Q2 2026 Intercos SpA Earnings Call

August 4, 2026

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Speaker #2: Make me feel my heart be real. Feel so real. My heart be real. Good evening. This is the Carlsberg Conference Operator. Welcome, and thank you for joining the Intercos SpA Q2 2026 financial results.

Operator 2: Good evening. This is the conference call operator. Welcome and thank you for joining the Intercos SpA 2026 Financial Results. As a reminder, all participants are listening-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, please signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Renato Semerari, Chief Executive Officer. Please go ahead, sir.

Operator: Good evening. This is the conference call operator. Welcome and thank you for joining the Intercos SpA 2026 Financial Results. As a reminder, all participants are listening-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, please signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Renato Semerari, Chief Executive Officer. Please go ahead, sir.

Speaker #2: As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, please signal the operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Renato Semerari, Chief Executive Officer.

Speaker #2: Please go ahead, sir. Thank you very much. Good evening, everybody. In a global context still marked by geopolitical tensions, currency headwinds, and the beauty market slowly recovering its historical growth pace of 4% to 5%, Intercos came back to growth, registering a Q2 with solid results both at top and bottom line level.

Renato Semerari: Thank you very much. Good evening, everybody. In a global context, still marked by geopolitical tensions, currency headwinds, and the beauty market slowly recovering its historical growth pace of 4% to 5%, Intercos came back to growth, registering a Q2 with solid results both at top and bottom line level. Summarizing the key highlights. Regarding top line, Q2 was the best ever Q2 of our history at EUR 285 million, a 5% growth at constant rate. This result allowed us to close the gap versus 2025 accumulated in Q1. The H1 was only 0.5% below a year ago. Important to note that such a result was achieved despite the decline of the packaging component of our revenues. As such, our value-added sales, i.e., net sales minus pack, resulted in H1 down by 0.9% at reported rates, which means low single-digit up at constant rates.

Speaker #2: Summarizing the key highlights, regarding top line, Q2 was the best ever second quarter in our history at €285 million, a 5% growth at constant rate.

Speaker #2: This result allowed us to close the gap versus 2025 accumulated in Q1. The first semester was only 0.5% below a year ago. It's important to note that such a result was achieved despite a decline in the packaging component of our revenues.

Renato Semerari: Important to note that such a result was achieved despite the decline of the packaging component of our revenues. As such, our value-added sales, i.e., net sales minus pack, resulted in H1 down by 0.9% at reported rates, which means low single-digit up at constant rates. This was done without depleting our order portfolio, which remained up mid-teens versus a year ago, thanks to continued strong order intake. As for EBITDA, Q2 was our best ever quarterly result at EUR 47.5 million, with a margin of 16.7%, which was 16 basis points better than a year ago.

Speaker #2: As such, our value-added sales, i.e., net sales minus PAC, resulted in the first semester being down by 0.9 percent at reported rates, which means low single-digit up at constant rates.

Speaker #2: This was done without depleting our order portfolio, which remained up mid-teens versus a year ago, thanks to continued strong order intake. As for EBITDA, Q2 was our best ever quarterly result at €47.5 million, with a margin of 16.7 percent, which was 16 basis points better than a year ago.

Renato Semerari: This was done without depleting our order portfolio, which remained up mid-teens versus a year ago, thanks to continued strong order intake. As for EBITDA, Q2 was our best ever quarterly result at EUR 47.5 million, with a margin of 16.7%, which was 16 basis points better than a year ago. H1 was therefore at EUR 72.6 million with flat margin at 14.2% on net sales. Or 17.9% on value-added sales. EBITDA was helped by prestige segment, which was up 4 percentage points over a year ago, and the pack component reduction, which was down by over 1 percentage point. As for net debt, we also were down by over EUR 10 million, actually EUR 12 million, after having covered for the share buyback expenses. Our strong cash generation led leverage to go down to 0.80 times the EBITDA versus last year, 0.87 times.

Speaker #2: First half was therefore at €72.6 million, with flat margin at 14.2% on net sales, or 17.9% on value-added sales. EBITDA was helped by the prestige segment, which was up four percentage points over a year ago.

Renato Semerari: H1 was therefore at EUR 72.6 million with flat margin at 14.2% on net sales. Or 17.9% on value-added sales. EBITDA was helped by prestige segment, which was up 4 percentage points over a year ago, and the pack component reduction, which was down by over 1 percentage point. As for net debt, we also were down by over EUR 10 million, actually EUR 12 million, after having covered for the share buyback expenses. Our strong cash generation led leverage to go down to 0.80x the EBITDA versus last year, 0.87x.

Speaker #2: And the pack component reduction, which was down by over one percentage point. As for net debt, we also were down by over 10 million euros, actually 12 million euros, after having covered for the buyback share buyback expenses.

Speaker #2: Our strong cash generation led leverage to go down to 0.80 times EBITDA, versus last year at 0.87 times. So, summarizing our financial results—which you will see in greater detail with Vittorium in a few minutes.

Renato Semerari: Summarizing our financial results that you will see in greater details with Vittorio in a few minutes. Q2, sales up by +4.9% on constant effects, +4 at reported rates, with an EBITDA of EUR 47.5 million, up +5%. Margin was at 16.7%, an improvement of 16 basis points versus a year ago. H1 reported sales at EUR 512 million, -0.5% versus a year ago or -2.4% at reported rates. Value-added sales were -1 at current ForEx, hence low single digit up at constant rates. EBITDA at EUR 72.6 million with 14.2% margin in line with a year ago or 17.9% on value-added sales. Net income was up by 33%, tracing to reductions in financial costs and tax rates. Net debt down by EUR 12 million despite share buyback equivalent to EUR 16 million.

Renato Semerari: Summarizing our financial results that you will see in greater details with Vittorio in a few minutes. Q2, sales up by +4.9% on constant effects, +4% at reported rates, with an EBITDA of EUR 47.5 million, up +5%. Margin was at 16.7%, an improvement of 16 basis points versus a year ago. H1 reported sales at EUR 512 million, -0.5% versus a year ago or -2.4% at reported rates. Value-added sales were -1 at current Forex, hence low single digit up at constant rates. EBITDA at EUR 72.6 million with 14.2% margin in line with a year ago or 17.9% on value-added sales.

Speaker #2: Second quarter, so sales are up by 4.9% on a constant currency basis and up 4% at reported rates, with an EBITDA of €47.5 million, up 5%.

Speaker #2: Margin was at 16.7 percent, an improvement of 16 basis points versus a year ago. For the first half, reported sales were €512 million, minus 0.5 percent versus a year ago, or minus 2.4 percent at reported rates.

Speaker #2: Value-added sales were minus 1% at current forex, hence low single-digit up at constant rates. EBITDA was €72.6 million, with a 14.2% margin in line with a year ago, or 17.9% on value-added sales.

Renato Semerari: Net income was up by 33%, tracing to reductions in financial costs and tax rates. Net debt down by EUR 12 million despite share buyback equivalent to EUR 16 million. Moving to sales details now, starting by revenues by business unit at reported ForEx. Makeup Q2 was down by -1.4 over a high base of year ago of +13%. This means it was basically flat at constant rates. There are a couple of important points to underline to fully understand the underlying trend of this business unit. First, the pack component was sharply down. As such, value-added sales were up at mid-single digit rates at constant rates.

Speaker #2: Net income was up by 33 percent, due to reductions in financial costs and tax rates. Net debt was down by €12 million, despite a share buyback equivalent to €16 million.

Speaker #2: Moving to sales details now, and starting with revenues by business unit at reported forex. Makeup in the second quarter was down by 1.4% over a high base a year ago of plus 13%.

Renato Semerari: Moving to sales details now, starting by revenues by business unit at reported ForEx. Makeup Q2 was down by -1.4 over a high base of year ago of +13%. This means it was basically flat at constant rates. There are a couple of important points to underline to fully understand the underlying trend of this business unit. First, the pack component was sharply down. As such, value-added sales were up at mid-single digit rates at constant rates. Second, the performance accelerated throughout Q2, exiting the quarter at a very fast pace. H1 closed at -3%, again on tough comps. Last year we grew 18%. Again, value-added sales were up low single digit. prestige clients were clearly up while mass suffered. EMEA region was the best performer, followed by Americas.

Speaker #2: So, this means it was basically flat at constant rates. There are a couple of important points to underline to fully understand the underlying trend of this business unit.

Speaker #2: First, the pack component was sharply down. As such, value-added sales were up at mid-single-digit rates at constant rates. Second, the performance accelerated throughout the second quarter, exiting the quarter at a very fast pace.

