EPRO-B.STEPRO-B.STSTO
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Jacob Broberg: Good morning, and welcome to Electrolux Professional Group Q4 and full year results presentation. My name is Jacob Broberg. I'm heading up Investor Relations and Corporate Communication. And with me, as always, I have Fabio Zarpellon, our CFO; and Alberto Zanata, our CEO. And I hand over to you, Alberto, please.
Alberto Zanata: Thank you, Jacob, and morning to everybody. And before starting the usual presentation, let me add a comment because I'm sure that you already saw the announcement that was posted yesterday night, where it has been announced that Paolo Schira, the current President of the Laundry business is stepping up and has been appointed as my successor following the decision to retire. Everything has to come to an end. And after the year that I spent in this company, I think it is the right time to hand over the baton to a person that I've been working with for many, many years and that have been instrumental together with all the colleagues in the group management to build the company for what it is today. So I'm very happy that he's taking over this responsibility. I'm confident that together with the team, he will build an even stronger Electrolux professional organization. With this said, I would move on. And before commenting the quarter, let me spend a couple of words on the year because clearly, we closed also the year, not only the Q4. And the year has been another year characterized by uncertainty and geopolitical and macroeconomical headwinds. They have been very significant these headwinds, in particular, for what currency and tariffs are concerned, but also for the indirect effect of currency and tariffs with the business in the U.S. and in China. Despite all these headwinds, we have been able to deliver another year with a profitable growth. We improved organic sales. We improved the profitability. We improved margin, and we took down the ratio between net debt and EBITDA to 1%. So another year in the -- along the path to deliver the result that we all expect to deliver. But you know what, more than the result in itself, I believe this year is characterized by the fact that while performing, we continue to transform and invest for transforming this organization. We continue to invest in R&D starting to bring to market some of the products that we have been developing for years, starting with the cooking lines during Q1. And then even more important during the summer, we will start to bring to market again new cooking product, but also the first batch of the laundry machine that are part of the big program that will revolutionize the portfolio of laundry. We also continue to invest to grow the business in North America and with the chains acquiring Royal Range. It is a small company, but it is an important step, an important add-on to our organization because of the product portfolio, because of the margin and because of the kind of customers that they are currently serving. And last but not least, the third big pillar of the transformation that was significant in 2025 is the efficiency program that we launched in September, a program that is progressing very well, a program that is expected to generate significant savings already this year, but even more next year, a program that will redesign our footprint, concentrating the production of 2 factories into others that will generate efficiency, productivities and [ there's ] a consequent benefit both for the organization and the P&L, but also a program that is allowing us to upskill the organization to make sure that we get people into the organization that are more focus on the front end because that is the shift that we want to have in 2026 to move from back to front to start using all the things that we have been developing during the years to grow sales and win the preference of the customer in the market. With this said, we move to the quarter. And in summary, I would say that the quarter -- we closed the quarter with a strong growth of the margin despite all the headwinds that we had to face. Just to quantify, we are talking about 1.3 percentage point that is the negative impact of currency, in particular, currency in the quarter. So quite significant about that. In the numbers, we also include the SEK 10 million of the acquisition cost. So if you look at the underlying profitability, it's even stronger than what it is -- what you see on papers. The quarter has declining organic growth. But let me see that inside of this one, the decline comes mainly from the U.S. food and beverage market that has been weakening just after the summer, after being very strong in the first part of the year has been weakening during the summer, is coming from Japan that is still a weak market. And in some way, we had also declining sales in North America Laundry, and we will comment later. But in reality, the big business for food and beverage have been growing. We have been growing in Europe. We have been growing in -- excluding Japan in the other Asian market. And Laundry has been growing in general, excluding the United States and Asia in that case. That is again Japan. So, a good quarter, a quarter also solid in term of cash flow and that gave us the possibility to reduce the ratio between net debt and EBITDA. And again, a quarter marked by the signing of the acquisition of Royal Range that was completed in January this year. With all these things said, we are also proposing dividends that are increasing the dividend per share according to our objective to continue to remunerate the shareholders. Specifically about the market, I think I said it. So Europe strong, that is good because it is still more than half of our business, geographically speaking; a relatively weak North American market, but we will comment later about Laundry because the dynamics between the 2 segments are completely different. And you see a declining business in Asia Pac, but it is entirely related to Japan. If we look at the specific trend in Food and Beverage, Food and Beverage has been growing organically, and this is thanks to Europe. Europe is doing extremely well, extremely well, improving, growing sales, gaining market share and improving profitability. And if you think that now Europe is also launching new product, you can imagine how positive it can