Earnings call transcript: InterCoast Q2 2025 revenue growth amid market challenges

InterCoast Group reported a 5% increase in revenue for the second quarter of 2025, reaching €525 million, despite facing a challenging beauty market. The company’s adjusted EBITDA rose by 16.5% to €75 million, reflecting an improved margin of 18.3%. With a market capitalization of $1.3 billion, the stock saw a modest rise of 0.17% following the earnings release, trading at €11.58, close to its 52-week low of €11.34. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, presenting a potential opportunity for investors.

Key Takeaways

• InterCoast Group’s revenue increased by 5% year-over-year to €525 million.
• Adjusted EBITDA improved by 16.5%, with a margin increase to 18.3%.
• The makeup segment was a significant growth driver, up 18% in the first half.
• The company expanded production capacity in Korea and China.
• Full-year sales growth guidance was revised to low single digits.

Company Performance

InterCoast Group demonstrated resilience in Q2 2025, achieving a 5% year-over-year revenue increase despite a soft global beauty market. The company’s focus on the makeup segment, which grew by 18%, contributed significantly to this performance. However, the skincare and hair and body segments experienced declines of 6% and 15%, respectively.

Financial Highlights

• Revenue: €525 million, up 5% year-over-year
• Adjusted EBITDA: €75 million, up 16.5%
• EBITDA margin: 18.3%, up 176 basis points
• Net income: €16.6 million
• Net debt: €134.5 million, with a leverage ratio of 0.87x EBITDA

Outlook & Guidance

InterCoast Group revised its full-year sales growth guidance to low single digits, around 4%, while maintaining a focus on profitability improvement. The company expects to meet EBITDA consensus and anticipates continued strength in the prestige segment. Analysts tracked by InvestingPro maintain a bullish outlook on the stock, with consensus recommendations leaning strongly positive at 1.38 (where 1 is Strong Buy). The company has demonstrated consistent growth with a 5-year revenue CAGR of 8%, suggesting resilient business fundamentals despite market challenges.

Executive Commentary

CEO Renato Semerari expressed confidence in the company’s profitability prospects, stating, "We are very confident in a significant improvement in profitability." He emphasized the importance of the semester’s results, noting, "The semester offers the most objective view of our results."

Risks and Challenges

• Global beauty market softness could impact future growth.
• Declines in skincare and hair and body segments may continue.
• Potential US market shifts due to tariffs could affect sales.
• Maintaining margin improvements amid market challenges.

Q&A

During the earnings call, analysts inquired about the sustainability of productivity improvements, which the company confirmed were not a one-off. The temporary decline in the hair and body segment was also addressed, along with potential US market impacts from tariffs.

Full transcript - Intercos Spa (ICOS) Q2 2025:

Conference Operator, Chorus Call: Good evening. This is the Chorus Call conference operator. Welcome, and thank you for joining the InterCoast Group First Half twenty twenty five Financial Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.

They may signal an operator by pressing star and 0 on the telephone. At this time, I would like to turn the conference over to Mr. Renato Semerari, sorry about that, sir, Chief executive officer. Please go ahead, sir.

Renato Semerari, Chief Executive Officer, InterCoast Group: You are forgiven. Good evening, everybody, and thank you for connecting to our conference call. In a generally unstable macro environment and a beauty market that is displaying an overall soft trend in both Western and Eastern world, Intercost posted strong semester results with sales ahead of market and above all, a very good improvement in profitability. Now it’s important to underline that the semester offers the most objective view of our results since quarter’s reading is blurred by last year’s cyber attack. And, mainly, the quarter one was depressed by the cyber attack, so it was easy to beat the comps.

In quarter two, last year, we had the backlog absorption. So all the orders that we could not produce in quarter one were absorbed in in the course of the second quarter. So all in all, we believe that the first semester data reflect a bit the overall trend of the company giving a more reliable balance to our results. So in the first half, we had sales growing ahead of market, as I just said, with a flat 6% at constant rate versus year ago. And this was driven by the exceptional performance of makeup, which grew a double digit rate gained back a weight on our total sales of above 60%.

