Yes, good, good morning, everybody, and thanks for attending this call. Before starting with the presentation, I would like to share a message also on behalf of our Chairman that unfortunately is traveling and is not able to attend this call. We are a bit disappointed about what happened this morning with some confusions on some numbers we reported with the level of revenue movement that was probably shared not in line with the real performance of the company. The fact that these confusions substantially drove the focus on an item that is not in reality the key item for the quarter performance.
In particular, this probably did not give the opportunity to highlight the strong value that the company created also during this quarter, thanks to a very strong margin improvement in line with what we substantially show in terms of expectations at the end of the presentations of the full year 2024. Also, the additional free cash flow that we generate with another important step forward in the leverage process. It is a pity, and I hope that the presentations could give to all the possibility to find the right focus on the element that also in this quarter gave us the possibility to create additional value, managing what is inside the company and not what, like the deflation, is linked to external factors and is not directly impacting our performance. Thank you, Benedetta. I leave you,
Thank you, Fabio. Okay, we can start with the presentation. Good morning, everyone. I'm Benedetta Mastrolia. I'm the Investor Relations Manager at NewPrinces S.p.A. Thank you for joining today's call. On the call today, we have Giuseppe Mastrolia, our CEO, Fabio Fazzari, Group Financial Director, and Rocco Sergi, our CFO. Before starting, I would like to remind you that this presentation may 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 NewPrinces S.p.A.'s current expectations and projections about future events. Any past performance should not be taken as representation or indication such performance will continue in the future. This presentation does not constitute an offer to sell or a solicitation of an offer to sell and buy NewPrinces S.p.A. stocks.
Our securities are not registered in the U.S. Now we move directly to the presentation. We have made some notes prior to the presentation to make sure that we are all aligned on the basis and what has happened also with the company name, just to give some clarity. As you may know, on the 28th of April this year, the annual shareholder meeting in actuary, the extraordinary shareholder meeting resolved to change our company name from NewFood S.p.A. to NewPrinces S.p.A. Together with our subsidiaries, we will be referred to as NewPrinces Group. However, we are still waiting for the update on the company's register, which is why you still see the Newlat Food logo on the presentation, on the official presentations and official press releases.
We will update the market once the change in the nomination is reflected in the company's register, which we hope will be in the next days. Regarding the financial figures, we are presenting, of course, consolidated figures for the first quarter of 2025, but we are using the combined figures for the comparative figures for the first quarter of 2024, to be able to show the effect of the Princes Group into our company from 1st of January. As you may know, Princes has been consolidated into our group figures from the 1st of August. Now we move directly to the financial update. As Fabio mentioned, there was, of course, a deflationary scenario in the spirit, which had an impact on our sales. However, we are really proud of the great achievements we've had in terms of margins.
As you will see in these numbers, we had great improvement in all of our margin numbers, in our cash flow, and in our financial position, and so on. In terms of revenues, we had EUR 672.7 million revenues, which compares to EUR 699.9 million last year. We had very good performance in some categories, especially in baby food, in mascarpone, in drinks, and in tinned tomatoes. As we mentioned in the press release, we had an impressive improvement in COGS, which offset the decrease in sales, actually. We had a decrease in COGS of 6% yea- on- year, thanks to the new, to all the new procurement approaches and the new strategies we have in place. We can see that in the next months, we might have even a further improvement in this sense.
Looking at EBITDA, we had an adjusted EBITDA of EUR 54.8 million, which is an increase of 30.5% since last year. In terms of margin, we had an EBITDA margin of 8.2% as opposed to 6%. As you may remember, in the last presentation for our full year results, we said we were looking to achieve a 10% margin by 2030. We think we are fully on track to deliver that performance, actually very much on track to deliver the 2025 targets as well. We will see also the improvement in each business unit later on. In terms of EBIT, we had an impressive improvement, actually, of almost 400%. Last year's result was EUR 5.9 million. This year we had an EBIT of EUR 28.9 million, and with a margin which, of course, improved by a lot. We had a margin, an EBIT margin of 4.3% as opposed to 0.8%.
