Earnings Call: Q2 2021

Jul 22, 2021

Good morning, and welcome to Electrolux Professional Q2 Results Presentation. My name is Jacob Proube, Head of Investor Relations. With me I have Alberto Sonata, CEO of Electrolux Professional and Fabio Sapolone, CFO. We'll start the presentation with Alberto. Please go ahead, Alberto. Thank you, Jakob, and good morning to everybody. To comment the Q2, I would start from the industry, picture about the industry. And Clearly, we can see that the industry had a recovery. The recovery has already started in March And accelerated during the quarter. The recovery is driven by the lifting of the restrictions and the reopening of the operation of our customers. Mainly, the recovery was seen in North America. We have if you remember, the coverage already started in Q1 in North America. And during the quarter, Mainly towards the 2nd part of the quarter, also in Europe, with an acceleration that was higher than expected. The business not all businesses are up and running. We still have some Segments, customer segments such as, for instance, the Business Travelers, Conventions, My exhibition is kind of customers that are still suffering, but we have to say that all the other segments are Moving really well. It is mainly replacement business, even if we can see that also the project business, The complete renovation of the operations of our customer are coming up and are under evaluation. If this is the industry, Elatro's professional captured the opportunity offered by the growth or the recovery of the industry, Growing sales. We developed sales compared to last year. We have to say that the Q2 of 2020 was That quarter, I remember 1, if not the worst, for sure one of the worst of the history. So very impacted by the pandemic. While 2021, the second quarter, we developed sales Mainly, again, in Europe and North America because of the recovery of the industry. Still not at the level of 2019. We have some countries and some businesses, for instance, the laundry in the Nordic That are very close to the 2019 level. But still in general, our sales are not on the 2019 level. Even if we have to say that the order intake, so the collection of the orders and the order stock, so the order that we have in house At the end of the month of June are higher than 2019. The third point is that thanks to this volume development also our profitability is back over 10%. So we are again over 10% with a cash conversion more than 100%. If now we go into the geographies, I think I already introduced the fact that the sales was particularly strong in Europe and in North America. Again, if I look at the comparison with the same quarter of last year, it's very strong in South Europe, but also because South Europe was the most affected in 2020 By the pandemic, by the restriction imposed by the different countries. The same applied to North America, where the percentage is Very high, both in Laundry and in the Food and Beverage. But in the Laundry, last year, for instance, we had The distributor in North America that was destocking during the Q2 and as a consequence, the comparison It's not the fair one. The growth is lower than in North America and Europe, in the Asia Pac region, JAPAC and Middle East region, because that is the area that started earlier, the recovery already during the 2nd part of 2020. And now in some ways, suffering. A country like Japan, for instance, we all read what is happening with the Olympic Games, It's suffering, and Japan for us is an important market. China is doing extremely good. It's the market that It's not the most the market that is developing faster, but surely is doing very well in the A good comment about the business development in all the region in this case is also is that also customer care. So All our business that is coming after having sold and delivered the product to our customers is growing At this stage and same level of the product, Customer Care was suffering all along the period, all along 2020 and during the 1st part of this year Because you remember, we were not allowed to enter the site of our customers. Now with the reopening, with the restart of the business, with the need to restart The product also the Customer Care business developed and is back to a trajectory that is very positive. Couple of words about the 2 different segments, starting from the Food and Beverage. Food and Beverage was the one Suffering more during the pandemic. Also, the recovery is more positive, obviously, For what concern these segments. Good development of the sales across all regions, I would say, In particular, again, the South European Europe in general and South European in particular because they've been the ones More affected than last year. Also in Food and Beverage, we have a situation where we are collecting orders And we have we are sitting on another stock at the end of June that is on the same level of 2019. If we go to laundry, laundry, in this case, the development of the sales is more softer. We have to consider that we always said during the bad and good time that the laundry business is a good business That is developing, that is less impacted by what happened during the pandemic. The good thing to show the laundry business, and it's nice to see also in this chart about the profitability, you see that All along the period that we have been always keeping the laundry business in a double digit area. So it is a highly profitable business That is developing nicely. With this said, I would let Fabio comment the financials. Thank you, Alberto, and good morning to everybody. As anticipated by Alberto, EBITDA in the quarter was 10.1 Food and Beverage with the recoveries of sales show a continued recovery of profitability that was 9% in the quarter. And as Alberto just mentioned, Laundry confirmed the good and stable EBITDA margin ranging around 16%. When it comes to the group common cost, we have no material change year over year. In absolute term, operating