Welcome, everyone, to Electrolux Professional Group Investor Day 2025. Happy to see so many of you here at our Stockholm head office. Also, welcome to those of you who watch this event online. The mission of Electrolux Professional Group is to make our customers' lives easier, more profitable, and truly sustainable. I hope that you, after having listened to us today, also should see that we should be able to also make your life as shareholders, investors, and analysts a little bit easier and more profitable, exactly like our mission. Over the last years, we have moved step by step towards our financial targets. It has been a tough market, many external challenges over the years, as you know, but we also increased investment to future-proof the success of our company.
Today, we will give you some more insights into how we think we will, or how we will reach our targets. We have also increased investments to future-proof the company. Today, we will focus on two important areas in our business: our laundry business, but also our Food Europe business. Let's take a look at the agenda before we kick off. You see it here. We kick off with Alberto Zanata, our CEO. Then, of course, we have a coffee break. Everyone is looking forward to the coffee break. Of course, we conclude with a lunch. For those of you who are here, it will be served by the Swedish culinary team. With that, I would like to welcome our first speaker, Alberto Zanata, up on stage. Please, Alberto.
Thank you, Jacob. Good morning to everybody. Good morning and welcome to our home here in Stockholm. One point about the agenda first. What I'd like you to bring home after the half a day that we will spend together is to get familiar with all the things that we have been preaching these days. We said that we are investing, that we are in a peak of our history in terms of R&D cost, in terms of CapEx, that we do all these things because we are going to bring to market a product that will help us to increase the profitability, to gain market share in the market, to win competition, and to increase profitability. Again, I say this two times because at the end of the day, it's really important.
You get the trust on the things we are doing and in particular the path that we are following to reach the financial target. Because in some way, everything is about that. We start exactly, and probably my part will be more about the past, what we have been doing, what we are doing. I will have the colleagues, Paolo, who is running the laundry business, and Camilla, who is running the food European business, and then obviously Fabio, that will crunch the numbers, putting the things together, and that you probably know being the CFO. Before introducing them, they will talk about how this is becoming reality nowadays in some way. Let me talk a little bit about the things that are behind. These are the years that we have been going through, years of profitable growth.
We can discuss about the speed, but we have also to consider this performance in an environment that since we started our journey, walking on our legs, has been full of events changing the route that we are going to follow. Many times I am using the example of sailing boats. I do not know if you are a sailor, but if you want to go there, many times you cannot go straight. You have to follow the winds. Now in these days, all these things have been the winds against us, the things changing, forcing us to go around obstacles. The important thing is to know where we want to go. That is at least our strength. We know what we want to do, what we want to achieve, and even more important, how to achieve it.
Despite all these things happening, I would like to start from the basic, our market. I think probably I'm boring with this picture because I'm using this one more than once. Nevertheless, the percentage is slightly different, but the percentages are showing that this industry, the so-called hospitality industry in a wider sense that is including the kitchen, the restaurant, the hotels, the bedding, whatever we do out of home. You are today, if you are in this industry, because you are out of home. You had breakfast here out of home, even if, okay, it was internally produced, but nevertheless, it is a breakfast. In any case, you will eat. Some of you will travel. We are traveling. We are in hotels. This is the industry that is at the base of our business. It is an industry that is evolving. These are general trends.
I would say some of them are not applicable only to our industry. If we talk about digitalization, digitalization is digitalization. Everything is digital. We were discussing with Jacob to print the hard copy of the material. Now everything is digital. Most probably, if you would have printed it, you would have left on the chairs because you do not want to bring paper with you. Everything is digital. Digital is shaping or reshaping also our industry, as well. Concern about the space. Less and less. Concern about the availability of work power, people. That is the main concern, in particular in the hospitality industry. Other things that are related to that one, like the electrification of this industry. There is a trend, not only at home, but also in this industry, to move to electric appliances. The important thing is that.
We embed all these trends, macro trend. On what we want to do, on what we are doing from the product and service side. If I go more specific on the things, the important thing is that the out-of-home spending, you know what it is, is what I said at the beginning, what we are spending every time we are out of home to get a coffee, a breakfast, a dinner with friends, traveling for business or for pleasure. This is what we call out-of-home spending. If you wash also your stuff out of home, it's out-of-home spending. The out-of-home spending is a growing trend. People are spending more and more out of home. By the way, if you eat at home, but you buy the already cooked food in a shop or you make it at delivery or whatever, it's out of home also that one.
This is growing, and it's steadily growing. It is steadily growing. Sorry, if I go back, I told you that I will talk a little bit about the past too, but if I go back to the COVID year, one of the most common things I heard on those days that were our first days was that this industry is over. Nobody will travel anymore. They are afraid we are locked at home. Really dark clouds on our industry. Reality is that we are stronger than before. The COVID had the opposite effect on people. They pushed people to even spend more for travel, more for enjoying time out of home. This is the picture about the market. A market I have spent all my life that I love, I think is beautiful, is enjoyable because at the end, you are enjoying life.
When you are parting out of home or also sometimes when you are traveling. The important thing is that, okay. If this is the market, how do we address, how we make sure that we continue or even accelerate the path that I showed you at the beginning? At the end, this is all about. That is another important thing. That is, again, I'm back to the sailing example. The important thing is to know where we want to arrive. These are the things that we said since the beginning. We said that we want to focus on innovative solutions. Guys, to have innovative solutions, you have to spend in R&D. You have to spend in research and development, in innovation. We said that we want to have, or we want to develop, or we want to mix up. Why?
Because we have a portfolio of products. With some exceptions, and we will see this picture where there are companies focused on one product, but we, and it is us, it is our DNA, it is our construction. By the way, all the large corporations that are competing with us, they have a pretty large portfolio. Nevertheless, it is important to focus investments and also marketing efforts on the high-margin products that are driving profitability and growth and differentiation. We want to have customer care not only because it's a high-margin business, it's also because it's a way to retain customers. Remember that in the big markets, I'm talking about North America, I'm talking about Europe, Japan. The majority of the business is replacement. Replacement means there is a kitchen like the one you saw here, and then I replace a product inside of the kitchen.
If you have strong customer care, if you've been providing strong service, then the selection or the customer will continue to select that brand. To have a strong customer care service is fundamental, not only because we are improving margin, but because we secure a recurring business for years and years. Last but not least, and here it is not just because it's very fashionable and a company cannot avoid talking about digital, but because really digital is in some way reshaping our industry. Let's have a couple of talks about all these four pillars, I call them. Sorry, let me step back one because I was so used to go ahead with the four pillars that I forgot the base that we added because that is new in this picture. It was not at the beginning. We added.
A picture about the cost structure of this organization. What I want to make sure you understand is that we did not add this line or this activity because the line in itself is just a printing box, but the activity has not been added because we have a critical situation that has to be addressed, cutting cost. Not at all. I showed you earlier. I showed you also that the market is positive trendly. The reality is that since we started our journey, we always said that one of the things that we should have reviewed was the structure of our processes. You know our history. Our history is a history coming from a group with great processes, safe processes, but much larger companies. Those processes were heavy for us because we are competing.
More than 90% of our competitors are privately owned companies where there is a person taking a decision on the spot. On these days, again, sorry to be back to the sailing example, if the wind is changing, you have to be faster in adapting your route. You have to be very fast. You have to be agile. Sometimes heavy processes are not helping. We said it since the beginning that one important thing would have been to make this company faster, more agile, flexible. Due to the things that have been happening, the COVID, the war, tariffs, we always had other things to focus on. Now a time has come. We have now the possibility, and that is what we announced in September.
A plan to really make use of the investment in digitalization, heavy investment in digitalization, because now we have the tool to automatize some processes. To make this company leaner, more flexible, and agile. By the way, we also took the opportunity to say, yes, but this company also needs different competencies. It is not only a way to reduce cost, but it is also a way to make a competence shift in the area that has to be addressed because the more digital it is, different competencies will be needed. Now that we develop the product, more competencies or skills will be needed in pushing sales. It is a great opportunity. It is not just a line, but it is something that is fundamentally important to support the other four boxes. Let us move. As I said earlier, to very quickly go through the four boxes in some way.
The first one is innovation. I'm coming from the product, so sorry for that. I love the product. I also think that in our industry, we sell services, we sell solutions, but everything is around the product. I'm convinced that in some years from now, the element that will make our company different from the other will not be necessarily the product in itself, but whatever is around the product, the software, the digital features, the solution we provide with them. In some way, even the business model. To do all these things, you need the product. You need the product that is constantly evolving. That is the reason why we are investing so much. 4.5% is high. If you compare with the data of our competitor, I'm already anticipating a possible question. Why do you spend more than what the competitor does?
Because we bet on innovation, because we have the fortune also to have the possibility to perform while transforming, not being focused only on the short term, but looking at also what is going to happen in some years. Perform today, every quarter, every month, every week, but also make sure that you prepare the company for the future challenges, transforming the company. That is what is about innovation. We have been investing. We will invest also next year. The peak is not completely over, but it is already. When you are now moving from sailing to mountains, when you reach the top, you start to go down. It is normally easier to descend than to go up. Why we? Now, without anticipating anything, because I have Paolo and Camilla here to talk, I am so excited to start bringing to market the new product that will.