be about the European business. U.S. is weakening. It has been weakening during -- as I said, during the fall, where we were flattish, but we saw this happening also in Q4. And as I said, the Asia Pac is mainly Japan. Despite this, profitability improved. Profitability improved, is above 10%, including acquisition cost. So the underlying profitability is even stronger. To be noted, and I think it is completing just the comment that I had about Europe is that the order intake for Europe is higher. So not only strong sales in Europe, but also a strong collection of orders. If we move on to Laundry, here, you see that we reported declining organic sales. And it is mainly related to North America and Japan, so Asia Pac, Middle East, but mainly Japan. Two comments about that one. Japan, I believe we believe -- or at least this is the feeling we have, is that we touched the bottom of the decline. And the other thing is that -- and this is we know because Japan is one of the market where we have hard numbers. We know that we didn't lose market share. So having maintained the market share that we have, that is slightly below 50%, so very strong market share in this large market. And having known that the decline should come to an end. Also in this case, the feeling is that we could see the future in a positive way. North America is a different story. Yes, we had a decline, but we have to consider that last year was a super strong last quarter -- last year, I'm sorry, I'm referring to 2024. In the last quarter of 2024 was a very strong quarter where our distributor built up a stock. I still remember that call 1 year ago, exactly this call I was asking if that strong growth would have been replicated? And I said, no, it can't be because it was a buildup of stock. Okay. In this quarter, the same distributor normalized the inventory that he has in North America. So the difference between generated a negative for us, and that is what you see reflected in the overall sales. Nevertheless, the business in North America, that is an important business for our Laundry segment, is a healthy business. It's a healthy business, completely different compared to the situation of Food and Beverage, and that is reassuring. The other important thing that I want to underline for Laundry is that despite the headwinds that we have been talking about, the currency in particular, but also tariff, we improved margin. And this is, again, showing the strength of this business -- the strength of the business. Also in this case, I think that if I look at the magnitude of the headwinds, it would have been a 3 percentage point better in terms of margin and profitability. Looking ahead, also Laundry as well as Food and Beverage Europe, the order intake at the end of the year was higher than what we had the year before. With this said, I would pass to Fabio to comment the financials.
Fabio Zarpellon: Thank you, Alberto, and good morning to everybody. Before I deep dive into quarter 4 financials, let me give you overall a perspective from a financial perspective of 2025. Overall, we grew sales organically by 0.5% and the EBITDA margin before the provision we did in September last year for restructuring increased from 11.6% of 2024 to 12.1% at year-end despite the large impact from tariff and currency that Alberto mentioned. Food and Beverage, the larger operating segment, grew 1.5 points overall, same currency and margin is close to 11%, 10.7% we closed the year. Laundry overall sales, the same currency, were flat, but not only the quarter, but full year margin increased, and we closed the year 17.4%, over 1 point better than 2024. Overall, if we look at how we generate the sales, I would say we have a pretty well balanced from a geographical perspective with America that is roughly around 24%; Asia Pac, 60%; and Europe around 60%. So, then moving from the yearly perspective to the quarter. As anticipated by Alberto, Q4 was another step towards our margin expansion, in line with our plan. EBITDA margin moved from 12% of last year to 12.6% of this year. The margin expansion overall was sustained by positive contribution from price, lower material cost and better productivity in our operations. To be noticed that good price management in U.S. compensated most of the tariff impact in the quarter. And let me say, provided there will be no additional change in the tariff award as anticipated during our Capital Market Day, we are confident to be able to fully compensate it in 2026. But before moving on, let me spend 2 words about currency. I mean, we are living in a period of unprecedented volatility for what concern currency. And I would like to develop through 2 dimensions, currency translation and currency transaction. When it comes to currency translation, SEK has been strengthening last year against, I would say, most of the currency. And currency -- all the rest equal, currency translation has reduced the top line by roughly 7 points and the EBITDA value in absolute term more or less by the same amount. So, with no change in what is the EBITDA margin. This also means that our EBITDA generated in quarter 4, if I look at it the same currency of the previous year, we are not deteriorated. So where you see a negative reduction in reality at the same currency, it is even a plus. On the other side, currency translation affected the underlying performance of the business, no doubt about it. And it touched sales, but also profit and profitability. On sales, I would say, mainly for Laundry where we invoice our U.S. distributor in U.S. dollar from our Swedish operation, SEK got stronger, meaning for the same $100 we get less SEK. And the impact is such that the group organic growth in the quarter net also of the currency transaction effect on sales instead of being negative would have been somehow positive, 0.6%, but positive. But I would say the main impact is on the profitability. The currency transaction, and it is mainly related to U.S. dollar, has hit our P&L by roughly SEK 45 million, 1.3 point in margin. So the underlying business performance is much better than what the reported numbers are showing. Currency transaction that was not important just for the quarter, but on a full year base, the impact is roughly SEK 100 million or roughly 0.8 point in margin. Alberto anticipated about the plan to reorganize and restructure our