Good morning, everyone, and welcome to Huhtamäki's first half and second quarter 2021 results presentation. My name is Calle Loikkanen, and I'm Head of Investor Relations. Today, Huhtamäki's President and CEO, Charles Héaulmé, together with CFO, Thomas Geust, will walk us through the highlights of the recent results. After the presentation, we will, as always, end with a Q&A session. Without any further ado, let's begin with the presentation. Let me hand over to Charles.
Thank you, Calle. Good morning to all of you, and thank you for joining us today for the presentation of our first half report. I will start by saying that we are reporting today a strong comparable net sales growth with improved profitability for the second quarter and for the first half of 2021. The net sales and profitability are actually above the pre-pandemic levels, which is the good news, and confirming the trend that we were already seeing and reporting at the end of the first quarter, meaning that we are continuing to see a gradual recovery in the demand, particularly in the food-on-the-go products, which were, as you know, affected by the pandemic since Quarter 2, 2020.
At the same time, in parallel, we continue to see a strong demand for retail tableware as well as for fiber packaging, all of it together supporting strong comparable net sales growth. At the same time, when we look at the P&L, we had lots of discussions after Q1, this is, of course, an environment this year where we see a significant inflation on the cost environment, not just the raw materials, but particularly in the raw materials. We have pretty well mitigated the impact in our P&L. We will look at this in further details. Another important highlight of the second quarter 2021 is that we have completed the acquisition of the company Jiangsu Hihio-Art Packaging in China. This acquisition was reported in the end of the first quarter. We completed it on the 11th of June 2021.
Maybe a couple of highlights on new product launches, which I'm pleased to share this morning with you that you may have seen in the different press releases during the second quarter. Interesting to highlight that all of these launches have been in the fiber technology, but in two different technologies, the smooth molded fiber as well as the rough molded fiber. First example is our Future Smart Duo fiber lids products that we've launched in the second quarter, which are replacing 100% plastic products, all the plastic lids that you all know in the market. This product, this fiber lids, is now 100% plant-based. It's completely free of plastic, it is recyclable, and it is compostable. A clear highlight in our innovation towards a more sustainable portfolio for our customers and for the consumers.
Second highlight is the Smilepack, which is a new design, of course, 100% plastic-free as well for egg packaging based on our rough molded fiber technology. This design is particularly dedicated to the U.S. market, where we see a strong trend towards demand for replacement of the polystyrene foam plastic packaging that is the traditional egg packaging in the U.S. That's a trend that we may speak more in the future, and therefore, we have this new launch there to help us with our strategy to grow in fiber. As well as another specifically focused innovation called Futuro, which is specifically dedicated to the German market, where there is a high demand for boiled colored eggs. It's a specific consumption pattern in Germany, where you have 80 million packs that are sold, not eggs, packs that are sold per year.
We are entering into and trying to conquer that market by a product that is going to replace a plastic solution, which is the sole solution today on the German market for this colored egg packaging. Moving on to our business performance for the second quarter, starting with the sales. We are reported net sales growth of 10% in the second quarter. It is important to identify that in this 10%, we have a - 4% currency impact, which means that when we look at comparable net sales growth, it is actually 14%. Of course, this is compared to a fairly depressed quarter two in 2020, but we will come back to what it means overall compared to as well 2019. As I said, we are above 2019 level.
Important to mention as well that we are growing in comparable rates 20% in the emerging market, so a very strong recovery as well. Moving on to page six of our report, which is highlighting the sales for the first semester of 2021, and where we see a positive sales growth, despite, again, the significant currency headwind. This currency negative impact is EUR -81 million on six months. That's 5% negative growth. Meaning that our net sales that increased 2% on reported statutory rates are actually, in terms of comparable growth, 6% on six months, which is a very good level, with 13% in the emerging markets. Going now slightly more into the details of this sales growth and looking into the sales growth per business segment. First of all, as I said, 14% overall growth in quarter two after a -8% in Q2 2020.
This is what I was suggesting just before as a comment. That means that in reality, versus Q2 2019, which is the most comparable baseline we have, that means a growth of 5%. That's to the concern, when are we going to be able to recover and grow versus the previous normal, if I may call it like this, then we are there in Q2 with +5% versus Q2 2019. The demand for the Food Service has consistently been recovering towards the pre-pandemic level. On the Food Service, we are not exactly there yet in the pre-pandemic level, but very close. Now we're talking about a gap, which is a small single digit, a very low single digit. As I mentioned at the beginning, the retail tableware continued to be strong in North America, which is very good news.
