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Edited Transcript of IP.MI earnings conference call or presentation 5-Aug-19 1:00pm GMT

Q2 2019 Interpump Group SpA Earnings Call

SANT'ILARIO D'ENZA Aug 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Interpump Group SpA earnings conference call or presentation Monday, August 5, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Luca Mirabelli

Interpump Group S.p.A. - Head of IR

* Paolo Marinsek

Interpump Group S.p.A. - Deputy Chairman

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Conference Call Participants

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* Alessandro Tortora

Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst

* Domenico Ghilotti

Equita SIM S.p.A., Research Division - Co-Head of Research

* Matteo Bonizzoni

Kepler Cheuvreux, Research Division - Equity Research Analyst

* Michele Baldelli

Exane BNP Paribas, Research Division - VP of Equity Research of Italian Mid Cap

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Presentation

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Operator [1]

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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Interpump Second Quarter and First Half 2019 Results Conference Call. (Operator Instructions) At this time, I would like to turn the conference over to Mr. Paolo Marinsek, Deputy Chairman of the Board. Please go ahead, sir.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [2]

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Thank you. Thank you very much. Good afternoon, everybody. Thank you for calling. Sorry to -- we are delaying the vacation of some of you. Of course, you know why. I'm especially thinking of our Italian friends. Anyway, I understand that monthly August 5 is not for sure everyone's favorite moment for a conference call. But what I really hope is that you appreciate our figures. I hope that -- because in my view, the figures of this quarter underline once more the most important characteristics of Interpump: solidity and reliability.

The mood in the financial market is characterized by general pessimism. And this is reinforced by some red numbers and also some -- the worst revision in the results and the expectations of many industrial players, including some of our competitors.

Well, I think that it is in troubled water that you can see the quality of a ship. And in this context, you check the quality of Interpump. Interpump, first of all, has positive organic growth. This is particularly significant given the very tough comparison base.

Sales. Our sales in both divisions reached their historical quarterly record. And so -- this is also in the overall EBITDA generation. And be careful, this, despite the unavoidable disruption, caused by a strong investment plan that is allowing Interpump to digest the stronger sales growth of recent past.

So let's look together at the numbers. Total sales in the second quarter amounted to EUR 359.6 million. This is up 8.6% from 1 year before. Looking more closely at this 8.6%, we have a pure organic growth that is 4.1%, currency [exchange] for 1.5%, and the perimeter extension accounted for the remaining 3%.

Looking by division. Water-Jetting total is EUR 118.1 million, thanks to an organic growth of 2.7%; a currency tailwind of 2.2%; and the fact that 2.6% due to the change in our perimeter that is in this case the amount of Ricci engineering and FLUINOX.

Sales in Hydraulics reached EUR 241.4 million, thanks to an organic growth of 4.8%, plus 1.2% from the currency exchange and plus again 3.1% from the addition of [Intradine] that we did earlier this year.

So in this situation, net of acquisitions, sales are up 5% in Europe. And in Europe, by the way, let me say, is a further demonstration of our reduced correlation with macro trends. Italy is in line because it's the same. Growth was 5%. U.K. is up to 6%. Germany is down. Germany is down 1% in the quarter but still 0.5% -- up 2% year-to-date.

Growth in the U.S. market is back to a double-digit percent, 13%. Part of this growth reflects a stronger dollar, of course, but the majority represents a significant change from this post seen in the previous quarter.

Latin America, also flat this year in the first quarter. Now it's up 19%. Brazil is changing sign from the previous minus 11% to an encouraging plus 8%.

Numbers get negative in Asia. China is down. China is down 14%, reflecting just continuing positive trend in Hydraulics and a momentary slowdown in Water-Jetting, but I would say that -- almost already forgotten; later, I tell you something about the rest of the year. And this slowdown is almost entirely attributable to timing of Hammelmann supplies to the shipyard industry, but I underline timing.

India is down 4%. But really, I should say that, to put the things in the correct perspective, I want to remind you that India grew 61% in Q2 last year. So the comparison is really extremely tough.

Let's have a look also to the sales by application sector. And as usual, this is more meaningful looking at the 6 months. And in this time frame, almost -- the main application sectors are showing this positive trend. The best performers are industry. Industries including chemical is up to 25%; construction is up to 24%; contractors 15% -- 15% to 14%; trucks 9%, of which truck manufacturers is plus 6%. Food, cosmetics and pharma is up 7%. Cleaning is up 3%. Agriculture and earth moving are growing only 1% in this time.