Renato Semerari: Second, the performance accelerated throughout Q2, exiting the quarter at a very fast pace. H1 closed at -3%, again on tough comps. Last year we grew 18%. Again, value-added sales were up low single digit. prestige clients were clearly up while mass suffered. EMEA region was the best performer, followed by Americas. Asia was down after years of double-digit expansion, driven by market dynamics that I'll elaborate in a moment. As for Skincare, Q2 was down by 3.4%. Also in this case, on top of the currency's headwinds, pack component went down, value-added sales were low single digit up.

Speaker #2: The first semester closed at minus 3 percent, again on TAF comps. Last year we grew 18 percent. Again, value-added sales were up low single digits. Prestige clients were clearly up, while mass suffered.

Speaker #2: The EMEA region was the best performer, followed by the Americas. Asia was down after years of double-digit expansion, driven by market dynamics that I'll elaborate on in a moment.

Renato Semerari: Asia was down after years of double-digit expansion, driven by market dynamics that I'll elaborate in a moment. As for Skincare, Q2 was down by 3.4%. Also in this case, on top of the currency's headwinds, pack component went down, value-added sales were low single digit up. H1 was down by 9.5% with Asia growing, but Western countries offsetting this growth. Hair and Body reported an exceptional +27% in Q2, driven by European clients, especially in fragrance. As such, H1 closed at +5%, in this case, also helped by the packaging component. Moving to revenues by region, EMEA was up +10% in Q2, driven by prestige clients in both Makeup and Hair and Body. Emerging brands took back their growth driver role after one year of multinationals' lead.

Speaker #2: As for skincare, the second quarter was down by 3.4 percent. Also, in this case, on top of the currency's headwinds, the pack component went down, so value-added sales were low single-digit up.

Speaker #2: First-half was down by 9.5 percent, with Asia growing but Western countries offsetting this growth. Air and Body reported an exceptional plus 27 percent in the second quarter, driven by European clients, especially in fragrance.

Renato Semerari: H1 was down by 9.5% with Asia growing, but Western countries offsetting this growth. Hair and Body reported an exceptional +27% in Q2, driven by European clients, especially in fragrance. As such, H1 closed at +5%, in this case, also helped by the packaging component. Moving to revenues by region, EMEA was up +10% in Q2, driven by prestige clients in both Makeup and Hair and Body. Emerging brands took back their growth driver role after one year of multinationals' lead. H1 therefore ended at +1% after the difficult Q1.

Speaker #2: As such, the first half closed at plus 5%, in this case also helped by the packaging component. Moving to revenues by region, EMEA was up plus 10% in the second quarter, driven by prestige clients in both makeup and air and body. Emerging brands took back their growth driver role after one year of multinationals' lead.

Speaker #2: The first semester, therefore, ended at plus 1%, after the difficult first quarter. Americas closed the second quarter slightly positive, plus 1%, overall in line with the duty market volume dynamics.

Renato Semerari: H1 therefore ended at +1% after the difficult Q1. Americas closed the Q2 slightly positive, +1%, overall in line with the beauty market volume dynamics. Prestige multinational clients were the best performers. H1 resulted as such down by -4%, also paying the weak USD toll. Asia was the most challenging region. Here we witnessed a comeback of the Western brands who gained shares back from Chinese brands. Hence, in our numbers where we post only our sales to local clients, you see a decline in reorders. As such, after years of double-digit growth and against tough base, we recorded a -5% in Q2 and -8% in the H1. Also, this region was impacted by currency headwinds, especially in Korea. Moving to client clusters. In general, this year we see the reverse picture of 2025.

Renato Semerari: Americas closed the Q2 slightly positive, +1%, overall in line with the beauty market volume dynamics. Prestige multinational clients were the best performers. H1 resulted as such down by -4%, also paying the weak USD toll. Asia was the most challenging region. Here we witnessed a comeback of the Western brands who gained shares back from Chinese brands. Hence, in our numbers where we post only our sales to local clients, you see a decline in reorders. As such, after years of double-digit growth and against tough base, we recorded a -5% in Q2 and -8% in the H1.

Speaker #2: Prestige multinational clients were the best performers. The first half resulted as such, down by 4%, also paying the weak dollar toll. Asia was the most challenging region.

Speaker #2: Here, we witnessed a comeback of the Western brands, who gained shares back from Chinese brands. Hence, in our numbers, where we post only our sales to local clients, you see a decline in reorders.

Speaker #2: As such, after years of double-digit growth and against a tough base, we recorded minus 5% in the second quarter and minus 8% in the first half.

Speaker #2: Also, this region was impacted by currency headwinds, especially in Korea. Moving to client clusters, in general, this year we see the reverse picture of 2025.

Renato Semerari: Also, this region was impacted by currency headwinds, especially in Korea. Moving to client clusters. In general, this year we see the reverse picture of 2025. Multinationals, which were growing a double-digit pace last year, and that therefore had tough comparables this year, closed the Q2 at -2%, with American Makeup clients performing well, but Asian and skin and hair clients declining. The H1 ended at -8% versus last year, when we had recorded a +18% growth. Emerging brands, conversely, took back their historic driver's seat.

Speaker #2: Multinationals, which were growing at a double-digit pace last year and therefore had tough comparables this year, closed the second quarter at minus 2%, with American makeup clients performing well, but Asian and skin and hair clients declining.

Renato Semerari: Multinationals, which were growing a double-digit pace last year, and that therefore had tough comparables this year, closed the Q2 at -2%, with American Makeup clients performing well, but Asian and skin and hair clients declining. The H1 ended at -8% versus last year, when we had recorded a +18% growth. Emerging brands, conversely, took back their historic driver's seat. In the Q2, they grew by +13%, driven by Asian Skincare and European Hair and Body. In the H1, they registered a +6% growth. Retailers also went back to a negative trend after an extremely high 2025. Specifically, in Q2, they posted -14% versus last year +20%, and the first year closed at -19%, offsetting last year equivalent growth.

Speaker #2: The first half ended at minus 8 percent versus last year, when we had recorded a plus 18 percent growth. Emerging brands, conversely, took back their historic-driven driver's seat.

Speaker #2: In the second quarter, they grew by 13%, driven by Asian skincare and European air and body. In the first half, they registered a 6% growth.

Renato Semerari: In the Q2, they grew by +13%, driven by Asian Skincare and European Hair and Body. In the H1, they registered a +6% growth. Retailers also went back to a negative trend after an extremely high 2025. Specifically, in Q2, they posted -14% versus last year +20%, and the first year closed at -19%, offsetting last year equivalent growth. I now pass the mic to Vittorio, our Chief Operating Officer, who's acting as CFO ad interim, to take you through the financials.

Speaker #2: Retailers also went back to a negative trend after an extremely high 2025. Specifically, in the second quarter, they posted minus 14 percent versus last year plus 20, and the first year closed at minus 19 percent, offsetting last year's equivalent growth.

Speaker #2: I now pass the mic to Vittorio, our Chief Operating Officer, who is acting as CFO ad interim, to take you through the financials.

Renato Semerari: I now pass the mic to Vittorio, our Chief Operating Officer, who's acting as CFO ad interim, to take you through the financials.

Speaker #3: Thank you, Renato. Good evening, everybody. Going to the economics of the first half—as we saw in the first part of this presentation—the top line went down 2.5 percent at reported rates, and 0.9 percent on the value-added sales. Going at the constant rate in the positive territories is a good sign of the value-added of our value-added sales.

Vittorio Brenna: Thank you, Renato, and good evening, everybody. Going to the economics of the H1. As we saw in the first part of this presentation, the top line went down at -2.5% at reported rate, and +0.9% on the value added sales, going at the custom rate in the positive territories, which is a good sign of our value added sales. Going to the gross margin, we have been able to increase the gross margin percentage of 36 basis points, thanks to the mix and the execution of the operational efficiencies we are executing our plan. Thank you to the lower packaging rate, which is 1 percentage point lower than comparable to last year. This drove to an EBIT of EUR 72.6 million, which is -2.6% lower than last year or EUR 2 million.

Speaker #3: Going to the gross margin, we have been able to increase the gross margin percentage by 36 bps, thanks to the mix and the execution of the operational efficiencies. We are executing our plan.

Speaker #3: And thank you to the lower packaging to the lower packaging rate, which is 1. lower than comparable to last year. These drove to an EBITDA of 72.6 million, which is 2.6 percent lower of the last year, or 2 million euro, but we recorded the highest quarterly adjusted EBITDA on the Q2 at the 47.5 million euro, or plus 5 percent, compared to last year.