But what is really remarkable in my view is the record EBITDA that we posted in the semester. We posted €75,000,000 of adjusted EBITDA, up 16.5% versus year ago with 140 basis points of improvement over the first semester of last year. Looking at the EBITDA margin on value added sales, we reached 18.3% of margin, up 176 basis points, which is the best ever margin on value added sales the company has ever had. And it’s important to note that profitability grew substantially also in the second quarter, and we now have a rolling EBITDA of €154,000,000 Net debt was up 135,000,000 maintaining the leverage ratio we had overall last year with 0.87 times EBITDA despite the increase in CapEx we have experienced in the first semester for the expansion of the Korea plant and the Chinese plant as we had anticipated now our road map of plant expansion. Let’s now look at the overall figures a bit more in detail.

So as said, sales were up 5% at current rate, 6% at constant rate, with value added sales growing also by 5% at current rates, which reflects a substantially flat percentage of packaging costs on our sales. So the phenomenon we had seen in the past three years of an increasing weight of packaging on our net sales has stopped, and we are now flat versus a year ago in terms of weight of packaging. Adjusted EBITDA grew, as I said, by 16.5% with a margin expansion of 140 basis points. As I said, what is more important in my view is the marginality on our value added sales, which grew by 176 basis points, getting to 18.2%, which is the highest ever achieved. Net income was instead down by 60 basis points due to two factors.

The negative exchange rates had an impact and also interest rates had an impact. Stefano will take you through in more details on these dynamics. Looking at the second quarter in isolation, sales were substantially flat at constant rates facing last year orders backlog recovery, as I just said. The good news is that the margin expansion was there despite top line was basically flat with a gain of 103 basis points over last year, which was the best quarter in terms of profitability for the total year. Now looking at the sales dynamics, let’s start by the sales by business unit.

Now here, the sales trend showed a completely different dynamic than last year with growth, which was entirely driven by our key business unit, which is makeup. Makeup was up by 18% in the semester and plus 13% in the second quarter. We posted growth, material growth in all regions. Multinationals were the key contributor to the growth, mostly pushed by our innovation in powders and foundations. Those were the two segments that were displaying the fastest growth rate.

Both mass market and prestige grew with a skew to prestige, which also helped profitability. So makeup went back to over 60% of our total sales, and Stefan will explain that this has a mixed impact, which is favorable for our total profitability. Skin care closed the first half at minus 6%, mostly due to the first quarter result. The performance was affected by The U. S.

Emerging brands, while multinationals were growing, especially in Europe. Important to remind that View was facing a strong first half of last year at plus 15%. Air and Body closed the semester down by 15%, entirely due to the sharp drop we faced in the quarter two. Last year, just as a reminder, quarter two posted a plus 39%, thanks to a number of fragrance initiatives that could not be anniversarized this year. Moving to sales by region.

Sales growth were again pushed by the performance of Asia, like in the past two years. America came back to high single digit growth, while Europe had a flat semester. Going in more details region by region, Asia posted a plus 16% in the first half despite last year very high base. Last year, we had a plus 28%. We had both quarter displaying double digit increases with both Korea and China continuing on their traction.

And this is no different versus what we experienced last year. Makeup was clearly the driver segment in this growth. And now we have Asia waiting for 24% of our total sales. Just as a reminder, a couple of years ago, Asia was only 17% of our sales. America posted a plus 9% growth in the semester with both quarters displaying growth.

Makeup was once more the only growth driver. Prestige was clearly the winning channel driven by both multinationals and emerging brands. As for EMEA, the semester ended flat versus year ago due to the soft second quarter. Now the region was the regional performance was affected by the difficult air and body second quarter. As you know, air and body is a segment which is basically present in Europe.

So the drop we saw in the segment had a weight on the region, while makeup and skincare had very healthy growth rates. Moving now to sales by client cluster. Also in this case, we witnessed a growth profile which is different from the recent past. In fact, multinationals took back the main role in the team getting back to 48% of our total sales. So they posted double digit growth in both quarters, closing the first half at plus 18%.

Makeup was obviously the focus with Asia and US as key regions. As for the emerging brands, they closed the semester down minus 8% due to the second quarter double digit decline in front of a year ago plus 34% growth. Also, in this case, the main driver of the decline was air and body category, as explained a few minutes ago. For retailers, as you may remember, last year, we had a difficult year with retailers. Now we gained back part of the year ago decline, growing at double digit rates in both quarter.

First half ended at plus 18% with makeup and EMEA as major drivers for this group of clients. Let me now pass the mic to Stefano, who will take you more in details into the financials. Thank you, Renato. Good evening, everyone. Well, as already mentioned by Renato a few minutes ago, the first half of the year recorded a 5% increase in sales, bringing total revenue to €525,000,000.

