Q2 2024 Philip Morris International Inc Earnings Call

July 23, 2024

Operator: Good day, and thank you for standing by. Welcome to the Philip Morris International Inc. 2024 Second Quarter Results Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded.

Bye. Bye.

Operator: Presenting by, welcome to the Philip Morris International Inc. 2024 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press * one-one on your telephone.

Speaker Change: Good day and thank you for standing by. Welcome to the Philip Morris International Inc. 2024 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.

Operator: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, James Bushnell, Vice President of Investor Relations and Financial Communications. Thank you.

Speaker Change: To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised.

James Bushnell: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead.

Bonnie Herzog: I would now like to hand the.

I would now like to hand the.

Operator: conference over to your speaker today, James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead.

conference over to your speaker today, James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead.

James Bushnell: Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2024 second quarter results. The press release is available on our website at www.pmi.com. A glossary of terms, including the definition of smoke-free products, as well as adjustments, other calculations, and reconciliations to the most directly comparable U.S. GAAP measures for non-GAAP financial measures cited in this presentation, are available in Exhibit 99.2 to the company's Form 8K dated July 23, 2024, and on our Investor Relations website.

Emmanuel Babeau: Welcome.

James Bushnell: Welcome.

James Bushnell: Thank you for joining us. Earlier today we issued a press release containing detailed information on our 2024 second quarter results. The press release is available on our website at pmi.com. A glossary of terms including the definition for smoke-free products as well as adjustments, other calculations, and reconciliations to the most directly comparable US GAAP measures for non-GAAP financial measures cited in this presentation are available in Exhibit 99.2 to the Company's Form 8-K dated 23 July 2024 and on our Investor Relations website.

Thank you for joining us. Earlier today we issued a press release containing detailed information on our 2024 second quarter results. The press release is available on our website at pmi.com. A glossary of terms including the definition for smoke-free products as well as adjustments, other calculations, and reconciliations to the most directly comparable US GAAP measures for non-GAAP financial measures cited in this presentation are available in Exhibit 99.2 to the Company's Form 8-K dated 23 July 2024 and on our Investor Relations website.

James Bushnell: Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2024 second quarter results. The press release is available on our website at pmi.com.

James Bushnell: A glossary of terms, including the definition for smoke-free products.

James Bushnell: As well as adjustments, other calculations, and reconciliations to the most directly comparable U.S. GAAP measures for non-GAAP financial measures.

James Bushnell: cited in this presentation are available in Exhibit 99.2 to the company's Form 8K dated July 23rd 2024 and on our Investor Relations website.

James Bushnell: Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements. It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel.

Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections.

James Bushnell: Today's remarks contain forward-looking statements and projections of future results.

James Bushnell: I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements.

Emmanuel Babeau: Or forward-looking statements.

Or forward-looking statements.

James Bushnell: It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel.

It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel.

James Bushnell: It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel. Thank you, James, and welcome everyone.

Emmanuel Babeau: Thank you, James, and welcome everyone. Our business delivered another outstanding performance in the second quarter of 2024. Our categories were strong across the board to deliver a record H1 2024 on organic top line growth and on organic operating income growth excluding the pandemic recovery year of 2021. The strong underlying momentum of IQOS continued in Q2 2024 with shipment and adjusted in-market sales volume growth above or in line with our expectation. This reflects another quarter of strong progress in Japan and robust fundamentals in Europe. Despite the volatility of the characterizing flavor ban.

Emmanuel Babeau: Thank you, James, and welcome, everyone. Our business delivered another outstanding performance in the second quarter of 2024. Our categories were strong across the board to deliver a record H1 on organic top line growth and on organic operating income growth, excluding the pandemic recovery year of 2021. The strong underlying momentum of ICOs continued in Q2, with shipments and adjusted in-market sales volume growth above or in line with our expectations.

Emmanuel Babeau: Our business delivered another outstanding performance in the second quarter of 2024.

Emmanuel Babeau: Our categories were strong across the board to deliver a record H1 on organic top line growth and on organic operating income growth, excluding the pandemic recovery year of 2021.

Emmanuel Babeau: The strong underlying momentum of ICOs continued in Q2, with shipments and adjusted in-market sales volume growth above or in line with our expectations.

Emmanuel Babeau: This reflects another quarter of strong progress in Japan and robust fundamentals in Europe, despite the volatility of the characterizing flavor bias. With pricing, manufacturing efficiency, and scaled benefits, the expanding profit contribution of ICOs is driving excellent growth for PMI. Zim continued its impressive growth trajectory with Q2 US volumes growing by over 50% despite recent supply tensions and increased price.

Emmanuel Babeau: This reflects another quarter of strong progress in Japan and robust fundamentals in Europe despite the volatility of the characterising flavour ban.

Emmanuel Babeau: With pricing, manufacturing efficiency, and scale benefit, the expanding profit contribution of IQOS is driving excellent growth for PMI. ZYN continued its impressive growth trajectory with Q2 US volumes growing by over 50% despite recent supply tensions and increased pricing. In addition to IQOS and US ZYN, I am pleased to report building multi-category momentum while still early days. VEEV has already become the closed pod leader in five European markets and is firmly on the path to profitability. While international nicotine pouch volumes grew over +60% in H1, matching US growth rates. This progress of smoke-free products is reflected in a rapidly growing consumer base with around 36.5 million estimated adult users as of 30 June and our products now available across 90 markets worldwide.

With pricing, manufacturing efficiency, and scale benefit, the expanding profit contribution of IQOS is driving excellent growth for PMI. ZYN continued its impressive growth trajectory with Q2 US volumes growing by over 50% despite recent supply tensions and increased pricing. In addition to IQOS and US ZYN, I am pleased to report building multi-category momentum while still early days. VEEV has already become the closed pod leader in five European markets and is firmly on the path to profitability. While international nicotine pouch volumes grew over +60% in H1, matching US growth rates. This progress of smoke-free products is reflected in a rapidly growing consumer base with around 36.5 million estimated adult users as of 30 June and our products now available across 90 markets worldwide.

Emmanuel Babeau: With pricing, manufacturing efficiency, and scaled benefits, the expanding profit contribution of ICOs is driving excellent growth for PMI.

Emmanuel Babeau: Zinn continued its impressive growth trajectory, with Q2 US volumes growing by over plus 50% despite recent supply tensions and increased pricing.

Emmanuel Babeau: In addition to ICOs and US ZIN, I am pleased to report building multi-category momentum. While still early days, VIV has already become the closed pod leader in five European markets and is firmly on the path to profitability, while international nicotine pouch volumes grew over plus 60 percent in H1, matching U.S. growth rate. This progress on smoke-free products is reflected in a rapidly growing consumer base with around 36.5 million estimated adult users as of June 30th and our products now available across 90 markets worldwide. Our combustible business also overdelivered with a return to gross margin expansion ahead of plan E2-2 after two years of significant inflationary headway.

Emmanuel Babeau: In addition to ICOs and US ZIN, I am pleased to report building multi-category momentum.

Emmanuel Babeau: This progress of smoke-free products is reflected in a rapidly growing consumer base with around 36.5 million estimated adult users as of June the 30th.

Emmanuel Babeau: and our products now available across 90 markets worldwide.

Emmanuel Babeau: Our combustible business also overdelivered with a return to gross margin expansion ahead of plan in Q2 after two years of significant inflationary headwinds. This was driven by stable H1 volumes and category share despite robust pricing, in addition to cost efficiencies.

Our combustible business also overdelivered with a return to gross margin expansion ahead of plan in Q2 after two years of significant inflationary headwinds. This was driven by stable H1 volumes and category share despite robust pricing, in addition to cost efficiencies.

Emmanuel Babeau: Our combustible business also overdelivered, with a return to gross margin expansion ahead of planned in Q2, after two years of significant inflationary headwinds.

Emmanuel Babeau: This was driven by stable H1 volumes and category share, despite robust pricing, in addition to cost efficiency. This broad-based delivery translated into double-digit organic operating income growth with significant margin expansion. As we have outlined previously, delivering robust growth in dollar terms is a key priority, and we are taking proactive steps on pricing and cost efficiency to mitigate currency headwinds. This is clearly evident in our H1 Adjusted Diluted Earnings Per Share delivery of mid-single-digit growth despite a currency headwind of over 12%, as essentially all of the expected full-year impact fell in the first. Following this exceptional first-half performance, we are increasing our 2024 full-year forecast on all organic dimensions and for adjusted diluted EPS on both currency-neutral and U.S. dollar basis.

Emmanuel Babeau: This was driven by stable H1 volumes and category share, despite robust pricing, in addition to cost efficiencies.

Emmanuel Babeau: This broad-based delivery translated into double-digit organic operating income growth with significant margin expansion. As we have outlined previously, delivering robust growth in dollar terms is a key priority, and we are taking proactive steps on pricing and cost efficiency to mitigate currency headwinds. This is clearly evident in our H1 adjusted diluted earnings per share delivery of mid-single-digit growth despite a currency headwind of over 12% as essentially all of the expected full-year impact fell in the first half.

This broad-based delivery translated into double-digit organic operating income growth with significant margin expansion. As we have outlined previously, delivering robust growth in dollar terms is a key priority, and we are taking proactive steps on pricing and cost efficiency to mitigate currency headwinds. This is clearly evident in our H1 adjusted diluted earnings per share delivery of mid-single-digit growth despite a currency headwind of over 12% as essentially all of the expected full-year impact fell in the first half.

Emmanuel Babeau: This broad-based delivery translated into double-digit organic operating income growth with significant margin expansion.

Emmanuel Babeau: As we have outlined previously, delivering robust growth in dollar terms is a key priority, and we are taking proactive steps on pricing and cost efficiency to mitigate currency headwinds.

Emmanuel Babeau: This is clearly evident in our H1 adjusted diluted earning pressure delivery of mid-single-digit growth despite a currency headwind of over 12%, as essentially all of the expected full-year impact fell in the first half.

Emmanuel Babeau: Following this exceptional H1 performance, we are increasing our 2024 full year forecast on all organic dimensions and for adjusted diluted EPS on both a currency neutral and USD basis. This reflects our strong H2 outlook with accelerating adjusted IMS growth for IQOS, sequentially higher ZYN volumes, and a step up rate of USD EPS growth at prevailing exchange rate.

Following this exceptional H1 performance, we are increasing our 2024 full year forecast on all organic dimensions and for adjusted diluted EPS on both a currency neutral and USD basis. This reflects our strong H2 outlook with accelerating adjusted IMS growth for IQOS, sequentially higher ZYN volumes, and a step up rate of USD EPS growth at prevailing exchange rate.

Emmanuel Babeau: Following this exceptional first-half performance, we are increasing our 2024 full-year forecast on all organic dimensions and for adjusted diluted EPS on both a currency-neutral and U.S. dollar basis.

Emmanuel Babeau: This reflects our strong H2 outlook with accelerating adjusted IMS growth for ICOs, sequentially higher VIN volumes, and a stepped-up rate of USD EPS growth at prevailing exchange rates. Looking at our headline financials, strong total achievement volume growth of plus 2.8% drove Q2 organic net revenue growth of plus 9.6% or plus 5.6% in dollars. Robust top-line growth, positive smoke-free margin mix, and ongoing cost efficiencies enable us to deliver adjusted diluted EPS of $1.59. This represents a 10.6% increase, excluding a larger-than-expected unfavorable currency variance of $0.18, which includes a small transactional impact from exchange rate volatility at quarter-end.

Emmanuel Babeau: This reflects our strong H2 outlook with accelerating adjusted IMS growth for ICOs, sequentially higher ZIN volumes, and a stepped-up rate of USD EPS growth at prevailing exchange rates.

