Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the De'Longhi Q1 2023 consolidated results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Fabio De'Longhi, CEO. Please go ahead, sir. Thank you. Good afternoon, ladies and gentlemen, and welcome to the De'Longhi Group Q1 2023 results conference call. Today, together with me are Nicola Serafin, Group General Manager, Marco Cenci, Chief Strategy and Control Officer, Stefano Biella, CFO, Fabrizio Micheli, Director of M&A and IR, and Samuele Chiodetto, Investor Relator. Let me start by reminding that in our last conference call, we presented some of the new product launch in 2022 in our core categories, showing how the group has been working to stay ahead of the pack, thanks to cutting edge technology and design. Today, I would like to direct your attention to the launch of True Brew, an innovative drip coffee machine with grinder, emphasizing again the role of the innovation in establishing our leadership in coffee. TrueBrew has been launched in March in the American market, supported by a fresh campaign starring Brad Pitt as an ambassador. It has a premium position and will have the role to enlarge our product range in the quality coffee experience, offering our American customers a new premium solution to brew fresh coffee from whole beans. Back to the quarter one results. Let me highlight how the group has been able to promptly react to the complexity faced, especially in terms of volumes, growth, and the effects of the cost inflation on consumer sentiments. In particular, in these first months of the year, the group achieved an operating profitability, clearly improving against the Q1s of the pre-pandemic years, namely 1999 and 2020 as well, thanks to the combined effects of our efforts in innovation, media investments, price strategy, and last but not least, effective measures to control operating costs. The Q1 of 2023 was characterized by an unfavorable and complex geopolitical and macroeconomic environment. In continuity with the scenario encountered in the H2 of 2022. As you already anticipated, the start of the year was impacted by some factors affecting the main regions and their sales trend. In the last two years, we achieved extraordinary growth in the Q1s, respectively 59% plus, 59% in 2021, and +5.5% in 2022 on a constant perimeter basis, which represents a very challenging comparison base. We witnessed a partial de-stocking effect of the trade due to a more cautious approach of some retailers, which have used their months to decrease the level of inventories. Let me remind you our strategic decision to exit the portable air conditioning market in the United States, which had an impact of EUR 23.4 million in the quarter and will have a negative effect even in the Q2. Let me focus to the quarterly results. Consolidated revenues for quarter one were down by 18.1%, reaching EUR 602 million, with a positive contribution of +0.6% from the currency component. As already highlighted in the past months, the European area has been affected more than the other regions by the effects of the Russo-Ukrainian conflict and the weakening of the consumer purchasing power caused by inflation. In more details, Southwest Europe recorded a double-digit decline, with all the main markets down, facing also a challenging comparison to the Q1 of last year, in particular with the one of 2021, which marked a growth of more than 60%, a constant perimeter and constant exchange rates. Northeast Europe showed a decline at a mid to high single digit rate in the context of a macroeconomic and geopolitical scenario, experiencing a complex evolution. The EMEA region has undergone a double-digit decline compared with a very strong acceleration trend in the last two years. In the American area, said performance was affected by the discontinuity relating to the exit from mobile air conditioning business, which impacted the turnover by EUR 23.4 million. Net of this effect, we would report a stabilization in the cooking and food preparation business, thanks to the growth of NutriBullet and their products. The Asia Pacific region achieved a low single-digit growth at constant exchange rates, with a significant contribution from Greater China, which confirmed its sustained growth. To product categories or the above mentioned effects that led to a decline for all the macro categories of the consumer business, including coffee as well, even if it confirms its relative better resilience. On the contrary, professional coffee, branded Eversys, showed a strong positive trend, which continued its growth trajectory at a high double-digit rate. Looking now at the evolution of the operating margins, the net industrial margin amounted to EUR 304.4 million, equal to 50.5% of revenues. Together with a positive contribution of the price mix, circa EUR 20 million, and the recovery of transport prices, there was still a residential negative effect from raw materials and production inefficiencies, which we led to find a full recovery in the coming months. Adjusted EBITDA amounted to EUR 64.3 million, or 12.3% of revenues, 13.6% in 2022. Following investments in advertising and promotions, which while