Earnings call transcript: Intercos Q3 2025 sees stable EBITDA growth

Intercos reported a stable third quarter of 2025, with EBITDA growing by 5.4% and an expansion in EBITDA margin to 15.9%. Despite a 2.7% decline in sales at constant rates for the quarter, the company maintained its profitability focus. The stock price showed a slight decline of 1.06% following the earnings announcement, closing at €11.32. Currently trading at €12.92, the stock remains significantly below its 52-week high of €17.61. InvestingPro analysis suggests the company is currently undervalued based on its Fair Value assessment.

Key Takeaways

• Intercos achieved a 12% increase in EBITDA for the first nine months.
• The company's EBITDA margin improved by 143 basis points to 14.7%.
• Sales fell by 2.7% in Q3, but the company focused on profitability.
• The stock price decreased by 1.06% after the earnings release.
• The company is optimistic about market normalization by 2026.

Company Performance

Intercos experienced a mixed third quarter, with a focus on profitability rather than top-line growth. The company reported a 2.7% decline in sales for the third quarter at constant rates. However, EBITDA rose by 5.4%, and the margin expanded to 15.9%. Over the first nine months, sales increased by 2.9%, and EBITDA grew by 12% to €116 million, highlighting the company's strategic shift towards profitability.

Financial Highlights

• Revenue: Decreased by 2.7% in Q3 at constant rates
• EBITDA: Increased by 5.4% in Q3, with a margin of 15.9%
• Nine-month EBITDA: €116 million, up 12%
• EBITDA margin: Improved by 143 basis points to 14.7%
• Net debt leverage: Stable at 0.86x EBITDA

Outlook & Guidance

Intercos anticipates market normalization by 2026 and expects a potential rebound in the U.S. market in the latter half of that year. The company projects flat sales for 2025 but remains confident in maintaining current margin levels, confirming the existing EBITDA consensus.

Executive Commentary

CEO Renato Semerari emphasized the company's strategic pivot, stating, "The era of extreme globalization is over." He added, "We are going back to the profitability levels we had back in 2019," underlining the focus on restoring profitability. Semerari also remarked, "We need to see what is going to happen with interest rates," indicating caution regarding macroeconomic factors.

Risks and Challenges

• Global Market Trends: Softer-than-normal trends could impact sales growth.
• U.S. Market: Flat performance over the past two years poses challenges.
• Competitive Pricing in Korea: Could pressure margins.
• Emerging Markets: While showing potential, their impact remains limited.
• Interest Rate Uncertainty: Could affect financial planning and consumer behavior.

Q&A

During the earnings call, analysts inquired about the dynamics of the China market, R&D organizational changes, and U.S. pricing strategies. The company clarified its expectations for the sales mix and addressed potential consumption impacts in the U.S. market.

Full transcript - Intercos Spa (ICOS) Q3 2025:

Coastal Conference Operator, Conference Moderator: Evening. This is the Coastal Conference Operator. Welcome, and thank you for joining the Intercos 9 Month 2025 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. Should anyone need assistance during the conference call, they may signal an operator by pressing Star and Zero on their telephone. At this time, I would like to turn the conference over to Mr. Renato Semerari, CEO of Intercos. Please go ahead, sir.

Renato Semerari, CEO, Intercos: Thank you very much. Good evening, everybody, and thanks for joining our call. In a global market that has continued to display softer-than-normal trends, especially in volume terms and especially in the US market. Intercos kept focusing on restoring profitability after three years of exceptional top-line expansion with a CAGR of plus 16.5%. But with a margin dilution that was apparent in these three years. This focus, if you move to my second slide, brought Intercos to achieve a 12% EBITDA growth in fiscal 2025 year-to-date, resulting in a 143 basis points margin improvement. The macro blocks that led us to these results are a slightly positive volume component, a significant profitability improvement mainly due to productivity gains, and a deliberate rebalancing of our sales mix that we will discuss in more detail later. Third, a negative forex exchange impact.