And this despite market uncertainty caused by the severe geopolitical situation and the well known issues of The U. S. Tariffs, which dominated the scene in the second quarter. The macroeconomic turbulence triggered by the Trump administration was also felt in the currency market. And for our group, the depreciation of US dollars and the Chinese renminbi weighed particularly heavily.

Past revenue growth at constant rate per tax would have been 6%, 1% one percentage point higher than the reported figures. The EBITDA showed a strong growth, reaching 74,500,000 or up to 16.5%, effectively three times the rate of revenue growth, with the EBITDA margin further improve improving from q one to 14.2%. Main reasons for this positive and sound performance were the excellent performance of the makeup business unit, up 18% compared to last year, a favorable customer mix, particularly because of the growth of the prestige clients, which grew double digit in both in the makeup and the skincare business unit. At the same time, the group is able to keep the pre issue revenue model with adjusted EBITDA on value added states at 18.3% or plus 177 basis points versus 24. On top of the on top of this, the company and the group continued the improvement in the transformation cost.

Among the operating expenses, we recorded the net nonrecurrent charges of €4,400,000, mainly related to HR severances, legal consultancy, LTI bonuses, with positive impact that came from the insurance indemnities for about €2,500,000 and the release of bad debt provisions. Taking into account the depreciation and impairments, which amounted to 26,200,000.0, the EBIT came in at €43,900,000, equal to 8.4% of revenues, up 25% over last year. The financial component weighed on operating profit by 13,400,000.0, mainly due to currency effect with a net impact of approximately 6,600,000.0. With an average net financial position as ex FX ex IFRS, sorry, of 75,000,000 for the semester, the financial components resulted in the net financial charges of €6,400,000. Finally, considering a reported tax rate of 45%, group net income amounted to 16,600,000.0.

We’re excluding the extraordinary income components, net profit reached 20,700,000.0, equal to 4% on net sales, slightly below last year result despite the aforementioned FX impact. Let’s then turn to the results EBITDA results by business unit. The 74,500,000.0 EBITDA is attributable 66% to the makeup business unit, 19.2% to the skincare business unit, and the remaining 15.2 to the hair and body business unit. Compared to the same period last year, the makeup division improved its profitability by over a 120 basis points with an absolute increase in EBITDA of 27.8%. And this positive result was achieved across all geographic areas where the group operates, thanks in particular to the performance of prestige and multinational customers.

After a particularly strong 24 in terms of revenue, the skincare business unit experienced a slight decline in sales, but still managed to improve its EBITDA, both in absolute value as at 14,300,000.0 or plus 32.5%, and in relative terms, revenue, plus 530 basis points, thanks to a more favorable prestige customers mix. The head and body business unit saw reductions in counter manufacturing activities related to emerging brands during the first half of the year, brands that have shown strong results in the same period last year due to the numerous product launches. As a consequence, EBITDA was impacted by this trend and decreased to 11,200,000.0, down 3,600,000.0, representing 10% of the net revenues. All in all, the actual results of the core makeup business unit more than offset the temporary weakness in the business unit dedicated to contract manufacturing. Let’s have a look then to the cash flow.

In the first half of the year, the group produced approximately €36,000,000 in working capital and over 33,000,000 in CapEx. As a result, the operating cash flow was €7,700,000, and the lower cash generations compared to the one recorded in the same period last year, it is justified by higher CapEx, particularly in China and Korea where the group is expanding production capacity in response to the significant local business growth and by higher DSO due to the current seasonality and the current weight of multinationals. At this stage, we do not see any critical issues in terms of cash flow even when considering expectations for the second half of the year. Following the distribution of approximately €18,000,000 in dividends, the net financial position stood at a €134,500,000, corresponding to a leverage ratio of point 87 times EBITDA. That’s all for the financial highlights.

Thank you, Stefano. Now moving a bit our side ahead of us. Now the situation of the market is very visible for everyone. So the market is quite in unstable. We’ve seen, you know, these trade wars and announcements about tariffs are polarizing everybody’s attention, including in our sector.

All in all, the market is quite soft in in in the beauty sector this year, especially for what concerns make up, which is obviously the segment we follow with more interest given the weight it does on our business. So U. S. Market is showing a low confidence rate from consumers. Most of the segments, especially makeup, are showing a soft trend.

