SEB SA (SK) Earnings Call Transcript

[Interpreted] Ladies and gentlemen, good day, and welcome to this presentation of our first half yearly results in 2020 for our group. We are meeting in our headquarters, and we will not be able to see you, but you will hear us. As usual, I will be presenting the results with Stanislas De Gramont, who's the Chief Operating Officer and who you all know well, as well as Nathalie Lomon, who is Senior Executive VP in charge of Finance, who is also CFO. I'm going to first give first portion as an introduction on the important factors in this first half year. We will then have a look at the activity and the figures of the first half year 2020. We'll talk about the forecast as well. And we will then, obviously, answer any questions you may wish to ask. In regards of introduction, first of all, the key figures, and perhaps a few other factors. You can -- as you can see, sales stood at EUR 2.670 billion, down 12.6%, with the first comment -- in the first quarter at minus 16%. 0.5% in the second half year with minus 8.4% was a big difference here, obviously, between the first quarter and the second quarter, but we'll get back to that. When we look in more detail between our 2 activities: mass market, which as I remind you, is 90%, roughly, of our sales figures. We have a bigger contrast between the first quarter, minus 17.3%, and the second quarter, which stood only down by minus 3.2%. Obviously, we'll get back to that with a very clear improvement in the second quarter. On the contrary, in our Professional activity, mainly coffee machines, you can see this is the opposite and the first quarter was not highly affected. As you recall, the coronavirus crisis was mainly in China at that time, which is not the biggest contributor in our professional activity. So that was down in the first quarter by 10%, and by 43%, however, in the second quarter. This activity depends a great deal, obviously, on hotel and restaurants -- hotels and restaurants, which obviously were closed more significantly. So there's a big contrast there in terms of our activity. Now the second slide, we get more into detail, after-sales. We said there's minus 12.7% and minus 12.6% for tcpc like-for-like, which leads me to say that we have, all things being equal, a very small impact in the first half year in terms of sales. And as you can see, the ORfA stood at EUR 103 million compared to EUR 230 million in the first half year 2019. If you recall the figures that we had announced in the first half year, we announced at the end of the first half year this year, an ORfA of EUR 18 million compared to EUR 138 million in 2019. For the second quarter, we're standing at $86 million compared to an ORfA of EUR 92 million, and we'll get back to that significant improvement in sales and a very strong action on cost. Now the net result stood at EUR 3 million compared to $100 million last year because this is mainly due to the effect of the presence in the second quarter of other more significant expenses than last year and net debt standing at $2.085 billion and EUR 306 million of that were related to IFRS 16. So to describe the first half year, I would like to start with having a look at history and the main priorities. Obviously, these involved, first of all and for the whole length and the whole period, priority in health and safety of staff. The crisis for us started right in January with China, and it carried on, and it's not yet over because it's still very much present in countries such as Brazil, significantly, or the United States as well. And obviously, our priority since this occurred was to obtain safety for our staff. And up until now, and knock on wood, we were fortunate enough to have had 42 people have been affected out of 107. We have 6 that are still sick, but no -- none of those people had to be hospitalized or have been seriously ill. So we're very, very happy about that, obviously, that our staff had not had any health-related results. The second thing is that, obviously, and I'll get back to this, we had a very contrasted activity, whether it'd be industrially in our commercial activities and with stops and starts, and I'll get back to that in a minute. We, obviously, have worked a great deal in maintaining our cash position, our liquidity, and the financial situation remains solid and robust. You will see it is very solid, indeed, with the renewal of -- with our financing. And we're setting up cost-reduction programs, which made it possible in the first quarter to have realized significant savings on staffing levels, on transport costs, on fees, and many expenses were reduced so as to compensate for the loss in sales linked to the COVID. But we didn't stop there. We continued on many projects, whether it be in acquisitions, spin-offs, sales, adjustments in our -- various adjustments in our company. So if we look on the next slide, which goes over the history, really, of this crisis, which is obviously without precedent, and as you can see, in green in the slides, you have -- the crisis does not yet affect the area. But in red, the situation -- the crisis was affecting us very deeply, and almost everything was shut down. And then in the yellow area, things were starting up again. And the greener it gets, the better it is. So what does all this mean? Well, the crisis happened at the end of January, which -- and confinement was -- the lockdown was, as you can see later on, and all staff were working remotely. And globally, all of distribution came to a halt, except via internet. So it was a very difficult period. And then that lasted a very short time, actually. We restarted the plants at the end of February, with the exception of Wuhan, which is in the center of the epidemic, which opened up at the end of April. And the commercial activity picked up again and became stronger and stronger, got back to normal, really. Obviously, at the beginning, there was more activity online, and then off-line was ramping up little by little. So the crisis was actually