Elica S.p.A. (ELC) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Elica First Half 2022 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Giulio Cocci, CEO of Elica. Please go ahead, sir.

Good afternoon. Good afternoon, everyone, and thanks for joining our quarterly call. Let's have a brief look to the agenda, which is the same. The nice thing is that in the presentation we shared that we have changed the pictures with our new products and with our exhibition in Eurocucina, which we also will see later. Very much appreciated, but all of the people that joined the year-end. If we go straight to Slide #4, we have a brief comment on the second quarter highlights. It has been a very good quarter, very good quarter from a revenue perspective because EUR 146 million is, again, a record for our company. But moreover, an organic growth of 6% sets a real difference versus what we are doing in respect of how the market is moving in this moment. It's a healthy, I would say, revenue growth driven by our own brand sales and by a model division where the investments that we made last year, acquiring EMC, is absolutely paying off. It was a quarter in which, despite what is happening in the macroeconomical scenario, despite a very hard hit or raw material cost inflection and energy costs that, in our case, means almost EUR 19 million in the quarter itself, reached EUR 9.6 million adjusted EBIT margin. Meaning, a 6.5% of revenues, which is again a profitability KPI that our company never achieved. And that confirms our ability to be fast in a scenario that every month change direction. Shows our ability to manage price, show the fact that our mix is growing in a profitable way. Shows also the fact that we have been able to manage also all of the costs that we sustain to guarantee to our customers the availability of our products. So the level of service that for them means revenues, that allowed us to gain almost 1.5 points market share according to the latest GSK estimates in the first 5 months of the year, because June is still not in official data. It is a quarter in which we have confirmed again the fact that our cash flow -- operating cash flow is solid, is strong. Allow us to make this continuous decision, especially considering the high investments that we made in net working capital, again, to avoid availability problems and the high investments that we are making in restructuring our industrial presence in Italy. In order to help from the first of January, but hopefully, even earlier, in optimized industrial trends between Italy and Poland. If we move to the following slide, without going too much to the numbers, the message that we want to pass discussing the first 6 months results. So EUR 290 million with an organic growth of almost 6%. 6.4% adjusted EBIT margin, again, in the direction that we want to have, and the net financial position that is absolutely healthy. What we want to show is that we are, again, achieving the plan, respecting our promise that in 6 months -- the takeaway of this slide, in my point of view is that in 6 months, we basically did all of the operating margin that after 2000 and before 2020, we were used to do within a full year. So this is a different company. This is a new company. Stefania, let's go through the industry trend and the details.

Good afternoon to everyone. Moving to Slide #7, the Q2 industry shipment. In the second quarter, the overall market demand in Europe and U.S. declined compared to a strong quarter of the last year. The slowdown trend is mainly due to supply chain constraints mainly relating to electronics components, high inflation and increased interest rate that affected the consumer demand negatively. In addition to the impact of the Russia and Ukraine war, the overall demand in Q2 is negative for 7.4%, with an EMEA region minus 10%, where the East Europe suffer most for the war dynamics, with the trend of market demand minus 14%. North America turned negative with a demand minus 8%. Our performance has been better than the market with an evident market share gaining. Move to Slide #9, the safe key drivers. Second record quarter, EUR 14 million of additional sales compared to the Q2 '21 and an organic growth of 6% sustained by price increase execution, motor growth and our brand growth. Positive trade-off between Acquisition and Divestitures, driven by modest growth that grows more than offset of the India's divestiture. H1 result plus EUR 21 million, that was last year, with an organic growth plus 5.8%. Moving to Slide #10, we go through the performance across the region. Second quarter with different dynamics across the region. America, negative organic sales affected by lower demand offset by positive currencies. EMEA, extremely positive with a double-digit growth driven by positive motor trend and the organic growth of our brand. Asia, negative due to the India divestiture but with a positive organic growth. The H1 results show the same dynamic of the quarter 2 in terms of organic growth. Moving to Slide 11. Now, we will see -- we can see the performance among the business units. Motor reconfirm the positive trend and demand continues to be solid, driven by heating sector with plus 15% organic growth, an additional EUR 10 million of turnover coming from the Motor Company acquisition. Cooking, positive organic growth plus 5%, driven by own brand and Aspiration Hub performance where demand is still positive. And moving to Slide #12. And now, you can see the trend between the brand. Performance by brand in the second quarter that confirm our solidity in our brand strategy. That is still growing the double digit -- double-digit growth, offsetting the India deconsolidation turnover. The performance achieved thanks to the price execution mix improvement through the NikolaTesla range extension. For the OEM, our revenue declined minus 6% is -- if you -- partially due to the negative industry trend in EMEA, U.S. and for the market dynamics that are involved in the Russian-Ukraine war. Moving to Slide #13. The key performance for high categories that's persisting the growth trend in our high-end products. Even an important progression -- even considering the important progression that has been done during 2021, we maintained growth also in 2022, improving our capacity to balance through the mix, the negative impact of the cost inflation. NikolaTesla increased quarter-on-quarter, plus 28% versus last year, above the average of our own brand. We could have been also better with the whole component available. And now, the categories reached 16% of the Cooking sales, gaining market share in the European market.