Create an additional gap versus competition. Laundry, we are the leading company for what innovation is concerned. Nevertheless, we do not sleep on that. We want to create another gap because competitors are not waiting, are not there just looking around. They are also working to catch up. We create another step to make sure that when they get to the same level, there will be another gap in between. The other beautiful things that I really like you to consider during and underline in your notes when you will get it from Paolo and Camilla. With these things, we are not just replacing a product present in a category. Because we are talking about the mature market. Remember, you saw the growing rate. We are also talking about products that will give us the possibility to enter or to serve new segments.
This could be seen as an acceleration of the sales. The same applies, by the way, to cooking. Very exciting. This is coming even earlier than that. It is coming, bringing, again, following the trend that we have been talking about. We have been talking about electrification. We have been talking about productivity, efficiency. Gas from electricity, from 50% productivity to 95% productivity. Wow, double. Double. This is touching the pocket of our customers. No question about that. By the way, here we are also showing you how we are leveraging acquisition because a year ago we acquired a company producing induction, a tiny company that probably, I do not know if you notice it because it was so small that it did not change our numbers.
It is instrumental to bring to market a product with unique features, a product that will make a difference, that will give us the possibility to accelerate the growth of the largest category and most profitable category that we have in Europe. Innovation is first. The second point I told you is to focus on the mix-up. A mix-up means it does not mean forget something. It means focus on growing the product, the segment, the countries with higher margin. Here we have been working in several dimensions. The first one is get rid of the products that are not strategic, that are commodities, that are not giving us the possibility to differentiate ourselves versus competition, and they have low margin. Sorry to be brutal, but the semi-professional refrigerators is a category where it is difficult to differentiate. It is like when you go to.
El Gigante here, our neighbor, and you look at the products that are displaying and you are in front of. Sorry for our friends over there, 20 refrigerators. They look the same. What are you looking for? By the way, you're not even able to see the brand. How do you choose one or the other? How do you? Price. We want to win where we can talk to customers, differentiate from competitors. I know that you like the drip coffee of the filtered one, but there is a clear trend that is showing a shift of taste of people towards other kinds of coffee. I do not mean that you have to change your taste. Not at all, please. Nevertheless, it is hard to differentiate with a drip coffee machine. It is not only that one. There are other ways to improve or to mix up.
For instance, the activities that we are making with the program that we announced in September. Closing two factories, reducing our footprint, concentrating production, more product in the same factory means better absorption, higher margin. If then you are also moving production from less cost-effective country to more cost-effective country, then you get an additional spin. We do this because the product we move, in reality, today, they do not deliver high margin, but potentially they do it. We know that they are in the trend of growing. They are instrumental to our positioning. The other mix-up is geographical customer segment. Big thinker, our competitor. I am sure you look at them. I got comments. Why are you not professional? Are you not as profitable as the other American companies? 70% of the business in the United States, 50% of the business with chains. That we like it or not.
By the way, it's not only this industry. Selling in the United States is more profitable than selling outside the United States for many reasons. The first one is that it's one market. Camilla will tell you about the structure we have in Europe. Europe is not one market. It's the aggregation of several markets where I have to have a different organization to address customers that in some way are different in terms of desire or other things. We try to make one, but one solution fits all doesn't work so much, in particular in a trend that was written also earlier, the regionalization. You can call it nationalization, whatever you want. There are three trends about mixing: chains, geography, product. Eliminating the undifferentiated one, but growing on the others. We do this.
I would like to spend a couple of words with chains, for instance, because. First, if I look at the chain business in the United States, I said it's not as large as our competitor. It is 50% of our sales in the United States. It is on the same level as a percentage. The pity thing is that this company is larger than us. They have 70% with chains. We are growing 13%. That is much more than what the market does. The other important thing that we always said, it is a strength, or I was saying should, but it is a strength. I strongly believe it is. Is that most of these chains are growing outside the United States. Now that we are present in the United States, they follow us outside the United States. By the way, these chains have been.
Also, fueling the growth of local chains. The picture that you see on the bottom shows that Yum is the largest, with all the brands that they have. Chains, they buy from us in China. We are the supplier of Yum in China. You know, the Chinese local companies now are in the range of thousands of restaurants. They are not talking about hundreds. Some of them are even larger than the American chains. The growth in that part of the world is exponential. We are in China. We have a factory in China. We have product produced in China. We are enlarging the production in China. I would say yes, we grow, we know, and we will continue in the United States. We have been going through tough years in the past. It is over.
Let's make clear about that because I've got some questions. It is over. We are doing extremely well in the United States. If you read also, some of our competitors have been suffering. We are growing. Also in the first quarter where you see the zero, food was growing. Chains was up 8%. It was the general market that is a little bit, let's call it cold, as you all know. The things happening in the United States. We are working what has or doing what has to be done to mix up, eliminating low-margin product, moving production to improve the margin, expanding in chains and North America. The third pillar is customer care. As I said, customer care is not just a matter of improving margin. The margin of customer care is by far higher than the average of the company and the target that we have.
We want to achieve, but it's also a matter of better serving the customer, retaining customer preference. We are measuring the net promoter score, and you see it's one of the key indicators. I'm looking at that one, sometimes even more than Net Sales Inhibitor, because Net Sales Inhibitor is what I did. The net promoter score is telling me how many customers I will have in the future. It's very important. It's very important to know that we have a strength in customer care. Our service organization, directly or indirectly managed, is a strength of Electrolux Professional. In the eyes of many customers, also in this case, we are going through a shift, a change, a transformation. I think this is one of the biggest transformations we are going through, and this is the competent shift that I mentioned at the beginning that will be instrumental.
To not only serve the customers. Because what we are recognizing is the block on the left. We have super good technicians, well-trained, that are fixing the problems. On the spot. The sooner the better to eliminate the downtime. The transformation will be when we will not only wait to be called by the customers, but we will be able to encircle the customer with a service. Beginning, I said, not only product, but solutions, services. The dream is that we will visit the customer without waiting for his call or her call because the product is down. We will tell the customer, "Your product is going to be down. And there's a consequence. We are here to make sure that you will continue to operate the product." Because this is a transformational.
This is the one that, despite the constant growth, and you see that it's different than the trend of the sales, it's clearly different than the trend of the sales. It's much faster. We are mixing up also thanks to customer care. This will be instrumental to have a step change here. In other industries, there are companies where the majority of the business is this one. For sure, the majority of the profit. It's not impossible. It can be done. To be done, I have to continue to work on the fourth pillar. That is the digitalization. The digitalization is everything in some way. I know that. Probably this picture could be used by everybody. You change the brand on the right, and it's good for other industries. In reality, it works very well for us.
I do not want to talk about everything, but just mention two things that are really changing. That is what we call the digital platform. It is a platform that we make available to service, sales, customers, obviously us. Connecting the product, making information available, but in particular, giving us the possibility to process transactions through the platform, eliminating the manual work. Leaving the possibility to people to do valuable activities. It is important. What I look at very much is the numbers. We are in the process. Half of our business is digitalized. It means that we are dealing with dealers through the platform. We have to convince also them. The best way to convince is to create value for them. Gradually, we are improving the platform. You saw the number, 85%. Look at the last.
Installation that was done in the largest market that we have in Europe. By the way, it is the second in the world after the United States. 94%. Probably the sixth is because they did a mistake. 94% of the transactions are going through the digital. This means they are not obliged. This means that it is creating value for them. We want to start to finish. You know that I cannot—there is no presentation where we cannot talk about artificial intelligence. Otherwise, we are old-fashioned. We are continuously improving. If you want, you can read it. Look at one number that I think is the most important. You know what is the challenge of having artificial intelligence while working in a company? Guess so. It is the quality of the data. Because if you have bad data coming in.
You will have even worse data coming out. 70% of the data that we are processing are clean. Probably you are saying you are looking at the 30, as usual, at the negative side. Believe me, 70% is a big number. 70% is a great number, considering the history, considering the acquisition, considering whatever we have been doing. We are ready. There are some projects that are already in place and that will make even the digital platform more intelligent. Because at the end, whatever works, including the connectivity of the product, including whatever we are going to serve, will work only if we create value for us, but also for our customers. That is the way to go with the connectivity, connecting the dots, going through the service. Good. These are the four pillars. Let's talk about—because not everything is around this one.
For instance, I'm sure you have questions. I already got this morning some questions about TOSEI. I said how we are making use of Adventis. A couple of words about TOSEI. TOSEI, we are facing a challenging market condition. Yes. Not entirely expected, but it is a business cycle. In particular, in laundry, more than food, but also food, as you say, they happen. We go down and we go up. The important thing—and we know this by facts in Japan—because in Japan, you know exactly the market share that we are not losing market share. We still have more than 50% market share in laundry and more than 50% of market share in the vacuum category that is a small portion of the Food & Beverage segment. What is also important, we are really making use of this company because.
We are making use of the unique technology that was developed in Japan, the Combo Machine. We got the award as the most innovative product in the United States. This says a lot, by the way, because it's a product that has been in the market for years in Japan. In the United States, it's been awarded as the most innovative product. We are bringing this outside Japan. We have been replacing the product we were buying with the one already done. Last time, a couple of weeks ago, it was there, and I saw the Tumble Dryer produced in Rayong that will replace the production done in Japan because we are improving margin, because they are more cost-efficient. They have better features. We are one company. We close from two offices, one. From two IT systems, one. We are working to create the base.