Eyes are declining since a few years. Face is quite stable, while lips is the only segment that is really showing growth. So US remains an area of a bit of concern. In on the other hand, we have EMEA that is posting some positive growth, not comparable to the growth rates of the last year, but still positive, although less so in volume terms, which is the indicator that is more interesting for us. As for Asia, we’ve seen some positive recovery signs from China.

Unfortunately, the June 18 promotion, ecommerce promotion was not that positive. But despite that, the semester closed with a plus 3% growth in China, which is better than than the one we saw last year, but still not strong enough to drive growth in a more decisive manner on a global spectrum. So all in all, the market is pretty soft. We’ll now see what are the consequences of all the tariff moves on the second semester. But all in all, we expect now a market that will remain positive, but below the usual growth rates this market is used to do.

In this context, we have decided to focus our attention, to focus our efforts on our core business,

Stefano, Chief Financial Officer, InterCoast Group: which is

Renato Semerari, Chief Executive Officer, InterCoast Group: makeup. This is the segment where we can leverage superiority in innovation, and this is where we’re gonna be focusing our attention as well as pushing hard to improve our profitability as we did in the second semester. So despite this would be a year with a top line growth rates, which are below the usual rates of this company, we are very confident in a significant improvement in profitability, which will which makes us confident to reach the consensus expectations in terms of EBITDA for the fiscal year. The last sign I would like to leave you is that the order entry continues to be solid and this gives us confidence and especially in makeup, which again, as I said, is the focus of our effort for this year. That’s all the key points we wanted to flag to you.

We are now ready to take on your questions.

Conference Operator, Chorus Call: Thank you, sir. This is the Chorus Call conference operator. We will now begin the question and answer session. Session. The first question comes from Ana Frontini of Berenberg.

Hi. Thanks for the presentation. Good afternoon, everyone. I have these questions. The first one is if you can confirm whether you still expect full year sales growth at constant perception in range of five to 7%.

That’s really previously mandated or Excuse me, miss Fontani. We can’t hear you very well. It’s you. Okay. Sorry.

Can you hear me now? Much better. Thank you. Okay. Yes.

So first question is related to the previously communicated guidance. Do you still expect sales growth for 2025 at constant effects in the range of between The second question is about emerging brands. I’ve noticed the decline in Q2. If maybe could you provide more color on what’s driving the softness?

Are you seeing a broader slowdown in demand, delays in launches or maybe some brand specific issues? Then third question, this is about The U. S. Market dynamics, Specifically, we’ve seen the news, call mark Korea’s plants opening in The U. S.

Was curious if you’re seeing any impact or shifting customer behavior from these? Or maybe it’s too early to assess any potential implication for Interco? And sorry, if I could squeeze a very quick one. If you can give us the split of volume versus pricing either for Q2 or H1 growth?

Renato Semerari, Chief Executive Officer, InterCoast Group: Okay. So, Anna, thanks a lot for your questions. I’ll I’ll I’ll start from the last one, which is the easiest. The pricing impact was in the range of 0.5%. So was a limited very limited impact on the total as expected.

So not it growth was really volume driven once more versus pricing. Moving to the guidance, which is the the key the key question here. In reality, in terms of top line, we expect it will be a bit below that. It will be in the low single digits. You know, it’s gonna probably be more in the range of 4%, more than five to seven, given how the market is shaping and the fact that we have air embodied that is going to be below our initial expectations and is showing a decline in rate.

So we we are very confident about growth in on our innovation categories while on the more contract manufacturing part of the business, it will be tougher than originally anticipated. So in terms of top line guidance, I would stay a bit more on the conservative side. On the other hand, and this is more important, I think that the results in terms of profitability is better than what we had anticipated. And as you’ve seen, you know, I’ve always spoken about the 50 basis points improvement. We are way above that rate.

And that is what we want to focus in this moment of overall market softness. So all in all, it will be a rebalancing year after very strong years in terms of top line growth with dilution in marginality. This year, we’re going to rebuild marginality and have a more moderate growth rate in terms of top line. Going to the emerging brands, well, the the picture is a bit affected by what is happening in the air and body sector where we had emerging brands that were pushing sales, thanks to initiatives in the fragrance market that had a high impact in terms of top line last year. And this year, the anniversary of those initiatives is not producing the the expected results and is is a lot softer there.

