Good evening. This is the COSCO Conference Operator. Welcome, and thank you for joining the Intercos First Quarter 2025 Results Conference Call. 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 at the star and zero on the telephone. At this time, I would like to turn the conference over to Mr. Renato Semerari, CEO of Intercos. Please go ahead. Good evening, everybody, or good morning if you're connected from the U.S. I'm very happy to show you the results of our first quarter this year. In an extremely volatile geopolitical environment and challenging market dynamics, Intercos posted its fourth consecutive quarter of double-digit growth. Our sales grew 13% in the quarter, with EBITDA, adjusted EBITDA by 41%, and a margin, EBITDA margin gain of 225 basis points. Important to note, at least for us, that on a rolling 12-month basis, it's the first time we crossed the EUR 150 million bar. In terms of net debt, we had a slight increase in terms of net debt, which is led by CapEx due to the well-communicated roadmap of plant expansion that we have started a few months ago. Now, going more into the details of our sales performance and looking at business units, our growth was driven by our core category makeup, which posted an excellent + 23%. All regions were up, including Asia. There was the year-over-year in terms of growth for this category. Multinational, in terms of clients, showed a very strong growth, especially in prestige segment. We see makeup growing 23%, followed by hair and body, which was our second-best contributor, maintaining a very strong high single-digit trend, driven in this case by air care, with fragrances flat in the quarter. Skin was the only declining category. This was the only category facing a tough comp of last year when we grew 22% versus 2023. Asia and Europe were performing well for skincare, but we saw a contraction from U.S. clients. I remain extremely confident that in the remainder of the year, we will see good numbers coming also in skincare. Looking now at the performance by region, I'm very happy to underline that all our regions posted double-digit increases. The hero was once again Asia, despite the fact that we had very high cosms of last year, where we posted a + 24%. Also this year, we posted + 18%, with both Korea and China performing extremely well. America was the second contributor to our growth, and this was mainly led by makeup, with also some positives coming from air care. Europe posted a + 10%, which was mostly driven by makeup once more, and slightly also from makeup, which was positive in the quarter for this region. Looking at numbers by customer type, our growth was driven by multinationals, first and foremost, but also retailers performed very well. Multinationals posted a + 28%. As I said earlier, it was mainly from prestige clients, but not only, and this was also positive in terms of mix for our EBITDA margin. As for the retailers, we posted a + 16% after several quarters. Actually, the whole year last year was difficult for retailers, but this year we profited from the solution of a problem that I had alighted last year, especially of one client that was in financial difficulties that are now solved, and this retailer has come back strongly in our numbers. Emerging brands was a bit of a surprise, quote and quote. After many, many quarters of consecutive double-digit growth, emerging brands were flat this quarter, facing a +1 5% of last year. Again, this is a group of clients that has driven exponential growth in the recent past, so a bit of consolidation is pretty normal in this phase of business. Now, looking forward, we continue to be focused on the key strengths of the company. Number one, innovation. We have seen in the course of the first quarter many clients. We had about 450 clients visiting our CosmoProf stand or our reporter in Agrate during the CosmoProf season, with very strong feedback on the innovation plan that we presented to clients. I am particularly confident on the innovation and the potential of business that this will drive in the months and years to come. Second strength is our diversification, and especially I think that it is not a surprise for anybody that the geographical diversification is becoming more and more important. This time is not only for agility reasons or environment-related reasons, but more substantially because of duties and trade wars that are ongoing since the beginning of the year. All this, I think, puts us in a strong position in the mid-long term, and this is very reassuring about the performance that we can project for the company. This being said, for the time being, we confirm the guidance we have alighted during our last call for a growth above market trend between +5% and +7% at constant FX rate. As you have seen, it is very volatile, also the currency trends, so it is very difficult to understand what can happen on that front. Last point to conclude my brief presentation. As you know, we have already disclosed the fact that we're not going to communicate on order entry any longer, but I want to reassure everybody that the order entry trend continues to be extremely solid. The four months that we have in our back are a record high for the company, so no alarm sign coming on that front either. That's all I had planned to say to you. I'm ready to take your questions. This is the COSCO Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question is from Deliano from Morgan Stanley. Please go ahead. Hi, good evening. Thanks for taking my questions. The first question is just on your margin. Margin was up a lot year- on- year compared to the quarter impacted by the cyber attack, but was below 2023 levels. Could you just talk about the moving parts there relative to 2023, i.e., how much of that delta is just related to sort of an increased proportion of packaging, or are there any other factors there? How does that feed into your expectations for EBITDA for the full year? There is my second question on the emerging brand performance that you mentioned. Obviously, a weaker performance for emerging brands in the U.S., but it seems that multinationals performed well across regions. Is that a trend that you're observing in the U.S. beauty market