income increased by roughly EUR 200,000,000 in the quarter. The main contributor was increased sales and production volume, but also price as well as The recovery of the high margin customer cat business that Alberto just mentioned were the main contributor for this EUR 200,000,000 While reading through the P and L, we see a significant increase of the Gross margin was 5.5 percentage point higher than quarter 2 last year. It's now running, Let me call it at a more normalized level. The improvement in gross margin was mainly driven by higher sales and production volume, But also happy to report that we have a significant increase in the productivity across our Plans in food, in beverage and in laundry. When it comes to the raw material and Development as well as transportation cost. We have had no material Impact for what concern quarter 2 profitability. Nevertheless, as we anticipated during last call, We expect an impact from increase of EBITDA in the 2nd part of the year. Because of this, we have already implemented an additional price increase For orders to be received from 1st July, price increase that we expect to fully compensate The direct material and the transportation cost increase. Few words on the operating cost, both in gross margin as well as SG and A. Cost increase compared to the low level we had In quarter 2 last year, where most of the activity were put on hold and this increase It's a deliberate decision to support the restart of activities. Overall, and this is what is Matter to secure productivity in our organization, the weight operating cost on sales decreased. Few words on the balance sheet. At the end of June, Operating working capital in value was roughly 10% below June last year at the same currency despite 38% higher growth in term of sales. When it comes to the operating working capital on sales, we are now running at 17.4%. I would say quite An improvement compared to the peak we had in September last year when operating working capital and sales were reaching 20%. Main improvement came from inventory management, but also happy to report that One of the things that was the increase of past due that we had during the pandemic The period in 2020 now is normalized. I will say moving towards the pre COVID situation. As you see in the graph, now we are running operating working capital back at the level we had in 2019. When it comes to the financial position, the financial position has been further Strengthened in the quarter. Now we are running the business with a net debt level that is just above EUR 400,000,000 And it has been reduced by 80%, a 0, compared to the date of listing. Our group At liquid fund available for EUR 750,000,000 we have a revolving credit facility available For EUR 175,000,000 confirming that we are well equipped to support The business development of this group going forward. Happy also to report that current level on net debt on EBITDA He's at 0.5. Few words on the operating cash flow. As Alberto anticipated, We delivered good cash flow in the quarter, EUR 223,000,000 was the amount with over 100% cash conversion on EBITDA. No material change on operating working capital. CapEx For the quarter was around EUR 20,000,000 roughly 1 third related to the competition of the Thai new plant. Going forward, we expect, as we anticipated also in the previous call, that CapEx on sales We'll be in line with historical level around 2% of sales. So my conclusion, overall, good quarter. We delivered double digit profitability, good cash flow generation, and we delivered on this whilst continuing to invest For the future development of this group. And with that, back to you, Alberto. Thank you, Fabio. And I'd like to reconnect to the last words of Fabio, Meaning the investments we are doing to grow the business, to organically grow the business. During the quarter, we introduced new product. I mentioned the 2 ones that are in the food and beverage area and that are significant. The first one is what we call LiberoPro is a new product. It's perfectly addressing the need of the customer today, where, For instance, in the hotel, in the breakfast area, you cannot have anymore the buffet area where people around are selecting the food by themselves, But they have served and this can be done in with a lot of freedom around the swimming pool during The hospital, in the hotels, in any kind of area. It's a good product, it's a great product and in particular, it's representing also What we mean and what we do when we develop new product, the cooking solution inside of this product, they have up to 90 percent energy efficiency. If you think traditional burners, they have a 50%. So this means that we can generate a significant savings In terms of energy consumption, in terms of polluting and all these things that are around the sustainability. So great product, and we are expecting a lot The second one is something that we have been already commenting During past quarters, but after 2 years, after the introduction of the new line of combi oven and blast chiller, We are relaunching the 2 lines with slightly changed aesthetics, but in particular, working On the IoT functionalities, whatever is the electronics. So we added solutions that are Allowing this product to be connected to provide additional features to the customers, Both are the ones that are using remotely or the ones that are using the product on the site. So Also in this case, important product that will surely help us to improve the margin, to improve the business and to capture the opportunity offered By the recovery of the market. Also, Fabio mentioned the investments to complete the new factory in Thailand. I think this is a subject that we have been mentioning all along the year. June 9 is the day when we Completed the move. We completed the setup. We had the official opening. Now the factory is up and running. He's already delivering good results during the year when things will be stabilized. We will surely talk