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Good evening, ladies and gentlemen, and welcome to our Q1 2020 earnings release. I'm directly moving to the Slide 5 of the presentation, and before we will answer more specifically into our Q1 2020's numbers, please let me say a few words on the overall environment in this unprecedented global health and economic crisis. We are indeed facing a fast-spreading epidemic that started, as you all know, in China and then spread in the rest of the world. This has led to massive lockdown and shutdowns all around the world of factory, offices, public spaces, retail, restaurants and hotels, with, in the end, all areas of the global economy being heavily impacted. Against this crisis, answers from governments are differing from one country to another, and visibility remains limited regarding the end of the epidemic for both the phasing of de-confinement and the speed of the resumption. And last but not least, regarding this environment, we have recently observed some significant currency devaluation, especially for emerging countries, Brazilian real or Russian ruble, for instance, and a rather unprecedented situation regarding oil prices that have collapsed over the past few weeks. Moving to Slide 6. I am now looking at what are the priority of the group. The Groupe SEB top priority has been to protect the health and safety of its employees worldwide and to strictly comply with local regulations in the many countries in which Groupe SEB operates. In response to this unprecedented crisis, the group quickly implemented all the necessary measures to carry out this mission, including the implementation of homeworking and business continuity plans wherever possible; the closure of industrial sites, according to the directive or recommendation of local authorities; all the reorganization and adaptation of the supply chain to ensure the best possible service for customers while protecting the health of employees. Furthermore, the group is adapting to the situation and short-term imperatives by implementing cost-saving measures and by strictly managing working capital requirements. And we will review later on the action plan that we have put in place. It's a bit too early to get excited about the recovery, but the group is ready to size all the opportunities of the gradual activity resumption. Moving to Slide 7. Let's have a look at the COVID-19 impact on our business and industrial base by geographic areas since January. We can see, as you all know, that the first hit was in China, then in Asia. In January, Hubei was locked down, and in February, all of our 7 factories in China were closed. The resuming and ramp-up of our factories occurred in March and April, and we are now back to a normal state of operations in our plants but still facing lower consumption. In other Asian countries, depending on country, partial lockdown occurred in February and March. Business is now back to normal, except for Japan, in which the state of emergency has been gradually implemented since the beginning of April. In EMEA and Americas, lockdown occurred later in March and April. Most of our factories and stores are still closed at end of April, and we are anticipating a partial reopening of stores and factories in the course of May. Moving to Slide 8, regarding our industrial base. What we can see is that the situation, as I was mentioning previously, is recovering in China as compared to end of February. Our 7 Chinese plants have resumed activity and are now running at normal production levels, including our industrial sites in Wuhan. In Europe, Eurasia and in the Americas, some finance measures remain widely in place in various forms. All in all, and you can see that on the left-hand side of the graph, there are now 23 out of our 42 factories that are open, including 9 running at reduced capacity. The remaining 19 factories are closed today. Please note that this is today's picture and that it can evolve quickly depending on countries. All in all, this situation requires a lot of flexibility on our side as we also need to adapt our factory to demand evolution. I'm now moving to Slide 9 to give you a vision on what our customers are facing. We currently experienced an unprecedented situation featuring a standstill for a large part of the retail industry worldwide. The chart on the left is a reminder of our sales breakdown by distribution channel with the 2019 figures. It shows that our exposure is quite balanced. Please note, in particular, the strength of e-commerce, pure players and e-commerce platforms of retailers, which represent about 25% of our sales and which has been the major growth drivers these past few years. Please note also that the B2B segment in the pie chart refers to our Professional business and includes restaurants, hotels or coffee shops. As such, we can approximately estimate that around 42% of our distribution channels remain open, while today, the remaining 58% are closed. But let's move now to the Slide 10 and have a look at what happened in China. China being the first-hit country worldwide and our first market, it's important to get lessons from what happened here. The chart on the left-hand side presents the key trends for both off-line and online channels. What you can see here is the first phase, i.e., the first 3 weeks of January, before COVID-19 outbreak that was pretty dynamic. Then, obviously, things have changed and that the second phase with the COVID-19 outbreak, having led to significant decline for both off-line and online channels. Both have been into negative territory, while off-line has been more impacted by the crisis, obviously. And finally, a third phase with very gradual and slow improvement on the off-line channel with stores havening reopened and still low in-store traffic, but online channel is now back to steady growth. So now we're moving to the numbers, and I am directly moving to the Slide 12. The Q1 2020 revenue reached EUR 1.454 billion, down 15.6% on a reported basis and 16.5% like-for-like. Our Consumer activity has been down 17.4%, 17.3% like-for-like; and our Professional business has been slightly down 0.7% and 9.7% like-for-like. In both cases, the downturn of our sales is closely related to government quarantine measures and the restricted movement of population as well as the closure of nonfood stores in most countries. Moving to Slide 13. You can see here our sales bridge between Q1 2019 of EUR 1.722 billion and Q1 2020. It's a 16.5% organic decline, as I just mentioned. Currency effect has been broadly neutral over the quarter with a plus EUR 3 million impact, and scope effect reached EUR 13 million over the quarter, with 1 month contribution from Wilbur Curtis and 3 months from Krampouz. The next slide, Slide 14, is showing Q1 2020 revenue by region. Figures will be commented with more details by Isabelle in a few seconds, but let me focus on the 2 columns on the right-hand side, the far right showing revenue performance in March, whereas the previous shows Q1 in total. You can see the impact of the containment measures in the countries in which the group operates. In EMEA, where revenues have been down 10.4% over the quarter with a significant decline in March at minus 25%. Same trends in Americas where revenue has been down close to 9% on a like-for-like basis with a 23% decline in March. And finally, Asia posted a 27% organic decline in Q1 with also minus 33% in March. Now I'm handing over to Isabelle for more details on the market. And so we move into Slide 15.
