Good morning, everyone, and thank you for joining today's call on the Newlat Food 2024 half year results. My name is Benedetta Mastrolia. I'm the Investor Relations Manager at Newlat Food, and joining me today to discuss our results are Angelo Mastrolia, our Chairman; Giuseppe Mastrolia, our CEO and Chief Commercial Officer; Rocco Sergi, CFO; and Fabio Fazzari, Group Financial Director. Before starting, I would like to remind you that this presentation might contain certain forward-looking statements that reflect the company's management current views with respect to future events and financial and operational performance of the company and its subsidiaries.
These forward-looking statements are based on Newlat Food S.p.A.'s current expectations and projections about future events, and any reference to past performance of Newlat Food should not be taken as a representation or an indication such performance will continue in the future, and this presentation does not constitute an offer to sell or a solicitation of an offer to buy Newlat's securities. We can go directly to page seven of the presentation, where we have our key financial highlights for the period as usual. We can say that the first half of 2024 was impacted by a deflationary environment, which resulted in lower sales as opposed to last year. We had EUR 370.1 million sales as opposed to EUR 413.3 million in the first half of 2023.
This was, of course, the result of a lower average selling price in all the main business units. However, we still had some positive performance. For example, in dairy, where we had an increase of 13.4%, which was split by a 10% increase in volumes and a 3% increase in pricing. Where we are gaining the most in this period is definitely our margins, where we had an increase, for example, in EBITDA, which was EUR 39.3 million, as opposed to EUR 38.5 million in the first half of 2023. In terms of margins as well, of course, we had an increase in EBITDA margin, which was double digit, and it was 10.6%, as opposed to 9.3% last year.
This is, of course, thanks to better purchasing conditions of raw materials because of the lowering prices and also just a better management of our resources overall. In terms of EBIT, we also had quite a good result. If we look at EBIT on an adjusted basis for 2023 , which excludes the EUR 1.67 million of income from business combination, which was recorded in 2023 , we had just a slight decrease of EUR 600,000. But overall, we had a very good performance in EBIT as well. Net income was particularly good in terms of performance. We had an increase of 11% if we look again at the adjusted figure for 2023 .
We had a EUR 10 million net income as opposed to a EUR 9 million net income in 2023. In general, we also had a very good free cash flow generation, which was EUR 20.5 million . Last year, we had roughly EUR 17 million , so we can say that we had a really good performance in cash generation. Also, thanks to our very good performance in terms of operational results. We also had an EBITDA free cash flow conversion of 74%. In terms of net debt, we also had a fantastic result, which ended in an almost neutral position of net debt, which was EUR 1.5 million , as opposed to EUR 29.5 million .
And this is on an IFRS 16 excluded basis, so we're excluding IFRS 16 in this accounting. However, the results for net debt, including IFRS 16, these liabilities were still positive, and it was EUR 42.6 million as opposed to EUR 74.3 million at the end of 2023. On the next slide, we have sort of a wider picture of what happened in the period, so in terms of revenues, as we said, we had a decrease. However, we would like to remind that last year, our results were, let's say, inflated by a very good performance, both in terms of volumes, but also in terms of an increase in the average selling price, which resulted in an organic increase of 19.3%.
If we include the inputs, it was even higher at 23.2%. So overall, despite the fact that we had a decrease, we can say it wasn't as bad as we might expect as well if we look at the comparison base. In terms of KPIs, we've already looked at EBITDA, so we had an increase in the EBITDA margin and EBITDA in general, with a 2% increase. And we also had a very good performance in other KPIs, such as return on sales and return on investment, which increased as opposed to the first half of 2023.
We also had a very good double-digit performance in the return on capital employed, which confirms the sort of the number we found at the end of 2023 for return on capital employed. The first half of 2024 was still a very investment-heavy period, where we're still finalizing the investments within the special products segment specifically. We also had the investment in Germany, but the most significant one is in the special products segment. But this will hopefully drive efficiency, which this will definitely drive efficiency in the future, and we can expect to see some volume coming back in the second half of 2024 for special products specifically.