So emerging brands is a bit affected by by this trend. If I look at the key the core segments of makeup especially, we are seeing emerging brands continuing to perform well in some regions very well. So all in all, we are not worried about the signals that we’re getting. It’s more contingent on specific specific performances in in certain segments. As for The US market, I think that Colmar it’s not that I think.

I know that Colmar’s decision was taken way before the famous April the second announcement of mister Trump. It’s it’s a market where Colmar wants to expand. It’s it’s very much focused on skincare, which is their core category, as you know. We are already kicked with with plans in US, as you will know. And but it’s a bit early to say, to predict what is gonna happen.

The the picture is is clearing up, but with ups and downs, we do not know exactly on which foot we’re gonna be dancing. The reality is that we have not seen aside from a few emerging brands that are asking us to move production to US. We are not seeing yet a massive movement in that in that sense. It’s a movement that I would personally like a lot, to be to be honest, because we are better keep the most of our competition in US. So we would welcome a move to to to US.

The the big question mark for clients is related to packaging, which in many, many instances is still coming from China. And so the more packaging costs, the more the tariffs on China are having an impact on the on the on the final cost of goods. So it would be a bit of a scattered reaction depending on what kind of packaging clients are buying from which country that will lead to to different ways of behaving. So we are obviously starting. We have seen the impact of tariffs on the second quarter of the year.

We have reverted the vast majority of it to our clients. Whether that will trigger a massive movement to U. S. Is still to be seen. It’s a bit still a bit early days.

I hope I’ve answered to all your questions.

Conference Operator, Chorus Call: Yes. Thank you very much, Samantha.

Renato Semerari, Chief Executive Officer, InterCoast Group: Thank you, Anna.

Conference Operator, Chorus Call: The next question, sir, is from Guillaume Delmas of UBS.

Stefano, Chief Financial Officer, InterCoast Group: Thank you very much, and good evening all. Two questions for me, please. The first one is on your EBITDA margin outlook. So you’ve decided to focus on profitability this year. You mentioned that the first half margin was ahead of your expectations.

So several questions here. What were the main reasons for this positive margin surprise in the first half? And do you think this is extrapolable to the second half so that 100 basis points plus of margin improvement in the first half, we could see something of similar magnitude in the back half of the year. And, you know, thinking about 2026, are the margins you’ll you’ll be achieving in 2025 sustainable, or it’s a bit of a one off? And from next year, we could see margins coming backwards.

And then my second question is on adjusted net income. Be because, again, your EBITDA in the first half was nicely ahead year over year. I think it’s 16 and a half percent you mentioned. But then adjusted net income was 9% below. So tax rate, financial expenses very much ahead in the first half compared to where to where they were in the first half of last year.

What should we expect for both lines, tax rate and financial expenses for 2025 as a whole? And how would it compare to 2024 to what you report in terms of tax rate, financial expenses last year? Thank you very much.

Renato Semerari, Chief Executive Officer, InterCoast Group: Thank you very much, Guillaume. So EBITDA margin, there were different factors that played in our favor. There were things that we knew and we expected and things that we didn’t expect at least in the extent that we saw it coming. Mix was favorable compared to last year. There were two different types of mix effects.

One is the relative weight of the business units on the total sales, which which had an impact. So the fact that air and body, which, as you know, is the business unit with lower marginality for us, went down while makeup went up in such a significant way, played in our favor and brought and brought our weight of segments in more in line with our historical situation. This was favorable and this was a bit above our expectations because we were not expecting everybody to to perform to this extent. The second is the fact that prestige has been growing faster than mass market. This also is very visible in skincare profitability.

It’s also visible in makeup profitability, and this was somewhat expected. But, again, given the growth rate we had in makeup and especially driven by prestige was a bit above our expectations as well. And the third factor, which is the one we knew better, is productivity that, for one, it has not been hidden by mix effects, increases of packaging, costs, and all that. So all of a sudden, you’re now seeing the results of not only six months of work, but the whole previous year work now become visible to you, and and and this is also leading to the improvement in in profitability. So all this went in in in a very positive way, I would say.

Is this a one off? Personally, no. I don’t believe it’s a one off. Know, the the productivity improvements were already there last year. We continued in this semester to bring productivity improvements, and they will keep being visible unless there are factors like food service, so packaging growing in a significant manner or having different mix effects that, like in the past years, were affecting our our profitability.

