Good afternoon to everyone and welcome to EL.En.'s Half Year 2025 Financial Results Conference Call. Today's call will be recorded and there will be an opportunity for questions at the end of the call. With me on the call are Andrea Cangioli, EL.En.'s CEO; and Enrico Romagnoli, EL.En.'s Chief Financial Officer and Investor Relations Manager. Before we begin, please note that there are management remarks during the conference call regarding future expectations, plans, prospects and forward-looking statements. Certain statements in this call, including those addressing the company's beliefs, plans, objectives, estimates or expectations of possible future results or events are forward-looking statements. Forward-looking statements involve known or unknown risks, including general economic and business conditions in the industry in which we operate. These statements will be affected if our assumptions turn out to be inaccurate. Consequently, no forward-looking statement can be guaranteed and actual future results, performance or achievements may vary materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update the contents or the forward-looking statements to reflect events or circumstances that may arise after the date hereof. [Operator Instructions] But at this time, I want to give the floor to Andrea Cangioli. Please go ahead, Andrea.

Good morning. Thank you, Nicola and thank you, Bianca, for introducing this call. And thank you, everybody, who's attending, for being with us in this call following the release of our financial report as of June 30, 2025. Enrico Romagnoli will be on this call with me and I thank him for taking care of the details of our financial reporting that he will be sharing with you in a very short time. The numbers are out since last night. So you have seen that our performance in the 6 months was good in revenue generation. Revenues exceeded on a consolidated basis to EUR 285 million, up more than 5% compared to the same period in 2024, meeting our guidance and confirming the positive trend of the first quarter. The goal of overcoming 2024's result wasn't met at EBIT level. EBIT result was, in fact, quite strong, reaching EUR 34.6 million, meaning 12.1% EBIT margin but was lower than the EUR 37.2 million of the corresponding semester in 2024. While by slightly exceeding the initial expectation given the overall condition of the economic environment, the medical sector delivered an excellent performance. Revenue growth in the industrial sector was weaker than expected and its lower contribution to consolidated EBIT constitutes in full the delay of 2024-'25 consolidated EBIT versus last year. When I mention the overall economic conditions, I am referring to an overall climate of uncertainty in international relations stemming primarily from the failure of international diplomacy to bring to an end the wars in Ukraine and Palestine and from the trade war initiated by the U.S. administration that is reshaping the trade relation and also the political relation between the most powerful countries in the world, including Europe. While the wars are now in place from so long that notwithstanding the risk of further escalation, the markets are acting like they are accustomed to this status. The trade war for the time being is impacting on our business, making it more expensive to sell our products in the U.S., making it less profitable due to a weaker U.S. dollar and also inhibiting the reduction of interest rates in the U.S. due to the expected tariff-driven inflation. We disclosed before how interest rate and expectations about the change of interest rates impact on our capital goods market, where our customers predominantly fund their investments with debt and therefore, are helped in their investment decisions by lower interest rates. Of course, the conditions in our specific markets are affected by this general situation and are confirmed by the business trend of the financial results that are available concerning certain competitors of us. Below the EBIT line, all the entries -- I'm talking again of the consolidated financial results of the EL.En. Group and below the EBIT line, all the entries contributed to widening the gap between the results of 2024 and the result of 2025. Foreign exchange rate differences hit financial income for roughly EUR 3.5 million. The contribution of the Chinese activities on the verge of being divested and sold was a EUR 4 million loss in 2025, worse than the EUR 3.2 million loss contribution booked as of June 2024. And we finally had in 2024, a EUR 5 million extraordinary income booked as a remeasurement of our financial debt no longer due at the time, an entry which, of course, could not be replicated in 2025. So what the very bottom line is showing, a wide gap between the EUR 27.3 million income of 2024 and the EUR 17.9 million income of 2025 is not adequately depicting and reflecting our current performance. But rather than on this gap, which is mainly generated by uncontrollable events or by area of business, which are not part of the group anymore at the Chinese facilities, I want now to concentrate on the remarkable achievements that we met this year. First of all, revenue and EBIT increase in the medical sector. Both were up by more than 5% and this is the envelope results of a set of more specific achievement and successes. With the release of the Magneto urology laser system in late 2024, the leadership of Quanta System in the laser devices for urology application was confirmed and strengthened. Almost 900 urology system, including TFL lasers as well, I mean TFL or the fiber laser source-based systems, those not only including solid-state lasers like the Magneto, were delivered in the first 6 months of 2025, exceeding EUR 35 million in revenues. And as the installed base increases and also the manufacturing capabilities of our plant in Samarate are progressively moving upward, the revenue for the sale of sterile optical fibers, the consumable needed for each and every surgical procedure materially increased, exceeding EUR 20 million in the 6 months with close to 180,000 delivered fibers. As demand in our main aesthetic application segment, hair removal, is experiencing progressive softening throughout the last years, we concentrated our efforts on one side in improving the performance and effectiveness of our laser hair removal systems in order to fight the market slowdown. And on the other side, we concentrated in improving the performance and effectiveness of our systems and technology dedicated to anti-aging procedures and in providing them an adequate marketing support. I'm talking of technologies which improve the appearance of the skin, removing smaller wrinkles which stimulate collagen regeneration, providing shine