NewPrinces S.p.A. (NWL) Earnings Call Transcript & Summary

So good morning, everyone, and thank you for joining today's call on Newlat Food 2023 Full Year Results. I'm Benedetta Mastrolia, I'm the Investor Relator on Newlat Food. And joining me today to discuss our results are Angelo Mastrolia, our Chairman; Giuseppe Mastrolia, CEO and Chief Commercial Officer; Rocco Sergi, CFO; and Fabio Fazzari, Group Financial Director. Before commenting on our results, I would like to remind you that this presentation may contain specific statements that are neither reported financial results nor other historical information. Any forward-looking statements are based on Newlat's current expectations and assumptions of future events that are subject to various risks and uncertainties that could cause actual results to differ materially from those projected or implied by these statements. Now we're moving directly to Slide 7, where we have our financial highlights for the period. As usual, we're analyzing the key financial figures of -- for the period. In terms of revenues, we recorded revenues of EUR 793.3 million, which is an increase of 7% compared to last year's results. In particular, we had an increase in instant food, which is partially boosted by the acquisition of EM Foods. So the unit increased by almost 22%. We also had a very good increase in dairy led by the increase in sales of mascarpone and dairy grew by 14.3%. And we also had a very good performance of bakery, which grew by 13% in particular, thanks to new contracts signed in the private label and B2B businesses. In terms of geographies, we had an increase of 3.1% in Italy, almost 6% in Germany and an increase of almost 9% in the U.K. In particular, other countries increased by 24.7%. We had an increase in some of the -- our major other countries, which we'll see later on. Regarding EBITDA, we're looking at adjusted EBITDA as usual. So for the period, we recorded an adjusted EBITDA of EUR 72.4 million, which is an increase of almost 22% compared to last year's result of EUR 59.5 million. In terms of EBITDA margin, we had an EBITDA margin of 9.1%, which is a major improvement compared to last year's results of 8% and this kind of proves the recovery of margins, which was initiated by the end of 2022 and the beginning of 2023, with the commercial action that was taken to increase prices to work against the inflation that we experienced last year. In terms of EBIT, we had an increase of 55% with EBIT being EUR 31.3 million for the period. Net income was EUR 15.5 million, which is an increase of 135% compared to last year's result of EUR 6.6 million. Moving on to free cash flow. We had an underlying free cash flow, which is calculated as operating -- operating cash flow minus CapEx of EUR 20.8 million. And we would like to highlight that we had a very positive free cash flow despite a higher expenditure in CapEx of over EUR 25 million. In terms of net financial position, we had an increase in net debt in -- we're looking at net debt, excluding IFRS 16 going from EUR 63 million last year to EUR 29.5 million this year. If we do include the IFRS 16 lease liabilities, we had a net debt of EUR 74.3 million as opposed to EUR 109.8 million at the end of 2022. Moving on to the next page. We've pictured some of the major food companies in Europe and in the world. And we've looked at their EBITDA margin improvement for the period. And we are very happy to see that we've been the best among the ones analyzed here in terms of improvement in EBITDA margin as we had an improvement in EBITDA margin of 110 bps compared to the other companies, which were not as -- did not have as good performance as us in terms of increasing EBITDA margin. This is once again that the commercial actions and the relentless work that was done by our commercial team to increase prices and to keep our margins high as well as the -- from the procurement side in terms of procurement and purchase management was done in a very smooth way and helped us have a very good result in terms of the EBITDA margin. Moving on to the next page. We have the review for the year. I would say that 2023 was a year of consolidation in different aspects of the company. Firstly, it was the first year of having EM Foods as our company. EM Foods was integrated, integrated very efficiently in 2023 and the integration is still ongoing. But in the span of 1 year, we were able to strengthen our relationship with Unilever, which was already part of the existing company, but we've been able to strengthen our relationships. We will also have been able to launch our own brand in less than 6 months. So our Minuto brand has been listed in Edeka; Rewe, Markant in Germany. And our Minuto Shakers -- [indiscernible] shakers were listed in wages in Waitrose in the U.K., and we have more plans to come regarding Minuto in the next year. Moving along, we've had a very good year in terms of Italian pasta sales in Germany. I would like to note that 2023 was the second year without the Buitoni brand, but Delverde was -- performed even better than Buitoni. So the transition from one brand to another was smoothness and was perceived very well by the German public and we actually had an increase of almost 2,000 tons in 2023. So we had a record year of 44,722 tons recorded in 2023. Moving on to investments. 