This is the course call conference operator. Welcome and thank you for joining the Intercos Group first half 2025 financial 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. Renato Semerari. He's Chief Executive Officer. Please go ahead, sir.
You are forgiven. Good evening, everybody, and thank you for connecting to our conference call. In a generally unstable macro environment and a beauty market that is displaying an overall soft trend in both Western and Eastern regions, Intercos posted strong semester results with sales ahead of market and, above all, a very good improvement in profitability.
Now, it's important to underline that the semester offers the most objective view of our results since quarter's reading is blurred by last year's cyber attack. Mainly, the quarter one was depressed by the cyber attack, so it was easy to be discount. In quarter two, last year, we had the backlog absorption, so all the orders that we could not produce in quarter one were absorbed in the course of the second quarter.
All in all, we believe that the first semester data reflects a bit the overall trend of the company, giving a more reliable balance to our results. In the first half, we had sales growing ahead of market, as I just said, with a plus 6% at constant rates versus a year ago. This was driven by the exceptional performance of Makeup, which grew at a double-digit rate and gained back a weight from our total sales of above 60%. What is really remarkable in my view is the record EBITDA that we posted in the semester. We posted EUR 75 million of adjusted EBITDA, up 16.5% versus a year ago, with 140 basis points of improvement over the first semester of last year.
Looking at the EBITDA margin on value-added sales, we reached 13.3% of margin, up 176 basis points, which is the best ever margin on value-added sales the company has ever had. It's important to note that profitability grew substantially also in the second quarter, and we now have a rolling EBITDA of EUR 154 million. Net debt was at EUR 135 million, maintaining the leverage ratio we had overall last year with 0.07 times EBITDA, despite the increase in CapEx we have experienced in the first semester for the expansion of the Korea plant and the Chinese plant as we had anticipated in our roadmap of plant expansion. Let's now look at the overall figures a bit more in detail.
As said, sales were at 5% at current rates, 6% at constant rates, with value-added sales growing also by 5% at current rates, which reflects a substantially flat percentage of packaging costs on our sales. The phenomenon we had seen in the past two years of an increasing weight of packaging on our net sales has stopped, and we are now flat versus a year ago in terms of weight of packaging.
Adjusted EBITDA grew, as I said, by 16.5% with a margin expansion of 140 basis points. As I said, what is more important in my view is the marginality on our value-added sales, which grew by 176 basis points, getting to 18.2%, which was the highest ever achieved. Net income was instead down by 60 basis points due to two factors: the negative exchange rates had an impact, and also interest rates had an impact.
Stefano will take you through in more detail on these dynamics. Looking at the second quarter in isolation, sales were substantially flat at constant rates, facing last year orders backlog recovery, as I just said. The good news is that the margin expansion was there despite the top line was basically flat, with a gain of 103 basis points over last year, which was the best quarter in terms of profitability for the total year. Now, looking at the sales dynamics, let's start by the sales by business units.
Here, the sales trend showed a completely different dynamic than last year, with growth which was entirely driven by our key business unit, which is Makeup. Makeup was up by 18% in the semester and plus 13% in the second quarter. We posted growth, material growth in all regions.
Most nationals were the key contributor to the growth, mostly pushed by our innovation powders and foundations. Those were the two segments that were displaying the fastest growth rate. Both mass markets and prestige grew, with a skew to prestige, which also helped profitability.
Makeup went back to over 60% of our total sales, and Stefano will explain that this has a mixed impact, which is favorable for our total profitability. Skincare closed the first half at minus 6%, mostly due to the first quarter result. The performance was affected by the U.S. emerging brands, while multinationals were growing, especially in Europe. Important to remind that BU was facing a strong first half of last year, at plus 16%. Hair and Body closed the semester down by 16%, entirely due to the sharp drop we faced in the quarter two.
Last year, just as a reminder, quarter two posted a plus 39% thanks to a number of fragrance initiatives that could not be anniversaried this year. Moving to sales by region, sales growth was again pushed by the performance of Asia, like in the past two years. America came back to high single-digit growth, while Europe had a flat semester. Going in more detail to region by region, Asia posted a +16% in the first half, despite last year's very high days. Last year, we had a +28%.