To have a highly profitable business because this is what is expected to be higher than our target. The other thing that I cannot miss is the sustainability. We are always pleasing ourselves with the award that we receive, and we claim to be the most sustainable company in the world. Okay, but so what? The what is that we are creating value for the customers. If I save 50% of the energy that you use to boil water, I'm sustainable, but I create value for you. If I reduce the operating cost in a laundry because I reduce water, electricity, and detergent, I'm sustainable, but I create value for you. I tell you that more and more customers are looking for these things. More and more, this is becoming a criteria to select products. We are well-positioned. Today, yes. Everywhere, no, today.
Tomorrow, absolutely, yes. It is an unstoppable trend. Again, it is not because you just be green. It is important, but in some places, it is still not the main criteria. It is because we create value for the customer. Value for a customer in this industry is money in the pocket. With this, we said we have been talking about how we are going to grow organically this company. You know that. Also, this one is probably boring you quite a bit. I tell you that we are focused on working to bring home companies that are instrumental to accelerate the growth. We are not looking for any company available in the market. I tell you, there have been situations where we dropped the possibility to participate because we were not ticking the core criteria. Profitability, accretive to our target.
Cultural fit, ability to make it working. Instrumental to reach our, or to accelerate the growth in our pillars. Here is where we are focusing more. We are focused on technology. The acquisition of Adventis last year. I told you that the more we grow in the United States and the more we grow with chains, the easier it will be to increase the profitability. By definition, we have focused activities in looking for possible acquisition in that part of the world and companies serving that kind of customers. Last but not least, also products that are in the higher part, the product with a higher margin. We are working on this one. The problem is that while I can stand in front of you and tell you that from January 1, we will start selling the cooking, in the end of Q2, beginning of.
July next year, we will start introducing to market the new laundry product. I can tell you that we are working to take down the cost. We are working to implement the digital platform. Here it is hard to tell you when this is going to happen. Hours, days, weeks, months. The only thing is that we are hardly working to look at that one. We are working. This means it is not that there are no possibilities. It is hard. It's like a wedding. Both have to say yes. At least in my world. Also a couple of words, but this will be very quick because I believe Fabio will tell more about that. It's the program that we have been launching to streamline this organization. Don't undervalue this one. It is important. This doesn't mean when you will see the bridge to the 15%.
It doesn't mean that we are giving up the volume growth, the sales growth. Not at all. I think I've been talking about growing the business until now. Right? Everything is about growing the business. Nevertheless, we learn, if it was necessary, by the way, that there are also external elements that could slow down the business development. It is safer to intervene also on the cost side, considering that we want to be leaner, more agile, more flexible. Intervene on the cost side in a way that is generating a point of EBIT. More than that. More than that. While sales is not like a wedding, but it's similar to that, I need somebody to say yes and buy my product. Here is entirely up to us. The only message I want to deliver to you is that we are progressing very well.
I'm very pleased. Because there were challenging situations. I don't know if you ever had an experience with a production facility in France. We are done. Sorry, we are not done. But it's set. It is agreed. We have to work on the detail. And the guy that is running the project, if he hears me selling details, he will be very scared. Nevertheless, we have the agreement. It is important, this one. With this said, I believe I'm at the end of this introduction because you should consider this one the introduction of the really core topics that will be the one presented by the colleagues. The industry is still evolving. It is still evolving. With different speed in the different markets. Now the United States is not really the booster. Yes, it is true. How long?
Normally, I'm always saying the United States is like a V. Going down sharply, coming back very quickly. Europe is more a large U, going down slowly, and coming up slowly. Europe is doing well. Asia is still doing well. The industry is moving. All our activities now. We've been reaching, we've been investing. As I said, it's at the top of the mountains. I'm not expecting. I tell you, we are not increasing. We will start to take down the cost of R&D. Normalize, we call it. That is more or less another point of EBIT. It will be a little bit large V if you want, but it will not be a U of years. Now we are starting to make use of the product that we have been developing during these years.
That is the beauty because this will help us to grow the business. With unique solutions that will win competition in the market. To secure that we are prepared for whatever comes, we also launch a program that is reducing the operating cost. This program will also be used to upskill our people, to help in the transformation, either digital, sales, customer care. I am really convinced that we will continue in the path that I showed you at the beginning. There are the conditions to even accelerate. Hopefully, but it is not hopefully, really making sure that we close the bridge between what we are and what we want to be. Thank you very much. Jacob, we are yours.
Thank you, Alberto. We will now open up for questions. Those of you who are online, you can also type in your questions.
We will start with the questions from the room. Please raise your hand, and we will give you a microphone, and then you can state your name and where you come from. I think the first one comes from Gustav over here.
Thanks, Gustav Hagéus with SEB. Thanks for that introduction. If I might start with what you finished off with, the R&D spend coming down. First, is that an absolute number? Is that reflecting your sales budget mainly? And secondly, I mean, one way to see it is obviously that it is positive that your margins will come up as R&D comes down. But one could also question if perhaps that money would also be useful to stay in R&D, to accelerate, and maybe you have good returns in actually keeping the level at current. How do you balance that between.
Thanks, Gustav Hagéus with SEB. Thanks for that introduction. If I might start with what you finished off with, the R&D spend coming down. First, is that an absolute number? Is that reflecting your sales budget mainly? And secondly, I mean, one way to see it is obviously that it is positive that your margins will come up as R&D comes down. But one could also question if perhaps that money would also be useful to stay in R&D, to accelerate, and maybe you have good returns in actually keeping the level at current. How do you balance that between.
Trying to accelerate returns through your own R&D versus coming down to 3.5%? Is that a magical number for you, 3.5%, or how did you end up at that number?
We wanted to, first, Fabio will talk more about the numbers, so showing you the numbers, the trend, and what is coming there. We wanted also to show the absolute number because the percentage is obviously related to the development of the top line. I'll give you an example. Despite having done things in 2020 with a drop of 25% of the sales, clearly, you have an increase of the percentages. Even if we did not spend more, we did not cut, but we did not spend more. So percentage is related to this one. 3.5% is a sort of magic number because it is what you need to keep going with a very healthy product portfolio. The innovation.
Project that we developed for laundry in particular, but also the cooking, we are talking about. The laundry, we are talking about basically 80%-90% of the laundry production. We are talking about everything. It is, I do not mean from scratch because everything is from scratch, but it is a completely new platform. Completely different. The cooking, we are talking about a large portion of our food business in Europe, food and beverage business in Europe. It is by far the largest portion. That is the reason why it is a peak, because the variety, how wide is the portfolio, and the importance of these two product categories. This does not mean that we will not continue to innovate. We will. We believe that with the number, we will have the resources to do this. Can I have a follow-up on sort of the innovation cycle then?
I assume that the laundry platform is like a decade or two decades, probably. But a few of these are, I guess, the induction line will be shorter-lived, maybe, perhaps. Where do you see sort of the payback for these innovations? Is that like a three-year, four-year cycle, or how long should we assume that you will benefit from this recent peak done in R&D? The laundry is a 30-year cycle. Now, to tell you that this platform will last for 30 years is a little bit too much, I do not know. For what we know, there are no reasons not to believe in these things. Thirty years ago, when the platform was developed, we had a platform. It was the first modular design product, a great that we did these things years ago. Then during the years, and you will see this, we had many new upgrades.
Like in the car, many times, you have the version of the new year where you work where electronics, for instance. Most of the things are in the electronic evolution. The cooking, I believe the cooking platform that we are renovating is a 20-year-old platform. The life of the product in this industry is pretty long. If you ask me, is it going to be so long also in the future? Probably the structure of the product, yes. What will be evolving quicker than in the past is the controlling side, the electronic and the digital features.
Thanks.
We have one more question over there.
Thank you. Henrik Christiansen from DNB Carnegie. A question on the customer care business. You talked about the net promoter score and you look at that as much as because that's the future of a business.
Can you talk a bit about how that has trended and also on the retention side? If you could give us some stats around what do you retain and what not, and if we can view that as an installed base or what it is really?
I was in some way expecting the moment I start talking about a net promoter score. We are not disclosing this one, but I'm convinced that sooner or later we will do it. We do not do it because it is not. The vast majority, we are not collecting the data as we want to have a truly statistical base. It is good in some countries, but to give you the data in one, two, ten countries, it does not mean so much. We are working on that. We are working to get this information. It is really important.
The good thing is that also the sales company are not perceiving this one as just, I don't know, a way to control or other things. It is, again, creating value. You know the number we are looking at in particular is the number of the detractors. The number of the detractors, because we follow up, we understand, we want to understand why you are not promoting Electrolux Professional. There are, I cannot lie on that, in every family, there is something not working. We follow up. You know what? At least my experience is that most of the cases, the detractors, they become the best promoter. You can turn them, and you turn them thanks to customer care. Thanks to showing that you care about them and you address their problems.
Thank you. Do we have any more questions?
Yes, Yohann at the back. Yeah, hi, [Yohann Eliasson at SP1]. Question, M&A is part of your strategy, obviously, and you can't say so much about what will happen going forward. You have done a number of larger acquisitions over the past few years, like Grindmaster, UB, and TOSEI. Now you're closing down the drip coffee from Grindmaster. UB had a bit of an issue starting up with you in the first year. TOSEI, you seem to have been surprised how the Japanese market developed. Are there any lessons learned from these M&A activities that you have done recently?
Yes, but Grindmaster, we knew it. We knew about that. Remember that Grindmaster, it was drip coffee, but the majority of the business was the cold beverage. Okay? The cold beverage is.
