EL.En. S.p.A. (ELN) Earnings Call Transcript & Summary

So good afternoon to everyone, and welcome to the EL.En.'s Half year 2024 Financial Results Conference Call. Today's call will be recorded. And so will be an opportunity for questions at the end of the conference call. With me on the call is Andrea Cangioli, El.En 's CEO; and Enrico Romagnoli, EL.En's Cheif Financial Officer and Investor Relator. Before we begin, please note that these remarks management makes on the conference call about future expectations, plans and prospects and forward-looking statements. Certain statements in this call, including those addressing the company's beliefs, plans, objectives, estimates or expectations of possible future results or events are forward-looking statements. Forward-looking statements involve known or new risks, including general economic and business conditions and conditions the industry we operate and may be affected should our assumptions turn out to be inaccurate. Considerably, no forward-looking statements can be guaranteed and actual future results, performance or achievements may vary materially from those addressed or implied by such forward-looking statements. The company undertakes no obligation about the content nor to update the forward-looking statements to reflect events or circumstances that arise after the trade here of. [Operator Instructions] At this time, I will give the floor to Andrea Cangioli. And so Andrea, please go ahead.

Thank you, Nicola. Thank you, Polytems for the introduction, and thank you, everybody for joining us in this call after the release of 6-month financials report. As of June 30, 2024, I will introduce the major themes of the 6 months, and then I will leave the word to Enrico Romagnoli for the financial details. The fact -- the first half of 2024 closed with group revenues just over EUR 312 million, with an approximately 9% delay compared to the corresponding period of 2023. EBIT in the 6 months declined as well at EUR 34.1 million, down 12% from 2023, but strong in terms of EBIT margin which was very solid and close to 11%. A onetime event contributed to income before taxes for EUR 5 million and led net income to mark an excellent EUR 27.4 million (sic) [EUR 27.3 million] results, beating 2023 on this metric. We had mentioned in the original annual guidance release and in the subsequent update, the expected initial decline in results to be followed by a recovery during the year, both in terms of revenues and EBIT. We were aware of being up to a weak start to due to the momentum of the thinner order collection of the second half of 2023. But also that order collection and general customer move was improving in the first months of the year, outlining an improvement in our performance from the second quarter on. This forecast only partially materialized. The Medical sector showed good performance in Q2, recording results in line with the same period in 2023, both in terms of revenue and profit. Although the first 6 months were not favorable in Italy, while trends in the European markets were quite positive. Revenues in the rest of the world, slightly down, were affected by a weak start of the year in the American and Middle Eastern markets, especially compared to the very positive trend of the first half of 2023. However, the difficulties in the Industrial sector especially in Cutting, causing a decline in revenue and profit results across the entire industrial sector and consequently in the consolidated results were not overcome in the 6 months. Altogether, the 6 months revenues results remained slightly below the schedule to meet the annual guidance. While in terms of EBIT, the strong performance of the second quarter aligned the 6 months EBIT with expected performance for the year. Given the overall market situation, we are quite pleased with these results. In fact, the first half of 2024 faced less favorable market conditions than in the past. Relevant countries like Germany are facing GDP decline, affected with others by the ongoing international tensions from the wars in Ukraine and the Middle East as well as by the high interest rates and by the uncertainty of possible impact of ecological transition on certain manufacturing activities. This factors weakened demand in several significant markets. The industrial sector in Italy was severely penalized with a sharp and widespread decline in demand, not only due to the general situation, but also due to the latency phase of investment incentivation policies for industrial equipment. The 5.0 incentive due to replace the very effective 4.0 incentives expire with 2023, were announced but not put in place adding to an already weak demand which was suffering from the obvious anticipation driven in 2023 by the expected end of the 4.0 added a tendency to procrastinate investments based on the new tax policy expectations. Hopefully, this very weak phase was overcome in the summer with the publication of the guidelines for the 5.0 tax incentives. The Chinese market continued to suffer from a structural crisis with manufacturers equipped and organized to benefit from unexpected growth in demand forced to aggressively reduce pricing on the domestic market, which is not growing as expected, and increasingly turning to export to compensate for the weak domestic demand. For a static medical application, demand from the American market, the most important in the world, is not maintaining the levels of previous years. The decline in revenues on the U.S. market of our reporting competitors. I mean, the competitors that are listed and publicly released the results was sharp. Nonetheless, the group confirmed and consolidated its position among the leaders in several application segments. It is recognized as a leader in the international markets where it operates. The innovative processes that allow us to improve our product range and to offer attractive and cutting-edge solution to our customers remaining cut-central to the activities, strategic focus and investments of the group. The effectiveness