Good morning, and welcome to Electrolux Professional Group, the result presentation of the third quarter of this year. My name is Jacob Broberg.

I'm heading up Investor Relations. With me, as always, have Fabio Zarpellon, the CFO; and Alberto Zanata, CEO.

And as always, also Alberto starts. Please go ahead, Alberto.

Thank you, Jacob. Good morning to everybody.

I would describe the third quarter of 2025 as a good quarter considering the context. The context is a context where the market condition are still not stabilized.

There is still the uncertainty, in particular in the United States, and in particular, after the tariff announcement in July, the market in the United States has full of uncertainty and the decision, in particular, if we talk about chain rollout, a big project has been put on hold or postponed. It is an environment that is clearly marked by tariffs and currency and that have been negatively impacting our business.

Despite all these things, and that is the reason why I consider it a positive quarter, we performed delivering organic growth, delivering improved margin, delivering improve EBITA. Currency impacted for a 0.5 percentage points, so quite significant in the quarter.

It is a quarter where we delivered solid cash flow, operating cash flow. Also in this case, are continuing to invest.

I mentioned more than once perform while transforming. And these are the quarters where this company is going through big transformation in terms of new products that we are finally -- we will finally start to bring to market from January 2026.

But it's a transformation that is not only considering the investments and the new product, but is considering also the organization. Beginning of the year -- beginning of September, sorry, we launched program that has the objective to streamline the operation, reducing the operating cost, but also has the objective to change the skills of the company.

We are -- we launched this program that has an impact of roughly SEK 85 million in terms of cost reduction already next year, is a program that is impacting a quite significant number of employees, 350 employees. Even if the net, as you see is not the total number of affected employees.

And why is that? Because an objective of the program is also to transform our organization.

Next year, we want to move more resources after having invested so much in R&D and developing product in investing in the automatization of our factory in the digitalization of our operation. Next year, we want also to invest to make use of these investments and to focus on the front end on the sales.

The program, by the way, is progressing pretty well. is according to our expectations, and we believe we will be able to deliver what we have been promising.

If we move about the market, I think I already commented the U.S. where you see that we are basically flattish on Food & Beverage, with the food still growing, in particular the chains.

Chain business is still growing. And I believe it's 7, 8, 9 quarters in a row that we are growing chains.

They are not the big chains. They are the mid- small-sized chains.

They are not big rollouts, but it is the replacement business, new openings or as I said, small chains, but it's growing. One comment is to Laundry.

You see Laundry here down, but I'm repeating things that I said also in the past, here, you should read these numbers considering that in the U.S., we have a large importer that is a stocking the product, and the fluctuation of the inventory and the shipment to this importer are clearly affecting the number that you see. The thing that I can say is that the external sales because we have visibility on the external sales of our distributor, our partner in the United States are healthy.

We have an order stock or our distributor has an order stock in the United States, that is at the historical peak. So there is good business.

And indeed, the order intake during the month of October is basically on the double level of last year. That was expected considering this number for Q3.

What is good and I'd like to underline is the trend in Europe. At the beginning of this year, we have been talking about Europe saying that we would have expected a slowdown after years of growth, in particular in the South European markets, in the Mediterranean region, reality is that Europe is still holding very well.

Both Laundry and food are holding well. And we see also not only the Mediterranean region contributing, but also the Central and Nordic region doing positive.

And I think this is important because despite the fact that we have a clearly global business, Europe still remains a very important part of our business with roughly 50% of the sales executed in this part of the world. A few words also about the 2 segments, Food & Beverage.

So Food & Beverage delivered organic growth. Food & Beverage delivered improved profitability and improved margin.

Food & Beverage is also partially affected by tariffs and currency, in particular for what the beverage business is concerned, that is produced in Thailand, most of the product in Thailand and Italy, and the main market is United States. Nevertheless, despite these things, I repeat, organic growth, improved earnings, EBITA and improved margin.

With Europe being the main market, delivering the positive results, U.S. food, in particular, while we had a decline in Asia and Middle East and Africa, but that is -- again, is these are regions with many projects.

And it is similar to the discussion we had even if not affecting the inventory, but the fluctuation of the order that can change the number pretty well. In that area, we are sitting on a good order stock, so we should be able to have the results done.

