Hello, and welcome to the Groupe SEB 2023 third quarter sales and financial data. My name is Caroline, and I'll be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only mode. However, you'll have an opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand over the call to your host, Stanislas de Gramont, the CEO, and Olivier Casanova, Senior Executive Vice President, Chief Financial Officer, to begin today's conference. Thank you.
Thank you very much, Caroline. Good evening. Good afternoon, everyone. Thank you for attending this call. As said by Caroline, I'll be, I'm Stanislas de Gramont. I will be managing the presentation of the third quarter results together with Olivier Casanova. And maybe before getting into the numbers, I would start by giving the two headlines of the quarter. The first one is that we have confirmed the rebound in sales that we are anticipating from the second quarter, and the second one is on our profitability. We are confirming the momentum towards our historical profitability numbers, and we are very pleased with this achievement. Without further ado, I will give it over to, hand it over to Olivier to take us through the numbers first.
Okay, thank you, Stanislas, and good afternoon, everyone. So this is Olivier Casanova speaking. So, on page five, you have the highlights, the sales numbers. So we are achieving a revenue of EUR 1.9 billion in Q3, which is up 8.9% on a like-for-like basis. As you can see, accelerating the trend that we have seen in H1. Moving to next page, you have the usual bridge of revenue on a nine-month basis. Obviously, in green, we can see the organic growth at 3.9%. As indicated, as expected, in fact, we have a higher currency, negative currency effect in the first nine months, at -5.1%.
You can see in the box on the right-hand side, the breakdown by quarter, and you can see the acceleration of this negative impact in Q3. I'll comment further on the next slide on which currencies are particularly responsible for this move. Sorry, before we move, we have a modest scope effect, which corresponds to the first consolidation of La San Marco and Pacojet, which are two of the acquisitions made during the year. So moving on to next slide. You can see here the breakdown. We have a total negative currency effect of EUR 282 million, which is in large part due to the depreciation of the Renminbi.
As you can see, it's dropping 8% year-on-year, and given the size of our revenue in Renminbi, this is obviously impacting significantly our top line. You can see also that three other currencies are explaining the bulk of this impact: the Turkish lira, the Ruble, and the Egyptian pound. Obviously, our revenues in these regions, these countries, are much smaller, but the depreciation of those currencies year-on-year has been quite significant, hence the very material impact on our top line. Moving to next slide, you can see, as Stanislas was indicating, the acceleration of the recovery with three negative quarters last year.
Q1 2023, which was down on the previous year again, and then up 6.8% in Q2, and up 8.9% in Q3. Stanislas, I hand over to you to comment on the-
Thanks, Olivier. We move on to slide number nine. That recovery or this rebound of sales will happen in the two, the two sectors or the two business activities we operate in. Starting with the consumer business, we have a nine-month sales at 1.2% like-for-like growth, when the last quarter, third quarter, is up 5.5%. Now, you can see that the currency effect is getting deeper, that was expected, yet it's worth mentioning this four-point improvement in the like-for-like sales in consumers. In Professional, I think the sales number is very, very impressive with 42.6% like-for-like growth in Q3. That converts into 50.6% reported growth in Q3, leading the year to date at 31% like-for-like, and 38% reported.
If I move on to the Professional business, with a few highlights or a few comments on what's going on, what went on in this quarter. Now, you remember that since the beginning of the year, in fact, since Q4 last year, we've had growing sales in professional coffee machines in all major regions, and our three major regions are Germany, United States, and China, and that continues in the third quarter. We have a further acceleration of sales growth in Q3, driven by large contracts in the U.S. and in China, but it's also substantially supported by service sales in all the regions. I think if we step back, what is worth and interesting to look at is that there is a structural growth in consumer demand in coffee-based beverages.
We can see that in China with some form of coffee-based drinks, which are mainly drunk cold. We can see that in the United States, where and that's the machine you have on the right here, the Skye machine is the first U.S.-type coffee machine, based and built on German full-auto technology, and that is one of the stars of this year's development. So we can see that in all markets, we're able to adapt our machine offers to the requirements of the market and the evolution of the market in terms of coffee consumption.