So I don’t think it is it is a one off. In reality, there isn’t nothing really extraordinary. We are just coming back to a mix of business that is more in line with the history of this company. So I think that it’s more a one off what we’ve experienced in the past two years more than what we are seeing this year. So I’m pretty confident for next year as well.

Now on the adjusted net income, it’s better that I pass Stefan, obviously, certainly more precise than I than I am on this. Well, regarding the the tax rate, as you may now understand that the tax rate of the first half is affected by the dividend distributions. That’s why we saw 45%. What what we see what we see for the for the full year is tax rate more standard, in line with last year. And I would say, I would expect the tax rate of about 303030%.

Regarding the financial expenses, taking a sign for a while, the possible impact on currency that is very difficult to predict at this stage, I would consider 10,000,000 net net financial expenses.

Stefano, Chief Financial Officer, InterCoast Group: Very clear. Thank you very much.

Renato Semerari, Chief Executive Officer, InterCoast Group: Alright. Thank you.

Conference Operator, Chorus Call: The next question is from David Hayes of Jefferies.

Analyst, Various (Berenberg, UBS, Jefferies, Equita, BNP Paribas): Thank you. Good evening. I’m just gonna follow-up on on James’ question actually. Just just in terms of the the profit uplift versus the sales direction. So you’re talking about in the outlook about folks on the call and therefore boosted profit.

So are there certain projects that aren’t happening this year and that you’re kinda delaying into And I guess that you it would if there’s some kind of impact potentially of that in terms of growth next year, just trying get a sense of whether there’s some non core projects that that you’re you’re basically delaying because of the the uncertainties. And then I I guess just in just in terms of the second question in terms of the emerging brands in EMEA, it feels like that’s where the real, obviously, soft spot is to your to your discussion. Is that just very consistent across all of your customers? Or is there one or maybe two customers that are particularly but have been buying differently and have planned differently, and that’s been the surprise.

Just just wondering how consistent the the difference in the margins. Thank you.

Renato Semerari, Chief Executive Officer, InterCoast Group: Hi, David. Project delaying, no. There isn’t any any delay on any project. Now it happens that our projects were focused on our core again. So the reason why we are expanding, as an example, our capacity in in Asia this this year, and we will be doing the same for Europe next year.

Very much focused on on makeup and to a lesser extent on skincare, but not not really on the contra manufacturing side of things, which in reality we had done a couple of years ago. So, no, the recent project delaying, but the reason deliberate effort from our sales force to focus and and from our marketing forces to focus our efforts where we can get higher dividends out of the effort in terms of marginality and profitability. But there isn’t anything substantial and need short or long term that we have decided to park. We don’t we don’t think there is anything to park because we we are, you know, all in all, we are pretty satisfied with the results we had because we knew we had to recover in profitability. You all have been very vocal on the fact that we needed to show improvements on profitability, so it shouldn’t come as a surprise that we are focusing on that.

But, you know, we are not stopping anything we had planned to do for any reason. In terms of Europe, brands, as I said, you know, it’s it’s much driven by air and body customers. As you know, we had exponential growth in the past two years in that area, in that group of customers, in that segment, which was particularly driven by fragrances. And, you know, the fragrance world, I’m very knowledgeable of it because I’ve been on the brand side for many years, and I had fragrances in my portfolio for many years. It’s it’s it’s quite volatile.

It can react pretty pretty quickly to new initiatives, new launches. And and then if you’re not strong enough in planning the anniversary of those, then you have drawback the the following year. And, unfortunately, this is what happened in this system. So we’ve been particularly affected by this factor. I think that the growth we have experienced in the segment in the past two years was way above anybody’s expectation.

So this year, we have the the other side of the coin, let me say. So, you know, in terms of mid long term trajectory, it doesn’t change it it doesn’t change anything substantial, to be honest.

Analyst, Various (Berenberg, UBS, Jefferies, Equita, BNP Paribas): Thank you. Great. Thank you.

Renato Semerari, Chief Executive Officer, InterCoast Group: Thank you, Larry.

Conference Operator, Chorus Call: The next question is from Paolo Carboni of Equita. My first question is on the order intake. Apparently, your downward revision of the guidance is pretty much linked to the decline in body. So I was wondering, would it be fair to say that, I mean, given the still supportive order intake, your expectation, your outlook for makeup and skincare are broadly unchanged compared to what you said in past calls? And also still on the order intake, can you comment about the visibility you might have in terms of mix?

