Good morning, everyone, and welcome to NewPrinces' first half 2026 results conference call. My name is Benedetta Mastrolia, Investor Relations Manager at NewPrinces. Joining me today are Angelo Mastrolia, our Chairman, Giuseppe Mastrolia, Chief Executive Officer, Rocco Sergi, Chief Financial Officer, and Fabio Fazzari, Group Financial Director. Before we begin, I would like to remind you that today's presentation and the related materials are available on our website. Also, please take a moment to read the disclaimer shown on screen. We will begin with an overview of the first half results, then go through a business update, and then we will open the line for questions. With that, we'll go directly to page six of the presentation with the financial highlights. We're looking at the consolidated figures for both H1 2026 and 2025.
Revenues were just above EUR 3 billion for the period, which is an increase of 131% compared to last year's consolidated results. This is, of course, affected by the recent acquisitions that were performed in the second half of 2025. Adjusted EBITDA was EUR 171 million, which is an increase of 64% compared to last year's result. Adjusted EBITDA margin was 5.6%, which is a marked increase compared to the Q1 results following the acquisition of the retail perimeter. EBIT returned positive in this period, so we had a positive EBIT of EUR 14.7 million. As you may recall, we had a loss of EUR 4.4 million in the first quarter of 2026.
Because of the first synergy deliveries and the good operational performance of the period, we were able to secure a positive EBIT in the second quarter of the year of EUR 19 million, which helped us reach a positive result for the first half. Looking at net profit, we had a similar situation. Although we're still slightly negative, a EUR 5.8 million loss, we have substantially recovered compared to first quarter, where we had a loss of EUR 22.6 million. We are now in Q2 at almost EUR 17 million of net profit, and we expect this to continue improving into next quarters. So really a positive also on how much we can deliver in terms of net profit for the end of the year. Underlying free cash flow was very strong, and we delivered EUR 53 million of free cash flow with a 31% free cash flow conversion.
This excludes the real estate investments that were made in the period. This is a surprisingly very positive result, given the new acquisitions of the retail perimeter, and this is thanks to the really strong operational performance we recorded in the period. Likewise, we had a very healthy net cash position at the end of the period, which is substantially unchanged compared to the end-of-year results with EUR 314 million of net cash available, excluding IFRS 16. This is very good, especially given also the investments we've made in real estate of EUR 35 million in the period. Looking at our P&L, we thought it would be helpful to show the movements in Q1 and Q2 to show you how much we're improving.
As I said at the beginning, we are seeing a more positive contribution from the retail and from the integration of the several acquisitions we made over 2025, with gross profit growing 311 basis points compared to Q1 and giving us a positive gross profit of EUR 650 million in H1 2026. Operating profit, as disclosed earlier, has improved materially. We had an increase of EUR 23 million compared to the Q1 results, and likewise, net profit delivered a very strong performance in Q2. Looking at our financial position, we would like to highlight that we are still a very good liquidity with EUR 1.4 billion of available liquidity at group level. This is substantially unchanged compared to the full year results 2025. This is also thanks to the really good cash generation of the group. We would like to draw your attention also to the own shares.
As you may be aware, we accelerated our share buyback program in April, so in Q2, and we bought a total of EUR 21.5 million worth of own shares in the first half, of which EUR 16.3 million were only bought in Q2, which brings our own share capital at around almost 5%, so 4.82% of the total outstanding share capital of the group of NewPrinces. Looking at net financial position, including IFRS 16, this has improved from EUR 83.8 million of net debt to EUR 67.3 million of net debt. That is also a reflection of the improved lease liabilities, which fell by EUR 21.5 million. As you will see later on and as we disclosed previously, we actually have been acquiring real estate to improve the lease liability impact over time and also to improve the quality of our earnings and our EBITDA profile.
This gives us then, as I explained earlier, a very stable net cash position, excluding IFRS 16, of EUR 314 million. Going to free cash flow conversion. As we explained earlier, we have been able to secure a very positive underlying free cash flow performance with EUR 53 million. This excludes the EUR 35 million investment in real estate. So from an operational perspective, we had a very strong generation of cash, and that gives us a cash conversion of 31%. Looking at some leverage ratios and net debt over EBITDA was very healthy and positive and has remained stable compared to the full-year results in 2025. Now we will move to the business performance for the period. As you can see, divisional performance, this is still comparing consolidated revenues against consolidated revenues last year, so you will not see the contribution of retail in 2025.
