Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Sabaf first half 2026 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 by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Gianluca Beschi, CEO. Please go ahead, sir. Thank you. Good afternoon to everybody. As you all know, we continue to navigate in a complex environment, in which macroeconomic and geopolitical situation affects also the consumer demand. In this context, Sabaf was able to report second quarter results, which give a positive trend, with sales increase both compared to the first quarter and to the second quarter of the previous year. This good improvement is due to the strategic initiatives that are going on and that are contributing to give Sabaf a solid position as a global supplier of components for household appliances. More specifically in the quarter, we recorded sales at EUR 73.6 million, up by 3.5% compared to the same period of last year. Growth would be at 4.4% at constant exchange rates. The areas where we proved specific growth was Asia and Africa. As regards Asia, we recorded a growth of 17% compared to the previous quarter of last year, and this is due to the ramp-up of the Indian plant, one of our strategic initiatives. After some years of presence, in the end, we have good visibility on the opportunities of the backlog, and the backlog confirms that this area is giving us some satisfaction, some positive results, and also looking forward, we are now more positive than ever on the opportunities in the Indian market. As regards Africa and Middle East, the increase of 30% is partly due to the postponement from the first quarter to the second quarter of some deliveries. We all remind that first quarter was affected by the start of the conflict in the Middle East, in Iran, and so some sales have been just moved from first to second quarter. The situation there remains complex because we know that the political situation is still critical, and so we cannot expect that the same trend stays stable for the months and for the quarters to come. Still, there is a lot of uncertainty in this area. LATAM confirmed a very good performance, growing double digit compared to the same quarter. This was the joint contribution of a solid market trend, especially Brazil, proves to stay as a growing market. On the other side, we have won new orders with some of the players in the market that allows us to work substantially at full capacity in our Brazilian plant. As regards U.S. and Mexico, so North America, have flat sales, would be slightly positive at the constant exchange rate. This is the combination of a weak market in U.S., but with the increase in market share due to the sales from the Mexican plant. Still a couple of comments here. As regards U.S., actually we see a weak market in the mass market, but we see a solid performance for the high-end part of the market. As regards our sales, this solid performance in high end compensates lower volumes for the mass market. As regards Mexico, we have to say that starting from the second half, we expect a further increase in sales because new products for which we have already started production, but not sales during the second quarter, will start sales and will boost both sales and profitability of the Mexican plant. Starting from H2. Also here we have a good visibility for the second part of the year. As regards Europe and Turkey, more in general, the market stays substantially flat. In some cases, we have been able to gain market share, especially in Turkey. In Turkey, some of our customers have difficulties due to the weakness and the competitiveness of the market. We have compensated some decreasing sales on these kind of customers with higher penetration in other more solid customers, and this has allowed us to keep substantially a stable level of sales. All that brought to an EBITDA for the quarter at EUR 10.7 million or for 14.5% of sales, which is up compared to the figure of the first quarter when it was EUR 9.5 million or 13.6%, and slightly below compared to the second quarter when it was EUR 10.9 million, so just EUR 0.2 million higher than in the second quarter of 2026. We have to say that all the impact of lower profitability comes from the exchange rate effect. We have a weak dollar this year, both in Q1 and Q2, against the euro, but also against the Brazilian real and against the Mexican peso, which are other areas where we have production, so local cost, and part of sales are denominated in dollars. Part of this unfavorable fluctuation of the exchange rate has been compensated mainly through operational efficiency. We have been, let's say, been able to minimize, to reduce the impact of the exchange rate. As regards sales prices, they are stable, substantially stable during the quarter and during the half. We did not pass increase in price during the second half. Most of that effect will be visible in the second part of the year. The same is as regards input costs. Input costs did not impact in a material way the operating results of the first half and particular of the second quarter. This is mainly due to the fact that the group was hedged on raw materials and also partly hedged on energy costs. Let's say, I repeat once again, the slight loss of profitability comes from the exchange rate, from the negative Forex impact. Below the EBITDA, we have a stable value at around EUR 5 million per quarter as regards depreciation, so no change there. While below it, we have booked the adjustment for the value of the put option of MEC. You know that we have a put option, so we will buy 49% of MEC, the American company for which we both acquired the majority in 2023. The value of this minority stake is linked to the results of MEC. The results of MEC continue to improve, so we have adjusted the value of this option, so of this potential ability, for around EUR 4 million during the quarter that have been recorded partly in financial expense and partly in Forex differences. Also, we have booked higher income taxes compared to the same quarter of the previous year. This is due to the fact that in second quarter 2025, we booked a one-off tax benefit linked to some tax incentives for investments made in Turkey. That brought to a, let's say, a positive figure on the income tax roll. This is not the case for the year, for this quarter. The comparison brings to a more important