organization and improve our operation agility and profitability. The plan is proceeding according to plan and the anticipated saving, meaning over SEK 80 million for this year 2026 and over SEK 170 million for 2027, are confirmed. Going through the remaining part of the P&L, you see that the finance net was pretty low, SEK 80 million, lower than same quarter of the previous year, thanks to reduced borrowing, but I would say, even a more cost-efficient funding structure. To be noted in the quarter that the tax rate was pretty low, 11%. And this is due to a non-recurring, let me say, change of the funding structure that we put in place to finance our U.S. operation that led us to review the deferred tax asset and therefore, a non-recurring reduction on the tax cost. On a -- As a consequence of this, the overall tax rate for the year was in the range of 21%. But let me say this is not changing going forward the guidance that we gave in the past of roughly 26% of tax rate on income before taxes. Overall, this led to, I would say, a pretty strong earnings per share at SEK 0.98. That is roughly 30% up compared to the same quarter of last year. Cash flow generation was solid, slightly below -- somehow below last year. And this is due, I would say, from 3 components. We delivered somehow a slightly lower EBITA. We have had higher CapEx, and we started to have a cash out related to the execution of our restructuring activity. CapEx year-to-date we concluded the year with a CapEx over SEK 360 million. It's roughly 3% of sales. And as anticipated also during Capital Market Day, I expect it to remain around this level also for 2026, where as we anticipated, we are bringing to market very important product innovation, both in Food and in Laundry. Last word on capital efficiency. We have further improved the operating working capital on sales, meaning the utilization of it. We have seen a slight increase to the rolling 12 that we had in September. This is mainly related to a marginal increase in inventory. Our financial position at the end of the year is, I would say, pretty strong. You see that since the acquisition that we performed in the first part of 2024, we progressively reduced net debt, and we end up a year in a very, very strong financial position. And with that, back to you, Alberto.
Alberto Zanata: Thank you, Fabio. And as I mentioned at the beginning, in a quarter with very strong headwind or even a full year, but a quarter with strong headwinds. But despite that solid performance and even stronger underlying performances, we continue to transform to bring to market new products that will surely generate additional sales. During the quarter, we launched the new cooking line in Europe. It will be sold also in Asia Pac, Middle East and Africa, but it's mainly the heart of the program of our European food organization. That is in line with what we always do. So more efficient product, product with higher productivity, product with the innovation that makes us different from competitors. But at the same time, we also -- despite the weak market conditions, we continue to innovate also in Japan. And this is a new product that is coming from the Tosei company, the one that we acquired. Also this one, pretty unique in the market. There are no similar stacking solution with a combo and a dryer in the market anywhere in the world. And this is, again, looking at a trend -- combining the trend of smaller spaces and lower investments to open a launderette. Part of this transformation is to create a new tool for the organic growth as the new products are, but also continue to make use of the cash that we are generating, investing in inorganic acquisition. I already mentioned the Royal Range, that has been completed. We are already working with the team -- [ of ] the Royal Range team to start generating value from this acquisition. So I'm very pleased about that one as well as the investment that we have been doing in this start-up. This is not significant for sale and EBIT today, but we [ count it ] to make use of the technology that the start-up is using to further increase the innovation path of our company. With this said, I would say that we are at the summary. And I have to say that we closed the quarter with profitability improvement. The profitability is mainly driven by the European business -- Food and Beverage, European business and by the Laundry business in general. And this improved profitability has been achieved, and we have been underlining more than once during the call, has been achieved despite of the strong headwinds that we had to face. We also closed the quarter with an improving order intake for Food and Beverage in Europe and for Laundry. And Food and Beverage and Laundry, they account for roughly 70% of our total business and -- you also know that for -- even more in terms of profitability, in terms of EBITA. We closed the quarter with the acquisition of the assets in the company in the United States, a company that we count to make use of this acquisition already in '26 or at least to start. And then for sure, it is something that will come next year. We closed a quarter starting to introduce to market the new cooking product and preparing for the Laundry platform. It is a quarter where we accelerated the execution of the efficiency program presented in September. I mentioned already that in the -- during the first quarter of 2026, we count to already move most of the production of the coffee from one factory to the other. And I think it is a [ counter ] that in a summary is another step in the building blocks path that we have been also presenting to reach our targets. It's a quarter where, thanks to the result of the quarter and the full year, bring us to propose the dividend and improved dividend per share according to our target and to our ambition to remunerate the shareholder. If I look at the first quarter of 2026, what we see, also thanks to the order intake that was reported at the end of Q4, we expect that the trend that we experienced in Q4 for what the Food and Beverage business in Europe and for what the Laundry business are concerned, should continue also in Q1. And this should compensate the U.S. Food and Beverage business that is -- that we saw relatively weak during the quarter. So that is what at least we can say today. With this said, Jacob, back to you.
