Orsero S.p.A. (ORS) Earnings Call Transcript & Summary

Good morning, everyone. I'm the conference operator. Thanks for being here and welcome to the Orsero Group webcall covering first half 2026 results. Everyone is connected in listen-only mode, and a Q&A session will follow the presentation. Right now, I'll hand things over to Mr. Paolo Prudenziati, Chairman of Orsero. Sir, the floor is yours.

Hello, and good morning to everyone. There are a few points I'd like to cover before handing things over to Matteo, who will walk through the numbers. Our press release states that we're satisfied, and I want to emphasize this a bit—why our satisfaction is reasonable—and touch on a few items. Even with the conditions in the market, particularly in the banana and pine business, we can reaffirm our full-year guidance at the midpoint of the year, which is fairly uncommon given what the banana business has faced this year—it resembles a perfect storm. Most of our competitors that are more heavily exposed to bananas are reporting half the profits, or at times even losses. In our situation, thanks to our strategy, we can confirm the company's guidance overall. Next, on the subject of our growth strategy: we've consistently stated that it rests on two pillars. The first is organic growth, and the second is M&A. Regarding organic growth, we've often noted between the lines that we aim to emphasize expansion of value-added products. Once again this year, there's something new, such as lychee importation from Madagascar before the year is out, which we see as a clear link between our organic growth strategy and what we're doing.

The second item is this year's most significant investment—the purchase of a key player in the U.S. market for the company, as you're aware. That's especially meaningful and a particular source of satisfaction for us, since we genuinely believe the U.S. market will, within a few years, turn into a major pillar of our business, on top of the Southern European markets. It's a particular point of satisfaction for us to have located the right company, the right people, and the right positioning for this. Third, the company has been delivering—and this may come through between the lines, but I think it matters—consistent growth in its results for several years now. If you consider what has happened across the last 5, 6 years worldwide from every angle, this company has kept growing and growing and growing. That's another reason for rational satisfaction. Last but not least, we're also glad to confirm that what we communicate and what we say always matches what we execute. I think that matters to the market. Now, I'll hand things over to Matteo to continue.

Thank you, Paolo, and good morning, everyone. I appreciate you being on the call. I'll share some background on the business, what happened on the corporate side during the first half, and the key figures, and after that I'll leave the remaining time for the Q&A session. As Paolo mentioned, the market environment during the first 6 months of the year — particularly starting in February — was quite challenging, largely because of the external factor impacting the overall market conditions in Europe. We're referring primarily to the Middle East conflict, which is still ongoing, and we don't see a fast resolution to the current situation. Against that backdrop, the inflation rate — driven mainly by factors such as the oil price — is still running. Our company and our business model can adapt to the situation; we're able to raise our pricing in light of the market context and the external factor. What matters most is that our strategy is very strong on the product mix. It's important to note that during this first 6 months, we achieved 10% growth on the value-added product, while staple goods such as bananas, plátano canario, and pineapple are struggling, mainly because of what's tied to the confusion and the oversupply in the European market, driven by the fact that many volumes historically allocated to the Middle East, coming from our same origin — Central America basically — are being diverted to Europe.

During spring and summer, what typically happens is the business can raise pricing and value, especially in the spring period, but this year the oversupply tied to the Middle East conflict put stress on the market's supply-demand situation. We weren't able, let's say, to transfer the value to the category, and this is happening for everybody. That situation is continuing through the summer, and we hope the market will now adjust and the supply-demand dynamic will return to a pretty normal situation. In the shipping business, we see resilience thanks to our integration. We managed to keep the pace on the shipping business, and the results are well in line with our expectation and with last year. Actually it's slightly over our expectations, and we're happy about that. Turning to the main corporate issues of the first half, as Paolo said, we have to note the strategic investment we made in Trucco Group. We acquired 45% of the company. We're still waiting for some authorization to complete the deal on a smaller part of the group, but the main part of the group is already an investment for us.

The overall investment came to roughly $46.5 million, and we're quite eager and are already at work on building out our strategy for the U.S. market. As for the rest of the capex in the period, the operative capex, those are largely consistent with what we expected, though in the first half we saw some chance to grow our business going forward. So we chose to put in a bit more, chiefly tied to developing the platform in the North of Spain, along with other operative investment across the group's infrastructure. Looking at where interest rates stand right now, we're in a really strong position, since 75% of our long-term debt is hedged. At present it's 60%, but a 75% share is already covered starting from December 2026. That's very good news given where the interest rate curves sit over the medium-long term. Turning to the headline figures, our sales rose 1.8%, coming to €860.5 million. Adjusted EBITDA fell by nearly 5.8%, landing at €45.6 million, which is still a very solid result on profitability considering our business, our sector, our competitors, and the market backdrop. Adjusted EBITDA comes to €26.5 million, and adjusted net profit hit €18.6 million, down 11% versus last year.