In particular, we can see that there was a decrease in admin and sales and distribution costs, which were over 10% in both cases, over 15% for admin costs. Again, this is following the restructuring process that we are undergoing with the acquisition of Princes and the integration synergies that we are seeing right now with the integration of Princes. Net income, so last year's net income, again, on a combined basis was actually negative, EUR 2.3 million negative. This year we have EUR 13.5 million. We had actually an increase of over 15, almost EUR 16 million in net income compared to last year. Margin was, of course, improved. Net margin was 2% compared to the negative 0.3%. Free cash flow, so free cash flow last year was also very strong. At the end of the year, you remember, was over EUR 200 million.
This year we are also delivering some very strong results. We had a free cash flow generation for the whole group of EUR 45 million. That is, of course, thanks to the positive contribution of EBITDA, but also thanks to the improvement in net working capital, especially coming from Princes. We had an excellent cash conversion of 84.4%, as opposed to 74.7% in the first quarter of 2024. Going to net financial position, so net debt for the period, excluding FRS 16, excluding actually the loan, was EUR 200.7 million, as opposed to a figure of EUR 246.2 million at the end of the year 2024. In just three months, we were able to really reduce our net financial position by a visible amount.
The same goes with the net debt figure, including FRS 16, which improved massively, going from EUR 346.2 million to EUR 302 million at the end of the first quarter of 2025. Now we go briefly into the sales breakdown and analysis. You will see from this slide that something has changed. We have reorganized our business units. The reason being is we had many business units and it was not easy and we thought it was a better presentation of our business units to have just six. The changes that have been made are in three main business units. Foods now includes both foods, which is basically tinned, posts and soups and so on, and also includes ready meals and bakery mixes.
Italian now includes both pasta, Italian, which was the Napolina pasta, as well as tomatoes and pulses, under the brand Napolina mainly, bakery and special products. Then, dairy also changed, including milk and dairy products in the same business unit, while fish oils and drinks remained unchanged. These are the main changes that were applied this time. In terms of performance, as we anticipated, we had a negative impact from the lowering of our average selling prices, which is, of course, a consequence of a deflationary environment. However, as we said earlier, we benefited from lower raw material prices, which then reflected into better margin and margins in all the business units you see here. In particular, if we look at the performance, we can see some of the performances. For example, Italian, Italian had a decrease.
However, this decrease was due to different factors. On one hand, we had actually an increase in sales in these amounts of Italian posts and baby food and pasta categories, which was offset by the lowered average selling prices. At the same time, we want to share with you that at the end of Q1, we had the first introduction of the Diverde, tomato and pulses, into the German market. That means that we will see more contribution coming from Germany, especially from Italian, in the next few months, especially towards the end of year with this new activity and the new market activity that's going on in Germany. Fish also is worth touching on because fish had a very good performance in the full year results in 2024. We had an increase of 9% at the end of the year.
This year we had a decrease at this period. Sorry, we had a decrease. However, that is again due to mainly a decrease in the average selling prices. We expect to see more volumes coming from fish in the next quarter following the new commercial initiatives coming from the cross-selling of the fish products into the existing Newlat channels and Newlat clients. We touch on drinks. Drinks was particularly good in the spirit. We had almost a 7% increase year- on- year. This was mainly linked to the new, relatively new, co-packing contract with Capri Sun, which started in autumn last year. We expect to see more contribution in drinks in the next months as well. Dairy also had a good performance actually.
It was slightly down, again because of the lower average selling prices. However, we had a very good performance in mascarpone, which actually grew by 3% year- on- year in terms of volumes alone. If we go to the distribution channel breakdown, we can see again the same concept of average selling prices going down. However, we had a very strong performance in B2B partners. That is because of two main reasons. One, because of the drinks new co-packing contracts and new clients. The good performance in drinks overall, as we have mainly a B2B and COB business in drinks. On the other hand, as you will remember, if you followed us for a while, we had a production hold in the baby food plant at Sant'Anna last year because of some renovations that we had in place.
