Morning. Good morning, everyone. Thank you for joining today's call on the Q1 2026 results for Princes Group. NewPrinces Group, sorry. I'm Benedetta Mastrolia, Investor Relations Director of NewPrinces Group, and I am delighted to be joined by our Chairman, Angelo Mastrolia, our CEO, Giuseppe Mastrolia, our CFO, Rocco Sergi, and our Group Financial Director, Fabio Fazzari. 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, and any reference to past performance of NewPrinces shall not be taken as a representation or an indication that such performance will continue in the future.
This presentation does not constitute an offer in a position or an offer to sell any of the NewPrinces securities. We'll start directly from page six of the presentation with our financial highlights. Q1 was particularly strong in terms of margin progression, we had solid revenues with EUR 1.5 billion of revenues recorded in the first quarter. On a reported basis, this marks an increase of 122.5%. On a like-for-like basis, we had some slight decrease in certain categories because of the deflationary environment. However, underlying demand remained pretty strong and stable throughout the period, and we expect the next quarter to see more an increased demand versus the other quarters of last year.
In terms of margins, we decided to show pro forma margins for 2025 to give you an understanding of the increase and the ongoing work that has been going on with the acquisition, especially of Princes Retail. Adjusted EBITDA on a like-for-like basis increased by 21.3%, which means that we went from around EUR 63 million in EBITDA to EUR 76.5 million. In terms of margin, we also saw an improvement from 3.9%- 5.1%, which means that we had an increase of 117 basis points in margins. EBIT was minus, so a loss of EUR 4.4 million.
However, we were very I would say we had very good results in terms of recovering those recovering in terms of EBIT with an EUR 8 million increase as opposed to a loss of EUR 12.8 million last year. Net profits similarly had a saw an increase of EUR 12.6 million, from a loss of EUR 34.8 million to a loss of EUR 22.6 million. We want to also say that we will we expect this trend, let's say this positive trend to continue in the next quarters as well.
Interestingly, we were able to generate cash, despite the new perimeter with underlying free cash flow, which excludes real estate investments of EUR 41.4 million, meaning that we had a 41% free cash flow conversion. Similarly, our net cash remained essentially unchanged. This is excluding IFRS 16. If we include IFRS 16, we actually had an improvement of EUR 23 million in the period. We also want to mention that, of course, net cash position includes the investment in real estate. On to the next slide. We have shown a P&L analysis comparing the consolidated P&L versus the pro forma performance. In terms of consolidation, of consolidated P&L, of course, we see an increase, material increase in revenues, an increase in gross profit.
Of course, from EBIT down, we see a, let's say, decrease in terms of margins. That's mainly related to, of course, the higher costs that we now have with the enlarged perimeter. And we also wanted to highlight that we had some admin expenses which were higher in the period because of one-off reorganization plan. However, we expect this to gradually normalize in the next quarters as well. On a pro forma basis, we had an improvement in gross profit. Gross profit margin was up 112 basis points.
We also saw a reduction in COGS of around 8%, which is a result of a new strategy in terms of procurement, especially at retail level and optimizing purchase prices. On the other hand, some decreases and deflationary effects that we had in some other raw materials. Adjusted EBITDA margin, as we said, increased by 117 basis points. We had pretty strong delivery of EBITDA in the first three months of the year, especially if we look at the performance of the retail segment. We had a particularly strong results in March and also in April on our year-to-date update, which we will go over in the next couple of slides. Net income, as we said, improved by EUR 12 million.
Overall, particularly good and positive results for the whole P&L. Now just quickly on our net financial position analysis. We wanted to show you how the financial position has been constructed as we thought it might be helpful. In terms of total liquidity, as you can see, it remained close to EUR 1.4 billion. This was also supported by the operational activities of the group, essentially unchanged versus year-end. If we look at the net debt, including IFRS 16, as I was mentioning earlier, this improved by EUR 23 million. If we exclude the effect of the EUR 27 million investment in real estate, we would have had an increase of EUR 50 million, an improvement of EUR 50 million in net debt position.
In terms of liabilities, we also had a decrease here. We will talk about our real estate investments later. Our intention is to gradually reduce our exposure to leases over time by acquiring and by investing in some strategic real estate, which have an average yield of at least 8%. Again, we will talk about that later. Which now brings us to the net cash position that I was mentioning earlier of EUR 317.5 million, which is essentially close to close to full year full-year results. Now on to free cash flow and free cash flow conversion. As mentioned, underlying free cash flows was EUR 31.4 million.