However, we had really good performance across most of the segments with drinks up 35% because of the inclusion of Princes Ready to Drink. Italian products were up 24%, partially because of course of the inclusion of Plasmon, but also there was an outweigh in terms of the lower selling prices of pasta, especially in Germany. As you can see, Germany was down because durum wheat reached very low prices in the period you will see in the next slide, and that has impacted the ever-selling prices of pasta. Milk and dairy had a similar position as milk prices reached a very low price point, and that was reflected to the customer pricing into H1. Other than that, we had very good performance across all the other business units. Oils was very positive.
Even though oil prices went down, we had very good performance in terms of volumes, especially in Poland, which is one of our main markets for oil. Also a good performance in terms of volumes for fish, even though the price of fish was down over the period. Overall, we are very satisfied with the results, and we've seen an acceleration in sales, especially at manufacturing level in Q2, with Princes alone delivering a 2.4% organic growth in Q2. As mentioned, we have seen some impact costs from a few of the key raw materials that affect the group. Even though we did see some inflationary impacts from the Iran war into gas and sea freight, we also saw some deflationary impact on oil, durum wheat, and milk, which reflected in the revenue going down in those business units that are affected by these raw materials.
On a very positive note, we are concluding our tomato campaign. The harvest season will close at the end of September, at the beginning of October. We have secured 220,000 tons compared to 110,000 tons last year. We've doubled the amount of output in our campaign. Very good news is that we've already sold 100% of those tons into customers in the coming months and into next year. We expect to see a strong volume growth into 2027 coming from tomatoes alone. We have also launched our own pilot field. We are growing our own tomatoes. This is a new project that we're working on, and we have seen really good harvests also from our own pilot harvest.
Very positive and we are really thrilled to keep working with several retailers that have confirmed some contracts with us on tomatoes, both private label and our own brand. We're also selling our own branded products into our own retail network in Italy. Going to our commercial update. This is at manufacturing level, so mostly Princes Group. We've secured different contracts, both in branded and private label contracts. In the U.K., we've seen a new distribution of some of our own brands, such as Princes Fruit, Branston Beans, our Jack Mackerel, and Ocean Select products, as well as Napolina. Our main brands have secured new distribution across the key retailers in the U.K., namely Tesco, Sainsbury's, Morrisons, Asda, and so on. In Europe, we've confirmed several new tenders, so customer own brand products across several of our key products, so tuna, bakery, and tomato.
We've secured tenders with retailers in France, in Poland, in Germany, as well as in Italy, and also some in the U.K. Most recently in June, we launched our Princes Tuna into the GS network in Italy, so our own retail stores. We launched 11 SKUs, and as you can see on this slide, we've completely taken over our retail stores with dedicated media plans, both in-store activation as well as, for example, Metro activation in Milan. In only just under two months, we've reached very good results. We've reached 1.2 million sales in Princes Tuna in our network. This is very good performance. We've seen also an increase in our market share in our stores. We are now at 25% of the tuna shelf across the 11,000 stores in GS Carrefour stores.
Very positive performance of the Princes product that has been introduced into the Italian market has been tailored to the Italian consumers. We've launched SKUs, for example, in glass jars as well as yellowfin tuna to really drive consumer intent and consumer purchase. We've also seen some repurchases already. Consumers are now getting used to the new product being on shelf. It is, of course, the first time that Princes is being sold in Italy, and the reception has been very positive. Really thrilled with the results so far. Moving to our retail network. As explained in previous conference calls, we've been actively investing in real estate with the intention to acquire those assets that have a positive yield and also to reduce the lease liabilities at group level.
In 2026, up until July 26, we've acquired EUR 67 million worth of real estate, of which EUR 35 million were at the end of June 26, and the remainder in July 2026. We are still, of course, focusing on other potential acquisitions of real estate. So far, since the acquisition of Carrefour Italia in December till now, we've acquired roughly EUR 100 million worth of real estate across 25 properties that were acquired over the period, which brings the real estate portfolio to over EUR 500 million in asset value. The reason for this acquisition in real estate, as explained, has several reasons. The first one is we want to retain and secure some very high potential locations such as city centers, such as very strategic locations where there's lots of traffic, as these could be taken over by other banners.