of our innovative processes allowed and will allow the group to seize the growth opportunities that our market presents. Primary urology, aesthetic medicine and identification market registered excellent performances in the period. As an example, Lasit, our company based in Torre Annunziata nearby Naples, controlling 4 subsidiaries in Poland, Germany, Spain and the U.K. registered a 10% revenue increase and a 22% EBIT increase in the 6 months despite with a very unfavorable situation on the Italian market for machine tools. Apart from the general trends of the main application segments, I would like to take the opportunity of this call to share with you some more detail in terms of application trends. In Aesthetics, we continue to register solid revenues in our main application segment, hair removal, that is low, marking a decline compared to last year's. The decline is being offset by the excellent market acceptance of our anti-aging platforms rage. The group has a unique offer with several different technologies available for various approaches to the anti-aging needs. And each technology bears highly innovative content in the newly released systems. Ablative CO2 systems such as Tetra Pro by DEKA are dedicated to facial rejuvenation with minimal evasive techniques like Coolpeel and is successful in the U.S. Alter store pools application, Nano and Picoseconds, like the Discovery PICO by Quanta and TORO just launched by DEKA are the standard of care for toning and are very successful in the Far East markets. The non-ablative technology of RedTouch Pro by DEKA is introducing a new paradigm in regenerative medicine treatments. Facial firming and reshaping are finding in the microwave technology of Onda and Onda Pro by DEKA an excellent tool in addition to the celebrated body shaping and cellulite removal capabilities of the system. Innovation in the hair removal segment with Echo and Suprema by Quanta System and Motus Pro by DEKA is aimed to lead a recovery in the hair segment as well. In surgical application, Quanta System released a new Magneto or Magneto System for urology, a breakthrough that will support the strong market position we retain in this application segment. The ability to modulate energetic laser pulses of high-power lasers without causing the stone to move away from the tip of the fiber with a sort of magnetic attraction, as the name of the system advocates, is bottom line allowing an increase in effectiveness of the device. Throughout the semester, the group continued its sustainability-related activities, which are included among the performance metrics for management compensation -- excuse me. In the 5-year plan, 2023-2027, the group identified specific and measurable sustainability activities and objectives on the whole sensitive teams considered such as finding climate change, circular economy, promoting our responsible supply chain, valuing people and contributing to the community. Reaffirming by this means its ongoing commitment to sustainable development and that environmental and social responsibility are increasingly integral to the group's business model. For what concerns cash generation, the 6 months performance basically met expectation with cash generated by operations absorbed by a slight net working capital increase and by dividend payment. And the net financial position according to accounting standards, increasing as an effect of nonrecurring inflows from the liquidity investment we book in long-term assets. CapEx moved to date according to the plans as well. The net working capital increase registered in the 6 months in presence of a revenue decline is attributable to ordinary and seasonal effect and seasonal factors. Inventories tend to generally increase in the first half due to our programming cycle aimed to make sure we are set to cover the planned needs and some potential upside. Just a note, without planning our components availability covering potential upside, we would never be able to manage our sales volume upside. In this 2024, there has been no upside to date. In fact, we're a little short in meeting the planned revenue targets, very short in some areas. Therefore, we have some extra parts for the 6 months plan and the parts needed for the expected recovery in Q3 and Q4. By the end of the year, usually, this misalignment are readjustment -- are readjusted and absorbed. For what concerns the laser cutting division, the project to realize an IPO on a regulated market in China, which had been already suspended in 2023 due to inadequate financial results for a successful IPO and due to the weakness of the Chinese market. The process is now interrupted. We don't see short-term market trends suitable to support the successful listing of the division. After canceling the IPO process, we are undergoing a reorganization of the laser cutting division's activities. Cutlite Penta that had been transferred under the control of Penta Laser Zhejiang in 2019 in order to allow the IPO of the division preventing possible horizontal competition was on August 29, 2024, repurchased by Atlas, which is a 98% controlled subsidiary of EL.En. In this new scenario, the presence of the financial investor in the shareholders' base of Penta Laser Zhejiang is not needed anymore. Penta Laser Zhejiang proceeded to liquidate the state of the private equity funds that had invested in its capital according to the terms of the original capital increase agreement, paying the investors, their investment capital and an interest of 6% per year. To avoid any potential dispute from the investment fund CITIC, although CITIC had previously waived its right to exercise withdrawal options in absence of an IPO, we deemed it prudent to proceed with its liquidation as well. We summarily reported these events in the half year report as significant events occurred after the end of the period covered by the report. Details will be provided within the third quarter's report, as usual, due for release at the mid of November. Please, Enrico, you can go ahead with your section.

