Thanks. Good afternoon, everyone, and thanks for joining us despite I
can
imagine many of you are already on holidays. So I think that we are satisfied today with the results that we have been able to deliver Despite as everybody could have noticed, we are still heavily struggling in our two very important assets, India and Mexico. Two very important assets that are heavily impacted by COVID and two very important assets considering the complications that are growing every day in China from a strategic point of view. So the natural alternatives for today and for tomorrow for a long term strategy company like Fila, India and Mexico are and will be very important options. For my analysis and my presentation, I would like to clarify that I tend to compare actual performance with the 2019.
With all due respect, 2020 has been so complicated, so heavily affected by COVID by quarter that I think the analysis would be less interesting. So what comes out immediately from the comparison with 2019, if you already were attending our call in 2019, you remember that I was expressing a certain kind of optimistic view on Fila that has always had a very long term approach and sustainable approach with also a competitive advantage versus the competition. I think that these first six months with, let's say, one year later than what should have been due to COVID is giving us finally quantitative indication that we were right. If you analyze the EBITDA, for example, in 2019, we have a gap of EUR 6,000,000 coming just from India and Mexico. So with almost 80% of comparable turnover, this year, we have been able to reach a very important and strong growth in terms of profitability.
I think you have appreciated also the profitability on sales that we have been able to reach in the first semester. The cash generation now that we have not been faced with the reorganization or SAP implementation finally. And as already anticipated last year, the substantial reduction of extraordinary items. So all in all, a group that has regained stability, profitability and cash generation without our two jewels, India and Mexico. I think, by the way, to compare India and Mexico with 2019 is an unfair comparison because the two countries were heavily growing until March 2020, especially India was running at the pace of 25% every year.
So to compare the numbers of 2019 today is really not generous. Last but not least, you have seen that thanks to the vaccination campaign, we see that the school business is strongly recovering despite I would like to remember you that until mid March in many European countries, including Italy, schools were closed. So we really could not enjoy, let's say, a full scale business. For this reason, I think that we will see school business to continue improving the figures. For what Mexico and Inge is concerned, we see some signs of recovery.
Unfortunately, there is a lot there is not I mean, customers do not trust too much their governance. So even if they have guaranteed a school reopening by the month by the end of the month of August, all customers are telling us that they prefer to, let's say, to see the reality, to see what will happen and then probably the regular flow of business will restart again. So I prefer now I ask Stefano to present the figures in a precise manner, and then I am available for all the questions. Thank you.
So after everybody to go to the presentation and to go to Page five, so we can start to analyze the core business sales trends. We the group closed with an amount of core business sale equal to EUR 324,700,000.0, show an increase as comparable FX of plus 11.1% plus EUR 34,200,000.0 compared to previous year. The FX assets are mainly allocated to are equal to EUR 70,000,000 and allocated for the main part to The U. S. And North America for EUR 13,400,000.0 due to the devaluation of the USD, I guess, euro of approximately 9.5% and for 2,000,000 to Central South America for the duration of pesos, Argentinas and Brazil Real Argentina Pesos and for 2,000,000 to Asia, mainly to India rupee devaluation of 8% approach.
So total amount of FX is million negative. This growth of sales is a confirm the trend that we had in Q1, where the group grew plus 3.1%. And we can see the contribution we have all the geographic area in a positive trend. And this is due, as Massimo mentioned before, to the recovery of the school business. So and of course, we had a confirmation, the fan art business.
By geography, we have the Europe that confirmed the trend of a growth plus 22.1%. The South America, up 40% was negative in Q1. North America, plus 2.5% was negative 3.9% in Q1. And Asia, plus 3.4% and was negative also in Q1. About the business area for the line, we can see HES where the confirmation for the Sanar business that confirmed the double digit growth, 13%, more or less seen a little lower than in Q1, that was 15%.
And but we can see how the school business recovered with plus 9.4% and was negative for minus 3.9 in Q1. So we can see how the school and office business recovered strongly in the Q2. Industrial business is not big, but show a big growth. And industrial business is important because in industrial business, it's a very strong margin gross margin. If you go to Page six, you can see by the cake graphics how the school how the Fanaut AOP business grew a little compared to previous year.