and elasticity to the skin, which are tightening the skin, providing remedies to laxity, which are removing redness from the face and from the [indiscernible]. I am talking of RedTouch PRO and Onda PRO by DEKA, of Discovery Pico by Quanta and TORO by DEKA and of the CO2 laser product range, including Tetra PRO by DEKA and [indiscernible] laser by Quanta System. As I said -- as said, revenues stemming from these application domains sharply increased in 2025, offsetting the softer demand in other disciplines. Even if the overall performance in the industrial sector wasn't successful nor satisfying, especially due to a soft demand in the manufacturing markets in Italy, we can count several activities that in these 6 months set the foundations for a marked improvement of the ability to compete of our companies. The Chinese business, which was not contributing anymore to the performance of the group, has been sold and is not constituting a burden for management and financial resources anymore. The European subsidiaries network started up by LASIT in the market domain in the last 2 years is stabilizing and becoming an increasingly reliable source of revenue, also contributing to profit at least for the older subsidiaries. A similar pattern is now pursued by Cutlite Penta, which in rapid succession incorporated 3 subsidiaries in Poland, Germany and Spain, which for the moment are obviously weighing on expenses and on EBIT but we count on them being soon accretive in profit generation. Cutlite gained control of [ Nexam ], a small company based here around Florence, specializing in the manufacturing of automation systems that are strictly complementary to Cutlite's high-power laser sheet metal cutting systems. When jointly installed with the laser system, automation system by [ Nexam ] improve the overall performance and productivity of the laser system, providing to Cutlite a means of differentiation on its very competitive market through increased performance of the system and more extensive customization ability. Cutlite is pursuing competitive advantage on one side through the expansion of the offer, integrating it with automation systems and on the other side, through an increased level of service and of proximity to the end user through the organization of local sales and service facilities. Another point I would like to mention, if you look at our financial performance, one of the worst performance in terms of financial results in the 6 months was the industrial division of EL.En., the mother company of the group. But the development work performed both on the mid-power range CO2 laser sources for special manufacturing application and also in the performance of the scanning units based on our proprietary galvanometers are promising to be the grounds for a future rebound in revenues. Under this profile, I'd like to mention that the performance of our 1.5 kilowatt RF excited CO2 laser source are currently reaching such a level of stability that we are working and counting on the release of a 2-kilowatt laser source within a reasonable time span. Such achievement will extend the maximum power of our product range, meeting a threshold that could open up several interesting application markets. Another item I would like to touch on in my remarks is cash generation. The balance of the net financial position decreased by EUR 20 million in the period. I don't see in this contingent trend any particular problem as seasonality of the net working capital balance is always unfavorable for the group in the first 6 months. And as we paid out dividends for EUR 80 million and change and booked investment for EUR 50 million, out of which 6, I would describe as midterm liquidity investments. For sure, the net financial position is one of the historical strengths of the group. It's one of the components of the wealth of the group. The other components are much more intangible and sit in the capabilities of this organization to continually evolve and innovate its high-quality product range, confirming its recognized position among the world's leading players also through several solid commercial relationships built over the years. Thanks to the uniqueness and differentiation of its offering, the group is able to maintain a high customer perception of its value, which can be defined as an excellent market positioning. Despite the macroeconomic uncertainties of recent months, the offerings of our business units remained attractive to customers, thanks to effective product development, marketing support, training and the excellent technical assistance that accompanies aftersales service in all markets. One last thing before I hand the microphone to Enrico, a comment on the U.S. tariffs. The 50% tariff, which our products are called to pay when entering the U.S. constitutes today a cost increase in the chain that delivers our product to our end users in the U.S. The tariff-induced cost increase could either be absorbed in full by our distributors that could accept the minor reduction on margins that the cost increase would represent given the high resale margin that they often apply or could, if reverted to end users, be considered marginal price increase and do not affect demand maintaining the price in a range where demand is, let's say, inelastic to price or such cost reversal to end user could push prices in a range where demand could decrease due to elasticity to price. Those are all the theoretical possibilities. Both in our industrial and medical distribution, a key element for selling in the U.S. has always been the innovative content and quality perception of the product that allow us to sell it at premium prices and margins, which means keeping the market positioning of the product in an area in which the tariff costs do not materially affect margins and volumes for our distributors. And again, this directly ties our chances to effectively sell on the U.S. market to our innovation capabilities. It is difficult today to predict the midterm market adjustments that the new tariffs will cause. As of today, the reaction of our American customer has been positive and demand fluctuation has been limited and more related to specific acceptance of single products than to the extra tariff cost. Under this profile, we have to note that the implicit tariff that the weakening of the U.S. dollar is anyway levying on our sales to the U.S. will be more effective in the second half of 2025 when average foreign exchange rate will be steadily in excess of $1.50 for EUR 1 and the presence of the extra tariff cost on our distributors will make it difficult to neutralize as we have done in other circumstances, the ForEx penalization on our margins. Please, Enrico, go ahead with your comments on the financial report.