So the contribution of Prestige versus mass? Is the outperformance of Prestige continuing apparently within the order intake in terms of the best way you have? Second question is, instead, about your EBITDA margin trajectory, which has been made to be very, very strong. You are delivering on efficiency gains. I was wondering where you are here in your journey in terms of a potential efficiency gain.

So how much can we expect this lever to play in favor of further profitability gain in 2026 and 2027, for example? And then the last question is on her and body. You have referred to it’s warranty as a temporary decline. So I was wondering what gives you maybe any confidence that this is just a matter of, you said, anniversarying past launches or maybe destocking from some clients or whatever drove you to say temporary, let’s say. Thank you.

Renato Semerari, Chief Executive Officer, InterCoast Group: So, Paula, one second. I’m noting down because I’m getting old and I forget questions. So order intake. So order intake, as I said, is remains solid. It’s going very well, especially in in in makeup.

And the trend we are seeing in our portfolio of orders mirrors quite quite well what has happened in the first semester. So we are seeing the same, let’s say, we are seeing both prestige and mass market going up, to be honest, but prestige a bit faster than mass market. So we think it’s going to stay like that at least for this year, which is obviously good news. Then, you know, we’ll see how things evolve in terms of general economic economic conditions, especially in US. If they are going to be inflation due to tariffs or not, this could create in 2026 some changes in the consumer preference in terms of segments and all that, but that is a bit too soon to be seen.

So for the time being, we are seeing, you know, solid order entry and Prestige performing well. So it’s it’s good news. Going to your second question about EBITDA margin and productivity going forward. So there are two types of productivity improvements. There are the daily work that is done in our plans to improve productivity.

This is a daily work and is going on. So we are not at the end. And, you know, I think we will never be at the end. Otherwise, it means that we seem to do some other changes, but so this will continue to go on. There could be other activities that are a bit more, let’s say, discontinuous that we will be looking and we are studying, those will have an impact if we go ahead further on in the future.

But obviously, we’re looking at positioning ourselves in lower cost, lower labor cost countries for parts of our production. I think that the commercial agreement, the partnership we signed with MiuMi in Indonesia is going in that direction. So giving us capacity in lower cost labor countries is a direction that it’s important for us and that might be projects going in that arena also in the future. So we will keep working. This is not a one off.

It’s it’s it’s an ongoing effort that needs to be made. Air and body performance, it’s temporary because it’s, you know, this sharp up and downs tend to reset the base in a more consistent way. In the past two years, and we said it pretty overtly, you know, we had, as an example, you know, we we had a segment that was basically new for us that was fragrances on which we we grew much more than what we had expected. So we gained new clients and significant initiatives from these clients. Now there aren’t that many clients in that segment.

So, you know, it’s if a few of them have a quiet year in terms of initiatives, it can have an impact on the on the overall performance that we are rating in the segment. And this is what is happening this year. So I think that we are resetting the base in a more reasonable place, which will then which should give us a more, let’s say, linear growth profile in the future than what we had in the recent past. So temporary is because the up and down is pretty sudden linked to the initiatives that happened last year. And then, you know, I think that the base will be in a in a more stable place, let’s say.

Conference Operator, Chorus Call: Thank you very much. Just a follow-up on this, is there any chance that this moderation in Earned Body might be offset by maybe your initiatives to, say, be more present within Earned Body but in segment where you can work with your own formulation, which was one of your aims, let’s say. I don’t know if you can tell us about discussions in this direction. Thank you.

Renato Semerari, Chief Executive Officer, InterCoast Group: Well, this is a bit like productivity. It’s something that we work we work on day in, day out. It’s a constant effort. So we are growing in terms of innovation capabilities in especially in the air care, I would say, less so in the body care. But in air care is is an area of focus for us in terms of of innovation.

We are growing, but, you know, typically, these are segments where you gain either small clients, emerging brands that that need to grow or niche initiatives of bigger brands. So the the growth will come little by little, brick by brick year after year. You won’t see the the volumes injections you can get when a fragrance, an important fragrance is being launched to the market that gives you immediate volumes that are concentrated in in a matter of six months in reality, and then it depends a lot on what happens in terms of the large for that brand. But, you know, you have an immediate impact in in the air care and innovation side. It’s it’s a little by little building the client base, building the project base, and and it’s a it’s a long term journey that we are in.