Emmanuel Babeau: Looking at our headline financials, strong total shipment volume growth of +2.8% drove Q2 organic net revenue growth of 9.6% or 5.6% in dollar terms. Robust top-line growth, positive smoke-free margin mix, and ongoing cost efficiencies enable us to deliver adjusted diluted EPS of $1.59. This represents +10.6% growth excluding a larger than expected unfavorable currency variance of $0.18, which includes a small transactional impact from exchange rate volatility at quarter end. This better than expected ex-currency performance reflect the improving profitability of IQOS, ZYN, and combustibles which I will come back.

Looking at our headline financials, strong total shipment volume growth of +2.8% drove Q2 organic net revenue growth of 9.6% or 5.6% in dollar terms. Robust top-line growth, positive smoke-free margin mix, and ongoing cost efficiencies enable us to deliver adjusted diluted EPS of $1.59. This represents +10.6% growth excluding a larger than expected unfavorable currency variance of $0.18, which includes a small transactional impact from exchange rate volatility at quarter end. This better than expected ex-currency performance reflect the improving profitability of IQOS, ZYN, and combustibles which I will come back.

Emmanuel Babeau: Looking at our headline financials, strong total achievement volume growth of plus 2.8% drove Q2 organic net revenue growth of plus 9.6% or plus 5.6% in dollar terms.

Emmanuel Babeau: Robust top-line growth, positive smoke-free margin mix, and ongoing cost efficiencies enable us to deliver adjusted diluted EPS of $1.59.

Emmanuel Babeau: This represents a 10.6% growth, excluding a larger-than-expected unfavorable currency variance of $0.18, which includes a small transactional impact from exchange rate volatility at quarter-end.

Emmanuel Babeau: This better-than-expected ex-currency performance reflects the improving profitability of ICOs, ZIN, and combustibles, which I will come back to. Looking now at the first half overall, our volumes grew by plus 3.2 percent and organic net revenue by plus 10.2 percent, our highest growth since the 2008 spin. Strong performance from both smoke-free and combustible drove operating income growth of plus 17 percent with margin expansion of 230 basis points organically and plus 7.1 percent growth in dollar terms.

Emmanuel Babeau: This better-than-expected ex-currency performance reflects the improving profitability of ICOs, ZIN, and combustibles, which I will come back to.

Matthew Smith: To.

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Emmanuel Babeau: Looking now at the first half overall, our volumes grew by 3.2% and organic net revenue by 10.2%, our highest growth since the 2008 spin. Strong performance from both smoke-free and combustible drove operating income growth of 17% with margin expansion of 230 basis points organically and 7.1% growth in dollar terms. We expect continued robust OI growth on both a reported and an organic basis. In the second half.

Looking now at the first half overall, our volumes grew by 3.2% and organic net revenue by 10.2%, our highest growth since the 2008 spin. Strong performance from both smoke-free and combustible drove operating income growth of 17% with margin expansion of 230 basis points organically and 7.1% growth in dollar terms. We expect continued robust OI growth on both a reported and an organic basis. In the second half.

Emmanuel Babeau: Looking now at the first half overall, our volumes grew by plus 3.2% and organic net revenue by plus 10.2%, our highest growth since the 2008 spin.

Emmanuel Babeau: Strong performance, from both smoke-free and combustible, drove operating income growth of plus 17%, with margin expansion of 230 basis points organically and plus 7.1% growth in dollar terms.

Emmanuel Babeau: We expect continued robust OI growth on both a reported and an organic basis in the second quarter. H1 adjusted deleted EPS grew by an impressive plus 16.8% in constant currency and by plus 4% in dollar terms. The $0.38 unfavorable H1 currency variant includes $0.08 of non-recurring transactional impact from Egypt and Russia.

Emmanuel Babeau: We expect continued robust OI growth on both a reported and an organic basis in the second half.

Emmanuel Babeau: H1 adjusted diluted EPS grew by an impressive 16.8% in constant currency and by +4% in dollar terms. The $0.38 unfavorable H1 currency variance includes $0.08 of non-recurring transactional impact from Egypt and Russia.

H1 adjusted diluted EPS grew by an impressive 16.8% in constant currency and by +4% in dollar terms. The $0.38 unfavorable H1 currency variance includes $0.08 of non-recurring transactional impact from Egypt and Russia.

Emmanuel Babeau: H1 adjusted deleted EPS grew by an impressive plus 16.8% in constant currency and by plus 4% in dollar terms.

Emmanuel Babeau: Focusing now on volume, total shipment growth in both the quarter and H1 overall reflect smoke-free share gains in a resilient international industry which grew by more than 1% in both periods. Even excluding oral and e-vapor, Q2 HTU shipments of 35.5 billion units exceeded our prior outlook, notably driven by continued strong performance in Japan, robust underlying growth in Europe, and promising growth in newer markets such as Indonesia. In addition to underlying momentum, Q2 saw an incremental phasing impact of around 0.5 billion units primarily related to Red Sea disruption.

Focusing now on volume, total shipment growth in both the quarter and H1 overall reflect smoke-free share gains in a resilient international industry which grew by more than 1% in both periods. Even excluding oral and e-vapor, Q2 HTU shipments of 35.5 billion units exceeded our prior outlook, notably driven by continued strong performance in Japan, robust underlying growth in Europe, and promising growth in newer markets such as Indonesia. In addition to underlying momentum, Q2 saw an incremental phasing impact of around 0.5 billion units primarily related to Red Sea disruption.

Emmanuel Babeau: Focusing now on volume, total shipment growth in both the quarter and H1 overall reflect smoke-free share gains in a resilient international industry, which grew by more than 1% in both periods, even excluding oral and e-vape. Q2 HTU shipments of 35.5 billion units exceeded our prior outlook, notably driven by continued strong performance in Japan, robust underlying growth in Europe, and promising growth in newer markets such as Indonesia. In addition to underlying momentum, Q2 saw an incremental phasing impact of around 0.5 billion units, primarily related to the Red Sea disruption. Q2 HDU adjusted IMS volume grew by plus 10.2%, in line with our expectations.

Emmanuel Babeau: Q2 HTU shipments of 35.5 billion units

Emmanuel Babeau: exceeded our prior outlook, notably driven by continued strong performance in Japan, robust underlying growth in Europe , and promising growth in newer markets such as Indonesia.

Emmanuel Babeau: In addition to underlying momentum, Q2 saw an incremental phasing impact of around 0.5 billion units, primarily related to Red Sea disruption.

Emmanuel Babeau: Q2 HTU adjusted IMS volume grew by +10.2% in line with our expectation. This includes the impact of the characterizing flavor ban in Europe, most notably in Italy this quarter. Total smoke-free adjusted in-market sales volume grew +11.2% in Q2 and +13.1% in H1. This includes our oral smoke-free portfolio powered by ZYN with Q2 pouch unit volumes up by +20%.

Q2 HTU adjusted IMS volume grew by +10.2% in line with our expectation. This includes the impact of the characterizing flavor ban in Europe, most notably in Italy this quarter. Total smoke-free adjusted in-market sales volume grew +11.2% in Q2 and +13.1% in H1. This includes our oral smoke-free portfolio powered by ZYN with Q2 pouch unit volumes up by +20%.

Emmanuel Babeau: Q2 HDU adjusted IMS volume grew by plus 10.2% in line with our expectations.

Emmanuel Babeau: This includes the impact of the characterizing flavor ban in Europe, most notably in Italy this quarter. Total smoke-free adjusted in-market sales volume grew plus 11.2 percent in Q2 and plus 13.1 percent in H1. This includes our all smoke-free portfolio powered by ZIN, with Q2 pouch unit volumes up by plus 20%. U.S. Zine shipment grew by plus 50% to 35.1 million caps. This does not include the promising results of our e-vapor business, where volumes grew strongly to the equivalent of 0.7 billion units on a year-to-date basis.

Emmanuel Babeau: This includes the impact of the characterizing flavor ban in Europe , most notably in Italy this quarter.

Emmanuel Babeau: Total smoke-free adjusted in-market sales volume grew 11.2% in Q2 and 13.1% in H1.

Emmanuel Babeau: This includes our oral smoke-free portfolio powered by Zin, with Q2 pouch unit volumes up by plus 20%.

Emmanuel Babeau: US ZYN shipment grew by 50% to 35.1 million cans.

US ZYN shipment grew by 50% to 35.1 million cans.

Emmanuel Babeau: U.S. Zine shipment grew by plus 50% to 35.1 million can.

Emmanuel Babeau: This does not include the promising result of our e-vapor business where volumes grew strongly to the equivalent of 0.7 billion units. On a year-to-date basis, cigarette shipments grew by +0.4% with notable positive contribution from Turkey and North Africa. This reflects a stable category share excluding market mix despite step-up pricing. With such a positive H1 volume performance, we are raising our full-year forecast for total cigarette, HTU, and overall unit volumes to +1% to +2%, which would mark our fourth consecutive year of volume growth.

This does not include the promising result of our e-vapor business where volumes grew strongly to the equivalent of 0.7 billion units. On a year-to-date basis, cigarette shipments grew by +0.4% with notable positive contribution from Turkey and North Africa. This reflects a stable category share excluding market mix despite step-up pricing. With such a positive H1 volume performance, we are raising our full-year forecast for total cigarette, HTU, and overall unit volumes to +1% to +2%, which would mark our fourth consecutive year of volume growth.

Emmanuel Babeau: This does not include the promising result of our e-vapor business, where volume grew strongly to the equivalent of 0.7 billion units on a year-to-date basis.

Emmanuel Babeau: Cigar achievement grew by plus 0.4%, with notable positive contributions from Turkey and North Africa. This reflects a stable category share excluding market mix despite step-up prices. With such a positive H1 volume performance, we are raising our full-year forecast for total cigarette, HTU, and oral unit volumes to plus one to plus two percent, which would mark our fourth consecutive year of volume growth. The power of our multi-category smoke-free transformation and recovery in combustibles is clearly illustrated on this slide, as both areas contributed strongly to double-digit organic OI growth of plus 12.5% for the group in Q

Emmanuel Babeau: Cigar achievement grew by plus 0.4% with notable positive contributions from Turkey and North Africa.

Emmanuel Babeau: This reflects a stable category share excluding market mix, despite step-up pricing.

Emmanuel Babeau: With such a positive H1 volume performance, we are raising our full year forecast for total cigarette, HTU, and oral unit volumes to plus one to plus two percent, which would mark our fourth consecutive year of volume growth.

Emmanuel Babeau: The power of our multi-category smoke-free transformation and recovery in combustibles are clearly illustrated on this slide, as both areas contributed strongly to double-digit organic OI growth of +12.5% for the group in Q2. Smoke-free continued its excellent momentum with +18% organic growth in net revenue and +22% in gross profit, driving 220 basis points. Organic gross margin expansion. This reflects the strong performance of ZYN and the growth and scale effect of IQOS, including manufacturing productivities and an increasing, albeit smaller, contribution from VEEV. Expanding smoke-free gross margin continue to widen the gap versus combustibles gross margin, enhancing the very positive mix effect of our transformation. However, combustibles gross margin expansion is also a key objective.

The power of our multi-category smoke-free transformation and recovery in combustibles are clearly illustrated on this slide, as both areas contributed strongly to double-digit organic OI growth of +12.5% for the group in Q2. Smoke-free continued its excellent momentum with +18% organic growth in net revenue and +22% in gross profit, driving 220 basis points. Organic gross margin expansion. This reflects the strong performance of ZYN and the growth and scale effect of IQOS, including manufacturing productivities and an increasing, albeit smaller, contribution from VEEV. Expanding smoke-free gross margin continue to widen the gap versus combustibles gross margin, enhancing the very positive mix effect of our transformation. However, combustibles gross margin expansion is also a key objective.

