Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the SabaF Results at the thirtieth June twenty twenty five approved. As a reminder, all participants are in a listen only mode. After the presentation, there will be an opportunity to ask questions.
At this time, I would like to turn the conference over to Mr. Pietro Yotti, CEO of Sabah. Please go ahead, sir.
Good afternoon to everybody. Thanks for attending the meeting. This morning, our Board of Directors approved the result of June 30, first half and first quarter second quarter. Just reading the main numbers. First half, revenue at $145,700,000 turnover versus $143,100,000 in half one hundred twenty four.
EBITDA margin, dollars 21,300,000.0 compared with $22,900,000 first half last year. Percentage of EBITDA on the revenues, 14.6% compared with 16% on first half last year. Company did investment for 12,100,000.0 And net financial position, June 1, was $79,400,000 The net we forecast the net financial position will improve. It will be lower in the second half due to less investment forecasted that the total investment in the second half in the total year, we forecast €18,000,000 12,000,000 already done and 6,000,000 will be done in the second half. And also, remember that in the first half, we distribute the dividend for roughly $7,000,000 Now in the second half are not in forecast.
And so this is the reason why we forecast lower net financial position at the end of the year, some million lower. I'm going to read the result of the second quarter twenty five. The revenue, 71,100,000.0 were $74,600,000 in first half twenty twenty five and $34,100,000 in Q2 twenty twenty four. The adjusted EBITDA, 10,900,000.0 in second quarter, has been $10,400,000 in first quarter twenty twenty five and $12,400,000 in Q2 twenty twenty four. EBITDA on revenue in the second quarter reached 15.3%, was 14% in Q1 twenty twenty five, so an improvement of 1.3 points, but lower than second half, second quarter twenty four, that where it was 16.7.
In the last fourth quarter, third and fourth quarter twenty four, and first and second quarter, twenty five. This is a quarter where the percentage EBITDA, 15.3%, is the best one of the last year. Net result, 3,200,000 Again, 3,500,000 in q one twenty five and five point April q two twenty four. What's regarding a comment that we delivered on our press release. The second quarter, our group improved the operating margins compared with the first quarter, confirming the ability of the group to deliver positive result even in a complex macroeconomic phase such as the current one characterized by unfavorable and change rate trends, tariffs, international economy, and certainly linked to depreciation of those tariffs in geopolitical risk.
In this scenario, the new product developed thanks to the group's offer diversification strategy and the important commercial agreement with some of the major player will allow us to increase our market share in the following months. Based on the current order backlog, we expect a moderate revenue growth for the year. So we expect to do a positive year at the end of the year in term of sales. Going to talk about which market has been the revenue in the different market. We can say Europe.
The grow in revenue was 2.3%. In Turkey, little bit lower, 1.7%. North America, the growth has been 9%, 33,200,000.0 against EUR 30,400,000.0. I'm talking about first half revenues. In South America, the growth was 4.1%.
Africa and Middle East, a decrease of 27 from 6,700,000 to from 9,200,000 last year.
Asia and Oceania, 8,800,000 against 7,500,000.0, so a growth of 18%. If we are talking about our division of products, we can say that gas parts growth of 1.8, inches seven 6.8%, electronic compose components degrees of 12%. This mix reached a total of one area gain, and I repeat, 145,700,000.0 turnover for the company and 143.1 last year. So the growth in six months of almost 2%, 1.8%. I can comment some of our main project regarding Mexico where, probably you remember, we invested last year last three years.
We started production last year in June. And our forecast of sales this year is EUR 7,500,000.0 end of the year compared with EUR 3,200,000.0 last year. So important growth, more than 130%. Our investment has continued with a new big press, the fourth one that we have there, a new, oven for, die casting and so on. In that company, we reached we passed the audit of general letters.
So with maximum of the point, the factory now is ready to produce also for this car, the important customer in North America. And also, we we start with a new big project with important customer in mobile for to know we're expecting more than 3,500,000.0 US dollar that we we are ready to start, at the first quarter twenty six. I can also say that we are very satisfied of the big job that we are doing in Mecca, the company that we take to cover in July 23 in Ohio, Mansfield Engineering Components. The company is growing 14% to an over compared with first half last year, And the EBITDA margin is more than 16%, up to the 16. I remember when we took over the company, the EBITDA margin was around 7%, 8%.