Okay. This regarding our sales. Now let's move on to profitability. EBITDA margin for the quarter was 23.2% compared to 23.3% last year. Without considering IFRS 16, the comparable figure for the quarter was 22.1%. Now the size of this decrease, I think would still follow, within reasonable range, to attribute to the sales mix. But we should also remember the ongoing implementation of a stronger than usual CapEx plan, which involves a number of relocation, a number of reconfiguration, production downtimes here and there. So really, a lot of things. But I would say that both these sectors are not structural, so we would not consider this year's number as an indication for the future.

However, I would point out that in absolute terms, our EBITDA generation in Q2 amounted to a very satisfactory EUR 83.5 million, which remains our highest ever -- remains our highest ever even after taking out the IFRS 16 effect. So I think that's -- this is a strong number. In this situation, in particular, Water-Jetting generated EUR 32 million of EBITDA, 27% of sales; and Hydraulic, EUR 51.5 million, 21.3% of sales.

Net income. Net income for the quarter was EUR 46.9 million, bringing the half year results to EUR 92.2 million, which does not include any one-off. This represents an increase of 11.6% over a normalized figure for last year. Last year, if you remember, included in the recognition was the very strong position of GS-Hydro as a nonmonetary one-off.

And tax rate. The tax rate for the period was 27.5%. As an indication in the quarter, net income was EUR 46.9 million. So it's plus 7% compared to a normalized Q2 '18, and tax rate for this quarter was 27.2%.

Same deck, it is time to look at the changes in our net financial position. As you probably remember -- you for sure remember, in the first quarter of the year, cash flow generation was quite low due to front-loading of inventories that we decided to have for our investment plans. And I would say that the picture is taking me to a different scene in Q2. Cash flow from operations amounted to EUR 71.9 million versus EUR 41.9 million last year. So this represents an increase of more than EUR 30 million, or if you prefer, 70%. And this really only in a very small part due to the IFRS 16 because we have a rental of EUR 4 million in the quarter so negligible.

The increase in sales net working capital was limited to EUR 17 million, lower -- absolutely lower than the previous year and certainly much lower than the EUR 52 million deferred in the first quarter. And I think this is a major improvement compared to the situation at the end of Q1.

Very important, CapEx. CapEx in the quarter was EUR 21 million. And this is, more or less, as expected, but anyway you have to consider that this is quite high. I think -- I really think that our companies are managing this process very successfully because an investment of this size and complexity could potentially cause a lot of practical problems. Instead, our customers are not feeling any consequences.

Despite this, free cash flow generation in the quarter amounted to EUR 36.5 million, nearly twice as high as Q2 last year, bringing the total year-to-date to EUR 39.2 million.

Then we had a few payments related to acquisitions, of which the most important is the minority shares of Tubiflex. Tubiflex is now a wholly owned subsidiary of Interpump. We have 100%. And then, we spent EUR 13.5 million in purchase of treasury shares. All these numbers brought our net financial position at the end of the period to EUR 391 million.

Additionally, at the end of the quarter, we had EUR 40.2 million in commitments for partnerships or subsidiaries, and this is down from the EUR 49.8 million registered 3 months before.

I think this was the last number I had to give you. Now what can I say about the bigger picture and what is ahead of us? As you know, as the year has passed, I would say 6 successful months in which Interpump performed according to our expectations. The expectations we expressed in the guidance, we gave at the beginning of the year. They are 6 months that justify my satisfaction and my optimism for the future. The market, as you all know, is changing a little bit. But I would not say it is decreasing in size. But the trend is not the clear one seen in the past 2 years. It goes up and down, inflating and shrinking. I see a picture that, it seems to me, almost like an accordion. And then a good example of this is the month of June. You have to know that June was the weakest month in the quarter. But the trend was completely reversed as early as July. July tends to be a very, very strong month, so one of the best of the year. And particularly with very satisfactory numbers for how many months in INOXPA, so bringing a very strong contribution to the Water-Jetting sector. So you see there is a situation where in June, you see volume go down, and in July, go highly up.

But I would say that this is precisely the situation that shows the resilience of our business model, where any worry, unpredictable issues are compensated for by unplanned chances that we are able to see and to catch because of our diversification and flexibility. Be it may, it is tough to find a group so diversified and so flexible in the same time. So able to get the opportunity even in a tough -- in a difficult period of time.