We had both quarters displaying double-digit increases, with both Korea and China continuing on their traction. This is no different versus what we experienced last year. Makeup was clearly the driver segment in this growth. Now we have Asia waiting for 24% of our total sales. Just as a reminder, a couple of years ago, Asia was only 17% of our sales.
America posted a +9% growth in the semester, with both quarters displaying growth. Makeup was once more the only growth driver. prestige was clearly the winning channel, driven by both multinationals and emerging brands. Accor and Mia, the semester ended flat versus a year ago due to the soft second quarter. The region performance was affected by the difficult Hair and Body second quarter.
As you know, Hair and Body is a segment which is basically present in Europe. The drop we saw in the segment had a weight on the region, while Makeup and Skincare had very healthy growth rates. Moving now to sales by client factors, also in this case, we witnessed a growth profile which is different from the recent past. In fact, multinationals took back the main role in the scene, getting back to 48% of our total sales.
They posted double-digit growth in both quarters, closing the first half at +18%. Makeup was obviously the focus, with Asia and US as key regions. As for the emerging brands, they closed the semester down -8% due to the second quarter double-digit decline in front of a year ago +34% growth. In this case, the main driver of the decline was Hair and Body category, as explained a few minutes ago.
Accor retailers, as you may remember, last year we had a difficult year with retailers. Now we gained back part of the year ago decline, growing at double-digit rates in both quarters. First half ended at +18%, with Makeup and Mia as major drivers for this group of clients. Let me now pass the mic to Stefano, who will take you more in details into the financials.
Thank you, Renato. Good evening, everyone. As already mentioned by Renato a few minutes ago, the first half of the year recorded a 5% increase in sales, bringing total revenues to EUR 525 million. This is despite the market uncertainty caused by the severe geopolitical situation and the well-known issues of the U.S. tariffs, which dominated the scene in the second quarter.
The macroeconomic turbulence triggered by the Trump administration was also felt in the currency markets. For our group, the depreciation of U.S. dollars and the Chinese renminbi weighed particularly heavily. PAC revenue growth at constant rates for the tax would have been 6%, 1% higher than the reported figures. EBITDA shows strong growth, reaching EUR 74.5 million, or up to 16.5%, effectively three times the rate of revenue growth, with EBITDA margins further improving from Q1 to 14.2%.
The main reasons for this positive and sound performance were the excellent performance of the Makeup business units, up 18% compared to last year, and a favorable customer mix, particularly because of the growth of the prestige client, which grew double digits in both the Makeup and the Skincare business units. At the same time, the group was able to keep the pre-issued revenue model, with the adjusted EBITDA on value-added sales at 18.3%, or plus 177 basis points versus 24.
On top of this, the company and the group continued the improvement in the transformation cost. Among the operating expenses, we recorded net non-recurring charges of EUR 4.4 million, mainly related to HR severances, legal consultancies, and GI bonuses, with positive impact that came from the insured entities for about EUR 2.5 million and the release of bad draft provisions.
Taking into account the depreciation and impairment, which amounted to EUR 26.2 million, the EBIT came in at EUR 43.9 million, equal to 8.4% of revenues, up 25% over last year. The financial component weighed on operating profits by EUR 13.4 million, mainly due to currency factors, with a net impact of approximately €6.6 million. With an average net financial position to act the tax, the SB5S, sorry, of EUR 75 million for the semester, the financial component resulted in the net financial charges of EUR 6.4 million.
Finally, considering a reported tax rate of 45%, the group net income amounted to EUR 6.6 million. Where, excluding the extraordinary income component, net profit reached EUR 20.7 million, equal to 4% on SA, slightly below last year's result despite the aforementioned FX impact. Let's then turn to the results, EBITDA results by business unit.
The EUR 74.5 million EBITDA is attributable 66% to the Makeup business unit, 19.2% to the Skincare business unit, and the remaining 15.2% to the Hair and Body business unit. Compared to the same figure last year, the Makeup division improved its profitability by over 120 basis points, with an absolute increase in EBITDA of 27.8%. This positive result was achieved across all geographic areas where the group operates, thanks in particular to the performance of prestige and multinational customers.