Became one of the core product lines with one of the highest margins that we have. One of the tools to enter chains, one of the best tools to enter chains in the U.S. Kratko, that is the brand used on the cold beverage product, is by far the market leader for beverage solutions. And beverage, we think the food and beverage. Nowadays, so and so, not because of the United States, but it's one of the fastest growing categories because the payback is very short. If you buy the product, and we have some of them here, I can show them to you. When they are installed in the chains, we know that they pay back in months. In months. You sell water with some sugar. Months. TOSEI. Now, before TOSEI, you said the Unified Brand. Unified Brand, we had a problem.
The lesson learned is that we were so focused on the fact that Unified Brands was much larger than Electrolux Professional. If you want to call it the two teams or the two communities, it was a reverse takeover, if you want to say so. The focus was internal-driven. Let's make sure that we merge the office, we close the office, we have one IT system, one process, one, one, one, one. We neglected the customer outside. The customer outside was questioning, what is going to happen? Are you going to kill the brand, the Electrolux Professional brand in this case? What are you going to do? Are you merging? Remember that in the same years, there was also our major competitor, Ali Group, Welbilt, doing the same things. It was pretty noisy what they were doing in terms of merge, firing reps.
The lesson learned is that when we run an acquisition, we have to make sure that the customer is not perceiving anything negatively from what we are doing internally. We have to work on our synergy development, the cost, but we have to make sure that the customer is not seeing anything of that. That is what exactly we are doing with TOSEI, because TOSEI came after that one. It was very similar in the meaning that the acquired business was much larger than the original business of Electrolux Professional. First, we had to make sure that we had the right leaders in place to run the things. Secondly, the focus was only on the customer side. We eventually delayed merge or other things. It came after roughly two years to make sure that we set the customers.
As I said, the market is what it is. We focus on the market. The reality is that, yes, some problem is unavoidable, but it is the big lesson learned about these things.
Thank you. Unfortunately, we need to end the Q&A session there. Thank you, Alberto. Thanks to you. The next presentation will be about one of our largest businesses, Food Europe. We will be especially focused on cooking. I welcome Camilla Monfeldt-Kirstein on stage. Camilla is the President of Food Europe. She has been with the company since three years back. The words are yours. Please, Camilla.
Thank you, Jacob. I'm very happy to be here today. I think it's the first time we present the food business in Europe, and I'm honored.
This is a very exciting part of the business, and I'm honored to represent the team and the business. I'm going to talk about three things. First, to give a brief introduction to our business and the market we operate in. Then I'm going to share our ambition and our strategic priorities, and also explain why we believe we are uniquely positioned to capture future profitable growth as the undisputed innovation leader in horizontal cooking. Let's start by looking at the market. The global food and beverage equipment market is large. Last year, it was estimated to be worth $32 billion. Europe represents one-third, roughly, of this market. Even though in recent years, growth in Europe has been slightly lower than in the Americas and in the Far East, Europe still represents a large and significant market. A few words on the food.
Business in Europe and our setup. BA Food Europe is part of the Food & Beverage segment of the group. We represent roughly one-third of the group revenues. Europe, you mentioned it, Alberto. Europe is our largest market. It is also the second largest market of the group. We have significant sales across Europe. Other key markets are Spain, Switzerland, France, and also the Nordics. Horizontal cooking, dishwashing, and ovens are our three largest categories. We serve customers in both the public and the private sector. Hospitals, no, sorry, hotels, restaurants, and public institutions are our main category or customer segments. In Europe, Electrolux Professional has a distinct position as the single multi-category brand, facing both specialists and multi-brand players. We have a broad portfolio. Our portfolio covers all three categories: wet, dishwashing, cold, refrigeration, and hot cooking.
If we look at competition, they typically, I mean, specialists by nature, but also multi-brands, they serve these categories by several separate brands. The fact that we have the full solution under one, the same brand, distinguishes us from the rest. Electrolux Professional is the largest brand. No, no, we're not the second largest, I wish. Second largest brand in Europe, in Food in Europe, with a very high brand recognition. We are launching a new vision for horizontal cooking, setting the stage for innovation in the years to come. Before going into our strategic priorities, let's have a look at what we want to achieve. Hours, days, a lifetime. We know the time you spend on refined flavors and chasing balance. Because cooking is more than a skill. It's the art of precision. It's technology serving creativity. Today. Tomorrow. And beyond.
A new era begins, elevating the professional kitchens to excellence. Born from experience, inspired by innovation, the Electrolux Professional modular cooking line simplifies every gesture and redefines performance to drive the rhythm of the kitchen. We own technology to boost productivity, streamline workflow, and fuel sustainable business growth. We're not just shaping products. We are reshaping life in the kitchen. Like it? Horizontal cooking is our core. That's where we are strong. That's where we have a leadership position. We not only want to defend that position, but we want to strengthen it and drive the development of our industry, reshaping life in the kitchen. We do not want to lose our multi-category edge. We want to decomplexify the business. Alberto was talking about it. Streamlining our portfolio, focusing on high-margin products. This ambition is anchored on two strategic priorities.
The first being to accelerate growth of high-margin products in key markets. The second is about reigniting our innovation journey, future-proofing the cooking offering. What have we done? What are we doing to accelerate growth of high-margin products in key markets? The two first areas, how we drive or optimize our go-to-market effectiveness and drive commercial excellence, is all about making it easy to buy and easy to sell, getting closer to the end customer and creating a pull for our brand. Here we have activities, we are working on refining or redefining our dealer network, working with the right partners, consultants, enabling us to enter the right segments. It is about shifting or strengthening and empowering our sales organization, shifting from a farmer to a hunter mindset. A lot of things, but it is all aimed to actually make it easy to buy, easy to sell.
The feedback or this process and the findings from this process feed back to how can we better serve our customers. The last area is about simplify and serve better. Here we're talking about actually streamlining our business, both the business or the commercial offering as well as operations. We are doing it just to give some examples. You were talking about whether exiting certain categories. We are rationalizing our assortment, focusing on star products, which is in actual fact another word for high-margin products with clear U.S.Ps. We are also redesigning our logistics setup to get for faster deliveries. We are optimizing our production footprint, moving production, thermaline production to optimize our margins. Some words on the relocation of thermaline. thermaline is a trusted and well-appreciated product line in the premium segment.
A few months ago, we announced that we wanted to evaluate moving the production from Switzerland to Italy. The decision has now been made, and we are in the process of moving production to Vallenoncello, where more than 90% of our production of the horizontal cooking range is already produced. This move will enable us to recover profitability, but also unlock synergies across the horizontal cooking range production. On top of that, it will free up resources for us to reinvest in go-to-market and in innovation. I will talk about our recognition of the innovation journey. Before doing that, I would like to explain why we choose to focus on horizontal cooking. Horizontal cooking is not only our core, but it is also the heart of any kitchen.
The market or this segment is large, and it has showed a solid growth trend. You see to the left that the growth rate is higher than the market in general. Within this segment, induction technology is the fastest growing technology, growing twice the speed as gas, as an example. We are, we're the largest player in horizontal cooking in Europe, both across modular and custom or made-to-measure. We have a very strong position. Horizontal cooking is also the biggest revenue contributor and has with a very high margin. That is the reason why. Our strategy is simple. We're matching our core strengths with the biggest market trends. We see a rapid shift from gas to electric and induction equipment. We mentioned twice the speed. We see customers are increasingly, I need water. Is this, it's okay? Safe? I didn't drink. You never know.
No, we see customers are increasingly prioritizing sustainability and efficiency and also adopting digital solutions. A few words to elaborate on sustainability. You mentioned it, and probably you will talk more about it for the laundry's sake. In food, sustainability is still not a very important decision-making factor. However, we see that there's a trend going on. There's a shift going on. In the northern European countries, it's increasingly being a factor in tender business, and it's just a matter of time before that behavior also reaches the southern parts of Europe. When it does, we are ready. We are ready now. You mentioned it, Alberto, that from the customer's point of view, they might not talk about sustainability, but they do talk about energy savings, and they do talk about cost-effectiveness. Just as an example, induction.
The annual energy consumption of an induction hub, if you compare it to the annual energy consumption of an electric hub, is 30% less and 40% less than a gas. We have already secured advanced induction technology expertise through the acquisition of Adventis last year. We now not only own the technology, we're not depending on external or other suppliers. We have also refocused our resources already towards cooking. I talk about both horizontal cooking and ovens, because if you look at these two together, they complete the professional kitchen. Ovens is also a segment which is growing. The development is driven by new technologies, demands for energy-efficient solutions, connectivity, and also ease-of-use appliances. By looking at them together, we can innovate and develop integrated solutions that better fits or meets the need of our customers. Last year, we also launched an internal transformation program to.
Accelerate innovation and speed up time to market. I am super, super, super excited and happy to say that that is paying off. Because already now, one year later, we have new products to launch or to bring to the market. We are launching the EXP Line, LiberoLight, and thermaline free-zone induction. Next year, we are bringing, we are launching the compact multi-functional cooker. This is a new segment to us. It is an unsaturated segment in the market, dominated by one player. We are bringing something which is unique, both in terms of the product itself. It is compact, so it satisfies the needs of the customer. Limited space. Utilizing every inch of the kitchen. An important factor, this product can be integrated into our other horizontal cooking lines.