So we are doing an important job, and also we are registered more interest from American customer producer of domestic appliances due to the fact that we are, based in US. Of course, they are looking to avoid tariffs from components imported from outside US. I think, also, in India, we are growing in a good way with some customer, not fast like Mexico, but we are quite confident that the company will do a good good job this year. It's growing in a good way, more than 50% compared last year, but we are talking about small numbers till today. But as we do a good job in Turkey in inches, the second quarter registered a very good improvement in turnover, more than 30% and margin up to 22% of EBITDA margin. On the opposite side, we have to say that the first half, this is one of the reason the cost impact on the first half. Remember that the inflection of Turkish lira compared with euro started in April.
So the first quarter, we paid a lot of bill for increase of cost of labor in Turkey that together with increase of cost of labor in Italy due to the national contract of labor on the side in June 24, we are we we registered in cost of labor increased in the two factor, Italian and Turkey, in the first quarter lower. I can say the second half second quarter in Turkey, the period a little bit now start again to run-in negative way compared with euro from the the the first of year, the in one year, the Turkish lira depressed depressed side of 30% roughly from 38 to 48 Turkish lira per euro. So I can say we are fast recovering the cost of labor, plus €18 from Turkey. And in Italy, the second half, due to the fact that national contract started in June, should be a comparison, let me say, more right, not so every last like the first half of the year. I think I told all the most important information.
Of course, I'm available for any question you can have. Thank you to attend and listen. Please.
Thank you. This is the conference operator. We will now begin the question and answer session. The first question is from Emmanuel Negri of Mediobanca. Please go ahead.
Yes. Good afternoon, everybody. Thanks for the presentation and for the Q and A. I have two questions. The first one is on the guidance, on the outlook you mentioned in your press release.
In the press release, you said that demand is expected to be stable in the second half of the year. Do you intend that this will be stable compared to the second half of last year or stable compared to the first half of this year? And the first this is the first question. And the second one is on Mexico. You mentioned that it is expected to have $7,500,000 revenues in 2025.
Can you give us an idea what do you expect for 2026 also considering the large project that you mentioned with Mabe for the first quarter of next year? Thank you.
No. So sorry. I lost you the last second question regarding what? Because it
The other second question was on on on expectation from Mexico for the next year, also considering the project with Mabe.
Okay. Okay. Okay. Mexico. Thanks.
So I I lost the subject. The first question, we expect to to have a stable situation compared with Q2 twenty five roughly. We expect to end of the year in positive, not so much positive as we would like to before, but in any case, also because some new projects are entering the second term. Now because the market is still weak, we have to say the domestic appliances global market as our big customer has let us know we're they're saying in their press release. The market of domestic appliance is still lower 10% compared with pre COVID level.
So in the market, stable but lower before COVID, we are planning to have a slight growth. So second half will be in line with q two, I think, should be a little bit better than last year, more or less. Last half. Second half, last '24 should be similar or a little bit better this year in the second half. In Mexico, expected turnover next year, We roughly estimate between €10,000,000 to €12,000,000 total year, thanks to the new project that are entering.
We have to say that is almost additional sales, not substituting European sales to US market, but just a new project. Because what we we are registering is that to have presence in Mexico and in Ohio, in this moment, is a very good position to have due to the, you know, what's happening in the economic world in the market regarding everything. So, for instance, in Mecca, we are receiving request of offer from Electrolux US and BOSS US for new project of engines that today they are buying from out of US. Thanks to the fact that we have the factory inside The US, so they are very interested to have a supply to be supplied from us. Let me say that, that acquisition was, today, we can say.
At that time, we didn't know. But today, we can say, from a strategic point of view, a good operation, good deal. We look
Thanks a lot.
Okay.
The next question is from Domenico Gilotti of Equita.
Good afternoon. I have a question on profitability as possible. So you have been mentioning the expectation for the top line. Can you give a sense give us a sense also on what is the level of profitability that you should deliver with this level of top line? And also if you help us in understanding the bridge between, if you want, Q1 and Q2 because you had a quite significant margin expansion despite the lower sales.