Thank you, Andrea. Good morning, everybody. And as usual, I'm going to briefly comment the H1 financial results. In the first half for 2024 the group closed with revenues of EUR 312.9 million, with a decrease of 9.5% compared to corresponding period of 2023. The decline in sales during the period was more market in the Industrial sector, minus 19.9% than in the Medical sector, minus 1.7%. The overall weight of Industrial sector sales on group sales decreased from 42.6% in 2023 to 37.7% in first half of 2024. In 2024, in the first 6 months, the weakness of Renminbi in Industrial sector and Yen in Medical sector, again, Euro, had a cumulative impact on the growth of approximately minus 0.8%, in value minus EUR 2.7 million, minus EUR 1.8 million due to Renminbi, minus EUR 0.8 million due to Yen. The gross margin of first half 2024 was EUR 129 million, down 2% from the EUR 133.5 million (sic) [EUR 131.5 million] on June 2023 with a recovery in sales margins from 38% to 41.2%. The improvement in the gross margin is due for EUR 1.9 million equal to 0.6 percentage points of turnover from the proceeds for insurance and government reimbursement relating to the damage caused by the flood in [indiscernible] in November 2023. Net of these proceeds, the period margin still improved by 2.5 percentage points compared to the first half of 2023 due to a more favorable composition of the sales, both in terms of product type and destination markets within the individual sector and due to the greater relative weight of the medical sector. Operating expenses increased and the impact on sales, up from 8.9% to 10%. And the main reason are the sales and marketing expenses for trade first and Congress incurred by both Medical and Industrial companies. The number of international trade fairs and conferences in which the group participated in the first month of the year was significant and above average. Staff costs increased in value from EUR 0.8 million plus 1.5%. And has impact on sales from 16% to 17.9% due to the lower turnover recorded in the period. The national cost for stock option plans in favorable employees amounted to EUR 1.3 million in the period against EUR 1.6 million in the first half 2023. As of June, the group had 2,030 employees, down from the 2,082 employees as of December 2023, and the main decrease was in Chinese companies. EBITDA was EUR 41.4 million, down 9.3% from EUR 45.7 million in the first half 2023. The incidence on revenue remains unchanged at 13.2% with a slight improvement in the Q2. Cost for depreciation and provisions increased from EUR 6.7 million to EUR 7.2 million, and their impact on turnover increased from 2% to 2.3%. The increase in this cost item was determined by the increase in the provision for credit risks, both in general and especially for the specific provision of EUR 1.6 million set aside by the sudden financial crisis of an important customer for our subsidiaries in Japan with us. The less unfavorable guarantee condition granted on the sales of laser cutting systems in China allowed the product warranty fund to be partially released while the risk provision was reduced following the positive resolution of some disputes by Asclepion. EBIT showed a positive balance in EUR 34.2 million, down 12% from the EUR 38.9 million as of June 2023 with a margin on sales basically unchanged at 10.9%. We recorded a net financial loss of EUR 468,000 compared to the loss of EUR 1 million recorded in the same period of the last financial year. An improvement essentially due to the more favorable effect of currency exchange rates in the period. Income before taxes showed a positive balance of EUR 38.5 million, EUR 37.8 million in the first half 2023. As already mentioned before by Andrea, the exit of the private equity funds from the capital of Penta Zhejiang has established the impossibility of completing the company's IPO on the Chinese market. Among the clauses of the contract with which in 2019, the group acquired the shares of Penta Zhejiang held by the minority partner of the JV, the listing by November 2024 was the condition for the payment of an earn-out of EUR 5 million to the liquidated partner. The management based on the IFRS 9 standard, therefore, remeasure the financial liability with a recognition of our non-operating other income of EUR 5 million in profit and loss. The overall tax rate for the period is 28.7%, slightly down compared to the 29.1% on the first half 2023, and the net income was EUR 27.3 million. Talking about balance sheet, we noted a decrease in non-current assets, mainly due to the disposal of the -- a partial disposal of the mid-, long-term liquidity investment in insurance policy during Q2 for a fair value of [ EUR 16.3 million ]. The ratio of net working capital sales increased in the first 6 months compared to the year-end, as usual, showing the same