Thank you for joining today's call on the First Half Results 2021 of Newlat Food S.p.A. Joining me today, we have Angelo Mastrolia, our Chairman, Giuseppe Mastrolia, CEO and Chief Commercial Officer, Rocco Sergi, CFO, and Fabio Fazzari, Group Financial Director. I'm Benedetta Mastrolia, and I'm the Investor Relator at Newlat Food. Before starting this presentation, I would like to remind you that this presentation may contain certain forward-looking statements that reflect the company's management's current views with respect to future events and financial and operational performance of the company and its subsidiaries. These forward-looking statements are based on Newlat Food S.p.A.'s current expectations and projections about future events, any reference to past performance of Newlat Food shall not be taken as a representation or indication that such performance will continue in the future. We move on to slide three of the presentation, which is the first half 2021 key financial highlights. Revenues for the period were EUR 245.5 million, down 3.9% versus the first half of 2020. We look at the pasta and dairy and German segment, we had very good growth. Pasta grew 5%, dairy grew almost 11%, and Germany grew almost 7%. Despite the difficult period, we definitely had some very good growth in some key markets and segments in our core business. EBITDA was EUR 21.7 million, with an EBITDA margin of 8.8%. There was a slight decrease, which was natural due to the decrease in sales. Last year it was EUR 23.1 million of EBITDA and 9.1% of EBITDA margin. Free cash flow was EUR 17.4 million, and the EBITDA free cash flow conversion was 80.5%. Once again, this confirms the group's ability to generate free cash flow and to sort of improve net financial position every time. Net income actually increased as opposed to last year. We are looking at the 2020 pro forma figures. This includes Centrale del Latte d'Italia from the 1st of January last year. We had a very good growth of 4% despite the decrease in sales. If we look at the net financial position as a consequence of the group performance, we actually had an improvement of the net financial position, which was positive by EUR 16.7 million versus EUR 5.2 million at the end of 2020. If we exclude the IFRS 16 lease liabilities, we would add EUR 32.3 million of positive net financial position, so cash. If we move on to slide four, where we see a very quick M&A update. We have in our pipeline, at the moment, we're looking at three deals, which concern three companies located one in Italy, one in Germany and one in the U.K. Our three main markets. Just a very quick recap on the Symington's acquisition. As you know, on the 4th of August 2021, we acquired Symington's, which is a U.K.-based hot snacks producer. The integration process is going on smoothly. We've been having meetings and strategic meetings and commercial meetings in order to align the two companies and work together towards shared goal in terms of commercial, strategic views. On to the next slide, we have sort of an updated overview of the business, as it stands today. Although we're looking at the first half 2020, which doesn't necessarily involve the Symington's acquisition itself, we wanted to give you sort of an update of where we stand today in terms of revenues and in terms of production and product categories. Revenues are in excess of EUR 600 million. EBITDA would be around EUR 60 million. We look at EUR 59 million of EBITDA and net income around EUR 17 million. We've sort of enlarged our product portfolio. We've added the instant hot snacks and all the products that are being produced by Symington's, which are many. At the moment, our geographic presence is, of course, in Italy, which is 56.8% of our revenues. The U.K. became our second-largest market, at 18.8% of our revenues. It's followed by Germany, which still is one of the main markets for us of about 15.2% of revenues. We still, of course, export to more than 60 countries. We have an exposure to other countries. We've added three facilities, which are in the U.K., to our existing 15 facilities in Italy and the facility in Germany. We like to look at this slide because it gives you sort of an update of what we've been doing. We've had a continuous expansion of brand and product portfolio. We've added the last column here with instant and others. We call it the instant and others at the moment, which shows you the three key brands of Symington's, which are Naked, Chicken Tonight, and Mug Shot. As you can see, our business model is very similar to that of a multinational corporation. We've been really striving to achieve that type of multi-product, multi-brand, multi-channel model that we've shared with you many times before. With this new acquisition, we've had the chance to even further expand our product portfolio and to further diversify our product portfolio. Really good for us. When we move on to slide seven. Here we have a quick update on the raw materials and the commercial side. Raw materials, as many of you know, there's been a significant increase in the wheat price in the last month. However, we've been able to renegotiate prices with retailers. At the moment, we've had a 50% acceptance of the new price. We're still working on the other 50%. We've been very successful so far, it's been a very short period in which we've been able to renegotiate and