We would like to secure those locations as soon as possible to retain those earnings and potential cash generation from those locations. Of course, the lease liability part, which I explained earlier, we would like to reduce the IFRS 16 liabilities currently on our balance sheet, and that will reflect in a better EBITDA quality and also in cash generation coming from the ownership of those stores. In recent news, last month, we unveiled the new logo for GS. As you know, our goal is to completely turn all the Carrefour Italia stores into GS stores by the end of 2028. We are in very good shape in terms of progress and plan. The first step was, of course, unveiling the new logo, and we will start with the first rebranding of a few stores in the next months.
By the end of 2026, we will start with the rebranding of some stores, with some pilot stores. The idea was to keep the original look and feel of the GS store, because as explained, the Italian consumers are familiar with the GS logo, and we didn't want to lose the heritage of the GS logo, and therefore we only made a refresher of the original logo. This will be also supported by a dedicated media plan once we go out with the newer branding of some stores. The formats of the GS store will follow essentially what we currently have with Carrefour. Grand Spesa GS will be the hypermarkets, GS will be the supermarkets, and Xpress by GS will be the express stores, so the local stores in the city centers.
The focus for the GS stores will be on fresh products, and therefore we will tailor the offering on fresh products both in terms of produce, but also in terms of bread, in terms of meats and fish, to make sure that our consumers get into the GS stores thinking that they can get the best products at the best price. We're also working on local sourcing. One of the key areas that needed to be improved was making sure that the products on shelf are reflective of the consumer needs at a local level. What we're doing now is making sure that we are sourcing locally as much as we can and also working on our integrated supply chain to make sure that the products on shelf are as fresh as possible and also as fitted to the consumer as possible, matching their needs.
To do that, we're also working on some handbacks of some stores. As you know, we currently have a hybrid model where we work both with directly operated store, both so through franchises. We have now taken back around 54 points of sale. So now they're directly managed by us. The reason for this is that it gives us more of a control over the economic model as well as the commercial model that is going to be launched at the end of this year. And that will give us a better idea of how the model is working, how we can adjust the supermarkets, and we think this is a better way of working on the new commercial model. To give you a rough idea of what's been done so far and what is in the pipeline for the next months and years.
We've worked on the new organizational structure in Q1. We have also worked on insourcing logistics. We've acquired several warehouses that were previously outsourced, that were previously owned by a third party, into our own network. That gives us, again, more flexibility in terms of logistics. We can use it both as a hub for the retail network, but also with the manufacturing network. So really working on integrating our supply chain as much as we can. The new commercial strategy, as I was mentioning, will be deployed in these months and in the coming weeks, and we're also consolidating the network, as explained, with direct ownership and management of selected stores. We are insourcing some of the services, so ancillary services, and working on production labs, working on rebranding also at the end of 2026 and 2027.
We will unveil new stores with the GS banner by the end of 2026 and the beginning of 2027. The pillars that will guide the relaunch of GS will be several. I would say one of the first and most important ones will be cost optimization. We've been working on this very closely with the GS team, really working on optimizing our cost base, making sure that we buy the best product at the best price in any case, and that is across all the different categories that we sell in our network. We will also work on the operating and commercial model, so standardizing that as much as we can, even though there will be tailored offering in terms of products. However, the model will be the same across the network. On assortment, this is another thing that we've been really working on.
How can we then present our products in a way that appeals to the customer? That is something that has been studied and worked on by our team and is in the final stages of being then deployed into the stores with the new commercial model. We will, of course, make sure that everything we do is margin and creative compared to the previous ownership, and also making sure that we have a good price positioning. Positioning GS stores as I said, high quality at a good price. Logistics, of course, is part of the supply chain integration that we talked about earlier. Lastly, we just wanted to close this presentation with some remarks. In terms of integration, everything is progressing as expected. We had some really good progress, both in terms of retail but also across the Princes Ready to Drink and Plasmon acquisitions.