Positive notice about this segment is that the order intake was positive for Food & Beverage. If we move to the Laundry, that is the segment that is more impacted by tariffs and currency because a large portion of this Laundry business is in the United States.

Organic sales are unchanged. So we have basically a flat development, with the order intake that was down, but remember the comment I made earlier is mainly because of this fluctuation.

We already see this in the month of October, we are close to the end of the month, and the order intake is very good in Laundry, in particular, in the United States. Despite the significant impact close to 1 point of EBIT due to the currency.

The margin in Laundry in the quarter improved, EBITA in absolute values was more or less flat, but the margin improved. And this is significant in relation to the -- how healthy is the underlying business of this segment.

With this said, I believe we can get a little bit more into the details and Fabio, they're yours.

Thank you, Alberto, and good morning to everybody. As Alberto mentioned, in the quarter, we made an additional step in our profitable growth journey.

Sales grew organically. We improve profitability before the provision for restructuring cost.

Despite the headwinds we had to face both from currency tariffs, and by the way, was to continue to invest in product innovation and digitalization of our group. From a geographical perspective, we continue to have a pretty well-balanced situation with Americas contributing roughly 26% of the total sales, APAC 16% and now Europe below the 16%.

When it looks to the margin development in the quarter, we got a positive contribution from price, lower material cost and the operational costs were more and less in line with last year with a different mix, meaning we continue to increase the investment for innovation and digitalization of the group. Thanks to this good price management.

I'm happy to report that we have been able to compensate, I would say, not all, but at least the majority of the tariffs impact in the quarter. Few more words instead on the current development that continue to affect negatively our financial.

And here, 2 pieces, currency translation and currency transaction. Currency translation affecting negative our top line by roughly 4.5%.

And in value more or less the bottom line, but no material impact for what concern the margin. Instead, currency transaction do also here to the strengthening of SEK versus, I would say, mainly U.S.

dollar and euro has reduced our, let me say, margin by 0.5 percentage point. Currency transaction that as we have reported previous quarter has not affected just this quarter, but it's somehow a negative contribution we face along this year and then if I sum up the currency transaction effect on EBITA in the year-to-date data, we are close to SEK 16 million or 0.6 points in terms of margin.

A few more words then on the program we have launched to streamline our operation and improve the profitability. Total costs, as you know, was SEK 235 million, we treat it as item affecting comparability, partially booking gross margin, and this is the reason why you see a reported decline of gross margin impacting SG&A.

The program is affecting both segment. Food & Beverage represent roughly 70% of the cost and the remaining of Laundry.

So you see that is more in line with the size of the 2 businesses. Execution started is proceeding according to plan and we expect to receive material saving out of it.

Based on current sales development already in 2026 about anticipated the SEK 80 million. They are equivalent to 0.6 point in margin and for 2027, where we are going to enjoy, I would say, the full contribution from the plan, we talk about 1.4 points of margin.

So execution according to plan material contribution to our margin expansion. A few words then on the other component of our income finance net was SEK 21 million, significantly lower than last year, thanks to the fact that we continue to reduce our borrowing thanks to the good cash generation.

A peculiarity in the quarter, we have positive contribution to income from tax. What happened in the quarter, the income before tax was pretty low due to the restructuring provision, and we have some previous period adjustment that brought the overall tax to positive.

If we exclude this, let me say, one-off situation, the underlying tax rate is in line with the guidance we gave in the past that is around 26%. EPS was pretty low in the quarter, SEK 0.14 per share, and this is due to the restructuring provision.

Without it, we are in line with the previous year earnings per share. Our cash flow generation continued to be solid over SEK 400 million was the cash flow delivered in the quarter, somehow lower than last year due to lower contribution from working capital and higher CapEx.

A few more words than on CapEx. We anticipated an increase of CapEx, it is happening year-to-date, we are close to 2%.

But I will say we see more CapEx in absolute terms and in percentage of sales coming in coming quarters this year and next year due to the investment we are doing in product innovation. This said, it is something that we can manage and will not affect materially our capacity to generate cash quarter-on-quarter.

Capacity that is supported by a positive development on operating working capital. We are definitely well below last year.