We are very pleased to see that the synergies we were anticipating four years ago when we bought Wilbur Curtis with the WMF integration are now bearing fruits and is a key driver of growth of this Professional business. Now, moving on to Consumer, which arguably was a bit more difficult in the beginning of the year. We see that, sorry, the recovery of Q3 or the, the acceleration of Q3 is driven by two regions, mainly. The Americas, we had a -10% like-for-like evolution in half one in Americas. We post a 15.5% increase like-for-like in Q3. That was planned. It's in fact, as expected, a bit better maybe than expected, but certainly in the direction we're looking for.
In EMEA, we moved from 3% growth half one to 7% growth Q3, again, like- for- like. When in Asia, the evolution is more modest, from -2% to -1%. We'll have the opportunity to come back to it a bit further down the presentation. I move on to the next slide, starting with EMEA. As usual, we have two dynamics in EMEA. If I start with Western Europe, we have a set of good news with a continued recovery of the business in Q3 in several countries. France, which is our bigger country, biggest country, with Germany in Europe, Benelux, and the Nordics. That is driven by most product families and most retail channels.
The DACH region, DACH is made of Germany, Austria and Switzerland, is still expected, is impacted, sorry, by weaker consumer spending. We, we see that consumption is sluggish in Germany. We also have, it's not noted, but we have a kind of two, three points negative effect of loyalty programs in Germany that impacts our performance. I mean, all in all, it would be flat, but in effect, it's slightly negative. I mean, we see some improvements lately in both small domestic appliance and cookware. We had, we have two negative countries in the U.K. and Italy. Those are affected by sell-in issues, phasing issues, mainly. I mean, they will be resolved, I think, in the U.K. later on this quarter and probably will last until the beginning of the year for Italy.
So overall, Western Europe, that is holding up quite well, if we put aside the DACH region. In other EMEA countries, sales are really booming, with 29.7% growth in organic. That is driven by positive market conditions. That is driven by very successful rollouts of new products. What we call new products in Eastern Europe is OptiGrill in general, Cookeo, that are not that new in Western Europe, but that are, and this is the model of the group, expanding their sales rapidly towards the eastern part of the continent. And last comment, maybe on Europe, is we have, or EMEA, we have two countries with very high currency volatility, Turkey and Egypt, and those show solid growth despite this effect's volatility. We are even gaining share in Egypt.
If I move on to the next stop, the next slide on the Americas. We have, as I said, a like-for-like growth in total Americas, 15.5% year on year, with 14.9% in North America and 16.8% in South America. The growth in the U.S. is very positive. We have a strong growth that is, yes, on the favorable base, but it's also thanks to market share gains on all our brands of cookware. Tefal cookware, All-Clad, but also Imusa cookware. So we are very pleased with our cookware performance in the U.S. We have a very strong performance in Mexico. Positive market conditions, strong performance in cookware, linen care, fans, and I should have added blenders.
Positive currency impact, the Mexican peso this year is gaining value against the euro, so it's a very positive story. Whilst conversely, in Canada, we have a weaker market demand and we are suffering. Just to give you an indication, today, Mexico is about twice the size of Canada, so it's the balance of both is very positive. Moving south, we have a solid performance in Colombia. You know that it's one of our jewels in Latin America. We keep gaining share in all categories, in Fans, in Blenders, in Cookware. We have a staggering 62% market share in cookware. We are at or close to market leadership in small domestic appliances. So it's a very, very solid performance against market conditions, which in this case, are not that positive.
And last but not least, we've had a very good quarter in Brazil. We have strong, good commercial performance in Fans, in Beverage, in Laundry, and it's good to see that all the countries in this region have posted positive results in that quarter. If I move on to Asia, well, it's a bit less positive. We have a 1% decline, like-for-like, in total Asia. 12.5% decline reported that reflects the devaluation of most Asian currencies, mainly or more importantly, the Chinese yuan and the Japanese yen against the euro. Now, if I break it into two pieces, starting with China, which is, of course, a very important market for us. We're passing like-for-like sales flat, which is a very good performance versus our peers.