Now this year we are back on track. We are fully integrating all the lost volumes that we had last year, and that has contributed to the overall increase in B2B partners, sales. Moving on to geographies. The geographies, we can see that again there was an impact from overselling prices. In terms of the Italian sales, we had the contraction, which was mainly linked to the dairy and Italian sales. In Germany, we had two main areas. Other than, of course, the overselling prices, one is the decrease in some sales because we exited some low margin, negative margin contracts that were previously in place under Princes. We had a good performance in the pasta category. We will see, perhaps in the next reporting seasons, a good performance from Germany as well. The U.K. was quite flat.
We did not have much of a decrease. It was slightly down, but the decrease was offset by the good performance in drinks. Really happy with the results achieved in the U.K. as well. Now we are moving on to the EBITDA breakdown by business unit. As you will see from the right-hand side graphs, there was a very good increase in some EBITDA margins, especially in foods and drinks and in Italian. As we said, EBITDA overall increased by 30.5%. EBITDA margin as a group was 8.2% compared to 6% last year. Really good performance overall. We expect to see even a further improvement in margins in the next months. In particular, as we said, foods increased by 320 basis points compared to the first quarter of 2024.
Drinks also had an EBITDA margin improvement of 300 basis points. Italian had the best, let's say, increase, which was almost 400 basis points. It went from 6.6% to 10.5% in EBITDA margin. Very good performance thanks to the reorganization and the reintroduction, the introduction of the pasta production of Napolina into our own factories, which really helped improve the margin of the pasta category and the overall Italian business unit as well. Now we move on to the next slide where we can see the free cash flow generation as well as our net working capital improvement. As we said at the beginning, we generated as a group a EUR 45 million free cash flow in the first quarter. You may remember that we had a very strong performance in 2024. The delivery of the free cash flow is still going on.
We're still generating very good free cash flow from the optimization in working capital, especially within Princes. Of course, EBITDA, as we just mentioned, was the main driver, but also working capital improvement really played a huge role in delivering a strong free cash flow for the period. We saw an improvement in the first quarter in the average days of inventory as well as the average days of payments outstanding. We expect to see a further optimization in DPO and also DSO in the next quarters as we move on with our, let's say, restructuring strategy in terms of payments, in terms of working capital optimization overall.
Lastly, we just wanted to touch on the news that was shared a couple of days ago, that we also published on our website, which is the announcement by the Ministry of Enterprises and Made in Italy, which announced that we have signed an exclusivity agreement with Diageo for the possible potential acquisition, which is subject to final agreement, of course, of the production facility of Santa Vittoria d'Alba in Piedmont in Italy. This production facility is specialized in the production of spirits, ready to drink products, and low and alcohol solutions. The reason we have decided to look at this potential deal is because we already have a consistent, as we within a consistent business, in drinks in the U.K. market alone, where we generate EUR 340 million. We see a good potential for growth in this market.
In particular, we have highlighted the strategic rationale in here. You can see that on one hand, we can expand and complete our product offering because at the moment we only supply soft drinks, mainly fizzy drinks and juices and squash. That would be a very good and complementary product to the current drinks offering we have. On the other hand, we can reinforce the position by entering into a very high growth and high margin category, which is the one of spirits and alcohol drinks. In terms of industrial capabilities, the Santa Vittoria d'Alba site is particularly advanced. It has very high capacity. It has very strong know-how and expertise in the production of these alcoholic drinks. Also, it is fully equipped. No additional CapEx is required from our side.
This will also allow us to have a very strong differentiation in the market. On the other hand, we have some synergies, some, let's say, some pros in terms of optimization and in terms of operations because we now have some plants in the U.K. which are full capacity. We can actually alleviate the current restraints that we have, for example, in Glasgow within Princes and be able to provide more products to our clients. This is also a very strong move in terms of flexibility because we can again expand the product portfolio and also expand the type of customers that we go to, which leads us to the commercial potential, because we have a very strong opportunity to accelerate growth in both in COGS and broaden the growth in this segment.
The ready- to- drink products, low and low and alcohol solutions as well as spirits, which is a very high and strong, an interesting category in Europe overall, especially because we can provide, if of course we are successful in the acquisition, we could provide these products also on a COB basis, the customer-owned brand. That is something quite new to the market. We would be probably one of the few companies that could provide this service to customers that could actually add very good growth and volumes to our current drinks segment. This is all we can say at the moment and any update will be communicated to the market in due course and following all the disclosure obligations of following the applicable law. The presentation was quite short.