This excludes the investment in real estate and free cash flow conversion was 41%. If we look at some of the leverage ratios for the group, we see a pretty healthy situation. We used 12-month rolling EBITDA based on Q1 results, and we see that 2026 gearing ratio, net debt over EBITDA ratios are pretty positive, close to zero. Now onto the business performance. We will go through some of the business units and highlight some of the progress we've made in terms of new product launches and also some other key areas of the business. Onto the divisional performance. As you can see, this is on a consolidated basis, we're showing Q1 2025 on a consolidated basis.
We saw generally an increase in the business units where we had where we acquired some businesses, so Italian drinks and retail. However, the underlying demand was quite resilient. We had some declining prices, so some deflationary effects on some key commodities, which were then translated into lower revenues. Particularly in dairy, we had a pretty strong decrease in the average purchasing price of dairy and some other and milk commodities. Drinks was affected positively by the acquisition of Princes Ready to Drink. However, the underlying demand was pretty flat. However, we had a decrease in terms of orange juice prices at Princes.
In terms of Italian, we saw a good increase in terms of, again, mostly Plasmon and, we had slightly decrease in some of the key raw materials as well, which reflected in a lower result in terms of revenues. Oils was pretty stable, retail, of course, saw an increase compared to the reported numbers. In terms of like-for-like basis, we've been working on a gradual repositioning of the prices at Princes Retail, so across the network, going from an average consumer index of 106, price index, sorry, of 106 at Carrefour Italy before to close to 100, so near the sort of market average.
Overall, in terms of performance in our geographies and channels, we saw a stable performance, which reflects the trends that I just highlighted. Deflationary trends with a stable demand, and some increases in some areas, for example, food service and B2B following the acquisitions, and of course, the inclusion of the retail business unit. Now onto some of the NPD we've been working on. This is Princes Retail exclusive, or at least the products that we've been working on with the Princes Retail team, especially with Princes Group. These will be the top ones have been launched into Princes Retail stores in May.
The bottom ones, except for Pezzullo, which was also launched in May, are going to be launched in the next couple of months. We've been working and spanning across different categories, going from tuna, first time launching tuna into Italy, with the Princes Tonno, so Princes Tuna. Completely targeted to the Italian market, yellowfin product, very similar to the competition in the market. Terra di Limoni is a limoncello product we launched and produce at Santa Vittoria. Energy drinks such as Spartan, again, at Santa Vittoria, new sauces at the Foggia site. We also have a pipeline of ready sauces which will be launched in the next couple of months as well.
More to come in in terms of juices from Cardiff in the U.K. and Santa Vittoria with tonics and fizzy drinks. Now on to some of the general NPD launches for the period. These are all products that were either launched in Q1 or launched in April/May, so are already on shelf. Delverde launched its first ready sauces into the German market, which was very well received by German retailers. We also launched 100% MSC-certified jack mackerel into the U.K. market. This follows what was done in the Netherlands couple of years ago. We also launched two new shapes of pasta with Napolina.
This is made at our Eboli site, really exciting to see how the integration of our manufacturing system with Napolina can allow further NPD. Casarecce is one of the products we produce at Eboli, and Cavatappi is one of the highest growing SKUs in the U.K. market, or product type, short pasta shape in the U.K. market with 25% increase year-on-year. We, of course, took the opportunity to launch this new shape into the U.K. market, and we expect to see good growth coming from this. We also launched some high-protein pasta in Germany. This follows a trend that's been going on for the past couple of years, but very strong in Germany.
We also renewed our partnership with Sammontana, the Italian ice cream maker. Last year we launched the biscuit on stick. This year we also launched the tub, which is, which has Plasmon biscuits inside, very well received by our by retailers in Italy. This was initially just a dedicated launch into one retailer. However, it was so well-received that we've received demand from different retailers, which is not Carrefour, by the way. It's other retailers as well, and we're also launching this into Carrefour, of course. Really good performance in this with this product as well.
