Let's start. First of all, this conference call is recorded. Good afternoon, and thank you all for joining us today. It's a pleasure to welcome you to our six-month conference call results. I leave the floor to Paul Fogolin, CFO of SIT.
Thank you, Maran. Good afternoon, everybody. Welcome to this call. I'm sharing the presentation that was sent to you a couple of hours ago, and we'll go through our H1 results that were approved by the board this morning. Highlights. As you can see, our top-line performance was +2%. Accounting for all the activities that were started in the second part of 2024 and throughout the first part of 2025, we are able to report a half-year result where we see, at different levels of the P&L, a performance that underpins, I would say, a turnaround in operating performance. In fact, on this slide, we report an adjusted P&L, H1 2025, compared to H1 2024. We take away all the one-off items that are normal in this kind of period when we're doing some special activities regarding organization and restructuring.
We can look at the numbers as they are comparable, and we see that at EBIT level, we have EUR +7.5 million . We can compare it to last year. It's a very different number. We have a net income adjusted of EUR +2.2 million, and we have an EBITDA at over EUR 20 million, at EUR 20.6 million, at 13.4%. Also at margin level and percentage level, we are looking at numbers that underline the work that has been done. Going to just a small detail, if we look at the divisional performance, we see that the heating has a +3.1% increase. Volumes are coming from that division because if we look at the metering versus the previous year, altogether, it is slightly behind last year. It's -4.3% at EUR 43.8 million. We have the gas metering at -9% and the water metering at +6%.
We can look at this business, this P&L, and we can understand that the volumes are coming from the heating and ventilation, and that is good news. Still, it's also important to underline the improvement of the gas metering in Q2 versus Q1. If we recall that the ratio between order book and invoicing was not quite positive, but now it's normalizing, improving, and will normalize in the second part of the year. Going to the net debt, we improved year on year by EUR 10 million, and then we can go into more details on this slide. Overall, I would say that the highlight gives us a positive snapshot of these six months. If we look at the reported numbers, which is the scope of this slide, here we can, first of all, understand that there are one-off costs for EUR 3.7 million in the half year of 2025.
This, on one side, impacts our net income, of course, but highlights the fact that we are still working on special projects, one-off projects that will provide a positive payback going forward. It's good. It's important to highlight the magnitude of this number. On the other hand, just to understand the comparison, we must recall that in H1-2024, when we look at the net financial charges, when we report EUR 7.2 million, we must recall that there were EUR 4 million last year for one-off costs due to the accounting standards because of the renegotiation. That is important to highlight if we want to do some comparisons. Also, the accrual on tax, the policy is different. Since last year, in the balance sheet, in the financial reporting, year-end reporting, we did not accrue deferred tax assets. There was a change in policy between H1-2024 and H1-2025.
We see the number here that is reported differently. These are more, let's say, under the operating performance, but it's important to highlight just to better understand the numbers. Cash flow from operations is positive, still positive. We will go into detail. Even if the pattern in trade working capital is more normal, it's important to say it's positive. This number, and as I said, net financial debt is EUR 150.8 million versus EUR 160.9 million. Here we report again the adjusted numbers just to highlight the change, the turnaround in the operating performance. Just going into the details of the top line, as I said, the heating and ventilation is going good in this part of the year. It's a low single-digit increase. We go into more detail of where we performed.
On the metering, I already said something, and maybe it's better to address the issue when we speak on the specific slide. We see on the graph on the right side, we see the impact coming from volumes and the impact coming from prices and the impact on forex that is negative, mainly in the heating and ventilation top line. The quarter does not really give a different trend. If we look at the numbers, basically, they confirm the trend. Even if when we go into more detail of the metering, we will see that the gas metering did fairly better in the second quarter versus the first quarter of this year. I will go ahead and go into the heating. Here, we start reporting the impact of the forex because, you know, of course, we are aware that the U.S. dollar mainly has changed value.
I think it's important to highlight the impact because it underlines the positive, you know, business and commercial activity in this division. I'd say Italy is going good. It's been going good for several quarters, all product families, especially ventilation activities. I would say here we see the positive contribution coming from that SIT MBT initiative that is focused on specific product families. Europe, overall, is better than how it looks, I would say, because the negative performance is very much specific in one area, I would say Turkey, where, of course, there is an important concentration of OEMs. If we look at other areas, other markets, I would say that the performance is not so bad. In Central Europe and also U.K. account a single-digit growth, specifically for electronics and fuels. Of course, we have America, which is performing well at both Q2 level and H1.
Here, of course, the impact of forex is even higher, is even greater. In all business segments, in all markets of this area, the performance is going well. While, on the other hand, we have Asia and Pacific, where China is confirming to be weak. We can only say that the other markets cannot offset the negativity of this area for now. Looking at metering, here we're looking at the quarterly and the half-year numbers of both. We recall that the gas metering in Q1 was - 15% versus the other quarter. Here, we're going at - 5%. If you look at the residential markets, it's + 22%. I would say that, as we said, as we reported in our previous meetings, the work, the delay was due to, let's say, manufacturing and operations and planning, things like that, that we would recover and we are recovering. That's good news.
