5 million versus EUR 52.1 million last year. Net CapEx decreased by around EUR 10 million to EUR 21 million in light of the Fit4Growth program leading adjusted free cash flow to EUR 23.6 million versus EUR 20.6 million in Q1, '25. In Q1 26, we had the net proceeds from divestiture, including the U.K. dilutive business for around EUR 10 million versus a net cash out for acquisition for EUR 41 million last year. This, together with no share buybacks in the period led to net cash flow for the period to positive EUR 27 million versus a negative EUR 31 million in Q1 '25. As a consequence, net financial position improved to EUR 1.15 billion versus EUR 1.45 billion at the end of 2025. Moving to Slide 10. We have a little debt profile trend and key financial ratios. As mentioned, the net financial debt ended slightly above EUR 1 billion with liquidity accounting for EUR 310 million, short-term debt accounting for around EUR 710 million and medium long-term debt accounting for around EUR 615 million. Following the IFRS 16 application, lease liability were around EUR 485 million, leading the sum of net financial debt and lease liability to 1.5 billion. Equity and [indiscernible] EUR 1.08 billion. Looking at financial ratios. Net debt, excluding lease liabilities, over EBITDA improved to 1.84x versus 1.92x in December 2025. in line with our target to deleverage the company in light of the prospective acquisition of GN Hearing. In this regard, please let me give you an update on the financing. We have now closed the syndication of the senior loan with a 24-month tenor from signing of the facility expected in the next few weeks allowing for high flexibility of execution of the takeout to a mix of debt and equity. Hence, we are not in rush to execute it. As far as the equity portion, please let me reiterate that they're up to EUR 750 million equity raise indicated at the announcement was the maximum amount calculated backward in order to maintain a very conservative net leverage, including lease liability as at closing, so slightly higher than the current leverage. And this ratio excludes any kind of run rate synergies. Therefore, we can reduce the amount of the equity raise without affecting the financial flexibility of the group. For example, even if you execute half of the maximum amount, our leverage ratio would move up only by circa 0.5x with no substantial change in the rating guidances financial profile. Furthermore, considering also synergies we would be just slightly higher than 3x, including lease liability at close. I will now hand over to Enrico for the outlook and final [indiscernible].

Thank you, Gabriele. So we have come to the end of today's presentation. And let me take a step back and connect to what we are seeing today with the actions we have taken over the past year. As said, we believe we have reached an inflection point in our performance throughout 2025, we executed a series of meaningful initiatives and made the targeted investments aimed at accelerating the future revenue growth and structurally improving profitability. These actions were proactive and designed to strengthen the business and position us for sustainable long-term performance. In the first quarter of 2026, we are already beginning to see the early benefits of these efforts materialize both in terms of organic growth and profitability. Importantly, we observed strong momentum building throughout the quarter, which continued to accelerate into April and also may in terms of trial activations. This give us increasing confidence that our plan is gaining traction. Looking ahead to the rest of 2026, we see a supportive and improving environment. We confirm a progressive recovery in the market demand with global growth in the region of 3%. Within this context, we are confident in our ability to continue outperforming in most of our key markets. driving further market share gains. This will translate into a strong improvement in organic growth with levels exceeding plus 3% and hence restoring a solid growth trajectory. At the same time, we anticipate a meaningful step-up in profitability supported by operating leverage and also by the continued execution of our Fit for Growth program with an expected improvement in adjusted EBITDA margin in the region of 100 basis points. Additionally, as we advance through customary regulatory review, I am pleased to share a very brief update regarding the prospective GN Hearing acquisition. We have already initiated a full-scale internal integration planning, and our teams are fully mobilized to ensure day 1 readiness aligned with our regulatory obligations and to position ourselves to capture the significant value creation opportunities we envisage. Finally, looking beyond 2026, we are highly confident and excited about our prospects. We see a clear path to sustained profitable growth, further strengthened by the transformational acquisition of GN Hearing. Francesca, over to you.

Thanks, Enrico. I kindly ask the operator to open for Q&A session. [Operator Instructions] Thank you for your cooperation. Now I turn to the operator.

[Operator Instructions] First question is from Hassan Al-Wakeel from Barclays.

A couple. Firstly, can you please comment on the dynamics you're seeing in EMEA, which was a bit of a softer region in today's results and particularly France, which you don't call out. What are your assumptions here for growth for the full year as comps get tougher in the second half -- and you very helpfully mentioned where you think you're gaining share. Where do you think you're losing share in EMEA and more broadly? And then secondly, on the margin, if you can just talk to the building blocks and confidence you have in now increasing your margin by 100 basis points, whether it's a function of Fit4Growth or better Q1 or both. Just curious on timing given some of the macro uncertainties. And I guess, to that end, if you could talk to the impact you're seeing from inflation, or the impact you expect to see later this year or next?