2023 was a very important year for investments. In particular, we had some major investments, including our IT systems. So our goal is to optimize and our IT systems across sites and countries in order to have more efficiencies in the long term. Regarding our investments in PPE, we had some important investments in machinery in the last quarter of the year, especially in the special foods plans. We even sold a new oven and we're also implementing the improvement on our production line of milk. This will increase our efficiency. We'll also increase our production capacity in the Special Food segment, setting us aside from the competition in terms of technology. And we've also had a very important investment in terms of logistics as we've bought a new warehouse in Germany, which is just a [indiscernible] to our German plant. Regarding marketing and sales, 2023 was a year of resetting our marketing and sales strategy. We've been able consolidate our existing positions in our reference markets as well as export markets. But we've also been able to put more work into our core brands so we've reset a 360-degree strategy in terms of marketing, which has been paying off very well in our core markets especially with our core brands, as we've had an increased social media presence. We've launched TV adverts, we've done line extensions, and we also work on some branded relaunches. Moving along to Naked. We've had a very good year for Naked. As you know, Naked is a brand we really believe in and we've been working with influencers in Italy and U.K. to raise awareness. We've also launched an e-commerce in Italy for the sale of the Naked parts and we've done different types of brand activations at events, universities, stores, where we've been presenting the products and we've done product tastings across different locations. And in general, we've been able to increase brand awareness in the U.K., in Italy and in Germany. Lastly, regarding M&A. As you know, we've stopped our negotiations with Princess last month, but we are really focused on our M&A as always. And we're also already considering for those years of 4 potential targets which have turnovers ranging between EUR 200 million and EUR 800 million in revenue. Moving on to our next slide, which is an overview of our ESG practice. We've had an extreme amount of work done in the last couple of years in improving our ESG stands and our ESG policies. In terms of environment, we've been able to reduce electricity output as well as water intensity, which is linked to some efficiencies that were put in place in the last years. We've been recognized for the third consecutive year as the most climate conscious Italian companies -- as one of the most Italian conscious companies by some important entities as well as sustainability leader again for the second consecutive year, and we've also been awarded different recognitions across this ESG -- across ESG. In terms of carbon intensity, we've also been able to decrease carbon intensity by 19% over the last few years, and we've also achieved more than 90% of waste to be either recycled or recovered across our sites. We've also increased our transport via train. So we've avoided at least 840 tons of CO2 emissions in 2023, and we expect to increase even more by using cargo by train in the next years. We've been extending our ISO 14001 certification to different sites. And moving on to social instead, we've been working with our R&D team to really work on innovation to be able to keep up with the different needs and specific dietary requirements of people. So we've had a unique plan-based formulas, high-protein and gluten-free lactose for new recipes. And we've had a lot of different new product developments being in place at the moment. In terms of generational change in the last few years, we've been able to increase our -- our weight of under 30 years of age people employed in the company. So we've increased by 27% our employees under 30 years. And we've also been able to engage with universities and schools talking about nutrition and food culture in general, especially in the Milk segment. Moving on to governance. So as you know, we have a very important Board of Directors with 3 women out of 7 Board of Directors. And in terms of governance, we've adopted group's ESG policy, and we've also shared a group's code of ethics. We will still publish our supplier's code of conduct, and we've implemented a whistleblowing system across all countries we are operating in. Now we're moving on to the commercial update. For this part, I will give the word to our CEO, Giuseppe Mastrolia, who will walk you through all the commercial actions that were taken in 2023. Thank you.