Just to add something to give you some flavor on how it's going, the Europe '21 market on aspiration hobs, that is for sure a category that is anticyclic, I would say. The Aspiration Hobs family in quarter 1 grew of 58% in Europe. And we grew with our sellout data, so not necessary coincident with our selling data, which is the one that you see in this report. We grew 73% against the market growing 58%. In quarter 2, mainly due to electronic availability issues, the market was up 28% while Elica was up 44%. Now, so what we see coming from official market data is confirming that our path is right and the direction is exactly in line with where we want to be. In the following slides, without going too much in detail, we had some snapshot of our stand in Eurocucina which was absolutely one of the most visited one, especially if you go to Slide #15 for the new products that we presented. The new LHOV, for us, as previously mentioned, represent not only an absolute novelty and a tool that is unique in the market. And that from June next year, will be given to our sales force to set even more strongly our market leadership in Europe. But also for the completion of our lineup of NikolaTesla line in Slide #16, I guess, there is some snapshot of the new products that we have presented in Eurocucina. NikolaTesla represents an important growth in terms of revenue and in terms of mix, so basically, margins in our path. We have enforced the last year with the NikolaTesla Fit that has covered, let's say, a low end of a very high segment this year with NikolaTesla Unplugged, with the Switch Glow, with the Alpha and with the Fit. We have enforced our lineup that was recognized as the best one in all of the fair. So again, this is an additional opportunity on top of the good things that we are doing so far. An important indicators. The only one we can catch from the fair with the exception of the direct feedbacks of our customers and also of the many competitors that came to visit our showroom, is the fact that the LHOV, that had a specific website within our website, was visited by almost 60,000 people, of which almost 80% were new users. So attracted in our website, attracting the, let's call it, Elica world, with a marketing way of talking. By the novelty, by the styles of this product, by what this product represents. And this is a good sign, considering the investment and considering that this product represents an important statement from our side on what we want to be within the cooking industry.

