SEB SA

PAR:SK

Earnings Call Transcript 2021-Q1

[Operator]

Hello, and welcome to the SEB First Quarter Sales and Financial Data Call. My name is Rosie, and I'll be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions]I will now hand you over to Nathalie Lomon, Senior Executive Vice President, Chief Financial Officer, to begin today's conference. Thank you.

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Thank you very much. Also joining me today is Isabelle Posth, who is the Head of Investor Relations and Financial Communication for Groupe SEB. So good evening, ladies and gentlemen, and welcome to our Q1 2021 earnings release.I will move very quickly to Slide 5 of the deck. Yes. So before we would enter into a more detailed explanation of the performance of the quarter, we just want to share with you our vision of the context, which obviously is still very challenging. You know that the environment remains uncertain. Everywhere in the world, a lot of different situation on a worldwide basis, depending on the restrictions in place, also the vaccination campaigns.However, during this quarter, the stay-at-home imperatives remain and is still impacting the consumers' everyday life. This has derived into a very strong momentum in the small domestic equipment, on cooking appliances, cookware, home cleaning. This is also supporting continuous boom on the online. On the other hand, the Professional business is still very much impacted by the overall lockdown in the hospitality industry. And last, but not least, we have started to feel in this quarter some tension in the supply chain being on raw materials, components and freight. But I will give you more details on this later on in the presentation.So let's move to the numbers, and I'm on Slide 6. This quarter, the group has delivered sales of EUR 1.852 billion. It's a like-for-like growth of plus 31%. The operating results came at EUR 198 million compared to EUR 18 million last year first quarter. And the net debt ends up at EUR 1.465 billion. This is EUR 375 million below last year end of the first quarter. So an excellent performance for this quarter that we'll comment throughout this deck.Moving to Slide 7. As I just mentioned, Q1 sales have reached EUR 1.852 billion, with Consumer driving the trend, EUR 1.722 billion, above 39% of growth on a like-for-like basis. And the Professional delivered EUR 130 million with a decline of 26% like-for-like compared to last year.I'm now on Slide 8, where you can see our sales bridge between Q1 2020 and Q1 2021. So EUR 449 million of organic growth delivered this quarter and then a negative impact of the currencies for EUR 81 million and a positive impact from the scope of EUR 30 million coming from the consolidation of StoreBound.Slide 9 is showing sales by region. So the figures will be commented in details by Isabelle in a few minutes. But you can see that the growth is strong in all areas for our Consumer business, with Europe delivering close to 42% growth like-for-like, Americas growing at 61%, Asia growing at 29%. You can also see some significant differences between organic and reported growth. So in South America and in other EMEA countries, it's, of course, due to the adverse FX valuation, so devaluation of all currencies versus the euros. And in North America, on top of the FX impact, it is reflecting the consolidation of StoreBound.Now moving to Slide 10, where you can see our top 20 countries for the Consumer business. So all these countries have posted double-digit growth in Q1 2021, with in particular very strong performance in France, Italy, Poland, Romania, Turkey, Ukraine, Canada, the U.S., all of these countries delivering more than 60% growth on a like-for-like basis.Slide 11 is showing you more details regarding the currency impact on our sales, mainly driven by the devaluation of emerging currencies together with the U.S. dollar at the right-hand side of this slide.I am now moving to Slide 13 with a focus on our 2 businesses, the Consumer on the one hand. And on the next slide, I will further comment on the Professional segment. So the Consumer business has posted a very strong growth, 39% like-for-like, with a very strong demand over the quarter on both SDA and cookware, on all geographies and almost all categories, except for fans. You may recall that we're selling a lot of fans in LatAm. And currently, the weather is quite bad. So when the weather is bad, it's not good for our sales.Well, apart from that, just good news, sales up, driven by volume. But also quality sales. We think that the environment is less promotional currently and compared to what it was 1 year ago. We have a strong product dynamic, strong market activation. And we start to see some upstream supply chain issues, but we will further comment on that once again.On Slide 14, Consumer sales by product category, you can see everything is positive here, apart from the home comfort. Very strong growth level in cookware, food prep, beverage, electrical cooking, all around above 40% on a like-for-like basis. Linen care is even back to growth, which is a very good news.Slide 15 on the Professional, the business is still hit by the ongoing crisis in the HoReCa industry with a lot of businesses being under lockdown. However, we're still benefiting from the go-to-market strategy, the diversified customer base of this business. And it is helping us maintaining a significant core business and also it's helping us fueling future order book. So that's why we have delivered sales, which are minus 26% like-for-like, a decline, but certainly not at the level of what we can see in the HoReCa industry overall. And as a reminder, we just want to tell you that this business had not been hit by the COVID in Q1 2020. So we had a more difficult or more difficult comparison based to 2 periods.I'm turning to Isabelle now who will give you more information by country or by geography for the Consumer business.

