Good afternoon, everyone. This is Benedetta Mastrolia. I'm the Investor Relations at Newlat Food, and thank you for joining today's call on the Newlat Food first half 2022 earnings call. Joining me today to discuss the results are Angelo Mastrolia, our Chairman, Giuseppe Mastrolia, Deputy CEO and Chief Commercial Officer, Rocco Sergi, CFO, and Fabio Fazzari, Group Financial Director.
Okay.
Before commencing the presentation, I would like to remind you that this presentation might contain certain forward-looking statements that reflect the company's management's current views with respect to future events and financial and operational performance of the company and its subsidiaries. These forward-looking statements are based on Newlat Food's current expectations and projections about future events. Any reference to past performance of Newlat Food shall not be taken as a representation or indication that such performance will continue in the future. This presentation does not constitute an offer to sell or a solicitation of an offer to buy Newlat securities. Now we move on to slide three, where we have the first half 2022 key financial highlights.
Before commenting, I would like to remind you that the 2021 figures are on a pro forma basis, which include Symington's from the first of January of 2021, in order to give you a better representation of the overall growth of the company. Now we look at revenues. Revenues for the period were equal to EUR 335.5 million, which is an improvement of 10.1% versus the first half of 2021. We had very good growth in all the business units, especially in pasta, where we recorded a growth of +24%, and in dairy, where we had an increase of 34%. In general, all the reference markets also grew.
In Italy, we had a growth of 9%, in the U.K., a growth of 14%, and in Germany, a growth of 13%. When looking at the EBITDA figure, we find that in the period we recorded an EBITDA of EUR 25.2 million versus EUR 25.4 million in the first half of 2021, and an EBITDA margin of 7.5%, which compares to an 8.4% margin in the first half of 2021. Of course, the first half of 2022 was impacted by the extraordinary increase in all costs that happened in the last six months, especially in raw materials, packaging, energy, and logistics prices, which negatively affected the margin. However, we were able, nevertheless, to keep the same level of EBITDA in this period.
In general, we were also able to maintain a double-digit margin in bakery, dairy, and special products. EBIT was EUR 7.7 million versus EUR 7 million in the first half of 2021, it is actually an improvement versus 2021 despite the cost increase. Net income was equal to EUR 2.2 million versus EUR 1 million in the first half of 2021. EUR 1 million excludes the non-recurring income which we earned in the first half of 2021. Looking at free cash flow, free cash flow was EUR 6 million in the period, and we had an EBITDA free cash flow conversion of 81.8%, which confirms the company's ability to generate cash, even in periods of great stress like the one we've been living in the last six months.
Moving on to net financial position, net debt in the first half of 2022 was EUR 42.2 million versus EUR 52.9 million at the end of the year 2021. Therefore, we had a great improvement. If we exclude the effect of the IFRS 16 lease liabilities, net debt would have been EUR 7.8 million versus EUR 13.8 million at the end of the year 2021, therefore yet an improvement versus the last financial reporting. Moving on to slide four, we have a very quick business update, so what we've been doing in the last months. As regards the sort of strategic and commercial initiatives in sales and marketing, we've been working on all the commercial initiatives that we already presented in the last months.
In particular, we've been really successful at launching Naked Noodle both in Italy and in Germany, and it's been very well-received among retailers, as well as some launches that are occurring right now, so the Crostino Dorato range extension, as well as the Birkel Minuto and Mezzi launch. We will see more on this on the next slide, actually. As regards our latest acquisition, which is Symington's, which has been just over a year now since the acquisition, we've been having some more progress on the integration. We've been working on the reorganization of the Consett plant, as we already mentioned in the last call, and this process is still ongoing, so we're still working very hard on this project. We've also been working on new product development.