Thank you, Andrea and good morning to everybody. As for the year-end, the half yearly report has been prepared in accordance with IFRS accounting standards, excluding the consolidation line by line of Chinese activities, both in 2025 and in 2024 due to the ongoing negotiation for the sale of the division in accordance with IFRS 5. The majority stake of the Chinese companies was sold on July 15. In the first half of 2025, the EL.En. Group recorded consolidated revenues for EUR 285 million, up 5.1% compared to the EUR 271 million on June 2024. The medical sector up over 5%, while the industrial sector up over 3%. Gross margin was EUR 106 million (sic) [ EUR 126 million ], up 5% compared to the EUR 120 million on June 2024, with an impact on revenue of 44%, in line with the last year. It should be noted that in 2024, the group recorded proceeds for insurance and government reimbursement relating to the damages of the flood on November 2023 for an amount of EUR 1.9 million, 0.7% of the revenues. While in 2025, Asclepion accounted EUR 1.3 million as R&D grants, 0.4% on the revenue. Excluding both of these nonrecurring income and the impact on gross margin on sales, the gross margin would have improved by 0.4% in 2025, attributable to the improved sales mix. Operating expenses increased in value and in impact on sales, mainly in G&A, R&D and IT cost and sales and marketing activities. Staff cost increased -- the increase in staff cost is due to an increase in headcounts and in salaries. EBITDA was positive at EUR 42.2 million, down 2.7% compared to the EUR 43.3 million on June 2024. And EBITDA margin in 2025 was equal to 14.8% compared to the 16% of 2024. Depreciation, amortization and provision amounted to EUR 7 million (sic) [ EUR 7.5 million ] in 2025 compared to the EUR 6.1 million in 2024. The main reason of the increase was the reversal of the provision for risk and charges in 2024 for EUR 1.6 million due to some legal disputes that were resolved more favorably than expected. Net of this amount, the overall cost aggregate is in line with the previous year. EBIT for the 6 months was EUR 34.7 million, down 7% from the EUR 37.3 million in 2024. The margin on revenue was 12.1%, down compared to the 13.7% of last year. As already mentioned by Andrea, financial management recorded a loss of EUR 2.6 million. In details, the first 6 months, the interest income generated by liquidity was EUR 1.7 million, while the interest expenses on debt was EUR 0.9 million. Exchange rate differences had a strongly negative balance equal to EUR 2.5 million. But in addition, there is a onetime exchange rate loss recorded in Q1 for around EUR 1 million, following the release of the currency conversion reserve resulting from the sale of the majority in -- with us. In other income, last year was accounted the onetime income of EUR 5 million due to the remeasurement of the liabilities related to the earn-out to pay to former minority Chinese shareholders in case of IPO of Penta Laser Zhejiang. Income before taxes showed a positive balance of EUR 31.7 million, lower than the EUR 42.3 million on June 2024. In discontinued operation is summarized the net contribution to consolidated result of Chinese activities under disposal. The negative impact was EUR 4 million compared to EUR 3 million of last year. The main reason of the negative impact in 2025 is due to the devaluation of KBF equity investment in the first 6 months of 2025. The effective tax rate in 2025 increased to 32% from 27% of last year. And the main reason for this increase is due to the nontaxability of the EUR 5 million accounted in other income last year. Moving on the analysis of the balance sheet amounts, we can see an increase in total noncurrent assets and net working capital, while the net financial position decreased. The value of ratio net working capital on sales is close with the value of last year. In detail, cash flow for the period showed a reduction of approximately EUR 20.6 million in the group net financial position from EUR 110.6 million at the end of 2024 to EUR 90 million at the end of June 2025. This reduction was also due to dividends paid by the group, EUR 18.6 million, capital expenditure for EUR 10 million in fixed assets, EUR 6 million in mid-, long-term liquidity investment, EUR 2 million has been invested in own shares. And the seasonality [ expensive ] trend of the net working capital components resulted in a cash absorption of approximately EUR 20 million in the 6 months. Regarding sales analysis, in the medical sector, system sales showed strong growth in all major segments. In the aesthetics segment, plus 3%, the very favorable trend for anti-aging application continued. Among surgical application, plus 14%, urology system continued to record significant growth in sales as performance in physiotherapy, plus 7% was also very satisfactory, thanks to the significant incremental innovation in the range of products offered, a more widespread and effective coverage of international markets, together with relaunch of sales in Italy. Sales of consumable and aftersales services remained very satisfactory, driven by the sales of optical fiber for surgical application, which kept service revenue growth to 6% despite the low of service contract revenue from Japanese companies with us whose majority stake was sold in February 2025. In the industrial sector, the cutting segment, which no longer includes Chinese companies, maintained growth of over 6%, thanks to the excellent sales result of the Brazilian subsidiaries, plus EUR 6 million of revenue in the first 6 months and the inorganic contribution of [ Nexam ], EUR 1 million, a company dedicated to the manufacture of automation system for Cutlite Penta laser system, a majority stake of which was acquired in early 2025. LASIT also performed well in the market segment with the increased weight of its subsidiaries, while performance was more -- while performance was more challenging for all of us and the industrial area of EL.En., highlighted by the reduction in revenue from sources for industrial application, after sales service revenue remained stable. For what concerns the breakdown by area, revenue growth in Italy was entirely driven by the medical sector, while in the industrial sector, despite strong order intake, which bodes well for the rest of the year, overall revenue failed to match the already poor results seen in the first half of 2024. In European markets, growth benefited industrial company, which are gradually building the direct distribution network. LASIT has branches, some of which are almost fully operational in Poland, U.K., Germany, Spain and France from 2025. Also Cutlite has just launched branches in Spain, Germany and Poland. In the European market, the sales in medical sector increase of 13%. Revenue in the rest of the world declined slightly in both sector, penalizing the industrial sector by lower demand from American markets and in the medical sector by the challenging performance of the Middle Eastern market. Andrea, please go ahead on 2025 guidance. And you'll hear from Andrea.