[Isabelle Posth]

Yes, good evening. Well, the worldwide tour is going to be a little bit shorter, because you've seen the figures, and they're very good. But nevertheless, I'll start my around the world with EMEA and Western Europe.Western Europe first, where revenue for Q1 has increased by 35% versus minus 15% like -- last year like-for-like, due mainly to the COVID-19 crisis that has surged as of mid-March last year and leading to the physical trade to be put under lockdown. So as already mentioned in previous communications, overall containment in Europe and the stay-at-home imperative entailed the reallocation of household spending that proved highly favorable to the small domestic equipment market. And that was also transversal geographically.Groupe SEB obviously benefited from this positive trend, with cooking appliances being the strong winners, followed by home cleaning. And strong marketing and advertising campaigns that we have been rolling out in Q4 last year have also clearly been supportive for the business.Group's performance in Q1 was based on quality sales with an overall improved product mix stemming from cookware, from vacuum cleaners, full automatic espresso coffee machines, and more generally, electrical cooking, including also grilling and food prep. E-commerce fueled massively turnover development. And almost all European markets contributed to the robust momentum, with some countries that have really delivered outstanding growth levels.Among these, there is France, whose revenue was up more than 60% like-for-like. You can see it in the chart, a combination of bullish demand translating into a less promotional environment, but also generally low inventories in trade, leading to strong sell-in to ensure availability of products; extended winter sales period, 8 weeks instead of 4, that generated heavy traffic in stores, but also online; and of course, our own dynamic, based on our broad and diversified product offering and the sustainable positive effect of significantly higher growth drivers in Q4 last year and more modestly in Q1.A few additional words on other countries. Brisk revenue growth in Italy on low comps, but also strong momentum in the U.K. and the Netherlands, despite hard lockdown; highly positive trend in Belgium with a solid capacity to leverage both our presence in traditional retail banners and channels and also phase the development opportunities in regional online pure players such as Bol or Coolblue; and very good dynamic in Spain, despite the roof collapse of our main warehouse, which substantially subdued performance, yet still up 2 digits.Moving now to Eurasia where the overall environment has remained volatile as in previous quarters. Confinement measures to combat the epidemic have been quite diverse, depending on the countries, either full or partial or weekend lockdowns. And that, of course, has been an issue. Another issue has obviously been the currency evolution with some massive and ongoing depreciation of currencies against the euro. As, for instance, it is the case for the Turkish lira, the ruble or the hryvnia. These explaining the substantial gap, of course, between our reported and like-for-like revenue for Q1 in the region.However, and very much in line with the second half of 2020, the group's organic growth in Eurasia continues to be outstanding, with sales up 57% like-for-like against the backdrop of solid market dynamics. While the performance refers to obviously low comps, it confirms the group stepped up development in the region. As mentioned in the press release, all countries, except for one, have contributed to the spectacular growth, including our large markets such as Russia, Poland, Ukraine, Romania, all belonging to the top 20 countries, and Central Europe overall; as well as our new rising territories such as Kazakhstan, Bulgaria, Slovakia or Croatia.Revenue in Turkey has been almost doubling on a like-for-like basis, which is a major turnaround, but the country is clearly a difficult country. And although the economy is back to growth, the general environment in the country remains quite complicated and challenging and materializes notably in the collapse of the Turkish lira.The strong momentum also continues to be nurtured by e-commerce with all types and all channels highly contributive. Main drivers are local click&mortar players, sometimes very emblematic of the offline retail and long-standing customers of the group. And for sure, we do leverage our relationship with them to enhance the current strong e-commerce drive, and we have been developing fast online with them. At the same time, pure players and especially regional and local ones, have been significantly gaining ground over the last year and are accelerating their expansion. Well, all in all, Groupe SEB continues to increase its online market share in Eurasia.Regarding product lines, as elsewhere in the world, market dynamic and our very robust momentum has been driven by the stay-at-home categories, and I would mention, in particular, cookware; vacuum cleaners, versatile and robots; Optigrill, which has built in Eurasia a huge commercial success ongoing; and also full automatic coffee machines.Now if we move to the Americas, starting with North America. Sales has been up 83% on a reported basis and 64% on a like-for-like basis with a sharp acceleration in March, owing to a less demanding comparable basis year-on-year on this month. You will note, of course, the discrepancy between reported and organic growth rates in the chart, which is attributable to: one, adverse FX evolution; and second, the integration of StoreBound.This solid performance has been driven by the 3 countries in the area, the U.S., Canada and Mexico. To be more precise, I'm sure that you have all noted in the previous slide commented by Nathalie that the U.S. and Canada has posted organic sales growth above 60%, while our sales in Mexico have been up more than 30%.I will focus only on the U.S., where consumption has been holding up firm over a certain number of months now and household confidence has reached peak levels during the quarter. Extended work-from-home and home schooling, stimulus funding and limited eating out