For Germany, we will see more results in the next years or so. Cash generation, as we already said, was 74%, so very good performance. Net debt, again, very good performance. We have to keep in mind that we had an extraordinary, say, deleveraging process in the last couple of years. If we keep in mind the position that was within CLI when we acquired it, as well, the bond issuance, so we've had a very good result in that sense as well. Now we go straight into some marketing and commercial activities that we've done in our main markets. Now we're looking at Italy. So for Italy, we focus on two main areas, specifically. So on one hand, we focus on the pasta and some foods, in particular, with Naked.
We've just launched the Naked Pasta range in September, so we were working on the launch since the beginning of the year. And at the same time, we also tried to integrate as much as possible the Delverde brand into the Crostino and GranFetta world. And by doing so, we've also just launched in June a new website for Delverde, which includes both Crostino and Delverde, so unifying basically the brand finally, and making just one big brand that covers both pasta and bakery products. In general, we've also worked a lot on social media and on marketing activities. We've done a 360 campaign for Naked, for example, but also for other brands.
We've just recently at the end of last year signed a contract with a counterpart, which is able to give us a platform, basically, which helps us find and scout influencers and people online. And it's an AI aided or boosted platform, which is very helpful in keeping relationship with these influencers. So we've been increasing our exposure to influencer marketing online, both for Naked as a first trial, let's say, but now we've branched out to, for example, Optimus, which is our mascarpone brand. We started working with some influencers and especially some chefs as well. So that's really helpful and sort of a very useful tool for our market and for our brand presence online.
In terms of milk and dairy, as I said, we are investing more on Optimus. We're really trying to relaunch the brand as much as possible and to keep the brand as say as well perceived in our customers' eyes as possible. We've also focused a lot on Mukki. We did some co-marketing activities, for example, for the Inside Out 2 movie. And we also just launched again in June the Mukki Bimbo e-commerce which has been doing really well. So we've been selling all of our baby milks with powder and liquid online, and it's been a very successful new channel for us. We've also been working on community engagement with our milk as usual. Going to the U.K., we're looking at Naked.
So with Naked, we've had a very good period in terms of marketing activities. We launched a new creative concept, which has helped us be consistent in communication, to be more memorable in the customer's eyes, as well as with the 360 campaign, we were able to sort of target all our customers. And the ad you see here was particularly humorous, so it really helped us gain some brand awareness, which increased by 7%, as well as the purchase intent, which also increased by 7% as opposed to last year. For the second half of 2024, sorry, we have some more activities in mind, and our new campaign goes live in the next couple of days as well.
We will also launch some three new products and three SKUs, so one is Sri Lanka-style curry and two ramens under the Ultimate sub-brand, and we are working on a new brand planning, but also on a completely new brand positioning for Naked, which we are really excited about and been working on for a few months, and hopefully, we will be able to reveal what it is soon. In terms of Mug Shot, on the other hand, again, in the U.K., we've had a very good performance as well. We've been able to increase our brand penetration as well as a number of buyers, so we had an increase in those compared to last year, as well as an increase in sales units, especially in the last 12 weeks as opposed to last year.
We've been working again on some marketing activities in the 360 campaign, which reached millions of customers in the U.K., as well as some in-person activities, such as the Mug to Mug tournament. We have some more to come in the second half of the year. With Mug Shot, we also worked on NPD with some new products, such as salt and pepper, chili beef noodles, and we also launched the Mug Shot Max, which is a bigger portion of Mug Shot, which has been performing quite well since we launched it in June. For Mug Shot, again, we're working on a pipeline of new projects and brand planning for 2025. We put this here to kind show what's been going on in the U.K. for the past year or so.