value as of June 2023. The net financial position increased from EUR 54.6 million at the end of 23 to EUR 68.6 million of June 2024. In terms of cash flow, the net financial position reported an increase of EUR 14 million during the period. The increase was achieved entirely in the second quarter, which showed a balance increase of EUR 22.5 million. The income flow from operating activities, together with the depreciation and the allowance for the first half of 2024 exceed EUR 30 million, which were used for increasing net working capital and other receivable and payable for EUR 14 million dividend for EUR 17 million and CapEx for EUR 8 million. The partial disposal of the investment in liquidity already mentioned before in -- when we are talking about the net financial position had a positive contribution of EUR 16.3 million in the net financial position and the residual fair value this kind of investment still recorded in non-current asset is EUR 7.5 million. The remeasurement of the financial debt due to the expected expiration of the earn-out clause, which was obligating Atlas to pay EUR 5 million to the previous partner of the Chinese JV in the event of the success of IPO of Penta Laser Zhejiang by the end of 2024 had a positive impact on the net financial position of EUR 5 million as this amount was accounted as financial liability in the previous financial proceedings. Sales by business. The weight of Medical sector sales on group sales increased from 57% to 62% in the first half of 2024. The sales in Medical sector showed good performance in Q2 2024 with an increase of 1.6% compared to Q2 2023, reducing the decline in the 6 months 2024 at around 2%. Opposite is the trend in Industrial sales with an increase in Q2 of 27% compared to Q2 2023 where in Q1, the decrease was 10%. And the decrease is mainly due to the cutting division with a minus 34% in Q2, up 14% -- minus 14% in the Q1. The performance of system sales in the Medical sector shows a slightly decline fairly consistent across the various application segment, aesthetic surgery and therapy. Revenue for services per parts and consumables, on the other hand, reported a growth of 6%, limiting the overall decline in the Medical sector to 2%, a commendable result given the market situation despite marking a decline of 3% in seminal revenue. The aesthetics segment registered excellent result in the second quarter, plus 6.5% , recovery ground compared to 2023, thanks to the significant revenue growth in the anti-aging technologies. Revenue for surgical systems showed a slight decline, but this revenue, a consumable referring to the box included in this category are accounted in the service and a strong contribution to the aftersales service has been done by the optical fiber with that representing more or less the 40% of the sales of this kind of the aftersales service sales. The therapy segment managed within the group by ASA [indiscernible] with revenue for EUR 7.7 million, marked a slight decline in revenue in the quarter, minus 5% compared to the EUR 8.1 million in the same period in 2023. In the industrial application sector, sales suffered due to the weak performance in the main outbound markets, particularly China and Italy, where unfavorable general conditions were compounded by a latency phase in the tax incentives policy for investment, mainly in Italy. However, there was an extraordinary acceleration in revenue from aftersales service and goods plus 45%. A direct and delayed consequence of the significant increase in the number of systems installed in the last 2 years with the share of service revenue on total sector revenue doubling during the period from 5% to around 10%. The market sector with a turnover of EUR 13 million compared to EUR 14.5 million in the same period 2023, recorded a decline of 10% with a weak semester integration application also for widespread difficulty in period in the fashion system. And the growth for the business unit of identification and traceability system managed by Lasit of Torre Annunziata. The laser sources segment reported good sales performance, plus 5%, with revenue of EUR 2.3 million. In terms of geographical distribution in the first 6 months of 2024, the weakness in the market in Italy was highlighted with a revenue drop of 46% in the Industrial sector and 9% in the Medical sector. Industrial sector suffered the effect of the interruption of the tax benefit from incentive 4.0 to the prolonged and latency of the new one of 5.0. Positive performance in Europe was reported in both in the Medical and the Industrial sector. Revenue in the rest of the world, slightly down was influenced by the still weak performance of the metal cutting laser system market in China and a weak start of the year in the American and the Middle Eastern market. Andrea, please go ahead to comment the guidance.