Lastly, the new product development in terms of rusks had been several years where we hadn't really had any innovation in terms of flavors and taste profiles in rusks. We launched two new SKUs. One is with coconut, and one is with citrus and cinnamon. One with energy and one with sort of immune defense benefits. Really trying to capture all the trends and all the consumer demand that's coming to market. We've been very fast of delivering these products. We're really pleased with the outcome of these NPD launches. Going on to EBITDA now. As we said, adjusted EBITDA on a like-for-like basis increased by 22%.
Looking at retail, especially, we saw a material increase of EUR 20 million, so from EUR 2.5 million in first quarter of 2025 to EUR 22.2 million in the first quarter of 2026, especially in the month of March. From March onwards, we've seen a step change in the profitability of Princes Retail, which is largely due to the first rolling, like first unfolding and first evidence of our synergies taking place. We will see this to progressively continue over the coming months and to year-end as well. Generally, we kept margins quite stable, increased them where possible.
Drinks, as I mentioned, there was a mismatch in terms of pricing adjustments in Q1 last year as we had higher prices into the market last year as opposed to now because of the raw material prices and also reflecting some of the arrangements we have in terms of drinks contracts. Other than that, we kept margins quite high. Dairy products increased its margins by 100 basis points. We had a huge increase again in Italian products, 110 basis points. Retail, of course, was the standout performer with 250 basis points from almost 0% EBITDA margin to 2.8%. We're really much on track and delivering ahead of plan with our margin recovery plan for the retail sector.
Now, we want to really give you some granularity on the performance of the retail business, especially with year-to-date data. To end of April, we've seen a very good performance in the months of March, but also in April, and completely exceeding our expectations, initial expectations that we had previously disclosed to the market. This was, of course, not a full surprise because we are finally seeing the fruits, let's say, of the seeds we planted within the first couple of months where we saw a more, I guess, a softer EBITDA performance, which was just sort of the first months of the implementation of the synergies.
However, now with the new plan and with the new strategy, we will see this, we will see this proceeding also in the next months. In terms of year-to-date results, we had an increase of EBITDA of 46% year-on-year, so year to year-to-date. Just looking at March and April, we saw an increase of EBITDA of 240%. We're really hopeful that we will see this trend to continue in the future. This brings us to be comfortable enough to upgrade our guidance from what we disclosed with the full-year results. We expect the retail EBITDA to be in the range of EUR 110 million-EUR 120 million at year-end at least.
We will, of course, keep the market informed with our half-year results should this guidance improve materially. However, we don't see anything, any reason why this shouldn't be met. Now just on to real estate investments. As I mentioned, the current plans to invest in strategic real estate, either in strategic locations, for example, city center of Milan or some hypermarkets or high traffic areas in Turin, Bologna, Rome. All the major cities we operate in. Also locations that we know could be interesting for other retailers. We wanted to really make sure that we could keep those locations as they're very highly sought after. For example, we also have some locations around the lakes in Lombardy.
I would say high yield locations. As mentioned, we go into our investment approach is to invest in locations that have a high yield of at least 8%, and also invest in those locations where we know that we have a good return also in terms of traffic and in terms of revenue generated by our stores. These locations are all Carrefour, really Princes Retail operated locations. We didn't buy anything with where there was another supermarket, for example. These are all our own locations.
We expect this to, as mentioned earlier, to reduce lease liabilities over the next months and over the years, and also improve and strengthen our cash generation and generally the EBITDA profile of the company, if we look at the IFRS 16, post IFRS 16 EBITDA. Now just some closing remarks. We are very positive on the integration of all the acquisitions of the companies we acquired last year, especially the retail acquisition, which of course is the question mark that everybody had. Really good progress in terms of strategy, in terms of procurement optimization, of price and a positioning, repositioning of prices on shelves of stores, of the new plan in terms of layouts.
Really positive, especially with half two. Well, half two we expect to see more benefits to show in our accounts. That will reflect in a strong margin improvement by year-end. We also keep working on our real estate program. Of course, keeping a disciplined approach to investments, never investing in anything that wouldn't have a good return. In terms of pricing, of course, the current situation is very uncertain in terms of commodity prices and raw material prices. We have very skilled procurement teams that are keeping monitoring raw material prices, so we don't really see any disruption or any problem in terms of translating those prices into our customers.