Vittorio Brenna: Thank you to the lower packaging rate, which is 1 percentage point lower than comparable to last year. This drove to an EBIT of EUR 72.6 million, which is -2.6% lower than last year or EUR 2 million. We recorded the highest quarterly adjusted EBIT in Q2 at EUR 47.5 million or +5% compared to last year. 16 basis points increase year-over-year at 16.7%. If you go at the net income, we have a very positive progression at 33.3%, driven by a positive impact of the financial items that last year was driven by the headwinds of the ForEx, and a lower tax rate that is from 45.5% last year to 34.7% this year,

Vittorio Brenna: We recorded the highest quarterly adjusted EBIT in Q2 at EUR 47.5 million or +5% compared to last year. 16 basis points increase year-over-year at 16.7%. If you go at the net income, we have a very positive progression at 33.3%, driven by a positive impact of the financial items that last year was driven by the headwinds of the ForEx, and a lower tax rate that is from 45.5% last year to 34.7% this year, influenced by the intercompany dividend that has not been yet distributed, and the mix of the different countries profit. Going to the business units EBITDA, we see a progression of the Makeup of 9% with an increase of 180 basis points, and this is thanks to the prestige part of our business that is growing, and a positive impact in the EBITDA of this category.

Speaker #3: So 16 bips increase year over year as 16.7 percent. If you go at the net income, we have a very positive progression at 33.3 percent, driven by a positive impact of the financial items, that last year was driven by the headwinds of the Forex, and a lower tax rate that is 45 from 45.5 percent last year to 34.7 this year, thanks to the influenced by the intercompany dividend that has not been yet distributed.

Vittorio Brenna: influenced by the intercompany dividend that has not been yet distributed, and the mix of the different countries profit. Going to the business units EBITDA, we see a progression of the Makeup of 9% with an increase of 180 basis points, and this is thanks to the prestige part of our business that is growing, and a positive impact in the EBITDA of this category. Increasing 180 basis points at EUR 53.2 million.

Speaker #3: And the mix of the different countries' profit. Going to the business units' EBITDA, we see a progression of the makeup of 9 percent, with an increase of 180 bps, and this is thanks to the prestige part of our business that is growing, and a positive impact in the EBITDA of this category.

Speaker #3: So increasing by 180 bps to €53.2 million. Going to skincare, the opposite: the decline in top line and the under-absorption driven by the fixed cost drove the 24 percent drop, or 300 bps lower EBITDA margin compared to last year, despite, in the second quarter, the client mix rising toward the prestige.

Vittorio Brenna: Increasing 180 basis points at EUR 53.2 million. Going to the Skincare, the opposite, the declining top line and the under absorption driven by the fixed cost drove the 24% drop or 300 basis points lower EBIT margin compared to last year, despite in the second quarter, the client mix is rising toward the prestige. Going to Hair and Body, we saw a 25% reduce the EBITDA compared to the last year or 280 basis points. This is mainly driven by the contract manufacturing weight within the category that historic has a lower marginality and a higher weight of packaging within the business unit. Going to the operating cash flow and the net debt evolution. As anticipated, we had a strong cash generation, thanks to the level of the working capital management. We posted an EUR 18.6 million progression compared to the last year H1 at EUR 26.2 operating cash flow.

Vittorio Brenna: Going to the Skincare, the opposite, the declining top line and the under absorption driven by the fixed cost drove the 24% drop or 300 basis points lower EBIT margin compared to last year, despite in the second quarter, the client mix is rising toward the prestige. Going to Hair and Body, we saw a 25% reduce the EBITDA compared to the last year or 280 basis points. This is mainly driven by the contract manufacturing weight within the category that historic has a lower marginality and a higher weight of packaging within the business unit. Going to the operating cash flow and the net debt evolution.

Speaker #3: Going to Air and Body, we saw a 25 percent reduced EBITDA compared to last year, or 280 bps. This is mainly driven by the contract manufacturing weight within the category, that historically has lower marginality and a higher weight of packaging within.

Speaker #3: The business unit. Going to the operating cash flow and the net debt evolution, as anticipated, we had a strong cash generation thanks to the level of the working capital management, and so we posted an 18.6 million euro progression compared to the last year, so each one at 26.2 operating cash flow.

Vittorio Brenna: As anticipated, we had a strong cash generation, thanks to the level of the working capital management. We posted an EUR 18.6 million progression compared to the last year H1 at EUR 26.2 operating cash flow. If I take out the CapEx, the conversion rate is 75%, which is a good sign of the cash generation. The reduced debt financial expenses and the reduced tax drove to a cash flow before dividend distribution and buybacks at EUR 13 million. That is a progression of net EUR 32.4 million compared to the same period of last year.

Speaker #3: If I take out the capex, so the conversion rate is 75 percent, which is a good sign of the cash generation. The reduced financial expenses and the reduced tax drove to a cash flow before dividend distribution, and buybacks after 10, 3 million euro that is a progression of net 32.4 million euro compared to the same period of last year.

Vittorio Brenna: If I take out the CapEx, the conversion rate is 75%, which is a good sign of the cash generation. The reduced debt financial expenses and the reduced tax drove to a cash flow before dividend distribution and buybacks at EUR 13 million. That is a progression of net EUR 32.4 million compared to the same period of last year. We go to the buyback that absorb EUR 17 million cash and the dividend distribution EUR 18 million, and we had a EUR 22.2 million cash absorption in H1 compared to EUR 36.8 million of last year. This is driving our net debt at EUR 122.7 million, including ForEx EUR 16 million, compared to EUR 134.4 million of last year, with an improvement of roughly EUR 12 million that is driving our levered ratio down to 0.8x compared to the 0.87 of last year, with this generation of cash.

Speaker #3: We then go to the buyback that absorbed €17 million in cash, and the dividend distribution was €18 million. Then we had a €22.2 million cash absorption in the first half compared to €36.8 million last year.

Vittorio Brenna: We go to the buyback that absorb EUR 17 million cash and the dividend distribution EUR 18 million, and we had a EUR 22.2 million cash absorption in H1 compared to EUR 36.8 million of last year. This is driving our net debt at EUR 122.7 million, including ForEx EUR 16 million, compared to EUR 134.4 million of last year, with an improvement of roughly EUR 12 million that is driving our levered ratio down to 0.8x compared to the 0.87 of last year, with this generation of cash. Thank you.

Speaker #3: This is driving the hour net debt at 122.7 million euro, including FRX 16, compared to 134.4 of the last year with an improvement of 12 million euro roughly 12 million euro, that is driving our level ratio down to 0.8 pair compared to the 0.87 of last year.

Speaker #3: With this generation of—thank you.

Renato Semerari: Thank you. Thank you, Vittorio. Moving forward. Overall, as you know, the geopolitical scenario is quite complex and very volatile. Despite this, beauty is overall well-oriented, and realigning to the historical trends of 4% to 5% growth. This being said, which is obviously good news, not everything is perfectly aligned, I would say, with what we would like to see, we would love to see. First of all, in Europe, the trends are pretty positive in both volume and price. Makeup, which is our strongest business unit, is performing below Skincare and fragrances in general. We would like to see Makeup getting a bit faster. US is up high single digit, but it's mostly price driven, we would like to see more volume contribution to the growth of the market.

Speaker #2: Thank you, Vittorio. Moving forward, as you know, the geopolitical scenario is quite complex and very volatile. Despite this, beauty is overall well oriented and realigning to the historical trends of 4 to 5 percent growth.

Renato Semerari: Thank you, Vittorio. Moving forward. Overall, as you know, the geopolitical scenario is quite complex and very volatile. Despite this, beauty is overall well-oriented, and realigning to the historical trends of 4% to 5% growth. This being said, which is obviously good news, not everything is perfectly aligned, I would say, with what we would like to see, we would love to see. First of all, in Europe, the trends are pretty positive in both volume and price. Makeup, which is our strongest business unit, is performing below Skincare and fragrances in general.

Speaker #2: Now, this being said, which is obviously good news, not everything is perfectly aligned, I would say, with what we would like to see – we would love to see.

Speaker #2: First of all, in Europe, the trends are pretty positive in both volume and price. However, makeup, which is our strongest business unit, is performing below skin and fragrances in general.

Speaker #2: So, we would like to see makeup getting a bit faster. U.S. is up in single digits, but it is mostly price-driven, so we would like to see more volume contribution to the growth of the market.

Renato Semerari: We would like to see Makeup getting a bit faster. US is up high single digit, but it's mostly price driven, we would like to see more volume contribution to the growth of the market. In China, in spite of a softer than expected June 18 shopping festival, it's performing in positive territory. Obviously, this market share shift from local brands to multinationals, Western multinationals, helps us in the other regions of the world, it doesn't on the Asian entities. In this context, which we think is going to be confirmed, in the H2 of the year, we expect the market to end in between 4% and 5% of growth.