We will keep working on the real estate investments, which will then help the integration of the overall model and also the asset base that we own. At manufacturing level, especially, we have increased some prices into especially U.K. and Europe, and we will see the price increases reflecting into H2 as the pass-through was applied from July. We will see an increase both in revenues and in margins in H2. We will of course keep managing our input costs as much as we can across the whole portfolio. In terms of M&A, we are focused on several deals, as disclosed in previous calls. At the Princes Group level, we expect to close at least one deal in the near future. We are currently engaged in several opportunities.
We have two opportunities that are at very advanced stage, and we are really hopeful that we can close one of those deals in the next months. Lastly, we wanted to give the market an updated guidance for the full group for the end of the year. We expect EBITDA for the group to be in the range of EUR 330 million- EUR 350 million. Therefore, we completely confirm the previous guidance on retail, and we are really hopeful and positive on the outlook for the full year results at group level. That was the presentation. We can now take your questions. I see that some people already have their hands raised. You can either raise your hand and we will unmute you, or we can ask your questions through the dedicated chat or Q&A. We will start with Alberto Gegra from Equita.
You can ask your question, Alberto.
Good morning. Can you hear me?
Yes.
I have a few questions. The first is on the guidance. Since you are confirming the indication for the retailer, I am seeing EUR 51 million of EBITDA in your appendix in the presentation. What kind of visibility do you have on the previous range of 110-120? Also, if I do the math at the midpoint, the second half in the manufacturing should imply a lower margin in absolute term compared to the first half. Are you being prudent on cost inflation or are there other moving parts that we should consider? Then also a question on the cash flow, working capital in particular. In the previous call of Princes Group, you mentioned the favorable dynamics in the first half driven by payables. My question is, do you think that moving forward you will have a reversal or do you think it is a sustainable level?
Maybe also a comment on the moving parts on the working capital for the retail segment will be helpful. Thank you.
Thank you, Alberto.
Regarding the cash flow generation, I wanted to give my opinion. I believe in the next months, we have the positive impact because it's clear we improvement the volume on the retail business. We expect for the end of the year, the positive impact on the cash flow generation. This I wanted to underline just to clarify this point. Maybe Fabio to respond about the rest.
Yes. On this basis, I can complete the point related to the net working capital. We do not expect to have a different picture in the future, but to continue with this trend in terms of cash conversion and cash generation. About the guidance, for sure the guidance imply the confirmation of the previous indications we gave about the potential development of the EBITDA in the retail business. We are happy about the performance that we achieve in the first half. You know that usually, in particular for the retail, but also for the industry, the second half of the year is the strongest of the fiscal year. So we expect this trend to continue and to improve honestly on the retail. So everything on the retail side is confirmed.
The visibility that we have at the moment is enough to confirm not only the guidance on the retail, but to give this range of guidance that is fully aligned with the consensus and most of the expectations that we saw. Because we expect that with the group, we may have also an improvement of the EBITDA contributions from the industrial side. I don't agree with the profitability trend you mentioned. It's clear that it depends about which kind of top-line movement we may have, especially on the industrial side, in which we have some reorganizational actions in place. And this means that with this level of EBITDA, we expect to have at least a confirmation of the profitability of last year.
Okay, thanks.
Arianna from Intesa Sanpaolo can ask her question.
Yes. Thank you, Benedetta. Thanks for the presentation. I have some questions. First, on the Carrefour Italia, the Princes Retail transformation. in Q1, you provided some indication on portfolio penetration within the network, which had increased by 60% year-on-year in volume and over 70% in value, if I am not wrong. Can you provide some update in this sense or other KPIs for the second quarter also? I guess this would include also the Princes Tuna introduction. Then, always on the Carrefour Italia, on rent savings following the acquisition of real estate assets, I would appreciate some indication on the savings, more or less, considering the acquisition of these real estate assets. Then at the group level, another question is on working capital. It is a clarification. We saw a decline in accounts payable of approximately EUR 107 million.
What kind of a DPO level can we consider as normal for the Princes Retail business? Then moving to other businesses. In terms of Princes Ready to Drink, can you provide some indications on how are tenders evolving for this business? On the tomato campaign, you had remarkable results in the campaign. But I was wondering if this revenue will be recorded in 2026 or at start of 2027. I would like to know, if possible, what kind of margins do you expect from this and from the change in volumes? Last questions would be on balance sheet. I saw that balance sheet shows approximately EUR 200 million current financial liabilities, an increase in these financial liabilities. Can you clarify this? Thank you.