have remained a strong catalyst over the quarter, favoring our core cookware categories.At the same time, due to the crisis and lockdown measures, broader adoption of the digital economy has accelerated the retail industry pace to become more multichannel. Households have been increasingly attached to the convenience and unlimited product selection afforded by buying online, and they make the trend a sustainable one.In this environment, Groupe SEB continued to strengthen its presence online and achieved a record performance in cookware, with strong growth stemming from our 3 flagship brands in the U.S., All-Clad, Tefal and IMUSA. The main engines that propelled revenue were similar to those of 2020: distribution extension, successful iconic products and enlarged offering to better serve all the end consumers. Oppositely, the more challenging situation for linen care has persisted as the market continues to decline.StoreBound, acquired in July 2020, posted another outstanding quarter with sales having more than doubled versus last year, recorded to over 60 customers, including 10 -- around 10 newly gained retailers, among which several premium accounts. Exposure to e-commerce has been enhanced with a strong acceleration in online sales.South America, our sales have been strongly up, as you can see. And as you can see also the massive and favorable currency effect are mainly stemming from the continuous and significant depreciation of the Brazilian real against the euro, while the COP is weighing less. South America remains heavily impacted by the COVID-19 epidemic. In Brazil, which is our biggest country in the region, the health situation is extremely worrying despite the gradual rollout of vaccination campaigns as of January. But at the end of Q1, around 9% of total population was immunized.Related to fierce pandemic scenario, almost the whole country was put under lockdown some weeks in Q1, including main regions such as South and Southwest. In this very deteriorated context, group performance sounds quite good. Yet, the very strong organic growth achieved was entirely driven by price increases to offset FX headwinds and other incremental costs while volumes have been declining as demand has been slipping and turnover lost during the lockdown weeks. In terms of product lines, cooking categories have shown overall good performances, cookware, oilless deep fryers, blenders, whereas linen care and fans revenue have been dropping, fans being impacted by unfavorable weather conditions.In Colombia, the first quarter was up by -- the first quarter sales were up by more than 50% on an organic basis, with the rise in revenue being mainly fueled by outstanding results in IMUSA cookware, but also blenders, which is an iconic product in the country; and skyrocketing sales in oilless fryers. In order to respond to robust demand and serve the best -- in the best way our customers, our 2 plants in Colombia have been operating at full capacity and have set a record production level in the first quarter.Now going to China. It's our first market, as you know. Sales for the quarter have been up 30% like-for-like on low comps in Q1 2020. The upsurge of sales has been propelled by online channels, with the offline retail still lagging behind. As mentioned, for our full year 2020 sales, e-commerce represents more than around 60% of Supor sales. And Supor keeps on accelerating digital activation and increasing the leverage of social networks, and this is true for TikTok and Kuaishou notably, which are hugely popular, to boost visibility and sales also towards the younger generation.Given the spectacular upswing in sales, the effective impact of the Chinese New Year on sales growth is quite difficult to quantify this year. By product category, on the basis of a dull first quarter last year due to the impacts of the extended closure of the Wuhan plant, Supor confirmed in Q1 the recovery of the cookware business, whose sales have been increasing tremendously. As in Q4 last year, most product families have contributed to the strong momentum, including in particular woks, pots and pans, pressure cookers and also drinkware and notably thermal mugs.Turning towards small electrical appliances. Sales development was mainly driven by kitchen electrics, with all the iconic categories such as rice cookers, electrical pressure cookers, kettles, high-speed blenders, while at the same time, Supor has continued to put increased focus on new categories such as oilless fryers, ovens, breakfast machines, et cetera, which are more western style and which are significantly gaining ground. Apart from kitchen electrics, significant growth has also been achieved in home cleaning.Now for the end, in Asia, excluding China, the group has achieved a very satisfactory Q1 performance with revenue increasing by around 25% like-for-like, with the vast majority of countries that have contributed to the sales dynamic. What I will focus, as last time, I will focus my comments on Japan and South Korea only.In Japan, we achieved a buoyant quarter with sales up around 25% like-for-like, driven by our bestsellers such as the electric pressure cooker category, where we have significantly enriched our assortment over time. And this is a very successful category. Among our flagship and champion products, cookware is also, as you know, a key growth driver, and it has been the case over the period, both via the Ingenio range, stackable items but also fixed handles. Worth to be mentioned, the group's retail network now comprises 46 stores, including 1 new opening in Q1 2021, and has enjoyed a solid growth over the quarter.In South Korea, strong momentum materialized in sales up around 20% like-for-like. And the momentum was driven by both offline and online sales with champion categories of the quarter being electrical cooking and a very specific mention for oilless fryers, food preparation, vacuum cleaners and also, of course, cookware.Again, as for Japan, we -- the retail -- the group's retail has been contributing actively to the growth like-for-like, but also with 2 new stores being opened. And the group retail in South Korea is doing fine. And all the other countries have been growing fast.