At half-year level, we see the 9.2% difference. As we said, we are recovering. On the other hand, also water metering did a good quarter, + 15%. That's bringing the half-year to 6.4%. Fundamentals are good. Just one comment, probably these are more traditional products than electronic products. For the full year, we have already, if you had a chance to look at the presentation, we already gave our outlook on both these two divisions. I will go forward. Working capital. We are comforted by this trend because it's a normalization. We know that looking at inventory, especially this half-year, the building of the stock is necessary for the high season. Our view currently is to have this high season in the heating.
We would say that from the supply chain point of view, planning and our understanding of the market, we see a positive pattern that is repeating itself as we were used to see it in more normal years. That is the same for the other items of working capital if we look at it on the half-year. Of course, it's important to underline also the year-on-year change because that is the activity that was done in these 12 months that we were producing, working on efficiencies and trying to improve the working capital and the longer-term effects of the shortages that we had in the previous year. Overall, I would say the performance here is positive because of the normalization of the trade conditions. Going forward and looking at the net debt and cash flow, the main impact, of course, comes from the EBITDA.
This is the conversion of EUR 17 million of current cash flow. There's a big difference versus last year. The working capital, of course, this is the translation of what we just commented on working capital in terms of cash flow. The other working capital is mainly VAT credit. That also is an indicator of volumes that are growing and the activities that are growing. CapEx is EUR 3.6 million, lower number than last year, probably lower than what we were expecting. Of course, strictly under control because we are very selective on the projects. We are very selective on the activities and the things that we are launching because of, as you can understand from the financial structure that we have in this moment. EUR 3.6 million CapEx is a bit lower. Overall, our cash flow from operations is positive.
The final number, our net debt increases by EUR 5 million in this half year, bringing it from EUR 146 million to EUR 150 million. Here, we underline, I think it's important to underline also the leverage ratio. Last year, this time of the year, we were speaking of 6.2x , and now we are at 4x , 4.1x. The work has been done and the results, we can appreciate the work on this indicator as well. I think I can leave the floor to Federico for the final comments and the outlook.
Thank you, Paul. Good afternoon, everybody. With regard to the comments and the full year, full year outlook is confirmed. We are confirming what we have already conveyed there, the message in the previous reporting sessions. With regard to the second part of the year, heating and ventilation, we expect this business unit to go back to normal seasonality. In the past, until 2023 and 2024, the market had historically a 48%, 52% split. What we are seeing now is that we're going back to normal from this point of view as well. Metering performance is forecasted to strongly improve. Already mentioned the gas metering, which is expected to recover the order invoicing ratio because we have quite a solid order book. With regard to water metering, the second part of the year, we expect to perform another growth between 15% and + 20%.
Margins, EBITDA is expected to remain solidly positive in double digits, despite what we're seeing being a currency mix that is expected not to support us in the second part of the year. As a result, net debt is projected at the end of the year. The net financial position, seeing further improvement, is expected to land at around EUR 140 million. Tariffs, we see now important. North America and the U.S. have been historically, but also in this past semester, and it's expected to continue to remain very important in our heating and ventilation business. We have, as you know, a plant in Mexico that is supplying the vast majority of the products to the U.S., and that plant is operating under USMCA regulation. Therefore, tariffs do not apply. Obviously, we know that the tariff situations change and can change very suddenly.
What is currently the status is that we are supplying the U.S. market without any tariffs from our Mexican plant. I would say quite a satisfying first part of the year. I'll leave to the Q&A session to you for any questions you might have.
Thank you, Federico. After this encouraging outlook, let's see if there is someone who could have questions. If you have any questions, please raise your hand. Emanuele Negri.
Yes, hi with everybody, and thanks for the presentation and for the Q&A session. I have a couple to start. The first one is on the outlook for the heating and ventilation. Could you please give us an idea of the main drivers, which should bring to an acceleration in the second half in terms of products? The second one is, around CapEx. They were kind of short of my expectation in the first half. Should we expect some further acceleration in the second half? Thank you.
Okay, so I'll take the first one. With regard to the outlook, about the drivers for the outlook for heating and ventilation. We continue to see the North American market to be strong. We are present in North America in three main business segments. One is fireplaces. Fireplaces are very much linked to rates, and therefore, we've seen rates decreasing in the past. Therefore, new home construction permissions have increased, and the demand for fireplaces has increased. We see this strong demand to continue also in this market. The second market in North America, or second segment that we supply in North America, is storage water heaters, which is historically quite a stable market. In this segment, we have been growing market share. With the NGA electronic product that we have purchased four years ago, we are getting back a market share in this business.
The third market, or the first segment that we supply in North America, is boilers. Boilers had a tough year in 2024, and now they're back to normal levels. The reason for bad performance in 2024 was mainly excess of stock. Now the stock level along the supply chain is back to normal levels, and we expect also the performance in H2 to continue, let's say, in line with H1. North America has played in the first semester. We continue to play an important role in the second part. We are seeing also other business segments like ventilation that has been driving and will continue to drive the growth in Europe in this case. In the heating business, general heating business, we're seeing Italy to continue at the normal standard, at normal levels. We're expecting some recovery from Turkey.