Okay. Maybe I take the first question around how our portfolio is developing in GS. I can say that our sales compared to last year improved of around 200% more into the supermarket, with several new launches of product. As we mentioned, the tuna launch of 11 SKU in the supermarket. The development is going really good and is based on really a strong collaboration in term of deliveries and service level that we are complying with the GS. I will take a few question out of these. The other question is around the Princes Ready to Drink tender that we won so far. We are participating of course to many European and U.K. based contract, of which some of them has been successful.
We see a strong opportunity both, first of all in the ready to drink business, so in cans, where the market is growing year-on-year quite significantly, and even in spirits where we see the opportunity, given our scale, to take big volume on the private label on the market. I cannot disclose the number of tender or the customer that we won so far, but what I can say is that we already won both in Europe and in the U.K. different tenders in both spirits and ready to drink. On top of supermarket tender, there are business-to-business opportunity that we are developing quite good in term of new business development on Princes Ready to Drink. Going to the tomato campaign.
This is a successful campaign as mentioned in the presentation, over 200,000 tons of tomatoes are still ongoing to produce but the sales have been realized and in term of margin, we see the marginality in line with the previous year because of course of what happened in term of cost inflation and so the marginality are in line with last year. I took three out of the set of questions. I don't know if Fabio wants to take the other question.
Yes, maybe I can continue with the financial ones. I can start with the rent. The rent saving is material in the sense that we have return on this asset that we book that is high single digit or double digit in many cases, so you can do your calculations to consider the amounts that we are going to save. I want to highlight the fact that we bought and we are going to continue to invest in very strategic and interesting locations. So, the value is not just linked to the saving of the rent, but we are putting in our balance sheet very high quality asset with primary location in the city center of Milan, for example, most of that. This means that it is going to increase also the quality of our balance sheet and our asset.
In terms of the working capital, the payable picture is very diversified because we have different business included in the consolidated figures. What I can tell you is that in terms of the net working capital, this level of efficiency that we got starting from December of last year is the picture that we would like to keep also in the future. This means that all the improvement that we got in the payables, if we consider some situation in Germany, in Italy, we have more than one days of payable outstanding. This is something that we would like to maintain also in the future, and this means that the picture in terms of cash conversion and cash generation is not sort of I would say temporary situation, but it's something that for us will continue also in the coming months, in the coming years.
To conclude about the EUR 200 million of financial liabilities in the short term, this is the reclassification of the bond that you know now is going to expire in February. This means that it's a short-term liabilities and we switch from long-term to short-term, this EUR 200 million, but there is substantially nothing different versus the past.
If I may follow- up as regards the bond, are you working on refinancing? What kind of pricing are you on?
We are free and flexible in the sense that, as you can see in our balance sheet, we have enough financial flexibility to reimburse the bond and to try, as we always do, all the opportunities that we may see into the market.
Thank you.
You are welcome.
We can take the question from Alberto.
Thank you. A couple of follow-up. The first is on CapEx, because excluding real estate, the CapEx are remaining quite low also in the second quarter. So what should we expect on the full year? Do you expect it in the second half or 2027 at a certain point, you will have to invest heavier on the retail network? Again, I am not talking about real estate. The second one on the M&A, you mentioned a couple of well-advanced dossier. Can we have a sense of the size in terms of sales and whether these are distressed company or a company with a good level of profitability?
Starting with CapEx, I would say that the picture should remain substantially stable in the second half of the year, because it is important also to highlight that the approach that we have on CapEx is that we are going to capitalize only the real investments in new opportunity, in grow opportunity, not the maintenance that is directly treated as a cost in the P&L. This is also one of the explanation of this low level of CapEx. The other one is related to the investments that we made and complete in the past years. This year is, I would say, a transitional year in this sense.
I think that it is also important to highlight the discipline that we have in this sense to remain focused only on what really is important to improve the business and to create a new opportunity. Going into 2027, the picture could be different.