Yes. Good evening, and I will start my round-the-world trip with Western Europe. As you can see, a negative development of sales for the first quarter. Apart from the phasing of the epidemic spread and the answers to the COVID crisis that has been given by European national governance, well, the key takeaways for Europe are quite similar across the board. Sales has been driven down in Q1 due to the sudden outbreak of the epidemic and the consequential measures, lockdown, confinement, brick-and-mortar store closures but also priority given to food and essential products that, as a matter of fact, did put additional pressure on supply chain and especially for mass retail and online players. So after -- following first -- a firm start to the year, the market -- the SDA market collapsed with only a few categories that, I would say, continued to enjoy better momentum going along with the continued containment and the new needs that consumers could have. Off-line sales, obviously, dropped very significantly, and that drop -- this drop could not be compensated by online sales. What we have seen is that a certain number of electrical cooking products have been resisting better than [ HPC ] namely OptiGrill, well, yogurt makers, bread makers, and the electrical cooking did also better than cookware overall. If we want to focus just on a few countries, France, as mentioned on the slide, has been -- well, our sales in France has been declining by 8% in Q1, including a major drop in small electrical appliances or more or less all categories together. But a more positive sense, cookware sales were up, and those were driven mainly by a large loyalty program that has been implemented. Regarding Germany, the core business was okay, but 2 factors did not help and put pressure on sales, and they were mainly related to 2019 high comp. One was related to a loyalty program that has been achieved last year. And the second is due to the impact of bringing back Groupe SEB Deutschland's commercial practices in line with group's principle. Regarding Italy, the severe drop that we can see in the first quarter is mainly due to the fact that it was the first country really severely hit, an early hit country in Europe. Spain and -- Spain were down also. Netherlands were down. Apart from Nordics, all the countries almost were down. Now if I switch to the next slide and speak about other EMEA countries. Well, this zone, as you know, there is this region is very heterogeneous, and it's difficult to make a blend of the whole picture. Well, the slightly positive sales trend that you can see is, in fact, even more dynamic if we take into account the fact that there was a non-repeat of loyalty programs of last year. And excluding those loyalty programs, as a matter of fact, sales were up 7% at constant exchange rates. The crisis, in fact, there were 2 stages in Q1. First, in January, February, where we continued on a cruise rhythm, double-digit growth with a very good core business driven by our key growth engines in the region; our partnerships with major customers and those partnerships have been very constructive over time; second, the ongoing online sales development with international, but also local pure players; three, a product dynamic and the new category activation and ramp-up; and four, the continued B2C retailing expansion, including, of course, store -- new store openings. So that was the first phase, very in line with what happened in the past year. And then a transition phase in March with sales that has been dragged down as all countries had entered the crisis with different speeds, but they all entered the crisis. Best-in-class countries remain for us, Russia, Ukraine, Egypt and also Central Asia. Eastern Europe, Eastern Europe revenue was softer. That was mainly due to the non-repeat of loyalty programs of last year, but the core business has been going on fine. In Turkey, there was no official lockdown, but it looks as if. As a matter of fact, sale were up like-for-like, and confinement, limited circulation in big cities. Many stores were closed, including ours. But overall, the dynamic was well maintained in the country for us before lockdown. If we go now next to North America. Well, sales were down, as you can see, like-for-like. It's a mixed picture across countries. In the U.S., the first thing is that we are lacking a large deal last year on Jumbo cookware. So we had a high comp regarding this specific deal. But overall, the core business was quite good at the beginning of the year with listing gains at mass retailers, Walmart, Target, but also doing much better with Amazon and also a good sell-out. So sell-in was okay and the sell-out was also good. Linen care revenue was up driven by the ongoing and the impact of the Rowenta launch in the mass and online that started only later last year. So we did not have this launch achieved in Q1 last year. So overall, a good stance, both in cookware and linen care at the beginning of -- at the very beginning of the year. Of course, online sales development has been strong but not enough after the beginning of the crisis to offset the store closures and the impact also on the essential-only strategy of Amazon. And in Canada, a quite soft business overall across all categories in a market -- in an aggressive competitive landscape. So nothing really changed in Canada, and Q1 was a difficult quarter. Mexico, on the contrary, even if we had a set number of assets issues, showed a solid like-for-like growth fueled mainly by the channel fulfillment of the major fan loyalty