After a particularly strong 24% in general revenue, the Skincare business unit experienced a slight decline in sales, but still managed to improve its EBITDA, both in absolute value at EUR 14.3 million, or plus 32.5%, and in relative terms to revenue, plus 530 basis points, thanks to a more favorable prestige customers' mix.
The Hair and Body business unit saw reductions in contract manufacturing activities related to emerging brands during the first half of the year, trends that have shown strong results in the same period of last year due to the numerous product launches. As a consequence, EBITDA was impacted by these trends and decreased to EUR 11.2 million, down EUR 3.6 million, representing 10% of the net revenues.
All in all, the excellent results of the core Makeup business units more than offset this temporary weakness in the business unit dedicated to contract manufacturing. Let's have a look then through the cash flow. In the first half of the year, the group produced approximately EUR 36 million in working capital and over EUR 33 million in CapEx.
As a result, the operating cash flow was EUR 7.7 million, and the lower tax generations compared to the one recorded in the same period of last year is justified by higher CapEx, particularly in China and Korea, where the group is expanding production capacity in response to the significant local business growth, and by higher DSO due to the current seasonality and the current weight of multinationals.
At this stage, we do not see any critical issues in terms of cash flow, even when considering expectations for the second half of the year. Following the distribution of approximately EUR 18 million in dividends, the net financial position stood at EUR 134.5 million, corresponding to a leverage ratio of 0.87 times EBITDA. That's all for the financial highlights.
Thank you, Stefano. Now, moving a bit our slide, ahead of us. Now, the situation of the market is very visible for everyone. The market is quite unstable. We've seen, you know, this, trade wars and announcements about tariffs, are polarizing everybody's attention, including in our sector. All in all, the market is quite soft in the beauty sector this year, especially for what concerns Makeup, which is obviously the segment we follow with more interest given the weight it has on our business.
The U.S. market is showing a low confidence rate from consumers. Most of the segments, especially Makeup, are showing a soft trend. Eyes are declining since a few years. You know, face is quite stable, while lips is the only segment that is really showing growth. The U.S. remains an area of a bit of concern.
On the other hand, we had a year that is posting some positive growth, not comparable to the growth rate of last year, but still positive, although less so in volume terms, which is the indicator that is more interesting for us. As for Asia, we've seen some positive recovery signs from China. Unfortunately, the June 18th e-commerce promotion was not that positive.
Despite that, the semester closed with a +3% growth in China, which is better than the one we saw last year, but still not strong enough to drive growth in a more decisive manner on a global spectrum. All in all, the market is soft. We'll now see what are the consequences of all the tariff moves on the second semester. All in all, we expect now a market that will remain positive, but below the usual growth rates this market is used to do.
In this context, we have decided to focus our attention, to focus our efforts on our core business, which is Makeup. This is the segment where we can leverage superiority in innovation, and this is where we're going to be focusing our attention, as well as pushing hard to improve our profitability as we did in the second semester.
Despite this would be a year with a topline growth rate, which are below the usual rates of this company, we are very confident in a significant improvement in profitability, which makes us confident to reach the contentious expectations in terms of EBITDA for the fiscal year. The last sign I would like to leave you is that the order entry continues to be solid, and this gives us confidence, and especially in Makeup, which, again, as I said, is the focus of our effort for this year. That's all the key points we wanted to flag to you. We are now ready to take on your questions.
Thank you, sir. This is the conference call operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press * and 1 on their touch-tone telephone. To remove your question, please press * and 2. Please pick up the receiver when asking questions. The first question comes from Anna Frontani of Berenberg.
Hi, sorry not to say hello. Thanks for the presentation. Good afternoon, everyone. I have these questions. The first one is if you can confirm whether you still expect full-year sales growth at constant rates in the range of 5% - 7% as previously communicated?
Sorry, excuse me, Ms. Frontani, we can't hear you very well.
Okay.
Sorry.
Can you hear me now?
Much better. Thank you.
Okay. Yes. The first question is related to the previously communicated guidance. Do you still expect sales growth for 2025 at constant rates in the range of between 5% - 7%? The second question is about emerging brands. I've noticed the declines too. If maybe could you provide more color on what's driving the softness? Are you seeing a broader slowdown in demand, delays in launches, or maybe some brand-specific issues?