These are now it's equal to 32.1%. So again, a little compared to the previous year. And also, we can see how Europe due to the strong growth in Europe, the weight of Europe by geographic area increased a lot compared to previous year from $32,600,000 to $37,600,000 If we go to Page seven, we can see the growth of the EBITDA. EBITDA is equal to $58,500,000 showing a growth of plus 30.8% at comparable FX. Just for your information, FX are equal to minus $1,800,000 and are mainly related to The U.
S. And North America area. And again, just again for the information that the weight of these FX is very low because it's less than 3% on the EBITDA value, just to confirm that we are a natural hedging on FX on the margin. And so the growth is plus 30.8% compared the previous year. It's very important to mention that the EBITDA margin grew from 15% to 18% of this year.
This is due, of course, to the operating leverage coming from the increase of sales because with the fixed cost where are already stable. We have still some, we say we say that we that the marketing cost, revenue cost, the capacity cost is a little decreased compared to previous year. Again, so because company, of course, are very careful in this moment due to the channel is not very stable to increase the type of cost. And this, of course, pump the operating leverage. And also, the EBITDA margin benefit of the mix of sales due to the final business that is still important with a stronger marginality.
And we have also we say that this is the main effect because the gross margin due to the final business gave a big gap to the increase of the EBITDA margin. As Martin must say, the certain tariff costs are more or less they show a little increase compared Q1 due to some increase of COGS risk costs, a certain Q of reorganization of cost in some areas Australia, Scandinavia and Santo Domingo, where we have some moving of some plants and some in Mexico. So Mexico, we had a fiscal organization due to the local law. And so we have some extraordinary catastrophe cost just to manage this fiscal organization. Going to Page eight, we can see also how the net income adjusted result benefit this trend.
We had $26,600,000 of net income result, showing an increase of $17,100,000 compared to previous year. Of course, for $12,400,000, this improvement is due to the increase over the improvement of the EBITDA. Then we have less amortization, depreciation for an amount approx of $3,000,000 and this is due to less CapEx made in the last year and also less accrual on write offs on receivable compared to previous year where we had there was a moment of the COVID crisis. And also, we have a positive result of $4,700,000 coming from the financial results. This is a mix of components.
We have a big effect coming from positive financial FX, and this is due to mainly to The U. S. Area, U. K. Area and Brazil area where we have some financing of the local currency.
But we have more or less also $1,000,000 of benefits coming from an improvement of interest. This is due to the better level of working capital, of course, but also to all the action that we did just to lend money in the area where from the head office in the area where the cost of the money is higher. These are just to mitigate in some areas Mexico, Brazil, Russia, the local cost of interest. And these help us to reach these good saving of interest costs. And of course, we have more or less $3,000,000 of tax, more tax amount due to the better results.
So mixing all these components, we arrived at the EUR 7,000,000 of improvement of net adjusted results. Going to Page nine, we have the net bank debt and net financial position slide. As you can see, we have a last twelve months decrease of net bank debt of $667,000,000 excluding the positive FX effects, mainly from USA. So the acquisition is very strong. The contribution come mainly from USA but also from Mexico, from UK, for Chile, India, but main part comes from The USA, of course.
And you can say also how the ratio on the working capital improved more or less of three point compared to previous year. Just we can see this improvement also if we compare the in Page 10, the cash flow statement comparing the first six months to of the previous year to the first six months of this next year, you can see how the free cash flow to equity improved of $45,000,000 past the accounts, of course, from the cash flow from operating activity for $70,000,000 but we have $23,000,000 coming from the improvement of working capital. And this is due mainly to The U. S. Inventory decrease or the American inventory decrease or inventory in general coming from The U.
S. Side, the big part, so the inventory management, but also to a good management of the receivable that improve compared to previous year. At this same time, we can say that, as you know, we have a testing of the covenants in June and December. We reached the leverage ratio of 3.85. If you remember, we mentioned the previous call that we negotiate without any additional cost with banks and a covenant reset with the banks.
So that means to adopt for this year the covenant leverage ratio that we have in 2020. So but not it was not necessary, of course, in the light of the results. And so we reached 385% operational compared the target of 5.45% that we have in an agreement with the bank. This good leverage ratio also allow to the company the possibility to ask the banker the decrease of the margin rush that we had with the banks for 50 basis points of the line that we had. That means less of EUR 2,000,000 of stable interest for the next year.
So I conclude, I think, and we are ready for the Q and A section.
The first question comes from Nicholas Toller with Kepler. Please go ahead.
This is Charles Massimo, Stefanos, Novacekica. I have a few questions. The first one, can you hear me?
Yes.