overall, of multinationals proving more resilient than the smaller emerging brands? Is that more just sort of specific to your particular set of customers? Is there any impact from that on your profitability, the difference between doing business with multinationals versus emerging brands? Thanks very much. Hi, Stevie. Thank you very much for your questions. First of all, margin's evolution. Now, it's true that we had the cyber attack last year affecting our marginality, but we shouldn't forget that we are coming out of a period where the mix has changed quite significantly, and the packaging component has become more important. Now, those clients have not faded away, so that has a carryover effect in the sense that that different split of clients and businesses is still valid. If last year we declined 30% in EBITDA, this year we grew 41%. I see still it as a positive rather than a negative. The reason they, magic wand change in terms of mix. There is an improved performance on marginality based on a relatively stable mix of orders. Trends of emerging brands. While it is a bit different, difficult to say whether there is a change of trends that will substantially see a modification of things. I must say that I am very happy to see multinationals coming back. They have been the bulk of our business for many, many, many years. We still have very good trends in Asia where emerging brands are particularly strong. They continue to go very well. I am talking about the local, especially the local Chinese brands. This is all coming positively. Now, we have a number of emerging brands that had exponential growth in the past years that now have taken the size where continuing to grow at the speed that they had is becoming a bit more challenging. There is also in the U.S. a bit of a, let's say, cautious approach because nobody knows exactly how to dance in this volatile geopolitical environment. It is not surprising that they are taking a bit more of a conservative approach on how to move forward and what place to orders they have to place. I think that it is a bit too early to assess whether there is going to be a fundamental change in terms of trends going forward. Let us see what happens in the coming months. All in all, I must say that emerging brands continue to have a significant portion of the pie. In terms of difference of marginality between multinationals and emerging brands, there is not a clear difference between the two. It all depends what kind of emerging brands, what kind of multinationals, how they are buying. Are they buying free issue, or are they buying in full service with packaging? It is a mixed bag of things. The difference can be seen on a client and product basis. You will not see a difference all in all by cluster of brands. So I would not conclude absolutely on the fact that seeing growth from multinationals and stability from emerging brands is a good thing or a bad thing. It is neither of the two. The important thing is that we have a healthy underlying business with both of them, and hopefully with a higher share of free issue, so no packaging-related orders, because that, yes, makes a difference in terms of marginality. I hope I have answered your questions, Stevie. Yes, that's great. Thank you very much. Thank you. The next question is from Francesco Rilli of Intermonte. Please go ahead. Yes, good evening. Can you hear me? Yes, sure. Okay. Thanks for the presentation, and good evening, Renato and team. Just a couple of questions from my side. First question is on makeup. If you can help a little bit on understanding the underlying growth rate of the category that you're expecting going forward, having in mind that the big growth posted in this quarter was announced, but the companies where makeup was particularly impacted by the cyber attack. What are your expectations going forward also in terms of mix of clients for this category? The second one is if you can help us with some reference to understand or try to assess potential impacts from the current scenario of tariffs worldwide based on your current production footprint and deliveries? Francesco, thank you for your questions. Okay. Now, makeup, yes, you are absolutely right. This is the category that was most affected by the cyber attack. It is not very surprising to see it growing at such a fast pace. I would like to remind everybody, though, that also the last quarter last year, so double-digit growth from makeup. Overall, the trend of makeup is very promising. Now, difficult to give you an estimate of what is the growth rate expected for makeup in the remainder of the year. You know the world has become more and more volatile, so doing projections is becoming tougher and tougher, to be very transparent. I am very confident that makeup will grow faster than the market. This is something that, as you well know, we are committed to do year on year. We want to grow twice as fast as the market. I think that we are well positioned to achieve this goal also this year. Again, there will be swings, th ere will be instability in the short term. This is a good bridge to your second question related to tariffs, especially in the U.S., because the impact of tariffs on U.S. productions is big. Although in the mid-long term, our position and our footprint allow us to find the best solution for our clients in order to minimize impacts from duties, and this is a significant competitive edge, even more than in the past, I would say today. In the short term, it creates instability and changes in the flows of goods that will create some turbulence in the short term. This will have an impact. I would expect it to have an impact, especially in the next quarter. Going forward, we have several plans to optimize things. Now this is depending on what is going to happen in reality with tariffs and I wish I could give you some more precise answers because it would mean I know what the plan. The plan, nobody knows what it is in reality. We need to see what happens in July, which are the countries that will be impacted in relative terms to what was announced in the liberation day. That will create some further adjustments to the sourcing plans of different brands. What we are seeing today is some insecurity