Thank you for your very articulated question, so I will try to answer to all the different points that you have raised with -- in terms of dynamics in the EMEA, we are very encouraged by the kind of trend that we have seen in terms of market, but also in terms of our performance because what we have seen was a slower start in January, but progressively throughout the quarter, we have seen also clear signs of improvement with strong momentum building in particular in some of key markets for us, like Italy and Spain. And I think that this is a very good news for us. I think you know very well that the market growth last year of these 2 markets, which are fundamental for our performance in the EMEA region last year was not great. So to see this kind of trend, both in terms of market, but also in terms of our performance is very positive for us. With regards to France, we have, according to the official data, the French market was very positive in terms of units in the first quarter. It is also true that you have when we compare our sales with the growth of the market in units, we have also to take into account the fact that given the mix change between Class 1 and the rest of the market, of course, the growth in terms of value is much, much less. In terms of forecast for the year at this stage is difficult to say, but clearly, from the second quarter of this year, we will be anniversary the strong growth of last year. Anyway, we envisage a positive growth for the full year. You also made a reference to share gain or loss. I would say that in most of the markets in which we operate we think, as I mentioned during the call, U.S., Spain, Italy, Australia, not sure about Germany but also -- but a part that we feel very good about our share performance. With regards to France, please bear in mind that last year, most probably we anticipated the market, so now we are comparing ourselves with an anticipation in sales that we had last year. But overall, let me say that we feel very good about our ability to overperform in most of the key markets in which we operate. With regard to the last part of the question and in particular to the profitability improvement this quarter was, let's say, the most challenging one in terms of comparison base because we are beating record on record. What I mean is that last year, already our profitability was the record 1 for quarter 1. And this year, we have again, increased our profitability, reaching, I would say, a remarkable profitability level of 24.5% EBITDA margin, which is very, very strong. We envisage also to continue to deliver strong profitability increase going forward. And our confidence is coming from the fact that, as you can see from our outlook for -- in terms of organic growth, which is above 3%, we envisage a good, strong organic growth for the remainder part of the year. As I mentioned during my speech, we have already quite a good visibility about quarter 2, and we are very positive also by the momentum that we see in terms of organic growth. So we envisage the increase in terms of profitability coming partly from operating leverage, but also from the execution of our Fit4Growth program, which will deliver increasing results going forward.

Next question is from Andjela Bozinovic from BNP Paribas.

The first one is on guidance. And the second one, just on the GM deal. So on the guidance, I understand that the above-market growth of about 3%, that's guidance for the organic part. But can you give us an indication on what should we expect for the bid for growth parameter and the scoping impact for the group for the full year? And the second question is on the GM deal. So assuming that the deal closes by the end of the year, could you discuss what theoretical rate do you expect to secure financing at just given the rates are very uncertain at the moment. Is this already set?

You mean interest rates?

Yes, exactly.

Okay. So I will answer to the first one, and I will let Gabriele to answer the second one. So with regards to the first one, as you can see, -- in the first quarter -- in the first quarter, we believe that the impact of feed for growth was minus EUR 2.4 million, EUR 2.5 million and this is more or less slightly above will be the impact for the year. You can assume between 2.5% and 3%. With regard to M&A, you can consider a positive impact of about between 0.5% and 1%, I would say, more towards the 1%, mainly driven by the carryover, which, yes, it will be around 1%. And then you can also assume an organic growth that at the moment we have identified in above 3%, and then we'll see throughout the year. With regards instead to the...

The debt rate, of course, it's difficult to say how much is going to be the IRS 7 year. As you know, it was much lower a couple of months ago. And then today, it stands at around 2.9 at 3.0. So let's say, let's see how the interest rate is going to move, I mean the IRS. For what concern our spread I mean the deal is going to be a BB+ bond for sure because, I mean, regardless of the amount of capital raise. We made the example before either 750 or something much, much lower we're going to end up below 4x leverage, including lease liabilities. So this standard will improve our business risk profile potentially, we can say regardless of the [indiscernible] in the BB+ area. Last time it was about record of 140 bps plan, which is going to be difficult to be achieved. But in any case, [indiscernible] so depending on the area, we call it interest rate at which we aim to finance the bond assuming 7 years, of course -- given the amount, sorry, probably since we will put together the debt financing of the operation, plus our bond power is going to be a couple of tranches with different maturity. We also have the opportunity to sign a loan portion with I mean the pool of the banks, which were very willing to syndicate the current, let's say, the former bridge financing to a senior loan. So let's say that also on the best part, we are not very much scared.