The growth has as well picked up in the Flexible Packaging, despite a continued volatility that we see depending on the market. We need to realize that depending on the geographies, the situation vis-à-vis the pandemic recovery is not the same. For instance, in Southeast Asia or in India, the pandemic is still much more of a disrupting reality than it is today in, for instance, Europe or in the U.S.. We see a continued growth in Fiber Packaging. Let's remember when you see 1% comparable growth in Q2, or only 3% in the first semester, let's remember that this is on the back of an extremely strong growth in the first semester 2020. In relative terms, it looks at least a little bit lower, but it's still a very strong, consistent business growth for the Fiber Business.
Moving on to slide eight, if you're following directly on the file, to look at the P&L. We are improving our adjusted EBIT margin despite the inflation on input cost. We see that with the reported net sales growth of 10%, our adjusted EBIT margin is actually growing by 14% to the level of margin of 9.1%, which compares to Q2 last year, 8.8%. Year to date, we have a 9.3% margin at adjusted EBIT level. Of course, you see with Q2 slightly lower, you can understand that there is a slight impact of the huge raw material inflation. Again, considering this very small impact, I would say we can conclude that the price inflation has been very well mitigated so far. The adjusted EPS is increasing by 21% in the quarter and 13% year to date.
Another indicator of the good health of the company and our business is we are increasing. We have suggested it at the end of first quarter. We are increasing our CapEx. That's because we have many projects for growth and we are very confident about our future in growing the different segments of our core business. That's why we are actually investing more this year. Couple of words on slide nine about sustainability. We, since Q3 last year, started to publish our sustainability performance in line with our strategy 2030. We had committed to give you more news and update. We are delivering clearly a positive progress in the execution of our sustainability initiatives, which leads to a clear improvement in our GSI. What we call our GSI, our Global Sustainability Index.
One important aspect is, for instance, that we told you in September last year, we had a reevaluation of our MSCI rating from triple B to A. This trimester, this quarter, we have had an upgrade of our EcoVadis rating to the level of from Silver to Gold now. If I would highlight a couple of aspects that we have been improving and that are the results of lots of efforts in the different units across the world. Renewable electricity, for instance, that from a level of 0 at the beginning of 2020 to 4% at the end of 2020, we are now at almost 10% of renewable electricity. Remembering that our target is 100% for 2030. Industrial waste as well, how much is recycled is improving. Our safety records are consistently, quarter after quarter, improving.
You can see that in the ratio of lost time injuries frequency rate, for instance. All those aspects, without bringing you into all the details, but we continue to follow month after month, quarter after quarter, all of our units and our plans are showing good commitment and good progress. Jumping into the business segments highlights. Starting with Food Service, Europe, Asia, Oceania, where, as I said, we are seeing a gradual recovery in the demand. You see the reported net sales growth is 41% in Q2. Of course, we need to be humble here with 41% growth. This is very much linked to a depressed quarter two 2020 for obvious reasons. It was -28% sales decline at the time. Now it's +40%. When you combine the two, it's actually basically flat versus 2019.
This in year to date translating to a 15% growth versus last year, same comments as for the quarter. We have said that we see a gradual recovery that was already mentioned in Q1, but it's really even more the case in Q2. This is, of course, we should not speculate about the next quarters, but unless there would be very bad news on the pandemic waves in the next quarters, we are reasonably confident that we will continue to recover and rebound to full growth into food service. Being aware that there are discrepancies, of course, between customer channels and markets linked to the disruption of the pandemic. The EBIT has improved through pricing actions to offset the raw material inflation. As well, we continue to focus on operational efficiency as well as on our transformational journey that is continuing.
We started presenting it at the end of Q3. If you remember last year, and every quarter, we have updated you on the fact that we continue this journey, not as a big bang, but as a progressive transformation on our portfolio as well as on our cost base in this segment. This is coming very nicely, I think, into the results. North America on the next page, where we have, as well, consistently with the rest of the world, a recovery in the food service business, but as well, a continued growth in retail tableware that is continuing. That is giving us a growth that is hard to read because it says 0% growth in Q2 and -5% in the first semester. However, those numbers should be adjusted for currency.
You all know the devaluation of the USD versus the euro between 2020 and 2021. That has, at least on the first semester comparable period, that means that we should look at the comparable growth, which in Q2 is 9% and in first semester, sorry, is actually 4%. The mitigation of raw material price increases has been extremely good in North America and as well early, which supports a very good EBIT margin. We should consider this aspect when thinking about going forward in the margin of North America, where we believe that, we didn't have any time lag, let's say, in North America in the price mitigation. If the raw material price would continue to increase in the third quarter or fourth quarter, then that would put further pressure on our margins. That's for North America.