Okay.
The first one is on what you see for the second part of the year, if you can give us the first flavor on July. And in particular on finance, considering that last year you had a very strong second half at plus 30%. So what do you see? Do you see stability at previous year's level? Do you see revenues coming back a bit.
Your feelings on that? And the second one on Mexico, in your introductory speech, it seems you were particularly negative on this market, whereas in our previous call after Q1, you were more bullish. Results were quite good, I would say. And so what has changed? Has something changed in the last few days that is I think you have this bearish sentiment on this market?
The other question is on India and it's related to the other two. And so I was wondering if you can think you can achieve your guidance even assuming India is not recovering from September as you were assuming before? And the very last one for Stefano, just to understand if I understood well, basically from next year, you will have EUR 2,000,000 per year in savings on interest rates because you have already agreed with the banks the change in the margin budget. Thank you.
I can start, Martha, for the last question. It's easier and quicker if you agree. So we when we submit to banks the compliance certificate, so it will be valid for the next month. And we have more or less $400,000,000 of M and A debt, and so 50 basis points of savings makes more or less this savings for the next year.
Okay.
Okay.
Thanks, Nicolas. First of all, I think that
July
is in line with the numbers of June of the first semester. So we have not noticed any significant change. From the positive side in North America and in Europe, I would say there is a very high level of
certitude
that school will be in presence and this is generating good sell out of product in these days. I would say, we are close to be back to a normal year, which means that we are expecting good weeks ahead of us. So in particular, with relating to Finata, I think Finata needed to be the analysis need to be splitted in two. The business of FINA in general for Fila is doing extremely well. In fact, this performance that you have seen in the first six months is also due to finance to the improvement in average margin, in product mix.
Our strong leadership in the market is confirmed, I would say, on a daily basis. And please remember that Fine Art in the last at least in the last five years, but also in the following period is a business with an organic growth. It is true that last year, the business has been a bit inflated. I'm not too much concerned in terms of guidance or expectation because the business was inflated, but was also inflated for entry level product, which is not our core business for Finat. So there was a moment in which whatever we had in the shelf was requested by our customer.
So it is possible that the top line, we will see a reduction in growth. But in terms of profitability, we are still extremely positive. In terms of guidance, let's say, the business in general, of course, we are positive. I mean, it cannot be different because in June with EUR 1,000,000 EBITDA from Mexico and India, we have done better than 2019. So our guidance for this year is between, if I'm not wrong, EUR 107,000,000, EUR 1 hundred and 8 million.
In 2019, we ended up with EUR 111,000,000. And even more, we have the exchange rate against us. So all positive elements. Our problem, but I think that in few weeks, we are going to have very clear signs is related to school reopening in those two countries. So I am not neither bullish nor negative for Mexico or India.
I am simply realistic. So if schools will reopen, both Mexico and India will do a great job for very simple reason that we have the back to school ready in our inventory. We are local, we are a domestic manufacturer, so we have a competitive advantage versus the competition that has huge problem with the supply chain. We are brand leader. So we have everything to be extremely successful.
If schools reopen, we will respond in adequate manner and we will see a very strong second semester. If school in those two countries will not open or we are going to have another wave of COVID. Clearly in 2019, we had SEK seventeen million EBITDA coming from Mexico and India. So the impact like for the first six months is important. We had seven we have in Page let me find in Page seven.
You can see we had EUR 7,000,000 EBITDA in 2019 as of June and we ended the year with SEK 17,000,000. Unfortunately, on Mexico, India, we do not have a view except official declaration of the President of Mexico. Again, last week that they will reopen schools at the August. I will be the happiest person in the world if this will happen. And in India, we see some states that started reopening schools.
So what does it mean? It means that in July, we have seen signs of recovery in both countries, but not signs of full business regained because we are sure that schools are reopening. We see customers making a choice of partial replenishment of the stock, partial I underline, in order to be ready if really the business if really the schools will reopen, let's say, in the next fifteen days. So I cannot be bullish, I cannot be negative. I am realistic.
We have demonstrated that we can leave without India and Mexico. Of course, I remember in 2019, the group was myself, I was indicating that the group was ready to go beyond the EUR 120,000,000 threshold of EBITDA. I think that if you look at our first semester, I think my indication that go back two years was absolutely realistic. It's just a mathematical calculation. We are at 58,500,000 with a gap of almost 6,000,000 in India and Mexico, which means 64,500,000 add maybe some FX effect and you see that the group was absolutely ready to go beyond the threshold.