Emmanuel Babeau: The power of our multi-category smoke-free transformation and recovery in combustible are clearly illustrated on this slide, as both areas contributed strongly to double-digit organic OI growth of plus 12.5% for the group in Q2.

Emmanuel Babeau: Smokefree continues its excellent momentum with plus 18% organic growth in net revenue and plus 22% in gross profit, driving plus 220 basis points of organic growth margin expansion. This reflects the strong performance of ZIN and the growth and scale effect of ICOS, including manufacturing productivity, and an increasing, albeit smaller, contribution from VIV. The expanding smoke-free growth margin continues to widen the gap versus the combustible growth margin, enhancing the very positive mixed effect of our transformation.

Emmanuel Babeau: Smokefree continues its excellent momentum with plus 18% organic growth in net revenue and plus 22% in gross profit, driving plus 220 basis points organic growth margin expansion.

Emmanuel Babeau: This reflects the strong performance of ZIN and the growth and scale effect of ICOS, including manufacturing productivities, and an increasing, albeit smaller, contribution from VIV.

Emmanuel Babeau: Expanding smoke-free growth margin continues to widen the gap versus combustible growth margin, enhancing the very positive mixed effect of our transformation.

Emmanuel Babeau: However, combustible gross margin expansion is also a key objective. After seven quarters of contraction, we are very pleased to report +50 basis point expansion and gross profit growth of +5.5% on an organic basis, providing a meaningful contribution to total PMI profitability. This reflects resilient volume despite very strong pricing in addition to ongoing efficiencies and reduced headwinds on our cogs, notwithstanding continued tobacco leaf inflation. We also expect combustible gross margin expansion in H2.

Emmanuel Babeau: However, combustible gross margin expansion is also a key objective.

Emmanuel Babeau: After seven quarters of contraction, we are very pleased to report +50 basis point expansion and gross profit growth of +5.5% on an organic basis, providing a meaningful contribution to total PMI profitability. This reflects resilient volume despite very strong pricing, in addition to ongoing efficiencies and reduced headwinds on our COGS, notwithstanding continued tobacco leaf inflation. We also expect combustible gross margin expansion in H2.

After seven quarters of contraction, we are very pleased to report +50 basis point expansion and gross profit growth of +5.5% on an organic basis, providing a meaningful contribution to total PMI profitability. This reflects resilient volume despite very strong pricing, in addition to ongoing efficiencies and reduced headwinds on our COGS, notwithstanding continued tobacco leaf inflation. We also expect combustible gross margin expansion in H2.

Emmanuel Babeau: This reflects resilient volume despite very strong pricing, in addition to ongoing efficiencies and reduced headwinds on our cogs, notwithstanding continued tobacco leaf inflation.

Emmanuel Babeau: We also expect combustible gross margin expansion in H2.

Emmanuel Babeau: Combined with a very strong first quarter, the year-to-date picture is even more compelling with double-digit organic net revenue, gross profit, and operating income growth. This is driven by the same dynamic as Q2, with an impressive plus 390 basis point growth margin expansion and plus 29% gross profit growth for our smoke-free business. Our H1 revenue performance again demonstrates the powerful drivers of our financial model with an unparalleled combination of positive volumes, robust pricing, and the very favorable category mix of our smoke-free products.

Emmanuel Babeau: Combined with a very strong first quarter. The year-to-date picture is even more compelling with double-digit organic net revenue, gross profit, and OI growth. This is driven by the same dynamic as Q2 with an impressive 390 basis point gross margin expansion and +29% gross profit growth for our smoke-free business.

Combined with a very strong first quarter. The year-to-date picture is even more compelling with double-digit organic net revenue, gross profit, and OI growth. This is driven by the same dynamic as Q2 with an impressive 390 basis point gross margin expansion and +29% gross profit growth for our smoke-free business.

Emmanuel Babeau: Combined with a very strong first quarter, the year-to-date picture is even more compelling with double digit organic net revenue, gross profit, and OI growth.

Emmanuel Babeau: This is driven by the same dynamic as Q2, with an impressive plus 390 basis points, growth margin expansion, and plus 29% gross profit growth for our smoke-free business.

Emmanuel Babeau: Our H1 revenue performance, again, demonstrates the powerful drivers of our financial model with an unparalleled combination of positive volumes, robust pricing, and the very favorable category mix of our smoke-free product.

Emmanuel Babeau: As mentioned, volume grew by plus 3.2%, and pricing contributed plus 6 points of growth, including plus 8.3 on combustible and around plus 2% on smoke-free. The Smokefree Category Mix added plus 2.5 points to the top line, reflecting the higher net revenue per unit of ICOS and ZIN. While still small, Ziv also contributed positively to the overall mix. I also note that the oral smoke-free product added plus two points to organic net revenue progression, underlying the continued accretion from the Swedish Match acquisition. As in recent quarters, the geographic mix was negative.

Emmanuel Babeau: As mentioned, volume grew by plus 3.2%, pricing contributed plus 6 points of growth, including plus 8.3 pricing on combustible and around plus 2% on smoke-free.

Emmanuel Babeau: Smoke-free category mix added 2.5 points to the top line, reflecting the higher net revenue per unit of IQOS and ZYN, while still small. VEEV also contributed positively to the overall mix. I also note that all smoke-free products added 2 points to organic net revenue progression, underlying the continued accretion from the Swedish Match acquisition.

Smoke-free category mix added 2.5 points to the top line, reflecting the higher net revenue per unit of IQOS and ZYN, while still small. VEEV also contributed positively to the overall mix. I also note that all smoke-free products added 2 points to organic net revenue progression, underlying the continued accretion from the Swedish Match acquisition.

Emmanuel Babeau: Smokefree Category Mix added plus 2.5 points to the top line, reflecting the higher net revenue per unit of ICOs and ZIN.

Emmanuel Babeau: While still small, Ziv also contributed positively to the overall mix.

Emmanuel Babeau: I also note that oral smoke-free products added plus 2 points to organic net revenue progression, underlying the continued accretion from the Swedish Match acquisition.

Emmanuel Babeau: As in recent quarters, geographic mix was negative. This is primarily due to combustible where volumes increasingly skew to lower margin markets where smoke-free alternatives are small or not available. With higher margin markets over-indexed to cannibalization, we expect this dynamic to be less impactful in 2024 than last year.

As in recent quarters, geographic mix was negative. This is primarily due to combustible where volumes increasingly skew to lower margin markets where smoke-free alternatives are small or not available. With higher margin markets over-indexed to cannibalization, we expect this dynamic to be less impactful in 2024 than last year.

Emmanuel Babeau: This is primarily due to combustible ware volumes increasingly skewed to lower margin markets, where smoke-free alternatives are small or not available, with higher margin markets over-indexed to cannibalization. We expect this dynamic to be less impactful in 2024 than last year. Now, let's focus on the mechanics behind our H1 margin delivery. Gross margin increased organically by 140 basis points and by 80 basis points in dollar terms. This was driven by our higher margin smoke-free business, pricing, and ongoing productivity savings across the value chain. As expected, SGNA cost growth stepped up in Q2, increasing 9.8% organically after a very modest increment in Q1 due to planned phasing of commercial spend.

Emmanuel Babeau: As in recent quarters, geographic mix was negative. This is primarily due to combustible-ware volumes increasingly skewed to lower margin markets, where smoke-free alternatives are small or not available, with higher margin markets over-indexed to cannibalization.

Emmanuel Babeau: We expect this dynamic to be less impactful in 2024 than last year.

Emmanuel Babeau: Now let's focus on the mechanics behind our H1 margin delivery. Gross margin increased organically by 140 basis points and by 80 basis points in dollar terms. This was driven by our higher margin smoke-free business, pricing, and ongoing productivity savings across the value chain. As expected, SG&A cost growth stepped up in Q2, increasing 9.8% organically after a very modest increment in Q1 due to planned phasing of commercial spend. The resulting 5.8% organic increase in H1 was below the rate of top line growth, driving +1 percentage point of margin expansion. With our successful back office program able to mitigate some of the investment step up with a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net revenue growth for the year.

Now let's focus on the mechanics behind our H1 margin delivery. Gross margin increased organically by 140 basis points and by 80 basis points in dollar terms. This was driven by our higher margin smoke-free business, pricing, and ongoing productivity savings across the value chain. As expected, SG&A cost growth stepped up in Q2, increasing 9.8% organically after a very modest increment in Q1 due to planned phasing of commercial spend. The resulting 5.8% organic increase in H1 was below the rate of top line growth, driving +1 percentage point of margin expansion. With our successful back office program able to mitigate some of the investment step up with a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net revenue growth for the year.

Emmanuel Babeau: Now, let's focus on the mechanics behind our H1 margin delivery. Gross margin increased organically by 140 basis points and by 80 basis points in dollar terms.

Emmanuel Babeau: This was driven by our higher margin smoke-free business.

Emmanuel Babeau: Pricing and ongoing productivity saving across the value chain.

Emmanuel Babeau: As expected, SGNA cost growth stepped up in Q2, increasing 9.8% organically after a very modest increment in Q1 due to planned phasing of commercial spend.

Emmanuel Babeau: The resulting 5.8% organic increase in H1 was below the rate of top-line growth, driving plus one percentage point of margin expansion, with our successful back-of-feed cost program able to mitigate some of the investments. With a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net-driven growth for the year. I am pleased to report we delivered over $300 million in H1 growth cost efficiency across both COGS and SG&A as we proactively drive bottom line growth.

Emmanuel Babeau: With a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net revenue growth for the year.

Emmanuel Babeau: I am pleased to report we delivered over $300 million in H1 gross cost efficiency across both COGS and SG&A. As we proactively drive bottom line growth, we expect an acceleration in H2 savings, notably from manufacturing as we progress towards our $2 billion target for 2024-26 period.

I am pleased to report we delivered over $300 million in H1 gross cost efficiency across both COGS and SG&A. As we proactively drive bottom line growth, we expect an acceleration in H2 savings, notably from manufacturing as we progress towards our $2 billion target for 2024-26 period.

Speaker Change: I am pleased to report we delivered over $300 million in H1 growth cost efficiency across both COGS and SG&A as we proactively drive bottom-line growth.

Emmanuel Babeau: We expect an acceleration in H2 savings, notably from manufacturing, as we progress towards our $2 billion target for the 2024-2026 period. The combination of these factors drove a plus 230 basis point expansion in our organic operating income margin. Despite a significant H1 skewed currency headwind, adjusted ROI margins were stable on a dollar basis. Moving to our smoke-free business. We estimate there were 36.5 million adult users of PMI smoke-free products as of June 30th, reflecting an additional 3.2 million during H1.

Speaker Change: We expect an acceleration in H2 savings, notably from manufacturing, as we progress towards our $2 billion target for the 2024-2026 period.

Emmanuel Babeau: The combination of these factors drove a 230 basis points expansion in our organic operating income margin. Despite a significant H1-skewed currency headwind, adjusted OI margin were stable on a dollar basis.

The combination of these factors drove a 230 basis points expansion in our organic operating income margin. Despite a significant H1-skewed currency headwind, adjusted OI margin were stable on a dollar basis.

Speaker Change: The combination of these factors drove a plus 230 basis point expansion in our organic operating income margin.

Speaker Change: Despite a significant H1 skewed currency headwind, adjusted OI margins were stable on a dollar basis.

