Dexelance S.p.A. (DEX.MI) Earnings Call Transcript & Summary

Good afternoon, everyone. We will begin shortly. Good afternoon, everyone, and welcome to Dexelance H1 2025 Financial Results Presentation. Before I hand over to your host today, [Operator Instructions] I now have pleasure handing over to Andrea Sasso, Chairman and CEO. Please go ahead, Andrea. the floor to you.

Thank you. Good evening, everyone. Let's go to Page 2 of the presentation, where we want to remind you who we are as Dexelance, it is a platform in the design sector that continues its growth by leveraging our key strategic drivers of value creation. We offer a full coverage of furnishing categories. We are well diversified, and we have balanced presence across geographies, product categories and distribution channels. Also, we have a distinctive M&A capabilities. For this reason, we invested in RODA, strengthening our presence in the strategic outdoor segment and in Mohd entering as a leader in the high-end design distribution, continuing our growth track record through acquisition. This year, too, we will achieve a double-digit growth by consolidating model alone. This is from an M&A acquisition point of view. But if we go to Page 3, for example, from the point of view of organic growth, even in presence of a challenging market situation, our sales in the first half of the year also grew slightly by 2.5%, achieving about EUR 155 million sales. EBITDA decreased by 5 percentage points essentially for fruition due to structural management investment and strategic investment and their Giorgio will go into details about the many marketing and commercial initiatives and 3.5 due to one-off of R&D costs. Unfortunately, one of our companies, we stumbled upon a couple of large backfile projects, we are attempting to manage a general contractor. We were also badly mistreated and we were after, for example, and this is not an excuse. The 2 most experienced people in management died -- by the way, we can only say that from both organizational and process standpoint, now we are back on track and it won't happen again, but numbers of this year will be [indiscernible]. And you see that we have EUR 11 million EBITDA with 7% marginality. We have also breakeven at the level of net income. But we are talking about net position. We achieved around EUR 112 million net financial position, and that's only coming back only with the net impact, we are talking about EUR 70 million. Now I will start to Giorgio to [indiscernible] multiple initiatives we have done.