So I'm trying to understand how much was, let's say, temporary relief and how much is more structural.
Okay. It's ready for you, a BDI bridge. First question, with margin at the end of total year, We can say, of course, just to forecast in lines or a little bit better than first half, we hope, due to some point, some consideration. The cost of labor, we expect stock to increase so much due to the Turkish lira and the, let me say, easier comparison in the second half with last year. We I can also add that on energy side, At the June, we can say that start we started with our photovoltaic in our plant in Ospitalletto.
We are saving roughly $405,100,000 euro per year in energy spending. We did an investment of 2,700,000.0 this year, which is one of the reasons why the investment arrived this year. So I have some help from this consideration. Cost of level, more in line with last half, energy saving. The question mark is regarding the currency, what will happen with exchanging with U.
S. Dollar. We are expecting that Turkish lira will continue depreciate compared with euro. That's with help. Of course, if the dollars became weaker, we consider to sell roughly 90,000,000 US dollar in US dollar in our to know one third almost.
But also, we buy some raw material in US dollar, so the balance has to be is complex to say in two words. But, of course, the currency is a point question mark for us what happened. Also, what will happen with raw material due to the tariffs because, of course, what happened, for instance, MEC in US, we buy stainless steel from US producers. Mr. Trump put the tariff 50% of stainless steel from out of US.
What do you think The US producer did with the price? Immediately, at the same level from just just 2% less that imported. No? Of course. So we say, of course, now the fighting is to transfer to the end customer.
We know all the customer are trying to do it to increase the prices on the market because nobody has room to increase to reduce its margin due to the tariff. So it will be a point interesting to see in the following month because we started just July 1. Regarding EBITDA bridge, the second Q, twenty five compared to second Q for '24. Remember that second Q, twenty four was was not an excuse, but was the best one in the last two years in the half, with the main impact, minus 900,000 due to less quantitative in sales volumes, more benefit from increase of sales of sales price, 75,000, due to currency exchange negative for almost €400,000 Raw material had a negative impact from 490,000, but it's bit negative, 5,000 from energy. Cost of personnel, cost of labor, negative for 630,000.
So we also have a negative impact due to the fact that last year, we had a store to eliminate stock grants, the effect. So that is a negative impact for 700,000,000 as well as cost of labor, if you want, at the end of the day. We had a positive fixed cost absorption for $2,200,000 so this is very positive. Dollars 800,000,000 negative from cost of other project, negative in electronic and induction. Induction.
And MEK gave a positive result for EUR $330,000,000. All those numbers bring the EBITDA margin EUR 10.9 compared with 12,300,000.0 last year. 10,900,000.0 is 15.3 EBITDA margin.
Okay. And if I may follow-up on just an update on the tariff. So you have been already mentioning, for example, that you are trying to pass some cost increases, and you have already mentioned the benefit from for MEC given that they are producing in The U. S. First, what is the time lag?
So you are saying, okay, there is interest on potential new projects by new customers for MEC, but what is the time lag between, let's say, discussing and then potentially translating this into sales? And the second, in general, so what do you see in the market for your exports to The US?
Yes. Oh, the time lag for a new project depend, of course, which projects are is from it will be from six months to three years. I can say that some of them can change the match because, for instance, we are talking with a big customer that is talking about €10,000,000 $10,000,000 of a new project we start '26, first, '27. For instance, that can change a lot the result of MAC. And, of course, all depends from what will happen in the market in the meantime because how we every day, something is changing.
Now it looks like to be 15% types, but then we'll see what happen in the future what to because we the general feeling is that, at the end of the day, The US customer will pay the bill the tariffs. This is what our American customer are telling to us. Of course, now they are asking us, well, you have to contribute now because 99%, 95% of our sales, the customer, transfer is in charge of a customer. So the cast for instance, that buy from Italy or or Turkey, they pick up the product from Italy factory or from Turkey factory, and they have the problem to to pass their duties. So it's it's their problem.
They vote to the president. They have to manage the situation. Of course, we cannot say them, but that is not our business because they are important customer. But I think, some troubles will happen on the market inflection in The US. This is a sentiment that everybody has in our industry. I don't know if I answered your question.
