Good morning, this is the conference operator. Welcome, and thank you for joining the Orsero First Quarter 2025 results web call. All participants are on listen-only mode, and after the presentation, there will be a Q&A session. At this time, I would like to turn the conference over to Mr. Paolo Prudenziati, Chairman of Orsero. Please go ahead, sir.
Hi, good morning, everybody. Just one thing before I pass the word to Raffaella and Matteo. As you know, in the last few years, we've been looking at, as a sector and as a company, at the slow volume erosion of the category. I want to draw your attention that this quarter, for the first time, we have been looking at the opposite side. I think this is quite encouraging for the company and for the sector. Please, Raffaella, go ahead.
Thank you, Paolo, and thank you, everybody, for joining us today. We are very pleased to deliver a very strong first quarter, but let's move straight to the highlights. Revenue increased by 12.6% to EUR 379.6 million, and adjusted EBITDA at EUR 21.5 million, improving 28% versus the first quarter of last year, with a very consistent margin of 5.7%. These results have been completely driven by distribution, which increased both sales volume and average selling prices. It is more remarkable that this result, as Paolo said, was achieved during the first quarter, which is usually a less performing one. To go more into details on distribution results, net sales of distribution grew by 12.6% compared to last year, while adjusted EBITDA grew by 35% from EUR 11.7 million last year to EUR 15.7 million in this first quarter. All countries performed well, as did the product mix.
It must be mentioned three special points. The Iberian Peninsula made a significant contribution this year, thanks to an overperformance season of Plátano Canario. Mexico's avocado saw an exceptional first quarter, and the banana segment did an important contribution, with better results than the forecast for two reasons: lack of production and a more comfortable EUR/USD exchange rate than at the end of 2024. Just a comment on the shipping segment. The overall outcome is fully in line with expectations. We face a stable trend in reefer load and an improved performance on dry cargo. Adjusted net profit stands at EUR 8.1 million, increased of EUR 3.2 million versus the same quarter last year. This is a direct result of the improved operating margin. In the end, we have a net financial position of EUR 115.1 million, which Matteo will explain in more detail. I conclude with a note on CapEx.
They are perfectly in line with expectations. We are finalizing investment for the new warehouse in Verona, and we are continuing with some other operational investments in France, Spain, and Portugal. Looking ahead, to date, we continue to see strong demand, well-balanced by product supply. That combined with the solid basis provided by the results of this first quarter makes us say that we can confirm the given guidance for 2025. I hand you over to Matteo.
Good morning, everybody. Thank you, Raffaella and Paolo. Raffaella and Paolo gave, let's say, all the relevant information about the first quarter. I will go a bit deeper into details using the presentation that we provided yesterday afternoon. In Q1, the CapEx are perfectly in line with the expectation, and we're still investing massively in our distribution footprint. Main investment is Verona warehouse. Actually, the investment is almost completed. It's a queue of financial costs related to investment that we study in 2024 and are almost completed in the first quarter of 2025. We will have the new facility with the berry operations ready for this season, and this is very good news for us. We're continuing to enhance and refurbish our warehouses in France, specifically with investment in Rungis, Paris, Spain, and Portugal.
Let's say that the main investment that we planned over the past year, including the one related to the ESG plan, strategic plan, is almost completed. We are entering into a phase of a more rolling investment. I would like to highlight that this year is going to be always related to investment. The second year of the dry docking for the ships, for the vessels. The first two vessels were dry docked last year, and the last two will be dry docked over the summer. You are not noticing any investment in the first quarter related to the vessels, but we will have those investments in the second quarter and third quarter. Interest rate situation, actually, the Euribor is declining, as everybody knows, but the hedging strategy put in place by the group in the past allowed a substantial stability in the cost of debt.
We have still a good duration on our financing, and 85%-86% of our gross debt is resulting in fixed rates. On May 14, so yesterday, the dividend of EUR 0.5 per share was paid to Orsero shareholders with a total outlay of about EUR 8.4 million. As you can see from our press release, we confirmed the goals for 2025 based on the actual situation and the performance that we're seeing on sales in April and beginning of May.
