Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the FILA First Half 2025 Results Conference web call. All participants are in listen-only mode, and after the presentation, there will be a Q&A session. At this time, I would like to turn the conference over to Mr. Cristian Nicoletti, Group CFO of FILA. Please go ahead, sir. Ladies and gentlemen, good afternoon. I am Cristian Nicoletti, CFO of FILA Group. The Group CEO, Massimo Candela, and the Group COO, Luca Pelosin, will also participate in today's conference call. Let's start with a brief overview on our financial results for the first six months of 2025. I would like to underline that these first six months were characterized by challenging conditions in U.S. aid consumption, reduced government-funded subsidies, tariff impacts, and negative forex effects. Despite these market conditions, FILA achieved stable profitability when it comes to effective cost containment. Let me add that the leverage is comfortable and permits the company to face current challenges with a comfortable and solid financial base. I would now draw your attention to slide number seven, where we illustrate the core business sales. In the first half of 2025, core business sales decreased by 5.6%. That said, on comparable forex basis, core sales would have been merely 3% lower. The main currency effect was due to U.S. dollar and Mexican peso weakness. These result from lower consumer demand and reduced government-funded subsidies in the United States and the United Kingdom. Central and South America, however, posted positive growth, mainly driven by a very positive performance in Mexico. Let's move to group profitability on slide eight. Adjusted EBITDA at EUR 65.4 million declined by 7.7% compared to the first half of 2024, with a negative impact for forex effects of around less than 3%. That said, it is important to underline EBITDA margin was broadly in line with 2024, 20.8%, supported by ongoing operational efficiency. Please turn to slide 10 and on adjusted net profit. In the same way, adjusted group net profit stood at EUR 22.5 million, down from EUR 32 million in H1 2024. Let me remind you that H1's net profit results include the contribution for participation in bonds for just January and March 2025. Further decrease in adjusted net income was the result of approximately EUR 7 million of forex losses. Please keep in mind that these are not cash items. On slide 11, we highlight the development of free cash flow. Free cash flow to equity stood at EUR 17.1 million versus EUR 14.3 million in H1 2024. These reflect some decrease of seasonality in the first six months, which consists of working capital subsidy, including EUR 2.5 million of tariff-related effects and EUR 2 million for closure of production sites in China. Cash flow reflects also EUR 5 million of aggregate profits and some negative forex impacts. On the other hand, we underline a significant reduction in net delivery expenses of EUR 4.7 million. Let's move on to slide 12. As of June 2025, the net financial position stood at EUR 280.8 million. This was a EUR 80.3 million reduction versus the end of June 2024, mainly thanks to bond disposals. I want to take the opportunity to make a couple of comments on our outlook for year-end. Firstly, we confirm a free cash flow to equity range of EUR 40 million-EUR 50 million as per year-end, despite a reduction of revenue and EBITDA, given the challenging U.S. consumption conditions, currency, and tariff effects. Secondly, H2 2025 organic performance is expected to be broadly in line with last year's results for the same period. Looking ahead, new tariff policy in North America may present positive tailwinds thanks to significant geographical diversification of FILA production footprint and less competition from the U.S. private labor market, whose products are mainly made in China. Lastly, looking forward to the medium term, a reduced macroeconomic instability and a clear tax outlook make us confident on the recovery of revenue and profitability. FILA confirmed its strategy to consolidate its leadership and long-term prospects while maintaining a solid financial position to size potential market opportunities and ensure shareholders' remuneration. Thank you all for your attention. We are now ready to take your questions. Thank you. We will now begin the question and answer session. To enter the queue for questions, please click on the Q&A icon on the left side of your screen. When announced, please click "Continue" on the pop-up window. If you are connected in audio only, please press "Star" and "1" on your telephone. First question is from Isacco Brambilla, Mediobanca. Hi, good afternoon, everybody. A couple of questions from my side. The first one is on school year guidance and the implied outlook for the second semester. We come from a very tough second quarter while you are envisaging overall flat trends in the coming semester. If you can give us a bit more color on what's driving confidence for a sort of sharp improvement, and also if you have any color on current trading exit speed to June or entry speed into July, you could share with us. Second question is on networking capital. Cash absorption was more driven by receivables, if I see correctly, rather than inventory. If you can elaborate a bit more on what's going on with your receivables and also if you have any benefits related to U.S. dollar devaluation that is impacting inventory in this semester. Okay, I can answer. Massimo Candela, I can answer the first question. Maybe you can answer the second question. Concerning the expectation we have for the second semester, what we see is that for the second half, we do expect numbers comparable to last year's second half. What we think is that what has happened in the first semester is almost consolidated, and now the situation is slightly improving. This is confirmed these days by some improvement we see in the level of orders and some information on the back-to-school that is giving us some positive signs. The macroeconomic situation, we don't think is going to improve a lot. Just take an example. Just one week ago, Trump has announced a 25% tariff with