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CORPORATE BODIES*

Board of Directors

GIUSEPPE DE' LONGHI	Chairman
FABIO DE' LONGHI	Vice Chairman and Chief Executive Officer
MASSIMILIANO BENEDETTI**	Director
FERRUCCIO BORSANI**	Director
LUISA MARIA VIRGINIA COLLINA**	Director
SILVIA DE' LONGHI	Director
CARLO GARAVAGLIA	Director
CARLO GROSSI **	Director
MICAELA LE DIVELEC LEMMI **	Director
MARIA CRISTINA PAGNI	Director
STEFANIA PETRUCCIOLI	Director

Board of Statutory Auditors

CESARE CONTI	Chairman
ALESSANDRA DALMONTE	Standing member
ALBERTO VILLANI	Standing member
RAFFAELLA ANNAMARIA PAGANI	Alternate auditor
ALBERTA GERVASIO	Alternate auditor

External Auditors

PRICEWATERHOUSECOOPERS S.P.A. ***

Control, Risks, Corporate Governance and Sustainability Committee

LUISA MARIA VIRGINIA COLLINA**	Chairman
MICAELA LE DIVELEC LEMMI **
STEFANIA PETRUCCIOLI

Remuneration and Appointments Committee

CARLO GROSSI ** Chairman FERRUCCIO BORSANI** CARLO GARAVAGLIA

Independent Committee

MASSIMILIANO BENEDETTI** MICAELA LE DIVELEC LEMMI **

LUISA MARIA VIRGINIA COLLINA** Chairman and Lead Independent Director

* The current corporate bodies were appointed during the Shareholders' Meeting held on 20 April 2022 for the three-year period 2022-2024. Following the resignation of director Massimo Garavaglia, the Annual General Meeting, on 21 April 2023, resolved, on the basis of the only proposed resolution submitted by the majority shareholder De Longhi Industrial S.A. to reduce the number of members of the Board of Directors from twelve to eleven for the remainder of the Board's current term and, therefore, until the Annual General Meeting convened to approve the financial statements for the year ending 31 December 2024.

** Independent directors.

*** Assigned by the shareholders' meeting of 24 April 2018 for the financial years 2019-2027.

Interim financial report at 31 March 2023

Introduction and definitions

This report contains the unaudited consolidated results at 31 March 2023.

The financial results as of 31 March 2023 are published in accordance to the decision of the Board of Directors that determined to continue to approve and publish the interim reports within the terms and in the manner usually adopted by the Company, on a voluntary basis and in addition to the annual and half-year financial reports as per article 154-ter, paragraph 1 and 2 of Legislative Decree n. 58/1998 ("TUF").

The adopted communication policy, until a different determination by the Board of Directors, stipulates that the content of the interim reports shall be the same published in the past and it refers, in particular, to financial year 2022. The Group's business is traditionally seasonal, with first-quarter revenues and profit proportionately lower than those of the year as a whole.

This report contains forward - looking statements, specifically in the "Outlook" section which, by nature, have a component of risk and uncertainty as they depend on future events and developments. At the date of this report, there is a high level of uncertainty which calls for caution when making economic forecasts as the economic prospects continue to change. The actual results could, therefore, differ from the forecasted ones.

The figures at constant exchange rates are calculated excluding the effects of converting currency balances and the accounting of derivative transactions.

KEY PERFORMANCE INDICATORS

Results

(€/million)	31.03.2023	%	31.03.2022	%	Change	Change
Revenues	602.4	100.0%	735.5	100.0%	(133.1)	(18.1%)
Revenues at constant exchange
rates	597.1	100.0%	734.8	100.0%	(137.7)	(18.7%)
Net industrial margin	304.4	50.5%	375.6	51.1%	(71.2)	(19.0%)
EBITDA before non-recurring income
(expenses)/stock option costs	74.3	12.3%	100.1	13.6%	(25.7)	(25.7%)
EBITDA	75.5	12.5%	93.5	12.7%	(17.9)	(19.2%)
EBIT	50.1	8.3%	69.1	9.4%	(19.0)	(27.5%)
Profit (loss) pertaining to the Group	38.7	6.4%	50.6	6.9%	(11.9)	(23.5%)