I hope everyone had a good understanding of what happened in the first quarter. Now we can open the room for questions. You can either unmute yourself and ask the questions, use the Q&A tab on the chat, or use the chat, whatever you prefer. We will be happy to answer any questions. Thank you. Yeah, I think Arianna has a question.
Yes. Thanks, Benedetta. Good morning, everyone. Thanks for the presentation and congratulations for the results. My question, first, is on the organic business. To what extent can we project a further margin improvement in the drinks business on the back of the co-packing contracts? This will be my first question.
On the working capital and the solid cash generation we saw, we have been speaking about that during the past conference call, but would you help us in catching up and better understanding what's left in terms of efficiencies? The current net debt target for year end seems conservative. Would you comment on that and would you be able to provide an updated guidance on this item? If I may add two questions on the external growth, I would appreciate if we could provide more color on the agreement regarding the plant of Santa Vittoria d'Alba. I was looking at the turnover per employee. It seems like an efficient plant. Would you elaborate on that and give, of course, if possible, more color on some KPIs, for example, regarding the capacity on that plant?
I was wondering also if there is some, from the Diageo side, the need of outsourcing capacity. The last question is a clarification on the 3 billion target you disclosed for the food and drinks division. Would you please elaborate more on the drivers behind these? Is it including also the plasma potential acquisition? Thank you.
Thank you, Arianna. About the first question that was on the drink business, we expected the drink business to perform even better in the future, not only due to the very strong expectations that we have if we will be able to close the transactions that we announced, but also on the organic side because there are some contracts ongoing in discussions, in negotiations. This is a business in which the volumes obviously play a very important role in terms of getting efficiency.
We believe that, starting from the coming quarters, we are going to see progressive improvement in this division, because we expect to finalize, positively finalize this contract. Drinks is also a division on which we are thinking about several different projects for the organizations and the reorganizations of the full divisions. It is clear that everything is at the early stage because it is part of the several projects that we have inside the NewPrinces Group. We recognize in this business a lot of potential. We believe that the potential acquisitions could increase massively the potential of this business. We believe that already starting from the second quarter, you will see a progressive improvement of the profitability.
About the working capital efficiency and the net debt, I want to highlight once again that the improvement on the cash flow generation is not only linked to the working capital. Working capital gave around EUR 15 million of full contributions in this quarter. The rest, the other two main drivers, are first of all the EBITDA, that is increasing in line with our expectations, achieving an important margin improvement around 100 basis points versus last year. This, I would like, could be considered as a proof that when we announce the ambitious target during the presentations of the full year 2024, we announced that with visibility, and together with the strong commitment that we have, we are now delivering in line with this ambitious plan.
The other part was obviously the reductions of the financial expenses for several different reasons, starting from the movement of the interest rate, but also the better level of cost of debt that we have after the issue of the bond in February. This means that half of the performance is linked to the networking capital efficiency in this quarter, in particular on the inventory side. The other half of the performance is strictly linked to the operating items. This is, in my opinion, very important to be highlighted. I agree with you that the target that we gave last year as a guidance for the full year 2025 is conservative. We expect to be above that. I think that, in any case, it is too early to mention a number, a precise number.
I think that the quarter confirmed our capability to generate cash, and you can do calculations by yourself, considering that we expect that the working capital, the networking capital could give an additional contribution this year that should be around EUR 100 million, as our Chairman confirmed during the past presentation. This means that we expect a very strong cash flow generation also this year. More color on the agreement with Diageo. Unfortunately, we cannot speak a lot about this agreement because we have to respect what the counterpart asks in terms of not to, obviously, disclose or to give visibility about several topics that are still under discussions and that remain between parties until the deal will be closed. This is the reason why we also try to give you whatever is possible at this time.
In particular, speaking about NewPrinces and not about Diageo. For this reason, what we can share is, as Benedetta mentioned in the slide, the strong opportunity that we see to complete our offering in drinks, to get a very strong opportunity, especially in the segment related to the customer-owned brands, doing something that at the moment is unique because we can operate into the market with a very strong technology that is the technology of the market leader. We believe that this could create a unique opportunity from all the possible points of view. We are very excited for this opportunity, but at the moment, unfortunately, we cannot share more, for the respect of the agreement that we have with Diageo.