Some say that absolutely we have no concern about the rest of the year. First, we had a good -- we have a healthy backlog. For the first time in a while, it is a little lower than 1 year ago. But I would say this is -- let me say, a fortunate circumstance as it is the expected consequence of the increase in production capacity, which is starting to show its effect. Today's portfolio are certainly more in line with reality, in line with a well-managed logistics, where customers are not overextending the time horizon of their orders because of a longer delivery time. So of course there is nothing that would suggest any changes to our guidance. The guidance for the year-end is that, of course, guidance is confirmed.

Saying that, consequently I want to be very honest with you. I have a hard time justifying the trends seen in the share price. The financial markets seem to overreact to details, details about a single country, a single sector, a single customer, a single quarter. Yet, quarter-after-quarter, the group is exactly the same. If you want, it is a bit larger. So it's even bigger. But with the same business model, and there's actually the same exciting opportunities for the future, both in terms of business and M&A. And this is the reason why we kept on buying back shares in the past month.

I mentioned the M&A. I'm sorry we don't have any new acquisition to announce today. Personally, I had hopes this would be the case, but as you know, the timing in this kind of operation is not entirely in our hands. Anyway, so to speak, the Interpump family is willing already to welcome the new members, and I don't think it will take many months before we have something we can announce. So absolutely no change in our growth strategy. And so I think I can give you a very optimistic forecast for the future. I think that's all from my side. If there is anything I have not covered, please take advantage of the Q&A session, which are now are ready to begin.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Matteo Bonizzoni of Kepler.

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Matteo Bonizzoni, Kepler Cheuvreux, Research Division - Equity Research Analyst [2]

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I have 3 questions. As regards to your EBITDA guidance of EUR 305 million, plus or minus EUR 5 million. Looking at the first quarter EBITDA ex IFRS 16 was up -- 5.3% year-on-year, if we take the midpoint of the guidance, the EUR 105 million, it means an increase of 5.7% for the full year. In the second half, by the way, you will have also lower help from ForEx and probably a more challenging comparison maybe because last year you posted very strong acceleration in the second half. So my question is are you more confident to hit this guidance more in the midpoint, in the high part or in the low part?

The second question is, as regards the industry dynamics that you are seeing, the peers in the Hydraulic business that have already reported results, Eaton and Parker, are all saying that there is a sort of also, let's say, destocking by your customer in Hydraulic. And all are saying that the order intake is going down and they have also projected organic growth negative for the next quarter. What do you see for the next quarter for the Hydraulic division? This is the second question.

And the last one is more, let's say, peanuts. As regards to a financial item. Just during the first half, I guess there could have been ForEx gains. Can you please detail the breakdown of your financial charges?

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [3]

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I'll start answering to the first question regarding EBITDA. I think that the range that you are mentioning is really not a very big range. So let me -- the guidance as it is, we've -- let me say, this is a small range of, let me say, possible difference. As I told you, we see a market that this is a sort of a harmonium. Anyway, on the numbers that I gave to you, you see that there is no business sector that is down. We have the most important market there are up. We had a very strong July. So there are still, let me say, a different situation that could bring us to, let me say, a result that is a little bit up here, a little bit down the other side. I think that EUR 5 million plus or less is not a big number.

Destocking. Destocking. You speak about the information you got for Eaton and for Parker. What I want to tell you is that both of those companies, they have a slowdown. So they have negative growth. We have organic growth. So I have not the same feeling. I told you, the market is going a little bit up and down, but I see still a good market. We have a good portfolio. So we have no big concern regarding the future.

Regarding the third question, the financial issue. I have to ask my colleague here if they understood the question, otherwise, I have to -- You asked the details of...

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Matteo Bonizzoni, Kepler Cheuvreux, Research Division - Equity Research Analyst [4]

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Yes. That EUR 1 million of the financial charges. I have not yet seen the full release of financial accounts. I guess that the pure financial charges were higher than EUR 1 million.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [5]

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Mirabelli is going to tell you the most important number on this point.

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Luca Mirabelli, Interpump Group S.p.A. - Head of IR [6]

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In terms of financial charges, there is no particular one-off we have to comment. We have losses from currency of EUR 4 million, and this might be the only item you are referring to. The other nonrecurring is an adjustment to the revenue, so it's improving our net financial income. An adjustment of the value of some good options that we had that amounted to -- I believe it is more than EUR 1 million. This would be the only, let's say, non-absolutely recurring and physiological item. I don't know if this answered your question or not. But this is detailed on Page 58 of our half year statements, which are available from our website. Apologies for the English speakers, the translation will be done after that. But the scheme is exactly the same that we use every time. So -- and of course, I'm available if there's any particular question on any particular item.

Did we solve your issue, Matteo?

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Matteo Bonizzoni, Kepler Cheuvreux, Research Division - Equity Research Analyst [7]

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Yes. Yes, I will look at the full accounts for the details.

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Luca Mirabelli, Interpump Group S.p.A. - Head of IR [8]

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Thank you.

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Operator [9]

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The next question is from Domenico Ghilotti of Equita.

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Domenico Ghilotti, Equita SIM S.p.A., Research Division - Co-Head of Research [10]

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I have a few questions. The first, I will start with the M&A. You are mentioning that you are expecting to announce something probably already during this call. I'm trying to understand if this opportunity has, let's say, passed? Or if you are still negotiating but just a matter of timing on the negotiation?

Second question, on the results. I was looking at the margin. Excluding IFRS, down 40 bps in Hydraulic and 170 bps in -- if I'm correct, in Water-Jetting. I'm trying to understand, in particular, for the Water-Jetting decline, it was quite significant. If you see what kind of margin evolution do you expect on a full year basis for the 2 divisions?

Third question, on the tax rate. It is running at around 27%, 28%. So I think -- I wonder if it is sustainable?

And the last question, on the top line organic performance, if I understood properly, you are mentioning that you are more optimistic compared to some of your competitors. And so you are still expecting to have some positive -- plus, let's say, in your organic performance for the second half? I wanted to check this number.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [11]

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Okay, Mr. Ghilotti. M&A and timing. The answer is timing. I think no big issue for something in negotiation.

Margin of Water-Jetting in your second question. I told you that in the month of July, we had a significant growth in Hammelmann and INOXPA. So I'm hoping that this will be a positive contribution.

Tax rate is sustainable. But I would say that tax rate is sustainable. Banci is giving high positive sign, so the answer is yes.

And last question was on...

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Domenico Ghilotti, Equita SIM S.p.A., Research Division - Co-Head of Research [12]

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Organic top line.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [13]

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Organic performance, positive effect. Yes, I am expecting to have still organic growth despite the number of our competitors.

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Operator [14]

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The next question is from Alessandro Tortora of Mediobanca.

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Alessandro Tortora, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [15]

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Yes, I have, let's say, 3 questions, if I may. Okay. The first one is just, let's say, a follow-up on the previous question on the guidance. If I remember well, the company was guiding for an organic growth in the region of 5%. Therefore, we should expect, okay, somewhat off also in the second part of the year. So just a clarification.

The second question was on the capacity expansion plan. You mentioned before -- you mentioned during the call that the company incurred in some disruption and some one-off cost. Are you able to quantify this cost? Or do you believe that the bulk of this, let's say, costs are now off? So just to have an idea of the impact or what we need to expect in terms of margin trend for the coming quarters.

And the last question was on the backlog. You mentioned before that now is much slower on a year-on-year basis. Do you see any specific situation, for instance, I was thinking about the Hammelmann German company, maybe affected by some exportation? So if you can share with us any update on some specific situation in which maybe you see some volatility, okay, on order intake.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [16]

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Yes. Okay. Guidance. I thought I already answered many times on this point. I am confirming the guidance. I think that if you want -- you have too much mathematics in this situation. Again, let me say, I do not see, I do not see a trend of slowing down. As I told you before, we had also a beautiful month in July -- in June. Sorry. And we had a beautiful month in July. So if after June, we would have also, let me say, a worse month in July, I could start thinking that there is a trend. But as I told you, for the time being, I do not see this trend. So I am in the position of confirming what we said at the beginning of the year. This is the first question.

The second point is capacity expansion plan. I would say that we have, let me say, very little disruption in a situation like this. I can understand, probably, you never worked in a plant and it's difficult for you to understand how tough it is to move from one plant to another plant, where you need to create buffer after any operation to have the time of moving the machine tools. This is a tough job, and I really think we did a fantastic job. Our guys did a fantastic job in having so little disruption in this situation. The quantification of this is very tough. It's very difficult. Because you could consider how much it costs you the transfer, the cost of moving the machinery here and there. But how much is the effect of the slowdown, it's very, very difficult to quantify. I could quantify it. The end of the story and basically, I don't know, between our reduction of our margin. So there is something of our margin that is, let me say, a consequence of the mix, and this you see in the difference between the 2 divisions. I would say that to try to put a reasonable number, consider that half could be mix and half could be in the other side, the rest of the disruption that you have for the expansion plan.