Statement of financial position

(€/million)	31.03.2023	31.03.2022	31.12.2022
Net working capital	159.9	162.3	142.9
Net operating working capital	256.6	334.7	288.8
Net operating working capital/Revenues	8.5%	10.2%	9.1%
Net capital employed	1,365.4	1,357.7	1,364.6
Net financial assets	317.2	274.6	298.8
of which:
- net bank financial position	399.2	356.7	389.5
- other financial receivables/(payables)	(82.0)	(82.1)	(90.7)
Net equity	1,682.7	1,632.3	1,663.4

Performance review

The first three months of 2023 were part of a context which was not unlike the second part of 2022 and were impacted by the macroeconomic factors that influenced the year that just closed. The inflationary pressures, the performance of the financial markets and the volatile demand, already commented on in the Annual Report, continued to influence the economy and affected the first months of 2023.

What was still a weak market was, furthermore, combined with a sell-in impacted by the de-stocking actions taken by distributors which involved both food preparation and coffee machines.

Lastly, the first quarter of 2023 was also impacted by the strategic decision to exit the portable air conditioning market in the United States.

The Group posted revenues of €602.4 million in the first three months of 2023, a decrease of 18.1% against the same period of 2022 during which the growth rate was quite high (+8.4% against the same period of 2021).

Net the discontinued portable air conditioning business, revenues were 15.4% lower.

The performance reflects lower volumes which were only partially offset by the pricing actions taken at the end of 2022, the improved mix and a positive exchange effect.

The weakness affected all the geographies in which the Group operates, albeit to different degrees and with a few exceptions in the individual markets.

In Europe sales, down by 17.9%, reflected the dynamics already seen in 2022 and the market weakness caused by the de-stocking actions taken by distributors.

America closed the quarter with revenues down 27.8% compared to the same period of 2022 due to both the weakness of coffee products and the discontinued portable air conditioning business (net of which the decrease would have been less, at 12.5%).

Revenues in MEIA fell 25.4% due, above all, to high levels of trade inventory in a few key markets and Egypt's ban on imports.

Asia Pacific closed the quarter with sales largely in line 2022 thanks to the positive contribution of the Chinese market, despite the shutdown of the market in early 2023 linked to pandemic restrictions, which offset the weakness seen in Australia and Japan.

Looking at business lines, all product categories reported lower revenues in the first three months with the exception of professional coffee machines which, similar to the performance seen in 2022, reported sustained growth.

Comfort was impacted by the strategic decision relative to portable air conditioners.

Lower sales volumes reduced operating leverage which impacted margins; in addition, the cost of goods sold in the reporting period was still impacted by the high costs implicit in the 2022 inventory valuations. The actions to control operating costs, also linked to inventory reduction, made it possible to contain the decrease in EBITDA.

In the first three months of 2023 the Group continued to invest in advertising and promotions to support the main brands and products. The new products include the launch, in the first quarter, of the unique, new True Brew machine which is an innovative bean to cup, drip coffee machine, dedicated to the American market, which called for sizeable investments in advertising that will benefit coming quarters, above all.

EBITDA before non-recurring income (expenses)/stock option costs came to €74.3 million (12.3% of revenues) in the first quarter of 2023, lower than the €100.1 million (13.6% of revenues) recorded in the same period of 2022.

The Group's portion of net profit came to €38.7 million or 6.4% of revenues (€50.6 million, 6.9% of revenues, in the first quarter of 2022).

Looking at the balance sheet, operating working capital was lower both numerically (€256.6 million, versus €334.7 million at 31 March 2022 and €288.8 million at 31 December 2022) and as a percentage of rolling revenues (8.5% versus 10.2% at 31 March 2022 and 9.1% at 31 December 2022).

This result was achieved thanks to the steps taken to manage inventory and receivables. With regard to inventory, stock was higher at 31 March 2023 than at year-end 2022 in preparation for the seasonality effect of the coming months; however, it was much lower than in the first quarter of 2022. The level of trade receivables was down, consistent with the trend seen already at the end of December 2022.

The net financial position with banks came to €399.2 million at 31 March 2023 (€356.7 million at 31 March 2022 and €389.5 million at 31 December 2022) thanks to the operating cash flow generated and containment of working capital in both the three and twelve month periods.