Our net financial position rose to €142.4 million, up from €116.1 million at the close of last year. The main driver here is the Trucco acquisition, which closed on the 30th of June, and its full effect is already reflected in these first-half figures. As we mentioned, on the sales side, distribution was up 1.6%, or €12.6 million, while shipping added €1.4 million. Everything else is negligible. The primary driver is the added-value product mix, which posted 10% growth in the period, though we do face some challenges, as noted, in the banana, pineapple, and plátano canario business. On EBITDA, shipping matches last year. Holding and services carries a slightly higher cost base, up €0.9 million, and the biggest impact comes from distribution, which fell €2.2 million versus last year. From a business standpoint, the key reason for this situation is how the staple goods performed. We recorded higher operative costs and SG&As, and that's largely tied to the company now being structured for growth, while the performance of certain products didn't let us cover the added cost.

This is something we anticipated, had forecasted, and it remains under control — and it will produce growth in the years ahead. Turning to net profit: adjusted net profit for H1 2025 came in at €20.9 million, and at this point we're at €18.6 million. The primary variance stems from adjusted EBITDA declining by €2.8 million. Amortization, provisions, and D&A were higher because of investments made in the past. Financial performance and the share of profit from our not-consolidated companies were better. Just as a reminder and for your guidance, as of the end of June we are not including any value of Trucco in our figures; that will be reflected in the second half of the year and beyond. Those are the main items, so to speak. Bridging adjusted net profit to the reported figure: this year non-recurring costs are slightly higher. The biggest ones are legal and due diligence costs tied to the Trucco acquisition, a bit above 600k; a tax assessment litigation in Italy, which contributes almost 940k; and other items of roughly €1 million, mostly non-recurring costs for chartering additional vessels on our call come service early in the year.

Turning to net equity variance, net equity came in at €278.6 million. Compared with the end of last year, the key variances are the period's net profit of €14.6 million; the dividend paid to the Orsero shareholder in May, amounting to €10.4 million; third-party dividend payouts, mainly tied to the Blampin family's stake in Blampin in France; and the remainder is fairly negligible. Moving to net financial position, the period's biggest impact stems from the Trucco acquisition, which contributes €38.2 million. We saw strong cash flow generation of €26.5 million, a healthy working capital release of €5 million, operating capex of €6.5 million, expansion capex of €6.8 million, the cash dividend paid to the Orsero shareholder of €8.5 million, and the mark-to-market change effect on the hedging instruments. Net financial position excluding IFRS 16 stood at €77.2 million, and then there's the IFRS 16 effect, which adds €65.1 million. My final words before handing over for the Q&A session concern the guidance. We've chosen to reaffirm the guidance's economic metrics — net sales, adjusted EBITDA, and adjusted net profit are all confirmed, with no variance there.

Right now, we lack the visibility needed to raise our guidance, and we believe the guidance issued in February remains solid given the environment we're operating in. What we clearly chose to do is update the capex and the net financial position, raising the capex we had forecast at the start of the year between €14 and €16 million. We now see a range of €19 to €20 million, and the reasons will become clear in the next few minutes. Then, of course, the net financial position accounts for the Trucco investment, the higher capex we're seeing toward year-end, and a working capital effect tied to the new lychee importation campaign from Madagascar. Breaking down the net financial position in our new guidance, we used, let's say, the lower end of our range. At the start of the year, we forecast the net financial position excluding the IFRS 16 impact between €37 and €42 million, and we're bridging from €37 million. We add €38.2 related to the Trucco acquisition. We have extra capex of €4.8 million, of which €4 relates to new expansion initiatives. Prudentially, we're factoring in a €10 million working capital impact related to the Madagascar lychee campaign.

This campaign is, let's say, quite unique. Typically, sales for the campaign are built up mostly over December. The cash from the campaign will show up in Q1 — January, February, early February 2027. This campaign runs on meaningful advances paid to growers. The working capital effect we're seeing at year-end has a very straightforward cause: we pay growers ahead of time to back the campaign in December, let's say from late October through December. Fruit arrives at the start of December. Sales happen across December and the first 2 weeks of January, and then of course the client settles with us, on average, within 30 to 40 days. That explains why there's an advances impact, yet at year-end we still don't see the cash from sales. Beyond that, the other impact is €5 million, which we view as making up the total working capital change, excluding the lychee we've already broken out, plus some non-recurring costs we've already discussed: acquisition-related cost, tax litigation in Italy, and the non-recurring vessel hiring. Our updated guidance for net financial position excluding IFRS 16 sits between €95 and €100 million, and taking IFRS 16 into account, moving from €102 and €107 million, which we released in February 2026, we now forecast a range of €160 to €165.