Emmanuel Babeau: Moving to our smoke-free business, we estimate there were 36.5 million adult users of PMI smoke-free product as of 30 June, reflecting an additional 3.2 million during H1. This includes an estimated 30.8 million IQOS users, 5.2 million overall users, and 0.8 million VEEV users. The increase in both total and IQOS user was broad-based with notable progress in Japan, Europe, and newer growth markets such as Indonesia. In addition to ZYN's strong traction with legal-age nicotine users in the US, our smoke-free products are now present in 19 markets following recent launches of IQOS, ZYN, and VEEV.

Moving to our smoke-free business, we estimate there were 36.5 million adult users of PMI smoke-free product as of 30 June, reflecting an additional 3.2 million during H1. This includes an estimated 30.8 million IQOS users, 5.2 million overall users, and 0.8 million VEEV users. The increase in both total and IQOS user was broad-based with notable progress in Japan, Europe, and newer growth markets such as Indonesia. In addition to ZYN's strong traction with legal-age nicotine users in the US, our smoke-free products are now present in 19 markets following recent launches of IQOS, ZYN, and VEEV.

Speaker Change: Moving to our smoke-free business.

Speaker Change: We estimate there were 36.5 million adult users of PMI smoke-free products as of June 30th.

Speaker Change: reflecting an additional 3.2 million during H1.

Emmanuel Babeau: This includes an estimated 30.8 million ICOS users, 5.2 million ORAL users, and 0.8 million VIEs. The increase in both total and high-cost users was worldwide, with notable progress in Japan, Europe, and newer growth markets such as Indonesia, in addition to seeing strong traction with legalized nicotine users in the U.S. Our smoke-free products are now present in 90 markets, following recent launches of IKO's ZinNV. Focusing now on ICOs in Europe, where fundamental dynamics are developing very well, including the user growth I just mentioned. First, we see robust recoveries in markets where the characterizing flavor ban has passed the initial adjustment phase.

Speaker Change: This includes an estimated 30.8 million ICOS users, 5.2 million ORAL users, and 0.8 million ZEES users.

Speaker Change: The increase in both total and high-cost users was world-based, with notable progress in Japan, Europe , and newer growth markets such as Indonesia, in addition to seeing strong traction with legalized nicotine users in the U.S.

Speaker Change: Our smoke-free products are now present in 90 markets following recent launches of Icos, Zyn, and Veeve.

Emmanuel Babeau: Focusing now on IQOS in Europe where fundamental dynamics are developing very well, including the user growth I just mentioned. First, we see robust recoveries in markets where the characterizing flavor ban has passed the initial adjustment phase. Second, there is continued excellent growth in markets where IQOS is already well established such as Portugal, Hungary, and Greece. Last, new growth leader markets are emerging with accelerating momentum in Germany, Spain, Bulgaria, and Romania. In addition to a recovery in Poland following the launch of DELIA.

Focusing now on IQOS in Europe where fundamental dynamics are developing very well, including the user growth I just mentioned. First, we see robust recoveries in markets where the characterizing flavor ban has passed the initial adjustment phase. Second, there is continued excellent growth in markets where IQOS is already well established such as Portugal, Hungary, and Greece. Last, new growth leader markets are emerging with accelerating momentum in Germany, Spain, Bulgaria, and Romania. In addition to a recovery in Poland following the launch of DELIA.

Speaker Change: Focusing now on ICOS in Europe , where fundamental dynamics are developing very well, including the user growth I just mentioned.

Speaker Change: First, we see robust recoveries in markets where the characterizing flavor ban has passed the initial adjustment phase.

Emmanuel Babeau: Second, there is continued excellent growth in markets where ICOs are already well established, such as Portugal, Hungary, and Greece. Last, new growth leader markets are emerging with accelerating momentum in Germany, Spain, Bulgaria, and Romania, in addition to a recovery in Poland following the launch of DLX. Our Q2HTU share increased by 0.8 points year-on-year despite the impact of the flavor ban, due to the usual seasonal factors and a resilient combustible market. Q2's share was sequentially below Q1.

Speaker Change: Second, there is continued excellent growth in market where ICOS is already well-established, such as Portugal, Hungary, and Greece.

Speaker Change: Last, new growth leader markets are emerging with accelerating momentum in Germany, Spain, Bulgaria and Romania, in addition to a recovery in Poland following the launch of Delia.

Emmanuel Babeau: Our Q2 HTU share increased by 0.8 points year on year. Despite the impact of the flavor ban. Due to the usual seasonal factors and a resilient combustible market, Q2 share was sequentially below Q1. HTU adjusted IMS volume demonstrated robust growth, growing by 0.8 billion units sequentially to reach 12.9 billion on the four-quarter moving average, as expected. Adjusted in-market sales growth of 6.8% was slower than in Q1 due to higher comparison and the initial impact of the characterizing flavor ban, notably in Italy. Growth excluding Italy was close to 10%.

Our Q2 HTU share increased by 0.8 points year on year. Despite the impact of the flavor ban. Due to the usual seasonal factors and a resilient combustible market, Q2 share was sequentially below Q1. HTU adjusted IMS volume demonstrated robust growth, growing by 0.8 billion units sequentially to reach 12.9 billion on the four-quarter moving average, as expected. Adjusted in-market sales growth of 6.8% was slower than in Q1 due to higher comparison and the initial impact of the characterizing flavor ban, notably in Italy. Growth excluding Italy was close to 10%.

Speaker Change: Our Q2HTU share increased by 0.8 point year-on-year despite the impact of the flavour ban.

Speaker Change: Due to the usual seasonal factors and a resilient combustible market, Q2 share was sequentially below Q1.

Emmanuel Babeau: HTU adjusted IMS volume demonstrated robust growth, growing by 0.8 billion units sequentially to reach 12.9 billion on the four-quarter moving average. However, as expected, adjusted in-market sales growth of plus 6.8% was slower than in Q1 due to higher comparisons and the initial impact of the characterizing flavor ban, notably in Italy. Growth excluding Italy was close to 10%. The impact of the ban is progressing in line with our prior estimate in the majority of markets. Though the implementation in Italy during Q2 was slightly more pronounced than anticipated, this was primarily driven by earlier sell-through of affected SKUs and concurrent prices.

Speaker Change: HTU Adjusted IMS Volume demonstrated robust growth, growing by 0.8 billion units sequentially to reach 12.9 billion on the four-quarter moving average.

Speaker Change: As expected, adjusted in-market sales growth of plus 6.8% was slower than in Q1 due to higher comparison and the initial impact of the characterizing flavor ban, notably in Italy.

Emmanuel Babeau: The impact of the ban is progressing in line with our prior estimate in the majority of market, though the implementation in Italy during Q2 was slightly more pronounced than anticipated. This was primarily driven by earlier sell through of affected SKUs and concurrent pricing. It is important to note this is a transitory dynamic and I'm pleased to report a recovery in markets such as Greece, Czech Republic, Bulgaria, and Romania where the ban was implemented previously following an initial period of consumer adjustment. Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe adjusted IMS growth in the second half. This is supported by the planned step up in commercial activity behind IQOS including the introduction of DELIA and LEVIA HTUs to an increasing number of markets.

The impact of the ban is progressing in line with our prior estimate in the majority of market, though the implementation in Italy during Q2 was slightly more pronounced than anticipated. This was primarily driven by earlier sell through of affected SKUs and concurrent pricing. It is important to note this is a transitory dynamic and I'm pleased to report a recovery in markets such as Greece, Czech Republic, Bulgaria, and Romania where the ban was implemented previously following an initial period of consumer adjustment. Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe adjusted IMS growth in the second half. This is supported by the planned step up in commercial activity behind IQOS including the introduction of DELIA and LEVIA HTUs to an increasing number of markets.

Speaker Change: Growth excluding Italy was close to 10%.

Speaker Change: The impact of the ban is progressing in line with our prior estimate in the majority of markets.

Speaker Change: Though the implementation in Italy during Q2 was slightly more pronounced than anticipated.

Speaker Change: This was primarily driven by earlier sell-through of affected SKUs and concurrent pricing.

Emmanuel Babeau: It is important to note this is a transitory dynamic, and I'm pleased to report a recovery in markets such as Greece, the Czech Republic, Bulgaria, and Romania, where the ban was implemented previously following an initial period of consumer adjustment. Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe-adjusted IMS growth in the second half. This is supported by the planned step-up in commercial activity behind ICOs, including the introduction of Delia and Livia HTUs to an increasing number of markets.

Speaker Change: It is important to note this is a transitory dynamic and I'm pleased to report a recovery in markets such as Greece, Czech Republic, Bulgaria and Romania where the ban was implemented previously following an initial period of consumer adjustment.

Speaker Change: Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe-adjusted IMS growth in the second half.

Speaker Change: This is supported by the planned step-up in commercial activity behind ICOs, including the introduction of Delia and Livia HTUs to an increasing number of markets.

Emmanuel Babeau: Another illustration of our continued progress in Europe is in our key city IQOS share. Strong gains in cities with already high IQOS adoption such as Budapest, Bucharest, Bratislava, Lisbon, and Sofia and historically slower growth markets such as Madrid, London, and Amsterdam highlight the enduring growth potential in the region.

Another illustration of our continued progress in Europe is in our key city IQOS share. Strong gains in cities with already high IQOS adoption such as Budapest, Bucharest, Bratislava, Lisbon, and Sofia and historically slower growth markets such as Madrid, London, and Amsterdam highlight the enduring growth potential in the region.

Emmanuel Babeau: Another illustration of our continued progress in Europe is in our key city of Techshare. Strong gains in cities with already high high-cost adoptions, such as Budapest, Bucharest, Bratislava, Lisbon, and Sofia, and historically slower growth markets, such as Madrid, London, and Amsterdam, highlight the enduring growth potential in the region. Kapan demonstrated impressive I-code growth in the quarter, with adjusted HTU-IMS growth of plus 12.5%, representing the seventh consecutive quarter of double-digit progression. Adjusted IMS volumes continue to grow sequentially, reaching 10.5 billion units on a four-quarter moving average.

Speaker Change: Another illustration of our continued progress in Europe is in our key city of Techshare.

Speaker Change: Strong gains in cities with already high high-cost adoptions, such as Budapest, Bucharest, Bratislava, Lisbon, and Sofia, and historically slower growth markets such as Madrid, London, and Amsterdam, highlight the enduring growth potential in the region.

Emmanuel Babeau: Japan demonstrated impressive IQOS growth in the quarter with adjusted HTU IMS growth of 12.5%, representing the seventh consecutive quarter of double-digit progression. Adjusted IMS volumes continued to grow sequentially, reaching 10.5 billion units on the four-quarter moving average. Total tobacco share for our HTU brand increased by 3.1 points year-on-year to 29.4%, with national offtake share exceeding the impressive milestone of 30% in June.

Japan demonstrated impressive IQOS growth in the quarter with adjusted HTU IMS growth of 12.5%, representing the seventh consecutive quarter of double-digit progression. Adjusted IMS volumes continued to grow sequentially, reaching 10.5 billion units on the four-quarter moving average. Total tobacco share for our HTU brand increased by 3.1 points year-on-year to 29.4%, with national offtake share exceeding the impressive milestone of 30% in June.

Speaker Change: Kapan demonstrated impressive I-code growth in the quarter with adjusted HTU IMS growth of plus 12.5% representing the seventh consecutive quarter of double-digit progression.

Speaker Change: Adjusted IMS volumes continue to grow sequentially, reaching 10.5 billion units on a four-quarter moving average.