Group results

The reclassified De' Longhi Group consolidated income statement is summarized as follows:

(€/million)	31.03.2023	% revenues	31.03.2022	% revenues
Revenues	602.4	100.0%	735.5	100.0%
Change	(133.1)	(18.1%)
Materials consumed & other production costs (production services and payroll costs)	(298.0)	(49.5%)	(359.9)	(48.9%)
Net industrial margin	304.4	50.5%	375.6	51.1%
Services and other operating expenses Payroll (non-production)	(166.1) (63.9)	(27.6%) (10.6%)	(210.7) (64.8)	(28.6%) (8.8%)
EBITDA before non-recurring income (expenses)/stock option costs	74.3	12.3%	100.1	13.6%
Change	(25.7)	(25.7%)
Non-recurring income (expenses)/stock option costs	1.2	0.2%	(6.6)	(0.9%)
EBITDA	75.5	12.5%	93.5	12.7%
Amortization	(25.4)	(4.2%)	(24.4)	(3.3%)
EBIT	50.1	8.3%	69.1	9.4%
Change	(19.0)	(27.5%)
Net financial income (expenses)	(0.6)	(0.1%)	(2.6)	(0.4%)
Profit (loss) before taxes	49.5	8.2%	66.5	9.0%
Taxes	(10.8)	(1.8%)	(15.7)	(2.1%)
Net result	38.8	6.4%	50.8	6.9%
Minority interests	-	0.0%	0.2	0.0%
Profit (loss) pertaining to the Group	38.7	6.4%	50.6	6.9%

Revenues

Consolidated revenues fell 18.1% in comparison with the prior year (when 8.4% growth against 2021 was recorded) to €602.4 million in the first quarter of 2023 which reflects the complicated conditions of the current macroeconomic situation.

Sales were impacted by the uncertainty stemming from the economic and geopolitical environment, inflation, as well as the changes in the financial markets which contributed to highly volatile demand.

The market was weak and the sell-in was also impacted by the de-stocking actions taken by distributors which involved both food preparation and coffee machines.

Furthermore, the first quarter of 2023 was also impacted by the strategic decision to exit the portable air conditioning market in the United States; net of this item, the reduction was lower of 3 basis points (to 15.4%).

The impacts due to lower volumes were only partially offset by the pricing actions taken at the end of 2022, by the improved mix and positive exchange effect.

Looking at distribution channels, there was a slowdown higher in online than off-line sales.

Markets and business lines

The performance of the commercial areas in which the Group operates (Europe, Americas, Asia Pacific and MEIA) is summarized below.

(€/million)	1st Quarter 2023	%	1st Quarter 2022	%	Change	Change %	Change at constant FX rates %
Europe	373.2	62.0%	454.5	61.8%	(81.3)	(17.9%)	(18.3%)
Americas	96.0	15.9%	132.9	18.1%	(36.9)	(27.8%)	(30.6%)
Asia Pacific	89.0	14.8%	88.8	12.1%	0.2	0.3%	3.2%
MEIA (Middle East/India/Africa)	44.3	7.3%	59.4	8.0%	(15.1)	(25.4%)	(28.2%)
Total revenues	602.4	100.0%	735.5	100.0%	(133.1)	(18.1%)	(18.7%)

Europe reported revenues of €373.2 million, 17.9% lower (-18.3% at constant exchange rates) compared to the first quarter of 2022. The main markets, particularly Germany, Italy, France and the UK, were impacted by the weak demand attributable to the negative sentiment caused by the geopolitical environment, high inflation and the volatile financial markets. Distributors also carried out further destocking. These factors contributed to a drop in sales across all business lines, particularly the domestic coffee machine segment and food preparation products (above all, kitchen machines).

Americas closed the quarter with revenues of €96.0 million, 27.8% (-30.6% at the same exchange rate) lower than in the same period of 2022.

The United States was impacted significantly by the discontinued business described above; net of this item, the decrease falls to 12,5%, and reflects the weakness in the coffee segment, particularly the Nespresso platform and the manual models, despite the positive feedback received after the launch of the new True Brew machine, an innovative bean to cup, drip coffee machine.