It can be used as a standalone, but also as an integrated part of horizontal cooking, which is unique in the market. We are also working on what is to come, the next generation modular cooking, but with new features. I cannot talk too much about the long-term plans, but what I can do is give you some more flavor of the next year's innovation pipeline and how these launches will help us target margin growth in key segments. At the bottom of this slide, you see our segment coverage current and then where we aim to end up after these launches. With the LiberoLight, LiberoPro is our plug-in range, compact and flexible plug-in range. With the LiberoLight, we are launching super efficient holding and cooking solutions powered by induction.
To broaden our reach in the light-duty segments of hotels, bars, and restaurants. With EXP and thermaline free-zone induction. We are turbocharging our induction offering, really penetrating the medium and, or the mass and premium segment of, restaurants and hotels. The multi-functional cooker I already talked about, new segment, unsaturated, unique solution, big opportunities. To summarize, key takeaways. We are operating in a large and resilient market with a distinct position as the single multi-category brand. We have a leadership position both in core markets and in key categories. We have already improved, and we are working on to further strengthen our go-to-market and our commercial excellence. Making it easy to buy and easy to sell, and creating a pull for the brand. Lastly, we are strengthening our foundation. We have and we are strengthening our foundation, streamlining operations.
Stepping up the game, revamping our ambition in innovation. We have already proven that we are capable of growing profitably. I hope you see why we are uniquely positioned to secure future profitable growth. I also hope you see that we've already taken significant steps on this journey towards reshaping life in the kitchen and really cementing our position as the undisputed innovation leader in horizontal cooking. The launch of the new XP Line is a significant step on this journey. Let's end or close with a sneak peek of what is to come. We're now not just offering induction; we own it.
Thank you, Camilla. We will now open up for a very short Q&A session. If you have any questions, as before, please raise your hand or post them online. We have the first question, two questions over there. Please, Pere.
I can take the first, [Piere Jorgensen]. Camilla, could you talk a bit about the replacement cycle? Because I remember before the spin-off from the old company, there was something going on with the replacement. Then we had COVID and so on. Now you have a lot of new products. Are you coming into a positive replacement cycle with your clients, restaurants, hotels, and so on? That is my first question. My second question is, is the European market actually better than media anecdotes? Because everybody, we read everywhere that Europe is not doing very well. Are Europe doing better for you than the anecdotes we read about?
I will start with the last question. As Alberto said, Europe is very heterogenic. It is not one market. We have different situations across Europe. Anyway, we have growth opportunities. Despite that the market is in some cases.
Challenging. We believe we can still grow. We have something unique to the market. You talked about the cycle, the replacement cycle. As we're growing, we're constantly adding, we are entering new segments, new customers, new markets. It's not easy to explain with what or answer you would say yes or no. I think we're constantly filling up with new customers and hence entering new cycles. What we see is that our business, we are serving, we are both project business and unit replacement business. We are focusing a lot on the unit replacement business to boost that and be less dependent on projects, but we still want to play and win in the project business. Answer to your question.
Right, Henrik from DNB Carnegie.
A question on the launch and what we can learn from history. When you listed the company, you talked a lot SkyLine Cook and Chill. My impression on these launches is that you will address new markets as well. There is sort of, as you mentioned, a turbo boost. It is not only getting a new product out, which in itself could drive sales and mix, but also addressing new markets. Is that rightly understood? What are the differences between them?
The launches that we do already now are kind of strengthening our offering in the markets where we are in today, or segments. The multi-functional cookery is definitely opening up a new segment for us. Lessons learned, yes, there are lessons learned, even though it was before my time, but this.
kind of product that we will plan to launch next year requires a different approach, the more the hunting approach. That is why we are also working now on the commercial excellence, preparing for kind of from farmers to hunters. Also, when we plan the launch for next year, we already now started to talk a long time ago to prepare the go-to-market part of it. To your question, yes, lessons learned, maybe, and we are focused on that, securing it in the future. I actually forgot to say that because I did not talk so much about the launches, even though the film showed all the new features and functions. I am sure it is for the untrained eye, it is hard to catch, but we can have a look at the kind of the advanced. There is a prototype of the induction hub, the kind of the Adventis.
Free-zone induction, which is kind of the key out in the showrooms. For the interested among you, we can have a talk about it during the break.
Thanks. This is Gustav Hagéus with SEB. It's a hardware, multi-functional cooking system. Yes. The main competitor would be Rational's iVario, I assume. If I recall correctly, they're generating some EUR 140 million, growing double digits. What would you consider to be a success for this product line, and in what time frame do you think it's fair to start evaluating it?
I will start by saying that even if we look at Rational's number, they are still only taking a small proportion of the big market. There are huge growth opportunities also for us. I will not give you a number on kind of what we have as a target.
We have internal targets, but there are huge opportunities by launching this product.
Sure. The connectivity with the rest of your products is obviously a key feature then versus your competitor.
In the multi-functional cookery, yes.
Sure. Are there other features that you think are worth highlighting compared to your competitor that would allow you to take? Is it a cheaper product or is it a more?
We have ambitious plans to enter the market with a unique and competitive product. Also when it comes to the price. The uniqueness is, I would say, what I would highlight is that this is a product we can integrate into the cooking blocks. It can be an integrated part of the horizontal cooking lines that we have, both EXP and thermaline. Most of them, you know, we have a high install base.
We have already a foot in into that market.
If I look at the iVario development, they obviously launched a product in a less mature market than you are launching. One would assume that more kitchens are aware of this type of. Is it fair to assume that a successful launch would indicate a more rapid growth than Rational had at the time?
Yes, we could hope for that. They have opened the market for us.
Thank you.
Alberto is more bullish than me.
I think that was it. I think it's time for a coffee break. We will be back again at 10:50 A.M. That's 25 minutes from now. Thank you. See you at 10:50 A.M. again. Welcome back to Electrolux Professional Investor Day.
Next presentation will be about one of our most profitable parts of our business, our laundry business. To talk to us about this, I invite Paolo Schira on stage. Paolo has been with the company since 2006, running the laundry business, but you have also been running the food business before. Please, the stage is yours, Paolo.
Thank you. Good morning, everybody. I'm super excited to be here because there is really a lot going on in laundry, and I'm very keen to give you, convey a little bit of my passion on what's going on. In today's session, we will cover three topics. The first one is about to give you an update on the market, the global laundry professional market.
You probably are aware that a month ago, exactly when our biggest competitor got listed, and I think it's good to confront and see how we position ourselves and what we can achieve in this marketplace. Point number one. Point number two is about a very exciting initiative we have been working on for a while. It's a project, a product initiative, not yet in the market, but I'm keen to give you a sneak preview of what's coming from next year. The third topic is very, very, very fresh. I think some of you asked earlier about M&A moving forward, and soon you will receive a press release because, as of 10/27, so very little time ago, we announced the investment in a startup in Sweden. I will give you some color because it is a small business, but it is super exciting for the future.
I'm going to give you some colors and nuances on what's going to happen. You are the first one to hear about it, so feel privileged. Good. Let me move on to the first slide. Here is the picture we have from the professional laundry market. As we presented on the previous occasion, we believe the market is roughly split in thirds: one third North America, one third Europe, one third all the rest, with a big bulk in Asia. In terms of evolution of the market, on a historical level, we consider the market growing roughly 2%-3% every year. It changes by year and changes by geography. The last couple of years, objectively, North America has been growing a little bit more.
In the going trend, we believe Asia probably will grow faster because of the trends of urbanization, middle class, and so forth. That is a little bit of the perspective we have. In terms of market share and cluster of segments in the market, we believe we have been growing faster than the market for quite a few years. I will give you evidence of it in a slide or two. We believe we have a good number too. There is an American company that is bigger. I just want to put a caveat and attention point here. In the number represented in the percentages, there are only comparable numbers to ours. We act only in the out-of-home business, as Alberto was mentioning. We do not work on the consumer business.
Whereas some of our competitors, the American and the German one, are reporting also turnover in the consumer business. That is not what we do. That is the first attention point. In terms of how do we see the market in terms of clusters, there are the huge machines, the heavy duty. As Electrolux Professional Laundry, we used to be there 20+ years ago. We are not any longer there in that part of the market. Our core, our bread and butter, is the truly professional part of the business. There is an attractive additional part of the market. It is what we call semi-commercial. Still out-of-home customers, but with a product that often is derived from consumer. Historically, we were not acting in this domain, but we are growing fast there. It is an attractive part of the market.
Let's have a look at our 2024 numbers or perspective in terms of the business. What you see here are two perspectives on Electrolux Professional Laundry business. One is about the product perspective, and the other one is the geographical perspective. On the product perspective, you see we have the traditional laundry, professional laundry categories, washer and dryers, and additional products. What I want to highlight for your attention is the 20% of customer care turnover we do in laundry. Why I want to highlight it? We believe it is a strong asset we have. Consider that we believe the average of the market is around 10%-11%. We are significantly better than the average of the market. We are working to accelerate even faster. Why we are so keen is because it's giving further resilience to our business.
It is, by the way, typically in customer care across industries, there are higher margins, and it is the same for us. By growing this part of the market, by this element, we are able to grow profitably our business. The geographic split, still, we are a company with a strong footprint in Europe. It is a long history in Europe. If you were to look at the picture 10 years ago, you would have seen that Europe would have represented 80% of our business. We are rapidly expanding outside of Europe, and the growth rate we had in the U.S. and Asia has been very significant. We are becoming even more resilient from the geographical standpoint. I told you earlier, I am convinced we have been growing faster than the market. To give you evidence of it, here you have two pictures.