So we've had a very steep decline in the average price index and that means that this impacted also the cost and the pricing of commodity products, which impacted a lot also the, say, instant noodle market, but also the fast food fast food chains and fast food restaurants, as well as just normal restaurants. You can see here an example. So this, of course, was particularly detrimental to the performance, but nevertheless, we were able to still get, again, some positions in terms of marketing. So hopefully we will see some more positive results in the next months. And now we jump to Germany, where we had a good performance in terms of branded pasta specifically.
If we look at the performance for the last year in pasta in Germany, we had just a slight decrease of overall branded pasta of 278 tons, with, however, a very good margin improvement of 5.3% year-on-year. If we look at Delverde specifically, we actually had a growth of just 1%, not too much, but still growth. If we think that last year we hit a record high in terms of volumes, which was over 42,000 tons of just Italian pasta in Germany, we can say that this is still a very good result, and especially if we look at some competition, as we've had...
Our number one competitor has been losing 8% in the last year and in the first six months of the year. Definitely, a good result if we look at the bigger picture. Now, just some updates briefly on Minuto. Minuto was launched just last year after we acquired EM Foods, and it's been doing pretty well. We had, again, a campaign with Minuto both on social and in person, with billboards and sampling. And it's been doing pretty well. The product is very well liked by customers, and we already launched 13 new SKUs this year. We launched 23 in the first year when we launched it, but now we will still have 13 more.
So many, many exciting recipes to come, thanks to the EM Foods, NPD and sort of chef background. So I'm really, really happy with the results so far. Now we go directly to the sales breakdown and analysis. So in general, as we announced, the period has seen a decrease in most of the segments, excluding dairy. Pasta was impacted by a combination of a lower sales price, which was across all categories, of course, but also as a result of a decrease in the pasta volumes in Germany and also in B2B and private label. Milk and ready meals as well were mostly impacted by the lower prices, but also by the loss of some volumes in Italy and the U.K.
In bakery, we had a decrease of 9.6%, which was the combination of different factors. One is the fact that we had to shift some promotional activity to July and August instead of June, so we lost some volume there. But also we had a decrease in price, which impacted roughly 7% of the 9.6% total. So, quite a lot was due to the pricing effect. In terms of the areas.
I want to add concern, something concerning the revenue breakdown. Concerning the revenue reduction, I want to emphasize that, strategically, during this period of price reduction, we chose to prioritize our margin preservation over aggressive promotional prices, as this would impact our margin. And then now from July onwards, we restarted all the promotion activity with our retail customer and partners. We prefer to prioritize the margin over the turnover and the revenues. Thanks, Benedetta.
Thank you. Yes, so as Giuseppe said, we try to protect as much as possible our margins and... However, we still had some growth in dairy, as I was saying. And we had an increase of 10% in volumes and 3% in value in dairy. And in special products, we had the impact of the current investment at our San Vito al Tagliamento plant, which were not finished by end of June. However, we will see some improvement in the next months, and definitely by end of year, we will be reintroducing some production. Now we move to distribution channels. So again, in general, we had a decrease mostly in our large retailers and B2B partners, which are our two main channels.
We had some decreases as well in the other channels, but not as important, let's say. But this was mainly due to the decrease in average selling price and also some shifts of promotional activities to July and August, as Giuseppe was saying. And really, there was comment there. In terms of geographies, we also had a deflationary environment in all the geographies, which so sort of a normalization as opposed to last year's results. So in Italy, we had a contraction, which was mostly due to a decrease in the pasta, milk, and bakery sectors. In Germany, it was mostly a decrease of the pasta, which was, however, slightly countered off by the increase in dairy.
U.K. was impacted mainly by instant noodles, and other countries was just impacted overall by a different number of categories. In terms of EBITDA, it's where I was saying we had some of the best growth, so we grew 2%, as we said, and this is the result of overall better COGS, as well as a better mix of contribution of sales. In general, we had a very good performance in pasta, where we had a double-digit margin. If some of you may remember, we used to not have a double-digit margin in pasta, so in the last years, we've really worked hard to increase our margin in pasta, and we reached 12.7% in the first six months of 2024 , which is quite notable.