Hello. Good morning, everyone. So thanks, Benedetta. And so first of all, I'd like to introduce this year was a real important year for us in terms of product innovation and new goals, as Benedetta mentioned before. So starting from the bakery line expansion, we successfully extended our offer beyond the popular solid crouton in Italy and put everything under the Delverde brand and now we are hitting the market with the 3 new products that are snacks, on which the work of the market only in Italy is around EUR 10 million and these products are produced in our facility in [indiscernible] and this can bring substantial value projected around in only in Italy industry STUs worth of market is EUR 10 million. So we really look forward to the launch of these 3 new articles. Then in the dairy and the alternatives as we are launching a bulk campaign to rejuvenate our range of vegetable drinks, as you can see. And we are setting really ambitious goals for our mascarpone segment. Within this year, we aim to double our market share in Italy for the brand Optimus that you see in the presentation in tapping into a market that was approximately EUR 170 million only in Italy. And of course, we do not stop our international growth. Our brand Optimus is -- the objective is to increase from EUR 4 million revenue in Italy to EUR 6.5 million during this year trying to confirm and increase our share as second player in the market. Additionally, we are introducing Kefir, a national scale, showcasing our commitment to innovation in the Dairy segment. Then we have the noodles range launch. So going to our noodles. We are excited to launch our Naked and best-ever range in Italy and Germany for Q3 2024. the Italian noodles market is worth about EUR 100 million. In Germany, it's worth about EUR 300 million. And we already embraced in Italy, a growth last year, year-on-year value of plus 71%, and this positions us strongly in this competitive landscape. About the new product launches, I want to underline that we really merge the know-how between the new company EM Food and the Italian company Centrale del Latte d'Italia with the new products launched of pana cotta in [indiscernible] targeting the restaurant, ordering -- marketing this initially stands for the successful integration between Newlat and EM Foods, allowing us to offer this premium ready to use the self-preparation. Then protein products, I'm going to add something about that. Now we are launching 2 new product category related to our new product. We introduced new sports drink under the training brand and the protein enriched, the milk under the Mukki brand. I want to underline that the market in Italy this year worth EUR 350 million and in Germany worth EUR 762 million. And compound growth rate of this segment is established at 4.55%. So we see a great opportunity in this new segment. That's why we are focusing on these new products, okay? So we are trying to, of course, subsequent to support everything through our marketing activities focusing ourselves as much as possible on our online -- online communication using tools, AI generative new tools that we implemented in the company to make the work more flexible and easy to do. And then we are continuing to change new content and collaborating with the influencers and joint sector of the market. Okay? So one point about the new context that we closed this year. So we will be the first supplier of Amazon pasta and the expected volumes are 500 tons. And what is already committed from their side is a growth -- volume growth plus 50 per year for the next 3 years. We are really pleased that we were able to lease our pasta Delverde in Costco Canada, that means 108 stores. I remember that Costco is the second biggest retailer in the world after Walmart, then we are launching and we are enriching our collaboration with the group Superunie that accounts around 1,800 stores and the group's Salling group that represents [indiscernible] and the group in Denmark, and we will be our -- their supplier under their own brand of 22 new SKUs of pasta. Then we're developing in the new countries and new markets like the Middle East, North African market. As you can see some pictures of advertisement in Lebanon and in other countries like Dubai, some countries, Saudi Arabia, Iraq, Iran and so on. Then we have baby formula contracts, so new markets to be launched in 2024. And upon this, we are trying to be as strong as possible, creating extra studies on milk alternatives for milk powder for babies. For example, protein lentils-based milk. So trying to be always upon research and new innovation. This is the key of growth for us. Then if you can go to the next slide. So U.K. Naked performance, the reviews are increased, and we increased our market share product improvement that is passing from the old Naked to the new naked noodle best ever, [indiscernible] growth since the product improvement, and we will have -- we had already an October campaign, and we will repeat it in the next months on the U.K. market trying to establish our leadership in this segment of ready-to-eat noodles. We have of course, a strong