been successful. That also showed in the successful renegotiations with B2B partners. There's two key points for us. The first one is that we have a fixed price contract in Germany, which sort of stabilizes our products below current prices until the end of the year. We also have some fixed contracts in Italy until the end of November 2021. For the next few months, we're still covered with lower old prices. Just as a give you an idea, the sector is initiating a general cost pass-through. All the producers are really trying to reprice their prices on retailers. Very quick commercial updates as well. We've had a good progression of the Buitoni and Delverde integration and phasing process in Germany. The Buitoni and Delverde packaging has been launched, and as you've seen in the quick snapshot before, we have had actually very good results in Germany in the first half of 2021. We expect to have good results even in the second half of the year. Regarding baby food contracts, the very infamous baby food contracts, we are expecting to start the commercial production around autumn 2021. I'm talking October, November 2021. We expect to have around EUR 5 million of sales in 2023, and over 30% of EBITDA margin. As we already mentioned, these products are very high margin products, very specialized products, which gives us a very good margin. Very quick update again on the launches of the products that we saw in the last presentations live in May and in March this year. We've been able to launch all the products that we were trying to launch in this period, and some of them are already on shelf, some of them are soon to be launched. In terms of new product development and new launches, we've been able to achieve our goals. Last slide before we move on to the sales breakdown is the Germany situation in terms of Italian pasta. Here you can see a slide which shows you the tons of pasta that were sold from starting from 2011 going to date. In the last 10 years, there was a steady increase in tons, especially if we look at 2016, when Newlat started selling Italian pasta on the German market. There's been a constant increase in tons of Italian pasta sold in Germany by us. 2020 was a particularly good-performing, well-performing year. This year we're seeing still some growth. We're really happy to see that this market is performing so well in terms of pasta, and we've been able, with our commercial team, to really sell more of our pasta around the country. We move on to the first half 2021 sales. The breakdown and analysis by sector and by channel. Move on to slide 10. Slide 10, we have sort of a picture of the revenues that we had this year compared to last year and to 2019. As we know, there was a decrease since last year, which is the result of two main points. The first one is, of course, the exceptional results that we had in 2020, which were impacted by stockpiling, by panic buying and all those things that affected 2020. Therefore, for us, it's only a good comparison base because, of course, there was a movement that wasn't expected in 2020. There was also an increase in marketing and in-store promotional activity in 2020, which is aimed at incentivizing customers spending in this particular moment in time. If we look at the 2019 pro forma figures, we actually had an increase of 1.4% with an underlying CAGR of 0.7%, still a good result. If we look at EBITDA, there was actually an important increase. We went from EUR 14.2 million to EUR 21.7 million. Again, if we look at these numbers, we can see that although this year wasn't necessarily the best performing year, it's definitely been a good year compared to 2019. Now we move on to slide 11, where we have the revenue breakdown by business unit. As you can see, we have pasta, which increased by 5%. It was mainly driven by the increase in sales in the German market. We had milk, which decreased as the result of lower sales volumes and also a less favorable product mix versus 2020. We have bakery products, which also decreased 2.9% as a result of decrease in sales volumes. Dairy products increased 10.9%, which was an extraordinary growth in this situation. If we think of 2020 as a very good performing year, this result was exceptional. We had new contracts signed with new customers and also new private label contracts in this particular business unit. Special products were slightly down 3% due to a slightly lower demand, but in terms of absolute numbers, it is not necessarily a huge decrease. If we look at other products as well, there was a decrease, which again, absolute numbers is not as bad as the 8% decrease that we see here. Moving on to page 12 of the presentation, we can see the revenue breakdown by distribution channel. Large scale distribution was down 5.5% as a natural reflection of the lower traffic in supermarkets this year compared to last year. B2B partners also decreased 5.2% as a result of lower demand, lower consumer spending. Normal trade channel was basically flat. There wasn't much of a change since last year. If we look at the Q1 2021 sales, in which we had a decrease of over 17%, we can see that we've been able to catch up with last year's sales. We've stayed flat and it's a good result overall. Private label was actually up 5.1%. This was due to new contracts with new retailers, both in pasta and dairy. Then we look at food service, decreased by 9.9%. Again, in