All in all, we closed the nine months with EUR 116 million and a 14.7% EBITDA margin. Looking at results in a bit more detail. In the year-to-date, sales were up by +2.9% at constant rates, thanks to the strong performance of our core color business, which was up 9%. Overall stability of skincare and a market decline, on the other hand, of contract manufacturing and therefore our hair and body business unit. Adjusted EBITDA growing double-digit, as we just said, with all quarters of the year up substantially thanks to a better BU mix—so with makeup now over again at the 60% bar and hair and body down—a lower weight of PAC in sales, and this is a very important component, especially in the third quarter, a better mix within the BUs with prestige growing faster than mass, and productivity gains across the board.

Net debt, the leverage was stable versus last year at 0.86 times EBITDA. With an absolute value increase mainly driven by CapEx linked to our plant expansion plan, dividends, and the share buyback program that we announced a few months back. In the third quarter of this year, sales were down by 2.7% at constant rates, mainly, if not exclusively, tracing by decline of PAC components of our top line, which, as I said earlier, was a deliberate choice and direction we took at the beginning of the year. The EBITDA, despite the top line decline, was up 5.4% with an acceleration of the margin expansion at plus 161 basis points, to 15.9% margin. This is our third quarter in a row of market margin expansion. Moving at the details of the sales component.

Starting with the BU by business unit, makeup is our best-performing business unit in the year with a +9% growth and over 60% of our sales. Multinationals are the key growth driver, both in Asia and in Europe, prestige performing better than mass. In the third quarter, sales drop was essentially driven by foreign exchange and PAC. Also to keep in mind that last year base was pretty high since we grew 15% in the third quarter of last year. Skincare, in the year-to-date, still shows a slight decline of -3%, all driven by the first quarter result. Asia and EMEA are both growing, while US is suffering, also driven by tariff affecting particularly Switzerland, which, as you know, is affected by a 39% duty incoming to US. In the third quarter, we had a slight positive result, +2%.

Despite the last base we had last year at plus 12%. Hair and body, in the year-to-date, shows a double-digit decline, mostly driven by fragrance. Mostly driven again by the packaging component and a high base of last year. As you know, we had a very, very high growth across 2024. Now, looking at the picture by region. Overall, the year-to-date shows and points to Asia as our key growth driver, plus 9% in 2025. While EMEA and US are quite stable. Looking region by region. Europe has a very consistent trend. Pointing at stability, both in year-to-date and third quarter, are at minus 1%. This is made up by makeup and skincare growing but offset by the hair and body performance, which, as you know, has a quite high impact on this region.

Multinationals, and especially the prestige brands of multinationals, are the best performers, both in the year-to-date and in the quarter. America's slight positive in the year-to-date, plus 1%, despite the double-digit decline of the third quarter. Makeup is growing with skincare offsetting here. Again, Forex has an important impact, but the overall soft performance of the market and our clients over the first semester had obviously an impact on reorders. As for Asia, high single-digit growth in the year, despite the very high base of last year at plus 29%. Both China and Korea keep displaying strong trends in the year. In the third quarter, which was highly impacted by negative currency trends, we recorded a slight decline on a high base of last year, which was 30% up in the quarter. This was driven by a softer trend in Korea, while China kept growing at high single-digit rates.

Moving to the cluster of clients, 2025 is characterized by a consolidation of the emerging brands, mostly due to the performance of hair and body. Multinationals in the year-to-date are growing at double-digit pace and regaining 50% weight on our total sales. Makeup is obviously the main driver of this comeback, with strong results in all regions. Prestige was clearly the best performer, and also in third quarter, multinationals displayed growth. Emerging brands, as said, saw a consolidation which was mainly driven by hair and body and affected both EMEA, especially EMEA, but also US. Asia, conversely, steady growth in both makeup and skincare for this cluster of clients. As for retailers, in the year-to-date, retailers displayed high single-digit growth after a difficult 2024. Hair and body was good for this group of clients. Although in the third quarter we had negative results, mainly driven by new projects' seasonality.