Okay. Let's move to Page 4 to the [indiscernible] Andrea. Let's briefly go through the main investment that we did in marketing and in people essentially that accounted for the 1.5 percentage point of our [indiscernible]. Basically, the development we made in strengthening the organization of the -- some of our companies occurred in the second half of last year. And so we see in the first half of this year, this cost decrease that will be offset in the second half of 2025. As far as marketing -- market initial things, as you see on Page 4, we took the chance to reinforce our presence in the North American market adding to our showroom that we opened last -- a couple of years ago in Mexico, Lexington and in New York. We added a 6th floor of the same building where we decided to feature those of our brands that are perfect for architects and designers. Featuring there, both furniture, bespoke and standard made by Turri and lighting corner [indiscernible] by Flexalighting and Axolight. The overall [idea] of what we offer in the A&D community, a comprehensive set of offer that includes the possibility of executing bespoke ambience as well as an [indiscernible], during the New York design festival that occurred last spring. We took the chance to make the grand opening taking a bet on the fact that all A&D community was around the city in that period. As a matter of fact, we had an important presence of professional and important visitors to our branding show. If we move to Page 5, during the, let's say, the spring time after the [indiscernible], we also kicked off our new relocated branch in China in Shanghai. If some of you remember, we have already, I'd say, office on a branch position in Xiuhu on our website from Shanghai. We decided to relocate our presence in the heart of the A&D community in Shanghai where you have to be -- we found a magnificent deal inside the French concession, very beautiful place where we definitely succeeded to display each room from each of our furniture and lighting brands. We kicked this off with a grand opening event and both Andrea and myself were present there. And we basically have been visited by the most important industrial retailers and in Shanghai as well as by the most important architecture for many interior designers. This is despite the situation of the Chinese market at the moment with the luxury in general and also with residential projects and luxury furniture, we still had a good success we are starting enjoying some of the benefits of this investment that we made. Moving on to Page 6. As you all know, we were present during the month of April, Salone Del Mobile is the most important event happening in our industry worldwide. We were present with all of our furniture companies, by companies and by brands and with the 3 companies in lighting -- the [indiscernible], Flexalighting and Axolight. In total, we were covering more than 30,000 square meters with our display paired by the events that we organized in the [Mohd] brand stores that each of our brand as [indiscernible] and as much as in the previous year, the event was definitely a success, Salone Del Mobile had more than 300,000 visitors to other important step. And by the way, we were the only group present with all of our brands at the event and the [indiscernible]. A minor event that is covered only by 1 of our companies, [indiscernible] is the one that occurred in high-quality North Carolina. Due to the Let's call it, kind of a mid-market, fair mid-market exhibition. But Gamma is just meeting its most important retailers in the United States, just at that event [indiscernible] because most of them, they are not used to come to -- [indiscernible]. For the moment being an investment that we have to do. If we move to Page 7, from, let's say, a declining like high point, we move to a vastly growing event in Copenhagen [indiscernible] 3 days of design sort of a, let's say, Jan week that was impacted not many years ago, but in the last 3, 4 years, grew up a lot, keeping the attention of most of the artificial designer worldwide. And each year, they, let's say, Copenhagen enjoy [indiscernible] a fastly growing number of people this in there. So we started 3 years ago being present only with our Saba brand. We ended up this year with the presence of both Saba and Meridiani, the furniture [indiscernible] of lighting in 3 different locations. And we also noted we enjoyed quite a great success. And that's kind of activity that only in the next years will be exhibit as an exhibit or some more of our brand than those 3. Moving to the retail part at Page 8. Davide Groppi, finally, we have reached the -- we built up the right organizational structure for the company or to allow the company to enjoy [indiscernible] potential that this brand has worldwide. And we just started opening 2 new shopping shops into overall premium markets for Davide Groppi. One unit in Germany, in the other one in Mumbai. At the same time, we are about to open in the next month of October. Another couple of Mohd stores in China. So the path that we designed for Davide Groppi in order to be present and visible worldwide through Mohd store of our border shopping shops is growing at an increasing speed and we have quite good expectation also for the coming years. Moving to another subject, M&A. As Andre anticipated, we announced the acquisition of a 25% stake Page 9. 25% stake in RODA for those who does know the brand is one of the few -- 2, 3 most known and renowned high-end outdoor furniture brands. Actually always the brand that invented many years ago, the luxury segment of the outdoor furniture in the past or even in the rich's houses balconies or villas was already furnished with a cheap product, plastic products, things like that. Rather launching the market in [indiscernible] that segment with outdoor. We saw furniture made in design made at the same level of quality and material as the indoor furniture. So it's a company that has quite a huge potential for growth that has not been once again exploited to its food. As you can read, we bought this 25% investing EUR 8.5 million, EUR 4.5 million buying existing shares and EUR 4 million were dedicated to a capital increase in order to support the growth and the potential that this company definitely has -- of course, we have also a [telco] option. But in how we foresee to leave a portion of the equity in the hands of the founders of the family because we want to keep them linked and motivated keeping on working and developing the company together with us. In other very important acquisition at Page 10 that we recently announced that will be completed in the next couple of weeks, is Mohd. Mohd [indiscernible] is not a manufacturer of furniture or lighting is a kind of strange company because is, by far, the leading e-commerce retailer in Italy for furniture, lighting and goods for the house. This is how most of the industry is now Mohd. But the truth is that only 25% of their sales comes from e-commerce. The main part comes from physical stores around 10%. But the most relevant part, 65% of the sales, they come from off-line sales so from residential projects, they build up a company that was worth EUR 70 million to now EUR 7 million EBITDA mainly the biggest part of the development of the growth came from this ability of let's say, of contacting people that we're willing to buy on the e-commerce side, one piece of furniture or one piece of lighting. And by discussing on the phone with this potential customer, supporting them in providing the full furnishing and full lighting of their houses. Thanks to a team of more than 70 people dedicated to this job on, let's say, in the back stage in the office. This is not a company that has a absolutely a huge further potential for growth, not mainly in the retailing in the e-commerce side by getting this part of the service for the -- to projects. They are billing and [indiscernible] basically all of the most well-known and highly reputed Italian brands. Our companies represent only so far only 3% of the total turnover. So on one side, we have a potential for growing our shares of sales in this type of company. But at the same time, we have a huge potential for using Mohd as a platform to say, to fetch and seize the opportunities in the most important residential projects around the world by boosting this -- target consumers and the focus that they do have. We bought a 65% share, quite an important share. But the founder, which is a very smart guy, will remain as an important shareholder in order to remain the heart and the, let's say, the engine of this company supported by all of our central functions as [indiscernible] have already started supporting him on the digital talent side, on the AI side and on many other different aspects of the business development of this company. So that this one Mohd is by far the most important acquisition that we have done so far was so the Mohd position more different from the other ones were not so far. There is also probably one -- the one that has the highest potential for growth, both in terms of sales and size and in terms of profitability. I would say, that's all, and I will leave the floor to Layla.