In terms of business, the market context in the first quarter of 2025 was actually under pressure, and there's a lack of confidence, I think, worldwide, but for sure in Europe, on the consumer spending attitude because of the complexity and uncertainties regarding the geopolitical environment, the Ukraine-Russia situation that is not reaching an agreement, and the U.S., let's say, new era in terms of tariffs and international commerce that is threatening the confidence and maybe the economy worldwide. This is something that day by day is affecting the mood of the consumer on the basic, let's say, staple consumer goods. Despite this challenging, the group, and we truly think thanks to the business model, the markets that were in the coverage of the sales channels and the product mix, were able to increase both net sales and profitability.
As Paolo and Raffaella said, we were able to increase as well the volumes. This is something really the combination of the three elements is very, very healthy for us and for the business. The first period of the year, the first quarter, used to be normally driven by banana and pineapple sales, and then some winter campaign like citrus. More and more, the first quarter is becoming as well a quarter where the avocados are strong, where the exotic fruits are strong, where the berries are strong. We are putting in place a strategy where we're trying to, let's say, rebalance as well the profitability over the quarters. Obviously, this quarter was really good, thanks to two or three products.
We are starting to see that each quarter, at the end of the day, thanks to the product mix and for the strategy put in place and for the client base, is very consistent in terms of our vision and expectation. Distribution is the killer, let's say, of this quarter with sales growth of 12.6%, mainly driven by price effect, but with a volume effect that is notable. Price effect is not really driven by an inflation on the category because we all know about the fact that inflation is not growing anymore, but it is more driven by the value of the mix that we are putting in place with our portfolio. Exotic fruit, kiwi fruit, table grapes, Plátano Canario, but pineapples as well. We had a very good performance. Adjusted EBITDA comes in with a 4.4% versus 3.7% of last year.
This is really the output of the product mix again. It's annoying. We're always telling this, but this is a true core organic strategy of our group, and we started the strategy five, six years ago, and it's paying off now. Banana business is always something that we know we can handle, but sometimes can be good and sometimes can be difficult. At the end of last year, if you remember, we were talking about a difficult scenario and context overall Europe, mainly driven by the price pressure that the big retailers are putting on the category. That is basically the most sold category in terms of volume into the retailers in the fruit and vegetables segment. All the retailers are battling the convenience of the store through bananas. This is always our challenge.
The strategy here is to be less exposed to the retailer standards when it's possible and to be more open on the opportunity on the spot market and on the wholesale market. That's why as well, over the past year, we invested a lot in the wholesale market because we truly think that this is a very healthy balance for the margins of the group. Retailers are super clients and partners, but sometimes their strategy in the short to medium run is not the good one as well for us. We have to be free to decide sometimes. Shipping business unit, there's a satisfying overall result. We were seeing last year, end of last year, a scenario of substantial stability on the shipping business unit.
We have a slight increase in sales and profitability, and it's mainly driven to the dry cargo, the backhaul cargo, but it's not really notable. The distribution business unit is the core reason of the result. Anyway, it's very relevant to tell you our vision. The shipping was stabilized last year, and this year is stable or something better is coming. We are, just for your memory, in years where the dry docking is affecting both the investment level of the group and the P&L of the group because we have some running costs related to the dry docking, and we have some investment related to dry docking. Considering all that, the stabilization of the shipping business unit is at a level that we're satisfied with. It's good news. I will drill down a bit more the consolidated net profit now.
Compared with last year, we had an adjusted net profit 2024 Q1 of EUR 4.9 million, and this year we have EUR 8.1 million. We have a massive increase. It is mainly driven to adjusted EBITDA, EUR 4.7 million. DNA and provision and financial share of profit variance is not relevant. We have a tax effect, minus EUR 1.2 million, that is related to the fact that obviously if the result of the shipping business stays stable and the distribution increases the profitability, we suffer, let's say, a major tax rate effect because obviously on the shipping business, we are in the tonnage tax atmosphere, and in distribution, we do not have this kind of fatigue. We do not have main adjustment on the result. The net profit reported is EUR 7.5 million.
The main effect related to the EUR 0.7 million adjustment is the top managers' accruals for full-year MBOs and then the share of profit of the employees in France and Mexico. As we say, Mexico had a very good performance, so we have to accrue a major, a massive, let's say, share of profit related to the load there. Consolidated net equity and net financial position. Net equity is moving up to EUR 260.7 million in Q1 2025. The main variance related to the reported net profit, so EUR 7.5 million.