One on net sales and the other one on profitability or profit evolution over time. I took as a reference 2019. We were still part of another company at that time, but it was before the pandemic. Then 2024 and rolling quarter three this year. What you can see here is that in terms of compounded annual growth rate, we did very well. This number contains both organic and inorganic. Even if we were to exclude the inorganic part, the acquisition of TOSEI, we would see more than the market growth over the years. That is the first point. The other point I am very proud of, of what the team has been achieving, is about the resilience. You see, during the pandemic years, 2020 and 2021, we only reduced by 10% the turnover, and the profitability kept pretty positive.
Overall, the message I want to give you with this picture is we have now a decent number of years of track record on delivering growth and delivering profit expansion. This is our trajectory also with the new investment we want to do. We want to continue. You heard at the beginning with the introduction of Alberto that one of the customer groups we prioritize as a company is the chains. Chains, historically, is the food chains, commercial restaurant chains. In reality, also in laundry, there is a trend, a trend that has been appearing probably in the last five-ish years of multi-outlet customers. We call them also enterprise customers, so customers that are open in more than one location. Here, we talk about customers with hundreds of locations.
I have to admit that this has been a major growth for us in several geographies, among which North America and Europe. Behind the numbers you saw earlier, there is clearly a strong contribution from this chain customer of laundry. Here, we have a picture from the U.S. and Europe from some of our customers. Why these customers typically appreciate our value proposition compared to other suppliers? We believe we have a lot of assets that are palatable for these customer groups. One is about customer care. These customers are often multi-location, multinational, and we can support them everywhere. They really look at the business as a return on investment proposition. The digital offering we have is considered very palatable. Also in terms of running costs.
We can prove all the times that we can have a better return on investment than all the other competitors in the marketplace. We have a strong value proposition. Let's move closing with the first part of the presentation on the market and where we are and our trajectory. I'm very keen to give you some color on the new product platform we are launching from next year, what we've been working on already for a while. What you have here in the picture is a little bit of the last 20 years' history of Electrolux Professional Laundry platforms in the marketplace. We have more than 120 years in this market. I have to say, we are proud to say that most of the innovation you even see in the consumer industry comes from our company. Even a small thing you may see today.
In your home, you probably have a washing machine that is spinning clockwise and counterclockwise. We were the first company on the planet to introduce it in the 1960s in the professional domain, then ported down to the consumer. We shape the industry both for the professional and the consumer part of the business. What is this new product about? Sneak preview. I will not give you too many details. It will be too early. The key point of this new product is a completely new platform with a strong standardization. Fewer components. A big asset of this platform will be that it will help us to reduce the production cost, the cost of the products. It will help us to combine the different modules to offer different value proposition, different solutions.
In practical terms, we are going to be able, still expanding the margins, to serve new customer groups. As information, as of today, we believe we are the clear leader in the premium part of the market. When there is something that is high level, high return on investment, probably a bit more expensive, we are the leader, undisputed. Probably we're not the leader in what I would call the value part of the market. With this new platform, we believe we can really aggressively grow in this very sizable part of the market, still expanding the margin. That's, for me, the critical element. As everybody would expect from us, being the leader in innovation and sustainability, the products will be just amazing. The best productivity, the best sustainability, the greatest return on investment you can imagine.
Very, very excited, as you can feel from my voice. We will start end of quarter two, beginning of July next year. The idea of the program is to continue throughout 2027. We do not launch everything at the same moment. It would be also unwise from a management point of view. We start in the second half of next year. Why we decided to invest now and do this major project? There are different drivers. For sure, despite the laundry industry is a rather consolidated industry with few big players, we see pressure from competition. We want to still lead the way. Alberto and Camilla mentioned sustainability that for us is not only the good thing on the planet, but it is also for profit. People, planet, profit. We always say about sustainability.
This product will help us to drive further the bar for everybody to follow. Of course, we believe we can accelerate our growth. Laundry has been doing decently well for the last few years. We believe we can accelerate thanks to this product because of these new markets, new segments we can target. Very, very cool and exciting. To summarize what is going to happen: one completely new platform. This new platform will impact mostly two of our four factories. It will impact Sweden, Ljungby, not far from here in Stockholm, and in Thailand. For us, it is really a way to future-proof our business, our profitability, our development over time. Naturally, with every new product we do, we strongly focus on digital and connectivity. The new products will be natively connected. As of today, we already do.
Decently well on connecting appliances. We have around the globe roughly 40,000 or 40,000 + machines connected. We want to more or less cover all our installed base, the future, but also the old one we connected. Why we want to do so? The reason is very simple. Especially in the B2B environment, especially in laundry, if you have machines connected, you can reinforce your value proposition around customer care, around the new business model, digital offering to the customer, and so forth. For us, it is just the right thing to do to continue encompassing and encircling the customer in this perspective. To close up with the last flag on the new products, already as of today, we are the best in class in terms of performances. A machine from Electrolux Professional.
On average, is using 20%-30% less energy than competitors, less water, less chemicals, and so forth. It is proven by many, many customers. With the new platform, we are going to stretch the limit even further. We bring really the sustainability level to, again, either side of our closest competitors. This, for me, is the perfect hook to introduce the fresh news I was telling you about, which is about our investment in a startup. We are investing in a minority stake of a company that is called Mimbly. Mimbly is a Swedish startup. The reason why we did it is because, for us, it makes a lot of sense, a lot of strategic fit to work in the areas where this company has been working for quite a few years. They are on the third iteration of their product.
What do they do? What is their business? They have two major value propositions. They develop a box. You see a picture close to our machine in this chart. There are two elements of their value proposition. One is water recycling. They have a water reservoir, and they reuse, filter, and clean the water coming from the washing machine. Instead of what you do in a typical washing machine, that you drain in the sewage the water after a cycle, what they do is they collect the water, they filter it, they assess the quality of the water, and then, with a very intelligent way, they bring back the water in the washing machine. They do it without human intervention. You do not need to go be a scientist or whatever, because the machine is doing everything by itself.
So, you know automatically that you get the best amount of recycled water that you could imagine. The performances are impressive. They can go up to 80% of water recycling in a usage of machine. And washing machines are using a lot of water. You heard from me before. Our machine is already best in class with 20-30% less water than competitors. With the new platform, we will be even better. Adding this device, I mean, we are going to be virtually using very, very little water, which is fantastic because water is expensive, because it's good for the environment, because you do not need to heat up the water, and so forth. That is the first, I would call it the short-term opportunity with this company. The other one that I judge even more exciting is that they are pioneering advanced technology to manage microplastics.
Probably some of you are familiar, probably some less. There is a big issue on the planet that is microplastics. The washing machine is making them visible. There will be regulations between 2028 and 2030 across Europe, California, Canada, and other countries that are limiting severely the amount of microplastic a washing machine can discharge. It will become mandatory by law. Dates are not certain, but this is the trend, the feeling we have. By partnering and collaborating with this company, integrating their solution in our machines, will help us to lead the way. We believe short-term, big advantage on the water, but midterm, we have a major advantage of several years of advantage to any competitors in this kind of microplastic situation. Small acquisition, still I'm very excited. Good. That's the point. Just to conclude.
Out of this short presentation, I just want to convey a little bit or repeat the messages I said. First, the laundry industry, maybe it's not a huge industry, but it's rather consolidated. It's growing across different cycles, different turbulences. We've been doing well. I believe we are really positioned very well to capture further profitable growth. You understood that for us, everything is about sustainability. That is, yes, the planet, the people, but also the profit, because our customers are business-to-business customers. These are customers that care for their bottom line, their wallet, et cetera. I told you about these last two things. One, the new platform, very exciting, huge initiative. Many people have been working hard for long. That will help us to enter the new segments. The benefits will start coming from the second half of next year.
There is still a little bit of time. This acquisition, sorry, this investment in this startup company, is exciting. It is small in magnitude, but in terms of potential and future fit, it is very attractive. That is my summary.
Thank you, Paolo. We have a few minutes for questions to Paolo. Please raise your hand or put them online, please. Gustav.
Thanks for the presentation. My question is more on the organization. Earlier today, we heard that you're moving production to Switzerland and you're trying to refocus your staff to be more aligned with the current environment. I'm thinking about Ljungby as a strategic fit in where this laundry market seemingly is heading towards more digitization, more front end, more chains moving in. Is that where you want to invest personnel going forward, or would it make sense over time to perhaps move some of that personnel to, say, more dense areas where it may be easier to find digital competence and so forth?
Very valid question. Probably I'll start in an adjacent point, Gustav, that is. For us, Ljungby is a major manufacturing site. Being Sweden, not the lowest cost country, for us to remain competitive as we are, we keep investing in automation. The reason why we can be very competitive out of Sweden is, I believe, it is probably the most advanced factory in the industry, what we have in Ljungby. The manufacturing part, I believe we are really in a good place there. We can afford also having a big business in Europe so close to the final market. What you highlighted is, in terms of future competencies, unfolding a pathway where the future is going more to electronic software and digital. Do we want to invest in Ljungby? The answer is probably not. We initiated already last year.
A major shift and focus of resources in lower cost countries. We have an innovation hub and R&D hub in India. We are using these resources because, first, it is easier to pull the right talents, and then it is easier also to deploy faster the solution. This is one element. The other element is, probably in the past, we have been very conservative in our approach to develop everything in-house. I think the world today is moving much faster in many directions. Defining strategic alliances to take also this acquisition with this startup, I think, is towards this direction. For us to be more agile, we need to own the core competencies, own the last mile with the customer, but then we can use flexibly different partners to develop stuff. I believe.