more about this one also to show the improvement that we are getting. And we have to remember that this State of the art facility that we've been building in Dayang is not only providing efficiency because we merged 2 factories into 1, But it's also a space where we invested for future development because we know that the environment is very competitive, The infrastructure is very competitive, and we can get benefit from this one. A couple of words also on something Additionally, that we have been doing within the food and beverage segments, selecting some food product and some beverage product, Coffee product. We also recognize that in addition to develop the business through the Alaplast Professional channel, so Having this product part of the package that the full solution that we are able to offer to our customer, There is the possibility to generate a lot of business addressing different segments from the one that are traditionally served Through by our dealers, by our partners. To do this, we created Dedicated group of people, dedicated division, in this case, with integrated functions That is in charge to further accelerate the business of this product. Again, We are talking about specific product in the Food and in the Beverages segment. So before going to the summary and the conclusion, let me remind you that September 15, We are going to organize an Investor Update Day. It will be done in Ljungbi, Sweden, where we have our laundry facility, the idea about this event is To give you the possibility to better understand this laundry business that, as I said also earlier, It's a nice business, it's a very high margin business, it's a resilient business And that didn't decline so much during the pandemic and could drive also the recovery during these days. So please register to this event. I'm really looking for finally meeting in person with you in Jumbi in Sweden On September 15. Summary of the quarter. I would summarize what happened in Q2 around 4 5 points. The first one, the industry is recovering. Not back to 2019 level, but when we discuss about How fast the business is recovering? We have been always referring to a fork between an optimistic view And a more pessimistic one. Optimistic view showing a recovery beginning of 2022, The more pessimistic towards the end of 2023. I would say that the speed and the sign of recovery are Positive. So probably, we are trending that towards the most Misty Kwan, we don't have news about this kind of research, but surely the sign of recovery and the acceleration that we During the month of June beginning of July are in this direction. 2nd point, 1st, in June, we're up, still behind the 2019, but with a good and positive Collection of order, what is called order intake and a good order stock, so order that are in house that we are going to deliver during the coming 3rd point, with the growth of the volume, also our profitability Significantly increased. This is a business where the volume are playing an important and significant role To generate profits, so our profitability is back on double digit. Laundry, you saw Very positive, but also Food and Beverage is in the right territory. 4th point Is that as we did during the pandemic, we still continue to invest. We invest because new products are the future of, I believe every company, but in particular, our company. We bring innovation to the market, innovation that are making the life of our customer easier, more profitable and truly sustainable every day. This is what we do and what we think every day we wake up and all the products that we are bringing to market I'm representing this statement. Last, There is optimism clearly because of the industry, because of our of the development of our sales, The order that we are receiving and the order that we have in house, but we have also to be realistic that there are Still some clouds, let me say, up in the sky. So there are some headwinds. The COVID situation is not clear yet. Yes, we see the lights at the end of the tunnel, but I cannot say that we are out of the tunnel yet. The raw material, Fabio mentioned that one. The dish of the material is not just the price that is Increasing, but it's also the scarcity. So and the same apply The logistic transportation containers where there is scarcity of containers and the price is up. I have to say that we put in place all actions to mitigate these headwinds. Thanks to the great team efforts. We never stop our factories. We have been able to manage the logistic flow to make sure that components were arriving In time to produce what was needed and requested by customers, price, yes, are up, but As Fabio said, there's no significant impact expected in Q2, also because we proactively Brought to market a price increase that will compensate the raw material price increase. So With this said, Jakob, back to you and opening up for questions. Yes, we open for questions. So please, operator, go ahead. Thank The first question comes from the line of Matthias Holmbe from DNB. Please go ahead. Your line is open. Thank you and thanks for the time. A couple of questions, if I may. First of all, I was just wondering if you could elaborate a bit On the comments you made on the sort of current run rate level versus 2019, which seem to have been closing versus the 15% lower level that you had in Q2 as a whole. Is it reasonable to assume that it's going to Be able to catch up to 2019 levels anytime soon, say within the next quarter? Or is that too optimistic? That's my first question. Okay. So the net sales are still below 2019. In the quarter, they were 15% below IT. So the gap is still significant compared to 2019. During the quarter, as I said, that the order intake was higher than the one we had in 2019, And we closed the quarter, so at the end of June with the order in house, what we call order stock higher than what it was in 2019. The point is that we have to say that this number could be Inflated because of two things. The