We're working on new recipes, new products, and we've been also working in efficiency in general. For example, we've been working on installing a new pot line and also an automation of the lines within Symington's. This overall efficiency plan that we've been working on for last year is still continuing and ongoing, but of course, with the sort of particular situation that we're living in, with the increase of cost of steel and machinery, we've been very cautious with investments in this period, because of course, that could not become a great outcome if we invest in this right moment, but the very moment. We've been still working on this. As regards sort of Symington's, we're also a new M&A target that we've been looking at.
We have recently been looking at a baking box and cake mixes producer in Europe, and this target, if successful, would definitely fit the Symington's current structure because Symington's, as a reminder, Symington's is the number one producer of private label bake cake mixes and baking box. They call it baking box, cake mixes. Therefore, if successful, this could be a very exciting opportunity to grow further in this market. Very last point on raw material and inflation. As we all know, we've had a very strong inflationary wave, which is continuing to be present on the market, and at this time it is very difficult for the company to make any kind of precise prediction.
However, we are confident and in 2022 we won't experience any solid impact from the energy price increases. On the basis of all of this environment, we already have been talking to clients of potential additional price increases in the last quarter of 2022, as well as the first quarter of 2023. We and the sales team have been trying to cover as much as possible the price increases and cost increases, and we're already scheduling ahead to try to keep the margins as stable as possible. Moving on to the next slide, we have the commercial and marketing initiatives of the last few months.
One very exciting news is that Naked was listed in Conad, which is one of the major retailers in Italy, and right now we have some promotions running. You can see on the bottom, right-hand side, a picture of what has been going on around the Conad stores in Italy. A very good promotion with all the Naked range, very vast range. One of the largest ranges actually on the market, if not the largest, range in the instant noodle, instant rice market. In general, Naked was very successfully accepted and, well accepted by all major retailers in Italy. Now it's being sold pretty much in all major chains in Italy.
Esselunga, which was actually the first client to accept the Naked range, also enlarged the current portfolio of Naked to place more products in their shelves. As regards Germany, the same has happened, so very great reception from all the German retailers who appreciate the great nutritional values and also the great positioning of Naked versus other competitors, as well as the variety of flavors and sizes of the product. We have some promotions at Lidl, for example, in the last few weeks. You can see on the right-hand side. We've also been working on ads with specialty food magazines specific to the sector.
We've also been working on Birkel Rösti in Germany, Rösti, Mezzi and Rösti. These products have been running with promotions at REWE and EDEKA, as well as other major retailers like Penny, Netto, Famila, and others. We are also launching in October the Crostino Dorato snack and Crostino Dorato al Cubo range, which will be a range extension of the current Crostino Dorato, which is a very famous brand in the Italian market. We're just enlarging the range with different sort of snacking type of Crostino. Next slide is actually something we've already seen in the past.
This is just a reminder of how good Naked is compared to its competitors, and that is one of the main reasons why we have been successful with the integration with the listings of Naked throughout both Italy and Germany, because it compares very nicely with the competitors in terms of nutritional values and calories, fats, saturated fats, carbohydrates and sugars. All the good nutritional values have been greatly accepted by all retailers, and they definitely believe that this product is very valid and mostly and something that will be appreciated by everyone. The great success is also thanks to the importance of the quality of the ingredients.
Moving on to the next slide, we have some exciting news about the sort of synergies in terms of industrial synergies of Birkel and Symington's. As one of the main industrial synergies that we highlighted when we acquired Symington's was the ability to produce internally the Birkel Minestrone range. We've been working on this project for a while, and by November 2022, the new Birkel Minestrone range will be produced at Symington's, will be launched in the German market. The product will be a premium product, so sort of same price point as Naked, although this will be more of a traditional recipe, so no Asian recipe type of product.
Pasta with tomatoes, with mushrooms, very kind of everyday type of pasta that you would eat in Germany and in general. We will be having promotions at retailers already scheduled for the autumn. What we are really proud of is that this product has a very good Nutri-Score. Some of the products have a Nutri-Score of A, some B. It is a great score, especially considering the type of product that sits on the shelf next to Birkel Minuto. Definitely it will be appreciated by the consumers. We do have already a very good high awareness of this brand, of the Birkel Minuto brand in Germany of 39%.