The third question is about the U.S. market dynamics, specifically, assuming you use Korea's strong holding in the U.S. I was curious if you're seeing an impact or see some customer behavior from this, or maybe it's too early for us to have any potential implications for Intercos. Sorry, if I can squeeze a very quick one. If you can give us the split of volume versus pricing, either for Q2 or H1 growth.
Okay. Anna, thanks a lot for your questions. I'll start from the last one, which is the easiest. The pricing impact was in the range of 0.5%. It was a limited, very limited impact on the total, as expected. It's growth was really volume-driven, once more versus pricing. Moving to the guidance, which is the key question here. In reality, in terms of top line, we expect it will be a bit below that. It will be in the low single digits. You know, it's going to probably be more in the range of 3% - 4%, more than 5% - 7%, given how the market is shaping and the fact that we have Hair and Body that is going to be below our initial expectations and is showing a declining rate.
We are very confident about growth in our innovation categories, while on the more contract manufacturing part of the business, it will be tougher than originally anticipated. In terms of topline guidance, I would stay a bit more on the conservative side. On the other hand, and this is more important, I think that the results in terms of profitability are better than what we had anticipated. As you've seen, you know, I've always spoken about the 50 basis points improvement. We are way above that rate, and that is what we want to focus on in this moment of overall market softness. All in all, it will be a rebalancing year after very strong years in terms of topline growth with dilution marginality. This year, we're going to rebuild marginality and have a more moderate growth rate in terms of top lines.
Going to the emerging brands, the picture is a bit affected by what is happening in the Hair and Body sector, where we had emerging brands that were pushing sales thanks to initiatives in the fragrance market that had a high impact in terms of top line last year. This year, the anniversary of those initiatives is not producing the expected results, and it is a lot softer there. Emerging brands are a bit affected by this trend. If I look at the key, the core segments of Makeup especially, we are seeing emerging brands continuing to perform well, in some regions very well. All in all, we are not worried about the signals that we're getting. It's more contingent on specific performances in certain segments. As for the U.S. market, I think that Kolmar is not that I think.
I know that Kolmar decision was taken way before the famous April 2nd announcement of Mr. Trump. It's a market where Kolmar wants to expand. It's very much focused on Skincare, which is their core category, as you know. We are already tipped with plans in the U.S., as you well know, and it's a bit early to predict what is going to happen. The picture is clearing up, but with ups and downs, we do not know exactly on which foot we're going to be dancing. The reality is that we have not seen, aside from a few emerging brands that are asking us to move production to the U.S., we are not seeing yet a massive movement in that sense. It's a movement that I would personally like a lot, to be honest, because we are better equipped than most of our competition in the U.S.
We would welcome a move to the U.S. The big question mark for clients is related to packaging, which in many instances is still coming from China. The more packaging costs, the more the tariffs on China are having an impact on the final cost of goods. It will be a bit of a fasted reaction, depending on what kind of packaging clients are buying from which country, that will lead to different ways of behaving. We are obviously starting. We have seen the impact of tariffs on the second quarter of the year. We have reverted the vast majority of it to our clients. Whether that will trigger a massive movement to the U.S. is still to be seen. It's still a bit early days. I hope I've answered to all your questions.
Yes, thank you very much, Renato.
Thank you, Anna.
The next question, sir, is from Guillaume Moret of UBS.
Thank you very much, and good evening all. Two questions for me, please. The first one is on your EBITDA and margin outlook. You've decided to focus on profitability this year. You mentioned that the first half margin was ahead of your expectations. What were the main reasons for this positive margin surprise in the first half? Do you think this is extrapolable to the second half so that 100 basis points plus of margin improvement in the first half, we could see something of similar magnitude in the back half of the year?
Thinking about 2026, are the margins you'll be achieving in 2025 sustainable, or is it a bit of a one-off, and from next year, we could see margins coming backwards? My second question is on adjusted net income. Because again, your EBITDA in the first half was nicely ahead year- over- year.