Moving on to flexible packaging, where we see a solid overall demand, but very strong headwinds from raw material, where the main raw material is resins and polymers. This is where we have seen the most consistent and the heaviest increase of the prices. That has, of course, had a pretty important impact or pressure on our margin where the price mitigation has suffered, of course, price lags. We see a sales growth of 3% and comparable sales growth of 6% in Q2 against last year. The earnings have been impacted, as I said, by roughly 1 point due to the higher raw material prices.
India has been the region the most disrupted, both in terms of COVID, but as well in terms of COVID impact on the consumption, impact on the supply chain still, but as well in terms of the impact from the raw material cost inflation that has been the most rapid to translate into the market during the first semester. Last point that is worth mentioning, you have certainly noted this during the quarter, we have announced that Marco Hilty has been appointed Flexible Packaging President. He will join the company as of September 1. We are extremely pleased with Marco joining the company. He has a long and solid experience in flexible packaging business. He is a global leader with strong international experience, particularly in the U.S., but not only. He will be with us as of September 1.
Finally, fiber packaging, where we see a continued solid performance. Solid performance because we have a growth from our volume, particularly in Europe overall. If I'm pointing out to markets, particularly in France and in Russia. The earnings have been slightly negatively impacted by the higher raw material prices. The two raw materials where we have seen pricing really blowing is our polymers, but as well as I mentioned in flexibles, but as well recycled fiber, that despite an excellent mitigation in our pricing, had an impact on our margin. That's where we need to be confident about the future. We are investing quite a lot in the fiber business.
For instance, in South Africa, this has been announced in May, with a new factory, in addition to the previously announced capacity expansion, for instance, in Egypt and in Russia, with a second factory in Russia. With this, I will hand over to Thomas, who will take you through more details on the financials.
Thank you, Charles. Happy to continue from where Charles ended. As commented so many times earlier, the growth seems to be back, and then the margins are currently improving despite the heavy headwinds on the cost environment. We have a negative impact from the raw materials in the quarter and year-to-date numbers. That is clear. However, when you are looking at the gross margin levels, you will realize that we are approximately on previous year's level. That's indicating that we have been good in cost management and of course, also have had the benefit of better absorption coming into the system. All in all, well recovered on the gross margin level and then also slightly improving on the relative costs below gross margin.
Happy to report then an improved EBIT and EBIT margin and looking at the items below EBIT margin, there we have a better finance cost level, mainly driven by lower net debt during the period and then a tax rate, which is at 23%, from rounding point of view, higher than previous year. On the same level as end of year ETR. The adjusted EPS is, as you can see, up 21% for the quarter, 13% year to date. Reported EPS is though slightly lower than previous year, mainly due to the one-time benefit we booked in first quarter 2020. On the currency slide, which has been already highlighted to a great extent by Charles, but some more details on this one.
Out of the EUR 81 million, roughly 2/3 comes purely from the USD and two other currencies with great impact is the Brazilian real and Indian rupees, as well as the Russian ruble. If we think about where we are with the USD, we are currently, I believe, on somewhere around 118 in the currency rate here. We see that the closing rate was 119. If we think about closing rate 2020, it was at 123. Fortunately, moving slightly better than earlier. However, the year to date or sorry, the full year average rate, the one which is impacting the profit and loss, was on a very low level in 2020. From that perspective, the negative currency impact will continue, though it looks like not necessarily with as high impact as during the first half of the year.
On the net debt to EBITDA ratios, we are continuing to trend on a good level, 1.9, below the corridor of 2 to 3. We have a gearing of 66 here. You will get some more information when we get to the balance sheet, but a good level here as well or a stable level. The net debt all in all at EUR 933 million, where EUR 159 is lease liabilities. On the maturity side, we basically remain on a similar maturity profile with the extensions and additions we have been doing over the last year. A good balanced maturity level in our portfolio. As said, also the financing cost is on a competitive level. If we move to the free cash flow, the free cash flow is slightly below previous year's level.
Main difference coming from the working capital, which is improving versus previous year, but then the capital expenditure and taxes. Taxes from a timing point of view is currently burdening the cash flow. Going to the balance sheet, so total assets of EUR 3.8 billion, roughly up from previous year, EUR 3.7 billion. Looking at the equity row, that one has now the impact of the dividend in, so not a fully comparable equity level, as we took the dividend only in the second half of last year. That one on a comparison basis impacting then both the gearing and the equity level. Otherwise, it's mainly currency translations again, which is impacting the equity. From a growth perspective, we are now, for the first half, trending slightly above our ambition level. A positive thing obviously coming in from, as Charles was highlighting, a low comparison in previous year.
As also said, we are now trending on levels above pre-pandemic levels. On the adjusted EBIT, we are moving upwards, so the trend is at least the correct one currently. As said, the net debt to EBITDA remains on a good level. As we have been highlighting earlier, we have agreed on the payment of the dividends, so the 47% payout ratio is confirmed for payout of the 2020 result. Looking forward, the outlook remains unchanged. In the short-term risks, we have done minor updates, slightly changed the wording for the first part of it, and then we have added a sentence at the end saying that further natural disasters and social unrest may have negative effects on the group's trading and on the group's operating environment. With this one, I leave it on this slide.
This is a summary already highlighted, so the key takeaways we leave visible during the questions and answers.
Yes, that's correct. Thank you, Thomas, for the presentation. Thank you, Charles, also for the presentation. Now let's move to Q&A. Before I hand over to the operator, let me just remind you that please, when you're asking questions, please stick to one question each. If you have more questions than that, then ask your first question, go back into the line, and wait for your turn for the second question. Now we can move over to the operator. Please, operator, go ahead with the instructions.
Thank you. If you do wish to ask a question, please press 0 one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 0 two to cancel. Our first question comes from the line of Jutta Rahikainen from SEB. Please go ahead.
Hi. Good morning. Yeah, a few questions, but I'll start then with one as instructed. On India, maybe if you could give us the number for sales, how much it decreased or increased from last year. I guess it increased then. Also asking the same question the other way around, if you compare India now in Q2 versus 2019 Q2, how is the business performing? What's your best guess, so to say, on India? What's going to happen in the second half of the year? Thank you.
Jutta, I take the comment on the growth in India. Yes, we do have a growth versus previous year of roughly 8% in year-to-date numbers and 6% for the quarter. We are slightly up only from 2019 levels, so a minor increase versus 2019, which is basically highlighting the business interruption that has been valid in the market.
All right. Yeah. Thanks. That was. Then on the coming quarters here, any comments or thoughts on that?
Yeah. I think India is remaining as a market, of course, challenging. We see the COVID situation still being there. We see interruptions in the supply chain and all of these things. From a commodity point of view, we hope that the picture will be slightly improving from the point of view that it seems like commodity prices in India, that's the first market which is being hit by high prices.
Okay, thanks.
The next question comes from the line of Maria Wikström from Danske Bank. Please go ahead.
Thank you. My question is on the raw material price impact. It seems that you guys were quite good mitigating the raw material inflation in the second quarter. My question is in the outlook, what is your expectation that is the negative raw material price impact is, do you expect that to be bigger in Q3 compared to Q2, or the same level, or smaller? How should we look at the raw material price impact for the upcoming quarter, please?
Good morning, Maria. Maybe I will take this question and then Thomas, you can, of course, complement. There are different variables, and it's complex to give you one snapshot answer on this. Why? Because, first of all, the raw material inflation, how it hits the P&L and our purchases is variable depending on the regions and the types of material. Again, as you remember, basically we have paper board that was really relatively flat. The strong increase was more on recycled fiber and on polymers. Depending on the regions it has been, for instance, India has been affected very early, U.S. much less. To your questions about how to project, there is another variable, which is in the price mitigation, there are areas where we have been able to avoid the time lag by a very good anticipation.
There are, as well, mostly segments of the business where we had a time lag, for instance, in the Flexible Packaging business. Therefore all these variables put together, it's a bit difficult to give you one answer about Q3 and Q4. There is one more variable, is what is the raw material inflation going to give in the next quarters? Many experts are thinking that it's going to be a very temporary inflation and that should cool down in the second semester. All in all, what we believe is that we will have a different mix net impact in our different segments. At group level, we believe that we should be able to more or less be in the same net position in the next quarters. Again, it's a very complex forecasting because of the number of variables.
Okay. Thank you very much.
Just as a final reminder, if you do wish to ask a question, please press 0 one on your telephone keypad now. We have another question from Jutta Rahikainen from SEB. Please go ahead.
Yes, just a sanity check on the CapEx. Obviously looking for around EUR 200 million for this year, although you're slightly now trending below that for the first two quarters. As a general thought, is that what we should have for the coming years as well, or should we think that perhaps acquisitions make a comeback and hence organic CapEx is a bit lower in the years to come?
Two aspects, organic, inorganic. If I start with inorganic quickly, we are always saying that we are very active on building our pipeline and identifying the right targets for inorganic growth. We don't have anything to announce today, but that's always in our strategy. As Thomas was highlighting with our balance sheet, we have the firepower for it. On CapEx, yes, year to date, the CapEx may look quite in line with last year, and therefore you refer to the EUR 200 million. Last year, I think that was EUR 220 million or EUR 224 million, the full year investment. This year we're looking at a slightly higher investment level. The reason is, as I mentioned, for instance, lots of investments linked to fiber business that we see consistently growing and demanded.
We have projects that are already initiated, which some will give growth in 2022, some as of 2023. Second, in the smooth molded fiber where we have launched innovations and now it's going to be about scaling the production. That requires more investments.
If I may continue on that one, I think the reason for being slightly vague on the guidance, except for that we believe it will be a higher CapEx, is really the timing issues, as a lot of it will be towards the end of the year. The decisions have been made, there are quite significant CapExes in the pipeline, therefore we believe the CapExes will be above previous year's level. Jutta, to give a small correction to my earlier answer on the India side. I assume you are referring mainly to the flexibles business, there we have a growth of 3%-4% roughly versus previous year.
Okay, good. That was for Q2 specifically now, that 3%-4%? Yes. All right. Not 6%. Good. Yeah. This links to the CapEx part, I'll ask it now. Has the single-use plastics directive from the EU point of view, has it changed anything for you? You earlier spoke about the hassle with the printing maybe creating some cost and issues there, has it impacted demand? Do you see actually a higher demand following this now coming into effect?
Short-term impact, no. Whether the legislative environment is continuing to put pressure, absolutely, actually accelerating. The EU Green Agenda is actually expanding potentially right now almost as we speak about the EU Forest Strategy that will have an impact more on the upper part of the value chain than on us. Still, it is showing that the EU Green Agenda is really boiling. No short-term impact. What we see, however, is an interesting, I will, if you allow, expand to the rest of the world, particularly to the U.S., which have been often considered as not driving the same trends as in Europe. In the U.S., we see a very rapid, actually, change of mentality, more than legislation actually, but mentality with strong demands for more renewable types of material in terms of packaging.
That's why we believe that there is a huge space to come in plastic substitution. Plastic is still extremely important in the U.S. because that's the only material that is recycled. I mean, not the only, but versus paper-based products. However, there is, against all the polystyrene type of packaging, there is a strong opportunity there. Back to your question on the EU. We are seeing at the same time that the E.U. legislation has been rushing so much that, and it's so complex with many people, thanks, I would say to, we have been very vocal about making sure that legislations are good and not restrictive and focusing on enabling innovation for the future and for the good of the planet.
I would say that many are becoming conscious that there are potentially unintended consequences in the preliminary projects of legislations, and therefore, this has delayed the legislation agenda. At the same time as there are more projects of legislations, they take a lot of time to come through. That's why short-term, we do not see any significant impact to mention.
All right. Interesting. Thanks.
We have one more question from Maria Wikström from Danske Bank. Please go ahead.
Yes. Thank you. I wanted to ask on North America as you had another very strong margin quarter. I think me and consensus, we're looking the margins to come from last year given that the mix was different, that if we think about the Q2 last year, you have a strong share of the sales in Retail Tableware. I read that the Retail Tableware continued to grow in the Q2 this year. At the same time you saw the recovery in the Food Service, which has been the lower margin business from you. Can you a little bit elaborate that is the total margin of the business, is that currently that we see that has improved? Given that the efficiencies you have taken out in the system or how should we look at the profitability going forward in North America specifically?
We believe that the current profitability of, let's say, the profitability of 13% in Q2 is not clearly the full year profitability. We're looking towards a slightly lower profitability, but still with 12.6% adjusted EBIT margin after the first semester, we are pretty confident on the full year. We are clearly benefiting. Yes, you're spot on, Maria, when you say that with the food service recovery, it should have a negative mix impact, and it does not for the reason that the retail tableware is the segment still most growing in Q2 and in first half of 2021 even on the basis of a very strong first semester 2020. What does it say? It says, but we should be very prudent with this. It says that the pandemic that has changed some consumption habits or reinforced some consumption habits, particularly in the U.S. market, are there to stay.