The future looks pretty positive in this approach because we are not any longer looking only on a small domain, in a small city in Sweden.
If I can ask one more question, it's with this apparent change, especially in the U.S., from mom-and-pop shops to enterprises rolling out, it appears as if financing will become a greater need for your customers or a key selling point. On the other hand, maybe opening up for more asset-light recurring revenues from the digitization. Where do you say, do you expect to be able to have to offer more financing or become more of a bank to your customers or your dealers to really take part of this transition?
Very good question. Financing is an instrumental element of a value proposition for a specific segment. It is the laundromats. If you take the U.S., if you take Asia, some countries in Europe, typically customers do not buy a laundromat at a coin-op shop, but they go, they invest their time, small or big, and they look for getting a finance business, and then they calculate their cash on cash and all the financial returns. The way we have been doing it so far, and has been rather successful, is we work well with external parties to provide the, to remain asset lean, if you wish, but then to have companies integrated seamlessly with ourselves to provide the financing component of the value proposition. In the U.S., it is done by our major distributor and a couple of banks.
We have another major part of our model that is on rental in Germany, where we do it with a specific bank that is integrated with our operation. So far, I'm not saying, Gustav, that down the line in 10 years, we should not review our policy, but right now, I think with this seamless integration with third parties, we are able to accomplish the finance value proposition without burdening our balance sheet with too much assets. We are happy about the lean balance sheet that is giving us strength for doing many things. I don't know if I've been clear in my.
Sure. Thanks.
Any other questions from the room? No one online either. Thank you, Paolo, for your presentation. Next on stage is Fabio Zarpellon, CFO, that will walk us through the numbers. Please, Fabio.
Good morning to everybody. Very happy to be here with you today. During my session today, I'm going to cover three topics. First, I will give you an update on where we are in our journey to deliver the financial targets. I'm going to give you some light trends for 2026 tomorrow. Then I will give you an update about our bridge to reach an important goal that is the 15% EBITDA margin. Let me start with our financial goals. Financial goals are confirmed. It's about profitably growing this business with a business model that is asset-light, leveraging, and keeping a balance sheet with a low leverage, and overall with a combination of profitable growth and asset-light business model, being able to deliver consistent dividend to our shareholders. Where are we in this journey? We got listed in 2020, the year of COVID, if you remember.
Our sales dropped over 20%. This company in 2020 was still able to deliver solid EBITDA and cash flow. Since the COVID time, you see our development. We continue both organically catching up on what we lost in 2020, and then with acquisition, being able to continue the journey to profitable growth of this business. On a rolling 12-month base, we see that we are already at 12% EBITDA margin. This, I would say, is a considerable achievement, considering particularly the headwinds we have faced this year, both about currency and tariffs that I am going to touch in a while. The journey was delivered in food and beverage and laundry. Here are our performances in food and beverage. First, 2020, food and beverage was a business that suffered the most. We declined sales close to 30%.
You see that in the following years, we have been able to swiftly catch up in terms of sales and in terms of profitability. Now we are running above 10% EBITDA margin. Here in the picture, we see somehow a slowdown in terms of profitability, a slight slowdown. This is mainly related to the fact that we are investing more than the year before in bringing new innovation in the market. Camilla, a few minutes ago, explained to us the big undertaking that we are taking to bring a new cooking solution, high-profit cooking solution, into the market. This combined, I would say, to a mixdown we are facing in the food and beverage category is somehow keeping the development of the expansion of the margin somehow on hold. This category is called, you remember earlier we were mentioning about Grindmaster acquisition.
With Grindmaster, we bring on board a very, very profitable cold category. Somehow this year's performance related to the development of the U.S. market in beverage is somehow slowing down. Paolo talked, and I do not believe I need to repeat more about the journey of laundry. It is impressive. Here we talk about a business above 17%. Being able this year to compensate and mitigate the impact from tariff, currency, and still expanding the margin. Behind this, whilst in food and beverage, I was talking about a mixing down due to the decrease of sales of cold beverage, here in laundry, we are enjoying a significant mixing up because within the product category, the high-spin, high-profit machines are growing faster than the rest of the range. I was mentioning about tariffs. Wow. Tariffs have been a big headache for us this year.
We have been able to mitigate most of the impact, but I have to say it has not been an easy journey for us. Tariffs are covering roughly 12%-13% of our business in the United States. Overall, the business in the United States is 25% of the group turnover. Less than half is subject to tariffs. We are serving the market via two channels: for laundry via an importer, in food and beverage with our sales company in the United States. To give you an order of magnitude, either paid directly by our sales company or by our importer, on a yearly basis, the impact of the tariffs based on current conditions is in the area of SEK 130 million per year. More than SEK 10 million per month. Big, big impact.
As we have announced also in the earlier call, thanks to activities that we have performed to reduce our sourcing purchasing cost, thanks to price increase that we have been putting in place in the market, we have been able this year to, I would say, compensate the majority of it. Did we compensate it all? No. Because in quarter three, we have mentioned that we have still a gap between the tariffs that the chain pays and what we recover in price in the area of SEK 10 million, and so far it's SEK 25 million. With the price increase that we have announced already in the U.S. market for 2026, the additional cost of tariffs will be fully compensated. The second important piece that affected our profitability is currency. We are a company listed in the Nasdaq Stockholm market. We are a Swedish company.
We report in SEK, and SEK strengthens against the other currencies. To give an order of magnitude, we are really a global company. 95% of our sales are outside Sweden. We report in U.S. dollar, in euro, GBPound, and so on. SEK strengthening has reduced our top line by roughly 3% and the bottom line equivalent. When I look into the currency translation effect, it does impact top and bottom line value, but not the margin. Currency transaction, in fact, has really affected our performance. On a year-to-date base, it represents roughly SEK 60 million or roughly 0.6% on total sales. An example of currency transaction is, I go back to our U.S. business. We are invoicing in U.S. dollars out of Sweden. Last year, $100 was SEK 110,000. This year is 10% less. This is, I would say, the major impact. Two important pieces.
Here you see in the chart on your right. If I look at the two years in comparable term, same currency, and neutralizing the currency transaction effect, you see that we have a business that is already at 12.5% margin. Here is good news because with the price increase that we are putting in place in the U.S. market and in the other market, we are counting to fully compensate also the currency effect in 2026. This morning, I believe you heard a lot about product innovation. Product innovation is a big undertaking from an R&D perspective, but also is an undertaking from a capital expenditure perspective. Historically, this group has been managing the CapEx in the area of below 2% of sales. We had a peak back in 2020-2021 because we did the investment in the factory in Thailand.
You see we are trending towards the 3%. This value will remain, also during 2026, but it is not expected to materially affect our cash flow capabilities. From 2018 onwards, I expect it will return to what is a normal historical level. A few words about our balance sheet and the way we manage it. As I mentioned, this is an asset-light business model in which we are operating. Not only is it asset-light, but you see we continue to improve it. Also in this area, I would just like to bring to your attention, we talk about digitalization on the product. We talk about digitalization in relation to the customer, in relation with the customer in terms of product connectivity. Digitalization is also in our processes.
Here I would like to bring to your attention an area that we have been digitalized during last year and this year. That is the area of credit collection, where we have been standardized and automatized the process, introducing a tool where all the transaction manual activity that were done before by manual transaction of the people to a digitalized relation. These have brought productivity, improvement, and faster collection process. This is a picture of our cash flow over the year. I would say that is a remarkable picture showing the capabilities of this group to generate profit and transform the profit into cash. Also in 2020, the year of really the COVID, cash flow generation has been even stronger than the EBITDA generation. Stronger cash flow means ability to repay debt. If I take the last couple of years, we have been investing.
A couple of billion SEK, mainly the acquisition of TOSEI, but also for Adventis. You see the speed that we had in reducing the debt. A company with a solid balance sheet, a ratio net debt on EBITDA around 1.2 times, and a swift repayment of the debt. I would say that when I look also into the future, the commitment to repay the debt, I would say we have a pretty sound debt maturity profile that we can manage relatively easily. When it comes to opportunity to grow organically and via acquisition, we have already established good tools to make it happen. We have just renewed the revolving credit facility for EUR 240 million, and we have tools to access the capital market for over SEK 5 billion. We are well equipped to fund the organic and the organic growth of this group.
Last but not least. You see that since the listing, we have been respecting fully our policy for what and ambition for what concerns dividend distribution that have been not only consistent with the policy, but also growing year over year. Now I have talked a lot about the past. This time I start talking about the future. The future starts from next year. How do I look into 2026? First, inflationary items are expected somehow to stay. Expectation is that they stay, but at a lower, let me say, weight compared to the historical path, both for what concerns salary and other service costs. We should see a positive contribution from direct material. I am saying should, but I could say we will see because we have been somehow already locking, I would say, half of the purchasing that we are going to do next year.
Thanks to the restructuring program that we announced, we will see, before inflationary items and salary increase, a reduction of operating cost, both in terms of absolute term and in terms of percentage of sales. Within the operational cost, let me spend a few words about our R&D cost. First, starting mainly last year, we have been increasing our R&D cost on sales. Last year is the year when we started the major investment in laundry. We have a level of R&D cost on sales in the area of SEK 550 million. This year, we are increasing that amount. We are increasing that investment. We will end up the year in the area of SEK 580 million, roughly 4.6%-4.7% in terms of weight on the sales.