We somehow temporary stop the increase -- the decrease, sorry, compared to June. This is a temporary effect due to some stock pile-up, due to production movement, particularly in Laundry.

Few last word on our financial position that you see the graphs is strong and continue to be stronger. So we continue to repeat that our net debt-to-EBITDA is reduced now to 1.2x.

So solid group with solid performance and with ingredients to continue to profitable growth the journey. And with that, back to you, Alberto.

Thank you, Fabio. And as usual, some words about the quarterly events.

And I'm very proud to report back or to inform you about the award, the product innovation award that we won. It's not the first time, but this year is important because it is in the U.S., first.

And secondly, because we got these awards, thanks to the technology that we have been embedded in the Electrolux product, Electrolux Professional product and presented in the U.S. by technology that we got from TOSEI.

So from the Japanese company, we acquired 1.5 years ago, close to 2 years ago now. I think this is an example of how we've been able to leverage the acquisition.

The TOSEI business is not performing as we were expecting in particular, on the food area, I would say, and nevertheless -- and it is not because the performance of the company, it’s because of the market conditions that are -- that have been deteriorated during the past 18 months. Nevertheless, we developed the Electrolux Professional version of the Combo machine.

Combo machine is peculiar technology where you're combining 1 machine at the washer and dryer cycle, you are probably used to have it home in some situation, in the professional environment it's only used in Japan because of the space constraint that they have there. And the big challenge is to have the 2 cycles in a way that the time is not so long as you probably has experience, if you had been using this machine at home.

The technology that we have in Japan is great. It works.

And it was a great success also in the U.S. because the reality, space constrained, you have also in a country like U.S., if you think about the big city.

So we got the award, is confirming our innovation is -- these are products that now we are marketing also outside the United States. In the synergy plan, it was only supposed to replace the external supplier that we use in the -- in Japan, we did it.

It's already done this one. But now we are also marketing this product outside Japan.

So great things. Even if it is not here, we are also using the technology of the Adventys, the other company we acquired last year, we are embedding in the cooking lines that we presented last week, and we start selling in January, and we will talk about that next week during the Capital Market Day.

With this said, if we have to summarize the quarter, as I said, I believe it's a quarter where we perform while transforming the organization, we performed because we improved our organic sales growing organically. We improved the underlying profitability, the margin and EBITA.

It is another step. I consider this one an additional step in our journey towards the financial target that we have is mainly driven by the large businesses, so the Food & Beverage and Laundry in Europe and the food in the United States.

We ended the quarter with a positive order intake for Food & Beverage. I would consider positive also the Laundry one, if I look at the number month today.

So the order intake is still positive, it's still positive despite the uncertainty that we have to recognize and acknowledge in the market. And exactly to face possible downturn, but not only for that, we launched a program that is in the execution phase to reduce our operating cost.

And as I said, clearly, it's giving us the possibility to be leaner, more flexible, agile, ready eventually for situation that we don't see in front of us today, but we could and we should be prepared for. But it's also a program that is giving us the possibility to have a shift in competencies in our organization to invest in resources that will make use of the product that we develop to further accelerate the growth of the sales.

It is a quarter also where we have been working hardly and we will talk more about that next week during the Capital Market Day, to prepare for -- to prepare the launches of this product. We had a peak -- we are in the middle of a peak of investment, both in R&D and industrial investments, so tooling factory lines, that obviously, they have to bring the fruits.

They have to generate something. And these are the products that we will start selling from January 1, 2026.

With this said, back to you, Jacob.

Thank you, Alberto. Thank you, Fabio.

With that, we open up for questions. Operator, please go ahead.

This is Gustav Hageus with SEB. Might I start with the comments on the R&D spend into the second half of next year.

Could you remind us where you are at, at the moment in terms of R&D to sales? And would you think this business commence or if not, where you've been historically in that relationship to get some sense of what the margin potential uplift could be here going into end of '26?

Okay. Gustav.

So the average R&D spending on net sales is at 4.5%. I mean average and the underlining average because it is higher, in particular, for what the business area, Food and Laundry are concerned.