program. But cookware sales also held firm, pots and pans, with strengthened positions in the country. South America. South America, let's-- the first thing is that, as you can see, reported sales drop is much bigger, much larger than like-for-like. And this is due, again, to a new depreciation of our 2 major currencies in the continent, Brazilian real and the COP against the euro. Now if we want to go fast to the 2 countries, Brazil, we had a slow start to the year in January, February as the fan season was a poor one due to unfavorable climate. In March, the story was different as the market deteriorated at the beginning of March, anticipating the impact of the arrival of COVID-19. And as for mid-March, there was the confirmation of the COVID stroke in the country with closures, circulation restrictions, et cetera. And the business was highly penalized as the physical retail massively closed and our customers started blocking delivery. Our plants -- our 2 plants in Brazil, as Nathalie said, were shut down and people were working from home. Among the resilient products, I would like to stress the point that the nice story that we have started with oilless fryers has continued, and that Dolce Gusto, in particular, posted a very strong growth, above 20%, and is -- continues to do very well. Regarding now Colombia, a very buoyant start to the year on the contrary to Brazil, which was driven by overall good performance in all distribution channels in the country and also by good performers among our products and namely fans with a nice double-digit growth, well, at the end of March and the ongoing development of electrical cooking and mainly oilless fryers. Colombia was put in lockdown since -- has been put in lockdown since March 20. China now, well, the first-hit country for us on a large scale, so major impact on the domestic economy and the -- of course, the small domestic industry overall has been hit. It has nevertheless been less severely hit than other industries, and Supor downward sales trend is very much in line with what the market shows, around minus 30%, minus 35%. Cookware market was more down than -- was deteriorated more. This is due to the fact that it's a more mature market. The equipment rate is higher. So the cookware revenue slump of support has been more significant for this reason but also for 2 other reasons: First, there are less online sales in cookware and than in SDA. And second, the Wuhan plant has been closed much longer than the other ones, and this, of course, disrupted our supply chain. We had some shortages, out-of-stock situation, and we could not access to our warehouses in the Hubei Province, for instance. So across all categories in cookware, it was clearly a very difficult quarter. In small electrical appliances, it was rather tough for kitchen electrics, apart from high-speed blenders, which belong to the top sellers in the e-commerce, and we had also stock available. But overall, sales were more resilient in care products, that is to say, garment steamers, vacuum cleaners but also air and water purifiers. Okay. Then we can go to the other Asian countries. Other Asian countries, as you can see, this region was more resilient despite a very early COVID outbreak. And if we do focus on the 2 major countries in the region, well, in Japan, there was no general confinement policy. There was a stay-at-home recommendation. So that means that a certain number of stores, the stores remained open, malls remained opened, and the SDA market held up quite firm in the first quarter, especially the electrical pressure cookers, now we have the international version of Cookeo, which is sold over there and has a nice success. Kettles were up, cookware also, which was holding up firm and also iron, the garment steamers that were significantly up as well as cookware. Good momentum also for the retail, our retail over there, which did perfectly well until the state of emergency was put in place in April. And that obviously had changed the deal and will change the deal for Q2 even if we had a strong shift to online business. Regarding South Korea, the economy and demand was sharply impacted by COVID-19, as everywhere, with a store foothold that has been significantly down while the online, of course, increased strongly. South Korea sales were down mainly due to sell-in in cookware and -- mainly due to the sell-in. Regarding cookware, the sell-out was okay, and did enjoy a strong momentum during this period. Regarding now small domestic appliances, the market was down, although we had a good start to the year, but March wiped up the situation. And we had a good momentum in garment steamers and food preparation, but nevertheless, the story -- the whole story is clearly a story of decrease in South Korea. Now ending with the Professional business. As you can see, sales has been down by almost 10% like-for-like. This is mainly due, of course, to the Professional Coffee Machines, which is representing the bulk of this business, and that was due to 2 things: First thing is that, last year, as you probably can remember, we had a very buoyant start to the year, which today represents high comparatives. So we had the supply -- the deliveries of a certain number of big deals last year, and so comparatives are very high in Professional Coffee Machines. And of course, the containment measures led to the closures of hotels, restaurants, coffee shops. And of course, all of these being customers of the group and postponing a certain number of orders and deliveries on the period. So this is it.