Speaker #2: And China, in spite of a softer-than-expected June 18 e-commerce festival, is performing in positive territory. Obviously, this market share shift from local brands to multinationals—Western multinationals—helps us in the other regions of the world, but it doesn't on the Asian entities.

Renato Semerari: In China, in spite of a softer than expected June 18 shopping festival, it's performing in positive territory. Obviously, this market share shift from local brands to multinationals, Western multinationals, helps us in the other regions of the world, it doesn't on the Asian entities. In this context, which we think is going to be confirmed, in the H2 of the year, we expect the market to end in between 4% and 5% of growth. We have achieved in the H1, results that are in line with our original expectation. Q2 saw an acceleration throughout the quarter. The order book is in the mid-teens up versus a year ago, despite this Q2 revenues acceleration, orders in flow remain strong. Actually, if I look at last month, it's more than strong. It's a record month.

Speaker #2: In this context, which we think is going to be confirmed in the second half of the year, we expect the market to end with between 4 and 5 percent growth. We have achieved first half results that are in line with our original expectations.

Renato Semerari: We have achieved in the H1, results that are in line with our original expectation. Q2 saw an acceleration throughout the quarter. The order book is in the mid-teens up versus a year ago, despite this Q2 revenues acceleration, orders in flow remain strong. Actually, if I look at last month, it's more than strong. It's a record month. On top of this, the Hair and Body forecast from clients is stronger than our original expectations. All in all, we hold this both for a strong acceleration of sales in the H2, which was already forecasted and communicated as a back-loaded year, this is confirming, everything is aligning to that.

Speaker #2: Q2 saw an acceleration throughout the quarter. The order book in the meetings is up versus a year ago. Despite this Q2 revenue acceleration, orders inflow remains strong, actually.

Speaker #2: If I look at last month, it's more than strong—it's a record month. And on top of this, the air and body forecast from clients is stronger than our original expectations.

Renato Semerari: On top of this, the Hair and Body forecast from clients is stronger than our original expectations. All in all, we hold this both for a strong acceleration of sales in the H2, which was already forecasted and communicated as a back-loaded year, this is confirming, everything is aligning to that. Based on this, we confirm our forecast, which is in line with the current net sales consensus, which is in line and is in the range we had communicated at the beginning of the year in terms of guidance for 2026. Everything is moving along expectations, I thank you for your attention, we are ready to take your questions. Thank you.

Speaker #2: All in all, we owe this both to a strong acceleration of sales in the second half—which was already forecasted and communicated as a backloaded year—and this is confirming, and everything is aligning to that.

Speaker #2: Based on this, we confirm our forecast, which is in line with the current net sales consensus and is within the range we had communicated at the beginning of the year in terms of guidance for 2026.

Renato Semerari: Based on this, we confirm our forecast, which is in line with the current net sales consensus, which is in line and is in the range we had communicated at the beginning of the year in terms of guidance for 2026. Everything is moving along expectations, I thank you for your attention, we are ready to take your questions. Thank you.

Speaker #2: So everything is moving along expectations, and I thank you for your attention. We are now ready to take your questions. Thank you.

Speaker #1: This is the call record conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone.

Operator 2: This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question, may press star and one at this time. The first question is from Andrei Condrea from UBS. Please go ahead.

Operator: This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question, may press star and one at this time. The first question is from Andrei Condrea from UBS. Please go ahead.

Speaker #1: To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time.

Speaker #1: The first question is from Andre Condrea from UBS. Please go ahead.

Speaker #4: Good evening, and thank you for taking my questions, Renato, Vittorio, and François. Two from me, please, if you don't mind. Firstly, you've reiterated your guidance on net sales; however, if we think in terms of EBITDA, how should we look at it, given that packaging has declined as a percent of your sales?

Andrei Condrea: Good evening, thank you for taking my questions, Renato, Vittorio, and Francois. Two from me, please, if you don't mind. Firstly, you've reiterated your guidance on net sales. However, if we think in terms of EBITDA, how should we look at it given that packaging has declined as a percent of your sales, what are your expectations for that part going into year-end? Secondly, just on Skincare, obviously, operating leverage played quite a sizable role in the 300 basis point margin decline. Could you help us breaking it down a bit further? Just trying to understand why margins were so soft in the division. Thank you.

Speaker #4: And what are your expectations for that part going into year-end? And secondly, just on skincare, obviously operating deleverage played quite a sizable role in the 300-basis-point margin decline.

Speaker #4: But could you help us break it down a bit further? I'm just trying to understand why margins were so soft in the division. Thank you.

Speaker #2: Thank you, Andrea. I will answer your first question, and then Vittorio will answer your second question. Yeah, I mean, in the EBITDA in the first half, you see two movements.

Renato Semerari: Thank you, Andrei. I will answer to your first question, and then Vittorio will answer to your second questions. Yeah, in the EBITDA in H1, you see two movements. On one side, you had a positive coming from prestige sales going up and pack going down. The two are, as you well know, well related because usually prestige brands deliver us their packaging. They don't ask us to buy packaging. On the other hand, the growth of Hair and Body, as you know, is dilutive. This is the business unit that has the lowest margin. The two components kind of offset one another. Going forward, we had forecasted the pack component, which had gone down significantly last year, to remain overall stable in the course of the year.

Speaker #2: On one side, you had a positive coming from Prestige sales going up and PAC going down. The two are, as you well know, well related because usually Prestige brands deliver us their packaging.

Speaker #2: They don't ask us to buy packaging. On the other hand, the growth of air and body, as you know, is dilutive. This is the business unit that does the lowest margin.

Speaker #2: So the two components kind of offset one another. Going forward, we had forecasted the PAC component—which had gone down significantly last year—to remain overall stable in the course of the year.

Renato Semerari: Going forward, we had forecasted the pack component, which had gone down significantly last year, to remain overall stable in the course of the year. Now, especially looking at the Hair and Body forecasts from clients for H2, I think that we will see in H2 either stability versus a year ago and a slight increase versus H1 in terms of percentage weight.

Speaker #2: Now, especially looking at the Hair and Body forecast from clients for the second half, I think that we will see in the second half either stability versus a year ago, and a slight increase versus the first semester in terms of percentage weight.

Renato Semerari: Now, especially looking at the Hair and Body forecasts from clients for H2, I think that we will see in H2 either stability versus a year ago and a slight increase versus H1 in terms of percentage weight.

Speaker #4: Okay. If I look at the skincare question, Andrea, so the main drop in EBITDA compared to last year is driven by the anticipated before by the fixed cost absorption on the legal entities where we sell where we produce skincare particularly the portfolio has been the execution has been soft due to the level of the orders.

Vittorio Brenna: Okay. If I look at the Skincare question, Andre, the main drop in the EBITDA compared to last year is driven by the anticipated before by the fixed cost absorption on the legal entities where we produce Skincare. Particularly, the portfolio, the execution has been soft due to the level of the orders. The level of under absorption principally drove the drop on the EBITDA in H1.

Speaker #4: And so the level of under-absorption principally drove the drop in EBITDA in H1. Understood. Grazie mille. Thank you.

Andrei Condrea: Understood. Grazie mille.

Vittorio Brenna: Thank you.

Speaker #2: Thank you.

Renato Semerari: Thank you.

Speaker #1: The next question is from Tileno from Morgan Stanley. Please go ahead.

Operator 2: The next question is from Tilly Eno from Morgan Stanley. Please go ahead.

Operator: The next question is from Tilly Eno from Morgan Stanley. Please go ahead.

Speaker #3: Hi, good evening. Thanks for taking my questions. I have three, if I may. The first is on makeup, where you saw an increase in the prestige SKU helping profitability.

Tilly Eno: Hi. Good evening. Thanks for taking my questions. I have three, if I may. The first is on Makeup, where you saw an increase in the prestige SKU helping profitability. Would you expect that mix towards prestige to persist, aka, are you still seeing that in your order intake? My second question is on Skincare. You saw the order book for Makeup and Skincare progressively accelerate even further. Could you give us any kind of color in terms of the dynamics between Makeup and Skincare within that? Aka, you've previously spoken about expecting a pickup in Skincare in H2. Are you still confident in that, or is it more about the other business units driving the full year? My third, final question, please, on China. You mentioned in the outlook that you would expect a progressive comeback of the local Chinese brands.

Speaker #3: Would you expect that mix towards Prestige to persist? Are you still seeing that in your order intake? My second question is on skincare.

Speaker #3: You saw the order book for makeup and skincare progressively accelerate even further. Could you give us any kind of color in terms of the dynamics between makeup and skincare within that? You've previously spoken about expecting a pickup in skincare in H2.

Speaker #3: Are you still confident in that, or is it more about the other business units driving the full year? And then my third and final question, please, on China.