Emmanuel Babeau: Total tobacco share for our HTU brands increased by 3.1 points year-on-year to 29.4%, with national off-tech share exceeding the impressive milestone of 30% in June. We also maintain an off-tech share of over 35% in Tokyo, despite seasonal factors, where the overall category continues to track at over 50% of total off-tech and grow sequentially, demonstrating the continued potential in this important market. Our continuous innovation is a key driver of this growth, with Q2 seeing a strong step-up in user acquisition following the launch of Illuma Eye and further innovative stereo variants such as Capsule Consumables.

Speaker Change: Total tobacco share for our HTU brand increased by 3.1 points year-on-year to 29.4% with national off-tech share exceeding the impressive milestone of 30% in June .

Emmanuel Babeau: We also maintain offtake share of over 35% in Tokyo despite seasonal factors where the overall category continues to track at over 50% of total offtake and grow sequentially, demonstrating the continued potential in this important market.

We also maintain offtake share of over 35% in Tokyo despite seasonal factors where the overall category continues to track at over 50% of total offtake and grow sequentially, demonstrating the continued potential in this important market.

Speaker Change: We also maintain off-tech share of over 35% in Tokyo, despite seasonal factors.

Speaker Change: where the overall category continues to track at over 50% of total off-tech and grow sequentially, demonstrating the continued potential in this important market.

Emmanuel Babeau: Our continuous innovation is a key driver of this growth, with Q2 seeing a strong step up in user acquisition following the launch of ILUMA i and further innovative TEREA variants such as Capsule consumables.

Our continuous innovation is a key driver of this growth, with Q2 seeing a strong step up in user acquisition following the launch of ILUMA i and further innovative TEREA variants such as Capsule consumables.

Speaker Change: Our continuous innovation is a key driver of this growth, with Q2 seeing a strong step-up in user acquisition following the launch of Illuma Eye and further innovative stereo variants such as capsule consumables.

Emmanuel Babeau: Taking a more global view, we continue to see very promising IQOS growth across a broad range of geographies including low- and middle-income market as highlighted by key City of Tech shares. Accelerating growth in Indonesia, the world's largest cigarette market by volume excluding China, leads the way with increasing geographic reach and clove HTU innovation.

Taking a more global view, we continue to see very promising IQOS growth across a broad range of geographies including low- and middle-income market as highlighted by key City of Tech shares. Accelerating growth in Indonesia, the world's largest cigarette market by volume excluding China, leads the way with increasing geographic reach and clove HTU innovation.

Emmanuel Babeau: Taking a more global view, we continue to see very promising high-cost growth across a broad range of geographies, including low- and middle-income markets, as highlighted by key city-of-tech. Accelerating growth in Indonesia, the world's largest cigarette market by volume, excluding China, leads the way with increasing geographic reach and clove-HTU innovation. Markets across North Africa and the Middle East are also growing weights and sources of We show Saudi Arabia, Lebanon, Morocco, and Tunisia here, in addition to Egypt, where performance in Cairo remains robust despite recent pricing and a recovery in the combustible market.

Speaker Change: Taking a more global view, we continue to see very promising high-cost growth across a broad range of geographies, including low- and middle-income markets, as highlighted by key city-of-tech shares.

Speaker Change: Accelerating growth in Indonesia, the world's largest cigarette market by volume, excluding China, leads the way with increasing geographic reach and clove-HTU innovation.

Emmanuel Babeau: Markets across North Africa and the Middle East are also a growing weight and source of growth. We show Saudi Arabia, Lebanon, Morocco, and Tunisia here in addition to Egypt where performance in Cairo remains robust despite recent pricing and a recovery in the combustible market. I am also pleased to report very good progress in the UAE and Jordan following the recent launch of Iluma. Growth in Mexico City is very promising and the East Asian market of South Korea and Malaysia continue to perform well. Also worth highlighting is a successful contribution of duty free where we are increasingly leveraging our multi category portfolio to expand share in a growing market as travel recovers in Asia.

Markets across North Africa and the Middle East are also a growing weight and source of growth. We show Saudi Arabia, Lebanon, Morocco, and Tunisia here in addition to Egypt where performance in Cairo remains robust despite recent pricing and a recovery in the combustible market. I am also pleased to report very good progress in the UAE and Jordan following the recent launch of Iluma. Growth in Mexico City is very promising and the East Asian market of South Korea and Malaysia continue to perform well. Also worth highlighting is a successful contribution of duty free where we are increasingly leveraging our multi category portfolio to expand share in a growing market as travel recovers in Asia.

Speaker Change: Markets across North Africa and the Middle East are also a growing weight and source of growth.

Speaker Change: We show Saudi Arabia, Lebanon, Morocco and Tunisia here in addition to Egypt where performance in Cairo remains robust despite recent pricing and a recovery in the combustible market.

Emmanuel Babeau: I am also pleased to report very good progress in the UAE and Jordan. Following the recent launch of ILUMA, growth in Mexico City is very promising, and the East Asian markets of South Korea and Malaysia continue to perform well. Also worth highlighting is the successful contribution of Duty Free, where we are increasingly leveraging our multi-category portfolio to expand share in a growing market as travel recovers in Asia. Our fundamental HTU growth outlook for the year has not changed.

Speaker Change: I am also pleased to report very good progress in the UAE and Jordan.

Speaker Change: Following the recent launch of ILUMA, growth in Mexico City is very promising, and the East Asian market of South Korea and Malaysia continue to perform well.

Speaker Change: Also worth highlighting is a successful contribution of Duty Free where we are increasingly leveraging our multi-category portfolio to expand share in a growing market as travel recovers in Asia.

Emmanuel Babeau: Our fundamental HTU growth outlook for the year has not changed. H1 adjusted IMS growth of 11.4% reflects the strong dynamic I described across Japan, Europe, and global markets, partly offset by the transitory impact of the EU flavor ban. Indeed, growth excluding Europe accelerated compared to the last year and we expect this to continue.

Our fundamental HTU growth outlook for the year has not changed. H1 adjusted IMS growth of 11.4% reflects the strong dynamic I described across Japan, Europe, and global markets, partly offset by the transitory impact of the EU flavor ban. Indeed, growth excluding Europe accelerated compared to the last year and we expect this to continue.

Speaker Change: I don't know, man.

Emmanuel Babeau: H1-adjusted IMS growth of plus 11.4% reflects the strong dynamic I described across Japan, Europe, and global markets, partly offset by the transitory impact of the EU flavor ban. Indeed, growth excluding Europe accelerated compared to the last year, and we expect this to continue. However, we see an incremental headwind of around 2 billion units to our full-year adjusted IMS forecast, the majority of which is driven by the ongoing delay in approval for commercialization in Taiwan, which was previously expected around the midpoint of the year. We also factor in an impact of a few hundred million units for a slower recovery from the characterizing flavor ban in Europe, principally in Italy.

Speaker Change: Our fundamental HTU growth outlook for the year has not changed.

Speaker Change: H1-adjusted IMS growth of plus 11.4% reflects the strong dynamic I described across Japan, Europe and global markets, partly offset by the transitory impact of the EU flavour ban.

Speaker Change: Indeed, growth excluding Europe accelerated compared to the last year, and we expect this to continue.

Emmanuel Babeau: However, we see an incremental headwind of around 2 billion units to our full-year adjusted IMS forecast, the majority of which is driven by the ongoing delay in approval for commercialization in Taiwan, which was previously expected around the midpoint of the year. We also factor in an impact of a few hundred million units for a slower recovery from the characterizing flavor ban in Europe, principally in Italy. I would note that our revised full-year forecast for adjusted IMS growth of around 13% represents the same absolute volume increase as 2023 despite the EU headwind. We accordingly forecast full-year shipment volume of around 140 billion units, with shipment as usual expected to be a few billion units higher than adjusted IMS given continued offtake and user growth.

However, we see an incremental headwind of around 2 billion units to our full-year adjusted IMS forecast, the majority of which is driven by the ongoing delay in approval for commercialization in Taiwan, which was previously expected around the midpoint of the year. We also factor in an impact of a few hundred million units for a slower recovery from the characterizing flavor ban in Europe, principally in Italy. I would note that our revised full-year forecast for adjusted IMS growth of around 13% represents the same absolute volume increase as 2023 despite the EU headwind. We accordingly forecast full-year shipment volume of around 140 billion units, with shipment as usual expected to be a few billion units higher than adjusted IMS given continued offtake and user growth.

Speaker Change: However, we see an incremental headwind of around 2 billion units to our full year adjusted IMS forecast, the majority of which is driven by the ongoing delay in approval for commercialization in Taiwan.

Speaker Change: which was previously expected around the bin point of the year.

Speaker Change: We also factor in an impact of a few hundred million units for a slower recovery from the characterizing flavor ban in Europe , principally in Italy.

Emmanuel Babeau: I would note that our revised full-year forecast for adjusted IMS growth of around 13% represents the same absolute volume increase as 2023 despite the EU headwind. We accordingly forecast full-year achievement volume of around 140 billion units, with shipment as usual expected to be a few billion units higher than adjusted IMS given continued off-tech and user growth. Importantly, we expect very strong H2 delivery in adjusted IMS on both a sequential and year-on-year basis, between plus 14 and plus 15 percent growth.

Speaker Change: I would note that our revised full year forecast for adjusted IMS growth of around 13% represents the same absolute volume increase as 2023 despite the EU headwind.

Speaker Change: We accordingly forecast full year achievement volume of around 140 billion unit with shipment as usual expected to be a few billion unit higher than adjusted IMS given continued off-tech and user growth.

Emmanuel Babeau: Importantly, we expect very strong H2 delivery in adjusted IMS on both a sequential and year-on-year basis to between 14% and 15% growth. This is supported by a notable step up in commercial activity, continued momentum in Japan, and increasingly dynamic global market. This includes the market I just mentioned and the ongoing acceleration in duty-free for Europe. A broadening of growth through acceleration in Germany, Spain, the UK, and Romania adds to the ongoing momentum in geographies such as Portugal and Greece. H2 should also see several markets start to rebound from initial fiscal band impact, including a gradual recovery in Italy.

Importantly, we expect very strong H2 delivery in adjusted IMS on both a sequential and year-on-year basis to between 14% and 15% growth. This is supported by a notable step up in commercial activity, continued momentum in Japan, and increasingly dynamic global market. This includes the market I just mentioned and the ongoing acceleration in duty-free for Europe. A broadening of growth through acceleration in Germany, Spain, the UK, and Romania adds to the ongoing momentum in geographies such as Portugal and Greece. H2 should also see several markets start to rebound from initial fiscal band impact, including a gradual recovery in Italy.

Speaker Change: Importantly, we expect a very strong H2 delivery in adjusted IMS on both a sequential and year-on-year basis to between plus 14 and plus 15 percent growth.

Emmanuel Babeau: This is supported by a notable step-up in commercial activity, continued momentum in Japan, and increasingly dynamic global markets. This includes the market I just mentioned and the ongoing acceleration in duty free. For Europe, a broadening of growth through acceleration in Germany, Spain, the UK, and Romania adds to the ongoing momentum in geographies such as Portugal and Greece.

Speaker Change: This is supported by a notable step up in commercial activity, continued momentum in Japan and increasingly dynamic global markets.

Speaker Change: This includes the market I just mentioned and the ongoing acceleration in duty-free.

Speaker Change: For Europe , a broadening of growth through acceleration in Germany, Spain, the UK and Romania adds to the ongoing momentum in geographies such as Portugal and Greece.

Emmanuel Babeau: H2 should also see several markets start to rebound from initial flavorband impact, including a gradual recovery in Italy. Turning now to Zin, where very good US progress continued in Q2, with close to plus 70% growth in 12-month rolling ship. As we shared earlier in the year, strong demand dynamics have created short-term supply chain constraints, which have impacted volume growth. As shown on this slide, this has resulted in a temporary slowdown in the category.