absolute terms, it's not a huge decrease, but that's the result. Moving on to breakdown by geography. We look at the three main countries for us. Germany performed really well. It went over 20% of our sales being only in Germany. Italy decreased by 7.3%, as mainly linked to the decrease in milk sales, which we saw earlier. Germany, as I said, went up 6.9% and other countries remained stable in the period. Moving on to page 14, where we have the EBITDA and EBITDA margin picture. We can see there was a slight but natural decrease in EBITDA and EBITDA margin, so we had 8.8% versus 9.1% of EBITDA margin last year. Pasta EBITDA margin went down to EUR 4.07 million versus EUR 4.25 million. Milk products were down compared to last year, and EBITDA margin was EUR 9.2 million. Bakery products also decreased, and the EBITDA margin was 14.1%. Dairy products EBITDA increased as a result of the consequence of the increase in sales, and we were also able to slightly increase the EBITDA margin to 14.8% versus 14.7% last year. Not a huge increase, but definitely a good result. Special products also increased the EBITDA and EBITDA margin of special products also increased. The margin was 10.8%. The EBITDA relating to other products is basically unchanged since last year. There was a slight decrease, which was naturally linked to the decrease in sales. Moving on to page 15, we have the net profit and the income statement picture. Net profit was the figure that grew the most in the period. The only figure that grew in the income statement, which grew by 4%, it reached EUR 7.1 million this year versus EUR 6.9 million last year in the pro forma and adjusted net income. This is a great result if we think that we had a drop in revenue, which was almost 4% lower operating margin, and also if we look at the interest payments of the bond that we issued in February this year. It was a good result. We were also able to benefit from a tax loss carry forward, here as you can see in the income statement. We had an overall profit margin of 2.9% versus 2.7% last year. Moving on to page 16, we have the free cash flow and our financial position picture. As I already said, we have been able once again to show that we can generate cash from operations, and we had a very strong cash conversion. Free cash flow again was EUR 17.4 million, and the EBITDA free cash flow conversion was 80.5% at group level, so both Newlat and CLI. This allowed us to even further improve our net financial position, which was positive by EUR 16.7 million versus EUR 5.2 million at the end of 2020. There was also a positive contribution on net working capital to the free cash flow number. Last slide, we move on to the net working capital and cash conversion cycle picture. This year, in these last six months, we've been able to further improve our days of sales and spending. We've been able to shorten the period to 37 days instead of 47 days, which is a great result, which also stems from our strong relationships with clients, who've been able to really shorten the period of sales outstanding without compromising our days of payables outstanding, which remains basically the same. In this period, as a result, we've also been able to decrease our trade receivables, which were EUR 54.4 versus EUR 73.5 at the end of 2020. Net working capital, as a consequence, was improved in a way. We went to negative EUR 58.9 million versus EUR 49.5 million at the end of 2020. That's the presentation. Now we can move on to the Q&A. As we usually do, I kindly ask you to unmute yourself and ask questions, and wait for others to ask or otherwise you can write them down in the chat and we will read them out for you and answer your questions. Thank you. Hello, it's Victoria Nice from SocGen. Can you hear me okay? Yep. Hi, cool. Just wondered, is the removal of sales and profitability guidance related to uncertainties on input cost inflation versus price increases that can be achieved? Also related to that, can you give us an indication of the level of raw material inflation that you are experiencing, and are other inputs rising? We're hearing a lot about transport and packaging also rising. Do you expect an impact there? When should we expect to see price increases realized? Put another way, are there sort of contract structures that might delay the recovery of raw material inflation through pricing, such as contracts that are negotiated annually, for example? Good afternoon, everybody. Good afternoon, Victoria. Yes, about the raw material, we can give you, I would say a simple and precise message in the sense that we, and I think all the sector, was particularly scared at the beginning of this strong increase. After that, we start immediately to contact our clients to try to understand the possibility to apply this pass-through immediately. I have to say that considering the magnitude of the increase and the fact that this is something that impacted all the sector, it's not something specific by Newlat or a single company. All the sector is reacting, and we got already a lot of agreement for price increase. We have today a good situation in terms of raw material in Germany because, as Benedetta anticipate, we have contracts that cover our needs until the end of the year. For the Italian production plant, we have raw material until mid, end of November. Sorry, Fabio. You remember on the milk, we have the