remaining in line with 2022 as a percentage of revenues at 12.1%, decreased in value by EUR 15.7 million, down to EUR 73.1 million. As to the balance sheet, net financial position as at 31st March 2023 stood at EUR 317.2 million, increasing by EUR 18.5 million from 2022 year end. In particular, the free cash flow before dividends and acquisition was EUR 167.1 million in the 12 months. In the quarter, the group was able to generate EUR 41.4 million in cash from current operations and working capital movements compared to the Q1 of 2022, in which there was an absorption of EUR 103.8 million. In terms of operating working capital, 8.5% of 12-month rolling revenues at the end of March. The negative change in inventories up to EUR 615 million from the record value of EUR 551 million of the end of 2022 was in line with expected normal economic financial cycle, and was more than counterbalanced by the positive cash generation of trade receivables and payables management. It should also be noted that capital expenditures absorbed EUR 19.2 million in the quarter, a clear decrease compared to last year, which recorded the disbursement for the acquisition of the new production plant in Romania and higher investments in tangible assets. As a conclusion of my results overview, I would like to stress the successful expansion that the group was able to achieve in the last years, emphasizing the adjusted EBITDA doubled compared to quarter one 2019, thanks to strong organic growth, effective investment, and focused acquisition, all goals that we're able to accomplish while preserving a healthier financial position. Finally, closing my remarks, let me underline that the well-anticipated weak start of the year was already included in our guidance. We expect a less challenging comparison in the coming quarters. Also bearing in mind that after the Q2, the growth will not be impacted by the discontinuity in the mobile air conditioning business in the U.S. In this context, therefore, we confirm the guidance for the full year of revenues slightly declining and an adjusted EBITDA in the range of EUR 370 -EUR 390 million. We can open the floor to Q&A. Thank you. This is the Chorus Call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star then one on their touch tone phone. To remove yourself from the question queue, please press star then two. Please pick up the receiver when asking a question. Anyone who has a question may press star then one at this time. Our first question comes from Mourad Lahmidi from BNP Paribas. Please go ahead. Yes, good afternoon, gentlemen. I have two questions. The first one is on the price mix effect in Q1, so the EUR 20 million that you report, how much is pricing, pure pricing and how much is mix? What... Do you expect pure pricing to continue to be a tailwind for the rest of the year, or is it only going to be mix that will be a driver? My second question is on input cost inflation. Could you give us the raw figure for input cost inflation in Q1? What kind of development do you expect for the rest of the year on this, on this part of? Of your costs. Thank you. Yes. We can divide the EUR 20 million of price mix into EUR 18 million price and EUR 2 million mix. With regard to pricing, we will have an impact of carryover price increases, but we don't foresee any price increase further. Actually, we believe that seeing a decline of input costs, probably the market might be more competitive in the H2. For the moment, pricing is would be positively affected by our measures that will have full effect in the second part of the year. In particular, well, as I said, the input costs are lower. I mean, I hand over the word to Nicola Serafin for more details around the input cost effect. In terms of cost inflation, compared with, let's say, the same quarter of last year, let's say that we have a bit of mix effect. We have a carryover of some cost inflation due to raw materials. We have cost inflation due to labor costs that the inflationary trend is bringing us. We have some, let's say industrial cost due to the fact that in this moment we do not have the same output volumes, volume effect. We are in the range of the low single digit of cost inflation. In more... It's more or less splitted in three areas of influence. Where we have benefits in terms of cost that are not directly in the industrial costs, is the benefit on the inbound cost of sea freight, warehousing costs, and logistic costs. We are already experiences beneficial benefit in terms of costs. We are expecting overall reducing impact cost inflation in components looking forward. For the time being, in the Q1, we are still let's say the carryover from past year. Okay, thank you very much. The next question comes from Alessandro Cecchini from Equita. Please go ahead. Hello, everybody, thank you for taking my questions. The first one is about the coffee market. If you could elaborate a little bit more what you are seeing, I mean, in the market in terms of sell out in, I mean, current month, just to have a better idea of the underlying trend, excluding of course, the current stocking that you underline in during the Q1. My second question is about, I mean