Thank you, Giorgio, and good evening, everyone. So back to the organic perimeter of the group. As already commented, Dexelance ended the first semester with revenue at almost EUR 155 million, up 2.5% year-on-year. In particular, what happened in the second quarter, revenue recorded an acceleration at almost 6%, mostly driven by the rebound of luxury contracts, which increased revenue by almost 50% year-on-year. This is the combined result of an easier comparison with Q2 2024, which has been the softer quarter last year, and recovery of some projects that were delayed during the Q1 2025. So overall luxury contract closed the first year -- the first half of the year with a growth of almost plus 15%. However, this must be read with attention because we remind that the 2 companies in this area are going through a normalization phase that we already announced during the first call of the year. That is due to the clients -- the key clients, more conservative approach towards new investment for refurbishment and new store openings. So we today expect that this area, despite being plus 15% up with respect to last year, will go through an important slowdown during the second half of 2025. With regards to the residential businesses in Q2, both kitchen and systems and lighting companies ensure the continued healthy growth in the region of mid single-digit increase. along with already positive, so coming from an already positive Q1. The 2 areas closed the first half of the year, up almost 10% for Kitchen & System and lighting -- and plus 7% year-on-year for lighting. Such trend, almost fully compensated the slowdown that we can see in Furniture, which ended the semester down 80% year-on-year. This area is not only the most exposed to retail and therefore, with consumption trends that we can see in a still complex market condition. It also keeps being impacted by some soft contract dynamics as we will see in the next slide. So going to Slide 12 and talking about the breakdown by channel, we can see, in fact, that in Q2, soft contract was down 7% year-on-year as a result of a tough comparison with Q2 2024, which had been last year, up 45%, mostly driven by projects by Turri and due to some project postponements mostly in the furniture area. So overall, the channel closed the first half down, but of about EUR 1.5 million with respect to the first half 2024. Retail in Q2, minus 4% year-on-year and following a good start of the year ended the first semester more or less with stable revenue. This is the result of positive growth for the business areas, Kitchen & System and Lighting and a weaker performance by furniture, which is more or less common to all companies. Contract for the pretense luxury contract. So it's exactly the same dynamics that we just commented for luxury contract. So going to the next slide and talking about the breakdown by geography. You know that quarters are always influenced by swings by luxury country projects, so commented directly results for the first half. Italy closed down 2% year-on-year, mainly due to some shifts, again, related to some 2 luxury contract projects. And in fact, residential businesses in the areas were stable, still showing that domestic market is somehow more resilient with respect to other key European markets like the DEX area, for example, that it is still in a negative territory. Flagship contract also fueled the growth in the rest of Europe, up about plus 4% year-on-year on the semester. Thanks to the delivery that we had in the second -- in the second quarter in key markets like France and Germany by luxury contract companies. North America, North America ended the first semester with almost stable revenues, plus 1%. We remind that out of the 2025 exposure depending on the period that the group has in the region. With only 10% is represented by residential businesses that are, of course, exposed to tariffs dynamics while the remaining percentage is business generated by luxury contract projects which follow different logics related to the clients, the investment decisions for new openings and refurbishments. So the good news is that both lines, business lines, residential businesses and luxury custom businesses in the first half showed solid performance. But the outlook for the residential business areas in the region remains a little controversial. In July, tariffs have been increased from 10% to 15%, which overall would result on a net retail impact of about plus 4% to 5% on our products, which is still a handleable increase for our retail panels. But recent declarations by the government, U.S. government, keep a new spot light on furniture import. And on top of this, we have the 50% target imposed on aluminum components. So all these uncertain regulation scenario generates a low confidence environment that is progressively impacting both sell-in and sell-out decision of our retail banners and most importantly, the attitude of specifiers for projects where Dexelance is mostly generating business in North America with the lighting companies such as Flexalighting and Axolight also have a local presence there. So of course, it's a situation where we need to keep a keen eye on what's happening hoping that everything will be clear soon. Rest of the World generated healthier growth of almost 8% year-on-year. Sustained by the conclusion of 1 important luxury project, luxury country project in Japan Overall, stable performance in other key areas like Middle East, while China, despite the positive feedback of the recent opening that Giorgio explained in Shanghai and the reorganization that we're going through for the local commercial subsidiary is going -- still going through challenging marketing conditions, so probably not being the area not being the most promising area at least for the end of 2025. Back to Alberto.