quite well controlled, all in all, other than China. But our big countries for us, which are Japan, Korea and Hong Kong, have stood up well, and I would say they have come back into green. Even if you do see -- in July, we saw some yellow because, as you know, there is -- there are some -- a bit of a comeback on the part of the virus in Hong Kong notably, and in Japan. Now in EMEA, Europe, Middle East and Africa, what we can see very clearly there's an offset in time. And that's one of the constants that we observed this morning that this offset in time is depending on the geography. But this is mid-March, and that would -- deeply blocked our continent before starting up again around the middle of the month of May, and it started up a little by little with a few residual problems in India and other countries. And in America, it's even later with an immediate lockdown in the U.S. in our plants, but also in Brazil and in Colombia, with a start-up that we can qualify as slow and uncertain. There's a huge spread of the epidemic throughout the North America, and this is very concerning, not only from a health point of view but also from an economic point of view in Brazil, with an assessment of some 35% -- depreciation of 35% of the real. And the -- so this virus is still very present. And in the United States, we talk about it every day, notably, the declarations of Mr. Trump. So now looking more at what's going in the next slide, and there is a slight error in this slide. The first 2 lines are fine. In other words, mass retail and e-commerce have not been affected throughout the whole crisis. We saw that all the distributors in France were open. Sometimes they prioritized food departments, but they still kept selling all types of products and culinary products and cookware and so forth. And e-commerce was the big winner, as Stanislas will get into later. But our specialists and traditional specialists in our traditional retail outlets were affected contrary to the rest of the group, not only starting in March but right in the month -- in the end of January and February in China. We have 700 stores franchised in China, and they were shut down, they were locked down. [indiscernible] were also shut down. So you can say that the red started before, right, in the month of February in those areas. And it is now June, which is back to green and most of the stores are open, but with a few stores that were closed in Japan. But the situation is really very much better, which explains, obviously, and we'll get back to this, the very strong improvement in our activity at the end of the first semester, notably in the month of June. In industrial terms, we've already shown this chart in the first quarter, we obviously had closures of our sites where -- with a maximum of sites that were closed. Up to 25 sites were closed on the 25th of April. Then the situation became roughly almost back to normal with all of our industrial sites open. Even if in Brazil, they're not working at full capacity simply because the demand is not there. However, our industrial activity has picked up again with, obviously, all of the necessary measures to that -- to the back-to-work situation with protecting workstations, masks and other arrangements and adaptations of methods and processes to -- adapting to the COVID. Through the whole period, there were roughly 15 days in Colombia where we had to maintain the supply chain active and warehouses that were open. There were adjustments done there in terms of working hours, but we never actually interrupted the supply chain. As to the teams that were working in headquarter, they worked -- most of them worked remotely. And in some countries, in Hong Kong, for example, they just went back to remote working. But there are many more people working in office space than in remote -- than remotely. Now if we move to the next slide, this is the continuation of our projects. We have one project, which is very important, which is the strength and the competitiveness of WMF. We've already talked about this. We announced it in July 2019. This is a plan for strengthening WMF's competitiveness with the reduction of the headcount at the head office and also the closing down of the cookware articles plant. And discussion with the German social partners was signed in May, and we have been able to see this reduction with support from the 312 position, of which 213 will be shut down in '20 end. And then cookware in Riedlingen with -- in Geislingen will be transferred to Selongey. This is for the cookware production of WMF, which is for the cookers for the SEB brand and towards Omegna in Italy for Lagostina taking over the stainless steel cookware produced by WMF in Geislingen. So we have the good fortune of having the need to significantly increase the headcount for the professional applications in our big plant in Geislingen, which is a major plant for our coffee activity. And so it will be possible for us to facilitate the transition in terms of staff. Another element, too, we've also shut down a warehouse in the north of Germany. And this has been brought back to Dornstadt, which is a warehouse in [indiscernible], near -- a few miles from Geislingen. And so our German teams have undertaken this plan during the lockdown period. The other point, which I feel is also extremely important in the fulfilling of our projects for this first half, is the preservation of our active liquidity management with 2 major operations. The first was the signing of a new bond issue and with a 5-year maturing term in 2025, with a coupon rate at 1.375%, pretty satisfactory and well underwritten and gives us a great peace of mind for the coming period. And this is something maybe that you're not familiar with this, but it is not something you read about in our groups, and it's very important to give this very robust financial position. And then we've also renegotiated our syndicated credit line of close to EUR 1 billion. We extended in 12 plus 6. In other words, 12 months already decided