Our goal for the next years will be to basically double our current market share in this segment because, of course, before this product wasn't produced by us, so we couldn't necessarily work as much on new recipes, et cetera. Now we have all the ability to enlarge the range, to work on promotions, to work on new packaging, et cetera. That will definitely add to the sort of growth in this market. Now we move on to the sales breakdown and analysis. Moving on to slide nine, we have sort of a picture of the first six months. As mentioned, there was an increase of 10.1% versus the first six months of 2021. This period was characterized by different factors.
One was the increase in demand in all the business units, especially in pasta, milk and dairy, and an increase in the average selling price due to the higher raw material prices as well as production costs. We did experience a slowdown in April and May of the inflation, but unfortunately it picked up again in the second half of June. At this time, with this very volatile market, it is very difficult for the management to make any provision for the forecast for the future. We are determined as a company to recover all the margin lost by the first half of 2023. We've been really working hard to keep margins and to keep a very solid financial base for the company, and we're really happy of the results.
Of course, we'll be working even more in the next months to make sure that the company stays as healthy as possible. Moving on to slide 10, where we have the revenue breakdown by business unit. Here we can see that pasta sales increased by 24.5%, and this was driven by a mix of price and volume increase, especially regarding volumes. We had new listings in the reference market, so Germany, Italy and the U.K. As regards milk products, we had an increase of 2.7%, which was mainly a consequence of an increase in the average selling price, but also slightly by an increase in volumes. As regards instant noodles, we had an increase of 4.9%.
This is an extremely good result if we consider that the first half of 2021 was particularly performing at Symington's. The instant noodle segment did particularly well in the first half of 2021. Therefore, this result of 4.9% increase is definitely very successful. Bakery products also increased by 3.5%. As regards dairy products, we had an increase of 34.1%. This is again a combined mix of increased client demand, as well as the pass-through of raw materials and production costs. As regards special products, we had an increase of 4.7%. Also, in this case, there was a combined.
It was a combined result of higher volumes and higher sales prices. As regards other products, we remain pretty much in the same level of last year. Other products is the commercialized products. Moving on to slide 11, where we have the revenue breakdown by distribution channel. We see that all the channels experience a mixed contribution from additional volumes and the increase of the average selling price. In general, despite the very harsh period and the passing of inflation onto customers, we didn't see any changes in the elasticity of demand, especially at large retailers as well as B2B and normal trades.
This proves that the products are very solid and even the increase in prices does not come into play when it comes to selling our products. B2B partners also increased by 11.2%, which was an increase mainly driven by a strong contribution from new volumes. Private label and food service were pretty much stable throughout the period. Now we'll move on to slide 12, where we have the revenue breakdown by geography. The revenues in Italy increased by 9.2%. This growth was driven by new contracts, which were both in private label and B2B, but also with our own products. The region benefited from the new initiatives in brand launches and promotions, et cetera.
As regards to Germany, we had an increase of 13.3%. This is mostly linked to new customers in pasta. And as a reminder, Delverde has been doing really well in the market after the Britannia exits. Pasta has been growing and it's been performing extremely well. We had new product launches, as I mentioned earlier, as well as some of course, some average selling price increase. In the United Kingdom, we had an increase of 14.2% versus 2021. This was again a very good performance considering the high sales volumes in the first half of 2021. The revenues generated in other countries increased by 1.71%. It was a combination of higher sales and also average selling prices.
Moving on to slide 13, where we have the EBITDA breakdown by business unit. We see that EBITDA was EUR 25.19 million in the first half of 2022, which compares to EUR 25.44 or 25.45 million in 2021. Therefore, EBITDA remained pretty stable, even though there was a slight decrease in the period. Despite this very challenging scenario in terms of cost inflation, the group was able to keep a very small dilution. If we look at the overall market, it was actually a very relative dilution because of the size of the inflation and that it had on costs and all types of costs in this industry. We had a very good recovery in Q2. We also benefited from the portfolio diversification of Newlat.