In terms of instant noodles, we also had a very good result as we went from 5.2% margin to an 8.1% margin, and we also had quite a good increase in just EBITDA, which increased by 13.7%. So overall, despite the decrease in sales, we still performed really well in this segment as well. For bakery, we had, as always, a good performance in terms of EBITDA, which was at 16%, as opposed to 13.5% last year. And it's worth mentioning that even special products, despite the decrease in sales, the quite big decrease in sales, still had a margin increase from 10.5%- 12.2%. Now we look at just some more key metrics.
So in terms of free cash flows, we said we had a very good performance, which was EUR 28.5 million. This was, of course, thanks to a higher EBITDA and also an improvement in the working capital, which resulted in a much higher free cash flow as opposed to last year. In terms of net working capital, we also had a very good proper management of both our trade payables and our liabilities, which resulted in an improvement in working capital of almost EUR 13 million.
In general, if we look at some other financial indicators, such as net debt to EBITDA ratio, as well as the gearing ratio, we can see that we went from still already good positions at the end of 2023, which were 1.03 for net debt to EBITDA ratio and 0.43 for the gearing ratio, respectively, to 0.59 for net debt to EBITDA and 0.22 for gearing ratio. So definitely below what's, you know, an acceptable, below, as in better, than the acceptable ranges. So really good performance there as well, as a testament to the group's financial stability as well. Now some updates on the Princes acquisition, which was completed just in late July. So it's been a month and 10 days since we acquired it.
We've had, from day one, a very big focus on some areas that you can see here, some of which had more of an immediate focus, such as the infrastructure in the U.K. For example, with the harmonization of the IT within the U.K. sites, as well as some other activities for synergy, for example, in warehousing. In terms of PIA, so Princes Industrie Alimentari in Italy, we also had some volume and operating benefits thanks to a focus on niche and major volumes, especially through our existing European customers and the relationships that Newlat has in Europe. We also explore some faster growth, especially through our channels.
Also, thanks to our operating facilities in Italy and the EU commercial opportunities, which we will see more on in the next slide, have been explored from day one. We already have some projects, and some projects are launching soon. We also had some broader synergies in terms of innovation, brand reputation, cross-selling, and procurement. These also, we have some more information on the next slide. Okay. From day one, as we said, we've been focusing on different areas, one of which was the better management of working capital. As we are a company that's always been very attentive to working capital and to improving its position, as well as its relations with customers and with suppliers, especially.
So improving the conditions we had with them was key for us from day one. And in that sense, we've already recorded some very good improvement in... We're now several days improvement in trade creditor days, for example. And we've been aligning all the supplier payment terms from day one, so we're slowly reaching a level which could be considered good for Newlat. So we're still working on this, of course. It's not a something that's done in a couple of days, but we are at a good we're doing good progress on this. In terms of procurement, we are also analyzing some sourcing opportunities within the group, especially for pasta.
And we're also exploring the launch of new products, such as premium pasta in the U.K., thanks to the existing Newlat facilities, and the ability to produce as many SKUs as you could ever imagine. So that's really something we're working on. And we're also looking at wider group purchasing synergies, because, of course, there are a lot of raw materials that are mutual within the group, so common. So we are looking at really realigning all the purchasing and trying to get better conditions with suppliers as much as possible. And then in terms of sales, as I was mentioning, we are really working on launching tomatoes and also tuna in Italy and Germany, as these two markets are pretty big in both countries.
And we are also looking at some other opportunities, for example, in the U.K., as Symington's has a lot of unexploited potential in terms of production, which could be passed on to... which could be working for Princes in terms of its products as well. So we're really working on exploring all the opportunities. We've been working every day on this, and hopefully we can see some results in the next months or so. Onto the next slide, we just have a picture of what it looks like right now in terms of net debt. So this is the figure at the end of August 2024. We had a net debt, which excludes the EUR 200 million shareholder loan from Newlat Group, of EUR 444.2 million.