I'll now hand over the remaining time to you for the Q&A session. Thank you so much.

Thanks. We’re going to start the question-and-answer portion now. If you’d like to ask a question, click the Q&A icon located on the left-hand side of your screen to join the queue. Once you’re announced, click continue in the pop-up window. If you’re joined by audio only, press * and 1 on your phone. Our first question comes from Gabriele Berti at Intesa Sanpaolo.

Good morning, everyone, and thanks for the presentation. I'll begin with a few questions about Trucco. Could you help us get a handle on the group's historical growth profile, its cash generation profile, and what contribution to profit share we should expect? Then, what potential commercial synergies do you anticipate, if any — I'm thinking about efficiency on sourcing, for instance? Specifically, should we expect Orsero to be directly involved in sourcing, in commercial strategy, or in investment decisions, or will the business stay highly autonomous? Finally, I was wondering whether the €38 million M&A impact on net financial position already includes the A.J. Trucco transaction as well.

Good morning, and thank you, Gabriele, for that question. Trucco. What we saw during due diligence is a company that expanded over the last 3, 4 years — I'd say massively — largely on the strength of the product mix it trades. Kiwi importation is a real strength for them. Blueberries are a real strength. Chestnuts are a real strength, and they have some solid business with citrus as well. The U.S. market is quite different from the one we have in the South of Europe. Typically, companies there are more category killers than we are. In Italy, we're more generalist. We trade many, many, many different products. In the United States, it's closer to a market like France or Germany, where you have, let's say, big retailers; the market is wide and enormous, but retailer concentration there is pretty high as well. There are still some regional players, but the main ones are, let's say, national or clubs. Given the structure of the market, the most successful companies are those able to be super expert and category killer on 2, 3, 4 business lines. Trucco's strategy was dedicated to certain products that are now booming in the U.S.

When you look at the market, clearly growth over the last few years has been really strong. We expect the company to expand substantially on an organic basis over the coming years, but the rationale behind this investment and the strategy driving it is to replicate what we've done in Europe. The aim is to combine the organic growth we see, which is stronger than what we can achieve in Europe right now, with growth through M&A as well — selective M&A, because the United States is a huge country. The East Coast and the West Coast are two entirely different worlds. At present, the company is concentrated on the East Coast, which accounts for 50, 54, 55% of the U.S. population, served from the warehouse that Trucco runs in New Jersey. That's very good coverage, but if you want to grow and reach, say, 80% of the population, we'll have to make a decision to move West or to add distribution capacity over the years ahead. The thinking there is obviously to support and capture the organic growth — the powerful organic growth we're already seeing at the company — while blending in some external growth too, just as we did in Europe during the past year. That's actually the very reason this acquisition is truly a partnership: the intention of both shareholders — even though we're now the minority holder and in 3 years we'll become the majority holder — is, in any case, very clear, and the right word to use is growth, and growth that is sustainable and financially healthy.

As you can imagine, from a profit standpoint, this business has done well historically, continues to do well, and possesses everything needed to keep doing well. Potentially, in our view, this company is more profitable than the blended mix of our group, and that is the approach we take each time we choose to make an acquisition. We followed it in France — Blampin and Capexo deliver higher profitability than the group mix. Our strategy around value-added products and the prospect market is very clear. What we want to acquire is a business with greater room for organic growth, one where we view the market as a core potential market for the group, and where the product mix is very healthy and more profitable than the mix we currently have. That is the only recipe available to us for driving rapid growth that is also highly profitable. On the financial side, Trucco has no — let's say — net financial position; as we stated in our press release, it is always cash positive and produces a very good cash yield. That cash yield is very comparable to our distribution performance, and the business dynamic is much the same.

Naturally, since it’s more profitable, the cash that gets generated can be larger, but the way the business works is truly similar to our distribution business. That’s roughly what I can tell you right now regarding Trucco. You asked whether we’re active in Trucco’s governance and management. The answer is yes — Raffaella Orsero and I joined the board; we came onto the company’s board. Beyond the board, so to speak, we’re collaborating closely with Nick Pacia and his team, and with the board, to grow the business. It’s very clear this is a partnership: we keep working side by side to find opportunities and to support the company’s growth with our structure, our strength, and our know-how. What we’re seeing is that, obviously, we share some partners, so to speak, with Trucco. We have some opportunity because certain of our production partners in Central South America want to collaborate with the group and with Trucco as well in the North American territory. Overall, we see major opportunities. We’re working very well alongside Trucco, and we are active in governance. It’s very clear that we’re eager to keep Trucco’s leadership as it is.

Nick Pacia is definitely staying on as CEO, since for the coming years we simply don't see a better person to lead us in the U.S. market. That's pretty much where things stand.

Thanks a lot, Matteo.

Our following question comes from Mathias Paladino over at TP ICAP.