Okay. That's very clear. But just to confirm, that is not already signed, like the interest rate is not already signed.

No. I think the interest rate today is the interest rate, which will lead us to the senior loan up to the takeout, which will be done through equity and that. So basically, this is the amount of money we have available in order to close the deal, in order to pay the EUR 1.7 billion cash to GN. Of course, our aim is to take it out through equity and debt. So the debt is going to be partially or large majority DCM and the portion maybe through that. I want to say that it was flexible. So of course, this is the financing for the closes, then we will have to refinance within the next 24 months.

Next question is from Veronika Dubajova from Citi.

I have 3, if that's okay. I hope I won't get terrible with Francesca. But what is very sort of technical, so hopefully, it won't really count. Like to big questions are 1 just on the organic growth rate in EMEA. I just want to understand, I think the data that we've seen from demand, and I know it's for a different parameter, but they're sort of suggesting the European market were 2%, your organic growth rate is still tracking meaningfully below that. I know you've made some changes in leadership in a couple of the large markets. I guess, if you can maybe just comment on your performance in Spain, Italy, in Germany, in particular, and I guess France as well and how you feel like you're tracking against the market in those major markets? And is there anything else that you can do to improve that organic performance relative to market? That would be my first question. My second question is around the financing structure for the GN deal and Gabriele, you alluded to that a little bit, but I'm just curious what your thoughts are around that EUR 700 million equity component given where the share price stands at the moment. And kind of what's your flexibility to get that leverage pretty close to 4x and maybe reduce that equity component? What your thoughts are on it at this point in time, given the market environment. And then my third -- and maybe I ask my shirt technical one at the end because it's very boring, and I don't want to -- I don't want you to loose the train of thought on the other two.

Okay. So I will answer the first one, and then I will let Gabriele to answer the second one. With regards to the organic growth of the MEA, what, in my opinion, is very important to underline is the fact that, as I mentioned before, First of all, we have seen a progressive strengthening of our performance throughout the quarter. And also, we have seen a very strong start of Q2, which makes us very, very positive, of course, also for the remainder part of the year. In particular, I think that what is positive for us is that we see very good signs of recovery, in particular our key markets like Italy and Spain. And in fact, as I said, and as I mentioned, we believe that in this market, we performed very well, and we performed even above the market. And I'm super happy about the kind of performance that we are seeing in Italy and also about the turnaround that the team has made in Spain. We have seen a softer performance in France. As I said before, most probably because last year, as we also discussed during our quarterly results, most probably we anticipated the growth of the market with a number of initiatives, which started much earlier than the rest of the market. So most probably, there is, let's say, a timing effect on this regard. But let me say to really summarize the fact that I'm becoming more and more positive about our prospects of organic growth in EMEA. As I say, the most probably, we are now both because of a more supportive market in the markets, which in the past were slower and important for us like Italy and Spain. We see traction there. This is very important to us. And most probably, overall, we see a supportive market in Europe probably also because of what we have been saying for long about the fact that some pent up demand anyway was building in the EMEA region, which was below the historical levels in terms of growth maybe starting to release. So to really summarize, I'm pretty confident and positive about what prospects of organic growth in the EMEA region. With regards to the second part of the question, I leave to Gabriele.

Yes, yes, absolutely. No, Veronika, when we decided to, I mean, finance with an equity issue of up to EUR 750 million, we really took a very conservative, very conservative stance. Just to give you an idea, Today, if I include the lease liability, our current rate is at 2.7%. And when we back the equation without including the synergy in order to land as we wanted to land at 3x. So just 0.3x additional leverage compared to where we stand today. So super conserving after a very strong -- very large acquisition with a lot of synergies without considering synergies. What we did was, let's say, if you want to say, super conservative, we raise this amount of capital and will end at tax. With a combined EBITDA of EUR 750 million including Amplifon and GN in the synergies, you can assume that each EUR 750 million of additional debt represent net 1 time the additional leverage. So basically, if you assume for a second 0 equity raise just that we would end up at 4x following our calculation, then, I mean, they Standard & Poor, for example, includes some additional items, so for them, it would be 4.2x. So probably with 0 equity raise, we would end up at BB flat, which can be also something sustainable. As you know, we are always very conservative. So frankly speaking, my belief is that something in the middle between 0 and EUR 750 million is probably the best choice today if market is positive. So if you ask me the same question, maybe at the share price of some months ago -- 1 month ago, so 8% to 9% for sure and would have excluded any kind of equity issue. For the future, let's see at how the share price is going to evolve and when the market will be positive. I think my personal belief standing in the middle between 0 and 750 is the right amount. Again, we have a lot of flexibility in terms of timing. I mean, the single loan is basically in line for the next 24 months. So we are not at all in a rush, and I'm sure that we will see good market condition in order to raise this amount of money.