If we exclude IFRS 16, net debt would have been EUR 354.2 million. We are already working on our de-leveraging process, thanks to all these actions that have been putting in place in terms of improved working capital, improved cash positions, and thanks to the better management of our resources, we expect to start working on de-leveraging the position as quickly as possible, and lastly, we have our 2024 outlook. We've given some guidance on what we expect in terms of areas that can be explored in the next months or so, and what we can expect in terms of just a general picture combining the two groups together.
So in terms of sales, we expect stable sales, but we still expect some growth coming from new products and new launches of products such as, for example, tuna and tomato in Italy, as we said, but other products that are being currently analyzed, and potential opportunities there are in the mutual markets of Newlat and Princes. On the other hand, we expect to have improved margins. As we said, we have been working from day one to improve our conditions, so definitely we expect to see an improvement in EBITDA margin, especially by the end of 2024 for the combined group. As we said earlier, we have some innovation investment going on, not only in special food segment, but mostly there.
And we have more opportunities coming from the post-closing, so with Princes, which could be bringing some more positive contribution in second half of the year or starting next year as well. In terms of procurement production synergies, as we said, we will see some results in the second half of the year, but we will see some more considerable gains coming in 2025. And lastly, we expect to see an increased exposure to international markets, thanks to the combined networks of both Newlat and Princes, as well as the new opportunities opening up for us with the new products coming into the market. Just a quick news: we're going to the first trade show in less than one month, specifically in Paris, one of the biggest trade shows.
We're going there with Princes as well. So we really see enhanced opportunities for our overall group and portfolio to grow and to gain more customers, which weren't necessarily our customers before because of the different category they would be working in. So definitely really excited to be working with the broader team and to explore new opportunities with new clients abroad in the next months. So that is the end of the presentation. Now, we're onto the Q&A. As usual, I would ask you to unmute yourself or ask the questions by raising your hand or just by unmuting yourself, or by sending a message. Thank you. I think Arianna has a question already, so go ahead.
Yes. Thank you, Benedetta. Good morning, everyone. My first question is a clarification on the guidance on Newlat standalone in terms of assumption behind it. So for example, what are you assuming in terms of price list dynamics, and what kind of contribution are you seeing regarding the Ozzano Taro plant since I understood you are going to conclude the investments there? Then the second question is some more flavor on Princes's performance so far, in addition to the qualitative indication you provided. And the third, lastly, the combined entity cash generation was strong so far. I was wondering if we are missing something. Is there any cash outflow we have to be aware of, in the coming months, or a seasonality effect, just to help us, in adjusting our net debt projection? Thank you.
Thank you, Arianna. About the Newlat standalone, we don't have at the moment any particular comment in terms of our focus, as also Giuseppe explained before, was to try to maintain the profitability that we gained in the past years. And it is important also to highlight that we reach in this semester in terms of EBITDA margin 9.65%, if we calculate a rolling picture for the 12 months. And this is a number that we didn't get before, neither before nor after the COVID year. That was amazing in terms of volumes.
The message of this number must be that, since the top line could be volatile because there are several elements that we cannot control directly, because we cannot have a direct control on the inflation, we cannot have a direct control on the general market trends. Our focus is to continue to create value in terms of profitability improvement and cash flow generation despite the movement that we can see on the top line.
If the strategy may be different, probably, as Giuseppe said, we may intensify the promotional activity in the past months, and we may have a different result in terms of top line, but for sure, also a different result in terms of EBITDA margin and cash flow generation. I think that, for the next months, we will continue to have the first focus on the profitability and the cash flow, but with obviously the attentions and to be ready to get also into the market with the new promotion also additional opportunity for the volume.
Yeah. So Fabio, if I may add something. So I want to underline once again the concept that I already shared before. So the drop of volumes is not the. So in terms of customer base, we are keeping our customer base tied to our. So we didn't lose any customer. All the volumes that you don't see here, that then impacted the revenues as well, as I mentioned, were strategically chosen to do not participate in this useless promotional activity in a period in which we prefer to maintain the stability of margin for the first six months.