About the, the target of 3 billion, it's clear that this is not a target that is driven by or only by organic growth. It's a target that includes M&A contributions and in particular the M&A on which we have visibility. I don't want to share you more at this stage because we have some negotiations that are in a very final stage. I would prefer to maybe to give you all the details when these situations will be finalized.
Thanks, Fabio. I understand.
We have two questions, I think, from Salvatore and Paola. I don't know who wants to go first.
Perfect. Thank you very much. Just a quick one. First of all, congratulations again on the results.
One thing for me, I'll try again maybe to get some color on the acquisition from Diageo. Are you looking, obviously, probably you will give more details later on, but are you looking to do this fully on cash or are you looking at other instruments to finalize this? Also, one question in terms of segment, obviously the private label or white label is again a big sector for you, is a big segment. Are you looking to expand particularly this given the fact that probably you have some capability and capacity to do that without deploying too much capital? Do we have a KPI, a target in terms of a proportion of the revenue that is going to generate this segment? Thank you.
Thank you, Salvatore.
Honestly speaking, at the end of the Q1, we have more than EUR 500,000,000 of cash available in our balance sheet. We are absolutely relaxed to be able to close all the acquisitions pending at the moment using the cash available. This is not an issue for us. About the other specific question, at the moment, the opportunity could be derived in different terms in the sense that, when you are available to operate with an asset like this one with the skill of the people inside this asset that produced, since many, many years, very interesting products, I think that you can develop your business in different ways, maintaining a lot of potential for success and to try to create a lot of value from this asset. Yeah.
At the moment for us, it's very important to continue to follow what is our mission, as a NewPrinces. To try to build up, to continue to build up this platform that is a platform multi-channel, multi-product, multi-brand, but also very important because we are a manufacturing company. First of all, is to continue to aggregate different industrial know-how in the food sector. This is a very strong opportunity for us. We are very, very excited for that. In the future, we will disclose in the details the strategy, the commercial approach, the opportunity. At the moment, I think that it's probably too early to speak about that. Another question is from Paola, probably. Yes.
Hi, good morning, everybody. Thank you for taking my question and congratulations again for the results.
I will start, in fact, from your impressive EBITDA margin improvement, which you achieved in Q1. If you can give us some color, if possible, on to what extent this has been driven by raw material deflation and to what extent by the efficiency gain you are achieving from the integration with Princes. Following this, what we should expect for the full year in the sense that, already multiplying by four what you did in Q1, we would be at the top end of your 210-220 million guidance. Whilst we might probably assume that your synergies will be more and more visible in the next few quarters. Is there any chance to be even more positive on this, for your guidance for EBITDA? On the other side, what is the trend in raw material you are expecting for the next few quarters?
Further question is on the working capital side. You mentioned that, most of Q1, improvement was on inventories. Maybe you can share where you see most upside in the coming quarters and in working capital, if it's still on inventories or on the other main metrics. Further question is instead on your reference in the press release to a potential listing in London. Just if you can clarify the rationale for that on one side and, say, what would be the perimeter potentially being listed on the London Stock Exchange. Very last one on Diageo, I appreciate there is some confidentiality constraint at the moment.
I just wanted to try, let's say, if you can elaborate a little bit more on the priorities for you, once you have this planned, in terms of product, in particular, are you thinking more or are you seeing, let's say, greater opportunities in alcoholic beverages, in no alcohol, in RTDs? Just to understand whether, I mean, you can share where you might be focused on. Thank you.
Thank you. About the first question that was on margin improvement. As I mentioned at the beginning of the call, I think that the margin improvement is the most important aspect of this reporting because first of all, this is the driver of the cash flow generation. That is the other important result that we achieve.
