Electrolux Professional AB (publ) ($EPROB)

Good morning, and welcome to Electrolux Professional Group Q1 Results Presentation. My name is Jacob Broberg. I'm heading up Investor Relations and Corporate Communications. And with me, as always, I have Alberto Zanata, CEO; and Fabio Zarpellon, CFO. And let's get started immediately. Alberto, please, I hand over to you.

Thank you, Jacob, and morning to everybody. Q1 -- we closed Q1 with challenging results. We reported declining sales and declining profitability compared to Q1 of last year. Looking into the results, not everything was negative. Indeed, we had a very good performance in Europe and Food Europe, in particular, where we continue to grow sales and profitability along the trend -- the last year trend. In the quarter, we also finally reported a changing trend in Japan. Japan market was challenging all along 2025. And in the quarter, growth -- slight growth was back both in Laundry and in Food & Beverage. The performance in Asia Pac, not impacted yet by the Middle East crisis, we reported declining sales, but just because of a comparison with the previous year quarter where we had the large orders that did not repeat in 2026. Reality, the underlying business is improving in the APAC-MEA region. The only area where we have the -- two areas where we had declining profitability -- declining performance is U.S. Food & Beverage where the negative trend started after the summer 2025 continued also in Q1 this year and Laundry. But in Laundry, it is important to mention that the underlying performance is -- has been positive. We grew volume, and we reported a negative sales and margin only because of the impact of tariff and currency not yet compensated with price. Also, this one is a comment that is important to underline. We have in place price increases that will compensate currency and tariffs on a full-year basis, not yet in Q1, but that is what is always happening in the meaning that the first quarter is a quarter where we typically invoice the product that we have in stock in the order stock from the previous year. The other element that is on the positive side is our efficiency program, the program that we launched in September, program that is progressing very well, both in terms of people that are leaving the company, but also they move of the production. I was in Aubusson a couple of weeks ago, and the full production of coffee has been transferred that the lines are working. Production is there, benefits are expected. Already in the quarter, we have roughly SEK 19 million of savings, and these savings will increase quarter-by-quarter all along the year. I think I already mentioned by geographies, the different trends. U.S. is the challenging area with 2 different dynamics related to the result of Food & Beverage and Laundry, as I already said earlier. If we go into the detail of the Food & Beverage business is the one we have the largest impact of the U.S. result. So with declining sales and profitability. In this result, we have also to consider that we have the acquisition cost of Royal Range that are reported inside acquisition or integration now of the acquired company in the U.S. that is also in this case, progressing well. Moving on the Laundry business. Here, it is important to underline that the underlying results are positive. We are delivering more units in the market overall, in particular in the United States, we are growing sales in the United States. Still the prices that have been applied has been already executed are not compensating yet the negative effect of tariffs and currency. On this matter, tariffs, just a word because you know that the rule has been changed. But what we can say is that according to the new directive, there will not be change basically compared to last year in the meaning that it will be slightly worse for Laundry and slightly better for Food & Beverage. All in all, nothing changed basically compared to last year with the difference that this year, the negative effect will be compensated by price, as already mentioned. With this said, I believe Fabio.

Thank you, Alberto, and good morning to everybody. As you have heard from Alberto, quarter 1 was a challenging quarter where we faced volumes decline in Food & Beverage and mainly U.S. And the profitability of Laundry was significantly affected by currency transaction effect. At the same time, we have continued to execute our plan, put in place the condition to restart the profitable growth journey. But let me dig into the P&L, starting talking about currency. Currency since roughly 1 year has started to largely affect our P&L. First, a few data points regarding quarter 1. Currency translation, we are reporting our performance in SEK, reduced top line roughly 7% and bottom line EBITDA roughly by the same amount with no material impact in terms of percentage but a significant impact in terms of absolute value in terms of EBITDA. At equal currency of last year, currency translation, our EBITDA this year would have been absolute roughly SEK 30 million higher. On top of currency translation, we had a significant impact also to currency transaction that affected both sales and in this case, margin. Currency transaction in sales affected also the top line. Our organic growth would have been roughly 0.7% higher without the currency transaction effect. And our EBITDA value margin would have been roughly SEK 25 million or 0.9% if we would have been able to invoice the same currency of last year. So a significant impact, both translation and transaction. Going through the P&L and this you see reflected also into GP3 volume, as Alberto mentioned, mainly related to Food & Beverage in U.S. where the major disruption ingredient into our profitability. At the same time, we did continue to work to offset this negative impact and build for a better performance into the future. Price contributed positively in the quarter, specifically the price increase in U.S. We were able to cover the tariff impact with a neutral effect in the quarter, so a remarkable achievement. The restructuring cost that mentioned delivered a significant fixed cost saving, making the company even more agile going forward and expected improvement in terms of benefit will come in the remaining part of this year and in 2027. We continue to invest. We invest in digitalization of our offer and in bringing new product to the market. Last year, we reached the peak of R&D cost. And as we anticipated, we were foreseeing a decrease of R&D cost for this year, in particular, starting in the second half. We see this already happening in Food & Beverage, not yet in Laundry because Laundry is working hard, the laundry colleagues working out to bring remarkable innovation into the market during the summer. In the remaining part of the P&L, good development of the finance net, significant lower than last year, thanks to reduced borrowing and cost-efficient funding structure. Tax rate, no particular comment in line with the guidance of 26%. Last comment on EPS. EPS was down roughly 20%, reflecting the income performance. Just a reminder to everybody, 1/3 of this reduction is due to currency translation effect. So currency is really impacting our representation of performance on top of the other business, more business-related ingredients I mentioned earlier. Cash flow. Cash flow was positive but roughly SEK 100 million in value below last year. Two ingredients I would like to point it out. One that is the main source of cash flow that is earning EBITDA was roughly SEK 90 million below last year. But I want to mention that we have had cash out of roughly SEK 50 million related to the payment of the restructuring initiative that we have put in place. No particular comment on the CapEx. Let me say, SEK 45 million was spending this quarter. I confirm the guidance of higher than average historical average spending for the remaining part of the year where we are going to complete major product introduction. What about capital efficiency? Here, you see the development of the operating working capital. We are somehow increasing compared to March last year and compared to the level of we achieved in December. A few comments about the ingredients. Inventory is stable on the same level of the previous quarter in terms of weight on sales. I believe this is a remarkable achievement considering that we have additional good in transit due to the -- what is happening in the Middle East, making our transportation heavier in terms of capital on sea. Our account receivable portfolio is with a good quality. We have seen the data for March, we have reached the lower value of past due on sales we have had historically since we measure. The offender on the operating working capital is related to the development of account payable. This is due to the fact that we bought [lesser], the conscious decision. But also we are facing a situation where in some jurisdictions, one example is Japan, local authorities, in particular, for smaller supplier imposing standard and shorter payment condition. And we are good citizens and we apply it. So overall, higher weight -- somehow higher weight of operating working capital on sales, but within, let me say, a good capital efficiency ratio. Last word on the financial position. Ratio net debt to EBITDA is 1.2x after the acquisition of Range. I would say, pretty strong situation, we start second quarter. In terms of borrowing structure, we have a bond that is expiring after the summer, and we are fully equipped to manage it. With that, back to you, Alberto.