To conclude, in a year which has confirmed an overall softness of the market and that we believe is going to get back to normalized growth rates in 2026. Intercos has decided to focus efforts in restoring the marginality level lost during the past three years of accelerated top-line expansion. Also, the team is executing the plan that is instrumental to the group's future growth, both in terms of innovation, with an acceleration of Blue Sky Innovation led by the think tank, which is a multifunctional team devoted to this kind of disruptive innovation. Manufacturing expansion that, as you know, has seen the expansion of our Korean and Chinese plants in 2024, as well as in terms of organization design. This is probably new to you, but we have decided and implemented new reporting lines for regional R&D.

Meant to increase the autonomy and therefore improve our speed in responding to the regional emerging trends. In the meantime, we confirm our confidence in matching the current fiscal year 2025 EBITDA consensus. That's all on my side. I'm available for any question you may have.

Coastal Conference Operator, Conference Moderator: Excuse me. This is the Coastal Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and 1 on the touch-tone telephone. To remove yourself from the question queue, please press Star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press Star and 1 at this time. The first question is from Anna Frontani from Badenberg. Please go ahead, Madam.

Anna Frontani, Analyst, Badenberg: Hi. Good evening, everyone. I have three questions. The first one is on sales growth. If you are comfortable with 2025 sales growth of 3-4%, a constant effect. Second question. You've shifted the focus from top-line expansion to profitability. I wonder how sustainable are the current margin levels once volumes will recover in 2026? And the third question is on the U.S. because you mentioned a rebound in 2026. Do you have a specific timing in mind? Should we expect a rebound more in the first half or maybe in the second half? Thank you very much.

Renato Semerari, CEO, Intercos: Thank you, Anna. No, I do not think that we will match the 3-4% growth in the year at constant rates. I expect that there will be stable or slight positive at the end of the year. This is driven by the packaging component element that I mentioned to you earlier. We took decisions at the beginning of the year that, coupled with a market that is softer than we had expected because we were expecting a second semester rebound, which did not happen, I think is going to bring us overall in a stability kind of position in terms of top line. This is what I think or what we believe we are going to be landing for the year. The second point, the sustainability of margins, yes, I do believe that these moves are sustainable.

Because of all the work that is now showing in terms of productivity, because of the push that we have deliberately made towards clients and brands and initiatives that are at higher margin level. You know there is always some volatility that is related to the sales mix of different clients. All in all, we have made a shift in our portfolio of clients and products that should show sustainability over time. We are basically going back to the profitability levels we had back in 2019, which we think is a very sustainable base on which to build further improvements going forward, to be honest. The third question is the most difficult one because no one has a crystal ball, obviously. I do personally expect that the progressive decrease of interest rates in the US will have an impact on consumption.

I think it will be more visible in the second half of the year than in the first half of the year, although I personally hope that we will start seeing some effects already in the second quarter. That is my guess, so take it with a certain level of cautiousness, I would say. This is what I would expect. US now is showing a flattish market since two years. Usually, in the normal trend of the past, you would see that after two years, you should see a rebound. We hope this is going to come. I hope I've answered all your questions.

Anna Frontani, Analyst, Badenberg: Yes, you did. I just have a clarification on the first one to ask you. So we can expect flat sales growth for 2025, which factors in a negative effects contribution.

Renato Semerari, CEO, Intercos: We're going to be landing at the same level of last year, all in all. This is with, obviously, the currency impact. The more you go on in the year, the worse it's got. There is a higher impact progressively. All in all, I think we're going to end up flat versus last year in sales terms.

Anna Frontani, Analyst, Badenberg: Okay. Perfect. Thank you very much.

Renato Semerari, CEO, Intercos: You're welcome.