Hello, everyone. At Page 14. Revenues in the first half of 2025 are EUR 154.8 million, up 2.5% compared to last year. The sales price level is broadly stable as well as the purchase prices of materials with a limited inflation effect. The increase of the operating cost is due to our foreseen cost of 2 job orders of roughly EUR 5.3 million in strategic or commercial marketing and digital costs of roughly EUR 1.8 million that reduced margins by roughly 3.5 percentage points and 1 percentage point, respectively, compared to different start for 2024. Issues on these job orders are being resolved and their economic effects are adding. If we don't consider this one-off cost for the 2 projects, the normalized EBITDA margin would have been closer to last year's. Personnel cost increased roughly EUR 1.3 million and depends on the strategic organizational strengthening with the recruitment at top level in some of our companies. This recruitment program is now complete. D&A are in line with the last EUR 1 billion. On the following Page 15, we can see change in net debt that is mainly due to the change in net working capital. CapEx and IFRS 16 are as expected. Financial activities have a limited event. Net working capital is in line with the first quarter higher than the previous year-end figure. It is due to limited increases in receivables and inventories on one hand and lower trade advances in payables to suppliers on the other hand, in the normal course of business. CapEx of almost EUR 5 million. They are part of our plan that will be implemented with the flexibility over time. The average cost of bank debt is less than 5.5%. Net financial position without IFRS 16 effect of EUR 76 million in the EUR 14 million higher than at the end of 2024 and EUR 5 million lower than at 30th June 2024. We remember investment in [Mohd] of EUR 8.5 million in conclusion of the acquisition of flexalighting of EUR 9.6 million in July 2025.

Thank you. So on Page 16, you can see that for the first time in many months, we have seen a decrease in orders due to the luxury Contract area. Speaking to our main clients in the second half of the year, some store openings will be postponed until 2026. And we expect sales between EUR 70 million, EUR 75 million in that area. We are talking about the postponements, not order cancellation, but that's how it is. In the residential area, we think sales will be roughly the same as last year, continuing the trends seen before, less furniture, more lights and kitchens. So thanks for listening. I think now it's time for question and answer.

[Operator Instructions]. I see that Carmen Novel has put her hand up. So Carmen, please go ahead with your question.

I wanted to ask something about profitability. I understand that the decline in margins mostly depends on those one-off costs related to those projects. I was wondering if we can expect a substantial recovery in 2026, assuming no other accident occurs. And then I wanted to ask also about the luxury contract in H2. How do you see this segment, but I think that you give some indications also during the presentation.