contract for two years in Tuscany? Yes. This is a very important cover on the milk department. Sorry. Yes. I was just finishing about durum wheat. In this sense, I have to say that what we expect is to complete this price increase that was so far extremely successful, and to have, at the end of the year, substantially a neutral impact in terms of negative impact from raw material inflation. In the sense that we should be able to pass through all the impact. As Mr. Mastrolia was saying before, on the milk side, we are today well covered in the sense that we sign several contracts fixing the price for three years, this means that we do not expect to have a particular impact on the milk side. Good afternoon, everyone. It is Dario Michi from BNP Paribas. The first question is on M&A. You have three deals according to your presentation, and cash for about EUR 400 million as at the end of June. Could you please tell us the magnitude of these deals? Are you going to employ all the cash you have, and if there is a particular deal which might exclude the others? The second question is on the statement in the press release referring to your budget forecast and industrial plan. You are ahead of these figures. Can you please share with us what do you expect for the full year? The margins is going to recover according to your statement about raw materials and so on. A bit of granularity on this would be really helpful. Thank you. Yes. Thank you, Dario. About the M&A, we are in talk for deals that all together could cover about around EUR 200 million, EUR 220 million. This is more or less the size. If will be less, we will be extremely happy. This means that we are going to pay a very interesting price. Apart this joking, we are concentrating on three target that could continue the strategical process that Benedetta show in the slide that substantially include all our products and our brands, in the sense that we want to continue the process to diversify geographically and also by product our company, and introducing new products that could create diversification, but also that could create potential synergies in terms of raw material, commercial asset, et cetera. Also, with the other brands that we have inside our platform. This is the strategy that we are pursuing. I hope maybe to be able to announce something very soon. The other question was about profitability. About profitability, I have to say, we made important decision on the commercial side to avoid to participate to campaign that could have a materially negative impact on the price positioning of our products. The dilution of the profitability that you have seen for the first half is mainly related to the fact that reducing volume, we have an operating leverage impact on our gross margin and EBITDA margin. Starting from this point, we believe that the potential negative impact coming from raw material will be totally offset by the pass-through. On the other side, we are experiencing, starting from July, a recovery of the top line performance, organic performance. This means that if we will continue on the trend that we are seeing starting from July and until September, the first week, we have visibility of the first week of September. In this sense, I think that our profitability could be very close to the level of the past year that was a very strong level of profitability. I do not expect to have a dilution of profitability. Thanks. Good afternoon. I have a question here about the type of targets you are proceeding on the M&A acquisition strategy. Only to know a little bit about it. I will not ask about the industry, because that could be too revealing. I'm mostly interested to know if you are looking for companies that are profitable and are companies that are in good shape, or you are looking for companies that need a little sort of restructuring, as you have done in the past very successfully. I want to understand the type of deals you are proceeding. Thank you. Thank you, Gabriel. We are looking for both, in the sense that we have a strong track record in terms of restructuring of underperforming assets. This is, for example, what happened in Germany, but also in Italy, in Ozzano Taro. We are looking for this kind of potential deals. We are looking for deals with potentially multinational company, which are being very interesting because we can get an asset with a very strong know-how, and sometimes, as happened in the past, we can also think about a long-term, strong relationship with this third party. This is something that, in the past, for Newlat Group created a lot of value. We are also looking at, as was the case of Symington's, of companies that are already performing alone but could generate a lot of additional synergies inside our group. This is especially the profile we are looking for. In terms of size, obviously, for us, it is very important to try to negotiate for a target that could have revenues at least minimum EUR 50 million, but our ideal target is with the size of Symington's, at least EUR 100 million of revenues, and the possibility to accelerate our rush versus the target of EUR 1 billion revenues. I think that as soon as we reach this target of EUR 1 billion, and with the new size of our group, also the M&A activity could benefit from the fact that we will be a bigger and more diversified player. Perfect. Thank you very much. You're welcome. It's