We will have the starting of the change of the banner for the retail chain. This obviously may have an impact, but I think that for 2026, we do not expect the picture to change in the second half. In terms of the M&A, we are working on a couple of deals in which we are very well in advance, more than the other, so the picture is more diversified and is bigger than just two deals. But now we are very well in advance in these two deals that together are substantially weight like EUR 300 million of revenues. Substantially, yes, it's EUR 250 million-EUR 300 million revenues. Equally split between both opportunities.
One is in bakery, the other one is in fish, are two deals that are very important, not only for the general, I would say, picture of the business, because are two leading players in their sector with important brands that could really match with our existing business. The profitability is very, very good. The business focus on bakery is double-digit profitability, so it could be generally accretive for the group. We are speaking about two deals that may give us the possibility to enter in new countries. We don't have any overlap in terms of product revenues, geographic area. So are two very interesting opportunities. We are working on that. We hope that by the end of 2026, we may enter in more details announcing these deals.
Okay. We have a question from the chat, from Sergio, who says: When you acquired Carrefour Italia, you mentioned the importance of increasing service level. Could you please comment on how service levels are progressing? Could you also elaborate on shops that you have not internalized yet? How is this progressing, including in relation with unions? How are revenues per store in the network progressing, and how many of the shops do you expect to convert into the new network versus franchise shops closing and departing from the GS banner? So, in this sense, in terms of service levels, we are seeing a significant improvement. We have, since the acquisition, dedicated teams who oversee these activities, and they continuously monitor the service level across the network.
At the same time, we're also bringing in a number of new functions that weren't previously in the old model, such as services in-house, such as cleaning services, and also shelf replenishment. So people that are dedicated to making sure that shelves are always looking full and making sure that everything's on shelf. These initiatives are already showing us significant improvement in the overall quality and service levels and the customer experience in our shops. In the internalization progress, it is going on smoothly. We have an excellent relationship with the unions, and we also have very constructive dialogues, which has helped us with the management of the transformation of the network.
In terms of revenue per store, we are seeing an improvement in the stores that already have implemented these initiatives. Of course, this is not across the whole estate yet, but it will be done progressively over time. Because of the extensiveness of the network, around 1,000 stores, this will take few more months to complete. The first signs are very encouraging. On the evolution of the network, we expect to focus mostly on the hypermarket and market stores in terms of directly operated stores, because we believe that the Xpress by GS format works well under the franchise model. It doesn't mean that we will not buy anything in the Xpress by GS format. However, we will focus mostly on the hypermarkets and market format, which is where we see the most uplift from being directly operated by us versus having a franchising model.
Overall, everything's going as planned. There might be another question coming through the chat now. This one's probably for Fabio. Good morning and congratulations on the strong improvement in profitability and cash generation during the second quarter. In recent months, you have referred to a significant M&A pipeline, including opportunities in categories such as olive oil. Some of those transactions now appear to have moved in other directions. Should investors interpret this mainly as a sign of strict valuation discipline or as a deliberate decision to prioritize the integration of GS S.p.A. and the other assets acquired in 2025 before pursuing further deals? What type of acquisition would currently meet your return criteria?
But probably it's better to clarify, first of all, that there isn't any connections in the M&A strategy and the strategy related to the GS S.p.A. integrations. The two souls of the group are going on separately, valuing and deciding the investments without any connections between the two situation. We valued in the past other options apart the two ones that I explained you before. There are part of these options that are still in place. For example, we are still involved in a deal related to olive oil or to oil in general. But at the same time, we remain very much disciplined in terms of the pricing and the valuations we want to use for the offer that we send in this tender. This is a criteria that for us, it's more important than maybe what we want on the other side.
To confirm to the market our capability to continue with the M&A strategy, to put new target inside the group. We are following this. We know that considering also the amount of cash that we have in our balance sheet, investors expect us to complete additional M&A deal. But on the other side, we need to maintain our discipline to make these investments with the right return. That for us, it's important to have a double-digit return on capital employed in maximum one year. This means that the price of the acquisition and the valuation at the initial stage of the process is very, very important to get this goal.
I believe there are no more questions. If that is the case, then we thank you for joining us today. We are always available for any follow-up questions, and we look forward to the next call in November. Thank you.
Thank you.
Thank you.