In the first quarter of 2023 Asia Pacific reported revenues of 89.0 million, largely in line with the same period of 2022 (+0.3%) due also to the negative exchange rate, net of which the sales would have been up 3.2%.

China and Hong Kong, up despite the pandemic containment measures which caused the markets to close at the beginning of 2023, benefitted from the sizeable investments made in communication and promotion and posted double-digit growth which made it possible to offset the weak sales reported in Australia/New Zealand and Japan. In the latter country, turnover was down, despite the good performance of coffee machines, particularly fully automatic machines, due to lower sales for kitchen machines, mainly handblenders, and comfort, as well as the negative exchange effect.

MEIA reported revenues of €44.3 million, down 25.4% compared to the first quarter of 2022 due, above all, to the high levels of trade inventory in a few key markets and Egypt's ban on imports.

Looking at business lines, in the first quarter of 2023 revenues were down across all product segments, with the exception of professional coffee machines which, similar to the performance seen in 2022, reported sustained growth.

Comfort was impacted by the discontinued portable air conditioning business referred to above.

Sales for Nutribullet/MagicBullet brand products were in line with the first quarter of 2022, sustained also by a positive exchange effect.

Profitability

In the first quarter of 2023 the drop in sales volumes reduced operating leverage; the cost of goods sold was also still impacted by the high costs implicit in the 2022 inventory valuations.

The actions to control operating costs, including inventory control, made it possible to contain the decrease in EBITDA.

In the first three months of 2023 the Group continued to invest in advertising and promotions to support the main brands and products. First and foremost, the launch of the unique, new True Brew machine which is an innovative bean to cup, drip coffee machine, destined for the American market. It called for sizeable investments in advertising which will benefit coming quarters, above all.

The net industrial margin came to €304.4 million, or 50.5% of revenues (€375.6 million, or 51.1% of revenues in the first quarter of 2022).

In the first quarter of 2023 a few non-recurring items, including net income of €1.2 million (net charges of €6.6 million in the same period of 2022), were recognized. This item includes gains on the revised valuation of assets in Ukraine as activity resumed partially in a few areas of the country which resulted in the collection of almost all of the receivables and in a partial sale of the stock, as well as the economic impact of the purchase price allocation stemming from recent acquisitions.

The Group also recognized €0.2 million in notional stock option costs, which represents the notional costs recognized in the reporting period (€0.9 million in the first quarter of 2022).

Amortization and depreciation amounted €25.4 million, slightly higher than the figure recorded in first quarter 2022 (€24.4 million) due to the recent investments in fixed assets.

In the first quarter of 2023 EBIT amounted to €50.1 million, or 8.3% of revenues (€69.1 million in the same period of 2022).

Financial expenses came to €0.6 million, a sizeable decrease compared to the first quarter of 2022 (€2.6 million), thanks to careful investing of liquidity and effective currency management.

After taxes of €10.8 million (€15.7 million in the first quarter of 2022) and minority interests, the Group's portion of net profit came to €38.7 million.

Review of the statement of financial position

The reclassified consolidated statement of financial position is presented below:

(€/million)	31.03.2023	31.03.2022	31.12.2022
- Intangible assets	880.3	875.7	891.2
- Property, plant and equipment	440.2	423.6	448.1
- Financial assets	11.6	12.3	11.7
- Deferred tax assets	64.6	74.7	64.6
Non-current assets	1,396.7	1,386.4	1,415.6
- Inventories	615.3	912.4	550.7
- Trade receivables	171.8	280.2	278.8
- Trade payables	(530.6)	(857.9)	(540.7)
- Other payables (net of receivables)	(96.6)	(172.3)	(145.8)
Net working capital	159.9	162.3	142.9
Total non-current liabilities and provisions	(191.2)	(191.0)	(194.0)
Net capital employed	1,365.4	1,357.7	1,364.6
(Net financial assets)	(317.2)	(274.6)	(298.8)
Total net equity	1,682.7	1,632.3	1,663.4
Total net debt and equity	1,365.4	1,357.7	1,364.6

In the first three months of 2023, the Group made net investments of €19.2 million (in 2022, after the purchase of the new plant in Romania for €21 million, these amounted to €56.8 million in the first three months of the year and €156.2 million in the twelve-months period), €13.5 million of which in fixed assets stemming mainly from improvements made to expand the capacity of the production facilities.