Coastal Conference Operator, Conference Moderator: The next question is from Andrei Kondreya of UBS. Please go ahead.

Good evening, and thank you very much for taking my questions. Two from me, please. First of all, if we look towards 2026, obviously, you spoke already about the US. Could you share some more color as to what makes you so confident about the other regions, China, Korea, and the emerging markets? Secondly, could you offer a bit more color on the changes you're making in terms of your local operations with the increased autonomy and improved innovation speed? Thank you very much.

Renato Semerari, CEO, Intercos: Hi. Thank you very much for your questions. In terms of trends, China has shown quite good recovery numbers post the June 18 event, which was negative versus a year ago. In the year-to-date, China is at +3.9%, which is not yet at the level we were expecting, but it is definitely better than last year. Now, the big question is what is going to happen in the double-11 event, which is the most important of the year. What we know is that the promotional sprint has started earlier than usual this year, and this helped the market to record a +8% growth in the last four weeks. The jury is out. We obviously hope to see a good all-in-all double-11 season, which would signal that China is getting out of the woods and that there will be a much better 2026. Emerging markets, they are doing well.

We're doing fantastically well in India and in Brazil as well. The reality is that their impact on the total results of the company and in general of the beauty market is still quite limited. They do not have the size altogether to make a swing on the total results yet of the company. I'm very positive about especially India. I'm also positive about Southeast Asia, but those are still quite marginal in the global scheme. Korea is a bit of a different story. Korea, local market is not that big either. It's a very competitive market. We are seeing a very violent reaction from our competition given the growth we've had in the past three years. They're really dumping on many fronts on prices to recover a bit of the lost shares that they've lost in the recent past.

Korea is more a factor of how much the country is going to be exporting into the US and Europe. We know that Korean brands are having a good development in the US and also partially in Europe. This is more skincare-driven, so it's not having a big impact on us so far. All in all, Korea, we keep being quite bullish on the growth we can have, mostly driven by the share gains we can still achieve in that country. All in all, as you know, Asia is mostly dependent on what is going to happen in China. That is the market everybody's looking at. The second point is quite important. What we have noticed is that the era of extreme globalization is over. I think that this is not a big discovery. It's visible across the board.

We had a way of working that was not really allowing us to be as fast as we could be in catching local trends. We have always been very good in all that is blue sky research and coming up with new technologies that then get applied across the board. We have been very good in catching some global trends and responding well and fast to those. There are, and we have seen more and more, local trends that are important in just one region. We have not been fast enough to jump on those. We have noticed it, especially in the Western world, which was more dependent on our corporate R&D, so the central teams. For instance, for China, we had decided to keep more autonomy for the local labs. They were more reactive and faster. What we decided is to shift the.

Reporting of the local R&Ds to the local COs so that R&D, sales, and marketing can be faster and more reactive or actually more proactive in responding to these local trends. We think that this will, coupled with all the goodies we have in terms of more fundamental innovation, which is going to be led as in the past, but this proximity of decision-making in the regions will allow us to be faster and more proactive for what local trends are concerned. This is something that we have announced a few weeks ago, and we think it's going to give us results already starting next year. I hope I've explained it a bit better. Otherwise, if I've not been clear, please ask again.

No, that was great. Grazie mille. Thank you.

Coastal Conference Operator, Conference Moderator: The next question is from Francesco Brilli of Intermonte. Please go ahead.

Francesco Brilli, Analyst, Intermonte: Good evening. Thanks for taking my question. I have a couple of questions from my side. The first one is on 2026 guidance. Behind your confidence on a more normalized and rebound in volume growth and revenue growth. Do you have just a confidence on trends on different markets, or is it based also on internal activities, new launches, or different commitments from clients on new technologies? Do you have something that makes you confident on a rebound in 2026, or is it just a projection on market trends? That's the first question. The second one is on the APAC normalization in third quarter. I appreciate that the Forex impacts is hitting. It would have been up low single digit at constant effects. We were used in the last few quarters to see much higher growth. I was wondering if.