Thank you, Rico, and prior to completing this presentation and getting into the Q&A section, I'd like to go back on the guidance. The results for the first half of 2024, showed a decline compared to the corresponding figure of 2023. A decline that the 2024 guidance had anticipated for the first months of the financial year. Considering the performance of current revenues in light of current market conditions of the volumes of order backlog to date and of the group's competitive position in the Medical and Industrial sectors, we do not foresee in the second half of the year to recover in full the revenues delay with respect to 2023. Nevertheless, due to the different and more favorable revenue mix with more weight on Medical sales. And within the Industrial sector with more weight on international sales, meaning outside Italy and outside China as an effect of our international expansion strategies, the goal of exceeding in 2024, the consolidated EBIT of 2023 is conferred. Moreover, the group is confident that the medium-term performance of our outbound markets will continue to outline positive developments. And thanks to our commitment to supporting continuing and focused investments in research and development and innovation to improve our competitiveness over time, we expect to benefit from the growth opportunities of our markets. Thank you. We are done and ready for your questions, if any.

Andrea, we have 3 people in the list of Q&A. The first one is Giovanni Selvetti from Berenberg.

Hello, everyone. Can you hear me?

Giovanni, yes. We can hear you.

I have a couple of questions. Some are very short answer, I hope. So the first one is that I was looking at Industrial revenues and Industrial revenues generated in Europe are up 40% in the second quarter. I was wondering if by trying to compensate this weakness in Italy by selling abroad in Europe, the margins you can make abroad with exports are higher than what you can do domestically. Secondly, staying on Industrial. You said during the presentation that finally, the guidelines about Industry 5.0 were out in the summer. I know that summer in Italy is quite peculiar. So it's going to take a while to see an impact, but I was wondering if you have a first sense on -- in September about the first days, if you see some practical implication of this. The third is probably more strategic, right, and still about the Industrial division. So I was wondering if the fact that the IPO is now off the table and that you bought back Cutlite Penta means that in theory, the division is not on sale anymore. -- if it ever was, I mean, but clearly, with the IPO, there was the possibility. And the last one is very short. In February 2024, a customer of Penta Zhejiang initiated a lawsuit claim in the reimbursement for which you set aside EUR 3.5 million, if you have any updates there?