Gabriel again. I was looking at the cash flow statement that you published in the presentation, and you were saying that the free cash flow is EUR 17 million this first half of the year, but it looks slightly higher for me. Could you explain a little bit on how you reached this EUR 17 million free cash flow level? I think, Gabriel, that there are two reasons that could explain this high level of working capital. The first one is the fact that we continue to do a very strong efficiency action on the working capital side. Okay. It's giving us around EUR 7 million in the first half. The second point is related to the structure of the P&L of the group, in the sense that we are not capitalizing nothing, in the sense that all the expenses in Newlat, referring to R&D, referring to other expenses that sometimes could be capitalized in Newlat, are directly put in the P&L, in the cost base. This means that the EBITDA that we generate in the P&L is really close to the free cash flow that you could generate because you don't have to make any kind of material adjustments. These I think are the two reasons in particular. Yes. Perfect. Thank you. Again, Dario. Coming back to the M&A, might you consider also to buy minority stakes or just the majority? Thank you. No, we don't consider minority investment. Thanks. Sorry, I give a very quick answer. Thank you. Hello. It's Paola Carboni speaking. Hello, can you hear me? Hi, Paola. Yes. Hi. Good afternoon, everybody. I apologize, but I'm not able to switch on the camera at the moment. I have a few questions. First of all, I would like some comments from you about the sourcing situation for Symington's. What should we think about inflation of raw materials, and their impact on Symington's profitability looking to the next few months and next year? Second question is about the baby food, the special segment. In the slide on page seven, you mentioned that you expect sales for EUR 5 million in 2023. I'm just struggling to reconcile this indication with past presentation from you, I think in March, when we were anticipating, if I'm not wrong, you were anticipating that EUR 68 million revenues and about EUR 7 million EBITDA in full year 2023. I'm just trying to understand if this is a part of that ambition or what are you referring to? Sorry about that. Maybe I'm a bit confused. A further question instead is on working capital. You had a further improvement here this time in terms of receivable time. I'm wondering whether the current situation, in terms of raw materials on one side and the need to pass-through with grocery chains on the other side, might lead an opportunistic approach to working capital in this respect going forward. Maybe accepting a bit less favorable cash in times or payment times in order to get better conditions with your suppliers and clients. Thank you. Thank you very much. Thank you, Paola. Starting from Symington's. Symington's is a company that process as raw material part of our production, in the sense that pasta for them is raw material, is not wheat raw material. This means that they could experience some months of delay versus what is our perception of the raw material increase. In this case, they have been lucky because we start immediately also with Symington's to ask for a price increase to the U.K. customer. They already realized a successful first round of this increase. They are continuing also for the bakery products. We believe that also for Symington's, considering what is feasible from this first approach, the full results will be also in that case, absolutely positive. What is important to highlight, again, also considering what you mentioned in terms of working capital, the potential impact from this general situation of raw material increase, is that when the situation is a situation that is impacting all the sector. You saw in the past days that other and bigger player, were speaking about the impact of the raw material, the fact that the market must change in the future to absorb this movement. This means that the situations that we are facing, fortunately, is not something that is impacting only Newlat or only the mid-size player. It's something that is structural, is impacting all the sector. This means that the pass-through to the retailer at first, and to the consumer, is a bit easier to be taken because is an impact for all the sector, a structural situation. This means that I think there are no particular room for specific action from Newlat or specific commercial agreement. I think that the way is only one. The modern trade in particular must accept this pass-through, because it's something related to the market and is not related to maybe an increase of demand. The market is what it was. We have this year, this news in terms of amazing increase of raw material, and I think that all the players, including the retailers, must be adapted to this new scenario. About the baby food, we share today what is the first substantially green light that we receive from our partner for a product that will be sold starting from the last months of 2021 and 2022 and 2023, only in one country, only in Mexico. This is the first green light we had during the first half of the year. The activity is continuing now. A very deep activity to generate prototype, to test all the products, the capability of the products to maintain all the active principle and the quality