Thank you, Fabio. And a few words about the efficiency program. The efficiency program, as I mentioned earlier, is progressing well. Factory in Carros has been still open because we will pay the cost of the factory until the end of June. But now there is no production anymore. Everything has been moved to the other factory, the Aubusson, where we concentrated food preparation and coffee in one facility. The same apply to what is happening to the Sursee factory that will operate until the end of the year. But already, the line of -- one line of cooking has been moved to Vallenoncello and those, in this case, is operating in the product has been delivered already from this facility. What is important is that we already generated savings in the range of SEK 19 million in Q1. This is giving us confidence that the objective in terms of savings will be achieved because if SEK 19 million is this quarter, then quarter-by-quarter, the number of people and as consequence, cost will decrease. And from July, we will not have the cost of the factory down in France. In some ways also working the upskilling. When we announced this program, we said that obviously, one part is the saving, but the second one is to prepare the organization to the new challenging with both from the commercial point of view to sell the new products that we will bring to market and also the digitalization of the operations. This is also proceeding pretty well, and we have already brought in people with the different capabilities. Moving on, Fabio mentioned that we continue to invest in innovation. The big thing is the launch of the cooking already done in place, and we are growing sales of horizontal cooking in Europe in Q1, preparing now for the launch of the laundry and the multifunctional cooker after the summer. But if these are the big ranges that are launched, nevertheless, we have new product also in the other regions. This is the case of the United States, where at the coming show in Chicago, we received the Kitchen Innovation Awards for these new features that are again, creating benefit to customers. And the other thing is also about sustainability. We are very proud to be already on the 2030 targets now more or less. But the other important thing is that we start to create value for our customers that in the end means additional business for us with our -- thanks to our sustainability leadership. And this is very, very important. So to conclude, challenging quarter -- challenging quarter with declining sales and profitability. Decline in sales and profitability mainly related to 3 things: The business performance in the United States, Currency and Tariffs. But at the same time, prices in place to mitigate currency and tariffs, and it will be mitigated at the current condition on a yearly basis. Efficiency program generating savings gradually increasing quarter after quarter, new product coming to market, some already in the market, some close to come. And all of this resulting in positive order intake at the end of March continuing into April and as a consequence, a richer order stock. With this said, back to you, Jacob.

Thank you, Alberto. And with that, we open up for questions. Please go ahead, operator.

[Operator Instructions] Ladies and gentlemen, there are no questions from the phone. I would now like to turn the conference back over. There is now one question from the phone coming from Fred Johan from SEB.

A follow-up on your comments around the new tariffs, the Section 232 here. As I interpreted, you said that there is no impact on the group as a whole, i.e., but slightly worse for Laundry, but slightly better for Food & Beverage, so net neutral. Is that correct?

Exactly. It is this one. And follow-up comment is that this is the last quarter where we have a comparison between last year where there was not the negative impact of tariff and currency and this year where there is and the price increase already implemented from January 1 will compensate both elements on a yearly basis.

So the price increases already implemented would also offset the new tariffs.

Yes, because there is no difference compared to last year.

[Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to the webcast for any further remarks.

Thank you. A few questions. That means that we were clear in our presentation. And with that, I would like to say a special thank you to Alberto for his 25th quarterly report. It has been a great journey over the years. So special thank you and all the best of luck to you. It's been a great pleasure for us and the investor community to work together with you. Thank you, and goodbye.