Something happened there, something changed, or it's just a mix of comp base and Forex impact.

Renato Semerari, CEO, Intercos: Okay. Grazie, Francesco. The guidance for 2026, obviously, the guidance we're going to give it at our next earning call. We are going through the budgeting process as we speak. At the end of it, I will have much clearer ideas. All in all, there are two components. One is that we believe, and based on historical data, that 2026 should see a rebound of the market. I've also seen a number of clients that are all pointing and believing in the same direction. This is obviously very important because it impacts more or less 70% of our sales, which are reorders. If sellout is lacking, then this 70% suffers. The second is also driven by the level of interest, especially in big multinationals, about the innovations we are showing to them.

The level of interest on new technologies and formulas we are showing them is pretty encouraging. This year, already, we have a weight of new products that is beyond the usual 30%. We are already seeing more, let's say, interest in outsourcing innovation to us. We think, based on all the signals we have and the interest from clients, that this is going to continue in 2026. Both are pointing in a good direction. How much that will materialize, we'll have a clear view in a few weeks. As for the second, which is the APAC normalization, I have always said that when you have very, very fast growth, there is a moment where there is consolidation. I could not say it's biology, but it's quite normal. This normalization is coming from Forex exchanges. That is.

Clearly well out of our control, but is also driven by, in the quarter, in the last quarter in Korea. We are coming out of years of exponential growth in Korea. We had a quarter that was softer because of clients' dynamics, launches' dynamics, a number of things that, it's bound to happen sooner or later. What is important is the trajectory, which remains very positive. For the region, all in all, I must say that I'm very happy about the results we're getting this year as well. I do not see any alarming sign, to be honest.

Okay. Thanks.

I hope I've answered your question, Francesco.

Yes. Thank you very much.

Thank you.

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

Paola Carboni, Analyst, Equita: Yes. Hello. Good afternoon, everybody. I have a few questions. The first one is a similar question about China. If I got it right, you mentioned high single-digit growth. It is a progressive drill down here, although clearly outperforming the market. I am just wondering whether you are seeing again a bit of catch-up from multinationals compared to Chinese brands on that market, and how this is possibly affecting your performance in the region. Another question is about the new organization for the R&D responsibility and with greater local autonomy. I am just wondering whether this might impact your profitability in any way, like, for example, a bit less of scale in your innovation, economies of scale in your innovation process. Third question, sorry, is instead on the sales mix.

If you can share with us your thoughts about the possible landing point of the mix between full service and free issue, because we started the year saying that would not change too much versus last year, whilst apparently, given the very strong performance of EBITDA margin we are seeing, it is probably going towards an improving trend compared to an improving mix compared to 2024. I am wondering if this is correct, and where do you think we should be end of this year and possibly also next year? To what extent are you committing on this direction even further? Thank you.

Renato Semerari, CEO, Intercos: Okay. Thank you for your questions, Paola. Yes. China continued growing by single digit. In reality, there you do not see the results of what's happening with multinationals versus the local brands. I remind you that in the numbers you're seeing, you're only seeing what we sell to the local clients. Because multinationals are tracked and are placed where the headquarter of the multinational is.

Paola Carboni, Analyst, Equita: Yes. That's clear to me. Thank you, Renato. It's just because, I mean, as much as for Korea, your growth used to be much stronger last year. I'm just wondering whether such a drill down is possibly correlated to multinational picking up a little bit again in the region versus local brands you are working with.

Renato Semerari, CEO, Intercos: No, I mean.

Paola Carboni, Analyst, Equita: It's clear now.