So what I can tell, and what Fabio as well mentioned, is that now that we have a better opportunity, even in terms of cost, and so we can keep this level of marginality, we look forward and we reactivate in a stronger way, the promotional activity with all our retailers. So what I want to tell and let everybody be comfortable about is that in terms of business development and business management, we are keeping in a really good way our customer base, looking for the long term, and the result, once again, is the best ever in terms of marginality. Thanks, Fabio.
Yes, thank you, Giuseppe. And on top of that, we have also to say that approaching the second half, if you remember last year, the second half. So the first half was the strongest in terms of the top-line performance. This means that also the comparable base in the second half will be substantially less challenging and will allow us to mitigate this first half performance in terms of revenue growth. Update on Princes' performance, I have to say that in these first months we start a lot of projects and a lot of activity. The underlying performance is in line with substantially our expectation.
It's clear that the general market trend is impacting all the players, but for sure, Princes is not getting, just to give you an indication, a performance in terms of top line, like the one that we presented today for Newlat. On the other side, what we expect in these first, I would say four months of managing Princes, is more than other aspects of the business, is to optimize the net working capital situation of the company, because we believe that this is the first area of value creation that we want to substantially to manage and to get value added for the group.
And I think that the data that we share, and we decided to share this data because, as we mentioned in the presentation, after the acquisitions, we believe that this is the first important area of actions. Already in the first months, we achieved a very strong results in terms of working capital improvement. On the other side, the data that you saw in terms of net financial position at the end of August is the right one. There are no particular adjustments or particular cash out that you have to expect in the next months. So this means that for the end of the fiscal year, we expect to improve further this position. This means that, considering what we announce in terms of the leveraging and the data of the announcement of the acquisitions, we are absolutely in line with our plan.
Thank you.
You're welcome.
Hello? Can you hear me?
Yes.
Yes. Hi.
Hi, Paola.
Sorry, I apologize for my technical instruments today. So, no, just a follow-up. First of all, for the sake of clarity on the guidance, it was not very clear to me whether the outlook for stable revenues was referred to the organic performance or to the combined group. So if you can elaborate on this. And then, coming back to your comments about volume prices and the shift in the promotional activity, I was wondering whether this was referring to a specific segment. Actually, in the press release, you referred to this only about one segment.
Sorry, I don't have the press release in front of me at the moment, but just to understand whether it was a more general reason for the slowdown, especially we saw in volume in the second quarter, and what are you seeing in this respect in the very last few months, like July and August, for your organic business, meaning Newlat standalone? Thank you very much.
Thank you, Paola. In general, for the end of the year, we expect to see an improvement versus the performance that we reported today in terms of the general volume trend for Newlat standalone. This because the comparison base in the second half will be less challenging, and also because we experienced so the main impact of the deflation in the first half, we do not expect to have a similar trend also in the second half, and also because the second half is also a period in which we can also have maybe more promotional activities.
That, as of today, what I can tell you is that there is a general focus where we find opportunity. We are ready to get it with maintaining the focus on the profitability that, for us, is the most important part of the story, together with the cash flow. It's not possible today to give you the granularity to say that we will have three promotion on pasta and four on bakery, and I don't know where the others. So we can generally say that we expect an improvement about the revenue trends in the second half.
Maybe, Fabio, I want to add something just to give a bit more clarity. So now the point is that we are trying to manage the promotion in a really careful way. What does it mean? That we want to participate in promotions in which we can see the real effect in terms of price on the shelf going to the final customer. Because as you can imagine, retail chains are trying to retain the margin for themselves. So we are trying to participate in a way where we see the real opportunity or real big volumes by the end of the year. So not giving so much. So we reduce the amount of discount that we give to the retailer and to have more effective promotional activity within the end of the year.
What I can say is that we look to the end of the year concerning, for example, pasta. So once again, with a really good level of volume. And so we forecast a really good end of the year, and so we expect that volume-wise, we can achieve really good volumes. As you have seen, on daily, despite everything, we continue to grow. This is mainly due to strategic organic growth, in which we are continue to work because, as you know, as you've seen in the last year, our business development entity is always keeping a really strong organic growth.