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Well, thank you, Isabelle. So let's move to the Slide 21, yes, with the operating results from activity. So first, as a reminder, and maybe especially this quarter, we just want to remind you that the Q1 is certainly not representative of the full year performance for the group because of the business seasonality. However, we have delivered a very strong operating result this quarter. I think it is a record high, being in sales or in operating results, which was driven. And I think we can move to the next slide. We have prepared a very simple, but I think, easy to read ROPA bridge for this quarter. So as you can see, all the growth is coming from the margin being coming from volumes, obviously, but also very positive price/mix impact and also cost of sales. So volumes, that is obvious. Price/mix improvement is coming from 2 aspects. On the one hand, we have been in a position, but we told you that last year to place price increases in the countries where the currency has devaluated when compared to the euro. So that's one thing. And second thing, we see that the environment is not as promotional or as price-driven as it was 1 year ago. And this is also explaining a significant improvement in terms of price/mix.Last, but not least, all the plants are running at full speed. And obviously, that was not the case in the first quarter last year where we had strong under-absorption of fixed cost in China and starting March in some countries in Europe.The net of growth drivers in SG&A is close to 0. Actually, we have made some savings in SG&A that we have reinvested in cost drivers. So that's also a good news and good trend. And we have a negative impact of ForEx in the first quarter of minus EUR 28 million. So that's how we move from EUR 18 million to EUR 198 million.Regarding the financial structure, it remains very strong. The net debt is EUR 1.465 billion. So that's below what we had at the end of last year by EUR 53 million. Despite the fact that we had a very positive impact coming from the suppliers funding at the end of December, we have managed to further reduce the net debt this quarter. And when we look back to where we were 1 year ago, it's -- as I said before, it's a strong reduction of EUR 375 million. The financing structure has not changed. It's still healthy, well balanced. And as a reminder, we have no covenants on our financial debt.So I think we're done with the numbers for this quarter, and I suggest we move to the next 2 slides, where we want to share with you the assumptions that we make for the full year. So first, as you can see, we had an excellent first quarter. And we expect that the second quarter will remain very dynamic. First of all, we have a favorable comparable basis. In the second quarter, we still see a very strong demand for the Consumer business. And we're expecting a rebound in Professional coffee coming from some specific contracts that we have signed.As far the second half of the year is concerned, we expect it to be stable compared to last year. And the reason for that is that, first of all, we have a very demanding comparison basis. You may recall the performance we delivered in the second half of 2020. We also have some uncertainties on the demand trend for the Consumer segment. Basically, we don't know what will be the attitude of our end consumers when we will exit the crisis, whether they will reallocate some of the spending to other segments of the consumption. So that's why we are quite uncertain there. And we also have some contingencies as for the pace of recovery of the Professional coffee in the second half. So that's why we make the assumption that the second semester would be stable.Altogether, this means that reported sales growth could end up around 10% for 2021 on a full year basis. And this includes a negative currency impact of around minus EUR 100 million. And the operating results margin could be close to 10%. This does include more penalizing headwinds regarding ForEx, raw materials and components and freight than what we initially anticipated and that we currently estimate at minus EUR 140 million on a full year basis on the operating results.So that's it for the presentation. I think we are happy now to take your questions, if any.