and 6 months which are optional, which would lead us to the 31st of January 2023. And let me note that this credit line hasn't been drawn to date, but it does give us securing in commercial paper. And also in terms of issues of bond issues up to the level of EUR 960 million. And this is a financing that is still also must be set at negative rates. And this is, of course, very useful in such times. So secured the financing and lengthening the average maturity date and still also a variety of instruments, of bonds and commercial papers, which mean Schuldscheins and this makes it possible to have no financial covenant on any of our financing. Another element in the description of this first half is clearly solidarity, of course, that a lot of groups have shown, but SEB in particular, during this coronavirus period. We've been able to draw on the group's commercial and industrial expertise, in particular development of an industrial rollout of artificial ventilator, MakAir, and this was supported by CEA in Grenoble. And we've been able to continue this project. And now we're about to bring out these artificial ventilators. We hope that we won't be needing them in France, but we can't be sure. And so we're ready, and we're ready for any demand we'll be having in Madagascar or elsewhere. And of course, they will be supplied for humanitarian reasons, and this will be with no margin for the group. We've also donated masks, gloves and plenty of other products, as you see here, to the Paris hospitals with coffee machines and other equipment for the nursing teams. And all this has been done. We are showing you here Moulinex and Tefal in France. And that to show it's in France, but this was also done in all the geographies, which is very normal in a critical period such as this. And we also had a lot of donation of paid leave in France, 400 paid leave days donated by employees, and especially for those who are on technical fellow, and also complementary days matched by the group and covering also reduction of certain costs of the group has meant that none of our employees had a reduction of their income by more than EUR 25. And of course, as it's normal in following the AFEP-MEDEF recommendations, we've reduced top management's compensation, and this was during the whole period of the technical fellow to show our solidarity. Now we're then going to move to last aspect, which is sort of acquisitions and stock taking. We signed yesterday evening -- around 8:00 p.m. yesterday evening, French time, the acquisitions of rather majority stake in the American company Storebound. This is a start-up. Actually, it's no longer a start-up because they started in 2010. But based in New York, right in the heart of Manhattan, very close to Wall Street. It's quite an extraordinary business that has grown at tremendous speed, because already last year, they had $90 million of sales, and a perfect mastery of the digital growth levers and community management. They're developing quite unequaled applications in smart marketing and production and packaging and we're very pleased. This is a company with over 1 million Instagram followers, for example. It's totally customer and consumer centric. And also very strong expertise in retail. And we're very satisfied because in the developmental move towards digital, and Stanislas, no doubt, will say more about that in a moment, but I feel it's extremely important to strengthen our in-house skills, thanks to companies who have that intrinsic calling. And this clearly, in particular, is good for reaching our millennial targets, which are very important. So this is excellent work in entire general public and will strengthen our presence on the U.S. market but as we said, in a different way because the company has been able to show tremendous growth this half -- first half, it's because it's operating quite differently to the classic players in the market. Now some of the projects undertaken by SEB Alliance, in particular. The environmental impact, you've heard us talk about Is-sur, which is Angell, which is electric assisted bicycles. We have the exclusiveness of the production, and this will be done in our Is-sur-Tille plant in Burgundy. And we've taken a share in the company, worked as minority with Marc Simoncini. And clearly, we feel that mobility is going to be a really strong driver in the coming years. We are already in mobility through mugs and thermos flask and other things, and we feel that electric-assisted bicycles are going to be a very important element for the future. And the second element for SEB Alliance is the minority stake in CASTALIE, specializing in the design of micro-filtered water fountains for businesses and restaurants. And micro-filtered makes it possible to have both just plain water and bubbly water as well. And there will be some 11 million bottles -- plastic bottles saved last year thanks to CASTALIE, and of course, the idea being to reduce all the plastic bottles that pollute our world. So we are there perfectly in line with our sustainable development logic. And the last point is the disposal of activity in nonstrategic activities, EMSA garden, for example, one of the German leaders in sophisticated preservation boxes. And we've also created through a French company, Poétic, French leader as well and which is developing with their own brand in France. And we're very happy to support them on this, and by giving over the EMSA brand, which we sold a few weeks ago. And the sale, too, of Boehringer Gastro Profi, which is specialized in the marketing of hotel products. And Boehringer has -- was also doing some sourcing to provide hotels in nonbranded products, and it was a business that wasn't profitable, and we decided to dispose of it. Please, I apologize for being a bit too long-winded, but I wanted to really show that despite the lockdown, our group has not been twiddling its thumbs. And now I hand over to Nathalie Lomon, who -- and to Stanislas, who will be commenting on the financial aspects of this first half.