All of our products came into play to keep margins pretty good. We also had a very good benefit coming from industrial efficiency as well as the brand positioning of our own brands, which are very high and very well-recognized throughout the reference markets. As mentioned already, our goal is to recover as much as possible this very small dilution that we had in this period and also keep sort of margins at the same level of their historical average. That is what we've been working on. We've also been working on new initiatives in the upcoming months to keep and protect the profitability in 2023. Now we move on to the next slide, which is the free cash flow slide.
As regards free cash flow generation, we had a very solid free cash flow generation despite sort of the investment or negative net working capital change versus the last reporting. We expect the cash generation to continue in the second half of 2022, which will eventually help us to further reduce the current net debt, which has been improving in the last months. One of the main reasons for this generation of cash and protection of profitability has been the very strong commercial activity and efforts that have been made by our sales to pass through production costs onto clients, which has been very successful. We are still working on passing through prices as much as possible.
If you look at the table on the right-hand side, you will see that actually the year-on-year COGS increase in the second quarter was higher than in the first quarter of 2022. Therefore, that's the reason why we had a small dilution of the EBITDA margin versus the first quarter of the year. However, as said, we've been really working on keeping margins as stable as possible. We expect to report good results in the next reporting season. This is the presentation. Now we can open the discussion for any questions. If you would like to ask a question, just unmute yourself, and we will be very glad to answer all your questions. Thank you.
Hi, good afternoon. I start with a few questions. The first one is if you can give us a broader picture in terms of the growth of the quarter of the semester in terms of pricing, mix, and volume. You gave some qualitative indication segment by segment, but it's a bit difficult to have the broader picture, let's say. How do you see these three levers evolving in the current quarter? I mean, it was also a chance to ask you about current trading. What are you seeing? If the attitude from the customer has changed, maybe due to this escalating inflation. You said that we are not experiencing any price elasticity.
I'm wondering if this is still true, or if you are experiencing any change in this respect for some category or in some price segment. The second point, I would like you to give a bit more color on the investment plans. You have mentioned in the press release about the Sansepolcro production site and the Ozzano Taro production site. With this also, if you can give us an updated guidance for the CapEx we should put in our model for 2022 and 2023. Thank you very much.
Thank you, Paola. Starting about the first question, obviously it depends quarter by quarter, segment by segment because the trend is not similar for pasta, milk, bakery. There are different trends. Generally speaking, we could summarize that in the first half, 70% of the growth was driven by price increase, and 30% was driven by volume. Volume means a new customer or a substantial increase of the underlying demand. What is important to highlight here is that, as you saw in the latest slide that Benedetta showed, the increase of the cost of goods sold, all the items included in the cost of goods sold is not just a matter only of raw material, but all the cost base increase.
You saw that the increase was substantially continuous and with volatility and a progressive increase. For example, if you see what happened in the first quarter, our plan was to cover this increase and without an additional material increase in the second quarter. Probably our initial view to be able to cover the profitability in the first half, so the profitability dilution would have been successful. Unfortunately, we experienced this continued increase. We experienced a sort of small stop, end of May and beginning of June. In the second part of June, we experienced again this inflation, this general inflation wave. This is the reason why the situation remains absolutely uncertain.
We already told our customer that if this is the scenario for the coming months, additional price increase will be needed. On the other side, at the moment, the sector is not experiencing elasticity of demand. This because, honestly speaking, most of our products are really staple products and are not linked to discretionary decision of the customer. On the other side, all the producers moved together to ask about this increase because the raw material increase, then the energy, the packaging, et cetera, was really a material increase.