Okay. First point, sales in Europe and also outside Europe, I would say, but in countries that are not China and not Italy are increasing and we plan to have them increase even more because we need to be more balanced and to have more sales coming from markets which are not China and Italy. And also because, as you mentioned, on an average, the very higher margins. This is also the reason why our guidance is guiding for basically improved margins of sales at the very end because we are looking -- we are guiding a decline in sales for -- a small decline in sales but not a decline in EBIT. The second is 5.0 and the answer to what we can see is positive. Yes, we have seen despite the summer months, that the possibility of applying for the 5.0 incentives have somehow put some movements in order bookings in Italy, and we are much more optimistic than we were a few months ago. Of course, it's a process that takes time because we need time to deliver the orders we booked in the last weeks, but the order booking in Italy in the last weeks has been sensibly stronger than it was before. Third, we moved back Cutlite for strategic reasons that have to do with independence of operations on the markets of our subsidiaries. You know how our business model has always looked for a great independence of our business units. We have several trademarks. We have several brands that we manage in a coordinated way, but that in a way competes, we felt that given that the need for having Cutlite Penta under Penta Laser Zhejiang was due only to IPO needs. We would have a better strategic position by having Cutlite Penta free from -- more than free, I would say, independent from the control of Penta Laser. This doesn't change any opportunity in our goal of reorganizing and eventually finding a way for our Industrial business for industrial -- for a laser cutting business. Fourth point. It's the [indiscernible] case for us. [indiscernible] is the name of this customer for which we built a fantastic because it's really fantastic system for cutting parts, sorting parts and an integrated automation for the factory which is aimed to build parts for a customer, which is making heavy -- I don't know how we say it in English, is making like it's a competitor of Caterpillar, John Deere that kind of vehicles, heavy vehicles for infrastructural needs. The technical appraisal of the system should be close to the end. We hope that the technical appraisal was going to be ended a few weeks ago, but still, we are waiting for the final result. We are very confident on the technical point of view. We are less confident on the overall outcome of this dispute because, as I had mentioned before, and as I repeat, basically, the customer doesn't have work anymore. It's not working. The market for this customer decreased and they are basically trying to find an excuse not to pay. And because they don't need the system anymore. Too bad that the system is a huge custom design system. And so we hope that we can get satisfaction from dispute and confirm. And also, we can get a little bit of momentum in a strategic expansion of our activities, which need to go into the direction of providing our customers with solution which are not the main standard laser cutting system but are also integrated in order to provide a complete manufacturing solution to our customers.

The second question comes from Carlo Maritano from Intermonte.

I just have some questions. The first one is on China. If I remember well, the first quarter was broadly flat compared to the previous year. I was wondering what was the trend in the second quarter? And if the measures to optimize the cost base is bringing their fruits. The second question is on current trading. So you already partially answered about Italy where you see some rebound. I was wondering if you're also seeing some rebound in the removal that started suffering from the second part of last year? And the final question is on cash generation. Cash generation in the second quarter was quite strong given that historically, is a quarter of absorption. So I was wondering if you have anticipated partially the usual cash generation in the -- of the second part of the year already in the first quarter, what is the trend that you expect in cash generation next month?

Okay. Thank you, Carlo. China. The second quarter was weak in terms of sales, especially in China. We have seen the trend of international sales improving, but this has not been enough to break even in the quarter. Though, the expense reduction process that had led to a sharp decline in costs starting from the second half of 2023 had its impact. Therefore, even if we recorded decline in sales compared to the same quarter in 2023, the cost was reduced and also the loss was reduced, but there was a loss in the quarter. Current trends. In the medical field, I believe we are set quite well. There is a bit of uncertainty remaining in the U.S. market, which, as I mentioned before, has been very difficult in this 2024 to date. We did fairly well, but we launched new products. We widened the number of partners that are operating on the market. So we did a very important job, but the market is not so easy as the very weak performance of our competitors' highlights. Concerning hair, in this moment, we are doing fairly well. We launched new products. It's difficult to say if now if we will be able to improve our performance to the end of the year. The good news is that we are getting less reliant on hair removal and improve our market position in other application segment, as I mentioned before. Cash -- and cash, I mean, I'd like to say yes, but looking carefully, we did do well in cash generation, but you have considered that in the cash generation balances of the first household, there are 2 important non-recurring inflows. So I believe the current management of cash was good but wouldn't have led to our cash position increase. Though, as I explained, we are talking of a seasonal behavior in cash absorption, and we count on a better seasonal behavior in cash management. Therefore, we expect the net financial position for its ordinary course to continue to improve throughout the year.