Backlog. Backlog, in some cases, we have also some companies that have a better backlog than in the past. If I would put a number just to give you the idea of the difference of the backlog today and 1 year ago, we are speaking about a single digit. So I consider that this is still, let me say, a value that give us confidence of a good market. And on the other side, it allows us to appreciate the results of what we are doing of this investment plan. There is no particular attention on the market. Hammelmann is going absolutely well. And by the way, we've also an optimistic picture for the future. No, I do not see any particular attention because the situation in the market.

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Alessandro Tortora, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [17]

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Sorry. To come back, let's say, to my point, because clearly we have a lot of messages talking about manufacturing data in Germany, let's say, excluding Italy, for a while, coming down. So for instance, Hammelmann is one of the company which you see, let's say, a backlog higher year-on-year? Or now, let's say, much lower year-on-year? As you said, in the single-digit area.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [18]

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Hammelmann is greatly stable. Hammelmann is one of the companies that they have a higher backlog in the sense that -- many times I mentioned that in this moment Hammelmann is involved in important offer, particularly in the shipyard business. So that in this moment, the portfolio of Hammelmann is even bigger than 1 year ago.

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Alessandro Tortora, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [19]

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Okay. Okay. And last question, sorry. On the working capital, you mentioned before that compared to the first quarter, you started, let's say, to contain this expansion. Do you have, let's say, any idea, any target for the full year-end to partly reabsorb, okay, the first quarter trend? If you want to share with us any indication on that because it was a bit volatile quarter-on-quarter, I know.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [20]

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On our working capital, we are still working on. And so that I am expecting further reductions.

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Operator [21]

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The next question is from Michele Baldelli of Exane BNP Paribas.

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Michele Baldelli, Exane BNP Paribas, Research Division - VP of Equity Research of Italian Mid Cap [22]

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I have a few questions. The first one relates to GS-Hydro. If you can update us on this story about its financial -- the restructuring story. What kind of level of margin it has now and what do you expect in the coming quarters?

The second question relates to the -- just the feeling of when these, let's say, relocation of capacity will have ended, like it has already ended? Do you expect to end in December, or it's something early 2020? Just to get a feeling of when we can expect, let's say, end of the story.

And another question relates to the trade tariffs. Do you see the new possible waves of tariffs impacting your business or not?

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [23]

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Okay. Let's start with GS-Hydro. We are very happy of what we are doing in GS-Hydro. I remember that, I guess -- it was not yet that we delay probably a couple of months because constantly now GS-Hydro is running double digits. And so that, if you remember, I surmised that in 1 years' time, GS-Hydro would have been double digits. Probably we are right there with a couple of months of delays. So that even not considering the contribution that we are receiving from the other company, for example, I.M.M. in the field of producing plant -- -- and so we've -- they're mapping GS-Hydro as double digit, not 20%, but double digits anyway. That is not even 10%, if you ask us. So it's okay. So we are very happy of what we are doing there.

The second was the increase of our net working capital...

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Michele Baldelli, Exane BNP Paribas, Research Division - VP of Equity Research of Italian Mid Cap [24]

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If I may, it was just on the timing of when do you expect these inefficiencies or any way do the relocations to be ended?

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [25]

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No. You have to put it [in context]. Of course, every year, we are doing new investment. This is this is the basic, the fundamentals of a company that is continuously growing and that is becoming bigger and bigger. So of course we will continue doing investments faster. We are not expecting to have as we had in the last couple of year, new plants. We will need to finish some plants in the U.S. But let me say that the big job, the very expensive job, the job where you have to move so many machine tools and so on and so on should be more -- absolutely much more limited. So we are expecting no big disruption for the future.

Last point is tariff. Tariff, because of U.S. taxation, U.S. and China, and so on and so on. For the time being, we are not expecting a different situation as it is today. I already remind you in other conference calls that we already have some products that we started. But since in the U.S., we have American company and we have American competition, all we are in the same situation. So basically, even in the products that are tied in this moment, we are not producing margin. The market is paying it more.

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Operator [26]

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The next question is a follow-up from Domenico Ghilotti of Equita.

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Domenico Ghilotti, Equita SIM S.p.A., Research Division - Co-Head of Research [27]

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I have a question on -- still on the outlook for the remaining part of the year. I wonder where do you see the best or the worst or less reassuring outlook in terms of geographies? What do you see in the market? More resilient? What do you see? Maybe a bit more volatile or more risky?

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [28]

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That is a difficult question, Mr. Ghilotti. You know that -- anyway, we have not a very, very long visibility. And you know that I like to say, sit on the floor. So that I do not trust too much in the indication that we receive from the future from our customers. I consider always in our backlog that the real order that we receive from the plant of our customers. So we are seeing in comparison with the last month, we are seeing a slowdown in India. But everybody's saying that this really is a momentary situation because of the new government. By the way, it's the same of the previous one. But they have to introduce new measure for infrastructure and so on and so on.

So basically, for the time being, I see good signal in all the major markets. And I'm not expecting dramatic changes in this situation.

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Domenico Ghilotti, Equita SIM S.p.A., Research Division - Co-Head of Research [29]

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Okay. And my last question, on the cost side. Usual question, do you see any trend, any risk or opportunities that you are facing that should impact the second half or next year?

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [30]

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Mr. Ghilotti, not specifically, not specifically. In our business, we always have something new. We always have opportunity is what I said in the conference call. The beauty of Interpump is to be ready to catch immediately any opportunities that should arise. That is the point. And you should see that in Hammelmann situation. Hammelmann today is working extremely well in shipyard. You remember that a couple of years ago, I considered that one very good opportunity could have been the marine engine. And then the marine engine, because of the cost of the fuel, was put on hold for the time being. So I really think that the real value of Interpump is to have so many chances because of its diversification. This is the point. If you ask me to forecast exactly who would be the next...

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Domenico Ghilotti, Equita SIM S.p.A., Research Division - Co-Head of Research [31]

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No. I was trying to understand if you see any tension or relocation of tension on labor cost, raw materials. I haven't seen any, but I was checking, in particular -- If you have any different...

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [32]

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I checked this morning the cost of materials. There is absolutely nothing dramatic. Labor cost is as usual. Every year, you have a couple of the central points of the increase in labor cost. That is pretty normal. So I do not see any unusual situation in this moment.

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Operator [33]

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The next question is from [Lano Delargione] of ONE Investment.

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Unidentified Analyst, [34]

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Just for clarification. On the -- if you can clarify before IFRS 16 impact in terms of ForEx, if you are both translation or transaction from ForEx in the first half for both divisions. And what are the expectation that you have at this point in time assuming whatever is the current rate for the second part and including your guidance range.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [35]

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Sorry, that's your second...

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Luca Mirabelli, Interpump Group S.p.A. - Head of IR [36]

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Okay. I will start answering your question. The IFRS 16, by and large, is currency neutral. So we don't have anything -- any different data than the one we report for the whole business. The currency factor at Interpump is almost entirely a translation issue. We are geared to a large number of currencies. Actually, our consolidation job involves probably more than 20 or 25 different currencies. But the most significant one, of course, is the U.S. dollar, both because of our presence in the States, we have some 25% of our capacity there, and because of the rest of the business in the world which is conducted in U.S. dollars. But anyway, the result is, by and large, a translation issue. We have a kind of a natural hedging between our costs and revenues here.

I don't know if...

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Unidentified Analyst, [37]

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I know the points. So not to be supersizing even if they are very small transactions, it's not meaningful. It's just to understand what kind of effect did you have on the first half and so what to expect in your second half. Just on, I would say, how the growth, both from organic and acquisition, is translating into EBITDA and excluding the FX, which is not entirely to your end.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [38]

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If you want to know how massive the effects of currency, in the first 6 months, we have EUR 11 million on sales and EUR 4 million on EBITDA. This is the amount.

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Operator [39]

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(Operator Instructions) Mr. Marinsek, there are no more questions registered at this time.

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Paolo Marinsek, Interpump Group S.p.A. - Deputy Chairman [40]

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Okay. Thank you. And I thank everybody participating to this conference call. The next one for the third quarter would be November 8. So for the time being, I wish you good holidays and see you on November. Thank you very much. Bye-bye.

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Operator [41]

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Ladies and gentleman, thank you for joining. The conference is now over. You may disconnect the telephone. Thank you.