Come back to the number. Moving to Slide #19, here, we have the financial results for Q1, for the H1. Second quarter with the sales track, we have already discussed and the EBITDA adjusted equal to EUR 9.6 million with an improvement of profitability versus the last year of 40 base points, 6.5% versus 6.2%. EBIT reported EUR 8.5 million, a non-recurring item with the EUR 1 million for which we see later on the details. The improvement of the operating margin, the positive financial items mainly relating to the ruble exchange rate effect and the reduction of the minorities pushed the group net profit for the quarter to EUR 7.6 million, more than the double result of the last year. In 6 months, we achieved an EBIT adjusted equal to the average of the full year results before the recovery period. EUR 18.5 million in exactly 6 months, the same amount of the full year results for the period from the 2017 to the 2019. And the group net profit is already EUR 12.3 million that is more than what we did the last year, offsetting EUR 37 million of cost inflation. With our positive impact in terms of earnings per share is the double respect to the last year, 20% in euro per share. Moving to Slide #20. Here, you have the detail of the nonrecurring items. A positive impact of extraordinary items relating to a transaction agreement reached with a producer under which the counterparts agreed to pay to Elica EUR 3.2 million for a co-ownership of the Elica patent. EUR 0.5 million related to our continuous focus that we continue to have on SG&A resizing and EUR 3.8 million for the execution of the Industrial Plan footprint, and they tied up of additional voluntary agreement exiting our Margo facility that will be bringing further opportunities in our plan. Moving to the section of the minorities, impact decline with the last acquisition of the Airforce share with Ariafina in Japan. Moving to Slide #21, net financial position. The net financial position improved versus last quarter despite the payment of EUR 8 million of voluntary agreement and EUR 1 million of buyback. And despite the additional inventory, it's useful to manage the industrial footprint transition and the supply chain bottleneck. Supply chain projects executed during the year with prime revenue helped us how to mitigate the impact of the stock inventory and the negative impact of net working capital versus the last year, equal to EUR 8 million. We are already cashing in EUR 2 million of the EUR 3 million for the co-ownership of the patent agreement. Leverage EBITDA versus the [PSN] is 0.8. But if you consider it as EBITDA adjusted, it's 0.5, 0.6. I leave the stage to Giulio Cocci for the dividend policy.

Yes. So what we've seen so far is, starting from the last slide, a very much improved operating cash flow and a healthy, very healthy net financial position. Despite an important investment in terms of stock, in terms of net working capital, to be the first in terms of serving our customers. Consider that in the first 6 months of this year, our level of service was in the region of 90%, 95%. So we see -- we know, we consider an opportunity the fact that some of our competitors, if you ask for an aspiration of today, they are going to deliver it in November. We are going instead to let our customers' business run. And also, our net financial position is absolutely under control and can only improve despite in the last couple of years, we have been pretty hard in nonrecurring items, restructuring the SG&A, restructuring my first line restructuring, and this was almost EUR 8 million in the first half of this year in the Italian facility in order to be more efficient, competitive, profitable from the first of January 2023. So we feel confident that this number can only improve. You've seen the group net profit, EUR 12 million last year, EUR 12 million in the first 6 months of this year. Again, this is a number which is a group net profit, not just consolidated net profit as it was before. Minorities are not anymore an issue. The money that we make make with our core business. And the EMC acquisition last year has already enforced this opportunity. Our margin, considering that in the last 6 months we have been paying almost EUR 19 million per quarter. Which was, by the way, the EBIT of the full year in 2019, '19 and so on, it's growing in the direction that we want. So we are controlling the margin. All of this brought us to understand that it was time to come back to be, I would say, a normal company. A company that grows, a company that makes profit, a company that has a strategy that doesn't change, but also a company that pays back shareholders. So we have called a shareholder meeting on the 28 of September to approve a dividend payout of EUR 0.06 per share, meaning, almost EUR 3.8 million, with a ratio of 31% on the net profit of 2022. That we feel is the beginning of a sustainable dividend policy through the year. Without -- because this is the most important decision that we made and the most important thing that we are sure we have under control, without changing or pending our focus on innovation, on production capacity investment and product development. And of course, an M&A initiative where we see the opportunity to grow faster and more profitably than we are doing. So just to move to the Q&A part of this conversation, of this presentation, strong execution. I don't want to be long on this slide. We are doing well. We see opportunities to do well also in the remaining part of the year despite we see a market scenario that is changing. Here, we have, let's say, 2 main opportunities. We are gaining shares, and shares remains is on top of what we did last year. We are doing very well, incredibly well in our branded sales, so we see 2 different dynamics between what is our under control and what depends on our OEM customers. There, for sure, there will be a slowdown. But we have a motor division, and the motor division doesn't follow directly, proportionally the dynamics of appliances market. Because part, I would say, 50% of what we do or what we sell as motors is driven by heating. It's linked to the various [PNR], to the energy transition, to the efficiency that we're trying to bring in our houses in order to have lower consumption, and all of these concepts pass through it in electric models. We have some key projects that we launched, that we are executing. And that by this year will be full in paying -- by the end of this year will be fully paying us back. The first one being the new industrial footprint that, as we know, means a point of operating margin for us and that we are sure from the first of January. But hopefully, before, we'll be fully running in Poland. So far, what we have seen is a full respect of the timing and additional opportunity in terms of having more voluntary agreements, then the 150 people that were agreed at the government level. For all these reasons, for the opportunities that we see to have a faster reduction in our organization costs without affecting, of course, the efficiency of our organization, we confirm the full year guidance. So revenues, in line with what we have discussed in the previous calls despite, again, the demand scenario, which is not the same as we had at the beginning of the year or why we were discussing the quarter 1 results. Margins are growing, and they will grow in line with our 2022 expectations and absolutely in line with our mid-term target. And again, despite a dividend payout of EUR 3.8 million, we see a further net financial position improvement by the end of the year. Dividends, we already discussed. It's part of the game. We are a new company. We are, from a dividend perspective, a company that at the end of the year, decide what is for growth, the majority of the resources that we have. But also how to remunerate our shareholders. Thank you.