It is a peak, as I said, because we mentioned this more than once that we are renovating the complete platform of Laundry and the platform of cooking in Europe. We expect that we will continue to spend this level slightly lower probably, also during the first part of next year, starting to bring it back to normal -- we call it a normalized level that is still high for the average of the industry, but it's part of what we do always during the second part of the year and going on into 2027.

What's the normalized level? it's roughly 1 point less than what I said.

That's helpful. And if I can stay on that with the developments you're doing in the facilities, some with the new product, could you help us a bit understand firstly, if there will be sort of the phasing of the new versus old products, is there going to be a gap here of prebuying, do you think from -- based from experience as you roll out the new platform?

And secondly, in terms of margin and the mix from the new products versus the old? And if depreciations will be a factor here going to -- as you roll these new products from the new facilities out to the new lineup, that would be helpful.

Okay. So I don't believe that there will be so much prebuying of all product for several reasons.

First, the first line coming to market is the cooking line that will come in Q1 next year, so from January on. And it is an important line because it's basically 1/3 of the business in Food Europe.

It is the line, the highest margin, so we are relaunching that we are expecting a push of sales clearly for the product that have the best margin in our European product portfolio. It is not only what we call horizontal cooking, so the stoves, but it is in addition to the stoves also relaunch of the Combi Oven with new features, and you know that the Combi Oven are high-margin product and the tabletop cooking.

So it's all -- whatever is hot, let me say, in our portfolio. So it's an important part and we are expecting to have an impact all along the year.

So to launch it in the beginning of the year is very, very important. And I repeat, these are product -- these are the most profitable product in our European portfolio.

They are a replacement, so they are going to replace the product that today have in production. The launch that will happen during the second quarter, that is the first batch of laundry is at 30% of the laundry sales.

It's also important, it's partially replacing something that we have in the portfolio today, but it's also giving us the possibility to be much more competitive mainly in Europe again with a small capacity washers. I don't have to say that Laundry is high margin product category.

The third line is -- the third product that we will bring during the summer is again in Europe, and it is cooking, and this is a completely new product for new segments. So there are no replacement that will be only added sales in an unsaturated segment of the market.

But I think probably I'm talking too much about these things because there will be a lot to say next week during the Capital Market Day.

Okay. But -- and could you just remind us sort of what the delta will be from the potential gross margin uplift then from these products versus I guess, more efficient production with the new line versus higher depreciations from whatever you have invested in the new lines.

What -- is the delta positive as you see it on operating margins from this?

Yes. So this -- we expect this product to positively contribute to the margin expansion.

Yes, we are going to have additional depreciation due to the investment we are doing on this product. At the same time, this will be compensated by a better other -- lower production cost in other items and better price and mix.

So we expect a gross profit expansion and EBITA expansion all included.

That's very clear. And if I can continue a little bit on the nitty-gritty with the cash flow.

Maybe you can help me sort out the discrepancy between the cash taxes and the reported taxes, both quite big in the quarter and almost SEK 300 million right in year-to-date. It seems like you're paying more taxes than you account for.

Will there be a reversal at some stage here? Or is there anything I'm missing?

Yes. So this is mainly related to the provision for the restructuring.

Somehow that has an impact on the tax and with no material yet on the cash flow. So temporary, we have been reducing the cash payment, but this one will come step by step.

So you should have a lower tax cash tax in Q4 2016 or how do I read it?

No, that all the rest equal, the tax rate for quarter 4 onwards is expected to be line with the guidance I gave earlier of the 26%. In the quarter, the tax rate was, let me say, even positive because, as I mentioned, due to the restructuring provision, the income before tax was pretty tiny.

So we have a tax cost pretty small in the quarter. And we have a couple of positive previous period adjustment that brought the tax amount to a positive roughly SEK 25 million in the quarter.

This was temporary related to the provision for restructuring this previous period adjustment, the tax rate and tax impact going forward is confirmed in line with what I mentioned, the 26% guidance .

Okay. And -- but in general, then cash flow into Q4, it seems like last year at least was quite strong.

Can you comment on the seasonality that you see this year for the cash flow into Q4?

Seasonality.

Seasonality of cash flow. Yes, if we go through the different quarters, normally, we have relatively quarter 1 and quarter 3 are somehow the ones that compared to EBITDA, they are lower in terms of seasonality, normally stronger in quarter 2 and quarter 4, and we expect also this year quarter 4 to be in that line.