Here I am. Excuse me, I was talking with the microphone off. So I will close this section of prepared remarks with a few comments on the guidance. I would like to add just a small shade of color to the very clear statements we made in the press release, the goal of beating 2024's EBIT is harder to meet given the delay that we have after 6 months and considering certain unfavorable circumstances I described earlier in the call. But we can rely on the relevant backlog of orders and as usual, on our capabilities. Therefore, within the frame I outlined during my comments, we confirm the annual revenue growth target compared to 2024. And in the absence of external factors that could hinder further order intake in the coming months, which is needed in order to reach the yearly targets, in the 2025 financial year, EL.En. aims to improve its EBIT as well. With this, we are done with the prepared part of this presentation and ready for your questions.

Okay. We now open the Q&A session and we have 2 analysts in our list. I give the floor to Giovanni Selvetti from Berenberg.

The first one is on the medical division, which is growing nicely. If I look just at the sequential trends in the Q2, I can see a sharp increase in the surgical applications but a reduction year-over-year in aesthetics. And I was wondering what's driving that. And also, if I look at your comment on the press release of Asclepion, it seems like that this is the only company within the group that is not performing. And as far as I remember, this has been like problematic for the past 2, 3 years in terms of, firstly, sourcing materials, secondly, now sales. So I was wondering what's the story there. Then on the last comment you were saying on the guidance that given the order backlog that you see, you seem confident in reaching the guidance. Is this mostly medical or it's like an improvement in the industrial that you see that apparently is based on what you were saying at the beginning, the major reason for the difference in H1. It's a mix of both. So if you can give a bit of more color on the order backlog. And the third one is probably on staff cost. I could see that the incidence of the cost of personnel is going up quite significantly year-over-year. Here, the question is more -- so what's driving this? And Enrico said it's a mix of higher salaries and more staff. Is this more, let's say, related to the hiring of salespeople for new subsidiaries that, of course, are fixed cost now with 0 revenues attached? Or it's like any different dynamics that we should be aware of?