However, we I have a selection of increase of processes that we will put in place, if needed. We are optimizing, as always, our procurement base. We'll keep doing so. In terms of M&A, we currently have, this morning we discussed with Princes Group, that we still have an active pipeline of potential targets at Princes Group level, with increasing, actually an increasing number of targets, we expect to close at least one deal, so in the food and beverage manufacturing, performed by Princes Group in the next 1 or 2 months. We are seeing more and more opportunities coming to market, so that is really comforting.
We are one of the, I would say, most sought after partners in terms of potential acquirers because of our track record, but also because of our very strong position, especially at Princes Group level. Now we can take questions. I will take questions. I think we have a couple of our analysts, so we'll ask them to ask questions. I think the first one's from Alberto Gegra. I will just allow your microphone. You can ask your question now.
Hi. Good morning, everybody. Hope you can hear me. So my first question is, if you can provide some example of these first benefits and synergies, from these initiatives on Princes Retail and whether these are more on cost or on the sales development. Then a couple of the on the cash generation around working capital, what are the main moving parts that we should expect going forward between the retail and the manufacturing part of working capital and on CapEx? So without real estate, CapEx in this first quarter were very low. So just to understand which kind of CapEx profile for, again, for the retail and for the manufacturing division, you are expecting on the full year, excluding the real estate. Thank you.
Hi, Alberto. I can start from the end speaking about the CapEx and working capital. What is important to highlight in this quarter is that we have been able to generate cash with the real estate investments. This means that if we consider going forward the level of CapEx, that could be more or less in line with the past years. We will be able, quarter- by- quarter, to manage the cash generations, the investments, the CapEx, the CapEx investments, to continue following these trends without any particular deteriorations of the cash generations profile. Because substantially, also the all the parts, the investments in CapEx, the investments in real estate will be managed to try to support the trend.
If you consider, for example, real estate investments during this quarter, we would have all the resources to do CapEx investments in line with the past years. What we are doing is to manage the resources between the CapEx spending and real estate investments to try to get the best opportunity, and also to optimize the investment in CapEx. Also on this side, we are very prudent with very high level of attentions to try to do only the investments that are really necessary and that could create value for the company. In terms of the initiatives on the retail side, we are implementing initiatives at 360 degrees.
This means that there are investments on the IT to develop the different platform that could support the development of the online business. We are investing in reorganizing hyper markets, putting inside the two different offer for B2B and for the offer that was already there for retailer. We are operating to revamp the offer, reorganizing the shelf with the new products. We are creating the base for the development of the private label. We introduce, for example, in May, as Benedetta shows, Princes Tuna in Italy. That is the first time that is on the shelf. It's a new, a new product, a new initiatives.
We are working also on the cost base, and the cost base is for sure the first element that gave important contributions especially in March and in April. The project is a 360 degrees project. There are a lot of things that are in place. It's clear that not everything could be delivered in a couple of months, because we need the right time, as we already explained last time. I have to say that the contributions that we saw in the past two months, it was really good, really supportive. For this reason, we decide to increase substantially the guidance also for this year.
Yeah. Just on the sales side, what we are doing on the commercial, just to give you some numbers. We grew into Carrefour as for from the industrial part, increased by 60% of our sales compared to last year in volume and 77% in value, in term of our product that are sold into our stores into Carrefour. This is excluding the initiatives that are going live now that Benedetta told around the tuna. That is a really high value business. This is just milk and dairy and pasta that was already there. Like- for- like, we increased around 60% in the first These are the first four months of 2026.
Just to give you a bit of, numeric base in terms of how much is the sales that we are doing.
Okay. Thank you. Sorry, Fabio, I also had one on working capital.
Yes, in terms of working capital, sorry, we expect that the trend should continue in this way, in the sense that we put in place a lot of actions on inventories, on payable in particular, but also in managing the credit we have in place, especially for the obviously not the direct business, but the franchising business. The aim is obviously to maintain these situations also in the coming quarters. It's a moving parts situation. Something could move, but we are, I would say, confident that, as we did in Q1, the same trend could be visible also in the coming quarters.
Okay. Thank you.
Arianna, you should be able to.
Thank you, Benedetta. Hi, Fabio, thanks for the presentation. I have a couple of questions. First, if you can provide a general comment on your expectation on price and volumes for the full year. We saw a mixed bag in terms of business units too, so I was wondering, for example, if the dairy performance was linked to some less contracts you had, or some rationalization of contracts, or if it was the long tail of the deflationary environment we saw in 2025. If you could comment by business units, if possible, the expectation you have. Also on business units, if you could provide an update on Princes Ready to Drink, and what are your expected volumes for 2026.