Unfortunately, a lot of water have flown in the last eighteen months. India and Mexico, we are still waiting. Positive news, I'm not negative like last year because it seems that anyway COVID in India is under control, even if vaccination is proceeding slowly. Also in Mexico, the situation seems to be under control, but unfortunately, the health system is not very much efficient. So the best solution they have found in the last sixteen months was to keep the school completely, completely I underline closed.
If you want my opinion in a way or in another, we will see Mexico and India restart their normal operation, but it's just an opinion, it's not a forecast.
Yes. Maybe a very quick follow-up. When you talk about finance, you said that you can imagine in the coming quarters a reduction in growth, but you still see the plus sign in front of the number or we can imagine also a decline compared to last year?
I think that it depends on the area. I would say in big majority of the area of the world, we will see a growth because as you have seen in June, we have a plus 13% organic. We have really extremely positive results in Europe, but not only Europe, but in many countries around the world, including China, India, all the small subsidiary around the world are growing double digit. In United States, maybe we can expect a slowdown because in United States, the big retailers last year were hungry of everything that could be sold as a finite product. These assets could a little bit slow down, but in a very positive environment anyway.
So again, United States are having very nice recovery of profitability, marginality because our brands are doing a pretty good job. So maybe United States, we could see a flattish number versus last year. In the rest of the world, I see a continued growth.
Thank you.
The next question comes from Alessandro Ceccini with EBITDA. Please go ahead.
Hello, everybody, and thank you for taking my question. The first one is about the I mean, the working capital that is so the big improvement that you had in the second quarter versus typical seasonality probably was due to inventories decline. I would like you to better understand if you think that you can go on with this kind of control of inventories for the next couple of quarters. So if you up to the moment, if you have the right inventories to serve the market and so to generate free cash flow. So this is my first question.
My second question is, I would like to go back a little bit on your confirmation of the guidance in term of EBITDA of $107,000,000, 1 hundred and 8 million dollars. So if I understood correctly, so this is including very limited contribution for India Mexico, if I understood correctly. So the potential reopening of India Mexico could be a potential, I would say, upside, but at the moment, it's better to be conservative and so to maintain this guidance. So I understood correctly this point. And finally, my last question, it's about the tax rate.
I saw very, very limited tax rate also on the normalized numbers of 23%, twenty four %. So I would like to better understand if what kind of tax rate normalized tax rate that we needed to assume for the year? Thank you.
Stefano, you like maybe to answer the first question on working capital. Let me before Stefano enters into the details, let me, Alessandro, point out one very important problem that all the businesses around the world are facing and we are also facing. The supply chain in this period of time is extremely complicated. Clearly, as we have stabilized our organization, we were expecting an improvement in working capital and this is happening. The improvement in working capital can easily happen in Mexico and India if those countries will open.
So we have area of improvement. But consider also that we have, I would say, in a big number around, I can mention hundreds of containers laying in different harbors of China due to the unbelievable problem of the logistic around the world. So if we are going to have some unexpected problem in the supply chain, this could maybe reduce the improvement that we are generating. And last but not least, remember that our target was to reach the famous 40% that we confirm or even slightly better. So in long term, the improvement is stable and we are showing that we are able to get there.
The, let's say, shorter term storm are complicated to manage because as you probably know from other businesses, the supply chain in this moment is a complete chaos. And of course, we are trying to manage in the best way possible. Stefano, maybe you can give some more precise numbers. I just wanted to explain the environment in which we are working.
I think that you explained everything very well because as Alessandro said, the improvement come mainly from the mainframe mainly from U. S. As you say, the environment is not so certain or so stable for the future. So for sure, we have a target of improving our net working capital. We have a target of free cash flow to equity generation.
Maybe the GAAP the positive GAAP can be a little reduced in the following quarter, but it will be still positive. Maybe now we reach just a peak of maximum deleverage of decrease the inventory. But for sure, in the control and it depends on the control in the next following months. So I think that maybe the gap can be a little maybe lower, but still positive in the next month. And about okay, Alessandro or do you?
Yes. Okay. And for the tax rate, yes, you are right. We benefit over some recoveries on tax credit, in particular in Fila, that we use fully. And so I think that, again, the tax rate for the fuel for this year maybe will be lower to the 28%, twenty nine % that I normally say I always say that will be a little lower mainly to this tax benefit that we have in fear because we use and we clean all the tax credit that we have.