Well, thank you, Isabelle. We are now on Slide 23, where I wanted to give you more granularity on our operating results and net debt figures. The operating result is EUR 18 million this quarter versus EUR 138 million last year. The decrease, obviously, is linked to the effects of the COVID-19 on business activity and the inherent sharp decrease in sales in the first quarter. But I first want to remind you that for the Groupe SEB, the first quarter operating results as well as the second quarter one are not representative of full year performance as our activity is stronger in the second half of the year, while operating costs are more evenly distributed over the year. In this context, the significant decrease in operating results in 2020 Q1 is mainly due to the sharp drop in sales and, to a lesser extent, to the underactivity linked to the production shutdown in most of our plants, first in China, then in other geographies, in particular in Europe. And finally, our net debt stands at EUR 1.840 billion, but I will provide more explanation on that in Slide 26. Now moving to the next slide, Slide 25 -- sorry, 24, to give you more color on our cost structure. On the left-hand side of the slide, you can see 2019 figures, as shown in our 2019 annual report. We had EUR 7.4 billion of sales. We had cost of goods sold of around EUR 4.5 billion. This includes purchased goods and raw materials, direct and labor costs, freight costs and other production costs. We also earned around EUR 2.5 billion (sic) [ EUR 2.1 billion ] of OpEx. This includes research and development costs, advertising, marketing, distribution and administrative expenses. As you know, we are keen on maintaining research and development investment in all circumstances as these are key drivers for innovation in the longer term. As far as advertising and marketing expenses are concerned, as already mentioned in the past, they are more flexible, and we may adapt our investment to the reality of the market. Out of this total cost base of EUR 6.6 billion, around 70% can be defined as variable costs on an annual basis, while the remaining 30% are fixed costs on an annual basis. Now let's move to Slide 25 so that we can review the impact of the seasonality of the business on the operating results. So as I said previously, and as it's been always said, Q1 is not representative of full year performance, while Q2 is usually the low point in the year. For instance, last year, in 2019, H1 accounted for 45% of full year sales while generating 31% of operating results. Oppositely, H2 accounted for 55% of sales and 69% of operating results. And more specifically, Q4 has been for years a key contributor to our full year performance, mainly fueled by Christmas purchases in many major countries and by the 11/11 promotional events in China. And as such, group sales activity and performance is strongly back-end loaded. Last year, Q4 alone accounted for about 45% of our full year operating results. So combining the cost structure that I explained in the previous slide, the seasonality and the absorption of the 30% fixed cost, which is not the same from one quarter to another, obviously, this translates mechanically to a stronger operating leverage in the second half of the year. So now if you were to do the math for the first quarter, in order to compare Q1 2019 to Q1 2020 operating results, you will see, assuming a gross margin in line with what we had in 2019, that the decline of revenue has generated roughly EUR 100 million less gross margin compared to last year. This lower sales also have an impact on our plants, which were less loaded, as I mentioned. And this has had an additional weight of around EUR 20 million. And so the rest of the explanation is mainly driven by the fixed costs we carry on a quite evenly basis from one quarter to another. I'm now moving to Slide 26 to comment on the net debt of the group. The net debt of the group stands at EUR 1.840 billion, including IFRS 16 and other noncash item at the end of March versus EUR 1.997 billion at the end of December. This decrease is coming from the lower operating working capital requirements, a result that can primarily be attributed to customer receivables and inventory and which is directly related to the dip in activity in the first quarter. As always mentioned, Groupe SEB has a healthy and well-balanced financing structure. As of today, the group has a total liquidity of around EUR 2 billion, including EUR 1 billion of cash and cash equivalents in the balance sheet and another significant EUR 1 billion of headroom coming from undrawn facilities. As far as gross financial debt is concerned, it amounts to about EUR 2.3 billion with diversified sources of financing and diversified maturities, as you can see on the bar chart. And furthermore, you can see that the group, as is already been mentioned, has no financial covenants for this debt.So now moving to the fourth part of the presentation to present you the action plan and the outlook for the year. So the magnitude of the crisis has led us to quickly implement action plans to protect both our P&L and our balance sheet. As you all know, circumstances have been very specific with people working from home. Nevertheless, the