This create a situation in which there is no one that could use maybe the price increase that one player could apply maybe to gain market share or to do a different strategy. I think that all the producer, all the food industry is together in the same boat, and the price increase, the pass-through of this inflationary wave, is the only applicable solution to manage this situation. The other question was about the current trend. The current trend in terms of demand on the volume side is absolutely positive in all the markets and all the sector. We are still experiencing good demand.
Obviously, on the other side, we are in a different round for a price increase. For example, we started in August a new round of price increase in U.K. I think that the situation in this sense is similar to what we experienced in Q1 and Q2 in terms of underlying demand. The situation didn't change. In terms of our approach, also considering price increase, et cetera, also it remained the same because the situation is still tricky, and we need to manage this with commercial policy that must be, I would say, really disciplined, and committed to cover this inflation wave and to complete the pass-through. About the investment plan.
I'm sorry. Sorry, Fabio, if I interrupt you on this. Are you seeing somewhere a negative mix effect? The demand is holding well, no price elasticity in terms of volumes, but the mix is sometimes shifting maybe like in Germany and U.K., which are usually more sensitive, shifting to private label or to lower-end products? I don't know.
No, I think that what I mentioned before is important to be highlighted. We are in a situation in which there is a general increase for all products. I think that people could for sure have a more cautious approach in consumption for discretionary goods, for discretionary consumption. Probably we are going to experience, you for sure remember the lipstick index in finance. The fact that when you have to maybe to reduce your consumption in travel, in discretionary goods, et cetera, probably the attitude is to maintain a good approach in food with maybe quality good product, et cetera. In this sense, I think that we could have an advantage in the market.
I want to highlight also another important thing from my point of view. The fact that all the industry is impacted, there are no leading player that are able to avoid this kind of margin dilution and cost increase impact. We made a survey considering most of the important player in the industry, and we saw that the margin dilution is between 150 basis points and 200 basis points. This means that substantially Newlat so far was able to eliminate any kind of company-specific dilution and substantially to overperform what is happening into the food industry. My...
We are convinced that, considering this general situation, the food industry could not experience an impact in terms of elasticity of demand, but maybe could remain one of the latest consumption on which the commitment remain high from the consumer.
If I can add something, I think that even the basket of our product, Paola, is really, let's say, essential basket. We are talking about pasta, we're talking about milk. Of course, people in this kind of inflation rate, they look more to maybe avoid eating outside, out of home will drop down, and home in-home consumption will go up. This means that if we have a brand, like we are a really good brand and well-positioned on the market, like in Germany, our consumption is growing and growing on this kind of product. I can tell you that the numbers in baseline are increased, like you see from the numbers already in H1. They continue to increase even in H2 in terms of volume increase and price increases.
I think that we are not in any kind of trouble in terms of consumption concerning our portfolio.
about the other question on the announcement we made about the fact that we are valuing the potential acquisition of the Sansepolcro plant in particular. We are thinking about also what is the situation also for the other plant and the investments that we want to do here in Sansepolcro and in Ozzano Taro. I can summarize that in many plants we need to do investments to increase capacity for particular products. For example, in Ozzano Taro, we want to do these investments to increase the capacity of the milk powder production, because this is a product for which we are experiencing a very strong demand.
We have also other investments, for example, in photovoltaic systems, and other similar things, technical things in other plants. We are together with our independent director, thinking about if it is the case to do these important investments into an asset that is owned by a third party, or it could be the case to create more value, acquiring the assets and doing investments in assets that we substantially directly own. This is what we have on the table. Nothing is at the moment obviously decided, but we want to inform the market that we are also thinking about this opportunity for the future to maximize these investments.
Part of these investments or most of these investments are linked to projects that are supported by several government policies. The advantage is also that part of the investments will be substantially reimbursed to the government because it's a specific plan to support these investments from the Italian company. At the moment, this is substantially the situation. Nothing is defined, but we wanted to inform the market because I think that is important for us maybe to receive, if any, a point of view from all the stakeholders, including investors, including analysts, to be able to do evaluation at 360 degrees for this project.