That's super helpful. Next question is from Oliver Metzger from ODDO BHF.

Yes. question. The first 1 is about the indicated recovery in Italy and Spain. So you appear very optimistic, but it's my understanding that last year, in Q2, it was very weak in both countries, potentially somewhere at the minus 10% level. So would you describe the recovery already as fundamental or which role plays the low base in this Q2 for you? And the second question is about -- you named the potential pent-up demand of the market because of some slower growth over last years. Do you have any indications for this? Because when I look for the overall [indiscernible] industry, everybody has something more muted expectations after some years with some slower growth. And it would be great to hear some more insights about that.

Thank you for the questions. So with regards to 2 key markets for us like Italy and Spain, I would say that I'm confident because we see a more supportive market. It is true that last year, they were -- they performed lower, but we see strengthening signs of recovery. Definitely, last year was not minus 10% as the performance was much less than that. They were negative, but not that much. So we see a more supportive market. But what I would like also to underline is the fact that we believe that the results that we are delivering and the kind of outlook that we are today sharing with you is not driven only by a recovery of the market, but it's also driven by all the work that we have done last year in order to improve our performance. And we have done -- what I can tell you is that we have done a huge, huge amount of work starting from advertising and communication to the protocols and the operations in the stores. So I'm very positive because from one side, we see a more supportive market. On the other side, I can see the results of all the work that we did last year. And then with regards to the contribution of the pent-up demand that I mentioned. I said most -- I mean probably we are seeing now some pent-up demand. Because at the end of the day, our services, products and services are not discretionary ones. So as I've been constantly saying, we expect that some pent-up demand has been built in the market. And sooner rather than later, this will be released. So I expect this and most probably part of it is starting to release now.

Next question is from Martinien Rula from Jefferies.

I would have 2 very quick ones if that's okay for you, please? The first one would be on the transaction with GN Hearing. I would be curious to hear your thoughts on whether you started to see some retaliatory measures from your comps in light of the transactions and -- and we'd also be curious to hear your thoughts on the discussion you currently have with for commercial partners and especially in the U.S., whether it be on the insurance segment or with your franchisees? And the second question would be...

Martinien, the question. Can you please repeat?

Yes. The question would be on the transaction with GN Hearing and more specifically, whether you started to see some retaliatory measures from your comps. And I would be also keen to hear your thoughts on the some sort of discussions you have with your commercial partners, especially in the U.S. at the moment, whether it be on the insurance side or with your franchises? That's the first question.

Well, first of all, let me underline once again that, of course, we are going through all the regulatory approvals, in particular, antitrust, et cetera, et cetera. And therefore, there is, I mean, Amplifon and GN Hearing are going to act as 2 very separate companies until closing. So this kind of this kind of questions I'm not relevant to be honest, at the moment. So we can't really -- we can't really comment on possible discussions with third parties, et cetera, et cetera, because we are not having these discussions because we are very respectful of our obligations while a process is in place.

Okay. That's very clear. And the second one would be very quick and would be focused on managed care. So at the full year 2025 results you've announced the termination of a contract in that channel, given your comments on the insurance segment in the U.S. still being depressed at Q1, I would begin on hearing your thoughts on whether you are further considering measures to streamline sorry, your exposure there or not?

No. The answer to your question is no because now we have a more, I would say, healthy and balanced portfolio of customers, which we are happy with. So no, but it is a matter of fact that the managed -- the managed care insurance channel continued to underperform in the first quarter. What is positive, I would say, for us, is that instead the private pay channel, which is the one in which we are more exposed actually was very positive. So that's in -- for us, is a good trend.

Next question is from Neils Leth, DNB Carnegie.

First question would be about the ongoing shift towards ITE hearing aids, and it seems like the manufacturers are making a push towards this category, which many years ago made up a much bigger part of the market. How would that -- such a trend affect your profitability in your stores? And my second question would be on your plans to convert Miracle Ear stores from franchise stores to company-owned stores. How is the acquisition of GN Hearing affecting your plans to convert for Miracle-Ear stores?