company has been very reactive. Regarding cost reduction actions, payroll flexibility measures have been implemented across the group, including short-time working, paid leave, contract suspensions, reduction of temporary staff, recruitment freeze. In France, for instance, headquarters employees have been asked to take a 5-day vacation in April. As previously mentioned, growth drivers are being adapted to market current situation and visibility. Non-essential expenses, such as travel or events, have been systematic cut. As you know, we have more than 1,300 stores in the world, including more than 60 stores outside China that are mainly closed today. The leases for these proprietary stores are currently being renegotiated. And finally, as mentioned in our press release at the beginning of the month, corporate executive officers will reduce their compensation paid in 2020, and the Board of Directors has also decided to reduce director fees to be paid in 2020 in the same proportion, i.e., 25% reduction pro rata to the duration of the applied short-time working measures. Moving to Slide 29. I want to emphasize the fact that we also have implemented a very strict cash flow preservation policy with a strict control of working capital. We are paying our suppliers normally, but we have a special attention for fragilized suppliers as we think it's our responsibility to help them crossing this very specific period. Furthermore, we have a very large and diversified customer base with no customer accounting for more than 5% of group sales. Nevertheless, given the current environment and store closures, we have implemented a strengthened monitoring of receivables, especially when customers ask for delayed payments.And finally, the decision to reduce dividend payment by around 1/3 versus the dividend that had been paid last year will have a positive impact on cash. As such, the dividend proposed by the shareholders' meeting on May 19, which, by the way, will be handled closed doors, will be EUR 1.43 per share and will be paid on May 26. In addition, please note that the group has not requested any government-guaranteed loans, no social or income tax payment deferrals.Moving to Slide 30. So we all acknowledge that it's a very complex situation. As I mentioned a few minutes ago, and as we already mentioned in the past, Q1 and Q2 have never been representative of full year operating results, and this is even more true this year due to the massive hit of COVID-19 in H1, which is usually a lower-activity period. I want to stress that visibility in such difficult times is really lacking and that situations are evolving quickly. Nevertheless, for the second quarter, we anticipate at this stage a more difficult activity than in the first quarter. Revenue loss should be somewhere between EUR 450 million and EUR 500 million, with, on the one hand, China business resuming progressively; on the other hand, ongoing shutdowns and lockdowns in many countries worldwide but especially in the EMEA and in the Americas. Under those circumstances, and given our cost structure and seasonality, operating results will most probably be negative in the second quarter. We will have no liquidity issues. But given the overall lack of visibility, we are not today in a position to give a full year guidance. We expect a gradual and progressive resumption of business in the second half of the year, and we anticipate that sales and operating results will be markedly down in 2020.Now moving to the next and last slide of this presentation. And the message we want to convey to you is that the group is adapting to the short-term imperative without jeopardizing the future. We're getting ready for the resumption of the activity and demand recovery with more than half of our factories being up and running. We stay focused on our long-term goals, including our ambition of profitable growth. The commitment of our employees is outstanding, and you know we have been through other crisis in the past. We remain very confident in our solid and well-balanced business model with a strong worldwide footprint and strong brands.So this is the end of this presentation, and we are now happy to take your questions.
[Operator Instructions] We have one first question from Mr. Nicolas Langlet from Exane BNP.
Hello? Can you hear me?
Yes. We can hear you, Nicolas.
We can hear you.
I've got 4 questions, please. First, on China, can you tell us what has been the trend in recent weeks? And what do you expect for Q2 at this stage? And also, have you seen any change in terms of consumer behavior, product mix, promotional activity in the country in recent weeks?Second question on A&P spending. You mentioned an adaptation of the spending. Are we talking about reduction as a percentage of sales or just a reduction in absolute terms?Third question, you mentioned the extra cost linked to the production site shutdown. Are you expecting the same magnitude of impact in Q2? And also, is there a scenario where actually we could have some offset in H2 if demand recover and production side work at full speed?And the last question, can you give us an update regarding FX and raw material impact on not just EBIT for full year '20 at current price?