Jacob Broberg: Thank you, Alberto. Thank you, Fabio. With that, we open up for questions. Please go ahead, operator.
Operator: [Operator Instructions] The first question comes from the line of Johan Eliason from SB1.
Johan Eliason: This is Johan at SB1 [indiscernible]. I have just a question. You talked about the positive Europe. Do you think there are some temporary impacts from the Olympic Games coming up in Milan in Q4 -- Q3, Q4?
Alberto Zanata: Let's say that we have obviously some good businesses as usual for the Olympic Games. But first, the Winter Olympic games are not as large or as impactful as the Summer Olympic games. And secondly, no, it is not because it is not only Italy. The European market, all the Mediterranean market are doing well. And the good things in Q4 is that also the Nordic market started to perform much better. So some sales, yes, but not as such that they could be considered a spike in the trend of Europe.
Johan Eliason: Okay. Good. Excellent. And then I'm wondering a little bit, I mean, you are generating pretty good cash flows here and your net debt is quite rapidly coming down and then probably closer to 0 at the end of this year than to 1x net debt to EBITDA, obviously, depending on what you are doing on the M&A side. How is the M&A pipeline? Is it sort of more of these smaller potentially attractive acquisitions that we should expect? Or do you still have something more sizable that could or could not materialize in the coming year?
Alberto Zanata: I believe you know that my answer will not be a straightforward answer on the matter. The only thing that I can tell you is that we are working on acquisitions. We are working on acquisitions. We just completed one, and I can tell you that we are working in parallel on many other opportunities. If I look around, clearly, there are more opportunity for mid-mall (sic) [ small ] sized company than for large one. The larger not so many all around. But for sure, we are looking for any possible additions -- inorganic addition that is instrumental to our strategy.
Johan Eliason: Good. And then you mentioned market share gains. I can't remember if that was related to Europe or where you said that. But is it any product category or geographic area? Or can you say any details on that?
Alberto Zanata: Okay. Yes, I was referring to Europe, in particular the food business in Europe. I'm referring to the cooking, and that is very good because remember that we are launching also the new line of cooking where we are the leading company in this market. So we are reinforcing our stronghold. So geography wise, let's say that as during the past quarters or here, so the South European market, in particular Italy, they've been overperforming. They've been above the average. But as I said, the pleasing thing is that also the Nordic started to move well. So -- but it is hot, so cooking in some way. And I would say that it's across Europe more or less now. So it's a very good and promising thing.
Johan Eliason: Excellent. And then I just have a detailed question to Fabio. In the cash flow statement, we see that the change in other operating assets, liabilities and provision was quite negative in the quarter. Is that the release of the provisions you took on the restructuring? Or what is that?
Fabio Zarpellon: I would say -- I believe you touched on the point. I would say the remarkable things that is somehow sort of discontinuity to the normal path is the cash out related to the execution of the restructuring. The rest is normal business development.
Operator: [Operator Instructions] There are no questions at this time.
Jacob Broberg: Okay. Thank you very much, operator. Glad that we have been clear in our presentation. So with that, I would say thank you very much for listening in, and see you next time. Thank you, and goodbye.