difference for which that is visible at the level of the net income. The quarter closes with a net income of EUR 0.9 million. It was EUR 3.2 million in the second quarter 2025. I'd like to comment now the financial position of the company. Starting from working capital, we have seen an increase in working capital driven by an increase of the level of stocks. This is linked to a choice made by the company, by the group, to grant the supplies for some materials for which there were uncertainties on deliveries. It was necessary to grant operational continuity during the months to come, but also to grant a level of price that was lower compared to the present prices. Starting from the second quarter, we have seen an important increase in the prices of the main raw materials that Sabaf uses. I refer to aluminum, to steel, iron, and to brass. We did not have any impact on profitability in the second quarter, and will partly mitigate this impact also due to the purchase strategy and the supply strategy that brought, on the other side, to a temporary higher level of stocks that we expect to be back to more standard level, more normal level by the end of the year. To reduce the impact of net working capital on sales. During the quarter, we also paid dividends for around EUR 7.5 million. Net financial position at the end of June is at EUR 85.2 million, of which EUR 60 million is represented by pure debt, let's say pure financial debt. Then we've booked EUR 19 million for the liability for the MEC minority, and the EUR 6 million debt, which is linked to the leases. Let's say, the rent to pay in future years for the real estate leases that we have in course. A couple of words now as regards the outlook. Let's say that the general environment, the general market sentiment has not changed, and we do not expect any material improvement on the main markets where we are. On the other side, Sabaf is self-helping to bring some sort of growth. The trend that we have seen in the second quarter could go on for the second part of the year. We expect to be able to complete the recovery, compared to the drop that we have experienced in the first quarter. By the end of the year, we expect that sales will be up compared to 2025. We are managing the impact of the increase of input costs, partly with hedging. Most part requires, and has required, price list upgrades. We have negotiated and obtained new prices, mostly starting from the beginning of the second half. Some negotiations are still on course. We think that this could contribute to mitigate a lot the impact of input costs. We also continue to work internally to further improve the operational efficiency. There are a lot of initiatives that goes in the direction of continuous improvement, both the factory and as regards the corporate cost. The target is to defend the operating profitability during the year. More specifically, I am referring to further verticalization of manufacturing in India, to further automation in some of the plants, which is on course. We are also focusing more, as announced, our expenses, our, let's say, budget for the induction operations, so that we are giving priority only to some of the projects for which we have higher visibility. The cost of that structure has been reduced, and will continue to be reduced during the months to come. On the other side, we continue to think that induction can bring us some possibility and some opportunities for business diversification. We continue to work also in this direction. For the moment, I would stop here, and I am available for any questions that you would like to ask. Thank you. 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 and one on their telephone. To remove yourself from the question queue, please press star and two. We kindly ask you to use handsets when asking questions. Anyone with a question may press star and one at this time. The first question is from Emanuele Negri, Mediobanca. Please go ahead. Yes, good afternoon, everybody. Thanks for the presentation and for taking my question. I have a couple. The first one is on U.S. You mentioned that mass market was kind of weak, while the high-end of the market was a bit stronger. Is something you expect also to continue in the second half? Which kind of outlook you have for the U.S. market in general for the second part of the year? The second one is on India. In which kind of capacity saturation are you currently working in India, and how much are you expecting to have, for example, for next year in terms of saturation? Okay. Yes, starting from the first question. Let's say that this trend of sort of polarization of the market that affects the U.S., we see a similar trend also in Europe, in reality. At least this is our feeling and the perception that we have from available figures. The comment that we have is that the high-end market is less impacted by the inflation pressures, by other economic, let's say, elements that keep the general mass demand more under pressure. Up to when, let's say, the discretionary part of the demand remains so weak, it's possible that this trend continues. What we expect to see a recovery of the demand of the mass market, the level of confidence for consumers has to improve. This depends of the general level of uncertainty. Of course, price inflation is a matter. More in general, the available income affects the demand. We all have to remind that the appliance industry is still working with a level of appliances sold, both in U.S. and in Europe, which is nearly double digit below the 2019 levels. It's not yet a normal level of the market, and this has brought to this polarization of the demand. This is our analysis. As regards India, let's say that we have to distinguish between the two product lines. One is valves, for which we are working at full capacity, and we are going to increase capacity with some small incremental investments during the second half. This could bring our potential capacity from around EUR 3 million, which is the present capacity, to EUR 5 million. This is just for valves. For which we are experiencing a solid demand, even because Sabaf is offering aluminum valves that compete against local domestic brass valves, which are more impacted by the increase of the cost of raw materials. This brings us a higher level of competitiveness also on this market. The second product line is burners, for