Excuse me, this is the Chorus Call conference operator. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Francois Robillard of Intermonte.

First one is on your second quarter volume dynamics. If you could just give us some more color on how volumes evolved in the different divisions? So B2B, B2C motors, and consequently, also give us some more color on how pricing went? My second question is more forward looking. What kind of dynamics can you currently see in your order books for B2C and B2B? And what kind of volume dynamics do you expect on the second half of the year? And finally, maybe you answered it in your last -- on the very last line of your last slide, but how does this new dividend policy affect your your M&A strategy going ahead?

So volume dynamic. Again, we are a multichannel business at the end. B2B and B2C, home brand and OEM have different dynamics, and Motors have different dynamics in itself. I would say talking about Cooking first, B2C. So our own brand sales are running with the exception of what is happening in Russia where price is absolutely covering volumes. I would say the volumes are stable. So NikolaTesla, growing hoods with a slight decrease. The majority of the growth is through price mix, so more NikolaTesla and more high-range products than the average product offer that we have, but again, a lot of the pricing that we applied through 2021 and the beginning of 2022. B2B is different because here, we have 2 important phenomenon. First of all is the phaseout of [Alexa] which looks best. So they are producing their own hood and aspiration hobs, and partially adjust for one line of products of BSH. Both of them were already, how I can say, included in our plan and in other our estimates -- in our estimates. So do not represent an issue. On the other side, what we have seen in North America and in EMEA is a decrease of one of our important capital input. Which is coherent, basically, with the figures that they have published a couple of days ago. So in this case, we see a decrease also from a volume perspective. Motor division is, I would say, volume-wise, flat. There is an important effect of price and an important effect of mix. So low-end motors, non-blowers motors are decreasing while blower motor, so motors with the electronic part inside, are getting share. And this helps us also from a mix perspective. So I would say, from a volume perspective, flattish own brand, and instead, a specific decrease driven by 2, 3 OEM customers. The second point was around the forward-looking, sort of dynamics. We see again motor division, which is running with the same speed we saw in H1. Even faster if we look to quarter 3 dynamics. We see a quarter 3 that instead will be, let's say, difficult from a B2B perspective. So many of our customers, many, let's say, 3 important of them have changed their estimates. So we foresee a quarter 3 in decrease. But we see a B2C business, so a branded business, which is growing more than, let's say, the B2C decrease. So long story short, we see a balanced growth that will be probably lower than the one we experienced in quarter 1 and quarter 2. But will be, in any case, a growth year-on-year. Dividend, how I can answer the question. Our priority is exactly the one that was while we were discussing and understanding the space to start back a dividend policy. So in terms of growth, in terms of the production capacity investment, in terms of investments in new products, nothing changed. What we understood, and we are working in detail to a 3 years plan that we will share, let's say, in quarter -- absolutely within quarter 4 this year, is the fact that our net financial position is healthy and can only improve whatever market scenario we can imagine. So there's space for continuing our projects without, again, changing any of main investments that we want to do, of the innovation of products that we are investing that we want to invest in, and also of the strategic initiatives that we have already put into scope. But there is also a space to start, again, a sustainable dividend policy. That means coherent, that makes sense to start with a dividend payout of EUR 0.06 per share. So that is basically what Elica was paying at the beginning of its story in the exchange rate. With a healthy ratio on the net profit, but with the net profit, which is the most important part of the story, which is more and more hours and that is expected only to grow.