Yes. I mean, yes, I mean, you're right, this 3.5 percentage points is a one-off situation that unfortunately half the profitability of this year, but it will not happen again. So we are talking about more than EUR 5 million that we will have in 2026. From an organizational point of view and from a process point of view, we put on track everything in this company where it happened, we expect already now. So it means that, I mean, we will not have anymore such a situation. And we will not act anymore as a general contractor as we have done, I mean, in these 2 projects. With regard to, I mean, the second question, yes, I already said that the luxury contract. So of the company, we have another [indiscernible] we will end at the end of the year around EUR 70 million, EUR 75 million, moving from EUR 91 million of last year. But bear in mind, you and everybody that EUR 70 million, EUR 75 million, it was exactly the result of 2019 before COVID. So, I mean it's not that these companies are becoming genius last year and now as of this year. But the fact that is the luxury sector is, I mean, a little bit thinking and [indiscernible] new store opens. And then we are following, I mean, these kind of trends. We are not losing any single points of market share. we are really strengthening our position between our main customer, but that is that they are postponing in 2026, given these, I mean possibility of moving between EUR 70 million and EUR 75 million. It could be EUR 75 million, but we don't know if it's more than this.

Our next question today comes from Vandita Sood.

Just a couple of things. Just one clarification on luxury contracts. So I think last time we spoke, you were expecting around 80. And then this quarter was actually ahead of our expectations. So I'm just trying to put the pieces together. Is it just again that you already have an indication from your clients that -- the second half will be slower? Or is it you anticipating that? Is it sort of the quarter just gone, you were expecting more and we just got our figures wrong. So I just wanted to understand what the developments were there that led you to lower the expectation. And then on the Mohd acquisition, I just -- I guess this is maybe -- I'm sorry if it's a silly question, but I just want to understand how it fits in with the geographical split, so how their customer base is clear? And then also the -- as I understand, the projects that they do would be more fitting in the residential segment rather than luxury contract? Or is there any overlap?

Okay. So splitting the answer in 2 parts. The Q2 higher than expected results for luxury contract, as Marella explained before, basically, comes from 3 reasons basically. One is that the comparison with the Q2 last year. Q2 last year was very depress result. Overall, considering our -- company. The second component is the fact that in Q1 of this year, we postponed -- we didn't postpone, we involved some of the projects in the month of April. So immediately after the closing of Q1, [indiscernible] of sales. And then last but not least, probably the most important. This first half of '25 basically is a sort of a carryover of the Mohd 2024, while the decision to when let's say our customers, our luxury personal luxury customer decided to postpone projects -- [indiscernible] postpone those projects were already in production. So they just postpone the projects [indiscernible] in second half this year basically. You remember during the last call, after Q1. Andrea anticipated the fact that between the end of August and the beginning of September, we would have carried out a survey among all of our most important customers in the month [indiscernible] clear understanding of which product we have remaining 2025 and which products were -- they have decided to move in '26. And we did this survey and the result is -- okay, brings us to the numbers that Andrea explained before this. That's basically the story. To complete the picture, also the order intake that we have enjoyed so far from these luxury companies for 2026 is still depressed before and you saw in the last slide that was projected that are still depressed compared to the, say the same period of last year. And also in this case, we don't want to get which level will arrive at the end of the year in terms of order intake and therefore, in terms of portfolio that will build up the 2026 results in luxury contract. Our expectation is to stay flattish compared to 2025. But again, it's an industry personal luxury industry that is in a huge uncertainty, and therefore, I mean, there has been the process of the decisions [indiscernible]. The second question was...

I think it wasn't very clear, Vandita, sorry. If you can rephrase it, please.

I would whether they are more from residential projects other than retail projects?

Mohd?

Yes. So just what their geographical split is compared to yours and what kind of categories that they have versus yours, that's all.

Talking about our last acquisition of Mohd?

Mohd. Yes, exactly.

So Mohd has nothing to do with the luxury contract segment because basically, they performed -- they basically send 25% in e-commerce piece by piece at individual private people. And the project part is 100% residential projects where basically they start -- they pick up consumers that enter the e-commerce side to buy a piece of furniture or a piece of lighting, these people call on the phone to have more specs and more information about the project. They take advantage of this phone call to engage this consumer and propose to him or her basically the full furnishing, the full lighting bundled in 1 delivery, et cetera, et cetera. So providing a very high level of service. So it's sort of an expansion of the normal typical e-commerce purchase process. So it's basically residential. It has a huge potential for being grown, and it's also becoming more and more attractive for our studios around the world because basically Mohd becomes a sort of a full back-office service provider to architect studios, to make it simple, when an architect has to organize to make a residential project. Planning the product, understanding the cost, configuring each product. I mean, it's a very -- it's a kind of a headache for an architect studio. So what Mohd does is not that actually is allowing the architect to design and to get the approval of this customer. But once the customer has approved the lead out of the project, all the remaining job is done by Mohd. So [indiscernible] with all of the most important brands [indiscernible]. They have all the price list now capable to configure a single project and to quote in terms of price, each single project. So they're able to come [indiscernible] with a comprehensive quotation of double project and then after that, once through the project, they can support with the logistics service. So bundling of the deliveries for the different companies and brands that will be both in the project, grouping them, delivering them with the right sequence of deliveries, and therefore, allowing the architect not to be bored with all these low-profit activities. So basically, we are talking about thousands and thousands of small size of special projects.