If I may just follow up from this. Let's say my question was also on the CapEx plan in general, let's say. Regardless of the fact that you buy back these plants and so you save the corresponding rent you are probably paying now. Let's say in any case, for these plants, for your plants, what are the CapEx you should invest for upgrade, expansion, et cetera, this year and in the next couple of years?
For the next year, I think that the CapEx spending could remain between 2% and 2.3% maximum of the revenues. It depends on the timing of these investments.
Now, just for clarity, if we can. This investment is make investment for support of the capacity on these two plants. This is a long-term investment with the support of a government fund. It is about 5-6 years for the timeline. It is not for the next year, but this is the longer term plan to make in the next year. We must meet the demand of the government support. Revision we need about two years for the answer, its approval. After this, we can go to make the investment.
Okay, thanks.
This part, obviously, this specific part, is related to fund that will be so directly put by the government. We don't have to reimburse most of the financing we receive. It's a specific project. Yeah. This is a question probably from MCC Investments.
Yes. Hello. Thank you for taking the question. Congratulations on your results. I would like to have, if it's possible and if it's allowed, an update on the previously announced purchase. You have a lot of cash in the balance sheet, and you've announced that there probably is, sorry, an aim to reach EUR 1 billion of revenues by the end of this fiscal year. I would like to have an update on that. Thank you.
Yeah. The M&A activity is going on in line with our usual activities, so this particular environment didn't impact our focus on the M&A. About the big deals we mentioned in the past call, we are still working on that. We made several step forward. We lost a bit of time due to the fact that the counterpart that is a very big and important player made in the meantime an internal reorganizations. This create a bit of a stop for the project. We start this negotiation. As I said, we made several step forward.
In the coming months, we hope to be able to share with you more details about this important deal. This is not the only one, honestly, because the situation is well in advance also for another opportunity that we could have in France, a business that is similar to part of the business we are doing in U.K. In this case, I think that also for I would say the commitment that we gave to the counterpart, I think that we could be in the positions to share something within the coming months. Because the timing is probably shorter than the other one.
These are the two discussions we have that are more advanced. Honestly, there are also other smaller ones on which we are working on. This means that we continue to maintain the same commitment that we had in the past. I think that when we will be in the position to announce this deal that we are mentioning since several calls, you could understand why we use so much time because you will understand at that time how complex the counterpart is, and I think that everything will be clear.
Thank you.
You're welcome. Paola, probably you have another question.
Yes, I have another question. At the moment, I take the opportunity to ask you updated view on your underlying input cost. So, on the escalating price of milk in the last few months, do you see any sign of a correction or do you expect anything to improve in the next few months? The same as for wheat. What are your expectations based on current situation and particularly after the summer, you usually have more visibility at this point of the year. The last on the energy cost, you said you have a contract which gives you visibility for this year, I presume until early 2023.
If we had to project, let's say, the current spot rates for energy in 2023, what kind of impact would you have on your profitability? You can elaborate on that. Thank you very much.
Okay. In terms of a general view on most important raw material, I have to say that today the trickier situation is on milk in which we are experiencing a very high level of price for the raw material and for some other smaller raw material. There are different scenario for durum wheat that is showing a decreasing trend, even if remain still high versus last year, but the trend is positive. This is what we mentioned, if you remember at the beginning of the year, when we said that we could be in the positions to considering first half and second half to match the margin of 2021.
Unfortunately, we experienced some other elements that happened into the market and substantially completely change the picture that we had in mind. In general terms for energy, yes, we do not expect any material impact by the end of the year. For 2023, I think that not for Newlat, but for the industry, and you probably read some news of other bigger player that ask for an action on this point. Energy could be the most important variable for 2023. There are no particular actions to do because this is not in our hands. We cannot have an impact on the gas and electricity price.