Okay. Thank you, Nicolas, for your questions. So we'll be starting with the first one and the trend we've seen in China in the recent week. We see improvements in China. So the activities are resuming. As we have shown at the very beginning of the presentation, obviously, we see a better level of business to our online channels versus the offline. But overall, the country is resuming, and the consumption is improving compared to what we have seen in the first quarter. Talking about change in consumer behaviors, I think that what we see in China with the offline resuming faster -- sorry, the online resuming faster than the offline is certainly a good hint regarding the change in consumer behaviors. Now talking about the products, I don't have on top of my mind any significant change on what has been purchased in the first quarter or at the end of the first quarter compared to last year.Your second question was regarding the adaptation of spending on advertising and marketing expenses. So you know that the group has always been very cautious to choose its battles regarding the growth drivers spending. As I mentioned, we will not jeopardize the future. So anything which is related to product conception is something that we want to keep in our P&L because it's the innovation and the future of the company that lies in those spending. And to the contrary, when there is no -- well, limited opportunities in terms of sales in the market, and this is the case in some countries here and there, as you know, we are -- we will lower our expenses. We are also taking some lessons from the current situation. And so especially in Europe, we are now planning to spend more to promote our online space compared to what were the original plan at the beginning of the year to make sure that we grab all the opportunity that are coming from this market.I'm sorry, I'm just stopping here. Operator, would you mind calling back Isabelle Posth because she's not on the line anymore.
Okay. Perfect.
Okay. Okay. Then to your third question, Nicolas -- did I answer your first 2 questions, first?
Well, maybe on the first question, so you said the situation is improving in China. On a year-on-year basis in April, I guess, sales were still down by how much?
Yes. So we're still down in April, and that will be overall lower sales in the second quarter, but not ready yet to share the numbers country-by-country for the second quarter. We are very cautious on how we manage the recovery in China.
Okay. And the second question on A&P. So overall, as percentage of sales, should we expect a lower A&P spending in 2020 given the current environment?
Nicolas, that will depend on how the business will recover. We want to make sure that we will be able to capture all the opportunities that will come when stores will be open and when the activity will be there. So what you could expect is that the pace of outspending will be a bit different from what it was in the past because we want to make sure that we will have enough growth drivers, enough marketing expenses to capture the opportunities when the business will recover.And talking about the extra cost. Your question was related to the -- what we could expect in the second quarter. Yes. It's likely that the costs will be higher in the second quarter, as in the first quarter, we had our Chinese plants close but already reopening in between mid-February and mid-March. And we only had 2 weeks of closure of our plants in France in March, whereas the situation is widening and spreading globally in the rest of the world, and so we have more plants closed in April than we had in March. So we expect that this impact should be stronger than the one we had in the second quarter.And to your last question, FX and raw materials. Raw materials, we do not expect anything significant. You know that we have a long-term hedging policy in order to offset the swings that the price of raw materials could have in our P&L. And as far as the FX is concerned, as usual, when we are witnessing strong devaluation in the currencies, especially in emerging countries in which there is no or limited production capacity, we are entering into a negotiation phase to increase prices so that we do not have the impact of the devaluation on our operating results.
Okay. So it means the recent depreciation of emerging countries' currency, the negative impact, you expect to fully offset that impact through price adjustment this year?
Yes. This is the policy that the group has always followed, to adjust the pricing so that there is no -- on the long-term base, there is no impact. I'm not saying 1 week after the other, but there is no impact in the operating results.
We have a question from Mr. Steve Levy from MainFirst.
I have 2 questions, in fact, that haven't been answered with Nicolas. The first question is on North America. Have you been impacted with the tariff increase on the Chinese product? I know that you brought it actually to -- from China. I just wanted to know whether or not they have been impacted -- has that been impacted in Q1?Second question is about the benefit from the, like, short time or one benefit have been registered for the first quarter or registered for the second quarter? Meaning that if you have been put people in short-time working at the end of March, just to know if it's accounted on the Q1 or in Q2? And maybe can you clarify a bit, the line was not that great, if you just come back on -- repeat yourself on the raw material just to be sure that I well understand the answer you've made to Nico.
Okay. So I -- it was a bit blurred, but let me rephrase your first question. I understand that your first question regards the tariff increase on imports from China and the impact on the North American business. So there has been an impact but quite limited because the U.S. administration has been going back and forth regarding those tariff increase and the very last version of what would be the grid for imports between China and the U.S. was finally less important that was expected. So it's been part of the job of the U.S. team to discuss with our customers some price increase to offset this part of the -- this increase in tariff.
And as a reminder -- sorry, as a reminder, only 1/4 of our turnover in the U.S. is, at this stage, concerned by those tariffs.
And also, you may recall that we had made, prior to the -- to this war between U.S. and Chinese administration, we have already made decisions to transfer some of our Chinese production to our Vietnam plant. So this has been fully executed by the end of last year, and it has also redeemed our U.S. operation from the impact of this tariff increase between the 2 countries.Then your second question was related to the impact of short-time work, whether it was -- it's in Q1 or Q2? The answer is that it will impact both quarters. A smaller impact, however, expected in the first quarter because this mainly concerns our direct labor workforce and the plants that were closed in France since mid-March. Those measures have been extended to the month of April in France, but also in Germany. So there will also be some impact in the second quarter and likely, larger than the one we had in the first quarter.And your third question was relating to the impact on raw material. That was your question, right?