India, not yet confirmed. The situation remains extremely confused, unstable. Our customers have a very limited view. In the United States and in the U.K, the government's budget for schools has been substantially reduced in the area of 15% compared to last year. This is clearly impacting our numbers in the short term. What usually happens is that if the schools have less availability to buy products, that is something that happens suddenly. The consumers need anyway our product, and they tend to move to go to the retailers or to e-commerce players to buy our products. There is a kind of shift in the consumption. Of course, we should see this positive effect during the course of July, August, and September. I do confirm we see some of this shift. In our view, we cannot consider because we don't have enough information what will be the final level of tariffs. As of now, we are exempt in Canada and in Mexico because we are compliant with the USMCA deal. This situation is still not consolidated because Trump has given 90 days to Mexico to reach a certain target, and then it's not clear what will happen. We do confirm the view of the second semester based on the information that we have today. Thanks, Cristian. Isacco, thanks for your question. Please go to page 11. Relating charges to networking capital, we aligned for respect in each one in 2024 on absorption for EUR 7.1 million. Many of you tariffs were paid in the first half of 2025, more or less for EUR 2.5 million, and EUR 3 million from the closure of production sites in China. We have a minimal absorption difference to respect in 2024. Relating the other part is due to inventory, considering for more or less EUR 3.5 million related to the freeze of our sales. Let me say that receivable and payable, the other part that I've not discussed before, are quite in line to respect in 2024. Other than that, when we show the cash flow statement, each line is without FX effects. Okay, thanks, everybody. Next question is from Nicolas Stoehr, Kepler Cheuvreux. Good afternoon, and thanks for taking my questions. The first one, if you can comment a little bit more on actions on cost you have taken during these first six months, which have allowed you to basically keep a good profitability, notwithstanding a relevant drop in revenues. Maybe if you can give us an update on your plan to close several plants that you told us a few months ago, if you can give us an update. The second question is on net debt. If you can quantify the benefit in the EUR 289 million you reported of weaker U.S. dollars, so translation of debt in dollar to euro. Thank you. Thank you. you. Thanks, Nicolas. With regards to your first question, in terms of a group organization, I will confirm we are closer to the complete closing of our Chinese, or one of the two Chinese plants in Pingshan. We have already finished pushing the remaining goods and all the assets to the other subsidiaries, and the building will be returned to the landlord by the end of September. I do confirm one of the three plants in the U.K., in Middlewich, has been moved completely to the main facility in Bracknell already at the beginning of this year. We just announced the closing of a second small plant, including a second warehouse in the north of the U.K., which will be moved by the end of the year to the main plant and main warehouse close to London. We are also in the process to reorganize strongly one of our Italian subsidiaries, Industria Maimeri. We managed different actions to bring back this company to a level of profit which is in line with our standard. Also, BrightShore, it was another plant included in the first phase of the reorganization, has been already shrunk, and the full process of this reorganization will end in the next few months. For this year, these are the main reorganizations in place. We have others in pipelines which will happen between the end of this year and the next year. Meanwhile, mainly due to these tariff implications, we are shopping more than the best around the world to find the better source for any raw material or materials. Clearly, we are also challenging all our vendors to more reduce costs from what regards purchases. On the other side, there are other many fine-tuning in the, I can say, small reorganization, and I could say in all our companies, mapping again all the process, finding additional process efficiency with the aim to have a cleaner structure which could manage in a better way our business. Nicolas, related to FX effects on net bank debt, the positive impact on net financial position in USD is more or less EUR 7.5 million per year, positive effects on liability in USD. Thank you. Thank you. Maybe a follow-up on pricing. Can you update us on possible price increases yet to be applied in the U.S. following tariffs? Massimo Candela, we have just implemented a price increase in the North American market. For the moment, we don't think we are going to ask for other price increases. In reality, for 2026, we had a project to move some production to India. As of now, we have been forced to freeze these kinds of synergies or efficiencies until we don't understand what will happen with the tariffs. We have a very important alternative in Mexico, but the decision with India will be taken soon, not today. We have not a clear idea of where we are going to land. As of now, we do not expect a further price increase beyond the 6% that we have implemented starting August 1. Thank you. Next question is from Alessandro Cecchini, Equita. Hello, everybody, and thank you for taking my questions. I take one by one in terms of questions. The first one, in a recent interview of your company, maybe you spoke about potential combinations, agreements with DOMS. If you can elaborate a little bit more, what are the options? Just to have a better view, what are the potential agreements between you and DOMS? This is my first question. Thanks, Alessandro. Massimo Candela. No, there is nothing more because as of now, we are talking only of medium-term strategy, not short-term strategy. There is nothing new. The only comment I can make is that this international turbulence and complication