What we only can do is to plan a price increase that could be enough to cover substantially this delta that we could experience. The pass-through is the only action that we have in our hand.
Okay, thanks.
Welcome.
Hi, Fabrizio. A couple of questions from my side, please. First of all, I'm sorry if you've already answered, but I didn't hear it. What's driving the outflow in the net working capital? You normally have a cash inflow from that line. So maybe if you could explain a bit. Afterwards, you've mentioned like what seems to be quite a substantial CapEx plan, many M&A opportunities on the pipeline. How should we think about and your financial strength in a time like this one now, which is a bit, let's say volatile. Why should you at this point want to invest in buying a new factory? Well, a factory from a related party.
Also how should we think about the share buyback at this point? I mean, you seem to have a lot of CapEx and M&A and a lot of cash requirements. Why not save a little bit of cash?
Yeah. About the working capital, it is important to explain and to share with you that the environment that we faced was really hard. We didn't experience any kind of shortage of raw material, but this happened in the market. We started this year considering all the potential actions that we put in place to protect ourselves, to create more connection with suppliers, more loyalty and substantially to try to get also the best price when you are going to buy raw material in particular.
This means that is true that in a normal situation, our contribution from working capital is positive, but we wanted to invest, to use also this flexibility that we have to protect the company versus shortage of raw material or lower level of loyalty from the supplier, et cetera. I think that you can really so understand this this approach that we used, because I think in a difficult situation, we have to use all the things that we have in our hands to get the best as possible in all the situation of the business.
About the M&A opportunity and the CapEx plan, I have to say that one thing is M&A and the investments that we want to do in M&A, and we are really working hard. I know that from your point of view, after the latest announcement that was the August fourth of last year, it seems that nothing happened. In reality, we are really working hard for a project that it's a transformational project. As I said before, when we will be in the position to share with you the information, you could easily understand why we took this long period of time to finalize this deal.
As I said before, there are also other smaller deals that we are managing, and this is part of the investment focus. There is another part that is related to investments in the plants that we have for two main reasons. One is the policy that we have internally to improve our ESG profile and also in terms of energy efficiency. I mentioned before the photovoltaic project. This is really important also to align the emissions, I would say, of our plants to the standards that we want to cover for the ESG policy. There are also investments that we need to improve or to maintain quality level and capacity availability for a specific production.
As I mentioned before, the milk powder for babies is a specific area in which we need to improve our capacity. This obviously because as you probably read in the comment that in the statement that our chairman made, we are focused not only in developing new M&A opportunity, but also in developing and managing important partnership with leading player of the food industry. For this reason, it's important that your plans needs to be with the highest standard that there are in the industry.
Great. Thank you, Fabio, for that. The question is more on I mean, it seems that you have a lot on your plate, and obviously this seems like very good M&A opportunities. The CapEx plan makes total sense, but in a moment of such substantial investments, would it make sense to keep the share buyback ongoing or to buy a factory which is in fact from a related party so there is no real risk of this factory going to someone else, no? What I mean is, shouldn't it be prudent to I don't know, to make this kind of share buybacks or factory real estate investments in a period ahead?
I mean, could you maybe, it probably is at a very early stage, but could you probably give a number of what kind of investment would it be to buy such a factory? Thank you.
In terms of the investment for the factory, I think it's really early because, as I said, it's just a project that we have on the table, and we will start to analyze in depth the project. What I can tell you generally is that, in terms of the cash availability that we have today, this is really enough to complete the M&A deal that we have on the table together with the investments. Having said that, I remind you that part of these investments are supported by the Italian government, so we have no needs of cash or extraordinary actions to get proceeds for specific project.
I also have to say that for us, what is important is to maintain the company with a very good level of profitability and of cash generation because this is something that allow us in the past and still is allowing us to have an important partnership with all the banks in, I would say, in the world, because there are banks coming from U.S., from other countries of Europe, not only Italy. We are experiencing a strong support for all the potential deal or potential investments we want to think about. This is related to the profile, I would say, of the company that give them enough warranty to continue to support us.