Yes. Just as the line was not great, so that's having a view on the raw material impact for this year and if you will have a positive tailwind for this year?
No, for this year, our exposure is, I would not say, 100% hedged, but it's already very significantly hedged. So there will be a limited impact regarding the -- coming from the drop of, especially, aluminum prices in the P&L this year. But this drop in prices is the support for hedging and so hedging our exposure for next year.
We have the next question from Mr. Cédric Rossi from Bryan Garnier.
Actually, I have 2. The first one is on inventories. So you talked about sort of your initiatives on receivables, but I was interested in having your measures regarding inventory reduction. So I recall that in 2009, the working cap had a positive contribution to the free cash flow generation. So I was wondering if you were expecting the same positive impact for 2020.And the second question is -- probably it's a bit early stage to talk about it, but I was interested in having your view on what could be the long-term -- whether the COVID impact would have a long-term impact on the industry drivers. I'm thinking of the consumer behavior of the acceleration in the online shift and so on. So if you can already comment on that.
Okay. So to your first question, the impact on working capital and especially inventory, so we have already seen in the first quarter a lower working capital. And as I said during the presentation, this came from both lower receivable and also lower inventory. We had lower inventories because we have kept in the months of Feb and March in all our countries our logistics open so that we were in a position to sell and to serve to the best we could our customers. But as plants were closed in China first and then, to a lesser extent, in Europe, we also had less production capacities, and this has led to a decrease in inventory. Now improving the level of inventory and the inventory turns is a day-to-day activity for the industry teams or the teams in charge of plants throughout the group, and there are many initiatives ongoing apart from this crisis to improve the group performance to that extent.Now talking about the long-term impact on COVID and what it means for us and for our customers. What we have seen, at least during this past week, is that the level of sales that we're deriving from online pure players or brick-to-mortar marketplaces has significantly increased. And you have seen that in China, which is a country a bit ahead from the others in this crisis, that the ramp-up in terms of recovery for the online is much faster than the one we can see in the offline. And that's why we all came and still working on the plant who are focused more our growth drivers and our marketing expenses on the online to make sure that we can capture and help our customers capturing all the opportunities that are coming from this stable of sales.Regarding the product and the overall consumer behavior, I think that there are different phases in this crisis. So the first phase was clearly that people were only prioritizing -- and retailers were only prioritizing essential goods, essential products, hygiene and food. And with the containment going on, clearly, of course, things change and evolve. We've seen over the past year more demand regarding trimmers, depilators, garment steamers, but also more electrical cooking appliances and probably more and more cookware. People are spending clearly more time to cook at home. And what we have seen also is that, for instance, if we look at the case factory community, you know that this product has been launched only with digital advertising and marketing. And we have -- as we have a community, which is quite active, and the community for Cake Factory over the past weeks have been growing significantly, very significantly. We have now something like 60,000 members of the community, which is more or less -- which is more than 20% more in a few weeks. So yes, there might be changes within the crisis and the containment period, which seems to be lasting, that might be also the case in the longer run with people also changing their habits. Yes.
We have a question from Mr. Alessandro Cecchini from Equita.
The first one is about, I mean, the pricing environment. I would like to better see your view after this somewhat of a lockdown. So when you will see the resumption sort of business normality. Do you expect some -- I mean some competition in pricing mostly driven by, potentially speaking, the clash that is ramping up between online and physical retailers? Because you stated right, I share with you the fact that online, of course, is going very well, but probably it's bad if it's going extremely well and the physical retailers are going fairly bad from a competition point of view between the channels. So I wanted just to have your view on the pricing environment that you expect in, I don't know, third quarter, fourth quarter, not at the moment.My second question is about if you can provide us the like-for-like in the consumer business that you have excluding China in January, February, just to understand the underlying business that you had in January, February.And finally, if you can provide us sort of a very fast percentage about your cooking exposure, excluding our cookware for your full year sales.