The expectation is that towards the end of next year, the majority of our effort to bring both the laundry and the cooking new product to the market will somehow end up in terms of peaks. I expect that we will enter more a normalized level with an R&D cost value below SEK 500 million in the area roughly one percentage point below to where we are this year. That represents a peak in terms of effort from our organization. The second part that I wanted to give you an update is about the restructuring program that we have launched. It is a large undertaking from our organization. It is a program that is going to affect roughly 350 people in our group. The net in terms of the crews of people will be lower because we are going to.
Re-add people where we are going to move the production on the existing site, and we will add new resources, as I've mentioned, in particular on the front-end resources. The total effort of this plan is over SEK 200 million that we have booked as item affecting comparability in September. 7% of this effort is in food and beverage. 30% is in laundry. Happy to confirm that execution is moving according to plan. We have already signed an agreement with several people to leave the organization. The two large, let me say, structural change in terms of footprint and production setup that is about the production in Switzerland and the production in France for what concerns the high productivity cooking and for coffee have been finalized, meaning we have had the agreement with the workers' representative, the local government authorities. Now we can move into the execution phase.
Large contribution and program moving according to plan. This is important because, as you see from the slides, the program will start to deliver material cost saving already in 2026, and more will come in 2027. Now I believe it's time to give you an update where we are and how we are going to deliver the 15%. What is different compared to the past? First, our starting point is stronger. We are now running a business at 12% EBITDA margin. What is different to the past is that you see from the chart that more than half of the gap that now is three points will come from cost reduction initiative, the restructuring program that I mentioned, and a normalized level of R&D spending on sales. We are somehow risking, if I can call it in that way, the gap to 15%.
This is one part. The other important part is that volumes will be still important, but I believe you heard this morning that we are bringing to the market really distinctive innovation in food and in laundry in high-margin product categories. Last but not least, when it comes to pricing, we expect to be able to fully compensate with price as we have done and we have been proving the last year's tariffs, currency, and inflationary items. Let me say, more solid, more structured, and more ready to execute plan. Lastly, my conclusion. When I was looking to these slides, let me say I was personally impressed about our journey. If I think about 2018, I was here in Sweden, started working to prepare this group, or this at the time was a division of Electrolux, to become an independent group.
During that period, we created the structure to be listed. We did not have communication, legal, group accounting. We did not have our own legal entities in the country. We have been investing a lot to make this working as an independent group, meaning also cost we have to face. To be independent means more cost than before. We entered into 2020. COVID came. ± 20% in sales. You see that despite all this, we have been having an impressive development. More than 30% more in sales, more than 30% more in profit. Generating cash flow. A balance sheet that is, I would say, super, super solid. I would say, in my perspective, a remarkable development. When I look into 2026, I look at the near future because 2026 is near future, is tomorrow for me, with positive eyes and confidence.
Because it is coming from two important pillars. We are going to get the benefit of a large cost reduction program. We are bringing to the market high-margin distinguished product categories. Very confident looking into tomorrow. Thank you very much for your attention.
Thank you, Fabio. We have a few minutes for questions. As always, please raise your hand. Also online, you can put questions, and you can also ask questions to the other presenters. We have time for that. Please, Henrik.
Yeah, one question there on the bridge. What sort of market growth assumptions do you have in that number for organic growth? What part is held by the new product launches?
I would say for the market assumptions, somehow are in line with what was presented at the beginning by our colleagues.
Short term, we expect somehow to be softer, and the majority of the growth has to come from the new product that we are bringing to the market. This is somehow the rationale why we have been working more on the cost side. I mean, we are living in an environment. Let's look at our history in the last five years. It is more or less impossible to predict the market. 2020 was COVID. 2021 and 2022, we have the disruption of the supply chain. Difficult. What we can do in the existing market is create the condition to deliver, I would say, not regardless, also in difficult market conditions. Cost and new product, new distinctly high-margin product categories.
Thank you. The second question on short term for next year. Very excited to see the product launches and the result of that.
From a margin point of view, obviously, new products, higher profitability, better growth, we've heard. Will it be another sort of marketing push, which will add to costs? Also, of course, you have to depreciate the assets and amortize the R&D.
Yes.
What's the effect of that?
Two things. Together with the product investment, we are also investing in front-end resources to bring the product to the market. I'll mention that. Also to present, to explain the new feature, we will need different capabilities. There will be also the shuffle, not only in terms of quantity, but profile of the sales organization. Yes, we are investing also in front-end resources. Second, and it is included into this number, next year, we are going to have additional depreciation, but they are already embedded here.
Just to clarify that, will it be net positive with these new product launches? Absolutely, yes. Thank you. Otherwise, we would really make the wrong decision.
Gustav, over here.
Thanks. This is Gustav, I guess, with SEB. On the balance sheet, 1.2 times net at EBITDA, Q4. As we said on conference call, typically a strong quarter. You have a target on the upside, but not on the downside. Is there anywhere where you consider yourself overcapitalized and would consider to return some of that through buybacks or extra dividends?
Okay. First, we have a strong balance sheet. We are generating cash flow. The mandate we got from the board and the shareholder is to grow this business. And we really count that with the cash generating, we will be able to find opportunity to further expand this business. At the moment, there is no in agenda.
Extra dividend or other form of distributing, but our focus and our goal is to continue to invest in this business. On the M&A targets, the scope that you have at the moment, so the leads you have, how big are they? Is there a scenario where you would have to go to leverage above 2.5 to acquire some of these potential assets? Let me say, first, we do not disclose our pipeline, of course, but I will say that we are well equipped, and I was mentioning earlier about our funding capacity, to finance even more than the threshold is saying. We have also, by policy, with, of course, a board approval, that we can temporarily go beyond the 2.5 times, provided that we have a clear path to the leverage below that level.
But also in terms of funding capacity, you see earlier I was mentioning close to SEK 6 billion funding capacity in terms of that capital market. I would say we are equipped to deliver on it. We need, as Alberto was mentioning earlier, to get married with more and larger opportunities together.
Thank you.
Any other questions from the room? None? I think I would say thank you to Fabio, and I will welcome Alberto back on stage to summarize the day.
Thank you, Jacob, and okay, thanks to all of you for having been here, for listening. Hopefully, I got the target or the ambition that I had at the beginning when I said I would love to have you leaving this room with a clear picture of.
What we are doing, how we are performing, and in particular, how we are transforming this company to bring it to the level and the situation where I believe we deserve. We have been talking about this, I think, ending up with the numbers. We showed you that first, yes, we have been investing. Now the investments are getting to a stage where we can start bringing to market the new product. Whatever we bring to market, thanks for the question, whoever asked, if the net will be positive. We do. For next year. In the year to come. We do not even start a project if with the new product, we are not improving the margin. It is the basic. The other thing that I think is important, and I am sure we deliver also to you, is that it is not just a matter of replacing.
This is an industry. If you look at the kitchen, there is everything inside of a kitchen, right? Nevertheless, there are some, we call it unsaturated spots. One very famous is the Combi Oven. We know that Combi Oven is a faster growing. Why? It's not in Europe, but in the U.S., in Asia. Now we are bringing to market other products that are present. This means I can sell this product not only to replace an old one, not only in a new project that is opening up, but I can also sell this product in existing installation. I can address a customer that today is not buying those products. It's opening up, it's enlarging the scope and the target of our market. I think it's important, this. The other comment I want to make is.
Let's be clear also about the program that we launch in September. This does not mean that the focus is not on growing business. Our focus, as Fabio said, is to grow business organically first, accelerating it with acquisitions. Considering the environment, considering everything, and also considering that there is a clear shift in competences that are required in service and in sales, in administration and back office, we need to upgrade our teams. It is important. If you look at the net, in September, when we published it, we also disclosed the number of people affected by this program. When we talk about people, we talk about people. You see that the net is less than the total number of people affected. Why? There is a competence shift that is going on inside of this organization.
With all these things together, I think we are really building a much more solid, not because it was not before, please do not get me wrong, but I think we are solidifying the activities that are giving us the possibility to continue in the profitable growth, in some way accelerating this profitable growth. This is the reason why I still believe that this is the company where I spent all my professional life. I do not tell you the years, it is better not to talk about that. It is a company that I love. It is a company that is in a beautiful industry. It is a company that is stronger, that has been changing, and I can say so because of the years that I spend in this company, changed completely the profile. Being global.
Being global, having a factory facility in China, in Japan, in Thailand, in Europe, in the U.S., believe it or not, is important. Because if you remember the trends, we have been talking about globalization of our customer, but nationalization or regionalization of many rules, imposing barriers. It is a company that has all the requisites to deliver against the target that we have. You know, the main thing that is not on the paper here, but I really think that we deliver to you, is that there are the human resources and enthusiasm. I think you had the possibility to see Camilla on stage, Paolo on stage, Fabio, who is even passionate about numbers. You saw these things, and that is, trust me, what you will get talking to whoever is inside of this organization.
I think this is the base, and it is the strong driver that will bring us to reach the target that we have in our profitable growth path. Thank you very much, really, for being here the whole day. I believe if there are other questions that you want to ask, we are here. Otherwise, we can get them outside, right?
Yes. Thank you, Alberto. That concludes the program here on stage today. Thank you to all of you who are here, and also thank you to our presenters. Thank you also to those of you who have viewed us online. A recorded version of this day will be uploaded on our website later today. Thank you.