It is a combination of several different actions that are linked to the synergies or the actions that we announced after the acquisition of Princes last year. We are substantially, successfully, getting all these targets that we announced and that we had since the beginning after we analyzed the situation of Princes. The raw material impact, yes, the raw materials show a decrease, an important decrease that was compensated by the reduction of prices that we apply. This is linked to the performance of our top line. This means that at the margin level, we do not have any benefit linked to the lower price of the raw material because the effect all in all is nil. What we have at the margin level is better negotiations on the procurement side.
This means that the reduction of cost and raw material not linked simply to the raw material price that was down, but by new negotiations, that gave us opportunity to have a material decrease on the procurement side. This is visible on the COGS trend that were down 6% year- on- year in the quarter. The other aspect is linked to the volumes, to the fact that volumes gave us the opportunity to generate operating leverage. For this reason, I made this statement at the beginning because it is important to say, yes, there is a movement, a negative movement on the top line fully linked to prices linked to the raw material that are down. This is a nil effect. What is important is that our business is still growing or stable in other category.
Volumes are there and the growing volume allow us to achieve operating leverage and to drive the EBITDA margin up for 100 basis points. This is the key reading of these results. We are very proud because in a very short period of time, we already start to deliver a very important result in terms of margin improvement and cash flow generation. About the working capital, we expect working capital to give additional contributions to improve in the coming quarters. In particular, we expect to maintain this improvement on the inventory side and to have an additional contributions from the DPO because our target is to overpass the 70 days. The target is more ambitious, but step- by- step. The first one is to overpass the 70 days.
For this reason, we expect that in coming quarters, step- by- step, and especially at the end of the year, which is usually the quarter that allows us on the DPO side to get the best benefit for the renegotiations that we usually do in the last months of the year, we are very confident to achieve another EUR 100 million of contributions from the working capital. The potential listing in London is something that we announce, together with other potential actions that we have on the table because we are looking everywhere to try to get opportunity to increase as much as possible the value creation for the group. This means that together with all the other, it's something that at the moment is a potential idea. We do not have details because we did not discuss details. It's something that we can consider.
For this reason, it's difficult for me, in this preliminary phase, to think about perimeter or a structure or whatever because it is in a very, very preliminary phase. It's together with the other projects, something that we can consider. It's not sure that we are going to do that or all the other projects that we mentioned, but this is to share with you the fact that we are looking at 360 degrees to find everywhere the opportunity to create value with the new big group that we have. About the Diageo opportunity, I can tell you something very simple. We believe that all the categories are important categories for the market because the no alcohol is growing in an impressive way. The opportunity for ready- to- drink is really amazing. It's something that, for example, in Italy is not really developed.
In the U.K., it's amazing, the growth of this category. The other, spirits are products that are in the market since many, many years, well known. There is a strong focus of the retailers to try to enter in this segment with a customer-owned brand. We would like to follow all the possible trends that we can get. Simply answering to your question, the first thing that we have to do after the acquisition is to get volume.
If I can add something, Fabio, to this, what is really good on the other side is that the private label business, in the alcoholic drinks and drinks in general, it's the main market in Europe. Number one is Germany. Second market is the U.K. They are all markets in which we are really strong already.
The market share of private label is increasing in both markets. We are looking even to the Italian market. We got the data in the last days. In Italy as well, it is increasing. As Fabio said, customer-owned brand is a trend that retailers are trying to follow on, really good and all the different products. Ready- to- drink, mixed alcoholic and non-alcoholic, are a trend that is growing everywhere. What is really important is the size of the market for Germany, U.K., and Italy that is growing as well.
Of course, we have all the out-of-home food service that we do not have the data yet because these are more hard to get and these are other channels. All the out-of-home is a huge market for out-of-home and food service for this kind of products.
That is another market in which I think we will have strong capabilities and big opportunities.
Very clear. Thank you very much.
Thank you. Okay. Should there be more questions, you can raise your hand, unmute yourself, and ask the questions. Otherwise, we may end the call here if you have no more questions coming in. In case you have any follow-up questions following the call, you can always ask us and send us an email or call us, and we will be happy to answer any doubts, any questions you might have. Thank you for joining today's call, and we hope to see you again very soon. Thank you.
Thank you. Bye.
Bye-bye.
Bye-bye.
Bye-bye.
Bye-bye.
Thank you. Bye.