first one, we announced price increase because we announced the price increase end of May, beginning of June. So typically, when you do it, you have a peak of the demand clearly of customers that are looking to book Orders with the old price instead of getting the new one. Secondly, there is also an effect that is driven by the scarcity It's something that you are reading on the papers. So there are customers that are trying to, Okay. Get the product ahead, order the product, book the product because they are afraid not to get them in the future. So I'm not obviously answering directly to your question, but there are surely positive signs, optimism is there. But there are also elements that are still creating some uncertainty on what is coming in the quarter and in the second part of the year. That's clear. Thank you. My second question would be on the price increases that you've announced. Given that you're effective as of 1st July, I'm just wondering what the impact could be On the margin in the near term, given that the orders in the order book is not affected by these price increases, so Is it reasonable to assume a shorter term margin pressure from this? You are perfectly right in the meaning that the impact of price increase will be mainly on the second on the Q4 more than on Q3. So again, this is a business where we yes, it is true that These days, we have the replacement. So if you place an order today for a single product and you wanted to have tomorrow morning, You pay already this product with a new price. But as I said, we have a pretty large order stock. So booked orders That are typically booked with the previous price and this is what is covering a significant portion of Q3. Have also to consider that in Q3, you have the summer breaks in the big regions in Europe and Nordic are basically Close on these days, the Southern European countries will not operate during The month of August or some weeks at the beginning of the month of August. So it is a quarter, the Q3, yes, Quite particularly, typically historically, so the seasonality is what it is. So I'm expecting that the real impact of the price increase will be On Q4 more than on Q3. Do also consider that in Q2, we still have a positive impact From material price, so we are because we locked the price already last year. And as a consequence, the real need is towards the end of the year. Perfect. And finally, if I may, I think that you've said earlier that we should expect Slightly higher capital expenditure this year compared to earlier years due to the investment in the plant in Thailand, but it seems like the run rate In the first half, it's below historical level. So any help here would be great. Yes, I would say Fabio probably you can comment here. Yes. And this is not by chance in the sense that We set priorities. And as you know, the priority in the recent quarter was to drive 2 major initiatives. One was the completion of the Ittai plant and the second was to drive our digital agenda. So we have a focus our investment in these two main area in the recent quarters. So And the major contributor to CapEx was the pipeline in absolute term. Overall, we kept CapEx on sale at, I would say, pretty low level deliberately waiting the development of the market. Now that the situation, as Alberto was saying, is somehow stabilizing, showing sign of improvement, we will Start to see an increase of the weight of CapEx of sales, but the remaining at, let me say, at a pretty Manageable level that we gave as a direction meaning below the or around the 2% of sales In the coming quarter. And I will say also, yes. Perfect. Thank you so much. Thank you. The next question comes from the line of Gustaf Hagias from SEB. Please go ahead. Your line is open. Thanks. Good morning, guys. Thanks for taking my questions. I'm also curious about the comments regarding The gap towards 2019 sales diminishing towards Q2. When we modeled in Q3, I note that in 2019, Q3 was 10% lower or something like that versus Q2. Is that a seasonality pattern? Is that a good, do you think, proxy to model into Q3 on seasonality? Or how do you think one should think about it? Or should we model Q3 2019 equals Q3 20 20 The model you are using is based on the seasonality. So Q3 is typically Less strong than Q2 because of what I just mentioned. So the closure that we have in some markets, September is typically the month of the restart of the businesses that is typically picking up during the last quarter, so October, November, December. 2019 is a typical year. It is true that was the year when we added the separation process in place And most of the activities were during the summer, but I would say this did not influence sales eventually Could have influenced operations. So you can use 2019 as a typical year. The fact is that 2021 is not a typical year because We had an acceleration of the sales towards the end of the quarter. We clearly recognize a completely different trend if I compare April with June, completely different trend. Now July is running very well. It's It's not like June because of the seasonality period. So what we are expecting during this month It's in some way still influenced by the uncertainty that I mentioned earlier. We don't know what is happening with the COVID. I believe this is another element that you should consider in your analysis. Well, looking at July numbers then, are they currently in line or above July 2019 numbers? We are not disclosing this kind of information. Okay. Another question then. You say that sort of returning to 2019 levels. I reckon that the replacement market is further along that recovery done Project market arenas and those type of projects, I guess, are few and far in between. So does that mean that you had You're seeing pent up demand in the replacement market driving this recovery? Or do you think you're taking market share in that market? Or is there something else to that? No, no. We clearly see a pickup of the demand in the