And in fact, we have weak market conditions. I think that's in the papers. Some of our competition has communicated about the market trends in, in China. And what we observe is that we gain market share, and we can attribute this gain of market share to two things. The first one, which is recurrent one in Supor, we have a very strong product pipeline. We are fast, agile, and reactive at launching new products. We have a very efficient omni-channel execution in all sales channels. We're number one in the growing, online networks, sales networks, like Douyin, TikTok. That's great. But we also see that, Supor is operating on more resilient and less discretionary product categories. We are very strong in rice cookers. We are very strong in Kettles. We are very strong in woks.
Those categories are part of the categories that Chinese consumers, when their rice cooker is broken, well, they need to change it. When maybe some other categories, like what we call Western style categories, like oil-less fryers, are less essential and more discretionary. So we think and we observe that Supor performance is fully helped by this category coverage that is more lean towards essential, more than discretionary. As for the rest of the APAC region, we see weak demand across the region, especially in Japan and South Korea. South Korea market is depressed, and in Japan, we have a very weak Japanese yen that is beating, biting into consumer's appetite for buying our products.
The Japanese yen is now tracking around JPY 160 to a euro, was, I think, JPY 128 two years ago. So that's taking a bit of a pinch on the performance. Before moving on to numbers, I will hand over. I will cover, yes, page 15, the evolution of the categories. With we have three categories at or above 20% growth in consumer. Linen care, which is having a very, very strong performance in all categories in all the geographies. Floor care, which is for this quarter, over 20% growth and home comfort, with a very strong fans performance in all Latin American countries, but also in Europe. Then we have beverages, which are north of 10% growth, driven by all most categories.
We have a strong performance in LATAM , in particular on beverages. Cookware is slightly positive, and that's great because cookware is a very important category, is the biggest category of our portfolio. LKA, large kitchen appliance in China, manages to stay positive in a pretty gloomy real estate environment in the country. Electrical cooking is moving on positive, driven by the likes of OptiGrills and oil-less fryers, which are with new product initiatives that are hitting the market this quarter, and food preparation stays slightly negative this year. Personal care is very small. I pass you on to Olivier to comment on the profit performance.
Okay, thank you, Stanislas. Moving on to next page. You can see that in the quarter, we are delivering EUR 209 million of operating results from activity, which is substantially up on last year. This represents a margin of 10.9%, which is up 460 basis points versus the same quarter last year. The reasons for that are partly explained by Stanislas. The top line is, of course, helping. We can see an acceleration of the positive volume effect, particularly in the professional segment. But we can see also an acceleration of the positive price mix effect versus the first half. Equally, we see a growing benefit from lower cost of freight and lower raw material and purchasing cost of finished goods.
All of this is helping in the recovery of margins in the third quarter. Finally, we have also a return to, let's say, the more normal pattern of investment of growth drivers. Last year, we had an unusual pattern with, let's say, more investment in the first nine months and less investment in the fourth quarter than usual. We are going back to a more normal, let's say, pattern this year, and concentrating our investment in the fourth quarter of the year to sustain the activity in the busiest quarter. Moving on to next page, you can see the evolution of the margin by quarter. In dark blue, of course, is Q3 2023.
In the middle, you have 2022, and on the left-hand side, we are showing the median margin over the 2015-2021 period, which represents, let's say, a good, it's a good representation of the historic margins of the group. You can see that in Q1 of this year, we were materially below the average. In Q2, we have caught up with the historic margins, and in Q3, we are confirming this recovery. We're up materially on last year, and we are in line with historic numbers.
And Q4?