Renato Semerari, CEO, Intercos: No, no. Thank you. I just wanted to be clear, not to confuse others. Maybe I realize that sometimes it's not easy to remember that point. No, all in all, I wouldn't say so. We see multinationals starting to do better. L'Oréal is doing reasonably well in China. Estée Lauder, you've seen the results. They are clearly saying that. They're getting a bit out of the woods and the crisis they had with the local market in China. All in all, local brands are still doing better than international brands in total. We do not see a rebalancing of the positions. You will always have one brand doing better than the other and things like that. It will depend also a lot, again, on what happens with the Double 11 activity and the level of promotional push that the brands will put in play.

I think that there will be a moment where the swing of market shares from international brands and Chinese brands will slow down. In terms of gains for the local brands, I do not see any reverse, at least not in the short, mid-term. I think that the part of the market that has been gained by the local brands will remain in the hands of these local brands for a while. Obviously, if the market picks up, that is going to benefit the volumes of everybody in proportion to the shares they own. I do not see, sorry, international brands overall taking share back from local brands. Again, it's what we sense. We might be wrong, but this is what we're getting as signals from the market. The second point, I hope I've answered your first question, Paola.

Paola Carboni, Analyst, Equita: Yes. Very clearly. Thank you very much.

Renato Semerari, CEO, Intercos: Thank you. The second point about the new organization of R&D. It's not going to have an impact on profitability in any material way, in the sense that it's not that we are building an organization that wasn't existing. We are only shifting the decision power more regionally than centrally for, let's say, the non-disruptive innovation, which is new technologies or new things like that. There won't be an impact of that kind. There won't be an impact in terms of critical mass that we have behind our innovation. Again, most of our investments in innovation are in the advanced innovation, the Blue Sky Innovation, which is going to stay led by the central teams. What we want is a faster decision process and adoption of formulations that are kind of already somewhere in our portfolios, adaptation to local trends in a faster way. The answer is no.

I do not expect any impact from this new organization on profitability per se. I expect only a faster speed to market for those local trends. Instead of getting them approved by a central team that will debate because they do not live and do not see the market reality on a daily basis, this decision is going to be taken locally where sales, R&D, and marketing are sitting together, talking to clients together on a daily basis. They can react faster and better. That's it. The last question you had, sales mix, full service, and free issue, is true that what we said at the beginning of the year is that we saw the shift from free issue to full service had stopped. In the last quarter, we are seeing a rebalancing of the proportion, getting a bit closer to what historically we were used to. Again, it's.

The result of a specific push in certain cases. It's within the same clients we have agreed not to buy packaging any longer for them. So it's going a bit back in the past. Now, as I said earlier, and you can make the math for yourself, the decline of the third quarter at constant rate is all linked to packaging. There is a change for the better. Admittedly, last year, in the last quarters, third quarter and.

Second half.

In the second half in general, third quarter and fourth quarter, there was a particular spike in the component of packaging in our sales. This is coming back to a healthier level.

All in all, you can assume that the level of pack in terms of weight on the sales is going to remain the same that you have seen more or less in the first half of this year, which is the opposite of what happened last year when the weight of packaging in the second half increased quite significantly.

Paola Carboni, Analyst, Equita: Okay. Thank you very much. Just as a follow-up to that, your guidance of simply confirming consensus EBITDA might possibly turn a bit conservative, given that you have already gained more than EUR 10 million in the first nine months. Do you have any specific concern on Q4? Why should we not have any increase in absolute EBITDA in Q4 then?

Renato Semerari, CEO, Intercos: I wish you were right. I would love to surprise you with some positives. We need to see. I think that, all in all, if it is not consensus, it will not be materially different, to be honest. We will see. Obviously, the better we do, the happier we are.

Paola Carboni, Analyst, Equita: Clear. Okay. Thank you very much.

Renato Semerari, CEO, Intercos: Thank you, Paola.

Coastal Conference Operator, Conference Moderator: The next question is from Michele Omanazzi from BNP Paribas Exane. Please go ahead.