Net operating working capital amounted to €256.6 million (€334.7 million at 31 March 2022 and €288.8 million at 31 December 2022), or 8.5% of rolling revenues (10.2% at 31 March 2022 and 9.1% at 31 December 2022), which reflects the containment of the stock, which increased in preparation for the seasonality effect of the coming months, as well as the reduction of receivables consistent with credit management policies and the balance of trade payables impacted by the timing of procurement and the supplying of services.

Net working capital came to €159.9 million at 31 March 2023 (€162.3 million at 31 March 2022; €142.9 million at 31 December 2022).

Details of the net financial position are shown below:

(€/million)	31.03.2023	31.03.2022	31.12.2022
Cash and cash equivalents	847.5	893.8	770.2
Other financial receivables	286.2	301.3	368.4
Current financial debt	(181.7)	(324.6)	(190.5)
Net current financial position	952.0	870.4	948.1
Non-current financial receivables and assets	124.2	71.8	124.6
Non-current financial debt	(759.0)	(667.6)	(774.0)
Non-current net financial debt	(634.8)	(595.8)	(649.3)
Total net financial position	317.2	274.6	298.8
of which:
- positions with banks and other financial payables	399.2	356.7	389.5
- lease liabilities	(75.4)	(75.0)	(80.5)
- other financial non-bank assets/liabilities (fair value of derivatives, financial debt connected to business combinations and pension fund)	(6.5)	(7.2)	(10.2)

The net financial position came to a positive €317.2 million at 31 March 2023 (€274.6 million at 31 March 2022; €298.8 million at 31 December 2022).

Net of a few, specific financial items, comprising mainly the fair value measurement of derivatives, the residual debt for business combinations, the net financial position with banks came to a positive €399.2 million (positive €356.7 million at 31 March 2022; €389.5 million at 31 December 2022) and showed improvement of €9.7 million in the three months (€42.5 milion for the full twelve months).

	31.03.2023	31.03.2022	31.12.2022
(€/million)	3 months	3 months	12 months
Cash flow by current operations	72.5	99.3	340.0
Cash flow by changes in working capital	(31.1)	(203.1)	(188.0)
Cash flow by current operations and changes in NWC	41.4	(103.8)	151.9
Cash flow by investment activities	(19.2)	(56.8)	(156.2)
Cash flow by operating activities	22.2	(160.6)	(4.3)
Dividends paid	-	-	(124.5)
Stock options exercise	-	-	3.4
Cash flow by other changes in net equity	(3.8)	10.1	(0.9)
Cash flow generated (absorbed) by changes in net equity	(3.8)	10.1	(122.0)
Cash flow for the period	18.5	(150.5)	(126.3)
Opening net financial position	298.8	425.1	425.1
Closing net financial position	317.2	274.6	298.8

The statement of cash flows is presented on a condensed basis as follows:

The good generation of operating cash flow and the containment of working capital resulted in positive cash flow in the three month period of €41.4 million (in 2022 it resulted in net absorption of €103.8 million in the first three months).

Total cash flow for the period was positive for €18.5 million in the first quarter 2023, negative for €150.5 million in the three months period of 2022 (which included higher investments).

The statement of comprehensive income and the main changes in net equity with reference to the consolidated figures in the first quarter are shown below:

(€/million)	1st Quarter 2023	1st Quarter 2022
Net result	38.8	50.8
Other components of the comprehensive income:	(19.3)	10.0
Comprehensive income	19.5	60.8
Attributable to:
- Group	19.4	60.7
- Minority interest	0.1	0.1

(€/million)	Group portion of net equity	Minority interests	Total net equity
Balance at 31 December 2021	1,568.6	2.0	1,570.6
Fair value stock option	0.9	-	0.9
Comprehensive income	60.7	0.1	60.8
Balance at 31 March 2022	1,630.1	2.2	1,632.3

(€/million)	Group portion of net equity	Minority interests	Total net equity
Balance at 31 December 2022	1,659.1	4.3	1,663.4
Fair value stock option	(0.2)	-	(0.2)
Comprehensive income	19.4	0.1	19.5
Balance at 31 March 2023	1,678.3	4.3	1,682.7

Alternative performance indicators

In addition to the information required by IFRS, this document presents other financial measures which provide further analysis of the Group's performance. These indicators must not be treated as alternatives to those required by IFRS.