[Interpreted] Thank you, Thierry, and good morning to you all. Maybe we can move to the next slide, please. This slide shows the evolution of revenue between the Q1 2020 and Q1 2019. As Thierry said, there's been a drop of EUR 420 million in terms of sales measured organically with a currency effect of EUR 20 million negative, which will be explained in the next slide. And in terms of scope, plus EUR 17 million, which includes the inclusion of [indiscernible]. And on the left-hand side, the next slide here, you see the green bars, which correspond to the positive impact of the conversion of revenues in all the currencies that have appreciated against the euro, mainly the dollar, Swiss franc and yen for us. And the red bars on the right-hand side show the same calculation but for the currencies that have depreciated with respect to the euro, in particular, the Colombian peso and the Brazilian real. So much for sales, I'll hand over now to Stanislas De Gramont for more detailed comments.

[Interpreted] Thank you, Nathalie. Good morning to you all, ladies and gentlemen. The first slide shows you the breakdown of sales in the first half -- between the first half 2019 and 2020. Thierry d'Artaise explained total organic sales of minus 12%, with the first quarter at minus 16.3%, strongly impacted by China. Second quarter, minus 28.4%. This overall trend masks 2 very different realities. One is the general consumer activity, which is down by minus 10.6% in the first half. We are breaking down it at minus 17.3% for the first half (sic) [ quarter ] and minus 3.2% in the second quarter, strongly impacted by the month of June, which was better than expected and much higher than April and May. Professional activity has seen a deterioration of performance in the first half, with the first quarter at minus 9.7%, second quarter at minus 43.4%. And this, in particular, has been complicated by the general lockdown in Europe until mid-May and the general lockdown in the Americas throughout April and May, as Thierry d'Artaise has explained and a slower take-up. Because the Professional activity, which means investments for our customers who have restaurants and coffee makers not progressing at the same level as the general consumer. If we move forward and we look at this performance as detailed per continent, this slide here shows for the 3 continents, Americas, EMEA and Asia, the performance in the first and second quarters. You see that Americas, and no surprise there, Americas represent almost 11% of the turnover for the group in consumer with minus 8.6% in Q1, but worse in Q2, minus 17.4%, with the U.S., but also Mexico, Colombia and Brazil, which are suffering in this quarter in particular. On the contrary, in Greater Europe, we have minus 10.4% for Q1, very deteriorated by March with the general lockdown in Europe, excluding just a few countries in Eastern Europe, and a much stronger recovery in the second quarter, in particular very positive month of June, driven by all the European geographies, which means that the second quarter is finishing at minus 7.5% comparing to the previous year. And in Asia, Asia essentially driven by China. We had the first quarter very strongly in decline, minus 28.9%, but a positive second quarter in particular with positive figures in June and the promotion on the 18th of June at Supor. And I'll come back to this a little more in detail. So 3 continents, 3 contrasting geographical situations. And all in all, a second quarter better than the first quarter, and the month of June better than the general quarter's figures. And if we look at the breakdown of various continents, beginning with Europe, we see Europe with a first half, as we said, minus 17.5%, with minus 11.5% for Western Europe, and other countries at minus 1.9%, which represent historic dynamics between the different regions. A very robust decline in online sales momentum in the first half. We've seen plus 45% of growth of our online sales. And as for our traditional stores, specialists and our own networks, they've been reopening gradually as of the month of May. And already in June, we've seen a strong retail inventory being rebuilt. And when you look at the performance for April, May, June, we see that in -- April is undervaluated with respect to real consumer demand. And we feel that June is overvalued, which explained a stronger growth in June than what we had planned a few weeks ago. And just one last comment. Very strong volatility of sales as well, with the low point in April at minus 50% compared to the previous year, but a recovery in June of plus 45%, again, compared to the previous year. So these are strong stock inventory recovery effect. If we move towards the west to the Americas, there, we have a health crisis, which is still extremely serious. It's very -- an expansion of the pandemic in the Southern and Western U.S. with still 60,000 new people sick in the U.S. yesterday. Brazil has become the second hardest hit country by the -- hardest hit by the pandemic. And Brazil has 3 negative effects: the pandemic and the economic crisis following the health crisis and then the devaluation of the real, which has obviously had a strong impact on our performance. Concerning currency, the depreciation of the real and the Colombian COP and the Argentina peso is costing us 12 points of growth essentially in Q2. So a strong currency effect, combined with the economic and health crisis. Nevertheless, business uptick in Colombia in June with a plus 29% in June, which gives us good hope for the recovery at least in that country. So let's move now to Asia. Asia with 2 different dynamics. China, as we've already seen, a first quarter at minus 14.4% with a breakdown at minus 32.4% in Q1 on a like-for-like basis, and the second quarter, plus 10.2%. This Chinese dynamic is driven by SDA and e-commerce. And knowing that cookware have been impacted by the closure of the extended closing down of the Wuhan plant, which is our #1 plant in China. And of course, this is at the heart of the epidemic and was the city that was most confined. It's the area that also took the longest to reopen. And I think that the take-up at the end of Q2 is certainly due to the excellent Supor performance at -- with sales at plus 64%, but also the rebuilding of inventories in cookware, which explains the ramping up of the production of the Wuhan sites. And concerning other countries, there's still the effects of the pandemic being felt with Japan in decline in Q2. We see that Japan is the most heavily impacted country by the pandemic. The Tokyo Governor, for example, for the next long weekend, is encouraging Tokyo population to stay at home. On the country. South Korea, which was the first country impacted in Q1 outside of China, is presenting a plus 10% growth in the second quarter with a strong product of the beer tenders and with very strong success in also the blenders -- high-speed blenders, which are growing by 47% in the quarter. So other European countries -- other Asian countries, I beg your pardon, which have been showing contrasting performance. In Professional business, we see that the image is different. We have a first quarter at minus 12.7% (sic)[ 9.7% ] and with a first published quarter of minus 21% for H1 as reported. There are 3 -- or rather 2 explanatory factors here. One is the signing of very strong contract signed last year with a strong impact on the first half. And also, the second item to be noted is the closure of the majority of hotels, restaurant, cafés as of March in China, Europe and then in the U.S. and the Americas. And of course, this is leading to postponement of investments or postponing or reduction of orders. The priority of our clients after long lockdown period is to not change their appliances, but to recover a good level of business, and we will be able to comment on this later. Now if we look at how our products have performed, the picture is somewhat different to what we usually see on -- as the median line, we put group total at minus 12.6% for the half, which gives you a point of comparison for the relative performance of each of the business lines for the group. And the 0 line is there, just as a reminder. Now the electrical cooking and food preparation articles are the ones which are a doing better. And this is due to the fact that consumers have been spending more time at home, and therefore, spending more time in their kitchens, preparing meals compared to traditional meals very often taken outside of house at midday and even in the evenings, in some cases. Now the question that comes to mind is why has cookware not benefited from the same impact? And as I said, we've seen the shutdown of the Wuhan site until the beginning of April, which had a negative impact on cookware in China. And when you look at the figure in China, we are minus 6.8% on cookware for the first half, which is, therefore, more in line with the preparation of -- food preparation electrical cooking. The third comment concerns linen care, home care and the large kitchen appliances, this is purely in China. And here, we've been penalized by the fact that consumers have been spending or giving less focus to this type of product, typically for linen care. This is a category that is moderately declining and has been declining moderately for quite a while. And we used to say with a smile that when you don't go to the office every day, you don't necessarily need to iron and steam 5 shirts a week. Of course, there, I'm talking about men. I see there are ladies and the women looking at me with a big smile. Well, no doubt, there has been a decline of interest in linen care and home care. But recently, home care, in particular, has been recovering a strong dynamic, in particular, in Europe. Concerning personal care and beverage, these are categories that experienced varied behavior during the crisis. This has been more impacted by our presence or not on these markets rather than by the markets themselves. And the last professional aspect, I won't cover this, I've already talked about it. We've already talked during this lockdown period of the development of online sales, and I felt it was important to share with you the evolution of the weight of online sales and you say the figures are quite significant. At Supor, we've gone from 45% in sales to 60% this half. In the U.S., gaining 10 points up to 40% of sales. And EMEA, we're going, again, from 20% to 30%, so that's plus 10 points. These are estimates, of course, because online sales include also sales of pure players, such as Amazon and others, but also there is the online sales of our traditional brands, Darty, Boulanger and others. Now we've gained 10 points, and we believe that this will continue to improve. We can't say, as of today, whether online sales overall growth will be more significant once the crisis is over. And when you come back to China, next slide, I mentioned the overperformance of Supor at the 618 festival with spectacular sales of up 64% compared to previous year. Let's remember that last -- we had qualified this as good performance last year. But here, we've had good performance. We are #1 in 10 categories in cookware. We sold 380 million views on live streaming of Thermospot. These are online demonstrations. And this is a way to activate our sales, which have been increasing more and more. And therefore, a very strong, robust business at Supor with -- confirmed by excellent results. And with that, I'm finished with this general overview of the world and the categories of the second half. And I'll hand back to Nathalie to give you the financial results.