Then, I have a follow-up on net working capital, in the sense that, I was wondering if there is any seasonal dynamic in the Princes Retail we should be aware of or, for example, in terms of relations contracts with franchisees. I noticed an increase in the shareholder loans, loaned by EUR 5 million versus year-end 2025. If you could comment that. Thank you.
In terms of the general pictures price, volume, I have to say that there are it's difficult to define a picture for the next months because you know that the general macro situations is moving every day and on this basis, it's obviously we expect to have a price increase, to pass through a price increase and this means that on our revenues we expect to have a contributions from pricing. In general, apart from this dynamic, I have to say that the trend that we are seeing in volumes is improving materially during April.
For example, the dynamics that we had in April was able also to more than offset the impact of the portfolio rationalization. The view that we have going forward in terms of volumes also considering the delivery of the several different initiatives that we put in place, is to have substantially a positive trends in pricing. It's clearly that everything will be link to the inflationary scenario that we are going to see and the needs that we have to complete a pass-through.
Yeah. If I can build on that just for your information, I want to talk about sector. For example, on the dairy, the first quarter, the first quarter of 2026 has been affected by the reduction in cost of raw material of milk because as you know, after, let's say, the duty from U.S., the price of milk in Italy and in Europe has dropped, so we dropped, or and margin-wise, we recovered more margin than in the past, just to give you a bit of a flavor. Of course, the effect on Q1 most of the time is the price and the condition that we agree with the retailer on Q4 of the previous year.
The deflation is, I would say, around 85% related to the deflation of raw material and not to an increase in term of promotional activity. Of course, Q1 has been a soft first quarter for all the FMCG industry, even looking around how the retailer are working. There's been a really extraordinary Q4 2025, and this create an effect of extra stock into the retailer, for the beginning of 2026, and this is where the impact of volumes we are seeing in the different categories. Overall, the dairy, on margin side, we improved our marginality even though we followed the price trend.
As Fabio said, now we are in a different scenario after the end of February and the start of the war in Iran, where now we are in an inflationary and we are working on the pass-through of our inflationary cost to the customer. The quarter are changing quite rapidly. I don't know if it's clear.
Really helpful. Thank you, Giuseppe.
In terms of Princes Ready to Drink, the situation is the one that we already described at the end of the year, in the sense that we are involved in several different tenders. We expect by the end of the year to get new customers, new product development. We already got an important contract with, in the B2B with an important spirit brand. We are also in talk with Diageo because there are a lot of volumes that will remain also in the next years, and this is obviously something really positive for the plant and for the development of Princes Ready to Drink.
At the moment, everything I would say is going on with the plan that we have. It's clear that the first year of contribution of this company to the group EBITDA, it will be 2027 for sure. In terms of the net working capital, there is nothing that we need to highlight in terms of seasonality. We don't have particular seasonality in the business apart the months, between September and December in which we have the peak of the tomato production, especially in September. Excluding that, there are no particular moving parts that are sensible to the seasonality.
In terms of the movement that you may see in the shareholder loan, you remember that all the interest and the cost related to the shareholder loan are PIK or capitalized, are not paid. They are not linked to a cash out. Every year it's clear that the amount will increase linked to the capitalization of the interest.
Thanks, Fabio.
Welcome.
The next question. Yeah, Dennis, you can, Henry Dennis, sorry. You can ask your question.
Good morning. Can you hear me?
Yes.
Yes.
Could I just ask a question from the Princes Group point of view? You talked about current trading seeing positive momentum in Q4. First, just a clarifying question. When you say current trading, would that be organic revenue growth turning positive in April? Beyond that, we estimated Q1 organic growth, if you kind of if you take out Plasmon, we thought Q1 organic was looking at something like -2.5%. Is that in the right ballpark from your point of view? If so, and if April has turned positive, kind of what are the drivers behind that improvement from Q1 to April? Thank you.
Yes. If you exclude Plasmon, the underlying was low single digit negative. You have to consider that Plasmon didn't have a full performance in the quarter because January was a month of integration, so it's not a full quarter. In any case, yes, it was low single digit negative. The situation's completely revert in April in which, thanks to the several initiatives that have been put in place in Q1 and at the end of last year, we had a positive situation versus last year, an underlying positive situations versus last year in terms of volumes and in terms of general revenues reported.