More in detail, the non-GAAP measures used include:

Net industrial margin and EBITDA: the Group uses these measures as financial targets in internal presentations (business plans) and in external presentations (to analysts and investors), since they are a useful way of measuring operating performance by the Group and its individual divisions besides EBIT.

Net industrial margin is calculated as total revenues minus the cost of materials consumed and of production-related services and payroll.

EBITDA is an intermediate measure that derives from EBIT after adding back depreciation, amortization and impairment of property, plant and equipment and intangible assets. EBITDA is also presented net of non-recurring items, which are reported separately on the face of the income statement.

Net working capital: this measure is the sum of inventories, trade receivables, current tax assets and other receivables, minus trade payables, tax liabilities and other payables.
Net operating working capital: this measure is the sum of inventories and trade receivables, minus trade payables.
Net capital employed: this measure is the sum of net working capital, intangible assets, property, plant and equipment, equity investments, other non-current receivables, and deferred tax assets, minus deferred tax liabilities, employee severance indemnity and provisions for contingencies and other charges.
Net financial position: this measure represents financial liabilities less cash and cash equivalents and other financial receivables; the position with banks, net of non-banking items, is also reported. The individual line items in the statement of financial position used to determine this measure are analysed later in this report.

The figures contained in this report, including some of the percentages, have been rounded relative to their full euro amount. As a result, some of the totals in the tables may differ from the sum of the individual amounts presented.

Other information

Pursuant to Art. 3 of Consob Resolution n. 18079 of 20 January 2012, the Board of Directors resolved to exercise the opt-out clause provided under Art. 70, paragraph 8 and Art. 71, paragraph 1-bis of Consob Regulation n. 11971/99 which grants the option to waive the mandatory publication of informational documents relating to significant mergers, spin-offs, capital increases through in-kind transfers, acquisitions and disposals.

Treasury shares

On 21 April 2023, the Annual General Meeting resolved to renew – by revoking the previous resolution adopted on 20 April 2022 – the authorisation for the purchase and disposal of treasury shares up to a maximum of 14.5 million ordinary shares and, therefore, not exceeding one fifth of the share capital, also taking into account any shares held by the parent company De' Longhi S.p.A. and by its subsidiaries. The authorisation was approved, in accordance with current provisions of law, for a maximum of 18 months (and, therefore, until 21 October 2024).

At 31 March 2023 the Group, through the parent company De' Longhi S.p.A., held 895,350 treasury shares for a total of €14,534 thousand, purchased in previous years.

Subsequent events

There have been no significant events since the end of the quarter.

Outlook

Looking at the start of 2023, despite results impacted by an unfavorable macroeconomic context, with prudent behavior by consumers and distributors, the management is satisfied with how the Group has been able to react to the many challenges and difficulties. To date, the Group can count on revenues and margins that remain well above pre-pandemic levels, thanks to organic growth, investments and acquisitions finalized in recent years: revenues for the quarter are now 60% above those of 2019 (€ 376 million in Q1-2019) and Ebitda before non recurring items/stock option costs doubled compared to € 37 million in 2019.

It's worth to underline how the satisfactory trend in margins in the first quarter, compared to 2022, was made possible by all measures of cost efficiency and containment put in place in recent months and despite all the communication and marketing activities carried on, following the success of the global coffee campaign.

Looking at the following quarters, it is reasonable to assume that the comparison with the past year will gradually become less challenging, thus keeping the growth rate at sustained levels compared to the prepandemic years.

In this context, therefore, the Group confirm the guidance for the full year of revenues slightly declining vs. 2022 and a solid Ebitda before non recurring items/stock option costs.

Treviso, 11 May 2023

For the Board of Directors Vice President and Chief Executive Officer

Fabio de'Longhi

*****

Declaration by the Officer Responsible for Preparing the Company's Financial Report

Pursuant to art. 154-bis para. 2 of TUF, Stefano Biella, Officer Responsible for Preparing the Company's Financial Report, declares that the accounting information contained in the present interim financial report corresponds to the underlying documentary and accounting records.