Mhmm. Okay. Thank you.
That is a feeling today. This is this is, in any case, not so easy to understand what will happen in the following month.
So the main concern that you have for The US market is some inflationary pressure on the final customer that maybe can, say, affect the market and the volumes in the market?
Yes. Yes. Exactly. That should be. We will see because Mhmm.
I know that our customer are trying to write on the bill 15% increase due to the tariffs because their president, will kill them. But we are close to that.
Okay.
We'll see. It will be interesting to under to see what happened in September, October, December.
Thank you. You're welcome.
The next question is from Emmanuel Enigri, Mediobanca.
Thank you. Sorry, just a quick follow-up. Considering the fact that MEC you acquired a couple of years ago is delivering some important growth, important results, expect to that you're looking to something to buy in terms of M and A pipeline in the coming months or quarter?
I cannot say, but we are working on. We never stopped to work on that. Should be we have some news in I don't know. I cannot say when, but not so far. I can tell you. You know Okay.
Thank you. Okay.
For any further questions, please press star and 1. The next question is a follow-up from Domenico Guilotti, Equita.
Following up on the previous answer and question in particular, so what do you what are you looking for? Because, MEC was also a rebalancing of your footprint in The U. S. Is this still something that is a priority, strategic priority? Or in the past, you were more focused probably on the development in the electronics business.
So can you elaborate a little bit on your M and A priorities?
I cannot answer directly this question. We are very interested in The U. S. Market, but also in European market for some business. For the moment, MEC is growing very fast.
We are increasing the sales and forecast will be continued to increase with MEC and with our company in Mexico. Of course, we are talking with the American companies. We are talking with the European other South American company. When I would when I will able to to disclosure, I will do it. Mhmm.
But to be confident that we are doing a good job on that.
Okay. And maybe more easier questions to answer. So the Q2 geographical performance, so I saw a very weak Africa region, particular, slightly weaker sorry, weaker Latin America, also a bit Turkey. I was looking at second quarter, actually. But so in this area, do you do you expect to see some recovery or it's still, let's say, tough market there?
So in this area, we suffer two two countries, Egypt and Iran due to the what happened. Of course, we don't deliver direct in Iran, but we deliver in other countries. But so these are the two main reason. In Egypt, because the customer have difficulties to have strong currency. So we accept only payment in euro and US Dollar.
So they are trying to have some trouble on that also due to the fact that the Egyptian market last year did very good result. So now it's a little bit breaking, and we don't know for what's happening in the last, second quarter, if you remember the bumping and so on. So those are the main reason, but we are not particularly worried about that. Probably, we see an increase on the opposite side that doesn't look so looks like not positive in South America in the second quarter. But the last three weeks, the orders came back in a strong way in the South America.
So we are positive in recovering South America, So a little bit recovery in Africa and Middle East. Not not recover all, but a little bit recovery, yes. We are already talking about small number because we are talking about two, one, two millions in the end. It's more important the recovery we expect in South America because South America, delivered roughly nine, ten million. In Africa, Middle East, we are talking about, three, four million euro total.
So the percentage looks high, but it's not important in our global business. Of course, we pay attention on that.
And on the Turkish market?
Turkish market is, you know, is quite weak. Some customer with the, let me say, the Turkish lira that lost compared with euro. Yes. But they could recover, but we are not not sure of that. Sure.
For sure, in the first four, five months of this year, they didn't perform it well. Now we expect we hope on the next month that Turkish lira will help to recover competitiveness from that customer that I remember 80% of their sales are towards Europe. So, of course, high price for instance, they have big, plants in Turkey. They are the two important player delivering products in Europe against Bosch or LateralX or others. We expect that we will recover cost in the second part of because they sell in Europe, but they have cost in Turkish lira.
So that should help them to recover volumes. They the volume they that they lost in the first half of this year. But Okay. It's just my thought. I'm not sure of that.
Mhmm.
It will be an expectation.
Okay. Thank you.
Thank you.
Mister Riotti, there are no more questions registered at this time.
Okay. Thank you very much, everybody, for attending the meeting. Of course, we are available for any further question also directly to our Investor Director, Mr. Baeschi, or directly also with me. Thank you all. Have a good afternoon.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank