Good morning and welcome to Electrolux Professional Group Q2 presentation. My name is Jacob Broberg. I'm heading up Investor Relations. As always, I have Alberto Zanata, CEO, and Fabio Zarpellon, CFO, with me. As always, we start with Alberto. Please go ahead, Alberto.
Thank you, Jacob, and good morning to everybody. Pleased to report the Q2 results that are showing, as we said in the highlight, another step towards our margin target. It is a quarter where organically we declined, slightly declined, 0.7, that if you compare with the first quarter, is showing a sequential improvement of the business across the different businesses. Total sales were up, thanks in particular to the acquisition of Tosei, even if the second quarter was the weakest quarter along the year, and slightly also thanks to the contribution of Adventys, the new company, the French technology company that we acquired in April this year. We improved in the sales, but we also improved in the profitability.
I would say that this is even more remarkable because the EBITDA in absolute value increase, including also the acquisition cost, so moving from SEK 385 million-SEK 410 million. This is despite the acquisition-related cost for Adventys and Tosei that amounted to roughly SEK 8 million. This improvement connected with the development of sales is also resulting in improved EBITDA margin, EBITDA margin that moved from 12.2%-12.5%. If I exclude the integration-related cost, it's even close to 13%, so 12.8%.
The other important financial, obviously, that we follow up is that the operating cash flow, also in this case, is lower than what it was in the second quarter of last year, but in any case, it's a solid operating cash flow that is including the payout of the dividends and is including also a significant investment that we are starting to do to prepare for the new lines that are going to be launched during the coming years. Last comment about the quarter is that we confirm an increase in order intake. So order intake, the collection of order, is still growing compared to the same period of last year. Last comment on this first slide, the overall one, is that in the quarter, we deliver sales above SEK 3.2 billion. That is the highest quarter that we reported.
Indeed, if I go to the rolling 12 months, we are for the first time above SEK 12 billion in sales. Geographically, you see that Europe is up, flattish in food and beverage, growing in laundry. America is just -1% with the laundry well up. Remember also that the laundry in the U.S., we have this large distributor, so it is more related also to the shipment that we are doing and the different dynamics, including the stocks. And in the APAC, we are down both in laundry and food and beverage, but we will comment later, that is mainly related to one region of the APAC or APAC MEA region that is related to the Middle East and Africa in particular.
If we go specifically to food and beverage, food and beverage organically we decrease by 4.3%, but it's important to see that the decline is limited to some specific area of business because in reality we have been quite flat in Europe and Europe had a super strong first half last year. So to be on the same level, I would say that is a good achievement also because the order intake is very strong in Europe, so quite promising, and Europe is our second largest business after the laundry. We have been growing the U.S. chains, and it is a sequential improvement because we have been growing in the month, in the quarter, and in the first half of the year.
So we see clearly, and we always said that the chains, we had a long pipeline of tests with the chains in the United States, and it seems that gradually they are now unlocking the orders and we are starting to get the benefit. We have been growing also in Southeast Asia, in India, in beverage in general. So the decline is limited basically to two areas, Middle East and Africa, and the U.S., the so-called general market or institutional market. So they are two areas. I don't want to neglect the importance, but they are two limited areas where we have a decline of the business. EBITDA, we improved the margin. We improved the margin from 12.2%- 12.3%. Without the integration cost, the integration-related cost, it moved to 12.7%.
So also in this case, also EBITDA in absolute value was down compared to the same quarter of last year, but without the integration-related cost, it presents an improvement also in this area. Last comment is that also in this case, the order intake is up compared to the same period of last year. Let's move to laundry. I think also in laundry we have to underline because we have an organic growth of 6.7%. Now laundry in the quarter is above SEK 1.2 billion. That is 50% higher than what it was in the pre-COVID. And we know that in laundry we even suffer less than food during the COVID period.
So laundry is really developing well, is growing in Europe, in the Americas, slightly declining in the APAC MEA region, as I said, specifically related to the situation that there is in the region of the Middle East and Africa. With the growth, we are also improving the EBITDA in absolute terms. Also in this time, we are for the first time above SEK 200 million in a quarter.
So we are improving the EBITDA that is now at 16.5%, but that is including the cost. So excluding the cost, it would be above 17%. For laundry, also the outlook for laundry is higher. One comment about the order intake for both food and beverage and laundry. We are now at more or less two-thirds of July, and I can report that the trend of the order intake that we saw during Q2 is still positive. It's still holding also during the month of July. With this said, I believe we can enter the financial comment, and I leave it to you, Fabio.
Thank you, Alberto, and good morning to everybody. As anticipated by Alberto, quarter two was another step toward our margin expansion. EBITDA margin moved from 12.2%- 12.5%. It should be said that the underlying margin before the acquisition integration cost of Tosei for roughly SEK 8 million reached the 12.8%, close to the 13%, +8% in value. The improved margin came mainly from an increased gross margin, thanks to the contribution from pricing, more than compensating inflationary items like the labor cost and lower material cost. Remarkable was in the quarter the contribution for laundry. Laundry business grew close to 7% organically compared to already a strong quarter of 2023, when if you remember, laundry grew 28% compared to 2022. So the comparable was stronger, and we deliver even higher sales, generating overall more than 80% in EBITDA compared to quarter two 2023.
Overall currency transaction that was an offender for last year, overall positive contribution in the quarter. This margin expansion was delivered despite the fact that in the quarter, the acquired companies had a dilutive effect of margin. Tosei, as anticipated during the previous call, have in quarter two and quarter four the seasonally weakest quarter in terms of sales and therefore lower in margin. Adventys, the professional induction cooking company, was acquired in April and contributed in terms of sales and profit only two months in the quarterly data. The overall impact in terms of EBITDA was negative, and this is because of the acquisition and integration cost. To be said and confirmed, the underlying profitability, meaning excluding the acquisition setup cost, is confirmed very good and higher than the group margin.
Finance net in the quarter was SEK 40 million, higher than last year in quarter one, and this is due to the additional borrowing we had for the acquisition. Few words about the tax rate. You see somehow an increase in the quarter to roughly 27%, and this is due to a country mix. Overall, the earnings per share was SEK 0.86 per share, somehow below last year, and this was driven by higher interest cost and taxes. When it comes to cash flow generation, we generate close to SEK 400 million in operating cash flow, confirming somehow the strong cash generation power of this group. This remarkable result has been delivered despite an increase of capital expenditure related to innovation projects scheduled to be launched in the incoming years.
When it comes to the asset management, happy to report that the rolling 12-month operating working capital on sales is now reduced to 17.4% on sales, lower than December, lower than March this year. Improvement came mainly from inventory, where, as anticipated, the action we put in place to bring down the inventory value are definitely paying off. We are very proud of this achievement because also in this area, not only in terms of margin expansion, but also in terms of asset management, we are step by step moving towards our financial target. Our financial position, even after the acquisition of Tosei and Adventys, remains strong with a ratio net debt on EBITDA of 1.9 times. That is exactly in line also with the level we had at the end of March.
I'm very proud also of this achievement because we were able to keep the ratio equal to March despite, in the quarter, we paid the dividend for SEK 230 million, and we have SEK 240 million of payment related to Adventys acquisition. So overall, also from a balance sheet perspective, cash flow generation, we are entering the second half of the year with a very solid situation with the means to support the sales and the margin expansion of this group. And with that, back to you, Alberto.
Thank you, Fabio. And reconnected with what just Fabio mentioned about the acquisition of Adventys. A couple of words about this company. It is a small company, but it is a strategically important company. We have been talking about electrification of the kitchen and the big trend that is already ongoing in Europe and is starting also in the United States for many, many reasons, clearly that we all know, and I don't have to be back to that one.
We believe that the electrification of the kitchens will come or will be driven also by a change in the way of heating, of warming the pots in the horizontal cooking, and the induction will be instrumental to accelerate this growth. This is the reason, the strategic reason to get into this company. We know these products are very good, highly performing, highly efficient, so wide range. We have been already working and evaluating to integrate these technologies in our product.
We are already having, obviously, we already have induction inside of our modular ranges where we have a leading position in the major markets. But with this one, we believe we can further improve our leadership in the category. What's important to say, and I think it has been underlined, is that these products are highly profitable. I would say they are what we call star products. So more we will see induction, let me say, penetrating into the kitchen, the cooking blocks in the kitchen. More evidently, there will be the possibility to do the mix-up to improve the profitability of an already profitable product line.
Due to the fact that we have been talking about the acquired company and the activities that we are carrying on to create value with the technology offered or with the opportunity offered by this company, I want to spend a couple of words also on the integration of Tosei that is proceeding very well. Again, the second quarter of Tosei is the weakest all along the year, so they have been dilutive to the group results. Nevertheless, the market is still relatively soft. But on the other side, we will believe that already in Q3, we will start to have some of the value creation projects that we initiated just after the acquisition providing some value. So this is important, and we see that the Tosei team is very eager to demonstrate what they can do and the value they can create.
Other important thing that happened during the second quarter, not only for the quarter, but I believe it is one of the things that will give us confidence that we can gain growth and accelerate this one, is that we finally introduced and made available in the market the AutoFill. The AutoFill is a device that we have been testing with chains for months and months and months. And finally, we unlocked this product for the market. It is an important device that is opening many opportunities because when you get this one, the payback is in really few months. So it's very, very interesting for all these customers that are looking for a high-margin product to be sold to their customer with a device that is providing them automatic automation of the operations, availability of the product, continuous availability of the product, and with a very, very short payback.
We already started the rollout with one chain, half in June, half in July. It's not a super big chain, but it is in any case an important American chain, and I'm confident that many others will come. With this said, in summary, so we developed sales thanks to the acquisition, but we grew sales organically. We have been improving compared to the previous quarter where we were - 4. This quarter, it was a - 0.7, and the decline is mainly limited on these days to some specific region of business. I repeat, Middle East and Africa. And I would say that Middle East is where the things remain because Africa, we already got some large projects that are going to deliver during the second half of the year, and in the United States for what concerns the institutional business.
So it's a small portion of our business, but still remains the market and the demand very soft in that area. While in the other area, Europe, that is, I believe it is an outstanding performance that the team provided in Q2, in particular in comparison with the previous year. The chains in North America and Southeast Asia, India, so these countries that are growing countries, we have been growing market share. I would say even above the market. With this developing sales, despite the organic decline, EBITDA improved. So this is confirming that all the activities that we are carrying on to have a profitable growth are working. So the EBITDA in value improved and the EBITDA in margin improved. So the comparable in the meaning without the acquisition and integration-related cost, we are very close to the 13%.
We continue to see an order intake positive, growing even during the first weeks of July. This is across the different businesses, not in Middle East, as I said, because of the specific situation. All this comment, including the new product that we have been bringing, including the integration activities that will start to create value, are confirming that we are making another step towards the financial targets that we have. With this said, Jacob, back to you and open to questions.
Thank you, Alberto. As said, we are open for questions. Please go ahead, operator.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you've entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only the handset while asking a question. Anyone who has a question may press star and one at this time. The first question is from Gustav Hagéus from SEB. Please go ahead.
Thanks. Good morning, guys. Thanks for taking my questions. I have a couple, if I may. Firstly, on your last comments there, Alberto, on the order intake growing in July, excluding Middle East, but do you see any relief also in the institutional on the food and beverage side in the U.S. on the institutional side? Is that still weak going into Q3 as far as you can tell now? And if you could elaborate a bit on the margin discrepancy in that U.S. business between the institutional side and the food and beverage and the chain side, which seems to be developing a bit better. Thanks.
So we see a sequential improvement also in the institutional side, but we still see the market that is relatively weak in the institutional side in the U.S. We are talking about U.S., obviously. So sequential improvement, yes. To say that the market is back, because I believe it is a market condition now, improving, but not back to what it should be. Completely different story is the chains where we clearly see a sequential improvement, not only in the order intake, but also on the sales. I told you that we are up year-to-date, we are up in the month, we are up in the quarter. So it is clearly getting better.
The long list of tests or businesses that have been under test. You know, the process for chains is a long one where you have a long test and then it has to be released and becoming order. It is still there. So some are unlocking and we are expecting, hoping that many others will come and finally we'll move on. About the margin, the margin, we always said that in the margin, more we grow the chains, in some way better it is for the margin. And not because we are selling at a higher price to chains, not at all. You know that chains are a very good buyer, honestly. But when we have this volume, we are talking about hundreds of thousands of units, single product, thousands of units that can be delivered in batches.