In terms of geography, the company is already generating -- It's not that different with respect to the group president, it's already generating roughly 80% of revenues of growth. So with the domestic market accounting for 20%. And the key areas of export are rest of Europe with the key markets that we always have in this industry like France, Germany, U.K., but it has also a very strong presence in the U.S. too, but with different channels because, of course, it's the complementarity of company comes from the channel perspective having the online presence that we don't have directly and having the specific characteristic to connect and the 2, what we can call the soft contract world. So the world of project dedicated to architects and specifiers, but most importantly, Something that we don't directly do as a group for the moment being, which is the interior design projects for end customers for the private individuals.

We now have a question from Paola Carboni.

Yes, I have a few questions. The first one is referring to your outlook for the residential business. If you can share with us what you're looking in terms -- what you're seeing, sorry, in terms of order backlog. And so what we should expect, I mean, for the very next few months? And also what you're seeing around you so what's your understanding of the market in this context. Another question is about working capital, you generally guide for a neutral impact on the year. This is apparently a very challenging year for several circumstances and in particular, the slowdown of the luxury contract segment. I don't know whether is somehow jeopardizing this guidance? What would you expect in terms of working capital for the year? And another question, sorry, if you can comment about if possible, the underlying gross margin trend. So I don't know if you are able to comment sort of adjusted gross margin without the impact of the one-off cost and the, let's say, the one-off events that affected H1 just to understand whether in terms of mix and in terms of pricing, everything is still on track.

Thank you, Paola. So first of all, with regard to the residential area. We are thinking that at the end of the year, it could be more or less the same number of last year with a different trend. Also, the order backlog is in line what we are telling to you. So less furniture but we want kitchens and lighting, okay, as it happens practical in the first 6 months, could be like that. Then 1% more, 1% less, that probably will continue I mean, in this way, showing that the activity and the investment that we have done in terms of marketing, commercial activity, presenting there and so on, it works because, as you know, working in a challenging market that is and a negative delivery. But we are thinking that we will mean [indiscernible] literally, we are not able to recover in the [indiscernible] in this year what we are losing in a luxury contract market. Then with regard to net working capital, I believe I mean [indiscernible]...

It's about the net working capital, we see every year that during the -- an amount higher than the amount at the end of the year because during the year, we are working. So inventory is higher and trade receivable the same. And this year, in this -- at the end of June, our net working capital was EUR 18 million. And the result, the expectation at the end of the year, we usually have a neutral effect. This year, maybe something could change because the impact of the luxury contract. Maybe we could receive a lower amount of [indiscernible] payment. For this reason, maybe net working capital could be more than 0. But it's difficult to say the effective amount at the end of the year but it depends on if some our customers decide to pay some advance before the end by the end of the year. We are not sure at the moment. So the best position it would be 0, but maybe we'll see something more.

Gross margin trends?

With regard to gross margin trends, I mean, if we are talking about the first 6 months, without the one-off operating costs, marginality will increase from 7.1% to, I mean, 10.6%. So we [indiscernible], by the way. And then what happened. Unfortunately, this situation, I mean, will not increase during the second half, but then we were keeping within the end of the year. So in terms of marginality, we are not giving a guidance now because it depends at the end of the year. from the impact of different mix of the product volume and [indiscernible] in the areas. Having EUR 70 million or EUR 75 million in the luxury contract area, that is the area where the marginality is higher than the others. I mean it's not so difficult to understand I mean what could happen. But I mean, it's too early to give you a guidance that generally, we don't know in terms of marginality. But this 3.5%, I mean, more with the main but we will [indiscernible] 2026.