And just on the dividend, is it included in your net financial position guidance? Or should we expect -- Okay. So is net financial position will improve net of M&A, payment and dividend?

Yes. Yes. the current M&A. So if there are additional operations, it depends on how they pay us.

Current M&A are related to the part of Airforce. And that's really done the first tranche during the month of July. The second tranche for MC that has been already done in July, so there remain EUR 7 million. And for sure, as Giulio said, we will confirm our guidance to improve the net financial position despite the payment of the EUR 3.8 million of dividends.

The next question is from Alessandro Cecchini of Equita.

Hello. Can you hear me? .

Yes. It sounds great.

Okay. [Foreign Language]. The first one is about -- if you could recap a little bit what are your targets in terms of cost decrease for your plan reorganization for the next year? So just that you -- to make a double check on your assumptions in terms of better cost dynamics for 2023 in terms of your reorganization plan? My second question is about instead your guidance for this year. You stated about margins in line with medium-term. Could you elaborate a little bit more on these? And then finally, I saw that your payable ratio was extremely low, so it's extremely efficient. I would like to better understand if this is sustainable or not? And then still about CapEx. CapEx were EUR 8 million, EUR 9 million, if I am not wrong, just to double check your assumption for the full year?

So industrial projects. Industrial project is an important block of the efficiencies that we see in 2023. In the industrial plan, and we are absolutely at the moment that we prefer to be in line with the original estimates as -- despite, as I mentioned, we see faster opportunities because there is an additional number of our colleagues that wants to get within the opportunity to, let's say, access to the factory. As you know, we have 2 reindustrialization projects, one with [Ariston Thermo] and the other one with [Filani ]. So without losing, I would say, if any of salary but getting an incentive, they change work, and they see an opportunity. Now this is also the way we manage our plan. Voluntary, but with a lot of opportunity. So what we see and what we have already discussed is that the industrial relocation project itself is worth 1 point of operating margin year-on-year. So we will start the first of January, hopefully before the year-on-year effect is this one. On top, we see the opportunity of another 0.5% coming from the completion of the complexity project which was a long path of 3 years. This year, we have seen part of the benefit. Next year, we will see the full completion of the project. So a range that will be reduced of almost 40% of the SKU with an important advantage in terms of platforms, in terms of organization costs, in terms of opportunity to optimize the cost of the negotiation with the suppliers, but also the net working capital. The 3 of them already summed up to, let's say, the current consensus without taking into account the 6.5%, bring our 2023 opportunity above 7%. The rest is to be written. From a side, we will be facing a market that is not anymore the market of 2021. Where if you did less than 10%, you are losing an opportunity. So for sure, we will have to be more efficient in -- and to continue to be as efficient as we are today in growing sales. But on the other side, we see opportunity here coming from our growing market share that we remain and also trend that, I agree with what I listened during the Whirlpool conference, it's probably supposed to be no longer but short. So it will not affect too much the growing estimates for 2023 and 2024. On the other side, we have opportunities because the motor division is going faster. And again, we have the new products that will be launched in the mid of 2023, so the combo. But again, this isn't on top. But the best -- the most important opportunity that I see, even if it's not this probably the proper moment to quantify, is the fact that this year, we are digesting. In the full year, we'll be almost EUR 50 million of raw material and, let's say, energy cost increase year-on-year. We were used to bring an average efficiency of 1%, 2% year-on-year on, let's say, a normal business here, so where nothing was basically happening. This year, considering that the raw materials, or at least some of the commodities that are important for us, turn their trends, invested their trend since April and May, we see an opportunity there that is a lot bigger than the 2%, 3%. For sure, this will create opportunity to improve our margins. But also in a moment in which, as I mentioned before, the market is not supposed to be particularly brilliant, an opportunity to invest in growth. I hope I gave you enough color to understand our point. Payables. Payables, here, what you can see in the efficiency of the payables is one of the reasons make us believe that our operating cash flow can only improve. So it's the positive effect of the reverse factoring project that we launched with a worldwide partner, Prime Revenue. And that is starting to pay back, meaning that we have created a platform in which our suppliers, especially the medium to small-sized one, can -- how can I say, discount their invoices in advance with rates that we negotiated with the power that is absolutely different with the one they have with their own bank. So that is making for them extremely convenient to join this, let's call it, network. On the other side, if I give you the rate and give you the tools, I ask you today. So the combination of these 2 is already visible in the, how can I say, in the efficiency of our payables, and it's supposed to improve through the year as more suppliers enter in this project and we cover from the [stackable] path that we have defined that we are working day by day to complete. Yes. Sorry, Alessandro. So in terms of CapEx, we -- basically we confirm our estimates to be in the region of EUR 22 million. So the second part of the year, there will be an additional, how much, EUR 14 million to do that, that we basically already placed. Again, product innovation, production capacity, motors, Mexico and some [indiscernible]