Okay. So starting maybe with your first question and the pricing environment and what we see in terms of trends currently and after the lockdown. So first, there is a very strict and strong pricing management made by the group just to make sure that we are not suffering from competition that could arise between pure players in the online world and the others in the offline. So that's one of the activity of the commercial teams to make sure that the category management is made so that we do not see inconsistencies between the pricing that we have in both channels. Obviously, the brick-and-mortar players may have -- may see different situation depending on the way they have in their business that is coming for a pure in-store whether -- versus what could come from marketplaces, if they have made their decision to invest into those. So we know that there will be some strong discussions regarding pricing. But again, and as usual, any support that the Groupe SEB could give in terms of promotion to help in-store players will be balanced with volumes, and the overall target of the company is always to make sure that the level of margin that we expect from all our channels is in line with the -- or the level of margin that we deliver from all the channels is in line with our expectations. So again, it's a balance of promotional activity, commitment in terms of volumes that is driving the decision that we make on pricing.Could you, sorry, remind me your second question?
So my second question was about the like-for-like for the group consumer business, excluding China in January, February. So just to understand the start of the year, the start to the year, excluding China, what was your trend before the lockdown started in Europe and U.S.
Well, usually, we don't comment on monthly performance. I guess that this quarter was a bit an exception, and that's why we showed March on a stand-alone basis just to help you capturing the impact and the violence of the COVID and the impact it had on sales but this is not something that we will disclose regularly on a monthly basis.
Okay. And finally, about the percentage of sales that can be assumed in cooking, excluding cookware, for your consumer business?
So if we are to talk to go into the various product categories, I will say that kitchen electrics are around 40% of our sales, and cookware is close to 30% of our sales.
We have another -- our next question from Marie Fort from Societe Generale.
I've got 3 questions. The first one is do you plan to adjust your CapEx plan for 2020? And could you share with us what you expect at this stage?My second question is related to your Professional division. And could you comment how your order book has fluctuated over the Q1?And lastly, related to online. Could you share the first feedbacks of your DTC website, Rowenta for instance? And do you plan to further expand the strategy towards the brands?
Okay. Thank you for your questions. So the first one regards the CapEx plan and what we aim to do in 2020. So as I said, the company really has a long-term view and we think that if we were to cut CapEx, especially industrial CapEx, that could have an impact that you would not see in this year but that could jeopardize the future. So we do not plan to stick to the 3%, 3.2% of CapEx on sales this year as we think that if we want to preserve the future, it's important that we are able to do the level of investments we foresee. And as I also mentioned, we think that we have enough liquidity to keep on funding our CapEx plan. Having said that, there are also some other CapEx that are not directly related to the industry that could be postponed, but it's clearly not the bulk of the CapEx spend for the company.Regarding the Professional business and the order book, when discussing with our teams leading the Professional business, what they tell us is that the leads are still there. The projects are still there. There has been no cancellation coming from customers. We are discussing here and there some postponements of projects, and it's very -- clearly are understandable that when shops are closed, it's more difficult to roll out the implementation of the installed base or the renewal of the installed base, but again, no cancellation on major projects on the Professional business.And your last question is about Rowenta -- [ DTC ] and Rowenta?
Yes.
So the feedback is quite good. But we've seen a very strong increase in terms of traffic, but we were coming from small numbers. And as I was telling before, one of the lessons that we draw from this crisis is that we want to capture all the opportunities that are coming from the online world. So we haven't yet started to spend on the marketing and advertising for those websites despite the fact that they are live. So we are very happy already with the growth in traffic, and we think that once we will spend on marketing and advertising, we will get certainly much more from those -- from this website than what we get today. And the plan, yes, is to roll out and to roll out on the other brands of the group and to roll out country-by-country starting with Europe.
And to a logistical point of view, did you face to some difficulties to deliver to the client or to all the cost?
So more generally, on the online business, as I've seen -- and I've shown, sorry, on the beginning of the presentation, it's 25% of the sales of the group. I'm not talking about the group website, but overall, what we are selling to customers. So we've had here and there some difficulties, especially in China, related to logistics, but we've been able to overcome all those difficulties and to support our customers, so the big marketplaces in China, but also the marketplaces from the brick-and-mortar and Amazon, obviously, which is one of the key winner of the crisis and one of the strong customer of us in the month of March.
I mentioned that when I spoke about France saying that we had had some milder disruptions related to supply chain issues because, also, there has been a prioritization on the said number of products, and these products have disrupted the supply chain for the other ones.
And last but not the least, so what was also very important for us was to make sure that when we made the decision to keep our logistical sites open, it was also making sure that our employees were safe and that social distancing was implemented so that it would not have any impact on their health.
And madam, we have no other questions.
Okay. So well, thank you for your attention, your attendance, and we're looking forward to talk to you -- to talk to you again. The next key dates for communications are the following: May 19, the AGM on a closed-door basis; and then July 23, so before market opens, we will release our H1 2020 sales and results. Thank you, and good evening.
Thank you. Good evening. Bye-bye.
Bye-bye.