Okay. Let me answer your question one by one. Yes, you are right. I mean it's on paper. The revenue for laser system dedicated to aesthetic application marked a small decline in the first 6 months. And as I highlighted also in my remarks, this is mainly due to the softening of demand in our main application segment, which is and still -- which was and still is hair removal. So if we look at the single performance of hair removal, hair removal is declining. We though offset for most of the decline in hair removal with the increase in these other applications. And we are pleased by this situation also because we can hope that there will be or there could be rebounds in the hair removal. We are working for that as well. But we are also acquiring a stronger -- a progressively stronger position in those other application other than hair removal where the market is growing and is expected to grow. So this is the general picture. For what concerned Asclepion, there are 2 circumstances, I believe that in this moment are impacting Asclepion's ability to effectively compete -- not compete, to effectively perform while competing on the medical aesthetic markets. The first is that we went through reorganization of our R&D capabilities, which is not easy in this moment in Germany because even though -- because we are in a fully -- full employment city like Vienna, where, I mean, we do not have the possibility to easily access to a certain level of employees or we do have the possibility of doing it by increasing the cost. And this also answered partially your question on the staff cost. If you look at the increase of staff cost in medical, this -- part of it is coming from Asclepion, where we had a sensible cost increase due to the need in order not to have people go -- we need to increase the average salary or the overall salary cost. And the second reason why Asclepion is struggling a little bit because within the companies of the group, it is the most -- the company that mostly relies on hair removal. It has products also for anti-aging and other application historically. But its main product, the [indiscernible] star, it's hair removal as a system. So it is strictly tied to the hair removal market. Of course, we are investing to differentiate. We have a new product for hair treatment, hair, not hair removal for hair treatment, the hair that stays on the head, which is very promising in the cosmetic field. But in the moment, we are a little bit struggling, fighting this not very positive moment in hair removal. Again -- and now I jump to question #3, which is the staff cost because you give me the -- I had the opportunity to jump on it when talking about Asclepion. Asclepion is one of the staff cost increase drivers. But I need to say that the staff cost increase, especially when compared to revenues was most evident in industrial, where we're hiring all those people with the subsidiaries, where we're hiring people also for R&D and where, as I said, revenue increased but we were expecting a sharp revenue increase. And therefore, we have a higher impact of the cost of staff on revenue. Of course, when you mention the reasons for the increased cost of staff, there are several causes. One is, let's say, the response to inflation that comes with contractual agreements to increase the salaries. Another comes on the need to keep attracting people by giving salaries higher than the average and so by giving benefits, bonuses and salary increases. And the third is actually the number of employees is growing in certain activities. Of course, we get a little bit more rigid to revenue fluctuation. But if we don't hire those people and if we don't increase the number of employees for a set of activities, which not necessarily are sitting in production capabilities but more also in support capability lies in the regulatory, the R&D, we won't be able to see revenues growing. So this is the answer for the question -- to the question for staff cost. Finally, back to your question #2, Giovanni, the backlog. Yes, we are pleased with the overall backlog, both in medical and in industrial. The backlog is stronger than in other phases, recent phases we experienced recently, both in the medical and then the industrial. Then you must know, we already -- we always told you that typically, only a very small part of our backlog of our order books is secured. Therefore, we have orders to deliver but -- and the customer need to confirm at the moment that we deliver their willingness to pay the delivery. And so the order books is a very good key indicator for the health of our market. But as I mentioned on the press release, as I mentioned also in my remarks, of course, we need this tension in demand. I mean, this positive tension in demand to be maintained over the period in order to have the confirmation that all the order backlog is converted into sales and is converted into sales within the end of the year in order to contribute to the revenues that would make the yearly revenues increase and by leverage effect would improve the EBIT with respect to the first 6 months and also with respect of the previous year.

Okay. May I have a follow-up on the hair removal and then I'll get back in the queue and then if there's enough time, ask a few questions after. On hair removal, is -- well, you said that partly it's Asclepion that is not performing, which is tilted to hair removal. Is it also due to Cynosure partly, because the sales going maybe to Cynosure are declining on the back of the new, I'd just say...

Yes, I didn't want to mention it because it was like trying to find excuses and not finding excuses and saying what happens. You're right, Giovanni. Part of the decline in hair removal is due to the fact that Cynosure new property, new management is basically discontinuing the product line, Elite iQ because they will source similar product from their Korean partner, Lutronic. And you're right, part of the decline in hair removal is due to the missing Cynosure relation. But as this is relevant because it represents probably more than half of the decline in the 6 months of the revenues in hair removal and it doesn't cover in full the decline and therefore, the general trend is there anyway.

Next -- the next -- we have another question comes from Carlo Maritano.

Three questions from my side. The first one is again on the industrial sector. If I look at the geographical breakdown, I see that the main reason is Italy, as you previously mentioned. I was wondering if you -- what's the reason given that last year was already weak, is still Industry 5.0 that is struggling or if there is any other reason that you think are the reason of this weakness? The second one is on the medical business. If I look at the geographical breakdown, I see rest of the world in the second quarter it is a little bit weak. I was wondering if it is related to the consolidation of -- with us or if there are any geographical area that is struggling. And the third one, I know that laser sources are quite a small business for you, but I see that in this period, they are struggling. So I was wondering what's happening in this division and if you think that will improve going on.