I think it's 16.5%, you mentioned, but then adjusted net income was 9% below. Tax rate, financial expenses very much ahead in the first half compared to where they were in the first half of last year. What should we expect for both lines, tax rate and financial expenses, for 2025 as a whole? How will it compare to 2024, to what you report in terms of tax rate, financial expenses last year? Thank you very much.
Thank you very much, Guillaume. EBITDA margin, there were different factors displayed in our favor. There were things that we knew and we expected, and things that we didn't expect, at least in the extent that we saw it coming. Mix was favorable, compared to last year. There were two different types of mix effects. One is the relative weight of the business units on the total sales, which had an impact.
The fact that Hair and Body, which, as you know, is the business unit with lower marginality for us, went down, while Makeup went up in such a significant way, played in our favor and brought our weight of segments more in line with our historical situation. This was favorable, and this was a bit above our expectations, because we were not expecting Hair and Body to perform to this extent.
The second is the fact that prestige has been growing faster than mass market. This also is very visible in Skincare profitability. It's also visible in Makeup profitability. This was somewhat expected, but again, given the growth rate we had in Makeup, and especially driven by prestige, was a bit above our expectations as well. The third factor, which is the one we knew better, is productivity, that for once, has not been hidden by mix effects, increases of packaging costs, and all that.
All of a sudden, you're now seeing the results of not only six months of work, but the whole previous year of work now become visible to you. This is also leading to the improvement in profitability. All this went in a very positive way, I would say. Is this a one-off? Personally, no, I don't believe it's a one-off.
The productivity improvements were already there last year. We continued in this semester to bring productivity improvements, and they will keep being visible unless there are factors like full service, so packaging growing in a significant manner, or having different mix effects that, like in the past years, were affecting our profitability. I don't think it is a one-off. In reality, there isn't anything really extraordinary.
We are just coming back to a mix of business that is more in line with the history of this company. I think that it's more a one-off what we've experienced in the past two years, more than what we are seeing this year. I'm pretty confident for next year as well. Now, on the adjusted net income, it's better that I pass to Stefano. He certainly is more precise than I am on this.
Regarding the tax rate, as you may now understand, the tax rate for the first half is affected by the dividend distributions. That's why we saw the 45%. What we see for the full year, the tax rate is more standard, more in line with last year. I would say I would expect a tax rate of about 30%. Regarding the financial expenses, taking us time for a while, the possible impact on currency that is very difficult to predict at this state, I would consider EUR 10 million net in net financial expenses.
Very clear. Thank you very much.
All right, thank you.
The next question is from David Hayes of Jefferies.
Hello. Good evening, all. I'll just follow up on Guillaume's question, actually, just in terms of the profit uplift for sales direction. You talk in the outlook about focusing on the core and therefore boosting profits. Are there certain projects that aren't happening this year and that you're kind of delaying into next year? I guess, is there some kind of impact potentially of that in terms of growth next year? I just want to get a sense of whether there's some non-core projects that you're basically delaying because of the uncertainties. For the second question, in terms of the emerging brands in EMEA, it feels like that's where the real, obviously, soft spot is to your discussions.
Is that just very consistent across all of your customers, or is there one or maybe two customers who have particularly been buying differently and have planned differently, and that's been the surprise? I just want to know how consistent the difference in demand is. Thank you.
Hi, David. Project delaying? No. There isn't any delay on any project. It happens that our projects were focused on our core, again. The reasons why we are expanding, as an example, our capacity in Asia this year, and we will be doing the same in Europe next year, are very much focused on Makeup, and to a lesser extent on Skincare, but not really on the contract manufacturing side of things, which in reality we had done a couple of years ago.
No, there isn't project delaying, but there is a deliberate effort from our sales force to focus, and from our marketing forces to focus our efforts on where we can get higher dividends out of the effort in terms of marginality and profitability. There isn't anything substantial in mid or short or long term that we have decided to par.
We don't think there is anything to par because we are, you know, all in all, we are pretty satisfied with the results we had because we knew we had to recover in profitability. You all have been very vocal on the fact that we needed to show improvements on profitability. It shouldn't come as a surprise that we are focusing on that. You know we are not stopping anything we had planned to do, for any reason. In terms of Europe, emerging brands, as I said, it's very much driven by Hair and Body customers. As you know, we had exponential growth in the past two years in that area, in that group of customers, in that segment, which was particularly driven by fragrances.