We have a negative effect on the hedging reserves because if you remember last year, end of last year, end of December, thanks to the fact that we hedged the US dollar for the banana tenders and we started to buy dollars in August, September, we had a very good positive effect on the hedging reserve by something like EUR 3 million. This year, end of March, is the opposite because after two months and a half of very bad for us, for importers, exchange rate with the US dollar, the situation changed. At the end of it, it is punctual at the end of March, we had the opposite effect. This comes in both in the net financial position as a negative effect and on the net equity.
Looking at the net financial position evolution, we started end of 2024 with EUR 55 million, almost excluding IFRS 16. We have almost EUR 12 million cash flow and EUR 11 million working capital absorption. This is totally normal for the quarter because we have a lot of advance payment to the growers all over the world. We have to settle down all the campaigns for spring and summer. The growth that we experienced on the sales is driving this effect. We have no strange or weird evolution in no countries regarding the working capital. It is perfectly in line with what we expected. Operating CapEx comes in with EUR 3 million. As we said before, EUR 2.6 million of mark- to- market on the hedging instrument.
Net financial position grew by EUR 5 million, more or less, of which EUR 2.7 million is only the effect of the mark- to- market and then the CapEx. We are seeing now over the next two quarters, we are going to cash in all the working capital that we absorbed to grow in the first quarter. We are really keen on cashing in all our working capital. To reach the reported net financial position, we have to add to the EUR 60 million, another EUR 55.3 million, counting a total reported net financial position of EUR 115 million. Regarding the guidance, as we said, at this very moment of the year, we are confident in confirming the objectives that we, the goals that we settled with the budget and the guidance.
Obviously, as it is for our policy of communication with the market, we will review each quarter the situation, and we will update you on our view on the future results. Thank you for your attention. Now I will leave the rest of the time for the Q&A session. Thank you.
Thank you. We will now begin the question and answer session. To enter the Q4 questions, please click on the Q&A icon on the left side of your screen. When announced, please click Continue on the pop-up window. If you are connected in audio only, please press Star and 1 on your telephone. The first question is from Andrea Bonfà of Banca Akros. Please go ahead.
Hello. Good morning to everybody. Matteo, my first question is, of course, the fact that you confirmed the guidance despite this very outstanding result. You told us that we need to look at your business at least on a six-month basis, if not over a 12-month horizon. If you can elaborate what are your only elements of, let's say, of concern, if you allow me this expression, that prevents you right now to increase your guidance. Thank you very much.
Ciao Andrea, good morning. Actually, it's the first quarter, so we know that the year is long, and the main summer campaigns are coming now, starting from May, ending with September, October. Last year, we had a very strong result in the core part of the year. We are positive on the guidance, but we just released the guidance two months ago. It's the starting of the year. As I said, we have many elements in front of us. Take into account, for example, the euro-dollar situation. Actually, we took the opportunity now to hedge our EUR/USD in a better position compared to the end of last year. Still, it's something we passed from 1.03 to 1.14, okay, in maybe 10 days. As it's happening that way, it can happen in the other way.
It's not context worldwide, geopolitical, macroeconomics, and whatever that allow us to take risks on our forecast. We are a company that likes to be prudent and likes to maintain a very significant update with the market. We would like to wait until, let's say, the end of June results in order to make a better evaluation and have a better vision, more consistent. We will be very happy to upgrade our guidance if we're going to be confident about that. That's the only reason. We don't have, let's say, main concern about the performance of the group, but I think we have a fair attitude to be prudent given the worldwide context.
Thank you very much. Very clear.
The next question is from Gabriele Berti of Intesa Sanpaolo.
Ciao Matteo, good morning everyone. I would like to understand if the better than expected environment in the banana business was confirmed in the first part of the second quarter. I would like to ask you if you can elaborate a little bit more on the underlying drivers of the strong performance in the Iberian Peninsula and Mexico, and if you expect this momentum to continue in the coming quarters. Lastly, if you have any update on your M&A scouting process that you want to share with us.
Okay. Ciao Gabriele, good morning. So banana business, first of all, as I said, the euro-dollar effect got really better, let's say, starting from mid-March. I think that the good momentum of banana is going to be even better in April and May so far. For what is related to an external factor like the EUR/USD exchange, obviously, we are not stuck in our position with the situation. When there's an opportunity, we use the hedging instrument in order to cover our budget. We basically decide to lose some, let's say, upside opportunity in order not to have a risk of enormous downside profitability risks on the EUR/USD exchange rate because it's not our business. Basically, the better performance is not only related to the exchange rate, but it's even related to production situation. As Raffaella said, there's a lack of production.