So, we think that the second half, seen all together, I want to anticipate that, because, of course, then you have to look to the end of the year as a really important moment for us, for the seasonality of many, many categories. So in the next six months, we expect to have really good result by the end of the year. In terms of volume, revenue, despite, of course, the deflation and marginality as a main focus for the company.
Okay, thank you, and a follow-up, if I may. Can you, you know, give us a bit more indication on the performance of Princes so far in terms of revenues? So you were saying not the same weakness we have seen for standalone. And also in terms of profitability, because as far as I remember, Princes already had a few initiatives, say, already in pipeline to improve its profitability. So I was wondering whether there has been execution in this respect before your closing date, let's say. So what's the situation starting point today for Princes? And the last point, sorry, I don't know if you have now a better idea about possible integration costs, one-off, which one might be aware of? Thank you very much.
I didn't understand the last question, Paola. Sorry.
Yeah. Yes, it was about possible integration cost. You might have a one-off for this year, in case we should be aware of anything in this respect.
Between Newlat and Princes, you mean?
Yes, for the integration. I mean, any, I don't know, layoff, consultancy, anything like this.
Okay.
Thank you.
Okay. So Fabio, I leave the floor to you for Princes.
About the financial performance, I like once again that we share the net financial position, because, for us at this stage, the most important point to share is the fact that, the leverage plan that we presented, and I remember some skeptical comment, is absolutely achievable, and it's clear that, if companies continue to generate cash, obviously, the operating performance that there is underlying is going on so well. At the moment, we are inside Princes since one month. We decided not to share any data, but, to be able to prepare the right pro forma basis, the comparable base, to share during the nine months, the result, in substantially roughly one month.
At the moment, what we can tell you is that all the main strategic goal that we have, that we had in mind by the end of this fiscal year are going on well. We are putting in place a lot of actions everywhere in terms of cost, in terms of working capital, in terms all also in terms of the integrations, commercial activity. There are a lot of things to do. Probably it's too early to see, I would say, a full result for all this action, but the first step are absolutely in line with our plan.
About extraordinary cost to share, we don't have at the moment a precise idea for the end of the year, in the sense that every week we implement the strategy with the new actions, we have new discussion. I think that at the end this is not from our point of view a material item, in the sense that it will be an extraordinary cost. What we believe it is important is to drive the business to step-by-step match the leverage that we have in mind, and also the margin improvement.
Because it's clear that the opportunity that we saw in Princes was also the fact that a company with this position, this leading market position in a different segment could substantially run at a different margin than the 5.5%. This substantially is our idea, and despite exceptional cost that we may find during the aggregations or also during the reorganization of the Princes standalone.
Okay. Thank you very much.
Welcome.
So I don't think we have more questions from the chat. If anyone else wants to ask a question, please, go ahead.
May I have the follow-up? Sorry, if there's a normal question. I was wondering whether in terms of outlook for raw materials, also including the categories covered by Princes, is there anything, which, we should monitor specifically in this moment, which might be, an issue for you? I mean, although clearly the domain, news flow will be on synergies and on the integration, but, looking to the underlying context for raw material, is there anything, which, might, be,
No
Critical?
At the moment, we don't have material area of, I would say, alert or of weakness in terms of raw material. What I can tell you, generally speaking, about the procurement, we have there a very interesting opportunity to have cost decrease and material benefit more than some challenges that we can experience also linked to the market. At the moment, we don't have this situation, so everything is in line with the expectations and without particularly swinging into the market.
Okay. Thank you.
So if there are no more questions, we might end the call. Otherwise, anyone has a last-minute question? Otherwise, we remain at your disposal for any questions. You can send us an email, you can call us, and we'll be able. We will be happy to answer all your questions. Thank you.
Thanks a lot, everyone.
Thank you.
Thank you. Bye-bye.