Tilly Eno: Are you still confident in that, or is it more about the other business units driving the full year? My third, final question, please, on China. You mentioned in the outlook that you would expect a progressive comeback of the local Chinese brands. Have you seen any early signs of those comebacks? Is this more just something that you think will naturally happen as a course of business? Thank you very much.

Speaker #3: You mentioned in the outlook that you would expect a progressive comeback of the local Chinese brands. Have you seen any early signs of those comebacks?

Tilly Eno: Have you seen any early signs of those comebacks? Is this more just something that you think will naturally happen as a course of business? Thank you very much.

Speaker #3: Or is this more just something that you think will naturally happen as a course of business? Thank you very much.

Speaker #2: Thank you very much for your questions. First, you talked about Prestige clients for Prestige orders for makeup. When we look at the portfolio in the end, Prestige remains very strong.

Renato Semerari: Thank you very much for your questions. First, you talked about prestige clients for prestige orders for Makeup. When we look at the portfolio on end, prestige remains very strong. We do expect prestige to stay high in the H2 of the year as well. The second point you mentioned is the order book between Makeup and Skincare. While Makeup is, as I said, in the H1, has been led mostly by growth in the Western sphere. This is still the case in the H2. For Skincare, it is the opposite. It is Asia driving. Asia is positive and Western is below. Now, what we expect is to see a comeback, as you said, of China clients, especially in Skincare in the H2, so a further acceleration there.

Speaker #2: So, we do expect Prestige to stay high in the second half of the year as well. The second point you mentioned is the order book between makeup and skincare.

Speaker #2: Well, makeup, as I said in the first semester, has been led mostly by growth in the Western Hemisphere. This is still the case in the second half.

Speaker #2: For skincare, it's the opposite. It's Asia driving; Asia is positive, and Western is below. Now, what we expect is to see a comeback, as you said, of China clients—especially in skincare—in the second half.

Renato Semerari: Now, what we expect is to see a comeback, as you said, of China clients, especially in Skincare in the H2, so a further acceleration there. As you know, the lead times, order lead times in China, especially in Asia in general, but in China especially, is a lot shorter than in the Western world. In Makeup, we see we have a richer order book than in Skincare, and that could simply be related to the fact that the transformation time is longer than what you see in Asia and China. Typically, a brand that needs goods for October, November, has already placed orders in the Western Hemisphere, is not yet in Asia and in China.

Speaker #2: So, a further acceleration there. As you know, the order lead times in China—especially in Asia in general, but in China in particular—are a lot shorter than in the Western world.

Renato Semerari: As you know, the lead times, order lead times in China, especially in Asia in general, but in China especially, is a lot shorter than in the Western world. In Makeup, we see we have a richer order book than in Skincare, and that could simply be related to the fact that the transformation time is longer than what you see in Asia and China. Typically, a brand that needs goods for October, November, has already placed orders in the Western Hemisphere, is not yet in Asia and in China. Now, coming to your last question, early signs of local brands accelerating in the H2. We do not have anything tangible. When I say anything tangible, are firm orders. What we hear, though, is their will to gain shares back during the Double Eleven event.

Speaker #2: So, in makeup, we see that we have a richer order book than in skincare. That could simply be related to the fact that the transformation time is longer than what you see in Asia and China.

Speaker #2: So, typically, a brand that needs goods for October-November has already placed orders in the Western Hemisphere, but is not yet in Asia or in China.

Speaker #2: Now, coming to your last question—early signs of local brands accelerating in the second half—we do not have anything tangible. And when I say anything tangible, I mean firm orders.

Renato Semerari: Now, coming to your last question, early signs of local brands accelerating in the H2. We do not have anything tangible. When I say anything tangible, are firm orders. What we hear, though, is their will to gain shares back during the Double Eleven event. Everybody has been quite surprised after a couple of years where they were winning to see the comeback of the Western brands. They all declare their desire and their eagerness to come back and react to this escalation of Western brands. It is not only our assumption, it is what we get qualitatively talking to the local clients.

Speaker #2: What we hear, though, is their will to gain shares back during the W11 event. So everybody has been quite surprised after a couple of years where they were winning, to see the comeback of the Western brands.

Renato Semerari: Everybody has been quite surprised after a couple of years where they were winning to see the comeback of the Western brands. They all declare their desire and their eagerness to come back and react to this escalation of Western brands. It is not only our assumption, it is what we get qualitatively talking to the local clients. Now, obviously, we need to see orders inflowing at an accelerated pace to, let us say, solidify this intention, and this is going to come towards end of this month, early September. I hope I have answered your questions.

Speaker #2: They all declare their desire and their eagerness to come back and react to this escalation of Western brands. So it's not only our assumption; it's what we get qualitatively, talking to the local clients.

Speaker #2: Now, obviously, we need to see orders inflowing at an accelerated pace to, let's say, solidify this intention, and this is going to come towards the end of this month, early September.

Renato Semerari: Now, obviously, we need to see orders inflowing at an accelerated pace to, let us say, solidify this intention, and this is going to come towards end of this month, early September. I hope I have answered your questions.

Speaker #2: I hope I've answered your questions.

Speaker #3: Yes, that's great. Thank you very much, Renato.

Tilly Eno: Yes, that's great. Thank you very much, Renato.

Speaker #2: Thank you.

Renato Semerari: Thank you.

Speaker #1: The next question is from Molly Villensec of Jefferies. Please go ahead.

Operator 2: The next question is from Molly Wilensek of Jefferies. Please go ahead.

Operator: The next question is from Molly Wilensek of Jefferies. Please go ahead.

Speaker #5: Good evening, Renato. Victoria Francois. I just want to push you a bit more on makeup and the order book. As you just mentioned, the order book is mostly makeup.

Molly Wilensek: Good evening, Renato, Vittorio, Francois. I just want to push you a bit more on makeup and the order book. As you just mentioned, the order book is mostly makeup. You've been talking about record levels since, I think, November of last year. Good to hear that makeup is now ex FX, ex packaging, back into mid-single digit growth. Can you talk us through sort of the acceleration you expect into H2? I'm not sure if I missed it, but just your expectations around packaging in H2 as well to get towards maybe a net sales number. Thank you.

Molly Wylenzek: Good evening, Renato, Vittorio, Francois. I just want to push you a bit more on makeup and the order book. As you just mentioned, the order book is mostly makeup. You've been talking about record levels since, I think, November of last year. Good to hear that makeup is now ex FX, ex packaging, back into mid-single digit growth. Can you talk us through sort of the acceleration you expect into H2? I'm not sure if I missed it, but just your expectations around packaging in H2 as well to get towards maybe a net sales number. Thank you.

Speaker #5: You've been talking about record levels since, I think, November of last year. Good to hear that makeup is now, if I understand correctly, packaging back into mid-single-digit growth.

Speaker #5: But can you talk us through the sort of acceleration you expect into the second half? And I'm not sure if I missed it, but just your expectations around packaging in the second half as well, to get towards maybe a net sales number?

Speaker #5: Thank you.

Speaker #2: Okay. So for makeup, we spoke about an acceleration happening at the end of last year. I must say that this acceleration is further accelerating, especially in makeup. Actually, it is mostly focused on makeup during these early summer months.

Renato Semerari: For makeup, we spoke about an acceleration happening at the end of last year. I must say that this acceleration is further accelerating, especially in makeup. It's mostly focused on makeup during this early summer month. We really see traction coming in makeup and mostly driven by the Western hemisphere, mostly coming from prestige. Prestige was up significantly in Q2 for makeup, also for skincare, but especially for makeup. When we look at the order book we have on end, we see similar dynamics. Let's say the weight of prestige versus mass is very similar, so we cannot predict what is going to be exactly at the end of the year. The indications we have in our ends point to the same direction. All in all, we expect to go in that direction.

Speaker #2: So, we really see traction coming in makeup, and it's mostly driven by the Western Hemisphere. Mostly coming from Prestige. Prestige was up significantly in the second quarter for makeup.

Speaker #2: Also for skincare, but especially for makeup. When we look at the order book we have on hand, we see similar dynamics. So, let's say, the weight of prestige versus mass is very similar.

Renato Semerari: Let's say the weight of prestige versus mass is very similar, so we cannot predict what is going to be exactly at the end of the year. The indications we have in our ends point to the same direction. All in all, we expect to go in that direction. On the other hand, let's not forget that what is more of a surprise is the fact that the forecast we're getting on the Hair and Body business unit is ahead of our expectations. That is good news in terms of top line, as you well know. You also know that is a bit diluted in terms of EBITDA margins going forward.

Speaker #2: So, we cannot predict what is going to happen exactly at the end of the year, but the indications we have on our end point in the same direction.