Thank you for your question, very clear. So with regards to the first part, and therefore, the mix of IT in our sales in retail, we are not seeing any significant shift year-over-year. So the mix has been more or less the same, I would say, now for a while. With regards to the second question and the conversion of some of our franchisees into direct retail. Of course, we have been very active in the past, acquiring many of our major franchisees. Of course, now in terms of M&A, the plan is to invest less in the coming months because, of course, the priority will be to the leverage given the GN prospective acquisition. Of course, if there will be some opportunity clear opportunities, we will get them, but more, let's say, on opportunistic fashion.

So if the trend towards ITE would get to your stores as well, how would you say that the profitability in retailing is between fitting ITE products and BTE products.

No, I don't expect any significant impact coming from that, not at all.

Next question is from Domenico Ghilotti, Equita.

Two questions. The first is on the Fit for Growth program. So if you can give us a sense of how much -- what is the contribution that you are expecting in the 100 bps profitability? And if you see upside looking at 2027 compared to your 150, 200 bps guidance? And second, just on the current trading. Is it fair to say that in Italy and Spain, in particular, in Q2 last year, you had a very quick June. So the comparison will become even easier entering into the last part of second quarter.

Yes. Well, I will answer first to the second question. And yes, yes, of course, in Q2, we will have some benefits coming from the comparison base of last year and most probably in June. So that also for -- this is also one of the reasons why, of course, we are very confident about our performance in Italy, Spain. But let me say -- let me underline once again, one thing that is for me very important, which is I believe that in many markets and including Italy, Spain, we are now seeing the result of all the work that we have done in last year. And we have done a huge amount of work in many different parts of the business, starting from, for example, advertising, we see very strong results from our latest campaign but we are also modifying our stores in order to be more proactive -- productive and to increase conversion rate. So Spain has shown a very, very strong trend in terms of performance. So I think that this year, these 2 market will contribute very positively to the results of the company and of the EMEA region. With the second question was about Fit4Growth. Yes, of course, we are very happy about Fit4Growth. As you know, I mean we are going full steam in all the different parts in all the different streams. So clearly, the 100 basis point is a combination of the Fit4Growth program, which had a limited impact in Q1, and the impact will increase in the next quarter. So and a combination of operating leverage, so we feel also very good about this target for the year, which will lead to a material improvement in terms of profitability coming back to more than 23.5%, 23.6% profitability in percentage. And so nothing particular to add about 2027, but a part of the fact that everything is going according to the latest plan that we shared with you.

Last question is from David Adlington, JPMorgan.

Most of them have been asked, but maybe just on the cadence of the growth through the first quarter, obviously sounds like better the quarter went on. I think you started in negative territory in January and then it got better, as you've got into April, I think you could be -- are you already tracking at more than 3% in April as you think about the second quarter?

Well, as I said, I mean, yes, you're right. I mean, what we have seen was a slow start -- lower start in January. And then we have seen progressive strengthening of our sales and we believe also of the market. And we have seen this momentum continuing, I would say, very strongly into April and also in terms of activation of trials, which are a good proxy of sales also in May. And this give us the confidence that we can definitely achieve very strong organic growth also in the coming quarter. And that's why also we have set as an outlook in organic growth for the year above 3%.

Sorry, I've noticed that there was still Susannah waiting on the line. So maybe we can have the last 2 questions from Susannah.

Last question is from Susannah Ludwig from Bernstein.

I have one question and then just a quick follow-up to Veronika's on equity issue. I guess the first question would be on pent-up demand in the market that you think is starting to be released. What could you -- do you think can be a catalyst to release this -- for example, all the major manufacturers are expected to release the product in H2? Could that play a role? Or on the flip side, inflation concerns, could that potentially have a negative impact on this release -- so for example, are you seeing anything in the U.S. HIA April data that might make you concerned there? And then I guess the second is just a follow-up. You noted that if your share price was trading where it was 1 to 2 months ago, you would use much less equity -- can I ask on the flip side, if your shares are trading a lot higher, say, in the range of 12% to 13%, then is it more likely that is closer to the maximum EUR 750 million in equity.

Yes, I would ask Gabriele.

Of course, I mean, in terms of pricing of the debt or price of the share, we cannot comment at the moment. I mean, we want to see a market supportive for an equity issue. And we believe that, I mean, if the market for [indiscernible] is improving as it did during Q1, for sure, where we see much better situation than the current one.

Thank you. So this concludes today's call. Thank you all for your interest and attendance, and we kindly ask operator to disconnect. Thanks. Bye-bye.

Thank you. Thank you, everyone. Thank you

Ladies and gentlemen, the conference is now over. You may disconnect your telephones.