That would bring the transition...

Yes, yes. The important thing is that part of this investment will be also the introduction of the aspiration of production lines in America. Which is an opportunity because, again, we are doing well, and this is a product line that is still not hugely growing as it was in Europe starting from 2016, so we see it as an opportunity. We have a fantastic and efficient plant in Mexico, and we want to be the first to invade the American market with our NikolaTesla line.

Okay, clear. Just to add a couple on your point about, I mean, opportunities to margin increase in 2023 that it's around 1.5% in terms of total points. This is assuming, of course, top line that is at the same top line of this year.

This is -- I would say, yes. With revenue flat, with revenue, let's say, growing in a not dramatic way. Again, the 2 actions that I mentioned first are basically being executed. So it's just paid a time. Whatever will come as a plus or as a minus from the market trend, but we feel quite hedged considering the 2 channels and the motor division will be an additional opportunity to improve our margins or to further invest in the business where we see opportunity to grow or to go faster in a moment in which I believe a lot of competitors will have to care about their costs more than we have together. Promotional advertising, commercial or distribution initiatives, I mentioned.

Last point, our reverse factoring project, what was the impact in the first half of this positive factor, I would say?

It was in the region of EUR 5 million to EUR 6 million, I guess. It's visible, but it's, let's say, quite difficult to estimate punctually, considering the suppliers involvement in the hub and their average revenue, this is the ratio. So we expect this impact to be importantly higher by the end of the year.

Yes, we continue to work with the supplier to find additional opportunities on this path. It's a project that has started from the Elica S.p.A. then we extended to hold the trading company of the group, so to Mexico and to Poland. So now, we closed the agreement for the top supplier with a high level of turnover. We continue to work so the expectation is to have a double effect during the full year in respect to what we achieved in the [H1]

The next question is from Emanuele Negri of Mediobanca.

Yes. [my] 3 questions. The first one is on Aspiration Hobs. And I like to know what do you see in terms of trend, meaning that we have observed impressive growth rate in the next quarters -- in the last quarters, both in your increased penetration and both in the market. So what do you see in terms of next quarter? I mean, that they can increase a lot, again, both in terms of incidents and in term of market or there is a kind of full capacity to be achieved, and then it will moderate a bit? The second one is on the motor division in the difference between ventilation and heating. Can you just provide us with some color on the differences in trend, in the heating part of the motors and in the ventilation part of the motors? And the third one, if you can provide us some more details regarding your M&A strategy? What do you see both in the short term and in the medium and long term?

Can you just repeat the last question, please?

Yes. Yes. It was about the M&A, so what do you see in terms of targets, in terms of evolution? So what are you planning in terms of M&A for the next few quarters and also maybe in the longer term?