Speaker #2: So, all in all, we expect to go in that direction. On the other hand, let's not forget that what is more of a surprise, quote-unquote, is the fact that the forecast we're getting on the Air and Body business unit is ahead of our expectations.

Renato Semerari: On the other hand, let's not forget that what is more of a surprise is the fact that the forecast we're getting on the Hair and Body business unit is ahead of our expectations. That is good news in terms of top line, as you well know. You also know that is a bit diluted in terms of EBITDA margins going forward.

Speaker #2: So that is good news in terms of top line, as you will know. But you also know that it is a bit diluted in terms of margins going forward.

Speaker #5: Thank you.

Molly Wilensek: Thank you.

Molly Wylenzek: Thank you.

Speaker #2: So sorry, sorry, just to complete. This air and body part that I just mentioned will drive up a bit the percentage of packaging component on the total net sales.

Renato Semerari: Sorry, just to complete. This Hair and Body part that I just mentioned will drive up a bit the percentage of packaging component on the total net sales. It will not be driven by makeup, I think.

Speaker #2: It will not be driven by makeup, I think. It will be driven by air and body.

Molly Wilensek: Yeah.

Molly Wylenzek: Yeah.

Renato Semerari: It will be driven by Hair and Body.

Speaker #5: Okay. Thank you.

Molly Wilensek: Okay. Thank you.

Molly Wylenzek: Okay. Thank you.

Speaker #2: Thank you, Molly.

Renato Semerari: Thank you, Molly.

Speaker #1: The next question is from Aaron Adamski of Goldman Sachs. Please go ahead.

Operator 2: The next question is from Aron Adamski of Goldman Sachs. Please go ahead.

Operator: The next question is from Aron Adamski of Goldman Sachs. Please go ahead.

Speaker #6: Good evening, Renato, Victoria, and Francois. Thanks for the presentations. I have three questions. First, a follow-up on skincare: how would you expect the prestige skincare performance to evolve into the second half of the year?

Aron Adamski: Good evening, Renato, Vittorio, and Francois. Thanks for the presentations. I have three questions. First, a follow-up on Skincare. How would you expect the prestige Skincare performance to evolve into H2? I think you commented on Makeup. Also, how should we think about the performance from multinationals in the US and European Skincare that appears to have been weaker? Second question is on China. I wanted to follow up on the comments regarding the fight back of the Chinese local brands and their willingness to regain market share. How would you expect that to play out in practice? Would you expect them to become more promotional, or would you rather see a pace of innovation to accelerate?

Speaker #6: I think you commented on makeup, and also, how should we think about the performance from multinationals in the US and Europe in skincare, as that appears to have been weaker?

Speaker #6: Second question is on China. I just wanted to follow up on the comments regarding the fight back of the Chinese local brands and their willingness to regain market share.

Speaker #6: How would you expect that to play out in practice? Would you expect them to become more promotional, or would you rather see the pace of innovation accelerate?

Aron Adamski: How would you expect that to play out in practice? Would you expect them to become more promotional, or would you rather see a pace of innovation to accelerate? Just to finish on China, it would also be great to hear your perspective on the trends we've seen so far in July, if you have the read already. The last quick question is just a technical one. Can you remind us of your expectation for this year for finance cost and the effective tax rate? Thank you.

Speaker #6: And just to finish on China, it would also be great to hear your perspective on the trends we've seen so far in July, if you have the read already.

Aron Adamski: Just to finish on China, it would also be great to hear your perspective on the trends we've seen so far in July, if you have the read already. The last quick question is just a technical one. Can you remind us of your expectation for this year for finance cost and the effective tax rate? Thank you.

Speaker #6: And then the last quick question is just a technical one. Can you remind us of your expectations for this year for finance costs and the effective tax rate?

Speaker #6: Thank you.

Speaker #2: Charles Adam, thank you for your question. Sorry, I'm writing them down because otherwise I forget them. Skincare Prestige for the second half—we are seeing them moving in a good direction, not a great direction.

Renato Semerari: Ciao, Aron. Thank you for your question. Sorry, I'm writing them down because otherwise I forget them. Skincare prestige for H2. We are seeing them moving in a good direction, not a great direction. We clearly see a difference so far between Makeup and Skincare in terms of prestige clients and multinationals. I know Skincare has been mostly driven by Asian clients, and I think this will continue to be the case in H2. As you know, there are few brands in prestige territory from the local brands. One example is, for instance, in China, MAOGEPING. MAOGEPING is one of the few Chinese brands that performed well during the 618 shopping festival. We keep thinking this brand will continue to go well also in H2, but there aren't that many.

Speaker #2: So, we clearly see a difference so far between makeup and skincare in terms of prestige clients and multinationals. I think that skincare—well, not I think.

Speaker #2: I know skincare has been mostly driven by Asian clients, and I think this will continue to be the case in the second half. As you know, there are few brands in the prestige territory from the local brands.

Speaker #2: Now, one example is, for instance, in China: Mao Geping. Mao Geping is one of the few Chinese brands that performed well during the June 18 festival.

Renato Semerari: One example is, for instance, in China, MAOGEPING. MAOGEPING is one of the few Chinese brands that performed well during the 618 shopping festival. We keep thinking this brand will continue to go well also in H2, but there aren't that many. I think that there will be a shift in the total panel of Skincare sales. There will be a shift towards prestige and a bit of mass simply because it will be more driven by Asia than the Western world. From the China fight back, I think that most probably there will be an escalation in promotional.

Speaker #2: So we keep thinking this brand will continue to perform well also in the second half of the year. But there aren't that many. So, I think that there will be a shift in the total panel of skincare sales.

Renato Semerari: I think that there will be a shift in the total panel of Skincare sales. There will be a shift towards prestige and a bit of mass simply because it will be more driven by Asia than the Western world. From the China fight back, I think that most probably there will be an escalation in promotional. Innovation, yes, they always had innovation. It requires a push to get the trial going, and when the Western brands are pushing hard to gain share back, they have an inherent advantage that is driven by their brand image. Getting a great offer from YSL or another luxury brand from the Western is tough for them to compensate. They need to sharpen their pencils to do better in that respect. Yes, I would to go up to answer your questions. July read, we don't have yet. Sorry.

Speaker #2: There will be a shift towards prestige and a bit of mass, simply because it will be more driven by Asia than the Western world.

Speaker #2: From the China fight back, I think that most probably there will be an escalation in promotional activity. Innovation, yes, but they always add innovation.

Renato Semerari: Innovation, yes, they always had innovation. It requires a push to get the trial going, and when the Western brands are pushing hard to gain share back, they have an inherent advantage that is driven by their brand image. Getting a great offer from YSL or another luxury brand from the Western is tough for them to compensate. They need to sharpen their pencils to do better in that respect. Yes, I would to go up to answer your questions. July read, we don't have yet. Sorry.

Speaker #2: It requires a push to get the trial going. And when the western brands are pushing hard to gain share back, they have an inherent advantage that is driven by their brand image.

Speaker #2: So getting a great offer from YSL or another luxury brand from the West is tough for them to compensate. So they need to sharpen their pencils to do better in that respect.

Speaker #2: So yes, I would. To answer your questions: for July, we don't have data yet, sorry. We have seen data up to the end of June.

Renato Semerari: We have seen data up to the end of June. We have seen a read up to the end of July for US market, but not from China. For the finance and tax question, I delegate to someone who is better equipped than me.

Speaker #2: We have seen a read-up to the end of July for the US market, but not from China. For the finance and tax question, I delegate to someone who's better equipped than me.

Speaker #7: Thank you, Renato. So I start from the tax rate to the ETR. We expect to have the ETR normalize in the 30–31% range, per consensus, because we know that the effect of the dividends is temporary.

Vittorio Brenna: Thank you, Renato. I start from the tax rate with thanks to the ETR. We expect our ETR normalizing at 30%, 31% as per consensus, because we know that the effect of the dividends is temporary on the H1, we anticipated before. On the finance cost also here, is depending, of course, how the ForEx will move in the H2, but we do expect here to stay in the range of EUR 12 to 12.5 million, aligned to the consensus.

Speaker #7: So, in H1, as we anticipated before—on the finance cost, also here, it depends, of course, on how the forex will move in the second half. But we do expect to stay in the range of €12–12.5 million, aligned with the consensus.

Speaker #6: Great. Thank you very much.

Aron Adamski: Great. Thank you very much.

Speaker #2: Thank you, Aaron.

Renato Semerari: Thank you, Aron.

Speaker #7: Thank you, Aaron.

Vittorio Brenna: Thank you, Aron.

Speaker #1: As a reminder, if you wish to register to ask a question, please press star one on your telephone. For any further questions, please press star one on your telephone.

Operator 2: As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is from Paola Carboni of Equita SIM. Please go ahead.