Thank you for this question that gives me the opportunity to treat with a little bit more detail, something which I didn't want to, let's say, be too long in my presentation. Yes, the industrial market, the market for manufacturing in Italy hasn't had a very strong rebound. We are seeing a positive buildup on the order books but we have been quite struggling, both in the cutting and also in the laser marking, in both situations. So we count now on a recovery because you're right, we are comparing to a weak year and being weak again and we really counted on a rebound. And this is -- when I say that we were expecting a stronger rebound, I'm mainly referring to the Italian market in the industrial. Second question is rest of the world in medical. What happened in the second quarter with us? I was trying to peak into the numbers and to see if with us -- of course, with us is part of the decline because we don't have with us revenues anymore. But well, I wouldn't say...

2024 -- in 2024 the -- can you hear me? 2024 revenues by -- with us are EUR 5.6 million, while in 2025 are EUR 1.4 million because we consolidated only until February. So the difference is EUR 4 million, EUR 4.2 million.

So yes, we had this difference, then we had Cynosure that Giovanni Selvetti mentioned. We just to be -- I mean, give you some more information, we had an excellent performance in Far East. I mean, in all the -- we had an excellent performance, weaker in the United States. And of course, Japan is missing with us, while Japan is building up nicely in the other medical applications after a low point in 2024. The third question was -- you had another question, Carlo.

Laser, laser sources.

Laser sources. Yes, yes, yes. We experienced a very difficult transition phase because we have a large part of the lasers, which are dedicated to textile. You know that we sell laser sources for stone -- for the laser stone washing of denim. The whole market of clothing has been struggling, as you know, from the luxury brands to the more standard brands. And we are being hit by this kind of stagnation in the textile and clothing market. We had interesting cooperations in other 2 segments, one which we feel is still very valid, which is digital converting. So it's the packaging, the automation in the packaging industry. And we had a very important cooperation, which hopefully is down to a low point again with an Israelian company. It's a listed company, which quite unexpectedly filed for bankruptcy in the first quarter. So not only we lost the expected revenues but we also booked a loss, which is booked into accruals, the accruals line, so below EBITDA line for about EUR 450,000, I mean. So this is impacting heavily EL.En.'s division for laser sources. And the other segment in which we were counting to work is the electric motors manufacturing. But again, since our customers are based in Europe, mainly in Europe, also this market for what concerns European demand is quite struggling. And also some of our partners are not in the most -- in the best shape, our final partners because we are manufacturing, we are providing laser sources for manufacturers of hairpin stripping systems and for the manufacturing of electric motors, which provide devices for companies like Magneti Marelli. And you know that Magneti Marelli for instance, again, at least in the United States, filed for protection from creditors. I wanted to mention this department, this small business unit in my prepared remarks because notwithstanding the poor financial performance and revenue performance in the quarter, we are investing in R&D and we believe that the products could be the base for a rebound in revenues in the next quarters, maybe not in 2025, maybe later on. But I believe that even though certain of our customers are going through an unfavorable phase, we have a very interesting technology and this technology will again be accretive to our revenue and to our profitability.

We have one more question from Andrea Bonfa from Banca Akros.

Very quickly on the duties issue, it wasn't mentioned, the fact that now Brazil is subject to a 50% duty. And for what I remember, Brazil was supposed to be one of the platform to export industrial laser in the U.S. If you can comment on that, if that is really an issue for you or if you can reroute that business from Italy. That's essentially my question for today.

Thank you, Andrea. Our sales to Brazil go to industrial manufacturers in Brazil that mainly manufacture for Brazil. So in the past, for certain markets, the plastic cutting, our Brazilian customers were exporting their product, not the system, their product cut with a laser in the United States. But currently, the Brazilian market is, for us, a market which is, of course, affected by heavy duties but those are the duties for exporting in Brazil. There, we end. We do not use Brazil as a hub for exporting anywhere else. By the way, the performance of Brazil was exceptionally positive in this first 6 months of the year. I mean they had record revenues summing up close to EUR 10 million, which means given the weakness of the real, an absolute record in revenues in Brazilian real. And still, we are [ tonic ] on the market. And so we do not see, as of today, any negative effects driven by the U.S. tariffs on the Brazilian market.

So -- and if I may, now the question is, how is the situation of exporting industrial laser to the U.S. considering that they haven't got any local production there, if I'm correct?