marketing campaign and new product development launch in Q2 and Q3 of 2024, concerning new potential products like ramen or the products that we target a really interesting for the market. Okay? What's new about the Mug Shot campaign, Mug Shot is a really well-known brand for pasta product in the U.K. So you see that we have this campaign in January 2024 that is the strongest that we can have. So we reached 3.8 million consumers. We dropped in front of the door 100,000 consumers our product of Mug Shot and we keep new campaign, okay? So what is really important was already mentioned is that Germany is a year of record. So we were able to grow still with Delverde despite the -- the brand and the position of other retailers -- sorry, other possibilities around the market, we are still #2 growing compared with the first player and so we have a strong growth in Rewe, plus 15% year-on-year, little plus 31% year-on-year. And we are #1 pasta supplier at Edeka, more than our main competitor that is Barilla. Everything, of course, as I mentioned, is all based on Circana hierarchy data. So market share continues to grow in the pasta category, and we are in a leading position in Germany. What is really important is the new launch of the -- of the acquisition EM Foods that we performed in 2023, we were able to lease the product in Edeka, Rewe, Markant and plus other retailers and in U.K. in Waitrose supermarkets. So we are really willing to see what will be the outcome of this important listing that we have done in Germany, okay? Yes, as I mentioned before, strong growth. So Delverde growing 1.5% is the one that grows the most. The other two players are the other two Italian producers that are on the market that didn't had growth similar to ours. And even on the German pasta, we still confirm our -- to be the first player in the German pasta segment with positive market share improvement versus the competition. In the German pasta, this is even more obvious than the competitors, as you can see from the chart shown here in the presentation. So we -- the [indiscernible] pasta sales, we are around 44,000 tons or 44 million kilos sold on Delverde and almost the same quantity of Birkel [indiscernible] regular. And so with around 90,000 tons in Germany, we confirm that this was one of the most important year for the compounded growth rate of 5% every year.

So now we're moving to the sales breakdown and analysis for the year. Moving on to revenue highlights. As mentioned, we had an increase of 7% in terms of sales this year compared to last year. In particular, the last quarter of the year saw a slowdown compared to the initial part of the year for three main reasons: one being a higher promotional activity compared to 2022. The second being a very challenging comparison base as the 2022 results were affected by inflation. So we had an average price of products, which was higher than normal. And we also had a series of industrial investments, which we will see later on that were initiated mainly in the last quarter of the year. In general, however, we can say that 2023 was a year of strong commercial and marketing activities, which resulted in a very good performance for the year and which is also expected to benefit the sales recorded in 2024. In particular, as mentioned highlight that we had a total investment of EUR 25.2 million, which is almost EUR 10 million more than last year. And most of it was invested in PPE. And these investments are expected to reduce costs and improve efficiency in the medium term. In terms of main KPIs, we had an improvement in all the KPIs. So return on sales was 4.5%, return on investment 16% and return on equity in 10.5% as opposed to last year's results, which were lower. Moving on to revenue breakdown by business unit. We had an increase in most of the business units. As regards to pasta, we had a stable performance in terms of sales, which is the result of a combination of higher volumes but lower average price compared to the inflated price of 2022. In milk, we had an increase of 6.7%, which was partially thanks to higher volumes and also linked to higher sales price. In terms of Instant Foods, we had an increase of 22%, which is linked to the EM Foods acquisition. If we exclude that, we had an organic growth of 4%. This organic growth was mainly due to increase in products. So we launched new products in this segment, both in instant noodles and instant pasta and in the home baking category. We had an increase in marketing activities, which helped us improve our sales. And we've also been able to grow new markets in this category. In terms of bakery products, we had a growth of 13%, which is driven mainly by the sales of Crostino rusks and melba toasts, in particular by Crostino and rusks because we signed some important partnerships with the private label sector this year. In terms of dairy products, we had an increase of 14.3%, which was driven by Mascarpone as usual. The markets in which we grew the most in terms of the Mascarpone sales were Germany with 82% increase, France with 25% increase, Netherlands with a 22% increase and Canada with a 