Speaker Change: H2 should also see several markets start to rebound from initial fleasor ban impact, including a gradual recovery in Italy.

Emmanuel Babeau: Turning now to ZYN where very good US progress continued in Q2 with close to 70% growth in 12 months rolling shipments. As we shared earlier in the year, strong demand dynamics have created short-term supply chain constraint which has impacted volume growth as shown on this slide. This has resulted in a temporary slowdown of the category. ZYN's premium positioning and superior brand equity remain strong with ZYN maintaining very robust category volume and value share. Despite these availability challenges and the recent price increase, we also remain highly focused on marketing ZYN responsibly to prevent unintended use.

Turning now to ZYN where very good US progress continued in Q2 with close to 70% growth in 12 months rolling shipments. As we shared earlier in the year, strong demand dynamics have created short-term supply chain constraint which has impacted volume growth as shown on this slide. This has resulted in a temporary slowdown of the category. ZYN's premium positioning and superior brand equity remain strong with ZYN maintaining very robust category volume and value share. Despite these availability challenges and the recent price increase, we also remain highly focused on marketing ZYN responsibly to prevent unintended use.

Speaker Change: Turning now to Zin, where very good US progress continued in Q2 with close to plus 70% growth in 12 months rolling shipments.

Speaker Change: As we shared earlier in the year, strong demand dynamics have created short-term supply chain constraints, which have impacted volume growth.

Speaker Change: As shown on this slide, this has resulted in a temporary slowdown of the category.

Emmanuel Babeau: Zin's premium positioning and superior brand equity remain strong, with Zin maintaining very robust category volume and value share despite these availability challenges and the recent price increases. We also remain highly focused on marketing ZIN responsibly to prevent unintended use.

Speaker Change: ZIN's premium positioning and superior brand equity remain strong with ZIN maintaining very robust category volume and value share despite these availability challenges and a recent price increase.

Speaker Change: We also remain highly focused on marketing ZIN responsibly to prevent unintended use.

Emmanuel Babeau: We are making good progress on expanding production and continue to expect a gradual improvement through Q3, with sequentially higher volume and for production volumes to meet expected consumer demand during the course of Q4. We expect the ongoing expansion of the existing facility in Kentucky to provide around 900 million cans of capacity for 2025. We also recently announced a planned investment in a new plant in Colorado, which is due to begin preliminary operation by the end of next year. Together these plans support our US and growth ambitions for the coming years.

We are making good progress on expanding production and continue to expect a gradual improvement through Q3, with sequentially higher volume and for production volumes to meet expected consumer demand during the course of Q4. We expect the ongoing expansion of the existing facility in Kentucky to provide around 900 million cans of capacity for 2025. We also recently announced a planned investment in a new plant in Colorado, which is due to begin preliminary operation by the end of next year. Together these plans support our US and growth ambitions for the coming years.

Emmanuel Babeau: We are making good progress on expanding production and continue to expect a gradual improvement through Q3 with sequentially higher volumes and production volumes to meet expected consumer demand during the course of Q4. We expect the ongoing expansion of the existing facilities in Kentucky to provide around 900 million cans of capacity by 2025. We also recently announced a planned investment in a new plant in Colorado, which is due to begin preliminary operation by the end of next year.

Speaker Change: We are making good progress on expanding production and continue to expect a gradual improvement through Q3, with sequentially higher volume and for production volumes to meet expected consumer demand during the course of Q4.

Speaker Change: We expect the ongoing expansion of the existing facility in Kentucky to provide around 900 million cans of capacity for 2025.

Speaker Change: We also recently announced a planned investment in a new plant in Colorado, which is due to begin preliminary operation by the end of next year.

Emmanuel Babeau: Together, these plans support our U.S. growth ambitions for the coming year. For 2024, we are now forecasting a U.S. shipment range of 560 to 580 million cans to reflect strongly increasing demand from adult nicotine users and the progress made on increasing our production capacity.

Speaker Change: Together, these plans support our U.S. in-growth ambitions for the coming year.

Emmanuel Babeau: For 2024 we are now forecasting a US shipment range of 560 to 580 million cans to reflect strongly increasing demand from adult nicotine users and the progress made on increasing our production capacity.

For 2024 we are now forecasting a US shipment range of 560 to 580 million cans to reflect strongly increasing demand from adult nicotine users and the progress made on increasing our production capacity.

Speaker Change: For 2024, we are now forecasting a U.S. shipment range of 560 to 580 million cans to reflect strongly increasing demand from adult nicotine users and the progress made on increasing our production capacity.

Emmanuel Babeau: I will now take a moment to update you on the international expansion of our smoke-free business. Our multi-category approach is gaining momentum as we unlock new horizon of growth with the increasing commercialization of IQOS, ZYN, and VEEV across markets. Our focus strategy for VEEV is showing very good early results. In Europe, closed pods are accelerating within the dynamic e-vapor category; we are seeing strong traction of our VEEV ONE product, achieving a number one closed pod position in five markets within the first year of launch including Italy, the Czech Republic, and Romania.

I will now take a moment to update you on the international expansion of our smoke-free business. Our multi-category approach is gaining momentum as we unlock new horizon of growth with the increasing commercialization of IQOS, ZYN, and VEEV across markets. Our focus strategy for VEEV is showing very good early results. In Europe, closed pods are accelerating within the dynamic e-vapor category; we are seeing strong traction of our VEEV ONE product, achieving a number one closed pod position in five markets within the first year of launch including Italy, the Czech Republic, and Romania.

Speaker Change: I will now take a moment to update you on the international expansion of our smoke-free business.

Speaker Change: Our multi-category approach is gaining momentum as we unlock new horizons of growth with increasing commercialization of ICOs, ZINs, and VIVs across markets.

Speaker Change: Our focus strategy for VEVE is showing very good early results.

Speaker Change: In Europe , closed pods are accelerating within the dynamic e-vapor category. We are seeing strong traction of our V1 product, achieving a number one closed pod position in five markets within the first year of launch, including Italy, the Czech Republic, and Romania.

Emmanuel Babeau: We are seeing strong traction for our V1 product, achieving a number one closed pod position in five markets within the first year of launch, including Italy, the Czech Republic, and Romania. We continue to observe good repeat purchase and conversion rates, which is often a challenge for this category. We expect continued volume momentum in H2, supported by ongoing geographic expansion, and to reach profitability in Q3. For Zinn, there is a large opportunity outside of the U.S., which we are working to capture. Our international nicotine pod volume, including the Nordics, grew by over plus 60% in H1, matching U.S. ingrowth.

Emmanuel Babeau: We continue to observe good repeat purchase and conversion rate which is often a challenge for this category. We expect continued volume momentum in H2 supported by ongoing geographic expansion, and to reach profitability in Q3. For ZYN, there is a large opportunity outside of the US which we are working to capture. Our international nicotine pouch volume, including the Nordics, grew by over 60% in H1, matching us in growth. We see promising results in a number of markets including Mexico, South Africa, Pakistan, and the important UK market where we have seen strong traction with only limited distribution so far. Our expansion of the IQOS portfolio remains active as we innovate to broaden and enhance our offer for both existing users and switching adult smokers.

We continue to observe good repeat purchase and conversion rate which is often a challenge for this category. We expect continued volume momentum in H2 supported by ongoing geographic expansion, and to reach profitability in Q3. For ZYN, there is a large opportunity outside of the US which we are working to capture. Our international nicotine pouch volume, including the Nordics, grew by over 60% in H1, matching us in growth. We see promising results in a number of markets including Mexico, South Africa, Pakistan, and the important UK market where we have seen strong traction with only limited distribution so far. Our expansion of the IQOS portfolio remains active as we innovate to broaden and enhance our offer for both existing users and switching adult smokers.

Speaker Change: We continue to observe good repeat purchase and conversion rate, which is often a challenge for this category.

Speaker Change: We expect continued volume momentum in H2, supported by ongoing geographic expansion, and to reach profitability in Q3.

Speaker Change: For Zin, there is a large opportunity outside of the U.S. which we are working to capture. Our international nicotine pod volume, including the Nordics, grew by over plus 60% in H1, matching U.S. in-growth.

Emmanuel Babeau: We see promising results in a number of markets, including Mexico, South Africa, Pakistan, and the important UK market, where we have seen strong traction with only limited distribution so far. Our expansion of the IQOS portfolio remains active as we innovate to broaden and enhance our offer for both existing users and adult smokers who are switching. Further market launches are planned in H2, including Delia and Livia HTUs and the new Illuma Eye device range, which is currently only available in Japan.

Speaker Change: We see promising results in a number of markets, including Mexico, South Africa, Pakistan, and the important UK market where we have seen strong traction with only limited distribution so far.

Speaker Change: Our expansion of the ICOS portfolio remains active as we innovate to broaden and enhance our offer for both existing users and switching adult smokers.

Emmanuel Babeau: Further market launches are planned in H2 including DELIA, LEVIA, HTUs, and the new IQOS ILUMA i device range which is currently only available in Japan.

Further market launches are planned in H2 including DELIA, LEVIA, HTUs, and the new IQOS ILUMA i device range which is currently only available in Japan.

Speaker Change: Further market launches are planned in H2, including Delia and Livia HTUs, and the new Illuma Eye device, REND, which is currently only available in Japan.

Emmanuel Babeau: We also continue with our preparation for ICO CILUMA in the US, and we are underway with consumer engagement for our first city pilot in Austin, Texas, with the ICO3 system, which we expect to start in Q4. As mentioned previously, the commercialization will be initially limited in scope and focused on direct activation of select legal edge brokers in a few cities, allowing us to experiment with different elements of the commercial model. The main purpose is to fine-tune our approach and readiness in anticipation of the full launch of ILUMA.

Emmanuel Babeau: We also continue with our preparation for IQOS ILUMA in the US and we are underway with consumer engagement for our first city pilot in Austin, Texas with the IQOS 3 system which we expect to start in Q4. As mentioned previously, the commercialization will be initially limited in scope and focused on direct activation of select legal age smokers in a few cities, allowing us to experiment with different elements of the commercial model. The main purpose is to fine tune our approach and readiness in anticipation of the at scale launch of ILUMA. We continue to assume an authorization from the FDA in the second half of 2020.

We also continue with our preparation for IQOS ILUMA in the US and we are underway with consumer engagement for our first city pilot in Austin, Texas with the IQOS 3 system which we expect to start in Q4. As mentioned previously, the commercialization will be initially limited in scope and focused on direct activation of select legal age smokers in a few cities, allowing us to experiment with different elements of the commercial model. The main purpose is to fine tune our approach and readiness in anticipation of the at scale launch of ILUMA. We continue to assume an authorization from the FDA in the second half of 2020.

Speaker Change: We also continue with our preparation for ICO CILUMA in the U.S., and we are underway with consumer engagement for our first city pilot in Austin, Texas, with the ICO3 system, which we expect to start in Q4.

Speaker Change: As mentioned previously, the commercialization will be initially limited in scope and focused on direct activation of select legal hedge brokers in a few cities, allowing us to experiment with different elements of the commercial model.

Speaker Change: The main purpose is to fine-tune our approach and readiness in anticipation of the at-scale launch of ILUMA. We continue to assume an authorization from the FDA in the second half of 2025.

Emmanuel Babeau: We continue to assume an authorization from the FDA in the second half of 2025. Focusing now on combustibles, our portfolio delivered robust organic net revenue growth and a very positive profit contribution, as I covered earlier. Please reflect resilient volume despite very strong Q2 pricing of plus 8.7%, including our proactive action to maximize growth. It is worth noting the large majority of our revenue is derived from regular pricing action unrelated to significant currency devaluation.