the food preparation strategy. You are, I mean, investing in the coffee with new products and so on. I remember that you stated about your strategy to expand the NutriBullet in Europe. I was just wondering if you are ready to launch new products in the food preparation. Just to better understand the strategy on these product category. Finally, on the margin side, we know that Q1 is typically, traditionally the quarter with the lowest seasonality. We needed to take this kind of 12.3% as a floor for the next coming month. Also considering the lower inflation. Thank you. Pardon me. Looks like the speaker line has dropped. Please stand by while we reconnect. We thank you for your patience. Pardon me everyone. The speaker line has reconnected. Sorry for the inconvenience. We were able to hear Mr. Cecchini's questions. Alessandro, now, the first question is about the market, the trend in coffee. We are monitoring the key markets and we are seeing a decline in the coffee market at a rate of low single digits around, let's say between two and four in the market. The decline is also coming in the first months after a weaker espresso market in the H2 of last year. We have seen also some signs of stabilization in certain markets. We feel positive in the long term in coffee as a growth driver for De'Longhi and for the industry. Although we are unable to predict when the stabilization will be completed, and we will be able to see positive markets again. We feel as a market leader also, you know, the responsibility to drive market growth, we are continuing in supporting our products with marketing initiatives. As said, we launched innovation in the United States, supported by the Brad Pitt campaign, also with the products aiming to American coffee, on top of what we're doing in espresso, not just in the United States, but worldwide. The second question is about food prep. Market is still weak. We believe that now the weakness that is reporting in the numbers is, you know, deriving mainly from the stocking effect that hopefully will be completed by April. The market is negative, but not at the rates that you see in our selling. We have to also to underline some positives, in food preparation, which is coming from a very strong growth for NutriBullet, high single digit, which I think is very strong compared to what's happening in the rest of the products. Again, it's not a strong growth for us at 8%, but it's significant, is I think, showing that there is a strong interest for personal blending, for quick, simple to use. Convenient. convenient appliances. NutriBullet is taking advantage of this trend in several markets. I also highlight the NutriBullet launch has not yet been, let's say, completed. Due to COVID, we had a kind of a slowdown in the international rollout of our distribution plan. Again, early good signs from NutriBullet and at least one growing category in food preparation. Margins, somehow, yes, is, well, quarter one historically is not the strongest quarter of the year. We think that quarter one EBITDA can give an indication that we have the ability to deliver what we have promised as year-end targets. Maybe we can have some weaker quarters or stronger quarters, but we confirm that given the circumstances, the trend we're seeing in the markets, the trend in the input costs, our cost control initiatives, we think that our margin goals are achievable as of today. Okay. Thank you. If I understood correctly, you stated that in on the coffee in April, you see a sellout on more or less in general that is flattish versus start of the year that was slightly negative, if I understood correctly. Yeah, yeah. In the current trading, yes. Yes. In the current trading, yes. Confirm it. Okay. Thank you. Again, if you have a question, please press star then one. Our next question comes from Andrea Bonfà from Banca Akros. Please go ahead. Hi. Good afternoon to everybody. Most of my questions have been already answered. Again, this is, let's say a curiosity on the actual trading environment, because looking at the performance of the Q1, and your guidance, your sales guidance for the year, it entails likely positive top-line growth in the next quarters. The question is, are you expecting to turn into positive sales growth in the next few months? If I may, a detail on the Q2, the exit from the U.S. AC market was EUR 23 million the Q1. What's the final count from that exit? I had in mind some EUR 70 million, but I just want to double-check. Thank you very much. Thank you. Thank you, Andrea. You know, you're right. We think that our growth rate will turn into positive again in the H2 of the year. About Q2, probably excluding the impact of portable comfort, let's say comfort. In the quarter two, we see probably a stable to slightly negative market of still for small domestic appliances. We expect to deliver the year-end results on the back of a return to growth in the, in the H2 of the year. With regard to air conditioning, the impact there would be around EUR 70 million, as you correctly noted. We probably the effect will stop with quarter two. I take also the opportunity to give some color around the comfort. At the beginning of