20% increase. It is important to highlight that we had a slowdown of sales in special products, which is due to the investments that were planned for the last quarter of the year, which partially halted production. These investments, which we will see later on, we will improve efficiency and increase our product offering. So we expect to have sort of a return to normal sales levels by the end of 2024 once all of the implementations are in place. Moving on to distribution channels. So the period was quite positive in terms of increase in the main distribution channels. We have increased, especially in the B2B partnerships, which is partially due to the acquisition of EM Foods. So for the products that we produce for B2B partners and we also had an increase in the private label and normal trade business. In particular, in regards to private label, we had said earlier, some new partnerships in Bakery and also in the Dairy segment. And for normal [indiscernible], we had an increase in the milk business. Moving on to breakdown by geography. So we had a positive trend in all our main geographies. In particular, the revenues in Pasta 1.3% as a result of higher sales volumes in pasta, milk and dairy as well as instant noodles. As Giuseppe mentioned earlier, we had an increase in the Naked sales by 71% year-on-year. So we had a particularly good performance in this segment. However, our result was set back by the decrease in special products sales, which was reported in the last quarter. In terms of Germany, we had an increase of almost 6%. This is mainly linked to the pasta that we saw earlier as well as the dairy increase, which we also saw earlier. And we've had overall a very good performance in this market for the period. In terms of United Kingdom, we had an increase of almost 9%, which is the combination of different factors, one being the instant noodles and instant pasta sector, which grew thanks to the commercial and marketing efforts that we put in place last year as well as an increase in the Pasta business. In terms of other countries, we had an increase of almost 25%. If we exclude the increase in France, which was 10% linked to EM Foods, we had a very good performance in some of the other countries, which I'm going to show here. So we grew some of our main export countries by 39%, for example, in the Netherlands. We grew Denmark by 35%. Canada also performed really well with an increase of 25%. Belgium also increased by 13% this year. And we've been really focusing on the Middle East and North African markets as well. So that proves the increase in sales of 12% for the period. And as I said, France was up by 10%, mainly due to the acquisition of EM Foods. Moving on to EBITDA breakdown by business units. So as you can be seen, we had a very good performance in terms of EBITDA this year. In terms of EBITDA margin, we reported an increase of 110 basis points, which brings us from 8% in EBITDA margin to 9.1% in EBITDA margin, which is along same levels of 2021 EBITDA. In general, we had an improvement in most of the business units aside from Instant Foods and Bakery, which had a slight decrease in the period, which is not major. Pasta was the business unit that performed the best. So we had an improvement of 410 basis points we went from 6% to 10.1%. This was done thanks to a better mix contribution and the signing of contracts that had a better setup compared to others. And we also had an overall better marginality as a result of our increase in prices. In terms of bakery, we maintained a double-digit EBITDA margin around 16.1%, even though it is slightly lower than last year, which was 17.3%. In terms of special products, although we did have a decrease in sales, we actually had an improvement in margins, which went to 15% from 12.2%. This is particularly thanks to some improvements in our contracts in the B2B productions of baby food. In general, we can say that it was a pretty good year in terms of marginality and the year-to-date results of EBITDA margin up until February 2024 is very much in line with the 2023 levels. So we've recorded an average EBITDA of 9.5%. Moving on to the investments, which we were talking about earlier in the Ozzano Taro plant for Special Foods. We've been really going through a transformation period in the plant so we want to set ourselves aside from competition. We want to be the main point of contact for specialized nutrition in Italy and in Europe. In particular, we've had some development and efficiency around in the pasta area, especially under the Delverde brand for high protein and [indiscernible] pasta as well as gluten-free pasta, which was launched in Germany last year. In terms of bakery, we are installing a new open line which will set us apart from the competition and which will enable us to have single portion packaging for both infant biscuits and breast substitutes. This is one of the most consistent projects that have been going on. In terms of milk, we had some new collaborations confirmed for next year, in particular with national and international clients. For example, hip in the organic segment and also lactose-free baby milk. In