Fiera Milano S.p.A. (FM) Earnings Call Transcript & Summary

[Audio Gap] You have received the presentation. I'd like to focus the fact that -- on the second page of the presentation, I'd like to focus on the fact that we have worked hard on replanning an important series of events in the second part of the year, mainly in the fourth quarter, given the fact that we are now allowed to do event and we hope to continue to be on that path for the second part of the year. We are almost -- and we are having in the pipeline almost 30 exhibition in H2. And you can see that out of these 30, the most -- the vast majority will be in the fourth quarter. We have been able to test the market in July with a couple of reported events, Si Sposaitalia and Milano Unica, each, despite clearly the virus and the situation, have achieved an important result in terms of launching and our markets reopening and recreating the momentum in the city. And at the same time, if you look at the results of the participants, they are not -- clearly, they are below the previous year or the normal -- or say, the current trade, so the one that was achieved before, call it, but they are clearly stronger in terms of results compared to the pandemic situation. And this has been a very good signal for taking the market in the pace at the beginning of the second part of the year. So I'd like to focus also on the presentation on Page 6 on the fact that we have worked a lot, especially with government institution, to create the framework of, let's say, healthy and safe events in the second part of the year. So we have created all the rules and protocols, which are going to be used to grant a safe environment for the exhibition. And as we -- just in the previous days, we have signed another agreement with the authorities in Rome related to the protocol, the Green Pass utilization. And we are now developing with all the exhibitors and organization of events, the -- let's say, strict appliance of application of these kind of products that have been created which is really an important path, especially because the market has to perceive the fact that the events are going to be held in a safe environment. On the -- just to mention again on financials, clearly, we are sitting on a pretty strong financial position because we have roughly EUR 90 million of medium-term loan, EUR 75 million of credit line that we can use to manage our business to get out of the shutdown, lockdown period, which has been clearly an important package that we have used in a prudent and accurate way during the previous 6 months. One of the focus on the period, which is going to be one of the main important enabler of the CONN.E.C.T. plan and for which we are already focusing our attention is still the sustainability. We put sustainability at the center of our development plan. As you can see, we have achieved a number -- significant number of already -- of, let's say, success in that range. One of the main one is the certification that we have obtained on the ISO 20121:2013 certification that is going to set basically the sustainability management system for the events. We have developed the purpose and mission, the corporate values and the materiality matrix of Fiera Milano. At the same time, we have launched, taking care of people, the Fiera Milano Education plan for which we took also the opportunity to get an advantage from the funded plan of this training framework. We got an important recognition for which we have been ranked first in the 21 Integrated Governance Index among the extra top 100 companies listed on the Italian market, which has been a success. We're going to do much more on sustainability with our team, and we are going to create a framework of project in the second part of the year to define an integrated approach and to create sort of KPIs list of which are the main points that we do consider sustainable index for Fiera Milano. And this significant lift of KPIs are going to be the trajectory for where we want to go and where we want to be in the medium term. So positioning a strong type of action, which are going to integrate the one that we have already developed into the plan -- CONN.E.C.T. plan. So there's going to be a further announcement of sustainability because we do believe that it's going to be the success for our events in the future. If we go to the business outlook, which is in Page 18 of the presentation. As we have discussed, we do have an important path and, let's say, framework for event planned for the fourth quarter. At the same time, we have to recognize that despite all the -- most of this -- the vast majority of this event has been able to be replaced and managed to be planned by quarter. We have a reduction in terms of profitability of the event, given the fact that most of them are going to use less space or less services or there is less investment. The players are still -- the exhibitor are still very careful about what's going on. And therefore, we are going to think that our profit in the end of 2021 is going to be reduced compared to our expectation. Our range of EBITDA IFRS adjusted is going to sit in between EUR 24 million and EUR 28 million, which is lower than the previous announcement that we're seeing EBITDA projected in between EUR 35 million to EUR 45 million. This is the result clearly of the reduced turnover, which is going to be set for the year-end to a value of EUR 130 million, EUR 140 million compared to EUR 160 million, EUR 180 million that was in our previous announcement. This is the profit adjustment that we are just discussing. But despite, I would like to stress the fact that despite the reduction expected in the profitability and the EBITDA at year-end, we are still in a very good position because I believe that the fact that having a strong pipeline of events in the fourth quarter, it's a clear synergy of the -- that the restart is in the right path and that we are on the right track then to confirm the events and the financial position in 2022. The last point that I would like to highlight in on the financial is the net financial position of the company, which is going to be set still on a value of a range between EUR 24 million and EUR 28 million. And it's a very good expectation set for year-end because this means that in the worst year of the pandemic situation -- because I'd like to stress the fact that 2021 is much worse than 2020 in terms of business development for us. The fact that our net financial position is sitting at the same level as the previous year is a very good signal because it means that we will be able to finance ourselves without incurring any further debt going through the worst years in terms of business expectation. It's very important to realize that 2021, despite the period of opening, is longer than the one in 2020. In reality, in 2020, we're coming -- getting the advantage of the flow of the business, which was already planned occurred between year-end '19 and the first year of the 2020. So it's true that we are going to be open by -- now we are open effectively from a business perspective since July, but there is a lot of, let's say, complexity in getting up the business and ramping up the business, replanning events, taking the exhibitors on track and the organizations still on track on the business pipeline. So that's why I'm more looking to see on the fact that 2021 is a very difficult year for the industry and being able to get out of this with the same financial position, I believe, is a strong commitment. I don't have further comments to comment specific from our side. I think that is quite a good feature of the business of what we did and what we are going to do. And happy -- we are happy to get with Pietro and the team -- the Investor Relations team your Q&A session.