The third question comes from Andrea Bonfa from Banca Akros.

Andrea, I got a couple of questions. They've already been partly answered. But looking at your, let's say, profitability by sector that you already kindly published in your interim report. The industrial business is actually more profitable than last year at the divisional level by a very small amount. But looking at the magnitude, the sales decline is quite a remarkable result. You already partly explaining this, but my curiosity, is that more related to cost reduction. Is it more related to better mix? If you can further comment on that. And although your sales guidance is a little bit behind your initial expectation, shall we expect the Medical sector turning into positive growth for the second half of the year? Or what are your expectations there?

Thank you, Andrea. There are several factors that lead to the better profitability of the Industrial sector in this half. We reduced cost in China. We increased the weight of sales in higher-margin markets. We had less sales in Italy, where our sales activity is very aggressive. Less sales in China where competition leads to sales margin compression, more sales in the international market, more sales in the laser marking business, which is more profitable than the cutting system in terms of marginality. And those are the operational reasons. Moreover, as Enrico mentioned, in his presentation, we also have the help of the reimbursement for the flood damages that shift positively our P&L in the first half of 2024 which represents a significant part with a not-negligible part of the profits of 2024 for the Industrial sector. Concerning the expected trend in the Medical business, yes, we expect the Medical business to continue to be strong and to surpass the 2023 performance in terms of revenue in the second half of the year. This is what we count, and this is at the base of our guidance for the year.

Just a clarification. So the EUR 1.9 million flood reimbursement were entirely booked for the Industrial division?

Yes.

Now we have, again, Giovanni Selvetti from Berenberg for a follow-up.

Yes, sorry. If you can maybe quantify the loss in Q2 for China. And -- maybe another one, I saw that the weight of minority interest at the bottom line was way lower, is still due to China?

I answered the second question. The first, I believe we have the numbers on the financials. I would like to give only public numbers, I wouldn't like to give more numbers. I believe that in our financials, we have the net profit of the Chinese companies. Enrico, don't we?

Yes, we have.

So you can answer to this question. In the meantime, the second question was -- excuse me.

Minority.

Yes. Minority -- we have minorities in China, which are heavy. So the less money we make in China, the lesser minorities concerned. We have minorities in Japan. And in Japan, we didn't make money in the quarter. And so I believe the only business we have significant minorities that improved its performance from 2023 is Lasit. While another business where we have minorities, which is ASA, in therapy, reduced its income in 2024. So it's not only China, but also Japan and ASA, which are determining the reduction in the minorities interest of early net sales. Enrico?

Yes, the loss of -- in China was EUR 4.2 million in H1 2023 and now is a loss of EUR 2 million in the H1 2024.

This is a net profit -- net loss.

This is a net loss.

Bottom line.

And maybe I think I missed what you were saying to Andrea before, saying that you expect Medical revenues in the second half to be higher than the second half of 2023. Medical revenue? So..

I do. I do... This is our expectation, which is our plan. This is what we count on. Let's hope -- we hope to make it.

Okay. I don't know, it was just to double check because the line went off on the second.

Okay, Andrea. We have not any other question in our list. I want to ask to the attendees, if there is someone else that want to ask a question. No, we have not any other question in our list. I kindly want to ask the floor. If you have some questions to investigate, please do not hesitate to contact Enrico Romagnoli. He will be happy to answer your questions. Thank you for attending this conference, and we hope to have you all again next time. Good afternoon to everybody.

Thank you, everybody.

Bye-bye. Thank you.

Bye-bye.