Perfect. And then that brings me to my last question, on capital prioritization, 1.2x EBITDA now gearing if I read correctly, target is 2.5.

So how do you -- I appreciate that you're looking to buy companies, but it's been some time now. So how do -- would you see that you prioritize between M&A, dividends, buybacks, further investments in organic growth?

We are still targeting to buy companies. So we are still targeting to make use of this cash to buy companies.

So that is still our priorities. We have been working.

I always said that it's hard to predict when it's going to happen. But still, this is a full-time activity, let me say, for some people, some resources in our organization.

.

To be added here, Alberto. If we look at the past, this group since COVID has been able to combine acquisition, investment in product innovation, in organic growth and pay dividend.

So let me say, we have the strength in place to be able to act on these 3 dimensions. And somehow, the trend of our net debt on EBITDA development is confirming that we have the ingredients to continue to perform on these 3 important aspects.

I think I will take 2 questions from the web. One is from Stefan Stjernholm at Handelsbanken related to TOSEI.

If we can give an update on TOSEI sales margin development and synergies. And also you had a question about R&D cost, but I think you answered that before, Alberto.

So TOSEI update, please.

TOSEI, we have -- we are experiencing 2 different dynamics. In Laundry, the business has been weakening, but it seems to recover a good level with the profitability more or less in line with what it was a different situation in food, the Vacuum business, that due to the fact that the post-COVID a season of large subsidies from the government and now the market stabilized on a lower level.

We know and that we clearly see this because Japan is one of the few markets where there are statistic that we didn't lose market share. Remember that we have roughly 50% market share in vacuum and 50% in Laundry.

We didn't lose market share. Nevertheless, the market, in particular, on the vacuum side is smaller.

So how -- what we are doing and the synergies are jumping in, in this discussion is because, in particular, on the food, let's talk about the food first. We launched the Electrolux produced product in the TOSEI business.

It is with the Electrolux Professional brand, but it's going through TOSEI. And I tell you that I experienced personally a couple of weeks ago when I was there, when all the products that are coming from abroad, like, by the way, for our competitor, they are typically tested by the distributor.

In our case, we are adding a brand or a brand -- sorry, a mark where is tested by TOSEI that is, in some way, giving trust to the customer that this is exactly the product fitting the request of the market in Japan. So we launched the food preparation, a lot of activities over there with the distributors.

And these days, we are also introducing the Combi Oven. So from the business synergies point of view, we are doing the things that we said, yes, it's not super fast, but the Japanese market is progressing much lower than other regions.

On the Laundry side, I think I mentioned earlier, when I was commenting the award that we got in the United States, we already replaced the external supplier that we had for the combo machine with a combo machine producing TOSEI and branded Electrolux Professional, we are also selling that product in the Asian market, in other Asian markets under the Electrolux Professional brand. And we also, at least a couple of weeks ago when I was there, I saw the TOSEI dryers that have been produced in the Thai factory and that should be sold in Japan replacing the local production with clearly higher margin and higher performances.

From the cost point of view, TOSEI is also part of our program because now we merged the 2 organization. We have 1 office, so we close 1 office.

We have only 1 office, 1 legal entity, 1 system, sharing all the showrooms around the country that are many, by the way, in Japan. And so we are starting to see the benefit also from the cost point of view.

Then I have 2 more questions related to the efficiency program. One was from [indiscernible] Capital.

What was the impact on the gross margin of the SEK 235 million in items affecting comparability. And how much of this amount was below the gross profit line.

And then there is another question from Henrik Christiansson, DNB Carnegie. The underlying gross margin, what was that margin.

Those were the questions. Fabio.

So overall, the provision was SEK 235 million, roughly SEK 135 million was included into the gross profit. So the underlying gross profit margin, excluding this provision was in line with last year, meaning the 34.5%, to be said that when we talk about the currency impact, currency transaction impact of 0.5 points, the tariffs impact, these are affecting the gross profit.

So the underlying gross profit, excluding these, let me say, items is expanding. It's expanding thanks to what I mentioned earlier, good pricing, reduction of product cost, mainly in the area of material.

