Half Year 2019 OVS SpA Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Fabio Fazzari - Equita SIM S.p.A., Research Division - Analyst : I have, first of all, a follow-up about the comment that you made before. You talked about positive like-for-like, you mean in September or so far in the third quarter? The second question is related to the gross margin. Since the extraordinary promotional policy is over, I was wondering which kind of trend we could expect for the gross margin in the second half. And lastly, if you can comment more about the agreement for the extension of the credit line about -- so all the conditions. If you can give us more color point-by-point as you reported in the document?

Question: Andrea Bonfa - Banca Akros S.p.A., Research Division - Analyst : I got the following question. One is, let's say, a more generic one related to your, let's say, amount of intake you mentioned at the beginning of your presentation. If you can elaborate an aspect, which is not totally clear to me of the fact that you lost some sales in H1 because of the lower intake in the sense that in a scenario, in a trading environment where you lose 4 percentage point on like-for-like, how can you lose the same sale is something a bit weird for me. So if you can elaborate on that. The second one, I was, let's say, quite convinced that the markdowns was -- were kind of over for this year after the first half, but you are still mentioning the possibility of some markdown depending on the trading environment, again, in the -- in H2. But if that is the case, can we count on some tailwinds in the cost savings? I.e., last year in H2 2018, you had some EUR 10 million lower cost. In the first half, there were EUR 20 million so this means that there are potentially at least another EUR 10 million in H2. If you can elaborate on that as well. And finally, if I may. If let's say you have a normal weather season this year, are you counting on some positive like-for-like? Just would like to have your opinion. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. SEPTEMBER 20, 2019 / 10:00AM, OVS.MI - Half Year 2019 OVS SpA Earnings Call

Question: Andrea Bonfa - Banca Akros S.p.A., Research Division - Analyst : Maybe I can rephrase that, if you want. You mentioned EUR 20 million cost reduction in H1, which on an annualized basis means EUR 40 million roughly -- EUR 42 million. So in last year, your presentation, you mentioned that you reduced your costs about EUR 10 million, roughly. So this meaning that annual rate level, you have still, normally EUR 10 million, EUR 11 million to play with in H2 2019. I hope this is a better explanation, but that was my interpretation. But that's...

Question: Scauri Andrea - Lemanik - Analyst : I was wondering, are you planning in case the turnaround is not providing a good sign of recovery to make some closures of shops?

Question: Scauri Andrea - Lemanik - Analyst : Okay. But the question was also related to the new strategy that you are telling us. The synergies that you can exploit with agreements with other chains. Putting everything together, do you still need this amount of stores if you plan to make some kind of relations with the chains or not? And the second question, are you -- you are saying that this is not a turnaround. So if it's not a turnaround, how would you define the equity story of OVS now to be...

Question: Scauri Andrea - Lemanik - Analyst : Exactly. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. SEPTEMBER 20, 2019 / 10:00AM, OVS.MI - Half Year 2019 OVS SpA Earnings Call

Question: Andrea Bonfa - Banca Akros S.p.A., Research Division - Analyst : And second call is about the same question on the cash flow generation. You were mentioning with the first quarter result that you are expecting a cost decline of your net debt throughout the quarters, and wondering if that is the case? And if you are happy with the consensus which is pointing to EUR 300 million on net financial position by year-end. On the latter point, if that target is confirmed, I'm wondering if looking at the higher interest cost that you just mentioned for the second half of the year because of the higher leverage, if you got internally as a target to reduce your net debt/EBITDA ratio to below 2 by year-end in order to save some financial costs for next year?

Question: Andrea Bonfa - Banca Akros S.p.A., Research Division - Analyst : And if I may, sorry, on the previous question that I made, I think we missed the aspect of issuer or maybe I wasn't paying attention. If you count on a normal weather -- seasonal weather for the last -- second half of the year, would that trigger from your standpoint a positive like-for-like on sales? Or what are your expectation?