I believe that what I said in relation to the U.S. tariffs in my remarks can be applied to the distribution of industrial laser system as well. By the way, we are in a very important week because this year, the FABTECH is being held in Chicago and is currently being held. So this is the week for the presentation of our products, especially for Cutlite Penta, which has a very large spend this year. And so big investment, Andrea and we're hoping a big return. What I can say is that currently, our offer is so diversified. I confirm there are no U.S. manufacturers that are able to offer on the U.S. market anything close to what we are offering. In certain specific segment, luckily, there are no competitors worldwide. We can have the kind of offer that we are offering in certain specific and smaller segment. Therefore, on the tariffs, what applies is the following. Since our distributors are applying interesting markups, they are able to handle the cost increase without affecting volumes and with only marginally affecting their margin and without -- not asking us to further reduce our margin given the fact that we are reducing our margin by 10% and more due to the weakening of the U.S. dollar itself. Anyway, before the FABTECH was starting, our view and our order backlog on the -- for the United States for the sheet metal cutting was positive. And so we could -- we were optimistic about then, I mean, next week, I'm waiting for the people to come back from this very important trade fair and to understand if the perception of our market positioning, which is very positive in the United States, is still confirmed with a high level of differentiation. Again, what I was saying in my earlier remarks, as long as we can provide a differentiated product and needs to be differentiated with a high perceived value in comparison with U.S. manufacturers or with other worldwide competitors as long as we maintain this perception of value, the 15% tariff which on laser cutting system could be a little bit higher since there is a little bit of steel in, a little bit, there's a lot of steel included in the laser systems. Anyway, the 50% tariffs does not change completely the value chain of the distribution in the United States and we can continue to be optimists in seeing the United States as an interesting market for selling our products.

And finally, if I may, last question. I mean, your working capital level at the end of last year was quite important. I mean you are coming from years where the procurement or raw material was complicated to say the least. Are you planning to structurally lower this working capital or the stock? Or what are your thoughts on this?

We sell in general, products which have relatively high margins and we can never run the risk of not being able to deliver because we don't have available materials to manufacture high-margin products. For these reasons, we have to plan ahead. Typically, the planning cycle has its peak working capital expansion in Q2 -- at the end of Q2 and Q3 because we then close the number for the end of the year, which corresponds also with the highest demand quarter. So we plan to improve our programming capabilities. We are investing in resources, in people, in softwares but basically, it's not easy to reduce the structural impact of working capital. So when I say that overall, the working capital increased by EUR 20 million in this first 6 months and I don't consider this a big issue is because I believe that it will be lowering in the next months and it will maintain more or less the same levels. Then if we will be able to trim 1 or 2 or 3 percentage points in the impact of net working capital on sales, this we will need to see. We are putting down policies in order to try to reduce but we do not want to run the risk to run out of parts because we try to control inventory because it's really -- it wouldn't be worth. This we know from history. Then I concur the level of net working capital is quite high. But good thing to know is that most of the things we have in stock will not lose value over time because they don't have any intrinsic obsolescence. They have obsolescence also, excuse me, only with innovation and we try to control innovation cycles in order not to leave in inventory older versions as we innovate the versions of our products.

Next question comes from Emmanuel de Figueiredo from LBV Asset Management.

I have just 2 questions. The first one is on the medical, on the tariffs in the U.S. Can you just explain a little bit what your competitors are doing in terms of pricing? Are they absorbing the tariff and hitting their margins? Or are they increasing price? What is your view on that? And what are you doing? And then secondly, again, on the medical, what is your best, let's say, best-performing product this year in the medical? You said that hair removal is weak but what is your best performing product.

Thank you for the question. Good to see you. I don't really know in detail. I haven't seen movements on prices in the U.S. market. So I can assume that everybody is trying to absorb the tariffs somewhere in the chain. I mean, I don't know if it's at the origin. I don't know if it's at distribution level. But we are not seeing, as of today, abrupt price changes, even though the United States is affected by inflation. So year-over-year, there is an inflation in prices. So this gives room to somehow absorb -- not absorb, revert part of the tariffs to the end user without creating a big difference in the approach compared to our other competitors. And about the successful products in the medical, of course, the magneto and the urology lasers are very successful. In aesthetic, we have 3 very successful products. One is Onda PRO. Onda, you remember very well, I'm sure our technology, which is based on microwaves, Onda in Italian means wave and it was originally a body contouring device. Onda PRO, this evolution launched last year adds a third handpiece, which is used for the face. And therefore, the system becomes also a skin rejuvenation device, having the ability to treat the skin of the face in order to tighten it. So it's a anti-aging device for tightening. The second very successful device is the RedTouch, which is a innovation, which introduces a laser emitting in the red for rejuvenation on the face and on the [indiscernible]. And I leave the third, the most successful of our technologies, I touched this earlier -- in earlier conferences is the CO2 laser. The CO2 laser, which is the first technology, the oldest technology that EL.En. has offered on the market and the technology that we master. And we improved its effectiveness starting from the technology base. Who visited our company knows that our facility has 2 kind of technology for CO2 laser source, the glass technology, DC excited, the metal technologies, RF excited. The RF excited technology has come to such flexibility in the modulation of the beam, which allows extremely dedicated curing on the skin and is the winning technology on the U.S. market, by the way, particularly on the U.S. market for the rejuvenation application. So Onda PRO, RedTouch and Tetra Pro are the game winners in this moment and are the units which -- with increased sales in the U.S. and in Far East are offsetting -- at least partially offsetting the decline in other disciplines.

And now we have Giovanni Selvetti with another question for you, Andrea.

I promise this is the final one. No, it was more of a curiosity on hair removal because I see that there's been quite a decent growth of, let's just say, self-made hair removal devices, laser devices as long -- at least here in the U.K., you see that a lot. So I was wondering if this is partially in a way, eating the market on your side because if people can do this thing alone without going to, like let's just say, a specific place, well, the demand just flows one way to the other, right? So I was wondering if this is something you see or if it's something that you believe it's a real concern going on?

Again, I don't want to be blamed as superficial. But the home, the devices that remove hair or claim to remove hair for household use are not able to remove hair by themself for a simple physical reason that they do not deliver enough energy to effectively remove the hair. They could be used for a maintenance after they use a professional use. And so in these terms, they could limit the number of visits that you make at a professional site. But generally speaking, I don't think they are effective enough to -- for the technologies available today to eat up market shares to our professional market. I see more a competition coming from lower-cost manufacturers, which improved their performance, which is eating up the low-level competition and forcing us to compete in a share of the market, which is still large, which is the high end but which is smaller than the whole market. We need to continuously differentiate and improve the performances in order to stay on this market effectively. The performances in term of both financial ROI and therefore, effectiveness of laser systems for hair removal improved dramatically in the last years. And our sales, we have in our pipeline further improvements of the technologies aimed of improving the effectiveness and the ROI for our customers. Sincerely, I don't think that the handheld home use devices are affecting our market. But I will study more deeply this situation, Giovanni and maybe be back to you with a more, let's say, acknowledgeable answer when we meet again in some time.

Okay. We have one more question right now from François [indiscernible].

I have seen his question.

Sorry for the time to connect the microphone. One question about your competition, especially in aesthetic sector from South Korea or from Israel. How is the relative competition evolving?

Yes. Israelian and Korean are the front line of our competition in the aesthetic market with a wealth of companies, both companies that are on the market from a long time, both companies that are now offering on the market new products. Of course, when you think about Israel, you think about Lumenis, which is the long term -- the longest -- the oldest company competing on the market as well as Syneron and as well as Sisram/Alma Laser. They are all competitors of us. We don't feel that we lost competitive advantage versus these competitors in the last years. Then there is InMode, which is the leader in terms of market cap, which is actually not directly competing against us because they sell RF technology with a high marketing content, with the use of testimonials, they are doing quite well but we don't feel a direct threat from them anymore. And then there is a new company, which was just launched by the former founder of both Lumenis and Syneron-Candela, Mr. Shimon Eckhouse. The company is called Softwave. It's quite small. And it's also competing in rejuvenation and skin tightening device. This is for what concern Israel. For what concerns Korea, the longest lived company is Lutronic, which is now merged with Cynosure. And we feel their competition very strongly, first, because we lost the customer, Cynosure due to the merger. And of course, they were purchasing a technology from us. When they merged with a company that has more or less the same technology, they, of course, are going to source this technology from Lutronic. Lutronic has been very strong on certain European markets. For instance, on the French market, they are the leaders. We are the runner up. And they are extremely -- I mean, they are extremely good in developing technology. So they are high-level competitors. So we cannot treat Lutronic as we can treat several other competitors coming from Far East that still deliver products which are well below par in terms of reliability, technical specification and overall product specification and quality. There is another pair, which is now flourishing in Korea. It's a company, Classys I. It's a listed company. You can see how with revenue, which is in the order of magnitude of $100 million on a yearly basis today, if I'm not wrong, they have a market cap, which is outstanding, over $2 billion. This is due to the rapid growth they are forecasting and to the very high margin. Basically, Classys is replicating, on a Korean basis, the business model of InMode or at least their ambition is to replicate it. They sell a very low-cost device as high prices and they're very successful in this moment. And again, looking at all this company, we feel more threatened by the competitors from Israel, which compete with the same -- apart from InMode with the same technological infrastructure that we do than from the companies competing from the Far East where the product level is improving but it's still behind what we have in Europe and what the Israeli and the best Korean company are able to deliver today.

Okay. We have no more question registered at this moment in our list. I would like to ask investors still connected if there are any further questions from their side. No more question. Okay. Then ladies and gentlemen, the conference is over. If you have any questions to investigate in the future, please do not hesitate to contact Enrico Romagnoli, who will be happy to answer your queries. Thank you to all of you for attending this conference and we hope to have all you again next time. Goodbye to everybody. Bye.

Bye. Bye-bye.

Thank you very much. Bye-bye.