[Interpreted] Thank you, Stanislas. Now we're going to move on to the first table here with the operating results from the activity of the group as of the 30th of June. First of all, the first half year, because of the seasonal nature of our activity in consumer sectors, was never representative of the group performance as a whole. And again, this year, as we've been subjected to, as a whole, half year and in all geographies the impact of the COVID crisis. Group realized operating result from activity of EUR 103 million, and I'm going to go into detail on the next slide the changes compared to last year's figures like-for-like. The ORfA breakdown depends mainly on the volume effect. You can see the decrease in sales. To a lesser extent, it resulted from a negative price/mix effect, which comes mainly from the growth in sales in China on online sales. Thirdly, variations in the COGS. We indicated that our production sites had been shut down little by little over the half year, so this had an impact on our industrial performance that we estimate to date standing at minus EUR 40 million. And one part of that negative impact was compensated by partial unemployment in France and in Germany and also by positive purchasing performance. So the result was a positive impact on the cost of sales of -- I'm sorry, negative EUR 24 million. As to the -- to counter these negative effects on the operating results and to take into account as well the decrease in activities in markets, we significantly reduced our other factors to the tune of some EUR 50 million. We reduced our sales expenditures and administrative expenditures by EUR 29 million. We've also, in this particular sector, benefited from partial unemployment for the staff in France and in Germany. So the last point is a negative business impact of EUR 24 million due to ForEx changes. This corresponds to the impact on sales that I indicated earlier, adding to that is the impact from short-term positions of the group, mainly in U.S. dollars and RMB and the variations of the scope effect in that period. At this point in this presentation, I'd like to draw your attention to the fact that the significant devaluation of certain currencies, emerging currencies continues to impact our operating results in the second half year. Now in terms of the operating results for the activity, the ORfA to net profit. Operating results from activities and discretionary, nondiscretionary profit sharings were down. Other income and expenses are significantly down as well. There's restructuring costs in our German activity, our VMS for EUR 23 million. And also the impact of the sale of activities or nonstrategic activities that Thierry de La d'Artaise spoke about of EUR 17 million. The financial results is a charge of $29 million compared to $46 million last year. The main source of those variations, other results, corresponds to the changes in the valuation of the optional financing based on the value of the shares -- the share value. So the difference is EUR 11 million. The decrease in the tax charges and the minority interest were down as well because of the decrease in support. Now moving on to the balance sheet. This is not the published balance sheet, but it is a simplified balance sheet based on assets to be financed and the total group financing as a whole. So we're going to move on to the changes in net debt, which stood at 31st of December 2019 at EUR 1.997 billion, EUR 2.085 billion as of the end of June. The free cash flow we used in payment of taxes and financial charges and CapEx variation was limited to the requirements, and the dividends were paid by SEB SA to their shareholders for EUR 75 million as well and the dividend to Supor, which is a minority shareholder for EUR 25 million. And the other contributing factors were comprised mainly of the buyback by Supor -- of share buyback for EUR 31 million. And the second portion corresponded to restructuring costs declared during the period. So let's move on to the financial ratios. With the working capital requirement as a percentage of sales, standing at 16.8%, that is down due to the decrease in activity over that period. There's a gearing of 0.8, and the net debt adjusted to EBITDA standing at 2.2. The last slide in this presentation, getting back very quickly to the financial structure. We're talking about EUR 2.8 billion in total liquidity. The maturity profile of group debt is very well balanced. As you can see, and as Thierry indicated, we have adequate and diversified sources of financing, and the group came back successfully with the T bonds in the second part of the half year. On the 30th of June, the group had liquidities of EUR 2.9 billion -- I'm sorry, EUR 3.5 billion. Now I'll hand over to Thierry de La d'Artaise. Thank you.