Okay. So Aspiration Hobs is growing in basically at the same rate since quarters. So we expect that the growth rate will be as it has been so far. What we see and it's been, how can I say, an anticyclical product from a demand perspective because even if we see the first 6 months of this year, what is happening with that segment is not comparable to the other sector, to the hood market, to the average appliances market. So we see only one limit that we are managing very well and that we have been managing very well so far, which is depending on the availability of electronic components. So as Stefania mentioned during her part of the presentation, in quarter 2, we grew more than our competitors. But if we had the full availability of whatever electronics we needed, we would have grown even more. So this constraint is the major constraints that remain from a supply chain perspective. And it's something that all of the producers have to manage on, I would say, a weekly or biweekly basis, if you are very good and very lucky also, I would say. So we see the opportunity to keep growing as we are growing so far, considering that we have quite a good visibility that we have been managing our supply chain -- electronic supply chain bottlenecks very well so far. Also, thanks to the fact that having a motor division in-house, so as component producer put us more closer to the supplier base also with more opportunity to get from a direct or an indirect supplier or even customers of our motor division, how can I say, the right network that we need to bring in-house the component that we need to keep producing and serving our customers. Modern ventilation. Of course, there are few different rates. So heating is growing massively. So for sure, it's driven by dynamics that are not the same of the one of the appliances world. So from a side, we are seeing in the first 6 months, and we see the trend growing in the same direction, growth in the region of 30%, basically, year-on-year. Now with the production capacity that we have timely invested in last year so that we can supply and that we'll be able to supply even better in the second part of the year when some of the investments we made will be running. Ventilation is growing at a rate of 6%, 7% I would say. So that again, represents, I would say, slightly more than the 50% of the sales. So we feel pretty hedged again from a market dynamic perspective, considering the very high rate of the heating part. For what concern M&A. M&A strategy is pretty clear. So in Europe, we need products because we are already leaving the segment we are in. We have the proper distribution. We have relations with customers, with definitely the key customers of Europe with the major kitchen makers, kitchen producers, kitchen studios in 30 years. And we have been\ efficient and well performing, I would say, looking at the number of sales force in all of the major countries. So the more products we have in our product portfolio, the more we have possibility to win and to grow, and this is something that we are investing. LHOV is a clear example, and it's real also. It's not a wish. And again, being NikolaTesla, being LHOV means being cooking. So the opportunity is to enlarge with other element of the kitchen, again, always around the cooking world our offer. We are looking for a company which can fulfill this product enlargement strategy that we have. Which is, I would say, profitable because we want to include to consolidate, not diluted business, and that represents a coherence in terms of products. So -- and brand positioning versus what is Elica today in Europe. So as soon as we found the company and assume there is a possibility, of course, to make a deal, we are ready to move on with the European M&A operation. You see in our net financial position. We have already discussed about cash, so there is absolutely a space for a sustainable acquisition in Europe. Same for what concern the U.S. In U.S., we have the same needs in terms of products. In U.S., the perception of Elica is a more premium brand which is perceived in Europe. We need product enlargement, we need distribution. So the more we are close to the final consumer, which is not really a [couchy] is the [chain] the more we have the opportunity to be visible. We have the size and we also bring back the value chain. So in the U.S., we are moving in 2 directions, products and distribution. We have, in Europe as well as in U.S., many [indiscernible] open. Of course, we are looking for the perfect levy or the perfect man. So it must be interacting with a very high positioning, beautiful and rich. Because we are, again, working to change completely the profitability of the company. So it makes sense to do it with somebody that we don't have to restructure for 5 years and then see some money. We see some opportunities. It's probably too early to discuss about timing, but this, for sure, is one of the focus that we have strongly taken into consideration while discussing about cash and while discussing about dividends, of course.

Just a quick follow-up, so just to be sure of something. Meaning that -- the EUR 3 million related to the acquisition of Airforce, are they included in the NSP for 30 June? Or are not included and they have to be expanded in the next few quarters?

No. No.

No. They have been paid, I guess, the first of July.

The first of July, according to closing. So it's not part of the net financial position end of June.

[Operator Instructions] Mr. Cocci, there are no more questions registered at this time.

Very good. So thanks for joining the call.

PThank you.

And talk you soon. Bye-bye.

Bye.