Hi, Renato. Thanks for taking my questions. My first one would be on the recently announced partnership between L'Oréal and Kering. Do you think there could be any implications from this partnership for Intercos? Is there potential for some incremental business for you? The second one is a follow-up question. Apologies, I know you've been asked about this already, but just to be absolutely certain in terms of full year expectations, when you referred to stable sales, you meant stable absolute sales, i.e., the same absolute sales as we achieved in 2024, i.e., EUR 1,065 million. That's what you are referring to and not growth, not flat constant effects growth. Am I correct? Thank you.

Renato Semerari, CEO, Intercos: Hello. Hi. Thank you for your question. First question, L'Oréal-Kering. Partnership implication. In reality, Kering is not an organization we are dealing with because their brands are licensed to Coty nowadays. The most important one, actually, the only important one for us is Gucci. And you've seen that their Coty contract expires in 2028, so there will not be any immediate change. Now, what I expect long term, and I see it as a positive for us as well, is the fact that L'Oréal has, and I wish this was not recorded, L'Oréal has better muscles than Coty in pushing brands, especially makeup. They have a machine that is number one in the world. Otherwise, they would not be the number one player in the world. I do expect them to push these brands better and faster, and this should be a positive for us.

As you know, we are very good partners with L'Oréal already, so I do not see any possible negative from this move. Also, the fact that, if I remember well, they are getting the license for the Kering brands to 2050, where I will be retired at that point if I'm alive. It means that L'Oréal will have all the latitude to invest behind these brands and harvest the fruit of these investments before their licenses get back into discussion. I see it positively. It won't have an impact in short term because there is not going to be a short-term change for us because Coty is going to stay there till 2028. The second question, the answer is yes. It's.

Current exchange rate.

Current exchange rate. We think we're going to be landing in line with the EUR 1.6 billion something of last year. So the answer is yes.

That's very clear. Thank you very much.

Thank you.

Coastal Conference Operator, Conference Moderator: For any further questions. Is Besta and Juan on your telephone? The next question is a follow-up of Paola Carboni of Equita. Please go ahead.

Paola Carboni, Analyst, Equita: Yes. It's me again. Sorry. I wanted to hear from you about what's happening in the US. You have referred to the fact that possibly the price increase your clients are implementing to offset tariffs might have been impacting to some extent volumes. Did I get it right? What's the price effect you are seeing? And to what extent do you believe this might really be a hinder to volume in the next few quarters for the US market? Thank you.

Renato Semerari, CEO, Intercos: Thank you, Paola. Yes. In terms of pricing, what we are seeing is that the overall price per unit in the US has moved from 1.6% in the first quarter of this year to 4.4% in the third quarter of the year, and in the last four weeks at 6%. This is not called anymore Nielsen IRI. It's a different name of company. These are retail data. So there is a move in pricing, which is pretty evident. Now, will this impact in a significant way volumes? Personally, I don't think there's going to be a major change in trends. The reality is that volume trends have been soft since two years, as I said before. I don't think it's going to help. I think that the move on interest rate is going to be more important than these price increases.

We need to see what is going to happen. It's going to get worse or not. I don't know. In general, the market, sorry, the US consumer has always proven a high sensibility rate to interest rates, which is linked to the fact that they are all getting debts very young in their lives, since they have to pay tuitions to university and so on. When interest rates go down, it makes an impact on their available income, and they go into consumption pretty fast. I think, and I hope I'm right, that move is going to be more important and more than upsetting the price increases we are seeing, which are most probably related to these duties dynamics. You may have different behaviors for different brands. Obviously, the brands that are more, let's say.

Relying on price competitiveness may be affected, but it all depends on how the relative moves of pricing are going to happen.

Paola Carboni, Analyst, Equita: Okay. Thank you. Thank you very much.

Renato Semerari, CEO, Intercos: Thank you.

Coastal Conference Operator, Conference Moderator: Mr. Renato Semerari, there are no more questions registered this time.

Renato Semerari, CEO, Intercos: Thank you very much. Thank you.

Thank you.

Good evening to everybody. Bye.

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

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