At this point, it's a little bit of a speculation based only on a couple of months of experience, therefore, we have to be very prudent. A slightly lower sales performance or demand in the retail tableware would have a clearly negative mix impact. At the same time, and that's the last point of importance for North America, in the first semester with this 12.6% EBIT margin, we are benefiting from a very well anticipated pricing mitigation work done. Considering that we believe that we have not seen yet all the raw material inflation through our P&L because of the time it takes through purchases and inventory consumption and so on, we want to be reasonably confident at the same time as prudent about any extrapolation on the second semester.
In the same topic, if I may continue, I think it's interesting that you said on the consumption habits impacting the retail tableware. If we a little bit dig deeper, is this coming from the overall food takeout and food delivery trends, or is this simply that people just eat more at home on the disposable tableware? If we dig a little bit deeper, where that strong sales in retail tableware is coming from in North America?
Well, maybe if you allow not just North America, but I think you said it all. About North America, you said it all. This is the two elements at the same time. I think the pandemic has clearly pushed or created a new consumption pattern and enjoyment, I would say, at consumer's level with the takeaway. Okay. The takeaway has been blowing really very strongly across the world during the pandemic for obvious reasons. Once you have tested the convenience that it gives to your life, you don't want to give it up. Maybe it will erode a little bit, so we are not going to see the same relative growth in percentage, but the consumption level is, we believe, there to stay. Very good for packaging, obviously, for our packaging. Second, to your point, the tableware.
Yes, it's another consumption pattern that is pushed, and that's specific to U.S. because this retail tableware is really specific to the North American culture. We believe that the convenience that has always been in the North American way of consumption is even more there, and there to stay, when we see the level of demand at the retail, particularly for this year, as people enjoy a bit more freedom, bit more partying and outdoor activities. We believe that we are very confident about the fact that the retail tableware is really a trend to continue in the U.S. Basically, you had the two points in your questions that are valid and supporting the sales.
Okay. Thanks a lot. Very interesting indeed.
We have one final question from Michele Filippig from Jefferies. Please go ahead.
Good morning. I have one quick question regarding your comments on the previous question on raw material impact outlook. You said that you believe that at group level, you expect a similar level of raw material impact in Q3. Is this comment includes the tailwind from price actions, or you just considering raw materials? Thank you.
I would say it's both, and again, to the first question from Maria at the beginning, I think I was answering that there are so many variables into it. If I try to keep it simple, one variable is the raw materials, and depending on the regions, I will take an example. In North America, we are expecting the inflation to be impacting us more in Q3 than in Q2. Okay. To be very specific. At the same time, there is the variable of how long the raw material inflation is going to stay during the year, and I will not risk myself to make any forecast, that would be pure speculation. There is an opportunity that it's going to fade away, this inflation, towards Q4, and then we would see the benefits, of course, in the P&L, but we can't forecast this.
The other variable is that, depending on the businesses, we have had our pricing mitigation action at different times due to the different contracting process that we have in the business, as well as in some of the businesses, no contracting and therefore no time lag in implementing the pricing action. I will give three examples. Fiber, rough molded fiber business, so eggs packaging, no contract. When we saw the price increase, the raw material inflation coming up, then we've been able, more or less on time, to mitigate the price inflation. Second, flexibles. Our sales are strongly through contracts with global accounts, and there we have a time lag of six to reduce to three months in many cases. Many price increases, our price increase, will come in place first of July.
At the same time, whilst I think Thomas was saying in India, we've been hit by the raw material inflation very early in the year, in the almost full first semester. In Europe, it's going to be much more the case in the third quarter. You see, so many variables. Third example, North America, where we had our mitigating pricing effect already taking place in the first semester, whilst still a lot of the raw material impact in the P&L will come in Q3. All in all, I'm not making the answer complex to confuse you, that's why at a certain point I said, if you want to more or less have our view, we believe that our net impact of all these variables should be more or less in line with the second quarter, in the third quarter. However, with swings between the different businesses.
Let's be relatively prudent as well in forecasting Q3 because the raw material inflation, all this turmoil on the raw materials and overall input cost has a long phasing in and will have a long phasing out.
That was really clear. Thank you.
As there are no further questions, I'll hand it back to the speakers for closing remarks.
Okay. Thank you, operator. This concludes the event for today. Thank you very much for participating. Thank you for the presentation and the questions. We will be publishing our Q3 results on October 21st. Let's be back then with the next results. Thank you, and have a good rest of the day and rest of the summer.
Thank you.
Thank you.