Q4, we will comment on Q4 next quarter. Moving on to the net debt figures. Net debt stands at EUR 2.278 billion, which is some EUR 300 million lower than last year. It is of course in part the result to the normalization of the working capital. As you remember, we had a particularly high inventory position last year, so inventory is now down about EUR 400 million year- on- year. It is also reflecting of course the higher EBITDA with the recovery of profitability. But it is also of course a reflection of the dynamic M&A activity in 2023, with the acquisitions in the first half of La San Marco, Pacojet, and of course, Forge Adour.
So this is, let's say, leading to this position of net debt. Stanislas, hand over to you to comment on the guidance.
Thank you, Olivier. I will, well, to kill all the suspense, we are maintaining our guidance for the full year, with the group revenues, mid single digit like-for-like growth, with a positive like-for-like growth in consumers, strong like-for-like growth in professional, negative impact of foreign exchange of circa 5%, and a group ORFA that will grow by at least 10%. Maybe a couple of qualitative comments. It is true that the current consumer demand is, and we read the press, and we see the numbers like everyone. We know that the demand is not in, at its peak of form.
Yet, we also know that we have some strong plans, strong action plans that are in place, have borne their fruits in Q2 and Q3, and we are confident that in this context that is not the most optimistic or positive. Our action plans will carry on bearing their fruit. So you have a management team in front of you that is committed to making those numbers, and we are confident that those numbers will materialize as we indicated them back in July. Now, I think we are done with the presentation. We are now ready to take your questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from line, Marie-Line Fort from Société Générale. The line is open now, please go ahead.
Yes, good evening. Thank you for the presentation. I've got three questions. The first one is about China. Could you comment further, trend in China? Could you comment further, trend in China? And what are your expectations for the Double 11 commercial operation, for instance, and how do you see the end of the year? The second question is about your interesting slide on page 18, and can we consider that the Q4 margin median between 15% and 21% is a good guidance for Q4 this year? Lastly, do you see more promotional operation on your markets, given the low demand? Are you worrying that your price could deteriorate end of the year and potentially in next year? Thank you very much.
Thank you, Marie-Line, bonsoir. Right, I can't say I'm surprised with the questions. Maybe, starting with China, Olivier will take the second one, and I'll cover the promotional operations, well, actually, in the first piece. China trend, I think China is a market that is searching itself. We do not expect an outstanding burst of consumption in Double 11. We see a very moderate sales growth in Q4, very moderate. Double 11 will be part of this very moderate sales growth. It's built in our numbers, and we are confident that very moderate sales growth will allow us to achieve our ambition.
When it comes to promotional operations, I think, we are, we are seeing that, of course, so are our competitors. Our starting point is, is very healthy from the gross margin realization and, and our, our prospects or our projection for the Q4 integrates that more aggressive promotional activity that we know is happening and will happen in the back end of the year. So the answer is yes, we see it, yes, we've anticipated it, and, and we, we are—It's part of our plan. Olivier?
Okay, so, first, of course, we are not guiding specifically on Q4 margins. However, we have made the comment that we are going back to historic profit levels, so that's one pointer. The other one is that we have clearly confirmed our guidance, both in terms of top line growth and in terms of offer growth for the full year. I think if you, you know, make the math, you will probably get to, let's say, a reasonable estimate for the fourth quarter.
You should also bear in mind that, as I indicated, we are going to have this year a higher concentration of our growth drivers investment in the fourth quarter to support the activity than we had last year. So, we are not expecting, let's say, the similar pickup on last year's profitability in the fourth quarter.
Okay. Thank you very much.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the next question from line Alessandro Cecchini from the line is open now, please go ahead.
Hello, everybody, and thank you for taking my questions. So the first one is about. It's maybe early, but your feeling about orders for Black Friday or orders for the last quarter, in particular in Europe, in the U.S. So if you could elaborate a little bit more on your feeling for the rest of the year. And if you could I mean better explain what you are seeing in Germany and your issues that you had in Italy and in UK in the first nine months, more or less in the third quarter, if I am not wrong.