In this particular scenario, considering the availability that we have in terms of funds, in terms of cash available, et cetera, I think that we have room to continue all the activities. Also in terms of pricing of cost of funding is really, really interesting in this period for our company. This means that we can continue, we can go on with all the activities, including the share buyback, without any particular negative impact, I would say. I think that is important for us to get these opportunities considering that there are no particular issues or to do this. We want to ride the wave today because today we have the opportunity.
Thank you very much for your answers.
Well, Fabio, there is a written question from George J. in the chat. If you can see, it's direct to you. I don't know if you can read it.
In the chat, I don't see.
Partecipanti, Q&A. There's a question, buybacks.
Okay. Partecipanti, Q&A. Now, Massimo Nova.
The Q&A. Okay. Te la faccio io la domanda. Ecco, leggo. Okay. Buybacks in last couple of months have been less than in the beginning of the year. Can you talk about the decision to buy back less shares and your view on the amount of buybacks going forward?
The buyback strategy is linked to several factors. There is no one thing that moves substantially us to buy shares in the market. Obviously, in the past months, we bought a lot of shares also considering the very low level of the share price that, in our opinion, does not respect the real situation of the company. We after our IPO in October 2019, we substantially doubled the revenues and the EBITDA, but we are today below the IPO price. We thought in the past months that could be an opportunity also to try to give to our shareholder a sort of premium for loyalty, I would.
If you want to go on with the buyback. At the moment, we reduce a bit, but this is also in line with the market volume that we experience. The approach remains substantially the same. If we go on with maybe other deals, other important results for the company and the situation remain the same in the market, the buyback remain a way to follow to try to maximize, for what is possible, the return for our shareholder. There is no particular reason why we reduce the amount in July and August. Is also linked to the fact that volumes were very low in this month.
There is another question that I think you already answered about in the previous conference call. You talked about being preferred bidder for a carve-out M&A deal with a multinational company. Is negotiation for this deal still going on, or are you focusing on other opportunities? These are. You already answered, I think, many times.
Yes.
I think that the MCC Investments wants to question once again.
Yes, thank you. The question might be trivial, I'm sorry, but the adjusted EBITDA is around EUR 25 million for the first half of the year. The free cash flow has been EUR 6 million, so it's a cash conversion of 25%. On the slide, we see 81% of free cash flow conversion, which is around EUR 20 million. Help me understand, and I'm sorry if it's trivial, but the difference between 20 and 6. Thank you very much.
Yeah. It's a matter of definition of cash conversion. We always use the definition that is explained in the slide. Because if you see in the last line of the slide, there is cash conversion that is equal to EBITDA minus CapEx divided by EBITDA. In this case, is 81%. This is to highlight substantially the impact of the needed reinvestments versus the EBITDA generated. What is the difference versus your calculation? Obviously, there are inside the interest and the working capital that are not included in these simpler calculations that we made. The definition is there, so in the slide.
Yes. Sorry. The EBITDA is 25. The CapEx are 4.6 or 4.6 4.5, which is 10.1. In order to arrive at 81%, you add EUR 10 million CapEx over 25 EBITDA. Okay. Yes. The interests are EUR 4.6, and the working capital. Okay. Thank you. Thank you very much. Sorry.
Okay. I think there are no other question probably. I don't see the chat, Giuseppe, if you can help me because.
Now it's after you answer, the George J. canceled the question. It's done. Do we have another question from MCC Investments? No, probably we may-
No. Sorry. No. Thank you.
Okay.
Okay, good. I think there are no additional question. Anyway, if you will have a question or needs of a follow-up, we are always available. You can contact directly Benedetta or we, myself. No problem. We are always available to answer to your question.
Thanks to everyone. Enjoy the weekend.
Thank you. Thank you.
Bye, everyone.
Bye.
Bye, everyone. Hello.
Bye.