This means that the general picture was really stronger because this result that we got in April is a result in which the underlying trend was able to more than offset the negative impact that we had for the portfolio rationalization initiatives that we mentioned. The current trading, speaking about the last month and also the beginning of May, it's really supportive for the full year.
Thank you.
You're welcome.
We have a few questions from the Q&A. We'll take that, and then we'll take the other question from Arthur. The first one from Q&A was, "Congratulations on your Q1 results, especially improvement in margins and cash generation. Could you kindly provide some additional clarification regarding the fee and royalty structure related to Carrefour Italia? During the previous calls, you indicated that there are no material fees payable to Carrefour Group than the only remaining cost related to temporary IT TSA services. Some external analysis refer to a potential economic impact linked to the transition and GS rebranding period.
It will be therefore helpful to better understand whether there are still any actual royalties and sourcing fees payable to Carrefour SA, or whether the topic mainly relates to the timing of the progressive capture of our commercial and industrial synergies during the transition period.
As we said last time, at the moment, we had no able to immediately eliminate all the cost and the fees versus Carrefour Group because for two reasons. First of all, because we have still in place the TSA, especially for IT and in general platform services. The idea is to finish the implementations of our own services by the end of September. We can probably have a material reduction of fees starting from Q4, but obviously it depends about the progress of these implementations.
There are also external part involved, like, SAP, for example, and this means that it's not everything in our hands, but this is a provisions that we can do in terms of the elimination of the impact of the TSA.
Sorry.
Of fees that
Sorry, Fabio, I want to underline the impact, okay, is it not material impact on the business? Just to clarify, maybe this is very important. We have TSA, is it not the material, you know, impact on this cost? Just that I wanted to underline this because maybe it's not clear, this.
Yes.
No, this is because maybe some people could think because we get spending, no. Is it not material on the total revenue?
Yeah. The other cost that remain is that obviously, until we remain with the Carrefour banner, we have to include the private label linked to the Carrefour brand. This means that we cannot manage this alone. Also in this case, so step by step with the initial change of the banners, we can progressively eliminate also this link and to be more efficient because the idea obviously is to produce internally, so using our production platform, all the products that we can produce generating a lot of synergies for both sources of the group.
Okay. I think that answered the question. There was another question coming from Alejandro asking, "What is the expected margin for Princes Retail at year-end?"
Speaking about margin is difficult at the moment.
Okay.
Because there are several different elements that could so impact in the sense that you have to balance top line and EBITDA. This is the reason why we decided to give you a view on the EBITDA expected between EUR 110 million and EUR 120 million. I think that at the moment the best way is to remain on the absolute terms of the EBITDA because so there are too much parts moving the picture until the end of the year, including inflation, for example. Probably is too difficult at the moment to define a precise margin level.
There's another question from the Q&A, saying, "You mentioned Q1 to be the softest of the year, and you expect margins to increase. Is the retail EBITDA guidance of EUR 110 million-EUR 120 million for full year 2026 very conservative, or are you expecting even softer quarters during the year?
We spoke about a softer quarter, especially for food manufacturing, but in reality, in general, for the industry also for the retail because it's clear that is the first quarter after Christmas, after the end of the year. Historically, you can analyze the trend of the industry also and of our company. The Q1 contributions is the lowest of the year. In any case, what we consider giving this guidance is the strong results, strong evidences that the actions are producing the results that we expect in March and April.
We have a very strong base of structure, a strong cost base, especially in retail and with the revamp of the top line, thanks to the several different initiatives. We believe that this could create a very strong contributions. On this basis, we gave this numerical guidance of a range between EUR 110 million-EUR 120 million. On the food manufacturing side, we expect margins to increase in the coming quarters because we have several different initiatives in place that just started, so, and, we expect the contributions to come in the coming months related to not only the commercial side, but also the production side.
There are reorganizational plan in place for the factory to get more efficiency. We believe that going forward, we can have a better additional contributions on the margin side.
Now we can take a question from Arturo Lopez. You can unmute yourself and ask your question. Thank you.