This is something that is starting to be, let's say, consistent over the past two and a half years. It is something that is becoming a bit more structural comparing to the past situation. Even the distributors, ripeners, and the operator, let's say, the industrial operator on the markets are less. The problem that we have related to the banana business is the fact that the market, the sales market of banana, is concentrated even in the south of Europe. In the north of Europe, it is almost 100%. In the south of Europe, it is concentrated 60-70% on retailers and tenders. The dimension of the spot market is getting lower every year.
Let's say the challenge that we have, that we as a company, but all the big players in Europe and all over the world, is to be able to dialogue with retailers in order to make them understand that we must give to this product a different value. The problem is not really now the oversupply that used to be the first big problem in the past year, but the rigidity and the attitude of some retailers worldwide that force us to have pressure on the selling price. Given the fact that the production cannot absorb any loss anymore because after COVID, it's in big trouble, let's say, economically speaking. We're talking about Ecuador, we're talking about Costa Rica, Colombia, we're talking about Guatemala, we're talking about countries that are living out of agriculture exportation.
The challenge that we have is to push on the retailers because the spot market that was really strong in the first couple, it is giving you the value of the product immediately. You do not have to negotiate anything. There is no tender. Each morning, each week, you define the price, and the market will tell you if the price is correct or not. Why the performer was better compared to the expectation, surely a portion of this is the exchange rate. Second, it is a short supply in origin. Third, the fact that we are still active in each country on the spot market, even if it is not as big as it used to be, still it is something that can balance our performance when there is the opportunity. Hope I answered your question. On the Iberia and Mexico, situations are different.
Last year, Iberian Peninsula in the first quarter was really bad. Was really bad because Iberian Peninsula is, specifically Hermanos Fernandez, the Spanish company, is exposed to Plátano Canario that is not like banana. It's an added value product. And to bananas as well and pineapple in the third quarter. Last year, Plátano Canario, that is one of the biggest volume items of the portfolio of Fernandez, was affected by a very high production situation in origin in Canary Islands. The prices went down. To maintain the market share, we had to, let's say, to liquidate a very good price anyway to the growers. Sometimes the market drives you in the short term to take some decisions that affect your profitability, but looking at the long term is the right thing to do. This is what happened last year.
This year is a more regular year with some ups because now there's a shortage of production of Plátano. Basically, the comparison is with a very bad quarter of Iberian Peninsula and a very good quarter this year. That's the difference. Mexico is only related to the fact that over the past years, Mexico's avocados or our Mexico avocados were shipped to the United States. We don't ship anymore to Europe, and we don't ship anymore to Paris. We work on a client base, and when the market gives you the opportunity, now the company has different clients, the quality is okay, so we are able to get good prices. In the United States, there's a situation of very high prices at consumption with avocado, and there's a very big consumption, and it's growing every year.
Basically, if you look at the Mexican performance, we're getting better year on year over the past three years. This quarter was a very perfect situation, let's say, with the correct volume in production and a strong demand on the U.S. market. In this case, we are connected to the domestic Mexican production era. Now it's ended. The performance that you do from, let's say, November to March is the performance that you do because then from March to June, you won't have any more fruit. The company has its cost, some commercial activity, but then we're going to see how it will be the next campaign, starting from July and ending again in next March. I think Mexico cannot repeat the performance of the first quarter, but even last year, every year cannot repeat the performance of the first quarter.
I think it's consistent, the fact that we have a good year in Mexico thanks to the fact that the first quarter was a good one. I hope I explained myself. On this point, M&A, we're working on that. We have some opportunities and some dossier. We're working hard, but it's not, let's say, still the moment to disclose further details with you because we don't have nothing, let's say, really on the table to be able to disclose to the market. It's very intense activities. We're very active and working on it.
Thank you very much, Matteo.
As a reminder, if you wish to ask a question, please click on the Q&A icon on the left side of your screen or press Star and 1 on your telephone. For any further questions, please click on the Q&A icon on the left side of your screen or Star and 1 on your telephone. There are no more questions registered at this time. I'll turn the call back to you.
Okay. Thank you very much to everybody for the attention, and we will keep you posted on the relevant evolution about our group. Anyway, we're going to have another appointment with the end of June results. All the best.
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