Operator: As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is from Paola Carboni of Equita SIM. Please go ahead.

Speaker #1: The next question is from Paola Carboni of Equita. Please go ahead.

Speaker #8: Yes, hello. Sorry, just a quick one from me. How do you see the inventory level in the system and in the market? And to what extent can this ensure the consistency of the fast growth you are expecting in the next few months?

Paola Carboni: Yes, hello. Sorry, just a quick one from me. How do you see the inventory level in the system, in the market, to what extent can this ensure consistency of the fast growth you are expecting in the next few months? If you can comment by today, I will be pleased. Thank you very much.

Speaker #8: If you can comment by category, please. Thank you very much.

Speaker #2: Ciao, Paola. Thank you for your question. Regarding inventory levels, to be honest, we do not see any particular point to raise. I think it’s pretty normalized.

Renato Semerari: Ciao, Paola. Thank you for your question. Inventory level, to be honest, we do not see any particular point to raise. I think it's pretty normalized. The consumer demand is growing in a very steady manner. We think retailers have had time to normalize their stock level. Sell-out, sell-in should be very much aligned, and we do not hear any particular concern from clients. Obviously, you would always have the exception, one client declaring to be a bit overstocked and therefore reducing orders. On the other side, you will always have the exception of someone who is a bit short in inventory and wants to accelerate orders. All in all, I do not see any warning sign. When I look at the reorders trend, as you know, we have a large part of our sales every year is based on reorders.

Speaker #2: The market, the consumer demand, is going in a very steady manner. So we think retailers have had time to normalize their stock levels, so sell-out and sell-in should be very much aligned.

Speaker #2: And we do not hear any particular concern from clients. Obviously, you will always have the exception—one client declaring to be a bit overstocked and therefore reducing orders.

Speaker #2: And on the other side, you will always have the exception of someone who is a bit short on inventory and wants to accelerate orders.

Speaker #2: But all in all, I do not see any warning signs. And when I look at the reorders trend—as you know, a large part of our sales every year is based on reorders.

Renato Semerari: All in all, I do not see any warning sign. When I look at the reorders trend, as you know, we have a large part of our sales every year is based on reorders. They are coming in a more regular and more consistent way than year ago. That is, generally speaking, a sign that the inventory level in the market is pretty normalized.

Renato Semerari: They are coming in a more regular and more consistent way than year ago. That is, generally speaking, a sign that the inventory level in the market is pretty normalized.

Speaker #2: They are coming in in a more regular and more consistent way than a year ago, so that is, generally speaking, a sign that the inventory level in the market is pretty normalized.

Speaker #8: And this is, let's say, this applies also to the Head and Body segment, which is apparently surprising, also to your own expectations?

Paola Carboni: Let's say this applies also to the Hair and Body segment, which is apparently surprising also your own expectations?

Speaker #2: Well, in Head and Body, the reality is that on one side, we have won some new projects we were not expecting in the year, to be honest.

Renato Semerari: Well, in Hair and Body, the reality is that on one side we have won some new projects we were not expecting in the year, to be honest, but also established clients have done a bit of a yo-yo. They were ordering a lot in 2024. They adjusted their inventories in 2025, and now they're running at a more regular pace. Over, let's say, a depressed base, they are now looking better. When I look at the millions, aside from the indexes, I do not see anything really surprising. The good news is that the decline of last year was not a sellout decline. It was an inventory adjustment, so now they're normalizing, and in our forecast, maybe we've been a bit conservative. We were expecting them to stay down at the level of 2025, and in reality, they're going up versus that level.

Speaker #2: But also, established clients have done a bit of a yo-yo. They were ordering a lot in 2024, then adjusted their inventories in 2025, and now they're running at a more regular pace.

Speaker #2: So over, let's say, a depressed base, they are now looking better. But when I look at the millions, aside from the indexes, I do not see anything really surprising.

Speaker #2: The good news is that the decline of last year was not a sellout decline; it was an inventory adjustment. So now they're normalizing. And in our forecast—maybe we've been a bit conservative—we were expecting them to stay down at the level of 2025.

Renato Semerari: It was an inventory adjustment, so now they're normalizing, and in our forecast, maybe we've been a bit conservative. We were expecting them to stay down at the level of 2025, and in reality, they're going up versus that level.

Speaker #2: And in reality, they're going up versus that level.

Speaker #8: Very clear. Thank you very much.

Paola Carboni: Very clear. Thank you very much.

Speaker #2: Thank you, Paola.

Renato Semerari: Thank you, Paola.

Operator 2: The next question is from Michele Romanazzi of BNP Paribas. Please go ahead.

Operator: The next question is from Michele Romanazzi of BNP Paribas. Please go ahead.

Speaker #1: The next question is from Michele Omanazze of BNP Paribas. Please go ahead.

Speaker #6: Good evening. Thanks for taking my question. I have one follow-up, please, on profitability. Now, you gave us some pointers on how to think about H2.

Michele Romanazzi: Good evening. Thanks for taking my question. I have one follow-up, please, on profitability. Now you gave us some pointers how to think about H2. If I look at full year consensus right now, I can see EBITDA of $164 million with margins stable year on year. Are you comfortable with where consensus is? Thank you.

Mikheil Omanadze: Good evening. Thanks for taking my question. I have one follow-up, please, on profitability. Now you gave us some pointers how to think about H2. If I look at full year consensus right now, I can see EBITDA of $164 million with margins stable year on year. Are you comfortable with where consensus is? Thank you.

Speaker #6: But if I look at full-year consensus right now, I can see EBITDA of €164 million, with margins stable year on year. Are you comfortable with where consensus is?

Speaker #6: Thank you.

Speaker #2: Yes, I am. I think it's pretty accurate, actually. I wouldn't be able to do it better than that.

Renato Semerari: Yes, I am. I think it's pretty accurate, actually. I wouldn't be able to do it better than that.

Speaker #6: Very clear. Thank you.

Michele Romanazzi: Very clear. Thank you.

Mikheil Omanadze: Very clear. Thank you.

Speaker #2: I'm joking. Sorry. No, but all jokes aside, I think it's pretty accurate. It's what we expect for the time being.

Renato Semerari: I'm joking, sorry. No, jokes apart, no, I think it's pretty accurate. It's what we expect for the time being.

Speaker #7: Is it reflecting the expectation?

Vittorio Brenna: It's reflecting the expectation.

Speaker #2: Yeah.

Renato Semerari: Yeah.

Speaker #6: Thank you.

Michele Romanazzi: Thank you.

Mikheil Omanadze: Thank you.

Speaker #2: Thank you.

Renato Semerari: Thank you.

Speaker #1: The next question is a follow-up from Aaron Adamski of Goldman Sachs. Please go ahead, sir.

Operator 2: The next question is a follow-up of Aron Adamski of Goldman Sachs. Please go ahead, sir.

Operator: The next question is a follow-up of Aron Adamski of Goldman Sachs. Please go ahead, sir.

Speaker #6: Yeah, thanks for taking my follow-ups. I had two quick questions. First, on fragrances, could you give us some more color on what's driving the strong performance in Europe?

Aron Adamski: Yeah. Thanks for taking my follow-ups. I had two quick questions. First, on fragrances. Could you give us some more color on what's driving the strong performance in Europe? Is it a specific client, a specific innovation that's driving that? Second, just on the innovation appetite, are you seeing any divergence in terms of demand for innovations between emerging brands and multinationals, or is it broadly similar? Thank you.

Speaker #6: Is it a specific client, or a specific innovation that's driving that? And then second, just on the innovation appetite, are you seeing any divergence in terms of demand for innovations between emerging brands and multinationals?

Speaker #6: Or is it broadly similar? Thank you.

Speaker #2: Hi. Thank you for your questions. Fragrance—well, first of all, I must say that the trend of the market, of the fragrance market, remains above, I think, everybody's expectation—certainly our expectation. Especially when I look at the trend in America, it's continuing to grow at a faster-than-usual rate.

Renato Semerari: Hi. Thank you for your questions. Fragrance, well, first of all, I must say that the trend of the fragrance market remains above, I think, everybody's expectation, certainly our expectation, especially when I look at the trend in America. It's continuing to grow at a faster than usual rate. There is that element that is driving consumption ahead of expectation. For all the clients that are particularly developed or strong in the American market, this is good news and drives higher volumes. Innovation, the flow of innovation is pretty similar year on year. Everybody plans more or less the same level. The reality is that it all depends on the rate of success that these new initiatives have, and therefore that can drive big swings in terms of performance for clients and therefore for us as well.

Speaker #2: So, there is that element that is driving consumption ahead of expectations. For all the clients that are particularly developed or strong in the American market, this is good news and drives higher volumes.