[Interpreted] One last word before answering questions, a word about the forecast. I think if I look at the figures in this first half year, my first comment, and we've been saying this for 20 years now, is that the operating results in the first half year, as you know, we have a big seasonal variation anyway in our activity. And the second half year is always more important, and the cost is balanced. So traditionally, we have an operating result, which is lower in the first half year always and much bigger in the second half year. All you have to do is look at what happened in 2019 in this respect, where for an operating of EUR 740 million to EUR 230 million was in the half -- first half year. You can see how important the second half year really is when you look at those figures. So that's the historical truth, basically. Now obviously, this year, 2020 is atypical with a crisis was a very deep crisis, EUR 280 million lower in sales throughout the world in the first half year. Now can we consider that this is over? No. But one might hope that the worst is behind us, especially in the first half year, it was certainly way heavier than in the second half year. Another factor which is not classical in nature. And we also have a second half year that was better than planned. So what -- the last year. So what we can say about the future? You have to be honest, we obviously have limited visibility in terms of mass market. Notably, the health situation, is that going to improve? And will it disappear? Or will it come roaring back? We'd all like to know, but we have to be humble here of what lies ahead. And it depends on the part of the world you're in. So what we can say is that the Professional activity will certainly be impacted over a longer period and maybe the whole year because the hotel activities throughout the world and restaurants are not back to normal. And so that should weigh heavily throughout the whole year for us in that Professional segment. In that framework, I think it's obviously difficult to quantify the impact that this will have on -- COVID will have throughout the year as a whole. I will not adventure into that type of estimation. We don't know. What we can say is that we'll certainly have an impact on raw materials, a positive impact on purchasing raw materials doing on operating side in 2020. And the impact on currency and exchange rates in emerging nations, I'm thinking about the real, will have a negative impact on our operating results. This impact we are currently estimating based on current exchange rates at roughly EUR 70 million and EUR 90 million negative of effect on the ORfA and the sales figures projected, but this is not a surprise, will certainly be down a market best compared to 2019, which will not stop us from getting through this crisis because we are very strong and results are good, and the financial situation is very robust. This is what we want to say about our first half year. And now we are available to any questions you may have. So fire away.