facing a very longer trip versus, in this case, Mexico, but also other region. This is the first green light that we obtain from our partner. We have visibility for this region. What could be substantially the revenue base and the profitability. The numbers that you mentioned and that we show in March are the number for the full project. As of today, we obtained the green light only for one of these. We communicate that we are working in terms of prototype and testing also for the other countries. As soon as we receive other green light, we will communicate this new green light adding revenues and EBITDA to the level that we communicate today. Okay. Perfect. Thank you very much. Maybe we are just missing the question about the receivable and payables, just to understand how much we expect to opportunistically leverage on your very healthy terms in this respect. I put this answer together with the first one. I think there are no room for specific action because it's not a scenario in which we could try to find an opportunistic solution. I think that nothing is going to change in this sense. About the working capital, we said, announcing the full year results, that until we remain with this cash availability, we could try to use this maybe to obtain discount, paying maybe with lower DPO. Was not the case in the sense that we didn't find this kind of opportunity. This scenario is a particular one this year. I don't think that in the second half we could find this kind of solution. On this basis, I think that the working capital will continue to give us a positive impact also in the second half of the year. Okay. Very good. Thank you. Just a quick question on financials. The principal repayments of lease obligations have increased a little bit this year compared to last year. Which type of leases are it's for? Some facilities or some offices? There is a natural process of the renovation also of expired contract, and you know that in this case you have an increase of the NPV because the average life of the contract is substantially increasing. If we start with the base of 10-year, maybe you have some contract that going close to the date of expiration, you renew this contract and you start again with the 10-year NPV, and the average value increase, but it's just, I would say, natural evolution of the leasing. Okay. Perfect. Maybe there are no additional question. Sorry. It's Paola Carboni again. May I add a question about the milk segment, if possible, because we had a bit of pressure here in the first part of the year. Do you expect to have any improvement going forward in the next few quarters? Thanks. About milk, yes, we expect to have a bit better performance in the second half. Obviously, in the specific situation we face in the first half, you have to consider that, especially the simple milk, is something that usually retailers use in their basket to try to attract traffic with the best offer, et cetera. The sector suffered from the new scenario after the COVID. We avoided putting our brands in this situation, try to maintain as much as possible our price positioning. This is obviously one of the reasons why we performed so badly. We expect maybe in the second half, a reaction in this sector, especially also considering the fact that in the first half, we didn't benefit from the contribution of the HoReCa sector that was substantially impacted by the lockdown related to the COVID. If we will gain contribution from the normalization of the HoReCa activity, I think that this could help to recover on the milk side. Okay, thanks. Welcome. I think there's one more question from Stefano Lustig, which says, "About the - 7% in Italy, how far was the performance from the market? Sorry, Benedetta, what's the question? If you open the chat, you can read it too. It says, "About the - 7% in Italy, how far was the performance from the market? The performance depends product by product. On average, I would say that the performance was better than the market. We perform extremely better in some categories, also helped by the brand substantially we have. I am thinking about the bakery side, for example. All in all, I think that the decrease that we reported in terms of revenues in Italy in particular, was absolutely better than the market. No. What I can add, Fabio, is that Sorry, Mr. Lustig. Our -7 is not only driven by. We are totally in line with the market. It is a stable market. The - 7 is driven by mainly the out-of-home and food service decrease that we had in the first period, because of COVID transition. That's why we had the - 7. It was part due to a low consumption in the supermarket and in the retail, so a bounce back from the last year explosion. On the other side, a part comes even from the food service business. It's not on market data, essentially. Yes. The point is that considering this impact from the out-of-home, the performance was absolutely, in some cases, also better because we have a lower exposure to the HoReCa and the other better than the markets. If there are no more questions, we may end the call. In case you have any additional questions after the call, you can send us an email at investors@newlat.com, and we will be glad to answer all your questions. Thank you, and have a nice evening. Thank you, everybody. Thank you. Thanks, everybody. Have a nice weekend. Thank you. Bye. Thank you. Bye. Thank you. Bye.