replacement. As I said, we see also that customer are looking after the projects. Many cases, they are thinking to go through the summer with investments done to have the operations on par running And then eventually think about the new the total refurbishment of their operations. But clearly, they are planning that one. And that is part of the order stock, by the way, that we have been collecting. For what's concerned the replacement market, again, difficult to say, but I can tell you that thanks also to the level of inventory that we have been During these days, we are capturing a lot of this business because we are able To guarantee product availability, thanks to the stock and thanks to the work done by the people to make sure that our factory are working full time. So all operations are working full time, are delivering the product. So I would say that we are capturing All the opportunities that are offered by the replacement market. Okay. And regarding pricing in the market, There's been some comments from competitors suggesting there's some pressure on pricing, maybe in particular related to projects. Is that something you see as well? Or is it fading now as momentum seems to be picking up in terms of demand? We see this one, and You rightly said these on projects in the meaning that nowadays for the replacement market In some way, due to the fact that there is a scarcity of product because there are tensions On making the product available because of the missing raw material, because of the logistics, because of This and that, because of the high demand of the product, I said that the incoming orders It's on the level of 2019 at the end of June. So this means a pretty high demand, in particular compared to the previous month. So The tension on price is mainly on the project because the projects are more long term. So they are projecting this in some months from now. And still there are few projects and everybody would like to have the project because it's the value of a project is Clearly, much, much higher than the value of the single unit. And two Short questions, if I may, to finalize. Firstly, regarding government support, you had some Support also in Q2. Is that it? Or do you expect more to come in Q3 as well? I would say, Fabio, you can answer. As you see, the government support in the quarter was reduced around SEK 10,000,000 And I would call it good news because it means that our production facility is now running at the normalized levels. Considering what Alberto just mentioned in terms of all the stock order intake, we expect Debt governance support will continue some amount in quarter in the coming quarter to quarter, but will be really Something very tactical, very minor, I would say lower than we had reported also in quarter 2. Okay. And finally, with these price increases and at current, you said that you've compensated now with price increases for the raw material freight costs. Is Johan interpreted as if prices do not move from here that you're you don't need to raise This is again to cover for raw material costs into 2022. Is that how we see it or is this more of a Q H2 thing? We are not planning an additional price increase during the 2nd part of the year. We are most probably planning or evaluating what to do on price from January 1. That is typically when also The price list and the other things are changed. Yes, yes. Okay. Thanks, guys. Thank you. The next question comes from the line of Lucy Carrier from Morgan Stanley. Please go ahead. Your line is open. Good morning, gentlemen, and thanks for taking my question. The first one was related To the mix of product and to some extent as well the seasonality, obviously, we don't have a very long History in terms of the divisional breakdown of the company. So I was just, first of all, trying to understand whether you see different type of mix During the year, for example, in preparation of the summer season, maybe more replacement or upgrade business. And then as you were talking maybe of project coming back to the market, I was just curious to understand whether you see a Similar type of profitability profile for project businesses generally speaking versus the replacement market. So I'm trying here to kind of Whether in the Q2 maybe we had quite a favorable mix and whether that could shift a little bit as we go forward into the year? Okay. So first, seasonality. We have some product that we call seasonal. I would say in particular, if we talk about the beverage Product, the cold beverage product, they have a very high seasonality during the spring and the summer. Indeed, within the food and beverage segment, also in the past during the pandemic, we always said that Beverage was suffering even more than food. Okay. During the month of June, beverage was growing even more than food, in the meaning exactly the opposite Because the customer, they wanted to catch up with What they didn't plan during the 1st part of the year and the demand of beverage product, also the coffee, But in particular, the cold beverage product was very, very high. We have also to think That the customer is doing to buy beverage product is much lower than the investments that they are doing to buy Laundry or Food Products. So in some way also the dynamic To take a decision about investing to buy a beverage product is pretty different compared to the one For an oven, for instance, or a big washer machine. So seasonality is mainly related to this product. And again, it's typically starting during the winter, so February, March going through the summer. I would say that in this case, it was mainly concentrated during the Q2, so the last part of the spring And the summer because of the uncertainty that was still very high during the winter, and so the customer didn't invest, Didn't feel confident to take decision at that time and they postponed the decision during the summer. Then the second part is about the mix in term of replacement business and a project