Yes, we are not yet able in the quarter to compensate fully the tariffs and the currency, but we have put in place action in terms of pricing to be able to do so over time in the coming quarters.

Thank you. Operator, please go ahead if there are any other questions from the phone?

Yes. So a follow-up on that because I noticed they're on the slides that you said that you've taken action on pricing to offset FX.

And I think you said, Fabio, that there was a SEK 60 million negative currency impact year-to-date, and you now said you have announced price increases as well. When do you expect that to go into effect?

The price have been already announced, they will take effect January 1 in some -- for some product categories. The last ones will be March 1.

It's a matter of timing, seasonality, habits, let me say, in the different region. But during the first 2, 3 months, all the price will be effective, as I said, already announced.

And we know that with this one, we will cover the gap that this year we were not able to cover because of the combination of the negative impact of tariffs and currency.

And a follow-up on that. So what is the total gap?

So the SEK 60 million negative currency? And then is there tariffs on top?

And do you expect to close that fully next year?

Yes. The tariffs is on top of it and with the action that Alberto mentioned regarding price, we expect in 2026 to compensate both.

And how much is the tariff impact that you haven't been able to close?

The tariffs, if the order of magnitude, just to give a sort of guidance in the quarter, meaning quarter 3 is in the area of roughly SEK 10 million. So it is negative -- this SEK 10 million is net of the price increase.

So this is somehow the net. It is there, not negative effect but not really material when you think that we deliver over SEK 300 million in EBITDA in the quarter.

I have just a minor follow-up. You mentioned in Food & Bev that beverage declined in the U.S.

How big is beverage of Food & Bev in the U.S. today?

And what was the reason for the decline?

Okay. I go by memories because half of it -- half of the Food & Beverage business is, I would say, less than 1/3 is beverage and it's 100% imported, majority from Thailand and some from Italy.

The frozen from Italy, the cold from Thailand. The reason is that it is the food -- the beverage business because we said the food, we grew while the beverage was declining, is that because it's 100% a chain business.

The beverage business in U.S. is chain business.

It is a chain business, and as I mentioned, most of the rollout, they've been put on hold. So it is a peculiar situation, the one that we are facing in the United States with the beverage business .

And is this -- I remember you had this big contract some years ago. Is that one big chain that is sort of behind most of the beverage business in the U.S.?

Okay. That was -- but it is already 5 years ago.

So I have to say that eventually, I can expect that we are going to replace this product relatively soon. But besides that, now the beverage business, we have -- today, in the beverage business, in particular, the business we're having are many midsized chains.

So some hundreds of restaurants, not the -- as it was in that case, the 17,000, 18,000 restaurant chain. So -- but United States is full of regional restaurants -- regional chains with some hundred outlets.

So it is still a profitable, healthy business that is -- beginning of the year, it was good, beverage, it was good until the spring, I would say. And then suddenly, everything was on hold.

And we discussed TOSEI say on how the integration and work on that is ongoing. How would you characterize the Unified Brands business today in the U.S.?

Is it where you wanted it to be? Because you had some issues, obviously, in the initial year?

Yes. Okay.

U.S., we had the record year in the U.S. was 2022.

I tell you that this is a year where we will do probably better. So we are improving all the issues that we have been addressing -- have been addressed.

We opened several places where we can host reps, dealers, customers. We have our own new place in Mississippi.

That is a brand-new one that we opened in March. I think we are doing well, honestly.

We are reestablishing the position that we have in this country growing, both the imported and non-imported products, so the locally manufactured, building around some strong brand. So Groen, Randell, Electrolux Professional and Crathco.

Crathco is the beverage. These are the 4 pillars of our strategy that is driven by brand and product.

So hot for growing technology in Electrolux Professionals, the beverage leading market, leading brand in called Randell, that is the preferred choice for blue chips chains for what the prep tables are concerned. So I would say that now it's clear, the strategy, the way to go.

And we have the setup that is able to support these things. We went through some years of difficulty, as you said, but I believe they are behind us right now.

Thank you very much for listening in. And hopefully, I will meet all of you next week on our Investor Day here in Stockholm on November 6.

Thank you, and goodbye. .