which we are working on a specific model designed for the Indian market, which is now under test and prototyping phase and test on some of the customers. This product has been featured and been designed based on the requirements of the market. This should also boost our sales, even considering that the unit value of a burner is much higher than the unit value of a valve. We are not yet in the position to give specific figures on this. Because we have not full visibility on the potential sales, but we can say that in 2027, also burners will contribute to the Indian growth and bring also this plant well over the break-even level. We are for the moment, in the first half, we were not yet at breakeven. Could be at breakeven in the second half, and then in 2027, also in India, we are forecasting a positive economic result. Thank you very much. Thank you. The next question is from Domenico Ghilotti, EQUITA. Good afternoon. A few questions. Maybe I start with a follow-up on the key strategic drivers. If you can give us some color also on the situation in Mexico. You were mentioning the call that you are expecting further growth in the second half. First of all, clarification if you are commenting, as on also compared to the current level or compared to last year, and if you can give us some color on the visibility on this growth. On market comment, maybe just to conclude on Brazil, on general LATAM, I was seeing some comments from your clients about a slowdown in the market. How do you see the situation there? It is usually quite volatile. But you were also here commenting on some market share gain. Then two question on the numbers. Visibility for the third quarter should be quite good. I am trying to understand how you see the development. If we should expect, let's say, more balanced contribution from Q3 and Q4 compared to last year. That was on the profitability. I am trying to understand here, how you see, how much is the risk of price increases not fully offsetting the input cost? If you have some additional efficiencies that can support on top of the higher volumes that you are flagging for the second half. Yes, sir. Starting from Mexico. We expect that in the second half, we will nearly double sales compared also to the first half. We had sales up around 20% in H1 compared to H1 2025. Starting from July, we are nearly doubling the level of sales. To give you some more specific figures, sales were in the range of EUR 4.5 million. Sales are denominated in dollars, but I translate in euros because then we consolidate figures in euros. They were EUR 4.5 million in the first half. We expect to be at least at EUR 8 million in H2. This is mainly for one big new product platform that we are now supplying, and other new projects that will bring further volumes will come also in 2027. We will continue to invest for CapEx expansion in Mexico. The plant, from the beginning, started to host a much higher production than the present levels. We started with three die casting machines. Then we added a fourth one, and in the beginning of 2027, we will add a further one. We increase capacity for another 25% compared to the present level. In this moment, we are working at full capacity in Mexico with the installed CapEx that we have there. As regards Brazil, let's say we have not any specific signs of a slowdown. We have seen for a list of quarters now, good level of sales. Of course, the visibility that we have is limited to some months, but I do not have any information about a different trend for the time being. Generally speaking, demand stays at good level, stays high. Of course, there are the elections in Brazil in October, if I am not wrong. This could represent a moment of uncertainty, but then let's see. For the time being, we are working at a level of sales which is higher compared what was our budget in the beginning of the year. As regards Q3 and Q4, I confirm that, of course, we have a good visibility on Q3 that allows us to comment the outlook for the full year, even if we have not yet a complete backlog for Q4. We have been used in the past years to see a Q4 which is weak. It's been a sort of seasonal trend that we expect that could be the same also this year. This does not imply a further drop in the market demand, but just, let's say, a policy choices made by the customers to close the year with the lowest possible level of stock. In this sense, it is possible that Q4 confirms to be a weak quarter as it was in 2025, and as it was also in 2024. This is possible. As regards profitability, I have not much more to comment in addition to what I commented before, in the sense that, yes, the impact of input cost is there. We have done what we could to minimize it, but, of course, part of the impact is there. Price list increases cover part of this effect. Some negotiations are still open, and we continue to work on operational efficiency. The target is to offset the impact of input cost. Day by day, we are working in this sense, in this direction. Okay. If I may follow up with a couple of additional questions. First on the profitability, just to, say, put some qualitative trends. Prices will be up, volumes will be up, effects broadly flattish, so better than the first half, but say broadly flattish year-on-year. Input cost up, energy and raw material. These are the four main Okay. The follow-up on MEC, because you are raising for the second time in 2 years. Also last year you raised the value, so the performance has been well above, say, plans. Can you give us a sense of what has been achieved? What is the expectation, for example, for 2026? What is the level of profitability that you are now getting from MEC? Yes. Let's say that we've been working with MEC both on the sales side, on the supply side, and on the internal performance, so on factory efficiency. All these three different gears have contributed to improve profitability. Nowadays, we are working in MEC with a stable EBITDA margin above 15%, which is substantially double compared to three years ago when we entered in the company. Okay. Here is where we are. Still we have some work to do, and that could bring further satisfaction to us. Thank you. Thank you. 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. Mr. Beschi, there are no more questions registered at this time. Okay. Thank you, everybody, and good afternoon, and see you soon.