business. Let's say that the selling process and as a consequence all the costs are related to that For the project are typically higher and longer, in the meaning that it takes much more time To prepare the sales of products within a project, then clearly to sell the units on the spot having them in stock or with a short production lead time to produce them. At the same time, obviously, the price is different because when you are in a project You are embedding all the costs that we are incurring. That is the reason why we added the comment about the price competitiveness that was in some way Because in this moment, there are few projects in the field. We have also to say that one of the segments that Customer segments that is recovering faster is the one of the chains. Chains are buying not the full project, but they are buying the Single units. And in this case, even if the chains are typically Great negotiators. So they are really tough in negotiating price, but at the same time, they offer the possibility To have a great economy of scale because they order quite significant volume. And in some way, chains Doing very well in this moment. In particular in Asia, we are having significant wins with large International chains that are developing pretty quickly. I think I mentioned during the geographical The description of the geographical trend, how well it's in China. And in China, we are doing particularly well, thanks My second question was more around the competitive dynamic in the industry and particularly on the M and A front, potential consolidation. We've seen obviously a lot of news flow on that over the past couple of weeks months. And I just wanted to understand, on one hand, How do you see maybe these moves impacting you in terms of competition? And considering also your very low leverage, How do you think about your position as a consolidator of this industry? And in which area? Yes, yes. Again, first, clearly, during the past months, you've surely been following the big move That happened or is going to happen because it's not closed yet even if it seems to be finalized Between these two large competitors, we don't think it will impact our Approach to the market, our strategy at the market, our competitive position in market because of the typical strategic approach that they have in term saves the 2 companies we are talking about. If we talk about ourselves, that I believe is what I can Say more clearly is that the possibility to Add inorganic growth to whatever we are doing organically is part of our strategy. It's not easy. It has not been easy because of first 2019, the year of separation. Secondly, since beginning of 2020, the pandemic that was in some way Putting everything on hold, we restarted We respect the dialogue with all the contacts that we have in the different parts of the world. Clearly with the priority to address The area where we have a weaker presence or a smaller presence that is the food and beverage in North America, Looking at companies that can also give us the legacy relation with the chainsaw that is another strategic target that we are having manhunt only. We are still scouting the market building the relations. We are not yet there, obviously, otherwise We could have communicated things like that, but it is part of our strategic plan to look at this one. And The load that we have and the availability of investing that is the tool that we intend to use. Thank you very much. Have a nice summer. Thank you. Thank you. We are now taking a web question over to the speakers. Yes, Jacob Boebe here. We have a couple of questions from the web. There was one from Perju, one from at Bowdoin Capital that was actually more also Related to M and A, basically the same question as you received from Lucie at Morgan Stanley. But also there is a question, If we would expect to do an acquisition in the U. S. Within the coming 12 months, that is the first question. And I have two other questions from Stefan Pfann, on Nat Nordea. One is if there were any one off costs or costs related to the new factory in Thailand now in Q2. And the third question is, if we see any risk for supply chain constraints impacting our ability to deliver on the improved demand in the coming quarters? Okay. So I would say, Fabio, you can take the question about the cost in Q2, If you want to answer, I can in the meantime answer about that. It is obvious that we are working and we would like to be able to report something about the M and A. I cannot say anything about the closure of an M and A that you're in the About the closure of an M and A during the coming 12 months. It is an industry that It's a way also is moving that. We saw the big move that one that was reported a few weeks ago. We are working for that one, but that is something very, very difficult to predict. For what concern the supply chains, yes, there are difficulties. There is It will price up, but as I said, for the time being, thanks to the great work of our team in operations, We have been able to manage the situation and we did not stop our production. For what I know today, I'm not expecting To see any stop of production as a consequence, inability to deliver the product Also during the coming months. Fabio? No material cost was booked related to the competition that Thai operation in Well, the 2, no, I do expect any material cost going for the remaining part of the year. Okay. So we have another audio question, This time from Karri Rinter from Handelsbanken. Please go ahead. Your line is open. Yes. Thank you. Just one question for me and it's about this creation of this new food preparation and beverage unit. So can you Talk a bit more about the rationale. Is it that the sort of the channel approach is different, I. E, maybe more direct sales instead of You too, Head Distributor. And then if we talk about the product portfolio, is it should we think of this as Similarly, Electrolux's small appliances unit, I. E, smaller products, which