Hello. Thanks for the opportunity. I have a few questions, if I may. I was looking at the U.K. entity, cash generation. The numbers you project there are very high, GBP 34 million. I was wondering how sustainable is that? Generally, the industry goes between 70% and 80%, so of the EBITDA. I was wondering what's the normalized level for the cash flow from the U.K. entity? That would be the first question. I will take them one by one, so please.
I have to say that first of all, it's a matter of model because if you analyze the history of NewPrinces, we always had a very strong level of conversions. It was always above 60%. It's clearly that we cannot say that going forward we will have for sure always a level that will be above 80%. What is important to highlight on the U.K. cash generation side is that first of all, this is the first quarter in which we don't have material contributions from the net working capital because the net working capital gave a lot of some material contributions in the past years. This is much more related to the operating contribution.
It's clear that there are a bit of temporary lag between the investments in CapEx. For sure, this quarter was with a lower level of investments. As we said, also in the previous call, we believe that the free cash flow, the underlying free cash flow generations could remain above 60% going forward on average, including maybe quarters in which we may have more investments, quarter in which, like this one, we have a lower level of investments. The difference is a different approach in managing the company with a more efficient working capital, a better profitability, because if you consider the history of Princes Group under Mitsubishi, the profitability was materially lower.
It was lower, the efficiency of the working capital because the net working capital always absorbed in the past cash. Now we are getting a positive contributions. In general, also the approach on the investment side, because CapEx is only related to the real investments for growth, it's not maintenance. Maintenance is treated as a cost in the P&L. I think that what is differentiate the new era of Princes Group PLC is for sure a more disciplined approach in investments. If you consider that we have spare capacity, a lot of spare capacity, it's clear that so we don't have this particular strong need of material CapEx investments. I don't know if I answer of your question of the specific one.
Yes, thanks. I'll go with the next one. Can you talk about the cash pooling from the U.K. entity at this stage? In particular, I would like to understand how hard or how easy it is to do cash pooling from the holding to the U.K. entity, given the net cash position of the U.K. entity.
The cash pooling is substantially something I would say muted in the sense that was created at the beginning to create direct connections with NewPrinces to help Princes after the acquisition in case of necessary. Because, you know, when we acquired Princes, we found inside Princes a lot of intercompany debt. It was a big acquisition, a reverse merger. We needed to create also to give confidence to the bank that supported the acquisitions, this kind of link. After that, it was always muted in the sense that now in the account that is linked to the cash pooling, we have adjusted the deposit of part of the investments that have been done during the IPO by NewPrinces in Princes.
It's not moved. All the business is managed by a different account. It's something that is there substantially and with no effect on the consolidated figure of NewPrinces. This means that it's not a matter of how is easy or difficult to manage this pooling situation because in reality, the pooling situation is just theoretical because there were no movement. If you consider the amount at the end of the year and the amount at the end of the quarter is substantially the same, is a deposit of, I would say, Princes for the amount that was invested by NewPrinces.
Okay. I'm just trying to understand because if I do the math, if I do the math, basically the Italian entity right now is burning cash. In case this burning cash accelerates given the current macro environment, I was wondering whether you can actually do cash pooling from U.K. or whether it's necessarily an intercompany loan, or whether it's a necessary dividend payment from the U.K. entity to the basically Italian structure.
We can consider potentially all of the options that you mentioned in the sense that. We will see which kind of needs we may consider in the future. All the options are open. They, you have to consider that the two entities are not two separated entities in terms of strategy, in terms of management, also in terms of ownership. It's clear that everything will be managed using the best options that at the moment we can see. They are really linked companies.
If you consider the names of the board member, there is a very strong connection. Is not something that, if you consider a real holding company in which maybe you have participations in a company that is managed by different manager, independent manager, and whatever, you have to receive an approval for a shareholder loan for a dividend, or whatever. In this case, there is a strong connection. It's clear that everything will be done in the interest of both entities, but everything is fully connected.
I'll go with the next one.
For example, we maybe may have a I would say an opportunity to for new potential shareholder of Princes PLC that are interested to invest into the company. The market could ask for an increase of liquidity. This is an area in which we may see the connections of NewPrinces and Princes.
Okay. Can I ask you a follow-up on the question on the shareholder loan? What's the interest on that shareholder loan? EUR 5 million over EUR 175 million is actually a 2.8% interest rate. It's a bit too high to be honest, only for being a quarter.