Finally, my last question, it's about the business in harder West Europe that was very strong. Actually, I would like to better understand how much was the component, the price component, within the organic growth. Lastly, on the Professional business, the quarter was very strong, actually much better than the previous two quarters. Just to go more about the outlook for the fourth quarter, if you see more normalized growth or you see these large contracts to be part of the last quarter as well. Thank you.
Right. Right, thank you very much. Your questions are very specific, and you will understand easily that it's difficult to answer specifically. Maybe to make it in three blocks. The first one is on the Black Friday orders. We are seeing a good level of activity moving towards Black Friday. It is pretty unstable, and we have to maybe expect orders coming a bit later than they usually come. And I think that reflects a certain fallacy of consumption and a certain fallacy of retailers to stock. And I think that's a good transition for what happens in Italy and U.K.
In Italy, in fact, we have one of our major customer that is pretty substantially carrying these stockings in this year. We don't report it, as it's not material at the group level yet. It's a fact that affects the sales in Italy, and I think that comes December, January, that will be over. U.K is more a phasing of sales between a huge sales number in September, August, September of last year that will probably happen more in October, November. So, it's a bit different. Germany is. I think the market is sluggish. As I said, we have around three points of sales decline due to loyalty programs year-on-year.
But generally, it's market conditions and trading conditions which are not very good. Now, when it comes to other European markets, it is a combination of pricing, right, and especially in countries with volatile currency pricing, is a key strategic lever to maintain profitability, but it's also good market conditions, but it's also market share growth driven by strong product initiatives. So pricing, yes, but not only, we are progressing in the Eastern Central Europe, and we've been progressing in the Eastern and Central Europe for many years, and that progression continues.
Now for the professional, yes, our sales, and I said that in my comment, our sales in Q3 have been curbed up or pumped up by specific strong contracts, so I don't expect Q4 to be as strong as Q3. Yet, as I said, the underlying trend is very positive and yes, there has been a pretty substantial blip up in Q3, in Q3 that will not replicate, but still the outlook is very positive.
Okay. Many thanks. So, just on Black Friday, if I understood correct, overall, you see a good level of activity, all in all, putting all the context in mature market?
Yes, yes.
Okay.
With some uncertainty on the consumer, on consumption. I mean, you read the papers as I do, you read the retailers' publications as I do, maybe, like, maybe more than I do. And we are in a context of overall consumption that is not very positive.
Okay.
As far as we are concerned, we see a positive outlook.
Okay, probably given, I don't know if you already answer, but the level of trade in distributors probably is still low. Or, so basically, the sell out is similar to the selling after quarters of the stocking.
That's our expectation. If you put aside Italy, I would say, mainly, yes. I mean, I could argue about this customer or that customer, but a couple of million here and there. But essentially, yes, I think there is normalization between selling and sell out. Today, now, if retailers are caught with cash flow issues, then you don't know, we don't know what they will do. What we can say, and that's probably a fact of this business, for the last 12, 18 months, is that the orders come late. And they don't come as a regular flow as they used to, two or three years ago. That's a fact of our business.
Okay. Many, many thanks.
You're welcome.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. It appears no further question at this time. I'll hand it back over to your host for closing remarks. Thank you.
Right. I don't know if the lack of questions is because of the clarity of the presentation or the quality of the results, or both. Let me be optimistic. Just to thank you for your continued following and support. I think we are now having a good understanding of what-- how we are going through, navigating through these post-COVID days. We see a business that is still evolving in a very hectic environment, yet we see numbers which are stabilizing and which are stabilizing towards a position that was the historical position of the group. Growth is still fragile. We've seen that, and that was, I think, the beginning of your questions. But in the short term, we're optimistic on our ability to deliver our numbers.
In the midterm, I can only reaffirm our convictions that this business is a very positive business. It's a business that makes people's lives easier, better, simpler, faster in their homes. That is very important for consumers in emerging markets, in developed markets. I think we'll soon be able to demonstrate that this business can recover its historical growth track and its historical profitability numbers. Thank you very much. I wish you all a good evening, and see you in the full year results in the end of February. Thank you.
Joining to this call, you may now disconnect.