Emmanuel Babeau: Focusing now on combustibles, our portfolio delivered robust organic net revenue growth and a very positive profit contribution. As I covered earlier, this reflects resilient volume despite very strong Q2 pricing of 8.7% including our proactive action to maximize growth. It is worth noting the large majority of our pricing is derived from regular pricing action unrelated to significant currency devaluation. Factoring a strong H1 and favorable outlook. We now forecast an increased fully combustible price variance of 7 to 8%. Our cigarette category share was stable in H1 and down 0.2 points in Q2 or stable excluding market mix impact. Lower share in Egypt and Indonesia was offset by positive contribution from Turkey, India, and the Europe region. Again, despite strong pricing, our global brand grew category share in the quarter with Marlboro gaining 0.3 points to 10.1%.

Focusing now on combustibles, our portfolio delivered robust organic net revenue growth and a very positive profit contribution. As I covered earlier, this reflects resilient volume despite very strong Q2 pricing of 8.7% including our proactive action to maximize growth. It is worth noting the large majority of our pricing is derived from regular pricing action unrelated to significant currency devaluation. Factoring a strong H1 and favorable outlook. We now forecast an increased fully combustible price variance of 7 to 8%. Our cigarette category share was stable in H1 and down 0.2 points in Q2 or stable excluding market mix impact. Lower share in Egypt and Indonesia was offset by positive contribution from Turkey, India, and the Europe region. Again, despite strong pricing, our global brand grew category share in the quarter with Marlboro gaining 0.3 points to 10.1%.

Speaker Change: Focusing now on combustibles, our portfolio delivered robust organic net revenue growth and a very positive profit contribution as I covered earlier.

Speaker Change: This reflects resilient volume despite very strong Q2 pricing of plus 8.7%, including our proactive action to maximize growth.

Speaker Change: It is worth noting the large majority of our pricing is derived from regular pricing action unrelated to significant currency devaluation.

Emmanuel Babeau: Factoring a strong H1 and a favourable outlook, we now forecast an increased fully-combustible price variance of plus 7 to plus 8%. Our cigarette category share was stable in H1 and down 0.2 points in Q2, or stable excluding market mix impact. Lower share in Egypt and Indonesia was offset by positive contributions from Turkey, India, and the European region, again despite strong prices.

Speaker Change: Factoring the strong H1 and favorable outlook, we now forecast an increased fully combustible price variance of plus 7 to plus 8 percent.

Speaker Change: Our cigarette category share was stable in H1 and down 0.2 points in Q2, or stable excluding market mix impact.

Speaker Change: Lower share in Egypt and Indonesia was offset by positive contributions from Turkey, India and the Europe region, again despite strong pricing.

Emmanuel Babeau: Our Global Brand Group category share in the quarter, with Marlboro gaining plus 0.3 points to 10.1% on a global basis. Our leadership in combustibles is a critical enabler to maximize switching to smoke-free products, and we target a stable category share over time. As mentioned previously, we evaluate our strategy on a market-by-market basis and have the flexibility to adapt our approach where smoke-free products have already reached critical mass. Taking a more holistic view of the business, our transformation and Smokefree Journey are backed by a strategy that seeks to embed sustainability in all that we do.

Speaker Change: Our global brand group category share in the quarter with Marlboro gaining plus 0.3 points to 10.1%.

Emmanuel Babeau: On a global basis, our leadership in combustible is a critical enabler to maximize switching to smoke-free product, and we target a stable category share over time. As mentioned previously, we evaluate our strategy on a market-by-market basis and have the flexibility to adapt our approach where smoke-free products have already reached critical mass.

On a global basis, our leadership in combustible is a critical enabler to maximize switching to smoke-free product, and we target a stable category share over time. As mentioned previously, we evaluate our strategy on a market-by-market basis and have the flexibility to adapt our approach where smoke-free products have already reached critical mass.

Speaker Change: On a global basis,

Speaker Change: Our leadership in combustible is a critical enabler to maximize switching to smoke-free products, and we target a stable category share over time.

Speaker Change: As mentioned previously, we evaluate our strategy on a market-by-market basis and have the flexibility to adapt our approach where smoke-free products have already reached critical mass.

Emmanuel Babeau: Taking a more holistic view on the business, our transformation and smoke-free journey are backed by a strategy that seeks to embed sustainability in all that we do. We are making strong progress towards our product transformation targets. Our smoke-free products are now available in 90 markets, placing us on track for our aspiration of 100 by 2025. We are also moving nicely towards our objective for low- and middle-income countries to comprise over 50% of smoke-free product market. The rapid growth of our estimated SFP user base, which now stands at around 36.5 million adult users, as previously described, is further testament to this progress.

Taking a more holistic view on the business, our transformation and smoke-free journey are backed by a strategy that seeks to embed sustainability in all that we do. We are making strong progress towards our product transformation targets. Our smoke-free products are now available in 90 markets, placing us on track for our aspiration of 100 by 2025. We are also moving nicely towards our objective for low- and middle-income countries to comprise over 50% of smoke-free product market. The rapid growth of our estimated SFP user base, which now stands at around 36.5 million adult users, as previously described, is further testament to this progress.

Speaker Change: Taking a more holistic view on the business, our transformation and Smoke-Free Journey are backed by a strategy that seeks to embed sustainability in all that we do.

Emmanuel Babeau: We are making strong progress towards our product transformation target. Our smoke-free products are now available in 90 markets, placing us on track for our aspiration of 100 by 2025. We are also moving nicely towards our objective for low- and middle-income countries to comprise over 50% of the smoke-free product market. The rapid growth of our estimated SFP user base, which now stands at around 36.5 million adult users, as previously described, is further testament to this progress.

Speaker Change: We are making strong progress towards our product transformation targets. Our smoke-free products are now available in 90 markets, placing us on track for our aspiration of 100 by 2025.

Speaker Change: We are also moving nicely towards our objective for low- and middle-income countries to comprise over 50% of the smoke-free product market.

Speaker Change: The rapid growth of our estimated SFP user base, which now stands at around 36.5 million adult users, as previously described, is further testament to this progress.

Emmanuel Babeau: With regard to our operation, decarbonization is an important focus area, and we are very pleased to have been awarded the top spot on the Forbes 2024 net zero leader list, which highlights the 100 US public companies best positioned to reduce their greenhouse gas emissions. It also follows the announcement earlier this year of CDP awarding us a AAA rating for our disclosure and efforts on climate change, forest, and water security.

With regard to our operation, decarbonization is an important focus area, and we are very pleased to have been awarded the top spot on the Forbes 2024 net zero leader list, which highlights the 100 US public companies best positioned to reduce their greenhouse gas emissions. It also follows the announcement earlier this year of CDP awarding us a AAA rating for our disclosure and efforts on climate change, forest, and water security.

Emmanuel Babeau: With regard to our operation, decarbonization is an important focus area, and we are very pleased to have been awarded the top spot on the Forbes 2024 Net Zero Leader List, which highlights the 100 U.S. public companies' best positions to reduce their greenhouse gas emissions. It also follows the announcement earlier this year of CDP awarding us a triple A rating for our disclosure and efforts on climate change, forest, and water systems. This recognition reflects our continued focus on our sustainability performance and robust reporting as we continue to work towards a smoke-free future.

Speaker Change: With regard to our operation, decarbonization is an important focus area, and we are very pleased to have been awarded the top spot on the Forbes 2024 Net Zero Leader List, which highlights the 100 U.S. public company best position to reduce their greenhouse gas emissions.

Speaker Change: It also follows the announcement earlier this year of CDP awarding us a AAA rating for our disclosure and efforts on climate change, forest and water security.

Emmanuel Babeau: This recognition reflects our continued focus on our sustainability performance and robust reporting as we continue to work towards a smoke-free future.

This recognition reflects our continued focus on our sustainability performance and robust reporting as we continue to work towards a smoke-free future.

Speaker Change: This recognition reflects our continued focus on our sustainability performance and robust reporting as we continue to work towards a smoke-free future.

Emmanuel Babeau: This brings me to our outlook for 2024. Following an excellent H1 performance and strong business momentum as we start the second half, we are raising our four-year currency neutral and U.S. dollar growth forecast. This is supported by accelerated total volume growth and pricing and reflects the very strong outlook for Zin despite short-term supply constraints and the increasing profitability of ICOs due to operating leverage, manufacturing efficiencies, and pricing. We continue to target close to $15 billion in smoke-free net revenue for the year.

Emmanuel Babeau: This brings me to our outlook for 2024.

This brings me to our outlook for 2024.

Speaker Change: This brings me to our outlook for 2024.

Emmanuel Babeau: Following an excellent H1 performance and strong business momentum, as we start the second half, we are raising our full year currency neutral and US Dollar growth forecast. This is supported by accelerated total volume growth and pricing, and reflects the very strong outlook for ZYN. Despite short-term supply constraints and the increasing profitability of IQOS due to operating leverage, manufacturing efficiencies, and pricing, we continue to target close to $15 billion in smoke-free net revenue for the year. Taking these factors into account and a robust combustible performance, we are increasing our organic net revenue growth forecast to a range of 7.5% to 9%.

Following an excellent H1 performance and strong business momentum, as we start the second half, we are raising our full year currency neutral and US Dollar growth forecast. This is supported by accelerated total volume growth and pricing, and reflects the very strong outlook for ZYN. Despite short-term supply constraints and the increasing profitability of IQOS due to operating leverage, manufacturing efficiencies, and pricing, we continue to target close to $15 billion in smoke-free net revenue for the year. Taking these factors into account and a robust combustible performance, we are increasing our organic net revenue growth forecast to a range of 7.5% to 9%.

Speaker Change: Following an excellent H1 performance and strong business momentum as we start the second half, we are raising our fully currency neutral and US dollar growth forecast.

Speaker Change: This is supported by accelerated total volume growth and pricing and reflects the very strong outlook for Zin despite short-term supply constraints and the increasing profitability of ICOs due to operating leverage, manufacturing efficiencies and pricing.

Speaker Change: We continue to target close to $15 billion in smoke-free net revenue for the year.

Emmanuel Babeau: Taking these factors into account and a robust combustible performance, we are increasing our organic net revenue growth forecast to a range of plus 7.5 to plus 9 percent. In addition to strong top-line growth, the positive smoke-free mix effect, combustible recovery, and further cost efficiency enable healthy margin expansion. We are accordingly raising our Organic Operating Income Growth Forecast to plus 11 to plus 13% for the year. We continue to target Adjusted Gross Margin Expansion for both smoke-free products and combustibles and Adjusted OI Margin Expansion for total PMI, all in both organic and dollar terms.

Speaker Change: Taking these factors into account and a robust combustible performance, we are increasing our organic net revenue growth forecast to a range of plus 7.5 to plus 9 percent.

Emmanuel Babeau: In addition to strong top-line growth, the positive smoke-free mix effect, combustible recovery, and further cost efficiency enable healthy margin expansion. We are accordingly raising our organic operating income growth forecast to 11% to 13% for the year. We continue to target adjusted gross margin expansion for both smoke-free product and combustible and adjusted OI margin expansion for total PMI all-in both organic and dollar terms.

In addition to strong top-line growth, the positive smoke-free mix effect, combustible recovery, and further cost efficiency enable healthy margin expansion. We are accordingly raising our organic operating income growth forecast to 11% to 13% for the year. We continue to target adjusted gross margin expansion for both smoke-free product and combustible and adjusted OI margin expansion for total PMI all-in both organic and dollar terms.