maybe are completely manufactured By someone else and you just tell them further or how should we think about this unit? Okay. So First, the rationale is that, again, these are businesses, some of them, for instance, the food preparation that had been Within our portfolio for many years, some other that were recently added during The past year, thanks to the acquisition. So it is not just a new product or product that We just started that, thanks to the acquisition. It is a mix of both things. But all these products, they have a characteristic in Come on. They are all part of the full package that can be delivered to customers. So I mean, when we go To restaurants, to a hotel, staff canteen or whatever bar, pubs, you can find products that are in the Cooking area, product in the preparation area, product refrigeration, dishwasher, the coffee machine, the beverage machine. So they are part of the package. And this is what The Elateras Professional Organization will continue to deliver under the Elateras Professional brand to serve this kind of customer. But we also clearly realize that the same customer because the end customer is the same at the end, In many cases, he's using a different channel to get this kind of products. Now I'm using an example that is very, very, very simple to be understood. If you think about the coffee machine, The customer can buy the coffee machine and then select the kind of coffee that he wants to use, Find them at macro or any other kind of food distributor or They can go directly to the roaster, so the coffee brand, get the product In users, so not buying the product, but paying the product basically inside of the cost of the coffee. So In some ways, a different way of buying, if you want to call buying or in many cases, getting the product in use. Clearly, the second channel, so the one going through the rosters is not typically served by Food and beverage dealer or food and beverage and laundry dealer or our organization. So we have to address this kind of customer Using the different resources. I'm using the example of coffee, but it's not only The coffee, the same apply to the ingredient supplier, the same apply to the distributor that are using the food and preparation Products and the other half. So we recognize the possibility to clearly accelerate the growth and capture additional business opportunity Having this division within the food and beverage business focus only on this product. I would say that the keyword is Focus. Then working with roasters, working with ingredients ingredient supplier, I mean, company like Coca Cola, Pepsi Nicolas, just to give you big names, requires a lot of flexibility. Most of the products are customized. If you think about this product, sometimes you don't even see the brand of the supplier, but you see the brand of the ingredient suppliers. So There are some rules of the games that are different and they required a dedicated approach, a focused approach. We believe a lot In this in the possibility to accelerate the growth of the business with this division that is in building, So we announced it. Now we are building the organization around it and it will be in place during the last quarter of the year. Sorry, the second part of the question was about the portfolio. The portfolio is equivalent to the Alaceras Professional. There are differences Clearly, but in terms of product, as I said, the same product are and will remain part of the Eletro's Professional full solution. Right. And then just a quick clarification. Some companies have been reporting issues with electronic components to the extent that they're saying that Going forward, at least in the next few months, they will have either inability to manufacture products that they want or that they will have disruptions in their production Because they can't plan because they don't really know when they get their electric components. So I think you already confirmed it, but can you just confirm it once more that you don't expect any such Disruptions. Now, this means that we will not have to put a lot of effort, a lot of energy to manage the supplier, But we do not expect we are not planning closure of the For this reason, we do not expect to have major disruption because of this. Perfect. Thank you very much. Welcome. Thank you. The last question comes from the line of Frederic Morgod from Pareto Securities. Please go ahead. Your line is open. Thank you very much. Just one question on my side. So the major acquisition that is going on in the industry in the way that it seems to be that is going on in the industry in the way that it seems to be closing now. The way I understand it, the buyer could potentially have to Divest some businesses, particularly on the cold side of their product portfolio to pass competitive authorities. Just thinking about that from a strategic perspective because I think you guys have been sourcing some products on the cold side rather than producing it On your own touch of cold rooms. Is there any reason for why you would not be an interesting buyer, if anything on the cold side Would come out in the market from this as a result of this acquisition? No, there are no reason why we are not We should not consider an interesting buyer. We are interested, but then we will see what is going to happen. But Again, these are speculation clearly in the meaning that we could expect and we hear that there could be the possibility that 1 of the 2 ICE business will have to be dismissed by the new company. If this is going to happen, I think it's known that at least we would love and we are interested to evaluate the Possibility to get it. Okay. Thank you very much. Welcome. Thank you. We have no further questions. So I will pass back to the speakers. So thank you very much for today. I would like to wish you all a good summer and speak to you the next quarter if not before or we'll meet in September in Jungby hopefully. Have a good Rest of the day and goodbye.