[Operator]

[Operator Instructions] And our first question comes from the line of Nicolas Langlet from Exane BNP Paribas.

[Nicolas Langlet, Research Analyst]

I've got 3 questions, the first one on China. So momentum was strong. But given the easy comparable basis and the calendar impact, I think we could have expected a bit more. So is there any additional comment to make in terms of competitive environment in the country? You mentioned increased competition from small players in the past. Was there any deterioration on that front since the beginning of the year?Second question, on the -- do you have a view on the sell-out performance of your product in Q1? Just trying to see what is related to retailer overstocking, given the procurement constraint we can have on the sector at the moment? Or [indiscernible] was really, really strong in Q1? And finally, on the headwinds, so you increased the headwinds from -- I think it was EUR 80 million before to EUR 140 million now. From where come from the increase between FX and raw material input cost?

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Okay. Thank you, Nicolas, for your question. So I'm going to start with the first one, momentum in China. So we have delivered a very, very solid growth on the Chinese market. There was no impact coming from the -- or no significant impact coming from the timing if we were to compare to 2020. What we have seen throughout the year is that the market has shifted to being now in majority driven by online sales. They would represent roughly 60% of the business we make in China, domestic China.And we know that the price/mix is lower online versus what we sell online. So it's still a very strong market, where we see our volumes growing year-on-year and quarter-on-quarter. But because of this shift to online with lower prices, it has an impact, obviously, of the level of growth. And that's, I think, one of the discussion we had already in the past that explains that we do not count anymore, except for this quarter, on a double-digit trend in China, but something on the midterm that would be rather between 5% to 10%.Having said that, what we're selling online is not -- has reached in a specification as what we would sell offline. The bit of materials is not as strong or as pricy. So this change in the business model has no impact on our margin. So we're still very happy with the performance of our Chinese subsidiary, stronger growth in volumes, no loss of market share and happy with the performance Supor has delivered in the first quarter.Then moving to your second question on the sell-out performance in the first quarter, it's very good. I would say that everything we sell through distribution is sold almost immediately. So difficult to say whether distribution is still trying to restore the level of inventory, because when we look at the sell-out currently, it's very strong. So we are not yet in, I would say, a restocking mode as far as distribution is concerned.And then to your third question on headwinds, so we had -- you're right, we communicated when we released our full year numbers on headwinds that would be in the neighborhood of EUR 80 million. And the breakdown was the following. We expected minus EUR 30 million on the FX impact on ROPA, minus EUR 30 million on freight, and minus EUR 20 million on raw materials. The impact on ROPA has slightly deteriorated as far as freight is concerned. We think that we will be now closer to minus EUR 50 million. That would be the same number, minus 50 million for components and raw materials. And we expect now minus EUR 40 million as far as the FX is concerned.

[Operator]

The next question comes from the line of Charles Scotti from Kepler.

[Charles-Louis Scotti]

I've got 3. The first one, in Europe and America, the organic sales growth was very strong. They are replacement markets. Do you think this strong growth reflects the fact that customers are anticipating the replacement of their product? Or do you think the equipment rate is actually increasing?Second question on online, which has apparently been very dynamic. Can you tell us what was the share of online sales in Q1 at the Group level and what do you expect for the full year? And finally, on the Professional business, if I'm not mistaken, it was barely breakeven at the EBIT adjusted level in 2020 according to your annual report. Should we expect a rebound of earnings in 2021? And if yes, what will drive this?

