Electrolux Professional publ AB
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Electrolux Professional publ AB
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Good morning, and welcome to Electrolux Professional Q2 presentation. My name is Jacob Broberg, I'm Head of Investor Relations. With me today are Alberto Zanata, President and CEO of Electrolux Professional; and Fabio Zarpellon, who is CFO.And I'll start with handing over to Alberto. Please go ahead, Alberto.
Thank you, Jacob. Good morning to everybody. Going straight to the quarter results. We had a challenging quarter with the sales dropping 40%. A challenging quarter that we closed breakeven and with a positive cash flow, thanks to basically 3 major areas of our activities. The first one is that the swift actions on the cost that we took in Q2, with a SEK 200 million of savings in the quarter. The second is that we captured the opportunity offered by the recovery in June with the development -- strong development considering the situation during the month. The third one is the Laundry business, the Brazilian Laundry business that has been performing, again in relative term, well along the entire quarter. Before entering the detail, let me say that our people reacted quickly and showed a lot of commitment and dedication, passion, and I'm particularly proud for this. The crisis that we are living at is presenting unprecedented challenges, and the way we reacted shows that we can stand strong also in the future. Now all our operations are up and running. The supply chain is up and running. We are managing all the operations and the office in a way to guarantee the health and safety of our people. How we developed in the quarter geographically? Let's start from a geographical perspective. As you see also on the map, not every region performed in the same way. We have the Asian or part of the Asian region, China, Japan, Korea, that are the countries that have been affected early that declined less in Q2 than any other region. On the opposite, we have the North American region that had a big decline in Q2 being late in the spread of the virus.Also Europe has different dynamics with the Nordic, Central, North European countries declining less that the Mediterranean area in general. But there are also regions and countries where we even performed better than last year. I'd like to mention Turkey. That is in the Mediterranean area, but where we performed better than last year. In the quarter, in the months, capturing opportunity in the healthcare segment where we deliver large projects for both food and -- kitchen and laundry installation.Also in Germany, with the rental business that we acquired when the acquired Schneidereit a year ago. Also that business has been growing all around the quarter. And in some countries like France, Sweden and Switzerland in the month of June, we have been performing better than what we did last year. So it's a very scattered picture this one that is confirming also the uncertainty that is present in the market these days.Looking at the sales. So we said that sales were down roughly 40%. Food & Beverage affected -- deeply affected than Laundry, 48% down Food & Beverage; 22% Laundry. With an improvement, a clear improvement of the trend after 2 months like April and May where we have roughly 50% down compared to the same period of last year in June where we closed 20% down. So far, July -- in July, we can see that the gap versus the same month of last year is in line -- the decline is in line with the one we expected in June. Looking at the 2 segments, the Food & Beverage, as we said, was the most affected. And also here, geographically, we can see that the decline was pretty deep in Europe and United States, but less in Asia, Middle East and Africa that I showed earlier are the regions that have been affected at least the Asian one earlier in the year. We are also to consider that, in particular, this is referring to the U.S. performance that we are still comparing the result of the performance of this year versus last year, not only the difference is due to that spread of the virus. But we have also to consider that last year, we had a large rollout. It was the tail of the large rollout that we had in Q1 -- Q4, Q1 and partially Q2 2019. Also here, in June, also for Food & Beverage, we reported a recovery of the business and the recovery of the business that gave us the possibility in the month to deliver positive EBITDA. A few words about beverage. Beverage is a part that is more affected inside of this segment. And that is all related to the fact that beverage is -- has higher seasonality than and the Food and Laundry businesses is related to the characteristic of the product, the kind of customers that are using this product, and the high seasonality in terms of production and delivery of the beverage product is between February and May, typically. So those were the months where the lockdown didn't give us the possibility to deliver to the customer to get to the customers. We have to say that also Beverage in June showed the sign of recovery.If we look at Laundry, I define it as a steady resilient business. And we can see that the decline in Laundry was much less and less enough than other was around 10% in Europe with some region, I mentioned Sweden but the Nordic and the Central Europe basically unchanged compared to 2019. The decline was particularly significant in North America. And here we have to say that the reason is, one, clearly related to the spread of the virus in that part of the world, but it's also related to the fact that, as I mentioned earlier, we have been building stock to make sure that we were able to serve the customers as we did, by the way, in June, and we are doing in July with prompt delivery. And in the case of the United States, we have been building the stock during the month of February, March. And so now our distributor is using that stock. So it's a combination of market conditions, but also the fact that we are destocking in the United States. With this said, I would let Fabio to comment the financial part.
Thank you, Alberto, and good morning to everybody. As you heard from Alberto, sales declined 40% in the quarter, but the swift cost measure allow us to deliver a breakeven in terms of EBITDA. And I believe that this is somehow confirming our historical capabilities to promptly react to adverse market conditions. When reading through the P&L, we reported a declining gross margin, and this is mainly because of lower sales and production volumes. Whilst happy to report that price increase and direct material cost reduction have a positive -- contributed also [indiscernible]. Selling expenses declined over 30% year-over-year whilst administrative expenses were up, as expected, due to the additional cost to operate as a stand-alone corporation.We added a new function that we receive as a service from Electrolux Group before like tax, IR, legal and so on. And we had additional cost in IT to operate as a stand-alone corporation. To be also added for comparability, 2 things: unique espresso coffee machine we bought last year was not yet reported in terms of P&L in the second quarter. And also for comparability reasons, last year in June, we had a large positive one-off of roughly SEK 90 million related to the pension scheme transaction in Sweden. As Alberto anticipated the strong additional cost generated approximately SEK 200 million savings in the quarter. This SEK 200 million compensated more than 1/3 of reduced margin due to volumes. We find the savings both in the landing cost and through the SG&A. To give you some more flavor on this saving, we have roughly SEK 20 million that we consider absolutely structural. And these are generated from the restructuring plan that we launched in September 2019 last year. Happy to report that there is a cushion now is completed, and we expect that the benefit of this plan will fully compensate, as planned, the emerging cost from separation already in quarter 3. Additional SEK 50 million are coming from government subsidies mainly but not limited to 3 major countries: Italy, Sweden and France. The remaining part is coming mainly from 2 areas. First, reduction of R&D and marketing spending. I have to say for comparability that in the second quarter of last year, we had somehow a peak of spend in this area because we finalized 2 major projects: one in Food, the launch of the new Skyline Ovens, and one in Laundry that was the launch of the new generation 6000. But I'm also happy to report that in this context, we have been able any way to bring forward few selected project of innovation as well as introducing the market a new solution to meet new customer requirement that Alberto will elaborate in a while.The second bucket comes from reduction of cost related to people via previous year solid consumption, stop of overtime, hiring freeze and so on. Operating working capital was down 9% year-over-year as a same currency. Account receivable significantly decreased in the quarter compared to last year and compared also to March, but somehow less in sales. And this was somehow anticipated because we face several requests of prolongation in the payment term, especially in the South European countries. When doing this, and this is a decision that we take case by case, our focus has been the ones that when granting longer payment term to secure the protection of this receivable. Inventory overall was slightly up compared to June 2019 due to, I would say, 2 main factors. One that is somehow coming from the market. Because we have received along the quarter, particularly in April, May request of customers to postpone the delivery due to the fact that their operations were not up and running, the infrastructure not yet ready. But also our conscious decision to secure good product availability for replacement sales.Having said so, I'm also proud, let me say, and we are very proud to report that the financial position of the group remain very solid through this difficult time. Net debt value is unchanged compared to December and somehow even lower than March this year. After June 30, we have more than SEK 800 million of liquid fund and still available revolving credit facility unutilized for EUR 168 million. Definitely, with this picture, we have a pretty low leverage company with a ratio of net debt on EBITDA of 1.3. Cash flow. As Alberto said, we delivered in the quarter a positive cash flow of SEK 31 million. CapEx in the quarter was SEK 43 million, somehow higher than last year, but the majority of it, close to SEK 30 million, is related to the project that we anticipated during the previous call related to the construction of new production site in Thailand, where we are going to merge our 2 operations, one in Laundry and one for Beverage, create a state-of-the-art plant. This investment is proceeding according to plan and it is expected to be completed in quarter 1 next year. Overall, once this project is completed, I expect that the ratio of CapEx on sales will go back to the historical level of roughly 2% on sales. Overall, also in this area, I believe that this is confirming our financial capacity to invest also in difficult market condition on key strategic initiatives, while continuing to generate cash and keep a strong balance sheet. And with that, back to you, Alberto.
Thank you, Fabio. And then I'm connected to what you just said about investments. Because despite the savings that we've been delivering along the quarter, we continue to invest building the new factory that will give a surely competitive advantage starting from Q1, Q2 next year, but also on products. And during the past weeks, we introduced in the market new solutions that we continue to develop despite the need to take down the cost, we continue to develop addressing the rising needs of our customers, such as hygiene sanitization, remote monitoring of the appliances. We've been introducing a new line of [indiscernible] washing, hygiene and clean that are able to guarantee a higher level of sanitization of the category of all the stuff that are used into the kitchens with the reduced what we call ceramics cabinet. Cabinet that can be used in shops in retail malls, whatever, to sanitize the closing after having used. You know what the regulations that are imposed in the shopping activities to make sure that if you try a dress, a shirt whatever then it has to be sanitized. And last but not least, we also work hardly to speed up the digitalization of our offer. In many cases, they've been suffering the need to serve our appliances without the possibility to enter the site. And that is the reason why, during the past month, we developed the so-called 2 pair of eyes where we have been able to serve our appliances from remote. And talking about customer care, what we call serving our appliances, I want to make a special note about this one because from the past experience, we always saw that during the crisis, the drop of the demand of the market, normally customer care, was performing better. So customers were trying to keep going with the product, repairing them, maintaining them. This crisis was different. We had unprecedented challenges because the reality is that our technicians were not allowed to enter the site. So we suffered a little more on the customer care side during the past month. While June was a recovery not only for the sales of the product, but was a recovery also for our customer care business because we have been free to go with the lift of the different lockdown. And with this product and the [indiscernible] clearly, here is how we see the coming months even if the uncertainty is pretty high, which is clearly that the opening in the countries is having a positive effect on our customers, some more than other in some geography more than others. The order stock that we have is still good. And it is related to the factor that, yes, the sites reopened and lockdowns were lift. But in some case, there is a delay of what was supposed to be installed last quarter that is going along the year. The other good thing is that the order that we had in-house, they are still confirmed. We are not experiencing order cancellations. I think I mentioned the other time that we had some order cancellations beginning of the crisis, but not now. So as I said, so far, July is trending like June. But the uncertainty is still high. And that is the reason why we already started to transform some of the temporary cost reduction activity into structural cost reductions. We really started in the U.S. in the industrial operation, and we have an ambition to define a plan during the Q3 for a total amount of roughly SEK 100 million, SEK 150 million. We don't know it yet, but we are clearly reviewing the plan also because most probably, it will imply one-off costs that we will communicate later.With this said, I would say that, again, thanks to the commitment and the dedication of our people. We closed the quarter breakeven despite the large drop of sales. Focusing on the cost reduction, capturing every possible opportunity offered by the market, mainly in June when the market reopened and clearly at least the first weeks of July, but we also started to work to prepare this company to the uncertain situation that are in front of us. Starting to the final plan that has the ambition to transform temporary cost reduction and structural savings that we will define in the coming quarter. With this said, Jacob back to you for the Q&A.
Thank you, Alberto, and thank you, Fabio. With that, we open up for questions. And I leave the mic back to the operator. Please go ahead, operator.
Our first question comes from Mattias Holmberg from DNB Markets.
When you say that you saw sales decline in July being in line with June and that you interpret this development as a sign of recovery, I'm just curious why is not the year-on-year decline in July smaller compared to June. This, to me, at least sounds more like stabilization rather than a recovery.
The stabilization of the market, I can imagine, or the demand, you're -- the point is that right now, you see that by geography there are pretty big differences, not only in the month of July and August, they are I would call it special months in the meaning that some countries, in Europe at least, they are closing because of the vacation period, the Nordic mainly during the July and the South European and Mediterranean during the month of August. So the revision of the demand also related to this effect in addition to the different speed of opening of the different regions. Then we have also to say that what is creating the uncertainties is -- are the events that are showing some region of the world that are going back into the lockdown or at least partial lockdown. So we see that the market is recovering, but it's remaining on the level of June, at least the gap versus last year. Until now in July is on the same level of June.
Perfect. Also to the structural savings that you intend to implement during H2, which is combined with already implemented activities should generate yearly savings of SEK 100 million to SEK 150 million. I'm a bit confused to what these earlier measures included. Is this including the SEK 100 million cost reduction program lost -- in September last year? Or how should I think about what pieces goes into this sum?
Okay. I'll let Fabio.
Okay. First of all, we have actually 2 initiative. The first one that we launched September last year that was supposed to generate over SEK 100 million saving on a yearly base is the ones that I reported earlier that we completed execution and already in quarter 3 this year is expected to fully compensate the merging cost from separation. On top of it, Alberto mentioned that we are evaluating additional initiative to reduce the running cost of this group for an additional SEK 100 million to SEK 100 million -- SEK 100 million to SEK 150 million. Part of this initiative have already been -- part of this additional initiatives have already been executed, in particular in the second part of -- in the second quarter of this year through reorganization of our operation in the United States and additional cost reduction into the operational area. So the sum of the ones already implement in these 2 areas, North America and industrial operation, plus the ones that we are evaluating, we are aiming overall as a package to deliver SEK 100 million to SEK 150 million yearly saving.
That's clear. And a final one from me, if I may. You mentioned some delayed deliveries. Would you like at all to comment on approximately what part or how big share of sales have slipped from the first half into the second half due to these delayed deliveries.
Let's say that in this moment, the order stock that we have is a healthy order stock that is even higher than what we had in the same period of last year. And this is related to the fact that a good portion of these orders, the order that we were supposed to deliver in the -- during the month of the lockdown, they've been moved to the Q3 or Q4 because some of them are not only related to just installation of the product, but some were project where we -- the refurbishment or the rebuilding of the space were done. So we don't disclose the exact quantity of that one, but it is a stock that is healthy -- order stock that is healthy. And the good thing is that the orders have not been canceled.
Okay. Jacob Broberg here in Stockholm. I have a question from the web from Stefan Stjernholm at Nordea. Three questions actually. Provision for customer losses in Q2, if they have been taken, and also risk in the coming quarter for additional provisions. Order backlog and cancellation, I think about you just spoke about. But I mean, how it differs today compared to the Q1 report? And also the new cost-saving program, SEK 100 million to SEK 150 million, are you prepared to say how much of that was realized in Q2? Those were the questions.
Okay. I believe Fabio can answer about the provision and the cost. I can comment again at the order stock that even if I already did it. We -- part of the order stock we had at the end of March was delivered during the quarter, but it didn't change significantly, I would say, because, in particular, during the month of June, we started also again to collect new orders.
Okay. Coming back to the 2 remaining questions. First of all, yes, we increased the provision on accounts receivable in quarter 2. Overall, it is, I would consider, not a material amount. But what I can secure is that we have had a deep review of our risk situation, taking all the accounting provision that we have necessary. In particular, on the customer side, and this is from, let me say, a pure reporting perspective. From a customer perspective, when requested, we review case-by-case the new payment term, securing that at least we were protecting or we were keeping the same level of protection that we had before. Let me also remind the comment that I was making also during quarter 1 report that is that I would say that more than 50% of our business is somehow all related to government or state customers. Alberto was mentioning the [indiscernible], for example, 2 institutions but also within this large portion, we have a large use of credit insurance. So I will say that, at least as it looks today, I'm pretty confident that the reserve we put in the balance sheet are well representing the risk we have. Just to add also some more colors, at least so far, we have had a few limited bankruptcy from our customer side, but these are not any material impact, I would say, on the P&L of the company. Then the second question is, how much of the SEK 100 million and SEK 150 million of ambition in terms of cost reduction did we have into quarter 2? I will say, still a limited portion because, as I anticipated, the actions that we implemented in United States and industrial operation were being executed during quarter 2. So I expect that they will start to -- we will start to see the benefit of this action from this quarter, meaning quarter 3.
[Operator Instructions] Our next question comes from Gustav Sandström from SEB.
Firstly, on the cost savings in Q2. You broke it down, but if we could perhaps elaborate a little bit. Firstly, did you -- I didn't quite hear if you said SEK 15 million or SEK 50 million from governmental subsidies. So if you could clarify that, that would be helpful. And then secondly, on the remaining parts, to what extent do you think these savings will carry into Q3 and longer or if they were solely related to Q2?
Okay. So out of this bucket of SEK 200 million cost savings in the quarter, SEK 20 million are structural cost reduction that are coming from the restructuring plan we launched September last year. The plan is completed, and I expect full saving from this quarter, meaning quarter 3. The second is roughly SEK 50 million, 5-0, is a contribution we had had from government subsidies, and we had 3 major countries that, by the way, is also the one where we have the larger manufacturing operation in Italy, Sweden and France. The remaining part comes from 2 main areas: R&D and marketing for the reduction. Compared to last year where we had, as I mentioned earlier, at peak related to the launch of the new ovens and the new generation of washer, and the remaining part is coming to overall reduction of personnel cost. We put in place hiring freeze, not replacing the people. We stop over time, we release temporary people, and we consume the previous year holidays. And this one has had a clear effect to sum up to the SEK 200 million that we reported in the quarter. When it comes to what is happening about this cost saving in the quarter 3, I would say that the part related to the SEK 20 million that is structural will continue, and it will become somehow even larger because full action will be in place. The SEK 50 million about the government subsidies is difficult to predict the amount. But at least highest factor list that according to the legislation we still have some benefit. I cannot judge and I will not speculate on it, but we will continue to leverage all possibilities that we have according to the legislation in the different countries. And for -- what the main cost bucket as we did proactively already at the end of quarter 1, and we extensively applied in quarter 2, we will continue to manage the discretionary spending in marketing, in R&D and for the labor cost in order to preserve our P&L.
That's very clear. And sorry for coming back to the order stock, but perhaps one more question that I'm interested to hear to say you haven't had any real cancellations but if you could quantify perhaps how much of your June and July sales relate to orders that have been taken in Q1 or earlier? And perhaps to what extent you have got new orders this year?
Okay. Let's say that in particular, June, I would say, it has been a month where we have been using part of this order stock now. The exact percentage, I don't have it here, but we have been using the order stock, yes. Also because the orders that are coming, and this is something that we would have expected clearly, are mainly for replacement business in the meaning that we are expecting that with the reopening of many sites, but the uncertainty that is in the market and in general, our customer will be more inclined to replace part of their operations, either in Laundry or in the kitchen, and as a consequence, the product availability is strategically important and the reason why we built the inventory. So part of this is that one. But in June, we delivered a good portion of the order stock. But as I said, if I compare March and the order stock we had at the end of March and the end of June, we have been able to rebuild, let me say, part of this order stock with the new orders. So the difference is not big, in particular, on the Food and Laundry side, I would say. The Beverage we have been depleting more the order stock than in the other 2.
Great. And lastly, perhaps coming back a little bit to your -- you saying that you decreased R&D spend to protect your earnings. Two of your main competitors launched sort of compact and very versatile tilting pans during Q2. I guess your assortment here relates to the thermal line, but mainly focusing a little bit larger volumes. So do you see this product category, they seem to get high hopes for it, to partly subsidize other parts in the kitchen, but do you expect also to get into this niche category? Or do you feel good about your assortment here?
Sorry, you're talking about the dish category or the pressure braising pan category.
I'm talking about the LiberoPro.
Both of them?
Sorry?
Sorry, your question is really you said that competitor launch product in the -- I understand the pressure kettle or something like that. And we have our term offer on that matter. But you were talking also about the dish category or did I get...
No, no, sorry. No, I did not mention the dish category.
Yes. So I know what you are referring to, obviously, because we saw the launch of the product of our competitors. We have to say that, in particular, on the Combi side, during the first part of this year. So also, in Q2, we completed the launch of our new range of Combi steamer and blast chiller. So we launched not only the oven, but we launched also the blast chiller that is completing the offer. Because now I would say, if not every Combi oven, but a good portion of the Combi oven -- majority of the Combi oven is sold together with the blast chiller. And now we have a very competitive product. Competitor came out with some news, but we still believe that our product is highly competitive with the several unique selling proposition. The other product you mentioned was the pressure pans. We also have an offer, targeting medium large installations. It's still a very competitive product of that one. And by the way, we are working also because it is on the line, not only of the pressure braising pan but in the complete thermaline, we call it, because it is in some way the high-end part of our offer that we consider making a difference in the market. So also a comment about the cap in R&D that you said. Fabio was mentioning that plan, but we have also to say that it is the comparison with doing this year and last year, where we had a pretty high peak because exactly in Q2 last year, we completed a large project in Laundry and in Food. The Combi oven that I mentioned, the blast chiller, but the so-called Line 6000 a little bit that are giving us a lot of positive results despite the decline of the market. And we completed exactly in that period of the year, both -- for both marketing introduction and R&D activities. So it is a comparison on, I would say, a little bit skewed because of the time.
Our next question comes from [Harry Rinker] from Handelsbanken.
Firstly, about the destocking that you mentioned in Laundry, can you, in any ways, quantify how much of the organic sales decline seen in Q2 was due to the destocking impact? And do you expect this to continue in Q3? That's my first question.
Okay. First, what happened, when the spread of the virus -- we had the spread of the virus in China. So we are talking about already January, and there was the risk to our supply -- the supply chain problem with the supply chains -- the distributor -- together with the distributor, we also work to build up stock in the United States, both for the products that are producing at our factory in Sweden. The risk there was the components, but also the product coming from the factory we have in Thailand, where we produce the dryers and some washers specifically developed for the market. So we have been building the stock in that time. Considering that, at that time, United States was not so much affected by the spread of the virus. So the combination of the stock that we have been building and the -- obviously, it takes time to get the product to the United States, and the spread of the virus in the United States basically forced many location to the lockdown, left our distributor with a significant stock. We had a talk with that one and the level of the stock and the investment they did, and I have to thank them, honestly, for what they are currently doing is unprecedented. It is a stock that they started to deplete. And we are expecting that, already from August, we should restart filling the product for United States.
Okay. That's helpful. Then the -- again, on the order stock, you mentioned that order stock at the end of June was up year-on-year. And then you also mentioned that you have depleted the beverage order stock quite a bit during the quarter. So then my question is, that to me sounds like the beverage order stock probably is down on a year-on-year basis. So can you comment on the categories where you actually see higher order stock year-on-year?
Okay. So you are perfectly right about the comment about Beverage. You have also to consider that in the order stock that we had in March -- Beverage on the stock that we had in March last year, there was still the tail of the subway order. So we are talking about big orders, not only -- I think I mentioned that Beverage is highly affected by seasonality. So this means that typically, you build an order stock already in February, and then you deliver February, March, April, May, partially June. I think that we didn't clearly had the possibility to do about that. Comment about that few order cancellation that we got at the beginning of the crisis were mainly affecting the Beverage business exactly for this reason because of "the lost seasonality." So that is the most effective business in June also Beverage show the recovery in terms of collecting a new order that are coming in. In terms of category, I would say that the Laundry business is surely the healthy one. But I would say, no surprise about the fact it is a resilient business. Whatever was planned to be installed during Q2, something we started to install in June if the site was not ready yet because of construction also has been delayed, I would say that it is postponed to July or later on. But the plan is one of the area where we experienced basically no order cancellation.
All right. And then finally, the replacement business that you mentioned. Can you remind us of what is the typical split of replacement versus new projects, both for Food & Beverage as well as for Laundry?
Yes. I would say that it's typically the same. Normally, you have roughly 60% replacement and 40% new project in Europe and in North America. Also in Japan, if you want that area, while you have the way around basically in the other part of the world. So if we talk about Middle East and Africa, Southeast Asia, Latin America is more project -- so new project, new installations than replacement. In this period, I would say, since the sites -- the countries reopened and then lifted the lockdown, we are expecting -- and again, I base this one on the experience we had during the past crisis, that the replacement could get up to 70% to 80% instead of being close to 50% to 60%.
Our next question comes from Johan Eliason from Kepler Cheuvreux.
This is Johan. Just coming back to this point about replacement share, is that typically higher margin than the projects?
I would say majority of our sales, as you well know, they go through dealer and distributors. So in some way, I would say the margin is not different. Obviously, the margin is different category from category in the meaning that not all the products they are delivering the same margin. But again, going through dealer, the business, I would say, the margin is not the same. If you want to say the cost to sell is different in the meaning that the cost to sell the product, the entire cost to sell the product, going through project, installation and so on, is typically higher than -- in the project business than in the replacement business, but also the competitiveness. So this means the discount you do to the end user is clearly different between a project and a replacement one.
Okay. Good. Then just on your Food & Beverage exposure, we are starting to get early channel checks from, for example, the U.S. restaurant market, where it looks like the fast food, single-serve type of restaurants, it's recovering rapidly, showing some positive growth in June, actually, while the full-service restaurants are still seeing run rates 30% down year-over-year in June. Now what is your exposure to sort of these fast food chains like Subway? And what are you doing to increase that exposure near term? Is there any particular activities? I know it's a growth area for you, but are you accelerating anything to get into this chain in a bigger scale?
Absolutely. So what you are reporting is exactly what we are experiencing. The fast food chains are -- or the quick service restaurants segment is recovering faster than the casual dining segment. You know that chains is -- to develop chains in North America, but not only, is one of our strategic priorities. So we are working both from the organization point of view. So this means how to approach the chains, how to get to the chains, how to get tapping the chains -- our product with the chains. But also from the product point of view, so bringing to market products that are specifically addressing the needs of the chains. So it is a strategic priority we are focusing. What we are experiencing these days is that many test that we had ongoing with the chains in North America, in Asia, in particular, that we have put on all, I would say, since February, maybe very early reacting to this crisis. Many of these tests restarted. When I mean test is the test in the lab, but also the market test where they are installing the product in the field. So obviously, we cannot comment on which kind of test, but I tell you that in terms of product, they are using beverage product in many cases, that is very good. They are using the SpeeDelight, our product that is reducing the cooking time of toasting and the sandwiches and the other things. They are -- the Bubblers are the one that we have been delivering to Subway is under test in other places. We have developed solutions together with some changes to have the remote monitoring of these appliances that is our need that they are looking for in order to guarantee the control, but also higher level of hygiene. So many products that have been unlocked, let me say, during the past weeks, we clearly see that they are planning and they are delivering a faster recovery than others.
And can you share roughly your overall exposure to them?
We don't share that one. But again, we know that, considering our presence in North America, that is the reason why we have the development of the chain business as a strategic priority. The reason why we acquired a company like Grindmaster that legacy relation with the chains that we want to leverage to speed up the growth. Let me say we are relatively new in that segment compared to others. But at the same time, we are bringing product with innovative solutions that are clearly appealing to the chains as well as the global presence. So it is a strategic priority we are focusing. We got some success not only last year but also this year in the U.S. We have been chicken fillet or chipotle. They are both chains that we acquired beginning of the year. We put on all the rollout because of the COVID spread, and we restarted right now. These are examples. We are clearly looking for many others.
Good. We are seeing some companies restarting M&A activity, where they have good balance sheets, et cetera, and you have a fairly solid balance sheet. What's your view on M&A? Is there an opportunity for you caused by this dynamic? Or will you wait and see what happens?
Also, M&A is an area where we are -- we always said that we have been using M&A during the past year to accelerate the growth, and we will use -- we will continue to use banks also to the balance sheet, as you rightly said, the M&A as an accelerator of our growth. Clearly, during the past month, it was pretty useless to continue to -- we cultivated the relation, absolutely, yes. But we have also to say that in this moment, what we face is that the valuation of the companies is, in some way, the big challenge in the meaning that clearly, with what happened during the past quarters, the turnover, the margin of the company went down. But at the same time, the value of the company is considerably -- particularly when we talk about privately owned company, is considered the same before the crisis. And this is creating some challenges. But I think it's the right time to restart all the relations that in some way we put on hold during the past 3, 4 months because opportunity can arise. The dialogue will be challenging. At least this is what we feel it will happen, but it is in our agenda.
The last question comes from Gustav Sandström from SEB.
I'm just curious about the cost savings related to U.S. You did some restructuring there, if I'm not misinformed a few quarters ago when you consolidated your 2 facilities into the 1 in Kentucky. So does this still relate to that? Or does it relate to personnel reductions or -- and so forth? And the second part of that question is, if you're happy with that setup being situated in Kentucky or is there a longer-term plan where you might also look to perhaps move the front end of your business outside of Kentucky to more central location?
Okay. First, yes, it is part of the consolidation of the operations and part is related to activities that we took after the consolidation to reorganize the staff in the operations that we have in Kentucky and in Louisville. For the time being, we are happy with the situation we have in Louisville, where we have our factory. We have now all our operations in terms of administration, service, customer support, sales. So logistically, it's a good place to be, particularly, I repeat, we have a manufacturing facility over there. And in our business, it's good to combine the 2 things. So that is the place where we are, and we do not have other plans. For sure, we have a plan that now that we are together to review how we are set in Louisville in the meaning that we want to have what we call center of excellence. So the place where we host people and we do the demonstration that are strategically important for our business that we have in Charlotte, and now we are evaluating how to do it also in the new place.
Great. I have one final question or basically a few final questions from the web from Peter Testa. The first one, if you can give us a view on the different performance of Food & Beverage and Laundry in June and particularly July within the 20% down. I mean, if there is a difference in the performance between the segments. Do we have a view on the reorder pattern from our distributors into Q3? And has there been any discussions on price? Those are the 3 final questions.
Three questions in this case, so -- okay. Performance in June, recovery of Food and partially Beverage was stronger than Laundry. No surprise, I would say, also because the drop of the sales of Food & Beverage in April and May was much deeper in Laundry. We always said that Laundry is a resilient business in the meaning that the up and down are -- the curve, let me say, of the development phase is much smoother compared to the Food & Beverage business. So in June, the recovery of the business in Food & Beverage was higher than what it was in Laundry. The second part was related to the pattern of the reorder or the reorder from our distributor in the United States. As I said, I mean, with this company, we have a relation that go back more than 60 years. They are really working and they are collaborating with us also on the development of the product. It is an open relation where they are weekly discussing the planning of the factory. And what we see is that it should be after the middle of August, we should restart to refill the stock that is in the United States. The third part is about price. Fabio was talking about price in the meaning that we have been holding price along the quarter. We have to say that we are experiencing pressure on price, in particular, for the new orders because competition is looking for volume. But for the time being, we are holding the price pretty well.
Thank you, Alberto, and thank you, Fabio. I think with that, we say thank you for today, and speak to you next time. Thank you, and goodbye.