And so we'll be I think, I estimate maybe 26% for year end. So a little lower than the normal 28%, let's say.
Okay. And about my understanding about the guidance, if my, I mean, building blocks are correct in terms of qualitative way, so that's your current expectation that was confirmed if it's assumed limited in CMX? Yes. I think that your analysis is correct,
Alessandro. So when well, first of all, you can imagine when we build up the guidance or let's say, when yes, when we build up, let's say, our budget, we were in November. And you remember, November was a nightmare in terms of environment and in terms of expectation of vaccine. So clearly, we had fortunately a conservative view on India and Mexico. I think I already told you during the first quarter results meeting that we have made a 2021 budget for India and Mexico as if in those two countries countries the situation would go back to normal starting June 2021.
So in reality, the situation is unfortunately worse than what we could imagine. But at budget level, the total contribution of India and Mexico, if I'm not wrong, was in the area of EUR 10,000,000, EUR 11 million, so much lower than 2019. This represents a great chance to improve the guidance the day that schools in those countries will reopen because the rest of the world is performing better than our expectations in November because vaccines are successful, vaccine campaign is pretty well organized. It seems that there are absolutely no more doubts that in Europe and in North America schools will reopen. So clearly, but in this situation, we have the, let's say, to give around the numbers EUR 10,000,000 EBITDA expected coming from Mexico and India that are a bigger question mark.
So if these countries will reopen, we will see probably even I mean a better than expected guidance. If they will not reopen, the rest of the world is really performing. So we think that it does not make sense that we reduce the guidance, but neither we reduce nor we increase because unfortunately there is too much uncertainty on what will happen in these two countries. And in this period, I mean, good or bad, these two countries are extremely important for us. And for many years, they have driven a very nice growth.
In Mexico, we have done a great job in the last two years. So from 2021, we expect a strong cash generation and very interesting improvement in EBITDA, but we need to go back to a normal business situation. So we are positive. But for 2021, we need we can only hope that the situation will go back to normal. So yes, your analysis is correct.
Okay. Thank you. So maybe last point. Basically, what you are expecting for the third quarter in terms of school European school, U. S.
School is a very very dynamic probably you have already orders or in The U. S. I know that your retail business is asking products in August. So basically, if I understood correctly, you are being positive on the school business, European and U. S.
School business for the third quarter versus last year was very, very negative.
Alessandro, there are statistics
that are available, by the way. So it's not related to my feeling, but it's very much related on numbers. And by week, the sellout of the retailers is much stronger than the same week of last year. And very, I would say, very close to the numbers of sell out of 2019. So which has not been the case until June.
So what if the question is that is are we positive on the trend of this third quarter? The answer is yes, because we are happy to see that on a weekly basis, the feedback coming from our customers is as positive as we expected.
Okay. Thank you.
The next question comes from Francois Robillard with Intermonte. Please go ahead.
Hi, everyone. Thank you for taking my question. First one is just bouncing on the statistics that you mentioned. I agree in a couple of articles that there was some shortage of back to school products in The U. S.
Currently. Is this a situation that you yourself are facing? Are there any products that you are not able to supply to the market at the moment? Then coming back on your top line figures for the first half, can you just give us a bit of a breakdown of how much was due to the rising prices, which you implemented to face the rising raw material prices? Same thing, can you just give us a quick update on on the situation for some of your main components like cotton or pulp or some plastics?
And finally, can you just give us the detail of the contribution of ARCH to your top line and EBITDA in the second quarter? Thank you very much.
Okay. Concerning the problems related to product availability, frankly speaking, we have been actually impacted in North America because we have containers sitting in the dock of different harbors. For us, this has not been significant because fortunately we have plant in North America and in Mexico fully producing for U. S. Market.
So we have been much less affected. It is true that the big retailers with their own private label have been seriously affected by the disaster of the supply chain in the market. So for us, I would say, yes, it has been an impact. I think it was not worth to mention this because the numbers are positive and we didn't want to enter into too many details of our complicated operations. But yes, we are going to see some slight positive impact on our turnover because of delayed shipment to our customers.
So yes, it's a problem, but it's really a big problem worldwide. The supply chain is really under serious constraints and huge cost inflation. The second question, I think, was how much is the impact of prices? But the impact of prices is minimal so far, at least in this semester, because the prices have been increased depending on countries. We started best case from one May, then one June or sometimes even '1 July.