[Interpreted] [Operator Instructions] We will first take questions in French, then we will take questions in English.

[Interpreted] I hope you hear me. The first question is about the Professional Coffee. You're prudent about the whole year. But finally, you talked about suspending and offsets and other cancellations in the orders. Could we anticipate a catch-up period starting in 2021? The second about the Professional segment is will -- the decrease in activity over the half year, is there difference between the sale of machines and maintenance? Is there a difference in those 2 things? And the third question about Professional segment. Could you help us to better understand the impact of the decrease in sales on the profitability because Professional Coffee Machines is -- where does that stand? And how heavily does that weigh on group figures? And the second series of questions was about the promotional intensity, which was significant. What country was concerned? And does this concern mainly the crisis period, March and April, or the pickup of activity in June?

[Interpreted] Thank you for your question. About Professional Coffee, there are 2, in fact, factors here to understand what's going on. First of all, in the main brand-related WMF and Schaerer activities, we are in an activity where we sell machines that are fully automatic between 3,000 and up to 10,000, 15,000. These are big machines with big customers, and they're big orders. And here, alas, what we can say is that there's a wait-and-see attitude really that's installed amongst our customers because given if you take Dunkin' Donuts, that are big contracts for us. But for the moment, they've been closed for some time. They're opening up a little by little. So there's no -- there's certainly an offset over the year in the contracts that will not be canceled, but which are postponed as it were to next year. So they're not lost, but they're set off in time. However, there are certain situations in China where you might have seen one of our big customers, King Coffee in China, had huge financial difficulties, not linked to the crisis, the COVID crisis, more linked to accounting -- internal accounting issues. And apparently, the activity is down and will not be catching up in '20 or '21. So basically, this wait and see for the big customers, but insofar as we are concerned, we are persuaded that the Professional activity will certainly be kicking off -- starting off again. I don't know if catching up is the word that we need to use, but there's obviously a slow up this year. But we do not believe that this will be sustainable. Business will pick up. There may be a certain number of contracts that will be signed by the end of the year. But this will be certainly below last year. Now the second activity in the U.S., which concerns Wilbur Curtis, which has a smaller customer base. Now the problem there will be to see whether what percentage of the small coffee shops, which sometimes is only one in the city, will be affected by this prolonged lack of activity. Will there be many coffee shops that may not survive? So obviously, here, we think that the start-up would be longer, and we won't see that before 2021, I don't think. And the second point, is there a big difference between normal sales and maintenance? I'd say that maintenance started up earlier because as soon as the stores opened up -- or I'm sorry, the restaurants and coffee shops and so forth opened up or the hotels, the first thing that our customers did before they even ordered new machines is obviously to have their old machine serviced and checked out and maintained. So the maintenance did pick up early than sales, obviously. So the effect on margin, well, we will see there are several effects. There's obviously an effect on industrial productivity, with under absorption in many of our industrial sites, I'm thinking about Switzerland and a little bit in Geislingen. But as I said earlier, the needs are felt less there, but there will be an impact on margin, but which will be temporary. The sales activity should ramp up to a satisfactory level, both in terms of sales figures. And you will see yourselves, this is volatile, much more than mass market. And the profitability would be back to a normal state of affairs, and Professional Coffee is 10% of the group. So the overall impact is limited. In terms of global margin, it will not have a major impact or downswing.