Thanks. That's helpful. In terms of you've had now a period of improving order books, have you seen any cancellations or withdrawals from that order book or is that order book just filling up? I know historically you haven't had much cancellations, but do you see any of that or is that going to be a catch-up effect at some point?
No, we didn't see any cancellation. You know what? What we see happening more than in the past, more in the past, and sometimes it's creating some kink in the result are postponements. For many reasons, because the site is not open, because whatever. Recently, in the month of June, for instance, China was slightly down, but in reality, it was not because just at the beginning of July, we delivered large orders also in China and now China is significantly up. So there are some postponements, mainly related to the fact that the site is not ready, plumbing, whatever, carpenters, whatever. But cancellation, I don't recall any order cancellation.
That's encouraging. If you could give us an update now on the integration costs versus synergy costs with those acquisitions? You have previously mentioned that the margin target and so forth. If I recall correctly, you stated that you had SEK 38 million or so in costs in Q1 related to integration costs for the acquisitions and another SEK 8 million now in Q2. And now you seem a little bit more positive on synergies maybe feeding through already in H2. So could you help us with the dynamics in terms of integration costs? Will there be further costs into H2? What do you think is a reasonable estimate or guess on the synergy costs in next year maybe to understand the delta in the margin going into next year from these? That would be helpful.
I think Fabio will comment about that. Please, Fabio.
When it comes to acquisition and integration cost, you saw that we had the majority of the cost in quarter one that were related to the acquisition of Tosei, where the majority of it was related to step-up inventory step-up cost. In quarter two, the cost acquisition integration were roughly SEK 8 million, majority of it related to step-up cost. What is the picture going forward? Somehow we expect still some integration cost. These are related to Tosei for the second part of the year, and they are related mainly to alignment of process and IT infrastructure related to the structure that we want to bring this acquired company in line with the structure and the tools that we have at group level. At the same time, both on Tosei and on Adventys, we already started to work on synergies. Synergy that will come step by step.
There are some areas, if I think about Tosei, that we may start to see already some effect in the second part of the year, mainly related to purchasing costs while bringing together the two organizations. We can leverage the purchasing power of Electrolux Professional, but I would say that the material impact is starting to be seen in 2025 for both acquisitions. This year is somehow a year of transition where we are facing somehow the acquisition, the integration cost, and the benefit will start to materialize next year.
Thanks. Could you address any of those numbers into a little bit more hard numbers for H2? Is that the delta is going to be still negative, I assume, for the integration cost?
Yes. The delta will be still negative in the second part of the year. Let me say the order of magnitude probably will be in roughly one fifth of what it was in the first part of this year. If you sum up the integration acquisition cost that we somehow announced the two quarters were close to SEK 50 million, we may face less than one fifth in the second part of the year.
What about synergies in 2025? Where do you think is a ballpark figure for those just to understand the delta in profitability year-over-year as we go into the next year?
I will first, Gustav, we are not disclosing this part, but I just to reconnect first. Adventys, even small in size, is accretive for the group. So net of the synergy and of the acquisition cost, also in quarter two, it was accretive. Yes, the size of the company is today small in the big picture of the number, but is accretive already and will be accretive for the remaining part of the year. When it comes to Tosei, if you remember when we announced the acquisition, we said that Tosei in 2023 delivered an EBITDA margin that was in line with the group one of last year, above 11%.
Let me say with the activities that we have put in place, we are moving towards the to align Tosei with the group expectation in terms of margin into already 2025. Overall, we are confirming the long-term target to bring Tosei in line with the group financial target of 15%. I mean, the activity that we are working on, both on the cost synergies as well as on the sales synergies, are confirming the condition to bring Tosei in line with the group target in terms of margin.
You think the main step will be already in 2025 in that regard?
First step will be already in 2025.
Perfect. No, I appreciate those answers. Thank you.
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Thank you, operator, and thank you for all of you listening in to us. We would like to wish you a great summer and hopefully some vacation too. Thank you and speak to you next time. Goodbye.