So the impact on the first semester of price increase has we are going to have this impact, but we are going to have also the impact of cost increase that is extremely important. We have budgeted in around the December towards the January. We have budgeted in a way that we consider the curve of the cost to start going down in July. So our indication was for to the commercial structure organization was to increase prices between 4% up to 6% depending on different countries. Reality is that unfortunately, this is not happening, so costs are not going down.
So the price increase that we have successfully implemented, I would say with not major problems, is not sufficient. So if the situation will stay as it is today, we are going to apply another price increase between last quarter twenty twenty one and first quarter twenty twenty two. To give you an idea on transportation, the cost has gone from $3,000 per container, Now it's $20,000 In terms of the pulp, we see cost in the area of plus 30%. In plastic, we are more towards 100% cost increase, but we see cost increase also in cardboard boxes for displays, for packaging. So the total impact starts to be significant, will be partially compensated by actual price increase.
Clearly, our profitability is growing anyway because fortunately, we were we had high inventory in the beginning of the year, so this is reducing the impact. And in order to fully compensate actual impact, we are we have decided to implement another price increase. I don't recall oh, yes, the last question is related to ARS. ARS is doing extremely well, both in terms of top line and in terms of profitability, which is absolutely in line with our expectation. The legal entity has in the semester has made almost EUR 8,000,000, but only the legal entity because then you have to consider the turnover of Arch is a split in all the subsidiaries around the world.
So I don't have a consolidated number of Arch, but is absolutely in line with the EUR 18,000,000 that we have announced when we made the acquisition. I would say we are higher than the EUR 18,000,000 on a yearly basis. In terms of profitability, the company is absolutely in line with our best expectations.
I can confirm your number, Massimo, totally correct. Just to integrate, if you like, the group ARCH turnover is more or less EUR $11,000,000
to six months?
Yes. Okay. Just coming on the first question, a quick follow-up. So are those supply chain issues and delays in deliveries, will they trigger some penalties from your customers as we saw in previous years?
As you have seen in our presentation, the adjustment now are close to zero and are really related to extraordinary costs mainly to COVID and restructuring and consultancy fee. So you have all the fines that eventually we are facing the first semester are all inside our income statement. So they are not any more extraordinary. There is nothing unusual in this moment because customer understand that we cannot do anything against the harbor that are closed, the shipping company that are not taking our request to ship a product on time. So it's a worldwide situation that nobody can really solve.
And again, as we have majority of our product made in domestic, our rate of service is much, much better than what our customer are facing with their own private label and with other competitor.
Thank you.
The last question comes from Bramble Zako with Mediobanca.
Hi, good evening, everybody. Thanks for taking my question. I have a couple. The first one is on 2021 guidance on free cash flow generation. I appreciate we are in the context of very high uncertainty, but it would be very helpful for us to have a sort of target on your side, even the range in terms of free cash flow generation for this year and also the net working capital assumption underlying such target?
And the second question is on 2022. Based on the very high profitability you are recording, should expect 2022 to be finally the year in which Fira reaches the 17.5% EBITDA margin you have been targeting for a while, I would say. And also for what concerns consensus on 2022 EBITDA, the current number, which should be in the region of EUR 120,000,000 EBITDA ex IFRS 16, in your view, which kind of school campaign is assuming for next year?
Thank you, Zako. Stefano, can you answer first question, please?
Yes, Zako, at the moment, I can confirm maybe can improve the guidance that at the beginning was a little less than EUR 50,000,000. So we seem to be over EUR 50,000,000.
Of
course, this is a good target because it's our natural target in normal condition. At the moment, I will try to confirm that it will be either over the EUR 50,000,000, but of course, it depends from a lot of component elements that are not very certain in the second half. But our view is positive to be to over EUR 50,000,000.
Let me add one point. I think until a few weeks ago, the market did not trust in our guidance. So these numbers are saying that our guidance was realistic despite a very difficult environment. Again, when you do a budget, it is around October, November '20 '20. So please remember the disaster we were in Italy, in UK, in France and so on.
These numbers are simply saying that our positive guidance because at the end was positive because we were moving from EUR 95,000,000 EBITDA to EUR 107,000,000. The numbers of this semester are telling us that now our guidance is really achievable. If by, let's say, the next meeting for with the at the stock exchange in September, we will have clear view of Skol reopening. We will be the first to be happy to review the guidance versus positive trends. But today, August 5, we have only announcement of school reopening and nothing more because they in Mexico and also in India, they are talking of reopening the school August.