Okay. Sorry, and just a clarification on these one-offs. Are the 2 projects ended. You said, so we shouldn't -- I mean, there's no risk that something else might still appear in the second half or maybe there's the risk, but you have already accrued some amount in this EUR 5.3 million. So how should we look at this of EUR 5.3 million of incidents in H1?

Yes. I mean, yes, you're right. I mean that's, I mean, the total impact of this unfortunate -- I mean 2 luxury project, but we already accrued everything. I mean, still we have a team of people into value within the end of October, I mean, but I mean we are sure that it will not happen again because now from a process -- organizational point of view, the whole organization because Turri's people, unfortunately, very important that we already signed, I mean, and on the market or human resource market. So we established our new organization that we change our 50% of the people there with more experienced people and then I mean, we can ensure that is the total impact for that project for the year.

We now have a follow-up question from Carmen Novel.

Just a quick follow-up on tariffs. If you can say something. I wanted to ask if you have any idea of the potential impact of current U.S. tariffs on your financials and how we have to consider them in our estimates, if you can say something.

Basically. Let's say we are not expecting any impact on our financials for a set of reasons. First of all, on the luxury contract part, which is the largest part of the reason that we're moving in North America. Basically, we will -- each project is voted according to the current cost -- and on the top of that, in that segment, there's no low cut competition based in the U.S. So whatever the tariffs will be these tariffs will be entirely past 100% to the different clients that we have in the luxury contract segment. So there, the impact is at 0. If we move to that residential day part. Basically, we decided -- we told you in the last call, we decided that whatever the real impact of these duties will be or the status will be. We will pass it, again to the market by adding a row at the bottom of kitchen invoice for the exact amount that we paid for the duties and our dealers will apply a price increase to their finance customers proportion to these tags. This is basically how we would plan to behave. But we are not expecting interest ratio to be stabilized as it is today with a 15% [indiscernible] we're not expecting this impact out of that. Of course, what is heavily -- we're not expecting this impact because we import tariffs on the import of the product that basically is the final consumer prices are more than double because we pay our broader set of tariffs on the import cost of the product that basically is the final consumer prices are more than the double. So basically, to make it short, a 15% tariff on the import cost will mean kind of 7% price increase to the final consumer or roughly that number. What is really penalizing up, not our financial, but our sales so far in the U.S. is the uncertainty that this story of tariffs and duties is bringing to the market. Because you have to think that if a final consumer order a sofa rom one of our brands from the day we confirm the order to the day they receive the good and pay the bill to the local retailer. Normally, the lead time is between 4 and 6 months. So if a richer American consumer ordering a piece of furniture or a piece of lighting today means that he doesn't have any idea or the American president keeps on leaving this uncertainty. He does not have any idea of the final price that he will pay for the good. So the most impactful element in this moment is by far uncertainty rather than [indiscernible], so making sure we're not expecting an impact on our financial probabilities rather than the top line we [indiscernible] uncertainty.

[Operator Instructions]. I see that we have a follow-up question from Paola Carboni.

Yes. Thank you. I was just curious to hear from you any possible comment on how RODA and Mohd are performing this year, year-to-date in this environment? And if you can spend a few words.

Okay. I mean Mohd, frankly speaking, is performing very well, but is fferent. They are a distributor more than, I mean, a producer. So I mean, their business model is working, and they are growing with respect to last year. RODA is impacted a little bit from the actual challenging market situation. That is particularly not positive in the outdoor markets. The season was impacted also because U.S. is very important also for them. And then many customer -- many American customer, they freeze the project there. in order to understand what will happen during, I mean, the famous discussion around the custom duties. So I mean, following a furniture trend for RODA increasing the excellent result of 2024 for Mohd.

Thank you again. Have a nice evening.

[Operator Instructions]. I see that there are no follow-up questions, so I will now give the word back to the speakers for any final comments before bringing this presentation to a close. Thank you.

Just thank you for listening us and see you as soon as possible.

This presentation will now come to a close. Thank you.