the year, we have outlined that we would expect weaker conditioning from the U.S. market in air con. I have to highlight that due to the weather and also some high inventory levels at retail level, also the European market is kind of softer in air conditioning, as well as we see a lower demand for heaters that were boosted by the worries around availability of gas after the war in Ukraine started. All in all, it could be that we will face a softer air conditioning season. Again, we are positive about the potential development our SDA business and coffee, particularly for the H2, confirming our guidance. In seasonal, although the decision in the United States will is structural, the weakness in Europe is more like due to seasonality, so cannot be extrapolated as a trend for those products in the future. It can be that actually after a weak year, the future will show a quite return to growth. Again, for us, it's important as we are focused as a group, as a strategic decision to focus more on SDA, where markets are more predictable and not related to seasonal effects. For the moment, fortunately, our exposure in term of sales and profitability to portable air conditioning comfort has reduced dramatically in the past. Great. Thank you very much. As a final reminder, if you'd like to join the question queue, please press star then one. Our next question comes from Luca Solca from Intesa Sanpaolo. Please go ahead. Hello. Good afternoon, everyone. Can you hear me? Yes. Sure. Okay, good. The first question is a follow-up on margin. I was wondering, how do you see the gross margin evolving in the coming quarters, taking into account that from one hand, you have some tailwinds on the cost side, as you were mentioning, but at the same time, the strong positive price mix effect that you experienced in last year will fade this year because of the overlaps. How those two elements will play out in the coming quarters. The other question is on the environment. If you see any deterioration in the competition and the early signs of price reduction due to the persisting weak demand on certain product category, above all on the food preparation. Finally, my last question is on the advertising and promotion. If what we have seen in terms of reduction in absolute terms in the Q1 is a good proxy for the full year. Thank you. Hello. Yes. Thank you, Luca. Gross margins. Yes, we see, potential for improvement in the gross margin. In the Q1, the cost saving was in particularly because of the lower logistic costs. While we are still suffering from industrial inefficiencies due to the fact that our production levels are still very, very low. On top of that, the high inventories that are... Sorry. The gross margin is determined by some, inventory costs that now we are clearing. Going forward, we expect the logistic costs to be on the low side again, so we can continue to benefit from low logistic costs due to the lower inventory levels and the lower rates from Asia in particular. As well as we start, we will start capturing some beneficial effects from the higher efficiencies as the factories are starting to ramp up again in line with the past. Also, we have not yet fully benefited from the lower input costs that now are also coming in. There is room for all this, which should translate in better margins. We expect also a potentially slightly more promotional market. I've seen nothing very critical for the moment. There is some room in our, let's say, guidance to also have more competitive initiatives to maintain, protect, or eventually grow our market share in the H2. All this, there is enough saving in order to also allow us to be more price competitive. I expect the market to be more competitive. We don't see risk for promotional wars or price wars, nothing like that. Just maybe a more promotional market during the year. Probably once the market will go back to normal or to growth again, I think also this initiative will probably ease. Going to the other question which was about A&P spending for the year. We believe that A&P spending is a very important pillar in our strategy. We think that if De'Longhi has been a winner during COVID times, despite you seeing a decline from our record high in 2021 and 2022, we are still a winning market share. Our sales are dramatically higher than before COVID. A&P played a major role in our success together with our products. We will continue to invest. Again, we want to be cautious. We might have a more adaptable strategy. Certainly would be a pillar, but, we will release our investments, in line with the developments of the sales. Expecting growth in the final part of the year. We will probably invest again massively, as we've done in the past. If, if we see that numbers for some reason will not, come in, we have room to cut some of the investment and still outspend competition, because I believe that De'Longhi is really the top spender in coffee and food preparation compared to our key competition, in Europe and in the key markets. Gentlemen, there are no more questions in the queue. Ladies and gentlemen, thank you for joining. The conference is now over. You may now disconnect your lines. Thank you.