[Operator Instructions] The first question is from Emanuele Gallazzi with Equita.

Three questions from my side. The first one is on the new guidance. Can you just provide us more details on the assumption of this guidance, I mean just in terms of square meters, for example, and the reason of the revision in particular at the EBITDA level? The second one is still on the guidance. I was wondering what is included in the guidance, I mean, in terms of grants or rent cut, just to understand and to be clear. And the last one is on the medium-term evolution of the business. If you can just share with us your view on 2022, considering this lower-than-expecting assumption of the business this year.

Okay. Thanks, Emanuele. We'll try to answer your question in order. I'll start from the first one, the assumption about square meter. I just can give you a couple of figures. I think that the budget 2021, the one that was forecasting the start of events from September, so which is 1 of the 2 assumption that we are willing to compare the results, was sitting off -- on a level of 900,000 roughly square meters sold. And in our forecast at year-end, we are thinking to reshape the number seasonal level of EUR 633 million -- EUR 630 million, let's say, which is basically the result of the -- what I was describing before, a very deep and comprehensive list of events, almost 30, but with a reduction in terms of square meter used or profitability and services. Clearly, it just also take the opportunity that the square meter is still one of our type in terms of guidance, but we need to avoid the business thinking out of the box and out of square meters because service is going to be one of the element that is going to contemplate from 2022 going forward our revenue pipeline as well. So just to solicit that kind of assessment as well. I think that I give you -- this is also to give you further information. If you think that 1 of our events is running, if you take the Salone, is running actually at 30% of the -- in terms of capacity compared to the -- what we know is a well-known event, which is normally held in terms of when say -- on an annual basis, on a recurring basis, in a normal time, we are running at 30%. Overall, you can set your minds that the events in this period is running in the range of 50% of the previous capacity. So this is clearly also, I think, answering to a portion the third question, which was what was the....

Medium term evolution.

Yes. No, what was impacting the driver of the reduction of revenue. If you deep dive on that, I can tell you that compared to budget 2021, we have a strong reduction, which is coming from the Salone del Mobile event in the range of EUR 20 million. And then the other important events are sitting at a lower trend as well, which is fairly indicated a strong seeking out because it means that the market is revamping. The market needs to be there as well. Everybody doesn't want to cancel the event, but they want to start as quick as possible. There is a bit of conservative approach on the exhibitor side, but also on the organization side, sorry, that is mainly into the security measure, how many people were able to bring the events and kind of approach because it's more also in the human being to get out of this uncertain period. And this is why all the exhibitor are pretty much conservative now on planning the size of their event. This is -- I think moving on into the second -- one of your question, which is the expectation for 2022. Clearly, we are going to go through the budget process starting September after holidays. So we are not yet there with the numbers. But I think that we will have a clear figure of where we are growing -- the ratio is good, and I said that we have 30 events squeezed in the calendar into the fourth quarter is a clear, again, evidence, signal of the market. And we don't have today any kind of signals that 2022 is going to be impacted or affected compared to our expectation. Our plan was already taken into consideration that the growth from 2022 onwards would have been with the same kind of events, but with the right scale and measure and with the shape in terms of scale, so it's already embedded in our plan.

Just a clarification on still the guidance. Does it include the grants or rent cut because in the previous one there were something like EUR 10 million of grants included in the guidance? And just to double check with you.

We are still including the cost control measurement, which include as a major one eventually reduction or discount on the rent, which is still ongoing in terms of negotiation with the shareholders.

[Operator Instructions] Gentlemen, there are no more questions registered at this time. Gentlemen, would you like to add any final comments to conclude the conference?

If there are no further question, Pietro, do you like to close?

Yes. In this case, we thank you for participating, and we close this conference call. Thank you very much.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.