in the microeconomical world are clearly changing the environment in which we are working. Despite the difficult first half, FILA remains the most solid and, from a competitive point of view, the strongest player in our business. We see around us a lot of companies struggling. I can confirm that FILA, in the future, will be a protagonist in the reorganization of our business. DOMS, as of now, there is nothing to disclose above what I said already. Okay. Thank you. In terms of organic performance, in terms of top-line growth, we saw, of course, already some anticipation that Europe was - 7% organic in the second quarter, while North America was -1 0% in the second quarter only. If you provide us some color, I mean, your expectation for this quarter, the third quarter, that is very important. If you expect more of a flattish trend for these two geographies, if you can elaborate a little bit more on your feeling about this. Thank you. I think we said in the beginning, we do expect a second half that will be more flattish. The problem we have faced during the first half, unfortunately, all the turbulences happening during the back-to-school, because if the same turbulences happened, let's say, between September and December, they would have affected us much less. The dance of Trump with the tariffs started when back-to-school was beginning. That's the reason he has injected so much uncertainty, so much confusion with our retailers, with their supply chain, with our supply chain. Unfortunately, the situation looks worse than what it is really now. We do confirm the second semester will be flattish because, under normal circumstances, we would be probably more positive. I think that this tariff strategy will generate a recession in the United States. I don't know when, but sooner or later, we will have to deal with a difficult situation. We know that many businesses are ready to increase prices. Not only us, we did this 6% price increase, but almost every consumable product is going to face a price increase. It's hard to believe that the consumer will continue buying with the same trend they did in the last decades. When we say the second half will be flattish, we start to consider a very weak market ahead of us in North America. Inside the flattish, we consider also the difficulties that the U.S. economy will have to face. For what Europe is concerned, the situation is difficult, especially in the U.K., because in the rest of Europe, the situation is more stable. In the UK., we are facing a very downtrend, a very strong downtrend in sales and a strong reduction in budget for schools. In the medium term, this will evolve in more purchases from the family with the retailers, like it happened in Italy, in which the budget for school is close to zero. We are already used to this kind of problem. In the U.K., the situation needs to stabilize. The big delay in Europe is very much related to what is happening in the U.K. Again, we start seeing some signs of recovery also in the U.K. We have a better realistic, better situation in the second half of the year. Okay. Thank you. About the tariff environment, we are still pending, of course, on India and Indian business. Just to elaborate a little bit on this, is it possible for you? I believe that now already you have probably shipped everything for the back-to-school to the U.S. It's a tariff probably or something to digest for 2026 if there are additional tariffs. It's potentially possible for FILA to manage the U.S. business through Mexico and Canada and just a little bit of Europe. Given the fact that I believe that probably Mexico and Canada, they will continue to have zero tariffs. I just want to understand if it's possible, if it's something that you have in mind. If you can elaborate a little bit more on this. Thank you. Yes. It is definitely possible to manage the business under the condition that we see today. Of course, the decision against India has taken out of the table a huge opportunity for us to have a strategic growth in the United States because giving 25% to India puts India more or less in a comparable situation to China. We are going to adjust our assortment. We are going to have more Mexican-origin products, more made in the USA because our plant in the United States is still working. From Europe, if the tariff at the end will be 10%, we don't see a big impact in our ranges. It's doable. It's sustainable. Again, I repeat what I said already in January. The real problem of the tariff is that my personal view is that the U.S. economy will fall into recession. In terms of sustainability, our product can easily sustain a 10% tariff from Europe or even a 25% tariff from India. What is difficult to sustain is to understand how deep will be the recession in the United States. I think nobody can have a clear view, neither on the recession nor on the level of the exchange rate of the dollar. Because anyway, the United States represents for us a 55% of the group turnover. When we consolidate a weaker dollar, of course, we consolidate less turnover and less EBITDA. We really don't understand where will be the new level of exchange rate between the euro and the dollar. The situation, I repeat, I try to answer again, is sustainable as of now. With Mexico, it was like this until a few years ago because India was not a supplier for us. It was too small, not ready to supply the United States. For the moment, it does not touch a big portion of our business. We need to understand what will be the final scenario, and we will adjust accordingly. Okay. Very clear. Just on tariff, of course, probably the only one is India to change, but this area is, I believe, secured at this stage for you, given the backlog that you have in the U.S. You say it is sure. With Mexico, the agreement says 90 days, and then we will review the situation. 