general, just wanted to give you an update on the contract that was signed for baby formula in 2020, where we had -- where we are having a very good performance and development of the contract, and we expect that it will come into full effect in the next year or so. We've also consolidated some partnerships that will start in 2024 with new clients in the Middle East. And we've also had some investments in the packaging lines, especially for the cap. So we are going to switch to the cap, which is anchored to the bottle to be in line with the new EU regulations. Moving on to the next slide. We have just an overview of the investment that was done in terms of logistics in Germany. So we acquired in the second half of 2023, a plant which is just next door to our existing Newlat GmBH plant, totaling to an area of 20,000 square meters. This plant is comprised of a warehouse and an office building. We are working on renovating the warehouse to make it completely automated. And this will help us save around 2 million of logistics in Germany because at the moment, we're storing some considerable amount of pallets of our products at a third-party warehouse. So this will really improve our management of stock of logistics, and we expect the payback period to be 4.5 years for this particular investment. Moving on to just a picture of the improvements, we've added some main KPIs for the period. So as we said earlier, we have had an improvement of EBITDA margin and revenues. Still we've had a constant improvement in revenues and particularly regarding EBITDA margin, although we had a decrease in EBITDA margin last year, we actually had an improvement this year, which brings us back to the same sort of level that was recorded in 2021, 2020. Moving on to our sort of net debt and CapEx picture. So we've had a, as I said, a pretty consistent, considerable increase in CapEx. However, this did not make our net debt or underlying free cash flow worse. Actually, we had a very good performance of both indicators and net debt was down as it can be seen on the chart below, we can see that net debt-to-EBITDA ratio actually went below 1. So we are back to being in a safer zone compared to last year. We also had an improvement in the gearing ratio, which is below 0.5. So we are at 0.37 for this year. So we can say that 2023 was a very good year in terms of risk management for the company and being -- putting us in a position of more comfort. Lastly, we can have a look at capital employed -- return on capital employed. So we had a very good performance this year, which brings us back to the initial levels that were recorded in 2019, although we did have a decrease in the last 3 years. We've actually been able to increase the return on capital employed and bring it back to 13.06%. Just briefly going over net working capital and cash conversion cycle. So this year, we've had a really good improvement in terms of net working capital. In particular, we were able to lower inventory levels, which last year were increased because of the increase in prices. So we used to stock up on raw materials and products in order to lock in lower prices. This year, we've been more flexible in this. So we kept our inventory lower. Also in terms of receivables and payables, we've been able to reduce those because of easier payment terms on both sides. In terms of cash conversion cycle, however, we still are in a position of negative cash conversion cycle, which means that we cash in before we cash out to suppliers. And in general, we've had a normalization of working capital compared to the 2022 result. Moving on to free cash flow. As we said earlier, free cash flow was EUR 20.8 million in 2023. However, we did have a very consistent amount of money spent into CapEx of around EUR 24.9 million. However, we've been able to have a very positive free cash flow, thanks to an extremely well position -- good position in the cash flow from operations, which was EUR 56.1 million. And this is, of course, thanks to the improvements that were done in terms of EBITDA. And in general, we've had very positive years in terms of working capital, as we said earlier. And this has made it possible for us to have a positive free cash flow and sort of underlying our operational model and financial help with these results. Moving on to the next -- to the last 2 slides. Some highlights on the current trading for 2024 for the first 2 months. So in the first 2 months of 2024, we had organic sales increase of 7% at group level. And in particular, we had some very good increases in milk by 10%, in dairy by 23%, bakery grew 5% compared to last year, instant noodles by 5% and pasta by 12%. So these are year-to-date year-on-year results. In general, in terms of revenues, we recorded revenues in the first 2 months of 2024 of EUR 135.7 million as opposed to EUR 126.7 million in 2023. In terms of EBITDA, we've been able to maintain the same EBITDA margin. However, we've been able to increase EBITDA to EUR 12.9 million as opposed to EUR 12 million last year. And EBITDA margin for the period was 9.5% as opposed to 9.4% in the first 2 months in 2023. If we take into account that usually the first 2 months of the year, particularly weak, we can say that these results have been particularly good and set the ground for a very good performance for the year. And this puts us in the perspective from a management point of view to be able to confirm that 2024 will have a very positive result. Moving on to the very last slide, which is the 2024 outlook. We have five main pillars that we will be working on in 2024 that we can confirm our commitment to. First one being the one I just said, which is positive organic growth. So we expect that all the work that has been done in the last year to improve our position in different markets, especially in some contracts that were already signed last year for the next year, will lay the ground for a very good performance in terms of organic growth. In terms of margins, as we just said, our margins are expected to be higher in terms of absolute terms compared to 2023, but keeping sort of a margin percentage stable compared to 2023. Although we have to take into account that 2024 will have a more of a deflationary effect compared to last year. In terms of innovation and investments, all the investments that we've done, which are not just the ones I showed earlier, but we have a lot of different industrial efficiency investments will help us have a positive contribution in the long -- in the medium term. As said earlier, we've had an increased exposure to exports so we expect to keep working on our exporting our products to increasing our exposure to international markets especially in the markets that have the most potential to grow in terms of consumption. So we've been really analyzing some key markets that we want to further develop this year. And then lastly, about M&A, as we just -- we said at the beginning, we are considering for targets at the moment. So we -- hopefully, we'll be able to show some the details -- sorry, later in the next months. So hopefully, we'll have some good news about some other deals that we are currently analyzing.

Now we move on to the Q&A. As usual, I would ask you to either unmute yourself and ask the questions or write it directly in the chat, and we can read it out for you and answer your questions. Thank you. So question from Arianna Terazzi.

Yes. In the chat, she is asking, could you please add more color on price list? What do you expect over the course of the 2024? Clarification on special products, update on the spare capacity also in light of the multi-country agreement and more color on the M&A. Okay, starting from the first one. I want to tell you that what we saw in the first quarter is still a stable situation. We grew by -- driven by volumes. But it's clear that if the situations linked to the inflation continue to follow the current trend that is a decreasing trend. Generally speaking, we expect to have a revision of the prices in the coming months. But at the same time, I remember you that our target is not linked to the price, but is linked to the profitability of the company. And in the current scenario, if the reduction of price will be linked to a reduction of cost -- of input costs, generally speaking, this is something that we can face really relish maintaining the level of the profitability of the company. About the special products this year, we faced a weak year due to the several actions that we made into the plant to make this plant more efficient and ready to increase also and to diversify more the production capacity also in terms of different specialty that we can produce there. And this because we have several opportunity also linked to a new contract, new customer to consolidate and to leverage these investments in the near future, starting from 2024. And in 2024, yes, we expect to have also a contribution from the multi-country contract that we started in the past year. It's clear that the investments that we made are not -- this is important to be clarified, are not simply investments linked maybe to the age of the machinery or to the age of the plant, that we invested to try to create a new and more important know-how inside the plan. We invested also in R&D to create new formulations, new products. And on this basis, we expect starting from 2024 and for the years to come to leverage these investments with a good improvement in this particular segment. In terms of the M&A, what I can share at this stage is that as usual, that this remains an area on which we are very focused. You know that we were involved in an important deal until February. In any case, we are already working on 4 different dossier. I can tell you that 2 of that are foreign potential acquisitions, while we have also 2 important dossier in Italy. At the moment, I don't want to share more -- are important because could allow us to diversify our portfolio of category and our industrial know-how. The size are very interesting. The biggest one is substantially close to our side, around EUR 800 million revenues. And I hope we can share something more very soon. But at this stage, we prefer to -- not to share additional detail for several reasons. Yes, there is Paola.

We have a few question. First of all, if you can comment on the CapEx projected for 2024. So what stage are you in your total plan for this additional CapEx and if this is going to be over by 2024? And also I was wondering because you mentioned some times in the past that part of the CapEx, you were thinking about additional CapEx, you were thinking about could have been financed by public subsidies, let's say exactly. So I was wondering if any of those or of the possible future ones could have this kind of contributions? Secondly, I wanted to have a bit more of color from you about the EM Foods relationship with Unilever. You said we have strengthened the relationship. So I was wondering if there is anything that you can share about your contract with them? And what's the contribution we can expect for 2024? And also on working capital. I was wondering if -- I mean, do you expect to maintain the good level you have reached or maybe use it as negotiating it with your suppliers or with your clients. So if there's anything we should be aware of looking to 2024 on this side?

Thank you, Paola. So about the CapEx, I have to say that this year, we reached the peak in terms of percentage of sales. We are a bit above 3%. And we expect, since we have still additional steps of the project that we started maybe to reduce the level around 2.5% in the next couple of years and then progressively to come back to below 2%. This because, for example, the automatic warehouse that we started in Germany is just in the first phase of the construction. So there are some investments that need additional CapEx also in the next years, but not at the peak level of this year. In terms of the public contributions, part of the Ozzano investments could be covered by these contributions. I don't have at this stage precise numbers to share, but part of that investments could be financed by the government contribution. Roughly speaking, we could be between EUR 1 million and EUR 1.5 million, roughly. About the EM Food and Unilever contract, what we wanting to highlight is the fact that we are developing and we are very happy about this. The relationship with Unilever at 360 degrees with new opportunity that we are developing also in other divisions of the group, like pasta, for example, we are speaking with them to develop additional projects that -- in pasta and in dairy, in particular, and also about the relationship that we have in France for EM Food. I have to say that nothing is going to change in the sense that we continue to produce for them all the productions that we had in 2023. And there are no issue in terms of the relationship with them about the new launch that we made in Germany about the Minuto products. So we are not fighting for competition, just to be very clear, but we are, on the other side, working to increase the collaborations, the partnership that we have also for other sectors. In terms of EM Food, we are very happy. We work a lot to integrate the company. We plan the new system, a good connection with Germany, also helped by the fact that this distance is low in terms of kilometers. There is a lot of collaborations with the commercial guy of the German division, and we are very happy for this first step that could count around, roughly speaking, 2,000 tons of production, but this is just the starting point for the business that we have in mind to develop not only in Germany, but also in the U.K., where we start with the first orders for that market and why not maybe also in Italy for some products. So we have a good view about the potential future of EM Food in terms of own brands, not only in terms of B2B or private label productions. We enter also, for example, in retailer, an important retailer in France. So we are doing a very important job in terms of business development for this area. In terms of net working capital this year, we reached an improvement. But our idea is that starting from 2024, net working capital need to become, again, a positive contributor for the free cash flow generation. And we are absolutely confident that this will happen this year. So we expect to have as it was in the past, the EUR 5 million, EUR 7 million positive contribution from the working capital and not even if very small, a negative contribution in terms of cash absorption. So this is the expectations that we have.

Just a clarification, when you said the 3% incidence of CapEx on revenues, you were referring to 2023? So the baseline of 2023?

Yes. I was referring to 2023. It was 24.7%. So close to EUR 25 million versus the revenues we are at the peak of the historical trend of CapEx.

[Operator Instructions] Maybe we can wait a couple of minutes to see if something comes up.

In any case, if you have follow-up tomorrow and on Thursday, we will be in Milano in the STAR conference, and it will be a pleasure to answer personally your question.

Okay. So thanks, everyone and thanks for joining and see you next time. Thanks a lot. Bye-bye.

Thank you. Bye-bye.

Thank you very much.