[Interpreted] Thierry, what about the promotional intensity?

[Interpreted] There is no particular reinforcement of promotional activities in this half year. We see mix -- price/mix effect. China is really running on e-commerce, mainly. And they're offline fights as it were competition. We can see these are more price/mix effects country by country and channel by channel than promotionally based. One thing worthy of note is a very strong loyalty program on cooking items, which weighs more or less -- dealing more or less with promotional activity. But today, we have a promotional intensity, which is comparable to what we had last year. It's very difficult as well to see how markets will change in the weeks and months coming up. We have customers -- at least some of our customers are focused on margin, others want to kick off consumption. So our promotional activity will be really the consequence of the way the demand changes and customer behavior evolves as well. So it's very hard to forecast that.

[Interpreted] How much have you lost in China? What about Professional Coffee, the variable and fixed costs?

[Interpreted] The first -- the #1 customer getting back to the Professional is 10% of our group sales in China. And the customer last year represented 5% of that Professional activity. So the question about fixed and variable costs of the Professional activity, we don't actually provide that level of detail in this communication. We've already given you a lot of figures in the last publication and give you -- we had that balance, but we're not getting into detail at this point activity by activity and even more so because we're talking about 10% of group sales. That's quite indicative.

[Interpreted] Yes. The next question from BNP Paribas. I have 3 questions. The first concerns China. Could you tell us how sales have been moving since the beginning of July, just to see whether June was truly exceptional with a very strong catch-up effect? And also, how do you see trends for Q3 with the information available to you? And still about China. Have you noted any significant changes in terms of consumer behavior, both in terms of product mix? Second question, concerning the currency and price/mix effect, you're forecasting it negative, some EUR 40 million to EUR 50 million negative for second half. Now are you going to do any price adjustments that could partially compact this -- compensate for this effect? And the third question, concerning the restructure in WMF, now you have done this restructuring, now was the initial objective to bring WMF profitability to a 10% level? And if so, when do you expect that profitability level?

[Interpreted] Thank you, Nicolas, for these excellent questions. Concerning the evolution of sales in China in July, I will be disappointing you by not giving any figures for a very simple reason. You know that our supply circuits in China are done through distributors. And with the sales strongly impacted by online sales, today, we are seeing a changing distribution model with Alibaba. We have much more direct sales, much closer and direct contact with consumers. So it's difficult to extrapolate an overall sales trend relating to that. However, I would take up key elements in China are good sales for June with the 618 promotion. We have traditional retail, which is still slightly negative for the quarter and a strong recovery of inventory in cookware in Wuhan. And this is having a strong impact. I know you would love -- we would all -- actually all love to see what sales are going to be in July, August, September. But unfortunately, we're going to have to lead the various phenomena, which are not actually properly speaking new, but nevertheless, in terms of their magnitude, to see really understand what the effects are going to be. Your second question concerning changes in consumer behavior. Here, too, I think we need to be cautious. There has been a change in categories that were particularly marked during the lockdown and the opening up again after that. I think it'd be premature to actually draw a long-lasting changes in consumer behavior. Clearly, during -- for several weeks, consumers who are spending over 80% of time at the office went to 100% of the time living at home. This obviously had an impact on how we live. Children were at home and were not at school and so on. Now yes, we can see some sectors growing. For example, we had a record sales of yogurt-making machines and bread-making machines. This happens in similar crisis. Now to draw a conclusion from that the people are going to continue making all the yogurts at home or making their bread, I think it's too early. In any case, the crisis isn't over. And I think we need to be very careful about being too hasty in drawing conclusions. Regarding to the currency and price/mix, when we're talking about minus 70% impact of this implies the evolution taken for our pricing. You need to know that there's always a catch-up effect between change in the currency price and the price changes, and this is due to the necessary negotiations with our customers and also depending on the level of inventory and also during the crisis period with very unequal movements in terms of inventories, the consumer crisis relating to the shutting down of stores. This has rather a delaying effect on the price evolution rather than favorable. So I think the minus 70% to minus 90% is a normal objective on the offer impact in the third quarter. Thierry, I'll let you answer about WMF.

[Interpreted] Yes. Concerning WMF, we haven't changed our objectives, which is to get the 10% rate on MOP. And we already said this within 2022 and not 2021. And I would say that with the unknown effect of the coronavirus and the speed at which the market is going to tick up. Now I would say with that reservation, the objective hasn't changed overall. Does that answer your question?

[Interpreted] Yes, thank you.

[Interpreted] The next question comes from Charles-Louis Scotti from Kepler Cheuvreux.