90 days from the 1st of August is the 1st of November. Unfortunately, nothing is clear. Personally, I am very pessimistic on the impact this strategy will have over the U.S. economy because until now, really, the effect has been limited in terms of inflation and reduction in terms of consumption. The situation, from my point of view, is not sustainable. We will see what will happen. In Mexico, for the moment, we are working with zero tariff for 90 days. Yes, okay. Thank you. Next question is from Michael Niedzlewski, ROCE Capital. Michael. Can you hear me? Yeah, can you hear me? We can hear you now. Yes. Yeah. Hi, everyone. Three questions for me. I noticed you have kept your free cash flow guidance despite the difficult H1. Could you help us by giving us your target for year-end net debt, excluding IFRS? Basically, I'm trying to find out whether the stronger working capital outflow that we've seen in H1 is going to reverse in H2. It'd be helpful if you could have a year-end net debt, excluding IFRS. Second question is on DOMS. Any plans to cut the stake further in DOMS over the next 12 months? It'd be helpful if we could have your view on that. The last question is on the U.S. I'm a bit surprised that we haven't seen some buying ahead of the tariffs during H1. It was pretty bad in the U.S., and I would have thought with the tariffs coming, you would see some buying ahead, and we haven't seen that. Can you just maybe make a few comments on that as well? Thank you. Massimo Candela, I can answer your question number two and number three. Concerning DOMS, we don't have any plans to dispose further the shares. We have some strategic possible developments in the next two, three years with DOMS, and we are going to dispose the shares only in case there will be important M&A opportunities, which will come for sure because our business is entering in a very difficult situation worldwide. I still consider DOMS a great opportunity. I don't see us dispose, not even in the next 12 months, to dispose further the shares. For the question number three, it is exactly what has damaged us. During the period when the United States was dancing on the announcement of tariffs, FILA has always had a very stable situation with our customers. They know we produce in the U.S., we produce in Canada, in Mexico. Customers have done a heavy pre-buy related to Chinese origin. They wanted to build. This happened also with U.S. consumers. They have pre-built cars, and they have pre-built electrical devices, digital devices. This has gone against our product. I think you catch my comment a few minutes ago. I told that we start seeing an acceleration of the level of sell-out of our product, starting from the end of July, early August, because we are entering in the back-to-school season. Finally, we are in a very good competitive situation. There was no reason for customers to pre-buy from us because we did not threaten with any price increase, as our supply chain is extremely efficient. In a certain way, I hope FILA will enjoy the situation starting third, fourth quarter of 2025 and definitely in 2026 because, as of now, we have been damaged by the pre-buy made by all the Chinese suppliers or supply chains. Cristian, can you answer question number one, please? Yes, sir, of course. Relating to net debt, let me say the main driver that we use to define more or less the results, so the expected results at the end of 2025. We confirm the free cash flow to equity, a seat between a range of EUR 40 million and EUR 50 million, considering also a dividend distribution for EUR 40 million. More or less, let me say, considering the actual situation, that the net debt is more or less in line with the previous year, December 2024. Of course, the actual situation that we are at the moment. Okay, thank you. As a reminder, if you wish to ask a question, please click on the Q&A icon on the left side of your screen or press "Star 1" on your telephone. Next question is a follow-up from Isacco Brambilla, Mediobanca. Again, two quick follow-ups on my side. The first one is on refinancing. There is a mention in the press release. If you can give us a bit more color on what should we expect, if we should expect anything over the second semester of the year on this front. The second question is if you can recap sourcing of your U.S. sales, how much comes from the domestic market, and a broad split of production between Mexico, Europe, and India for the rest. Cristian, can you answer question number one and Luca, question number two, please? Sure. Thanks for your question, Isacco. Of course, Isacco, we are discussing with the bank about the condition of the event in the new financing. We have time until June 2027, considering that is our deadline. We have a window of discussion with the bank in the second semester of 2025 and the first semester of 2026. The renegotiation depends on the opportunity of FILA equity in the future and the continuing delivery because FILA is rising. I confirm that FILA is absolutely confident to respect the payment at the end of 2025 and 2026 without any kind of problem, considering that we are open discussion to take the better position with the bank at the moment. Okay. With regards to the supply chain for the U.S., again, subsidiary supply in the U.S. is here in Mexico. We can say it should be between 15% and 20%. The rest, the second one, I can combine Europe, because we are supplying the U.S. from France, Italy, Germany, and the U.K. It's a big portion of the supply. India, at the moment, is not so big, also for the reason Massimo already explained before. There is another big portion that is related to domestic sales, mainly for school paper products, which are converted in our plants in the United States. Basically, the jumbo rolls are all purchased in the domestic market. Do I recall correctly, the domestic portion is above 50%, well above, I would say, of what you sell in the United States. Okay. That is related to converting the products in the United States? Yes, 50 is related. Okay, thanks again. Probably a little bit less than 50%. We don't have precise figures, but it's a big portion. For any further questions, please click on the Q&A icon on the left side of your screen or press "Star 1" on your telephone. Mr. Nicoletti, gentlemen, there are no more questions registered at this time. Thanks a lot for attending our conference call, and we'll see you next one. Thanks a lot. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices.