Amplifon SpA

MIL:AMP

Earnings Call Transcript 2021-Q1

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Amplifon First Quarter 2021 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Ms. Francesca Rambaudi, Investor Relations Director of Amplifon. Please go ahead, madam.

[Francesca Rambaudi, executive]

Thank you. Good afternoon, and welcome to Amplifon's conference call for our First Quarter 2021 Results.

Before we start, a few logistic comments. This morning, we issued a press release related to our results, and this presentation is posted on our website in the Investors section. The call can be accessed also via webcast and dial-in details, which are always on Amplifon's website as well as on the press release.

I have to bring your attention to the disclaimer on Slide 2 as some of the statements made during this call may be considered as forward-looking statements. Please also let me drive your attention to the fact that from this quarter, we are also reporting 2019 income statement data for greater comparability purpose given the impact of COVID-19 outbreak on 2020. The commentary will be, therefore, also based on this figures.

With that, I am now pleased to turn the call over to our CEO, Enrico Vita.

[Enrico Vita, executive]

Thank you, Francesca. Good afternoon, everyone, and thank you for attending our conference call on our Q1 results.

So we are at the beginning of what I believe is going to be an important year for our industry. And in fact, we are at the beginning of a year that I'm pretty sure we'll see some players emerge stronger from the pandemic and some other get weaker. And we feel we are, well -- very well positioned. We are well positioned thanks to all the work done last year by our GAES by our team to become even more efficient and effective, and also thanks to our confirmed commitment to the pillars of our strategy, keeping investing significantly on our people, on our brands, on our Amplifon Product Experience and also on our M&A strategy.

So we started off the year in a very strong way, we are very happy, in a very strong way and even stronger than expected just at the beginning of this year. All the 3 regions reported strong growth despite some markets were affected and they're still today affected by some sort of restrictive measures. And I refer, for example, to markets like Germany or Italy even. And we estimate we have once again grown share in all the main markets.

So let's now go to see our numbers for Q1 in the next chart. Since the performance of Q1 2020 was already affected by the pandemic, I will comment with you our results primarily in comparison with Q1 2019, which I believe is a more meaningful base. As you can see, total revenues were up 12.5% at constant ForEx. And we reported a very strong organic growth, which was over 8%. Very positive is that, as I said before, all the 3 regions contributed significantly to these results. Meaningful was also the contribution from acquisitions, around 6%, mainly related to the acquisition of PJC Hearing in the U.S., Attune in Australia and the bolt-on acquisitions in EMEA.

With regards to the integration of PJC Hearing in the U.S., I'm also very happy to share that everything is going well so far. The team there is doing a very good job, and I'm very confident that this business will be a great addition to our business in the U.S.

The currency effect was negative by 1.6%. At the same time, we have been able to increase our EBITDA margin by 180 basis points from 20.1% to 21.9% and even after a significant increase in our marketing investment of about 15% in the period. The material contribution to these results came from Spain, thanks to the synergies related to the integration of GAES.

The cash flow generation was excellent as well. Our operating cash flow increased double digit versus Q1 2020 and almost doubled versus Q1 2019.

So all in all, I believe today, we are presenting a very strong set of results, and we are very pleased about these results.

I now hand over to Gabriele to give you more colors about our performance in numbers.

[Gabriele Galli, executive]

Thanks, Enrico, and good afternoon, everybody.

Moving to Chart #5, we have a look at the EMEA outstanding financial performance. As Enrico mentioned, since the performance of Q1 '20 was already affected by COVID-19 outbreak, especially with regards to EMEA and APAC, I will comment our results primarily in comparison to Q1 '19, representing a much more meaningful comparable base.

In Q1, revenue growth was 9.5% at constant ForEx with a well-above market organic growth at 6.8% despite a restrictive measures still in place in several markets. M&A contribution was 2.7% for bolt-on primarily in France and Germany. Very strong organic growth was reported in France also driven by the recent regulatory change, Italy and Spain. Weaker performance was instead recorded in Germany and U.K. due to the more severe restrictive measure still in place.

EBITDA amounted to EUR 82.8 million, up around 34% versus Q1 '19 with margin at 26.6%, up 480 basis points versus Q1 '19, thanks to improved efficiency and productivity as well as to the outstanding performance of Spain following the synergies stemming from the GAES integration.

Moving to Slide #6, we have a look at Americas excellent performance. In the quarter, revenue growth was around 34% at constant ForEx versus Q1 '19 with an organic growth at 17%, thanks to the excellent and well-above market performance in the U.S. driven by the very strong performance of Miracle-Ear. Double-digit organic performance was also reported both in Canada and Lat Am.

M&A contribution was around 17% versus Q1 '19 primarily reflecting the recent PJC Hearing acquisition. As anticipated by Enrico, this amount entirely reported in the M&A line reflects both the consolidation impact of PJC since January '21 as well as the very strong organic performance of PJC in the quarter.

Total ForEx was negative for 11.5% due to the euro appreciation versus U.S. dollar and Lat Am currencies. EBITDA amounted to EUR 16.3 million with margin at 21.2%, up 100 basis points versus Q1 '19, also after continued reinvestment in the business thanks to greater efficiency and productivity.

Moving to Chart #7, we have a look at APAC, which showed an outstanding performance across all markets. In Q1, revenues were up 18% at constant ForEx driven by a strong organic growth of over 8%, also despite localized and temporary lockdowns both in Australia and in New Zealand at the end of February, early March. M&A contribution is related to Attune and accounted for 10% versus Q1 '19. ForEx was slightly positive.

In the quarter, New Zealand and China posted double-digit growth not only versus Q1 '20 but also versus Q1 '19. Australia also reported a positive performance versus Q1 '19 with a significant acceleration throughout the quarter.

EBITDA amounted to EUR 16 million with a 14% increase versus Q1 '19. The EBITDA margin came to 30.2%, down 130 basis points versus Q1 '19 due to the very challenging comparison base.

Moving to Slide #8, we can appreciate the profit and loss evolution. Total revenues increased by 12.5% to EUR 441 million with an excellent 8.4% organic growth versus '19. The structural efficiencies and the productivity enhancement derived by the decisive measures implemented last year led the EBITDA margin at 21.9% with an improvement of 180 basis points versus Q1 '19. Total recurring EBITDA increased by 22.3%, around EUR 18 million, to EUR 97 million. Reported figures included EUR 2.4 million cost related to GAES integration and to the redefinition of the corporate structure of Amplifon S.p.A.

Following the strong investment plan during the past quarters, D&A increased by around EUR 8 million, leading the recurring EBIT to around EUR 44 million with a growth of 27% or EUR 12 million versus Q1 '19. Net financial expenses, accounting for around EUR 7 million, led profit before tax to EUR 36 million from around EUR 28 million in Q1 '19, posting a 31% increase.

Tax rate, as usual, is slightly higher in the first quarter versus following quarters due to seasonality, posted a 130 basis point reduction versus '19 from 32.2% to 30.9%, leading recurring net profit at EUR 25 million with an increase of 33% versus '19.

Moving to Chart 9, we can appreciate the cash flow evolution. Operating cash flow after lease liabilities was in the period equal to EUR 68 million versus EUR 61 million last year, which already reflected the action implemented in March last year to mitigate the COVID-19 impact, posting an improvement of EUR 7 million or 12%. The comparison versus Q1 '19 shows an outstanding improvement of EUR 33 million with operating cash flow almost doubling versus '19.

Net CapEx decreased by around EUR 1.5 million to around EUR 15 million, leading free cash flow at EUR 53 million versus EUR 44 million last year, posting a growth of EUR 9 million, around 20% versus last year. Versus Q1 '19, the improvement of free cash flow is over 3x.

Net cash-out for M&A was EUR 32 million driven by bolt-on acquisition in EMEA versus EUR 42 million in '20 primarily related to Attune acquisition last year. The share buyback program executed in the quarter absorbed over EUR 30 million, leading net cash flow for the period to over EUR 7 million positive versus EUR 2.5 million negative in Q1, leading NFP at EUR 625 million with an improvement of around EUR 165 million versus Q1 '20 and further improving despite seasonality versus EUR 634 million at the end of 2020.

Moving to Chart 10, we have a look at the debt profile trend and key financial ratios. As mentioned in the previous chart, the net financial debt closed at EUR 625 million, with liquidity accounting for positive EUR 558 million, shorter debt accounting for around EUR 121 million and medium long-term debt accounting for around EUR 1.06 billion. This confirms the very strong financial profile of the group with over EUR 800 million financial headroom including undrawn revolving credit facilities after the continuous improvement of the net financial position and the completion of the financing program executed last year.

Following the IFRS 16 application, lease liabilities amounted to EUR 428 million, leading the sum of net financial debt and lease liabilities to EUR 1.05 billion. Equity ended up at EUR 831 million with an increase of around EUR 30 million versus December last year.

Looking at financial ratios. Net debt over EBITDA ended at 1.44x with a further reduction versus December 2020 by around 20 basis point, representing the best result after the completion of the successful GAES acquisition. And net debt over equity ended up at 0.75x, posting a reduction versus 0.80x at the end of 2020.

I would now hand over to Enrico for 2021 outlook.

[Enrico Vita, executive]

Thank you, Gabriele. So as usual, we are at the end of our presentation for today. Looking ahead, even if some degree of uncertainty still persists, I now believe that the visibility on the next months is improving day after day. April trading is going well, and we expect our market to continue to normalize during the year as COVID-19 vaccines are administrated. In light of this situation, we now expect revenues for the full year in the region of EUR 1.93 billion. And of course, as said, this target reflects and take into consideration some caution due to the fact that we can't say that the situation is 100% solved yet.

Also, I can confirm that in terms of profitability, we expect to continue to reap the benefits of our actions implemented since Q2 of last year. And therefore, we aim to achieve a significant margin improvement compared to 2019 in the region of 180 to 200 basis points.

Looking further ahead, we remain very positive, as usual, on our prospects of growth as we confirm our strategy and our investments. And therefore, we confirm what is crucial for the medium- and long-term development of our company.

And now let me now hand over to Francesca again. Thank you.

[Francesca Rambaudi, executive]

Thanks, Enrico. [Operator Instructions] Now I turn the call over to the operator in order to open the Q&A session. Thank you.

[Operator]

[Operator Instructions] The first question is from Niccolò Storer with Kepler.

[Niccolò Guido Storer, analyst]

I have 2 questions for you. The first one is on your revenue guidance. In Q1, we grew 8.4% organic. And if I make some calculation, your guidance implies lower growth versus 2019 compared to the one-off of Q1. So I was wondering why you adopted such a cautious stance given the fact that probably going forward, the comparison should become easier and easier versus 2019, of course.

The second one is on profitability. Probably also with stronger than previously expected top line, you're still guiding for the same 180, 200 bps increase. Why is this? And also -- so why is -- I mean are you planning further expenses offsetting the operating leverage effect that you are going to have?

And related to that, on profitability in APAC, which was down compared to 2019, you spoke about the tough comparison base. But if I look at 2019, 2019 was already lower than 2016, '17, '18. So if you can give us some color also on this drop in profitability in APAC.

[Enrico Vita, executive]

Niccolò, thank you for the questions. So with regards to the first question and therefore to the guidance on revenues, I would say a couple of things. The first one, you need also to take into consideration that the comparable base in the second half of this year versus the same second half of 2019 is going to be definitely much more challenging than in the first half. And in some way, our guidance reflects this.

But also, I would say that, as I mentioned during the presentation, our guidance in terms of revenues reflects and take into consideration the fact that we can't say that the situation is yet solved 100%, and therefore, in this guidance is also included some sort of caution for that. So at this stage, we believe that this is quite a fair assumption for the full year.

With regards instead to the profitability, we said that our target in terms of profitability was not depending so much on the level of revenues. We said this during our last conference call also because we could flex our cost according to those. And in this case, I believe that a target of 180, 200 basis points versus '19 is a real and remarkable target and very strong target.

With regards then to the third part of your question and, therefore, the profitability of APAC, I would say that this also is reflecting the investments that we are making in the APAC region following, from one side, our switch from the local brand National Hearing Care to Amplifon, which we have mentioned now for a few times. So we have -- in Australia, we have rebranded all our stores to Amplifon. Now Amplifon is our brand in Australia. And in order to support these activities in terms of rebranding, we are investing quite a lot in terms of marketing.

And we are very happy to do so because, from one side, we are building a much stronger brand, a global -- we are present in Australia now with our global brand. And from the other side, I believe that these investments, which have been quite significant, in particular, will be quite significant this year, will support also our objectives in terms of growth in the private market. Finally, let me say that I'm more than fine with a region with a profitability above 30% in a low seasonality quarter. So I'm more than fine with that.

[Niccolò Guido Storer, analyst]

Sure. Can we say that -- to conclude that you are not facing any kind of price pressure in the region?

[Enrico Vita, executive]

No, no, no. Not at all. Not at all. It's just -- I mean the profitability, which again is above 30%, is just reflecting of the fact this year. If you have time, you can go to YouTube and look our new advertising in Australia. We are air. It's the biggest invest -- on air in TV, I mean, and it's the biggest investment ever done in Australia on TV. And as I said, it's a very conscious decision that we have taken in order really to build a brand in a market which is, of course, a core market for us and where we see the opportunity actually to build likewise in many other markets the #1 brand of the market.

[Operator]

The next question is from Aisyah Noor with Morgan Stanley.

[Aisyah Noor, analyst]

I have 2, please. The first is on the U.S. market. Could you talk about your growth versus the reference market in the U.S. and what's driving the strength in Miracle-Ear given we've seen other market players report much lower growth rates relative to you?

Question number two is more of a longer term question around lead generation. In the last few quarters, you've seen a few companies come to market. They are offering digital or online hearing care with a strong focus on digital lead generation. So I guess my question for you is how do you see yourself positioned versus these competitors. And do you think online lead generation is the way forward for your business?

[Enrico Vita, executive]

Sure. Thank you. Thank you for the questions. So with regard to the first question about the U.S. market, in the U.S., the reported numbers are about -- are telling us that the U.S. market has grown in the first quarter double digits, I think, in the region of 10%, 11% or 12%. However, as far as we also understand, these are sell-in numbers, sell-in figures. As far as we understand, these numbers are also reflecting the effects of an important stock-in by a manufacturer into Costco, into a major retailer. And so this could have distorted in some way the reported number.

But our growth was above our market reference. And in particular, this is true for Miracle-Ear. We are doing extremely well in Miracle-Ear. And the kind of organic performance of Miracle-Ear was definitely very, very strong.

Also in addition to that, we have consolidated PJC Hearing, which is also doing extremely well. As I mentioned during the presentation, the integration is going very well. PJC and also our corporate stores have reported a very strong growth. So again, I think that in general terms, in the U.S., we have continued to grow share in particular with Miracle-Ear.

With regards to the second question and about digital lead generation, well, for sure, lead generation -- digital lead generation is part of our core business is how also we do lead generation in Amplifon. You know very well that we have invested progressively more and more on digital channels. We have grown our investments through the years, through the recent years quite significantly. So it's nothing new to us. It's definitely nothing new to us. It's part of our way of making lead generation. And of course, it's becoming more and more important year-after-year, but really nothing new.

[Operator]

The next question is from Kit Lee with Jefferies.

[Nyeok Lee, analyst]

My first one is just on your organic growth on the monthly run rate in Q1. I'm just wondering if that organic growth has accelerated in March. And if you look at the April run rate currently, how does that compare to the Q1 performance?

And my second question is just around pent-up demand. I think 8% organic growth versus Q1 '19, that's a pretty strong performance. I'm just wondering if you have seen any sort of pent-up demand coming through? And how do you think about pent-up demand for the rest of the quarters in 2021, please?

[Enrico Vita, executive]

Yes. Thank you. Thank you for the questions. So with regards to our organic growth through the quarter, yes, we have seen some acceleration, although you have also to consider that in March, we -- in comparison with the same period of '19, so with March '19, we had 2 working days more. But yes, we have seen some sort of acceleration. I would say, as I mentioned that -- during my presentation that also in April, we see a very positive trend. So -- which is in line with what we have delivered in March.

With regards to pent-up demand, of course, I mean we have seen quite a strong recovery, and we are seeing quite a strong recovery. And I think that this is also reflecting some sort of pent-up demand coming back. To estimate how much it is pent-up demand and much this underlying demand, et cetera, is not that easy. But as we mentioned also in the last quarters, for sure, you know very well that our services are not discretionary services. So what has been lost in 2020 because of the pandemic, we believe, will come back sooner rather than later, certainly first on returning customers and maybe more in the -- let's say, in the medium term on new customers. So definitely, we expect some effect from pent-up demand also in the coming quarters.

[Nyeok Lee, analyst]

That's great. And just to follow up on that, if you look at your sales mix today by existing customers and new customers, has that changed so far in Q1? Or is that quite in line with what you have seen in the past?

[Enrico Vita, executive]

Well, it's coming back to the usual ratios, which is more or less 50-50. So it's coming back. It's coming definitely back to the normal ratios.

[Operator]

The next question is from Veronika Dubajova with Goldman Sachs.

[Veronika Dubajova, analyst]

I have 3, please, if that's all right. The first one is just on the full year guidance. And listen, I appreciate that there's still quite a lot of uncertainty, and this is an evolving situation. But I guess, Enrico, if you were to look at the blue sky and say, okay, let's assume from here on we have a smooth rollout of vaccinations as we go through the second quarter and the world does get back to whatever the new normal is by the time we get into summer and there are no big variance, what do you think you could do versus 2019? I mean what would be a realistic kind of blue-sky scenarios that you have penciled in your book that you're thinking about for the full year? That would be very helpful if you can speak to that. So that's kind of my first question.

My second question is for Gabriele, just a financial one. Looking at the EMEA margin, I know you called out the GAES margin improvement versus 2019. But if you could just decompose that 480 basis points of margin improvement versus Q1 '19 between GAES and the underlying business, that would be much appreciated.

And then my kind of third question is just a follow-on onto one of the earlier questions. Just your desire to move not just into digital lead generation but into digital care provision, and I know this is a question that we've debated a lot, but I'm just kind of curious if your thought process on that has changed at all as we've gone through the last 12 months and you've seen your customers become more comfortable with the digital world, if -- not necessarily full outright remote sales but some more hybrid models. Is that something that you're working on in the background and something that you're considering?

[Enrico Vita, executive]

Thank you. Thank you, Veronika. Thank you for your questions. So I will start with the last one. I would say that the pandemic did not change at all, and I want to say again at all our view about our services, about the customer journey of our customers. I think that we mentioned many times that our vision about the customer journey is an omnichannel experience, where the physical interaction is still the core. But it's a customer journey where we can definitely -- that we can enrich adding to the physical touch points in the stores, so also digital touch points. And this is exactly what we are doing. This is exactly what we are working on.

And also in a way that this -- the pandemic has changed and switched many, many different business to digital propositions, which is something that did not happen, I would say, almost at all in our businesses. So in some ways, the confirmation of the fact that given the nature of our customers, given the nature of the hearing loss, which is a quite complex pathology, the best experience, the best results for our customers can be delivered through, let's say, an omnichannel experience made of physical interactions in the stores as well as additional new digital touch points enriching the customer experience.

With regards to the first question, and then I will leave to Gabriele, as I said, I think that at this stage, our guidance is a fair guidance. It reflects definitely some level of caution because as I said and as you know, the situation is not 100% solved. So if I have to imagine the rest of the year with no other issues, with no other problems, et cetera, et cetera, I think that definitely, there is a possibility to go even over that. But I think that at this stage, it's a quite fair assumption.

With regards to profitability of EMEA, I would leave to Gabriele, profitability.

[Gabriele Galli, executive]

Profitability in general?

[Enrico Vita, executive]

Yes.

[Gabriele Galli, executive]

Yes. Yes, absolutely. So Veronika, I mean during the conference call a couple of months ago, what we said is we do not give any guidance in terms of sales, despite this, we can deliver 180, 200 basis point EBITDA margin improvement. While not giving the guidance on sales, we gave a very strong communication in terms of current trading because we say that sales were very positive during the first couple of months. And today, of course, we confirm they are very positive, a little bit higher than what we saw during the first couple of months.

So I understand, I mean, your reasoning. So now your sales are probably higher than what was expected during the last conference call, so why operating leverage is not materializing and why you are not increasing the 180, 200 basis points. The point is that, I mean, of course, as you can imagine, we developed a strong ability in managing cost and investments during the last year. And we believe that this kind of margin expansion at this level of turnover can be achieved even after a very strong reinvestment in the group. We want to build up not only the quarterly profitability but also the medium, long-term advantage versus competition.

And so in our understanding, 180, 200 basis points over '19 means an EBITDA margin ranging from 24.5% to 24.7%. And with such a number, if we are able to overinvest in the business, we prefer to do so to build for the future than delivering another 10, 20 bps in the quarter. That's the reason.

[Veronika Dubajova, analyst]

Apologies, Gabriele. I think my question was much more specific to Europe and just looking at the significant margin improvement you delivered versus Q1 '19. And I was just trying to understand what the contribution from GAES was to that versus the underlying business.

And if I can just a follow-up to my first question, Enrico, and I don't mean to be facetious, but why not sell digital? I mean I look at some of the players...

[Enrico Vita, executive]

Sorry, sorry, again? Why...

[Veronika Dubajova, analyst]

Why not go digital and direct to consumer? I mean I look at some of the players you look at, the financials that Eargo is delivering. It seems like they're tapping into a new consumer market that wasn't there before. They're growing the total market. They -- it would be creating a funnel of consumers. I mean I appreciate most of your customers are 70. But there obviously is a vast untapped market. And I guess I'm just a little surprised by your and just the general industry's reluctance to engage with that if it's creating a new incremental market opportunity that doesn't exist. Where is that reluctance coming from, I guess?

Because, I mean, listen, Eargo doubled sales in 12 months' time. It's a small number, but it's growing very healthily. So I'm just trying to understand why is it that you don't want to participate in that channel, in that market?

[Enrico Vita, executive]

The answer is very simple to this. And the answer is that because we are planning to stay in this business for a long time. And we believe that you can't deliver in particular. And when I say the peculiarities of our customers, I'm not relating only to the age but also relating to their degree of hearing loss. Our customers have moderated to severe hearing loss, which is quite a complex pathology.

And since, as I said, we want to provide to our customers the best solutions, the best services, the best customer experience, that, in our opinion, in my opinion, can be delivered, I don't want to say only but mainly through a customer journey which is made of a part which is physical and a part which can be also digital. As you know very well that we have also -- we are also working on this now for a while, and we will continue to work in order to enrich the customer journey of our customers with digital touch points.

So -- and I think that for us to deliver the best service, the best customer experience to our customers is definitely the priority #1, which is also what has allowed us also in the past to detach, if you want, in a way from a pure logic of price.

With regards to the EMEA?

[Gabriele Galli, executive]

Yes, with EMEA. Sorry, if I understood about the global profitability. Regarding EMEA, as Enrico stated, there are 2 contributions. So GAES is a significant portion but, of course, may account for 20% to 30% of the overall improvement of EMEA; while the remaining part, so let's say 2/3, is linked to the efficiency and productivity measures that we implemented last year. We put on our, I mean, ability to deal with the cost base. And you will see this improvement, I mean, going out through the different quarter of the year. So GAES, as Enrico stated, is really performing very strongly.

Actually, compared to the initial guidance we gave of EUR 20 million to EUR 25 million, then EUR 25 million, today, we are in a completely different order of magnitude. And in the medium term, there will be further improvement because, as we said, at the end, Spain is not so different country compared to Italy in terms of potential profitability, thanks to the very good average selling price, thanks to the lower cost base and also thanks to the very strong, I mean, market share of around 50%.

But I mean there is still a potential in improving this profitability. But today, we already achieved a significant portion leveraging on, I mean, cost reduction, the first reorganization at the end of 2018, and also, I mean, in direct purchasing optimization. So today, the initial guidance is beaten. But again, Spain is just a part of the improvement. Also the other countries are performing very well. Also some of them are reaching the critical scale on a country base.

[Operator]

The next question is from Julien Ouaddour with Exane BNP Paribas.

[Julien Ouaddour, analyst]

So I have 2, please. The first one, speaking of profitability again. So you did achieve 180 bps margin improvement versus 2019. And it was despite a very strong investment and especially in marketing, I think where your spending was 15% above 2019. So I guess you...

[Enrico Vita, executive]

Correct.

[Julien Ouaddour, analyst]

Yes, so I mean you could achieve even more like without strong investments. So just to help us to understand the outcome of this investment especially given now your marketing is much more efficient than pre-COVID, just what have you seen so far in terms of the impact on the business? And would you say that you could be able to generate an even higher organic growth in the future than you did pre-COVID recover it because of that, because of this higher marketing spend?

And just to finish on that, could you help us to forecast the corporate cost for the remaining quarter of the year? Should we expect around EUR 20 million spending every quarter?

And the second question is on your guidance. So EUR 1.93 billion top line revenue for 2021, it represents approximately 24% sales growth year-on-year. Could you maybe help us to understand how much is organic and how much from M&A?

[Enrico Vita, executive]

Very good. Thank you. Thank you for the questions. So I will take the number one and the number three, and then I will leave to Gabriele about corporate cost.

Well, yes, absolutely, I mean the objective of our very strong marketing investments is to ensure the sustainability of our future performance in terms of organic growth in the medium and long term. Our objective is very clear. We want to have the #1 brand in all the main geographies in which we are operating.

And this is, for example, what we are doing in Australia as I mentioned before. In Australia, now we rebranded the National Hearing Care, which was a brand known in the market but not so strong in the markets. And therefore, we rebranded to Amplifon in order to build and to leverage on our global brand. And now we are investing significantly in Australia in order to strengthen the awareness and the equity of the brand.

I think as I mentioned a few times that in our sector, having strong brands, having trusted brands is of paramount importance. And this is what we will continue to do also in the future in order to ensure the sustainability of our growth in terms from an organic viewpoint also in the future.

With regards to the corporate cost, Gabriele, maybe you can give some more...

[Gabriele Galli, executive]

Absolutely. Absolutely. So corporate cost is something on which, of course, according to the market condition we can play to push more for, I mean, improving our organization -- transforming our organization and something that, of course, in particular quarters or periods such as last year when COVID was there, I mean you can act in order to reduce a little bit the speed of development.

So what we did during Q1, of course, given the positive market condition, given the positive performance, we went on full speed with a big corporate project, meaning, I mean, projects for global marketing, global IT, global purchasing in order, I mean, to build up all these level of capabilities that we need in order to grow and perform better than the market. All in all, this resulted in around EUR 20 million cost, which represents around 4% of our revenues.

Moving forward, I think that this is a sound percentage when market is performing. Of course, you can see maybe the same percentage on a quarterly basis because of seasonality, so some quarter turnover is higher, especially Q2, Q4, so percentage may be a little bit lower, some other quarters are a little bit smaller, Q3. But all in all, this is a sound level of investment when we see that the market is there.

[Enrico Vita, executive]

With regards to the third question about the -- let's say, the split of the total growth between organic and M&A., I would say roughly, you can consider about 60%, 2/3 being organic growth and the rest acquisitions.

[Operator]

The next question is from Oliver Metzger with Commerzbank.

[Oliver Metzger, analyst]

The first one is on the M&A opportunities. Just you talked about PJC, which might be something extraordinary, but the normal cost of acquisitions or normal stores in the chains, where are you right now? Is it already a pickup in M&A activity? That's the first one.

The second one is you mentioned that U.K. and Germany were still impacted by restrictions on first quarter. If you look right now on these markets, is it already a normal situation? And is also your comment related to the fact that both markets showed a higher resilience in the first and second quarter of last year?

And finally, also a quick question on your marketing expenses. So right now, are you already on a normal level? That's all.

[Enrico Vita, executive]

Thank you. Thank you so much for your questions. So with regards to the first question about M&A, yes, as I also mentioned at the beginning of my presentation, I think that the pandemic will bring some changes in the market. I think that the strongest players will get stronger. Other players will get weaker. So it is our intention to exploit this moment, this situation and also in order to accelerate on our M&A activities. For sure, we will continue to invest in Germany, in France, where we still have room for increasing our network. We will -- as we mentioned a few times, we are also aiming to enlarge our footprint in China. So definitely, we envisage an acceleration in our M&A activities as well.

With regards to U.K. and Germany, in the first quarter, yes, both markets were affected heavily by the situation. In the recent weeks, whilst in the U.K., we have seen a significant improvement, but you know that the U.K. does not represent a large part of our business today. The U.K. accounts for something like 2% of our total revenues. In Germany, we have not seen yet a material improvement. So in Germany, still the market is not recovering as we have seen in other markets.

The last question was about marketing investments. Yes, we have -- we are now -- definitely restarted now since a few months to reinvest significantly in terms of marketing. Also building on what Gabriele was saying before, given also the very positive trend that we have seen in terms of revenues, we are even accelerating our investment. I think that this is something that you should see as very positive because we wanted to really build in this moment the best brands, the best positions in our markets in order to leverage on our scale, on our possibility to invest and to overinvest sometime in order really to create even a bigger competitive advantage to our competitors. So this is exactly what we are doing and what we will continue to do.

[Francesca Rambaudi, executive]

I think we have time for one last question. So I kindly ask the operator for a last question. Thanks.

[Operator]

So the last question is from Domenico Ghilotti with Equita.

[Domenico Ghilotti, analyst]

Very few questions. The first is still on the margin and profitability because in Q1, you were, say, back in line with your guidance. I wonder -- but the mix was a bit, let's say, different from area to area. And so I wonder if you expect to be more balanced on a full year basis, so we should expect despite the marketing investment in APAC to have a recovery and maybe also an acceleration in North America or Americas.

And my second question is a follow-up on the M&A. You're running more than EUR 30 million in Q1. And your comment is very pushy, so I would expect the full year to end with investments, say, north of EUR 100 million or EUR 120 million. I wonder if you can confirm this.

And the very last is your commitment on the Capital Market Day. Should we expect Capital Market Day in the next few weeks or months?

[Enrico Vita, executive]

Yes. Thank you. Thank you, Domenico, for the questions. So with regards to the margin mix, I would say that directionally, you will see the same kind of margin trend. Definitely, EMEA will be the biggest contributor. Definitely will -- in Asia Pacific, as I mentioned, we will continue to invest strongly in terms of marketing this year. In the year of the rebranding to Amplifon, Americas will be, let me say, in the middle. So more or less, you will see the same kind of shape in terms of margin development across the 3 regions.

With regards to the second question, and therefore M&A, I think that your assumption is quite fair. Of course, M&A does not depend only from us, but you say -- you rightly say that we are definitely quite keen on that. And therefore, the assumption that you have made, I think, is correct.

With regards to the Capital Market Day, yes, it is our intention to hold these events for the financial community before the summer. Definitely, yes.

[Francesca Rambaudi, executive]

Thank you. Many thanks to all for participating in our call, and I kindly ask operator to disconnect. Thank you.

[Enrico Vita, executive]

Thank you, everyone. Thank you.

[Gabriele Galli, executive]

Thank you.

[Operator]

Ladies and gentlemen, thank you for joining the conference. It is now over, and you may disconnect your telephones.