The interest is a bit higher. It's 300 basis points and...
Yes, it was only a quarter. EUR 5 million on EUR 175 loan currently outstanding is actually a 2.8% for basically 90 days. If the interest is about 300 basis points, whatever, you should have that on 365 days rather than just only a quarter. It would be materially lower the impact of the peak versus the EUR 5 million loan that you actually explained. I can't do the math on that. I'm really struggling. Either the interest is different or there is something else going on.
No, the interest is the one you mentioned. This is the spread obviously plus Euribor.
We can send you the full calculation on this.
I would really appreciate that.
Yes.
I also have one last question with regards to logistics costs for the company. Obviously the current environment is very challenging for all the logistics. Perhaps you can elaborate on how much do you spend actually in logistics and what's the, so far the increase that you have seen. That would be great to better understand the current macro scenario and the impact on the company.
At the moment, especially logistic and fuel are the two main things that we are in discussions with. I'm speaking about in particular about the food manufacturing business. We are in talk with all the customer to complete the pass-through and for the food manufacturing side, beginning mid-June, it will be the time in which we put in place this pass-through. We already informed the customer about that. It's something that it will be obviously pass-through because it's something objective evidence, is something that we cannot avoid to share with our customers.
I think that we may probably see one month in which we have to absorb this impact. That could be May. Could be mid-April and May, from June this will be fully passed through to the customer.
What's the value of the consolidated expense on that?
Speaking about food manufacturing, we have, in terms of logistics, should be around. It depends what we include there, because there are also some costs related to some warehouse that are not directly managed. It is not only related to fuel, but you can consider around 2% of revenues.
2% of revenues. Okay. On a consolidated basis?
On the consolidated basis, it could be a bit more because we need to include the retail business that it's a bit more exposed. To give you a precise number, I will send you this response.
Yeah. Maybe, Fabio, if I can jump in.
Thank you.
If I can jump in to this point, if it's easier. Basically we already communicated to the retailer what is the CPI process. With most of the retailer, we have an automatic pass-through of most of the commodity prices. This means that on some, like plastic or transport, we had official index that are agreed with the retailer. As the index goes on, I just give an example on transport, that is the Portland index, where the cost of petrol is based on. We fixed the term of the base before the start of the conflict, and then we agree with the customer on a weekly basis what is the difference between the start of the conflict and up to now.
A few big retailer I cannot name for the privacy and confidentiality manner. A few top retailer agreed already to this mechanism concerning the cost of transport. Now we are going with the CPI concerning everything that is related to all the other costs. That some of them are already kicking in, and some will kick in in the short period of time. I want to say, of course, I have a clear number in mind. I don't think that this is the place where we can share the number. I think it's confidential and needs to stay confidential.
By the way, Fabio's indication is not far, concerned to what we are going to ask. I want to be clear that we will pass to the retailer, the increase that is real impacting our P&L, and I don't want that these questions can create any kind of turbulences as well, because it's important that we I agree that you can ask this kind of question. The management is totally under control. I don't want on the other side that, you know, as this is a public moment, I don't want that we disclose this kind of number. If I may say my honest opinion.
Okay. Thank you very much then.
Thank you.
We'll take the last question from Alberto, and I think we can close the call after that.
Yeah. Just a quick follow-up on my side, if you can give us an idea of the size and profitability of these potential deals in the upcoming months.
You mean on the M&A?
Yeah, exactly.
On the M&A, we are involved in several different potential deals. We have a EUR 100 million revenues target in fish. This is the most in advance. We have a EUR 150 million revenues deal in bakery in France. We have a potential deal in Europe in the oil sector. This was just so at the beginning of the process for EUR 800 million. We have a potential deal. This is more diversified in terms of portfolio but is always food manufacturing exposure in Western Europe and U.K. Mainly U.K. because it's around 70% of revenues and it is around GBP 500 million of revenues.
We are also considering other smaller deals. For example EUR 70 million in oils, but this because is creating a lot of synergies, and it's really complementary with the existing business and in particular also the potential acquisitions that I mentioned before. These are the most interesting potential M&A deals that we have on the table now.
That's it.
Thank you.
We may end the call here. Of course, if you have any other questions, you can reach out to us directly and we look forward to talking, speaking again soon. Bye.