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Okay. Thank you. So to your first question, where do we stand -- how do we explain the strong performance of in Europe and America, I think it's difficult to answer. Maybe there's a bit of anticipation of renewal. But when we are looking into more detailed studies, trying to understand what is the level of the equipment rate in our products, it ends up to be quite low. We are working on the categories for which the equipment rate is still very limited. If we think of the full auto machines, for instance, it's around maybe 3% of home -- households having a full automated machine that may be 15% on other categories of products.So I think that maybe there has been a bit of anticipation that what we think is that the fundamentals of the markets are very strong. We still have a lot of room to grow our business, because the level of equipment overall is quite low.Regarding the online share in the first quarter, so I'm sorry, we do not have this number on the share for the first quarter. We ended up the year at 35%, if I may recall, and we think that the first quarter should be close or maybe slightly above this. But we will monitor this carefully, and that will depend, obviously, on the pace of traditional retail reopening.And then your last question was about the professional segment, whether we want to improve the performance there. Well, obviously, that's the target. We said that we were expecting the recovery to start in the second half. So that means that, obviously, because it is just a very, very profitable business that the performance will be better of what we expect -- will be better, sorry, in 2021 when compared to 2020 just because of the volume effect, the impact of the absorption in the plants that will drive the profitability up. Did I answer your question?

[Charles-Louis Scotti]

Yes, yes. Maybe one follow-up on the Professional. According to your Universal Registration Document, the business generated only EUR 2 million of EBIT adjusted. I know that the EBIT breakdown by geographies or businesses is not relevant. But is this figure relevant EUR 2 million for professional?

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

I think that it's difficult to read the performance of segments in the registration document, as it is not taking into account some of the transfer prices assumption we make between the companies or the subsidiaries that are producing versus the ones that are selling. So I would not count on this number already like it is.

[Operator]

[Operator Instructions] And our next question comes from the line of Alessandro Cecchini from Equita.

[Alessandro Cecchini, Analyst]

The first one is about China.

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Alessandro, yes, we cannot hear you.

[Alessandro Cecchini, Analyst]

Are you hearing me? Hello?

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

No. We -- maybe you want to speak closer to the mic, yes.

[Alessandro Cecchini, Analyst]

Hello. Now?

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Yes, better.

[Alessandro Cecchini, Analyst]

Okay. Okay. Okay. Sorry. My first question is still about China. I would like to better understand, because actually making a calculation of different regions, it seems to me that probably it's the only country that is below the 2019 levels. Is it just a question of tough comparison and the price/mix? Or -- so just to better understand, because other regions are above 2019 levels. So my first question is this.My second question is instead about your guidance. So if my calculations are correct, you are expecting, roughly speaking, flat to slightly up organic growth in terms of sales, while in term of ORfA you are expecting a double-digit decline second half versus the second half of last year? So this kind of double-digit down is explained. First of all, it's correct calculation? And secondly, it's driven by this kind of freight rate, raw materials, so these kind of headwinds? Or there are other, I mean, probably increasing spending in advertising or other drivers?

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

So I'm going to start with your second question. I'm not in your model, but I'm not sure I would have ended up with the same conclusion than you. So -- well, I'm not sure I share the vision that the ROPA is decreasing in the second half, but maybe they can be -- I'm, okay.Then back to China, back to China. So you're right. The level of sales is below the one that we had in 2019. But again, I think that the distribution has changed so much during those 2 years in China, and we were a mandatory selling through traditional distribution in 2019. And then it was -- it has changed and shifted very quickly to online.And as I said, previously, it's really a change in the product mix and also has an impact on the prices rather than anything. So no issue regarding the volume we are delivering on this market. It's still a very dynamic market. No issue again on our market share. We're still there. I think that we may have even slightly grown back, as now we are back in business in the cookware segment. So it's really a matter of the category of products we are selling.Now we are working obviously to improve the product and, as a consequence, the pricing mix with the better or improved functionalities on the product that we are selling online. We are investing a lot on innovation, as usual, to improve the situation and trade up on what we're selling online to improve the situation. But again, we see the change. We see the evolution in distribution, but we are also in a position to maintain the level of margin that we do there. And this is what we consider being the most important.

[Alessandro Cecchini, Analyst]

Okay. And just last point on -- I mean about production. You stated that there is some shortage. So just if you can elaborate a little bit more on the current situation of your plans. What is going on and so on about the production?