Speaker #2: Innovation, the flow of innovation is pretty similar year on year. Everybody plants more or less the same level. Then, the reality is that it all depends on the rate of success that these new initiatives have, and therefore, that can drive big swings.

Renato Semerari: The reality is that it all depends on the rate of success that these new initiatives have, and therefore that can drive big swings in terms of performance for clients and therefore for us as well. I think that all this is more or less normal in terms of trend. Yes, we have one important client that, as I said, tempered its volumes or is buying to adjust inventory last year, and this year has come back to its, I would say, more regular ordering pace. That is also helping and making a difference.

Speaker #2: In terms of performance for clients, and therefore for us as well, I think that all this is more or less normal in terms of trend.

Renato Semerari: I think that all this is more or less normal in terms of trend. Yes, we have one important client that, as I said, tempered its volumes or is buying to adjust inventory last year, and this year has come back to its, I would say, more regular ordering pace. That is also helping and making a difference. Coming to your second question, innovation demand from emerging brands and multinationals, very similar. They are all very eager to move ahead to come up with innovation. There is also a lot of activity going into reformulations of existing franchises. They are driven by regulatory needs, either short term or midterm regulatory needs. There is a lot of renewals going on, both for emerging brands and for multinationals. I don't see any slowdown at all.

Speaker #2: Yes, we have one important client that, as I said, tempered its volumes or was buying to adjust inventory last year. And this year has come back to its, I would say, more regular ordering pace.

Speaker #2: So that is also helping and making a difference. Coming to your second question, innovation demand from emerging brands and multinationals—it's very similar. I mean, they are all very eager to move ahead, to come up with innovation.

Renato Semerari: Coming to your second question, innovation demand from emerging brands and multinationals, very similar. They are all very eager to move ahead to come up with innovation. There is also a lot of activity going into reformulations of existing franchises. They are driven by regulatory needs, either short term or midterm regulatory needs. There is a lot of renewals going on, both for emerging brands and for multinationals. I don't see any slowdown at all.

Speaker #2: There is also a lot of activity going into reformulations of existing franchises. They are driven by regulatory needs—either short-term or mid-term regulatory needs.

Speaker #2: So, there are a lot of renewals going on, both for emerging brands and for multinationals. I don't see any slowdown at all.

Speaker #6: Great. Thank you very much.

Aron Adamski: Great. Thank you very much.

Speaker #2: Thank you.

Renato Semerari: Thank you.

Speaker #1: The next question is a follow-up from Andre Cundrea of UBS. Please go ahead.

Operator 2: The next question is a follow-up of Andrei Condrea of UBS. Please go ahead.

Operator: The next question is a follow-up of Andrei Condrea of UBS. Please go ahead.

Speaker #6: Thank you for taking my follow-up. Just one from me, please. Would you mind updating us on the search for a permanent CFO—how that's going along?

Andrei Condrea: Thank you for taking my follow-up. Just one from me, please. Would you mind updating us on the search for a permanent CFO and how that's going along? Thank you.

Speaker #6: Thank you.

Speaker #2: Yeah. I mean, we are scanning the market a lot. As you can imagine, we do not want to make any mistake. We want to be bulletproof on this one.

Renato Semerari: Yeah. We are scanning the market a lot. As you can imagine, we do not want to make any mistake. We want to be bulletproof on this one. I must say that aside from Vittorio, that is probably complaining about his workload, he is doing a super job as a CFO, so I am almost.

Speaker #2: I must say that, aside from Vittorio, who is probably complaining about his workload, he is doing a superb job. So as a CFO, I kind of don't feel the pressure to rush into a new hiring.

Andrei Condrea: Thank you.

Vittorio Brenna: Thank you.

Renato Semerari: I kind of don't feel the pressure to rush into a new hiring. We have scanned about 70 resumes. We have gone through a round of interviews of about, I would say, 20 candidates, more or less. We are going through the funnel.

Speaker #2: But we have scanned about 70 resumes. We have gone through a round of interviews with about, I would say, 20 candidates, more or less.

Speaker #2: We are going through the funnel and shrinking the candidate list. So, I think that between September and October, we should come to a conclusion on that.

Andrei Condrea: Shrinking

Vittorio Brenna: Shrinking

Andrei Condrea: shrinking the candidate list. I think that between September, October, we should come to a conclusion on that. In the meantime, we have recruited the new IR manager, who's going to join us on 24 August. That is going forward. We've done some other additions in the finance team, so we are beefing up and having stronger shoulders. On the CFO side, we want to be very sure about what we do, so we're going to take our time.

Speaker #2: In the meantime, we recruited the new IR manager, who’s going to join us on August 24. So that is going forward. We’ve made some other additions to the finance team.

Speaker #2: So, we are beefing up and having stronger shoulders. But on the CFO side, we want to be very sure about what we do, so we're going to take our time.

Speaker #6: Understood. Thank you very much.

Andrei Condrea: Understood. Thank you very much.

Speaker #2: Thank you.

Renato Semerari: Thank you.

Speaker #1: The next question is a follow-up from Paola Carboni of Equita. Please go ahead.

Operator 2: The next question is a follow-up of Paola Carboni of Equita. Please go ahead.

Operator: The next question is a follow-up of Paola Carboni of Equita. Please go ahead.

Speaker #5: Yes, thank you for taking my second question. I was wondering if you could share with us some initial thoughts about your view on the market for 2027, and in particular your view regarding the strong acceleration we are going to see in your revenues and from your order backlog in the second part of this year.

Paola Carboni: Yes, thank you for taking my second question. I was wondering if you can share with us some first thought about your view on the market for 2027, and in particular, your view for what concerns the strong acceleration we are going to see in your revenues and from your order backlog in the second part of this year. To what extent do you think we can have still a tail or to what extent can this be sustainable also entering into 2027? Do you see any temporary element that should fade in the short term? Thank you.

Speaker #5: So, to what extent do you think we can still have a tail, or to what extent can this be sustainable, also entering into 2027?

Speaker #5: Or do you see any temporary elements that should fade in the short term? Thank you.

Speaker #2: Thank you, Paola. Well, it is a bit early, frankly speaking, to have a view on 2027. I personally believe the market will realign, as it is already—as expected—doing this year. It is realigning to its historical growth trends.

Renato Semerari: Thank you, Paola. Well, it is a bit early, frankly speaking, to have a view on 2027. I personally believe the market will realign, as it is already, as expected, is doing this year, is realigning to its historical growth pattern trends. I think that is there to stay also next year. I would expect, or at least I hope that the currency will be a bit more favorable next year. In terms of behavior in general, I wouldn't expect any big news, to be honest. I expect the market to stay in the 4% to 5% growth rate. I expect brands to continue to have a very high appetite for innovation, especially because there are some regulatory changes that are going to get closer in terms of timing. That race will continue to be up there.

Speaker #2: I think that that is there to stay also next year. I would expect, or at least I hope, that the currency will be a bit more favorable next year.

Speaker #2: But in terms of behavior in general, I wouldn't expect any big news, to be honest. So I expect the market to stay in the 4% to 5% growth rate.

Speaker #2: I expect brands to continue to have a very high appetite for innovation, especially because there are some regulatory changes that are going to get closer in terms of timing.

Renato Semerari: I expect brands to continue to have a very high appetite for innovation, especially because there are some regulatory changes that are going to get closer in terms of timing. That race will continue to be up there. In terms of backlog or anything like that, it will depend a lot on how we'll perform at the end of the year and what is going to be the ordering flow in H2, especially from October onwards, so it's a bit early. I have no, let's say, anxiety about 2027 for the time being.

Speaker #2: So that race will continue to be up there. And in terms of backlog or anything like that, it will depend a lot on how we'll perform at the end of the year and what is going to be the ordering flow in the second half of the year, especially from October onwards.

Renato Semerari: In terms of backlog or anything like that, it will depend a lot on how we'll perform at the end of the year and what is going to be the ordering flow in H2, especially from October onwards, so it's a bit early. I have no, let's say, anxiety about 2027 for the time being.

Speaker #2: So, it's a bit early. I have no, let's say, anxiety about 2027 for the time being.

Speaker #5: Okay. Thanks. Thank you.

Paola Carboni: Okay, thanks. Thank you.

Speaker #1: Gentlemen, there are no more questions registered at this time.

Operator 2: Gentlemen, there are no more questions registered at this time.

Operator: Gentlemen, there are no more questions registered at this time.

Speaker #2: So, if there are no more questions, I thank everybody and wish everyone a good summer. Thank you very much. Thank you very much.

Renato Semerari: If there are no more questions, I thank everybody and wish everybody a good summer. Thank you very much.

Vittorio Brenna: Thank you very much.

Speaker #1: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Operator 2: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

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