The fragrance world, I'm very knowledgeable of this because I've been on the brand side for many years, and I had fragrances in my portfolio for many years, is quite volatile. It can react pretty quickly to new initiatives, new launches. If you're not strong enough in planning the anniversary of those, then you have drawbacks the following year. Unfortunately, this is what happened in this instance.
We've been particularly affected by this factor. I think that the growth we have experienced in the segment in the past two years was way above anybody's expectation. This year, we have the other side of the coin, let me say. In terms of mid-long-term trajectory, it doesn't change this, it doesn't change anything substantial, to be honest.
Okay. Great. Thank you.
Thank you, David.
The next question is from Paola Carboni of Equita.
Yes, hello. Good afternoon, everybody. My first question is on the order pipeline. Apparently, your downward reading of the guidance is pretty much linked to the decline in Hair and Body. I was wondering, would it be fair to say that, given the supporting order pipeline, your expectation and your outlook for Makeup and Skincare are broadly unchanged compared to what you said in the past quarter?
Also, still on the order pipeline, can you comment about the visibility you might have in terms of making sure the contribution of prestige versus mass market? Is the outperformance of prestige continuing the quality within the order pipeline? Is that the best overview you have? The second question is instead about your EBITDA margin trajectory, which has been admittedly very strong. You are delivering on efficiency gains.
I was wondering where you are here in your journey in terms of a potential efficiency gain, and how much can we expect this lever to play in favor of the profitability gain in 2024 - 2027, for example? The last question is on Hair and Body. You have referred to it apparently as a temporary decline. I was wondering what gives you maybe any confidence that this is just a matter of, you said, anniversary, past launches, or maybe the stopping from some clients or whatever drove you to say temporary, let's say? Thank you.
Paola, one second. I'm noting down because I'm getting old and I forget questions. Order intake , as I said, remains solid. It's going very well, especially in Makeup. The trend we are seeing in our portfolio of orders mirrors quite well what has happened in the first semester.
We are seeing both prestige and mass markets going up, to be honest, but prestige a bit faster than mass markets. We think it's going to stay like that, at least for this year, which is obviously good news. We'll see how things evolve in terms of general economic conditions, especially in the U.S. If there are going to be inflation, duty tariffs or not, this could create in 2026 some changes in the consumer preference in terms of segments and all that. That is a bit too soon to be seen.
For the time being, we are seeing solid order entry and prestige performing well. It's good news. Going to your second question about EBITDA margin and productivity going forward, there are two types of productivity improvements. There is the daily work that is done in our plants to improve productivity. This is a daily work, and it's going on. We are not at the end, and I think we will never be at the end. Otherwise, it means that we need to do some other changes. This will continue to go on.
There could be other activities that are a bit more, let's say, discontinuous that we will be looking at and we are studying. Those will have an impact if we go ahead farther on in the future. Obviously, we're looking at positioning ourselves in lower cost, lower labor cost countries for parts of our production.
I think that the commercial agreements, the partnership we've signed with Meiyume in Indonesia, is going in that direction. Giving us capacity in lower cost labor countries is a direction that is important for us. That might be projects going in that arena also in the future. We will keep working. This is not a one-off. It's an ongoing effort that needs to be made. Hair and Body performance, it says temporary because this sharp up and down tends to reset the base in a more consistent way.
In the past two years, and we said it pretty overtly, you know, we had, as an example, you know, we had a segment that was basically new for us that was fragrances, on which we grew much more than what we had expected. We gained new clients and significant initiatives from these clients.
Now, there are not that many clients in that segment. If a few of them have a quiet year in terms of initiatives, it can have an impact on the overall performance that we are rating in this segment. This is what is happening this year. I think that we are resetting the base in a more reasonable place, which should then give us a more, let's say, linear growth profile in the future than what we had in the recent past. Temporary is because the up and down is pretty sudden, linked to the initiatives that happened last year. I think that the base will be in a more stable place, let's say.