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Yes. So all the plants are up and running. Having said that, we are not immune to what's happening in the rest of the world. So we see some tension on prices, on raw materials, on the one hand, on components, some components on the other hand. Those tensions are now more reflected in prices than anything. So it's not driving any shortages in terms of production.As far as the components are concerned and especially the electronic components, the fact that the tension would happen on the market is something that we have identified some quarters ago, it was back in the middle of last year. We have a very detailed supply plan. All the orders for 2021 have been placed. We are monitoring this as all the industrials on a very regular basis. And for the time being, we see some tension, but no impact on our level of production.

[Operator]

The next question comes from the line of Lorenzo Margiotta from Bank of America.

[Lorenzo Margiotta, Research Analyst & Associate]

Congratulations on a good quarter. Two from me. So I think in the press release, we spoke about Professional being linked to sort of specific contracts. Should we expect visibility on that in Q2? Or is that more of a second half story when those will actually sort of sign and come through the P&L?And then -- and secondly, I'm sorry, I just want to ask one more on China. Just to clarify, I guess, other than Q1 last year, the rest of the year was ahead of 2019 levels. And then, obviously, this is sort of step-down. For the rest of 2021, are you expecting headwinds from product mix, et cetera, to -- essentially, should the rest of 2021 be below 2019 levels as well? Or can we look at 2020 as a guide. Sort of the 2 are kind of going in opposite directions for me, so I'm struggling a bit to go over that.

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Okay. So I'm going to start with the -- well, your first comment. So thank you for the congratulations. And then moving to the Professional, well, yes, we're mentioning some specific contracts and whether -- and your question is to know whether it will impact Q2 or rather it will be more back-ended. So no, we expect to recognize revenue in the second quarter. And that's why we have commented on a rebound of the Professional segment.And then to your second point, which is we would expect from the Chinese market, where we expect to have nice growth, I would say, of double-digit growth throughout the year, so despite the fact that we have more tough comparison basis starting in the second quarter.

[Operator]

[Operator Instructions] And our next question comes from the line of Marie Fort from Societe Generale.

[Marie-Line Fort]

Sorry, I've got one question more on China. You've partly answered to my questions, but I would like to better understand why we see a mix deterioration in China? Why we should benefit from the rise in living standards? So are Chinese consumers less keen on new products, less keen on innovations, while it was part of your strategy to go upmarket in this country? So if you can elaborate a bit more on this mix deterioration.

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

So -- no, I think the issue in China is the right one. And we see a lot of innovation coming from the Chinese market, and the Chinese consumers love new products. So what has happened on the online is that some kind of new players have entered the market with some products that had, I would say, low features, were not necessarily requiring a strong level of innovation. And this is what has driven the price down. But as I was saying, those, I would say, low features end up with a bit of material that is not -- has price scale when you would sell a more sophisticated product.So it's not an impact on margin. What we think is that the market, and we start to see it, we think that the market will move upwards overall. We are delivering products now with -- where we can start to see the trend of increasing prices. So that will take a bit of time. But we definitely think that innovation will remain a strong driver for the Chinese market, that this is what Chinese consumers are looking for. And this is what will help us increase also the price and the product mix, even on the online sales.

[Marie-Line Fort]

And how long would it take before we could see some kinds of evidence?

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

I wish I knew. What I can tell you is that we are monitoring product category-by-product category. We have started to think of how we were marketing our products online in the course of last year, where we've seen that the online trend was booming and overpassing what we were selling in traditional retail.We start to see the very first positive sign of the strategy that we are implementing there. And it's very difficult for me to tell you how long it will take. I think that the upsell or the up-trading is a situation that the group has already managed in the past in Europe successfully. So we are going to apply the same kind of strategy, the same kind of policy and also pricing discipline to make sure that we keep on growing sustainably in China.

[Operator]

[Operator Instructions] Okay. We have no further questions coming through. So I will now hand back to Nathalie Lomon for any closing remarks.

[Nathalie Lomon, Senior Executive VP of Finance & CFO]

Okay. So thank you for your questions and your attention during this call today. If I were to conclude on top of the performance of this quarter, maybe -- and to mirror on the question that you raised, amongst the pillars of the growth strategy, I want to highlight 2 of them. The first one is innovation. Second one is international exposure. I want to tell you that we will keep on innovating, and we are very happy to see all of our geographies growing during this quarter.And if I may say one last thing, we think that 2021 will be a good year for Groupe SEB. So thank you, everybody.

[Isabelle Posth]

Thank you. Bye-bye.

[Operator]

Thank you, everyone, for joining today's conference. You may now disconnect.