We have seen a good performance of the U.K., the British market, and we are expecting also that to continue over the next six months.
I will take the question regarding CapEx. Of course, Emanuele, you are aware of the previous levels of investment. We have already made several important CapEx in both, I would say, industrial facilities and capacity, and of course, in the laboratories and the facilities for R&D and the new headquarters. We come from a period of strong CapEx, and now we are very much focused on a new product development. The projects are declined. I mean, they are the ones that we have already discussed. They have to support the further generations of the combustion products, the heat, the electrification products, the focus on the other electrical and applications that are not related to heating, and several other projects of this kind. They are just, I would mention, behind schedule in this phase. We do typically have an acceleration in the second part of the year.
We will probably do more than double this number, but probably not as much as we previously disclosed in our previous meetings. That is our view. Of course, there is no need to underline that we are controlling that number also because of our financial situation. We are very careful in the maintenance, in the maintenance activities to do actually the things that are needed in this part of the...
Okay, thanks. Thanks.
Thank you, Emanuele. I don't know if there are any further questions. No, I don't see any additional question.
Christopher.
Christopher, you are on mute. Christopher, you are on mute. No?
You are not on mute, but the headphones don't work.
Now, try again. No, we cannot hear you. In the meantime, the Christopher...
Can you hear me now?
Yes.
Yes. Apologies. I had a strange button here. Sorry about that. I was just wondering in terms of, first of all, really good to see things generally stabilizing. Hopefully, in the second half and going into next year, you'll see some momentum in some of your businesses. I was wondering in terms of two things. In terms of what you expect the trend to be looking at 2026, if you can give a sense of what kind of evolution you'll see partly in heating and ventilation, if you have any indication from customers what they would like you to be prepared for going into 2026?
Then on the metering, and in particular, perhaps looking at the water meters, what you expect in terms of also 2026, 2027, because we hear from several utilities that CapEx in water meters is becoming a priority, is sort of moving up the list of priorities in terms of spending from their side, potentially sales for you? Lastly, in terms of your various businesses, because you operate in many niches, if there is anything you can do in terms of perhaps disposals, maybe you have some real estate assets somewhere in order to accelerate the decline in the net financial debt? These are the areas if you could give some color or discuss, that would be very helpful. Thank you.
Thank you. With regard to the first question about the trend for 2026, it's still too early, as you can imagine, to give an outlook on next year. What I can say is that we are planning some market share growth in the heating business in the market where we're already present, and we are expecting also to enter the heat pumps business. That will contribute regardless of swings, ups and downs that might come from the market. Obviously, later on in the year, we'll have a better view on the market expectations. Regardless of that, we're expecting some market share growth and entry into new business segments where we're ready with the new products and where we are continuously enlarging our product range. As far as still the 2026 for the gas metering, we expect the Hita Gas Nimbus, a new gas meter project, to take off, to start.
That will be absolutely key for the gas metering in 2026 to be able to secure. We know that the volumes will be around the end of the year. For the majority of 2026, we still will continue to sell traditional meters. Again, the Nimbus awarding process will play a very important role. With regard to water, I think we have been delivering another six months, another period of good performance. As we said, we're expecting also for the second part of this year to continue to grow. We're expecting in the second part of this year and in 2026, the volumes and most of the growth coming from our new electronic products. New electronic products that are spreading. We're talking about, as you know, the ultrasonic smart water meter that we have been developing. That's in production now. We have first customers already.
We start delivering in the next weeks. In the second part of 2025, this will be a key driver of the +15%, +20% growth. In 2026, we again expect growth to come from this product. As far as geographies, we are entering new geographies and we are improving our presence, our market share in our core markets, i.e., Spain, Portugal, and South America. Again, early to say about what we expect for water for 2026, but we see a general positive trend in terms of investment being directed into this business. More and more smart metering being applied as a general part of energy efficiency and efforts to reduce non-revenue water. As far as the third question, disposals, yes, we are considering the opportunity of cellular analytics of our assets. It's something that we are considering and investigating.
The ratio, obviously, the rationale behind it would be obviously to continue to accelerate the reduction of the net financial position and therefore free resources to be invested into the business. You mentioned a couple of good opportunities for sure. Water is one of them. That would allow us to free up some important resources for the core business and for the water business.
Understood. Thank you.
I don't know if there is any additional question. Let me check. No.
Okay, doesn't look like.
It doesn't look like. To announce portfolio diversification in terms of products, I would say I try to summarize some of the key guidelines in terms of vision for this company. To announce portfolio diversification, I was saying in terms of products, global presence, but local to local production, lower CapEx, and continuous optimization of the cost base, I would say. Probably those could be the main drivers for looking forward for the development of this group. We will speak again for the third quarter results by 11th of November. If there are no additional questions, I would say that we are wishing to all of you fun and relaxed holidays.
Okay.
Okay.
Thank you, everybody.
Thank you, everybody.
Thank you.
Thank you.
Thank you.
Bye-bye.
Bye.
Bye.
Bye.