and, some let's say, conservatism on the client side in placing orders where, because they do not know exactly what is going to happen in the next few weeks. So there will be an impact short term, probably we will minimize. Now, we have been very clear in telling that to clients that we're going to pass on the impact of duties that we have to pay for their supplies. On the other hand, we've also reassured them that we are ready to put in place mitigation plans leveraging our global footprint so that we can minimize going forward the impact of tariffs. This is always based on the fact that at one point there will need to be clarity on what's going to happen on that front. I'm sorry for the answer, which is pretty vague, but honestly, I have no crystal ball, and it's going to be difficult to give you a more precise answer till we know exactly what is going to be done. Thank you. Thank you very much. The next question is from David Hayes from Jefferies. Please go ahead. Thank you. Good afternoon. Could you please speak to me if I can? Just to follow up. Sorry, David. Sorry to interrupt you, but we hear you very, very far away. So it's very difficult to hear you. Is that better? A lot better. Thank you so much. Sorry for that, apologies. Apologies. Three questions for me if I can, actually. On the first one, just following up on that last answer on tariffs, just to understand, was there some inventory building by customers in the first quarter, and now you're seeing them buying less as we go into the second quarter, and they're waiting to see where tariffs end up, or was there no real impact in terms of customer buying behavior from the tariffs in the first quarter? The second question is just on the outlook. You did not mention the category growth estimate of 4%, even though you kept your guidance for your own performance. Was there a reason for leaving that out? Is there less visibility on the category growth than you saw back in March, or was there a note here, i t was just not in there this part? The last one was just on the skin growth recovery. You're confident of that recovery happening. Is that just the comp dynamic that you talked about, or is there reasons that you think from an outlook perspective the underlying demand will improve? Thank you. Okay. Thank you, David. First answer on tariffs. No w e have seen no orders increase as a way to preempt the impact of tariffs. The reason is pretty simple. It was so immediate that if anybody had any visibility on it, the moment they place the order, then it takes at least three weeks to get goods from China. They would have paid tariffs no matter what. No, there was no speculative inventory build in the first quarter because of that. Now, is there more conservatism going forward? Yes, we are seeing, although we do not see that in the order intake yet, but when we speak to clients, we see them being worried about tariffs and being worried on the impact on how they should act on prices to compensate for these tariffs. Again, difficult for the brands as it is for us to put in place a strategy. We have a number of options available, but to change the flow of goods or to change the pricing, all this needs some structural thinking and strategic thinking and structural movements that do not happen overnight. It is obviously a bit more complicated to put them in place. It is easier to put a blackboard with this country pays that much and the other one pays that much than finding a solution and putting it in place. I think that everybody is watching, and we will be acting as we go along as soon as we have more visibility. Category growth, the category is not going very well. In general, the market is not going very well. What we had alighted in previous calls is still valid, which means China is still flattish or slightly declining. Europe has decelerated, although it is still slightly growing. I think that the biggest surprise is that what we had expected was the rebound of the U.S. market. This has not happened yet. I think that the uncertainty related to the actions that the administration is putting in place are kind of hindering what was historically the trend post-presidential election. I still believe that we will see a brighter second semester, but I think that a 4% growth in the year is already, I would say, more on the optimistic than in the conservative side though. Confirming our guidance clearly points to our will to grow faster than the market. Skincare, I continue to be positive because I am seeing the interest of clients. I've seen the interest of clients to our innovation during CosmoProf. There are a number of new projects that are boiling, and they will be coming in the second part of the year. The first quarter decline was mostly driven by eye cosms on one side and a couple of important clients that had not placed high orders in the recent past. The ordering flow we see coming is pretty positive. I am confident that we will see skin coming back. Great. Thank you so much. As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is from Kate Rusanova from UBS, please go ahead. Good afternoon all. Thank you for taking my questions. I just had a couple of follow-ups. Firstly, it would be great if you can help us unpack the growth in hair and body. You mentioned that fragrances were stable versus last year. I appreciate you had very strong growth last year, but we keep on hearing from other beauty players that the category is doing very well. I'm just wondering if there are some market share issues on Dolce & Gabbana side or if there is any other reason for that. Also, since fragrance is particularly heavy on packaging, do you expect to see a positive impact on your margins for the remainder of the year? I just wanted to check on the currency trend that you mentioned. If you were to take current spot rates, what impact do you expect to have on your top line versus last year from that? Thank you. Hi, Kate. I'll answer to the first question, and then I'll leave the second question to my currency specialist. In hair and body, yes, you're right. The category, I mean, going well is a bit of a statement, but it's a segment that is holding better than other segments. That is true. It is also true that in the past, we had some important clients, and especially the one you mentioned, that not only had to supply the demand, the end consumer demand, but also had to fill the pipeline of distributors and retailers with their goods. So they were building stocks for themselves. They were building a distribution network and a safety stock in their warehouses to get to a more normal supply trend. Dolce & Gabbana, as far as we know, and we can see from the numbers, is doing well in terms of sellout. We have no worries related to that, but the pipeline phase of their adventure is over, and that had to come to an end at one point in time. The cosms is high also because of that factor. In terms of marginality, hair and body, as you know, the number one issue is the business model. It is not only packaging. Packaging is an important component, but there is the component of contract manufacturing where marginality is lower than on innovation, where we own the IP of the formulas. I do not expect any revolutionary change in terms of marginality. I think that it will be in the coin, in the same trend as in the past. Currency trend, I do not know, Stefano or Andrea, you want to say. You had seen the first quarter. We are coming from a quarter where we had a positive impact on the exchange rate. First of all, looking at the two years, you need to consider this. Second of all, if we look at the 12-month forward consensus of the exchange rate, we see that we are still within the guidance. Now, we believe it's a bit unfair, and we didn't do the exercise on today's spot exchange rate because it wouldn't have made any sense, to be honest. Looking at the forward and the consensus and the split of the currencies within our top line, we are within the guidance that we have provided to you. Thank you. For any further questions, please press star and one on your telephone. The next question is a follow-up of Francesco Rilli of Intermonte. Please go ahead. Yes. Just a quick follow-up on just one thing. You mentioned last conference call that you had ongoing some projects aimed to enhance productivity, and that would have been positive for margins going forward. Are they still in place, and did you, I mean, counting on them to enhance this year's marginality? Yes. We do have those still in place, and we're working to make them happen. Obviously, when you talk about industrial productivity, they are not things that happen in 0.5 an hour. They take investments. They take time to put them in place. They will have more impact in the second part of the year than in the first part of the year, but we are working behind that. Obviously, you may see shifts happening this year related to the different plans' fixed cost absorption, depending on how we will need to modify our production flow to minimize the tariffs. If I may say, in this moment, the number one worry we have or things that occupy our days is to see how we can make movements in our flow of goods to minimize the impact of tariffs more than working on the industrial optimization flow, which is still going on but may be wiped away if in one plant you have a lot less volume than what you had before. Again, there are investments that are connected to these programs, so we need to put them together with the rest of the considerations before we implement and we put money on the table. Yeah. Very clear. Thank you. For any further questions, please star one. The next question is from Misha Omanatske from BNP Paribas. Please go ahead. Hi. Just one quick follow-up for me, please. On profitability, if my understanding is correct, previously you suggested that we would likely see some improvement in the DAR margin for the full year. Now, I understand there is obviously a lot of uncertainty right now, but as things stand now, do you think that for the full year you would still be able to expand margins here and there? Thanks. Hi, Misha. Yes, I do expect to see an expansion of margin in the course of the year. Obviously, there are a bit more question marks than what I had when I last spoke about that, but I'm pretty confident that this will still be the case. Again, I think that the next quarter will be pretty rough because of all the moving parts and understanding how to dance in this new environment. Structurally, I think that we are well equipped to make that happen. Great. Thank you. For any further questions, please press star and one on your telephone. The next question is from Kate Rusanova. It is a follow-up from UBS. Please go ahead. Hello. Yes. Me again. I just wanted to come back on the tariff discussion. My question is related to your skincare business in the U.S. because you do not have a skincare plant in there. I just wanted to check what impact you expect from that, what measures you are taking to offset any kind of negative impacts from tariffs on particular skincare business in the U.S.? Okay. Very difficult to give you an answer on that. Yes, we do not have a plan for skincare in the U.S. and is this a disadvantage in the mid-long term? Probably yes. That's why we've been working relentlessly to find a solution to that. I'm not sure in the short term this will be a negative because in reality, it depends on how tariffs will be applied on different countries. To be clear, if we stay with a 10% duty from Europe, I don't think that we will see any impact in reality because we are talking about a marginal price increase for brands to offset that duties. If it goes to, I don't know, 25% - 30%, then it's a different story. Again, the bulk of our business in skincare is not from the U.S. It's from Asia. No problem on that front. It's from Europe. No problem in that front. We're talking about a relatively small part of our skincare business, and it all depends on what is going to be decided in terms of duties from Europe mostly. Duties from Europe, from Korea, from the places where we are currently sourcing things. Thank you very much. Very clear. For any further questions, please press star and one on your telephone. Gentlemen, there are no more questions registered at this time. Okay. If there are no more questions, I thank everybody and have a good evening. Thank you. Thank you. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.