So it's just three, four weeks ahead of us. So it will be really stupid from my point of view that we revise our guidance three weeks ahead before seeing if school will really reopen. So maybe in September, we will be able to revise our estimation. Concerning your second question, your second comment of CELA threshold beyond EUR 120,000,000, I give you a very simple mathematical analysis. In 2019, we made EUR 58,000,000 and we ended up at EUR 111,000,000.
You just have to add Arsh that we bought in March 2020 and you have to add the organic growth that Fila has had in its history, except in 2018 and 2019 for the SAP implementation and for the acquisition of Bacon and all the reorganization that for us has been a bit painful. I think that our numbers today are really in line with a minimum threshold of 120. So already the number of this semester.
Clear, thanks. Just on margins, is that 17.5% margin achievable even in the current context of challenges on materials, given the far better seismic that you are enjoying right now?
Yes, it is challenging,
but as every problem, even COVID that has been a problem is giving us opportunities. And the inflation in cost from for example, from my point of view, is not has not to be considered, let's say, as a concern. And I explained to you why. It's more a personal analysis, but I think you can share with me. Number one, in Finata.
In Finata, Finata is a 30 plus percent of our business and the inflation is much lower than other businesses. So let's say that at least one third of our business is not heavily impacted by inflation, For example, cotton for high end paper in this moment is almost stable. Second, the inflation by definition is a percentage of growth. So when you are a brand leader like Fila, it is true that you have to increase prices. But imagine our competitors or the private label that have to pay $20,000 per container when they import sometimes one third of the value of the comparable value comparable to us, to our product.
So if you want my opinion in a business and this I think I have always told, in a business in which the unit price is very unsignificant for the economy of the family, we are talking of a few dollars, few euro per family. I think that this inflation should be of a big concern from the company that have decided historically to occupy the entry level range of product or the big retailers that have pushed for their private label. And in fact, they are struggling a lot. I have I think I already mentioned that the private label in few European countries, Italy, Spain, we have seen a decline of 50%, five-zero, in terms of sellout in our business. Because clearly when you see a reduction of the gap between the brand leader and the private label, clearly the private label become less interesting.
So from what you consider a problem, I think we could have an opportunity. Don't forget e commerce in which private label in our business is zero. Today, I have not heard any question of e commerce. We are booming with e commerce and in e commerce we work with average higher margins and we are already implementing price increase. So inflation is a shorter term problem, but could be an opportunity for companies like Fila.
Yes, thanks. There are no more questions at the moment.
Sorry, there is
a follow-up from Isakko Brambila. Please go ahead.
Hi. Sorry, the very final last question from my side. Any comments on M and A, whether you are seeing any additional opportunity opening up in the asset map of COVID? And if yes, do you feel you are in the position to complete M and A just with your cash per power or are you potentially open to evaluate even other options to finance consolidation of the sector?
Yes. Thank you for this question. But first of all, I think it is important to see that we are proceeding very fast to regain a kind of stability. So with the trend of today, the level of three times NFP EBITDA will be reached towards the end of this year or we will be very close. If you recall, just one year ago, there were doubt on Fira sustainability of the debts and let's say problems like that.
So I think that we are going to regain quickly stability. Our supporter, the banks will appreciate also the speed with which we are regaining stability. You are right. Now that connection has restarted with the competition, I think also you had the chance to analyze the semester of some public competitors. And you have seen that the performance related to our business are definitely worse than what Fila is announcing.
So this COVID is clearly speeding up the potential opportunities of M and A. There is nothing really ready because and today, any way to travel is complicated. Steve, there are a lot of limitations. And Fila, in this moment, would like to deleverage as a priority more than be involved in M and A project only because, I mean, we really feel satisfied and happy, let's say, in the last six months. So we would like to enjoy a little bit at this moment.
It's true that there are a lot of discussions and opportunities coming on the table. I don't see any of them in short term. But with this demonstration of regained cash generation, high profitability and strong leadership in many markets, in the moment in which we will enjoy India and Mexico to restart, yes, Fila will be for sure a protagonist in the future M and A session.
Perfect. Many thanks for all your answers.
There are no more questions. Maximo, I don't know if Joanna has something like a takeaway after the call or otherwise.
I really thanks everyone for the questions, for the patience during this