We’re making progress year after year, but it’s a it’s a it’s a long way forward still.

Conference Operator, Chorus Call: Perfect. Very clear.

Stefano, Chief Financial Officer, InterCoast Group: Thank you

Conference Operator, Chorus Call: very much.

Renato Semerari, Chief Executive Officer, InterCoast Group: Thank you.

Conference Operator, Chorus Call: The next question is from Mitra Omanazei of BNP Paribas Xain.

Stefano, Chief Financial Officer, InterCoast Group: Hi. Thanks for taking my questions. I have one question and two follow ups, please. So, you know, when we listen to the beauty players, especially in the cosmetics and skincare side of things, Initially, h two was supposed to be half year heavy with launches. Do you still think it’s going to be the case or you are seeing some of those launches being postponed into the next year?

And then in terms of the follow-up, the first one, just to make sure I understand this correctly, the plus three to four for the full year, that’s at the constant FX level, right, which would imply 0% to 2% constant FX for H2? And also a follow-up on one of the questions.

Analyst, Various (Berenberg, UBS, Jefferies, Equita, BNP Paribas): Could you confirm that the guidance cut was largely driven by hair and body, or you would prefer not not to specify segment wise? Thank you.

Renato Semerari, Chief Executive Officer, InterCoast Group: Hi, Misha. No. We’re not seeing, you know, launches postponed. We are seeing, you know, some lengthening of the d of the orders, but more on the repurchase side. So and this is mostly driven by brands being a bit cautious given the the tariffs instability not to be too exposed to big orders that would come and and and get hit by by tariffs or unexpected kind of tariffs.

But I think this is going to be should clear up with the month of August when we will know more clearly what is going to happen in that front. So I mean, to be honest, in the second semester for the beauty market in general is the the semester of the big launches. This is pretty standard, and I would be surprised that brands would delay launches given the fact that without initiatives in a market that is not growing fast, it would be very bad in terms of end results. You know, the the reasons due to Christmas, it’s not a mystery. So it’s pretty normal that September, October are the months where most of the initiatives appear to profit from the novelty effect at the peak consumption period of Christmas.

So, no, I don’t see I don’t see a postponement in that. Now, obviously, for us, everything is a bit anticipated. So if someone launches in September, it means that we are producing three months ahead of that, normally, two, three months ahead of that. So it’s it’s it’s not the same the same pace. The second point you made, yes, well, constant rates, yes, we are talking about that because, to be honest, we are a bit confused about the the currency trends in general.

I must say that we do not get a lot of help from what we see from the banks because we see a lot of divergent opinions in terms of what to expect. So, yes, I prefer to talk about constant rates because it would be a bit of gamble to to see what happens on the currency front. From an ignorant like me, I wouldn’t have expected euro to go down relative to the dollar given the different trends in terms of interest rates. It has happened exactly the opposite. So, honestly, it’s a bit difficult for us to predict what is gonna happen in in that front.

On the third element, the the guidance, yes, is mostly driven by Air and Body. We knew that it was not going to be a brilliant year for the segment. Always said it was going to be a consolidation year in that front. Well, the consolidation is there, but it’s it’s a bit more a bit more evident that than what we we had expected at the beginning. Again, I think that what you’re seeing in terms of results for the first semester are clearly showing the main dynamics of the year.

And again, I would like to underline the EBITDA improvements that come also thanks to a different mix of the different segments we are competing in. I think we look at both the positive and the less positive things. But personally, I’m very happy about the performance we are having in EBITDA and the mix of segments is contributing to that as well. So, you know, it’s it’s everything that’s good and bad. And this one, I I rather take take it positively rather than the opposite, to be honest.

Stefano, Chief Financial Officer, InterCoast Group: That’s very clear. Thank you, Renaud.

Renato Semerari, Chief Executive Officer, InterCoast Group: Thank you, Misha.

Conference Operator, Chorus Call: As a reminder, if you wish to register for a question, please press star and one on your touch tone telephone. For any further questions, please press star and one on your telephone. Gentlemen, at this time, there are no more questions registered.

Renato Semerari, Chief Executive Officer, InterCoast Group: Thank you very much. Thank you, everybody. Thank you. And for those of you who will enjoy vacations, have a nice vacation. Goodbye.

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

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