I think I really have to just follow up on this. Is there any chance that this moderation in Hair and Body might be affected by maybe your initiatives to be more present within the Hair and Body, but in the segment where you can work with your own formulation, which was one of your aims, let's say? I don't know if you can tell us about this success in this direction. Thank you.
It's a bit like productivity. It's something that we work on day in, day out. It's a constant effort. We are growing in terms of innovation capabilities, especially in hair care. I would say less so in body care, but hair care is an area of focus for us in terms of innovation. We are growing, but you know, typically, these are segments where you gain either more clients, emerging brands that need to grow, or niche initiatives of bigger brands.
The growth will come little by little, brick by brick, year after year. You won't see the volumes injections you can get when a fragrance, an important fragrance, is being launched to the market. That gives you immediate volumes that are concentrated in a matter of six months in reality. It depends a lot on what happens in terms of sell-out for that brand. You have an immediate impact. In the hair care and innovation side, it's a little by little building the client base, building the project base, and it's a long-term journey that we are in. We're making progress year after year, but it's a long way forward still.
Perfect. Very clear. Thank you very much.
Thank you.
The next question is from Mikheil Omanadze of BNP Paribas Exane.
Hi. Thanks for taking my questions. I have one question or two for us, please. You know, when we listen to the music players, especially in the cosmetics, Skincare side of things, initially, it's what's supposed to be a half-year period with launches. Do you still think it's going to be the case, or you're seeing some of those launches being postponed into the next year?
In terms of the follow-ups, the first one, just to make sure I understand this correctly, the top three to four for the full year, that's at the constant rates level, right? Which would imply 0% - 2% constant rates for H2? Also, a follow-up on one of the questions. Could you confirm that the guidance part was largely driven by Hair and Body, or you would prefer not to specify segment-wise? Thank you.
Hi, Mikheil. No, we're not seeing, you know, launches postponed. We are seeing, you know, some lengthening of the orders, but more on the repurchase side. This is mostly driven by brands being a bit cautious, given the tariff instability, not to be too exposed to big orders that would come and get hit by tariffs or unexpected kind of tariffs. I think this is going to be, it should clear up with the month of August when we will know more clearly what is going to happen in that front. No, I mean, to be honest, in the second semester for the beauty market in general is the semester of the big launches.
This is pretty standard, and I would be surprised that brands would delay launches given the fact that, you know, without initiative in a market that is not growing fast, it would be very bad in terms of end results. You know, the business kills Christmas. It's not a mystery. It's pretty normal that September, October are the months where most of the initiatives appear to profit from the novelty effect at the peak consumption period of Christmas.
No, I don't see, I don't see postponements in that. Obviously, for us, everything is a bit anticipated. If someone launches in September, it means that we are producing three months ahead of that, normally two, three months ahead of that. It's not the same, the same pace.
The second point you made, yes, constant rates, yes, we are talking about that because, to be honest, we are a bit confused about the currency trends in general. I must say that we do not get a lot of help from what we see from the banks because we see a lot of divergent opinions in terms of what to expect. Yes, I prefer to talk about constant rates because it would be a bit of a gamble to see what happens on the currency front.
From an ignorant, like me, I would have expected euro to go down relative to the dollar, given the different trends in terms of interest rates. It has happened exactly the opposite. Honestly, it's a bit difficult for us to predict what is going to happen in that front. On the third element, the guidance, yes, is mostly driven by Hair and Body.
We knew that it was not going to be a brilliant year for the segment. We always said it was going to be a consolidation year in that front. The consolidation is there, but it's a bit more evident than what we had expected at the beginning. I think that what you're seeing in terms of results for the first semester are clearly showing the main dynamics of the year.
I would like to underline the EBITDA improvements that come also thanks to a different mix of the different segments we are competing in. I think we look at both the positive and the less positive things. Personally, I'm very happy about the performance we are having in EBITDA, and the mix of segments is contributing to that as well. It's everything that's good and bad. This one, I rather take it positively, rather than the opposite, to be honest.
Perfect. Yeah, thank you, Renato.
Thank you, Mikheil.
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Thank you very much. Thank you, everybody. Thank you. For those of you who will enjoy vacations, have a nice vacation. Goodbye.
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