Speaker Change: In addition to strong top-line growth, the positive smoke-free mix effect, combustible recovery, and further cost efficiency enable healthy margin expansion.

Speaker Change: We are accordingly raising our Organic Operating Income Growth Forecast to plus 11 to plus 13% for the year.

Speaker Change: We continue to target Adjusted Gross Margin Expansion for both smoke-free products and combustibles, and Adjusted OI Margin Expansion for total PMI, all in both organic and dollar terms.

Emmanuel Babeau: Consequently, and also factoring a lower forecast net financing cost, we are raising our forecast for currency-neutral Adjusted Diluted EPS growth to 11% to 13%. This translates into a range of $6.33 to 6.45, including an unfavorable currency impact of $0.34 for the year at prevailing rate. The increased currency headwind versus prior guidance is primarily due to the Q2 impact already described, as shown by the increase in our forecast USD EPS growth to 5% to 7%. The underlying strength of our business and proactive mitigating actions have allowed us to more than compensate for this, and we expect to deliver on our objective of strong growth in the latter terms.

Consequently, and also factoring a lower forecast net financing cost, we are raising our forecast for currency-neutral Adjusted Diluted EPS growth to 11% to 13%. This translates into a range of $6.33 to 6.45, including an unfavorable currency impact of $0.34 for the year at prevailing rate. The increased currency headwind versus prior guidance is primarily due to the Q2 impact already described, as shown by the increase in our forecast USD EPS growth to 5% to 7%. The underlying strength of our business and proactive mitigating actions have allowed us to more than compensate for this, and we expect to deliver on our objective of strong growth in the latter terms.

Emmanuel Babeau: Consequently, and also factoring a lower forecast net financing cost, we are raising our forecast for currency-neutral adjusted diluted EPS growth to plus 11 to plus 13%. This translates into a range of $6.33 to $6.45, including an unfavorable currency impact of $0.34 for the year at prevailing rates.

Speaker Change: Consequently, and also factoring a lower forecast net financing cost, we are raising our forecast for currency neutral adjusted diluted EPS growth to plus 11 to plus 13 percent.

Speaker Change: This translates into a range of $6.33 to $6.45, including an unfavorable currency impact of $0.34 for the year at prevailing rates.

Emmanuel Babeau: The increased currency headwind versus prior guidance is primarily due to the Q2 impact already described. However, as shown by the increase in our forecast US EPS growth to plus 5 to plus 7 percent, the undying strength of our business and proactive mitigating actions have allowed us to more than compensate for this, and we expect to deliver on our objective of strong growth in dollar terms. Focusing on the second half in more detail, we expect another strong performance driven by excellent high-cost adjusted IMS growth, progressive improvements in ZIN volume, and continued positive impact from our actions to drive bottom-line growth.

Speaker Change: The increased currency Edwin versus prior guidance is primarily due to the Q2 impact already described.

Speaker Change: As shown by the increase in our forecast U.S. EPS growth, 2.5% to 2.7%,

Speaker Change: The undying strength of our business and proactive mitigating actions have allowed us to more than compensate for this, and we expect to deliver on our objective of strong growth in dollar terms.

Emmanuel Babeau: Focusing on the second half in more detail, we expect another strong performance driven by excellent IQOS adjusted IMS growth, the progressive improvement in ZYN volume, and continued positive impact from our actions to drive bottom line growth. For Q3, we forecast a record high quarterly adjusted diluted EPS of $1.77 to $1.82 despite a significant step up in commercial spending and an unfavorable currency impact of $0.02 at prevailing rates. This is in contrast to a forecast currency tailwind of $0.04 for H2 overall which enable us to target accelerated US dollar adjusted diluted EPS growth. We include a table of estimated currency impact by quarter in the appendix.

Focusing on the second half in more detail, we expect another strong performance driven by excellent IQOS adjusted IMS growth, the progressive improvement in ZYN volume, and continued positive impact from our actions to drive bottom line growth. For Q3, we forecast a record high quarterly adjusted diluted EPS of $1.77 to $1.82 despite a significant step up in commercial spending and an unfavorable currency impact of $0.02 at prevailing rates. This is in contrast to a forecast currency tailwind of $0.04 for H2 overall which enable us to target accelerated US dollar adjusted diluted EPS growth. We include a table of estimated currency impact by quarter in the appendix.

Speaker Change: Focusing on the second half in more detail, we expect another strong performance driven by excellent high-cost adjusted IMS growth, the progressive improvements in Zin volume, and continued positive impact from our actions to drive bottom-line growth.

Emmanuel Babeau: For Q3, we forecast a record-high quarterly adjusted deleted EPS of $1.77 to $1.82 despite a significant step up in commercial spending and an unfavorable currency impact of $0.02 at prevailing rates. This is in contrast to a forecast currency tailwind of $0.04 for H2 overall, which enables us to target accelerated US dollar adjusted diluted EPS growth. We include a table of estimated currency impact by quarter in the app

Speaker Change: For Q3, we forecast a record-high quarterly adjusted diluted EPS of $1.77 to $1.82 despite a significant step up in commercial spending and an unfavorable currency impact of $0.02 at prevailing rates.

Speaker Change: This is in contrast to a forecast currency tailwind of $0.04 for H2 overall, which enables us to target accelerated US dollar adjusted diluted EPS growth.

Speaker Change: We include a table of estimated currency impact by quarter in the appendix.

Emmanuel Babeau: This Q3 forecast notably reflects another quarter of dynamic growth with HTU shipment of 34.35 billion units and an acceleration in HTU-adjusted IMS growth. Given expectation for a strong full-year profit delivery, we are forecasting operating cash flow of around $11 billion, which is at the upper end of our previous forecast range at prevailing exchange rate and subject to year-end working capital requirement. We expect this improvement to more than offset an increase in capital expenditure to around $1.3 to 1.4 billion as we further accelerate ZYN capacity expansion. Last, we continue to target a 0.3 to 0.5x improvement in our net debt to Adjusted EBITDA ratio in 2024, driven by profit growth and strong cash flow generation.

This Q3 forecast notably reflects another quarter of dynamic growth with HTU shipment of 34.35 billion units and an acceleration in HTU-adjusted IMS growth. Given expectation for a strong full-year profit delivery, we are forecasting operating cash flow of around $11 billion, which is at the upper end of our previous forecast range at prevailing exchange rate and subject to year-end working capital requirement. We expect this improvement to more than offset an increase in capital expenditure to around $1.3 to 1.4 billion as we further accelerate ZYN capacity expansion. Last, we continue to target a 0.3 to 0.5x improvement in our net debt to Adjusted EBITDA ratio in 2024, driven by profit growth and strong cash flow generation.

Emmanuel Babeau: This Q3 forecast notably reflects another quarter of dynamic growth with HTU shipment of 34-35 billion units and an acceleration in HTU-adjusted IMS growth. Given expectations for a strong four-year profit delivery, we are forecasting operating cash flow of around $11 billion, which is at the upper end of our previous forecast range, at the prevailing exchange rate, and subject to year-end working capital requirements. We expect this improvement to more than offset an increase in capital expenditure to around 1.3 to 1.4 billion dollars as we further accelerate zinc capacity expansion.

Speaker Change: This Q3 forecast notably reflects another quarter of dynamic growth with HTU shipment of 34-35 billion units and an acceleration in HTU-adjusted IMS growth.

Speaker Change: Given expectations for a strong four-year profit delivery, we are forecasting operating cash flow of around $11 billion, which is at the upper end of our previous forecast range, at prevailing exchange rate, and subject to year-end working capital requirements.

Speaker Change: We expect this improvement to more than offset an increase in capital expenditure to around $1.3 to $1.4 billion as we further accelerate zinc capacity expansion.

Emmanuel Babeau: Last, we continue to target a 0.3 to 0.5 times improvement in our Net Debt to Adjusted EBDI Ratio in 2024, driven by profit growth and strong cash flow generation. As of June 30th, we have already improved to a ratio of three times on a 12-month trading basis as compared to 3.2 times at the end of 2023. This represents good progress towards our target of around two times by the end of 2026. We intend to reconsider shared repurchase, subject to board approval, once we are within sight of this goal. I will now conclude today's presentation with some closing remarks.

Speaker Change: Last, we continue to target 0.3 to 0.5 times improvement in our net debt to adjusted EBD ratio in 2024, driven by profit growth and strong cash flow generation.

Emmanuel Babeau: As of 30 June, we have already improved to a ratio of 3x on a 12-month trailing basis as compared to 3.2x at the end of 2023. This represents good progress towards our target of around 2x. By the end of 2026, we intend to reconsider share repurchase subject to board approval. Once we are within sight of this.

As of 30 June, we have already improved to a ratio of 3x on a 12-month trailing basis as compared to 3.2x at the end of 2023. This represents good progress towards our target of around 2x. By the end of 2026, we intend to reconsider share repurchase subject to board approval. Once we are within sight of this.

Speaker Change: As of June the 30th, we have already improved to a ratio of 3x on a 12-month trading basis as compared to 3.2x at the end of 2023. This represents good progress towards our target of around 2x by the end of 2026.

Speaker Change: We intend to reconsider shared repurchase, subject to board approval, once we are within sight of this goal.

Owen Bennett: Goal.

Goal.

Emmanuel Babeau: I will now conclude today's presentation with some closing remarks. The powerful combination of strong underlying business momentum and our own proactive steps enable us to generate best-in-class growth across key metrics. Our strategy is delivering on volumes, pricing, cash flow, and dollar earnings despite ongoing currency headwinds. The success of our smoke-free transformation is reflected in our remarkable first half performance with excellent underlying IQOS and ZYN growth, very robust pricing, positive category mix, and step-up cost efficiencies. This puts us firmly on track for an exceptional 2024 with accelerated top-line growth and margin expansion. Our momentum is broadening across the business with exciting multi-category growth opportunity. To further the delivery of our 2024-2026 growth targets. We remain highly focused on delivering performance in SG&A, and as shown in H1 2024, we are taking measures to mitigate currency headwinds.

I will now conclude today's presentation with some closing remarks. The powerful combination of strong underlying business momentum and our own proactive steps enable us to generate best-in-class growth across key metrics. Our strategy is delivering on volumes, pricing, cash flow, and dollar earnings despite ongoing currency headwinds. The success of our smoke-free transformation is reflected in our remarkable first half performance with excellent underlying IQOS and ZYN growth, very robust pricing, positive category mix, and step-up cost efficiencies. This puts us firmly on track for an exceptional 2024 with accelerated top-line growth and margin expansion. Our momentum is broadening across the business with exciting multi-category growth opportunity. To further the delivery of our 2024-2026 growth targets. We remain highly focused on delivering performance in SG&A, and as shown in H1 2024, we are taking measures to mitigate currency headwinds.

Emmanuel Babeau: The powerful combination of strong underlying business momentum and our own proactive steps enables us to generate best-in-class growth across key metrics. Our strategy is delivering on volumes, pricing, cash flow, and dollar earnings despite ongoing currency headwinds. The success of our smoke-free transformation is reflected in our remarkable first-half performance with excellent underlying high-cost enzine growth, very robust pricing, positive category mix, and step-up cost efficiency. This puts us firmly on track for an exceptional 2024 with accelerated top-line growth and margin expenses.

Speaker Change: I will now conclude today's presentation with some closing remarks.

Speaker Change: The powerful combination of strong underlying business momentum and our own proactive steps enable us to generate best-in-class growth across key metrics.

Speaker Change: Our strategy is delivering on volumes, pricing, cash flow and dollar earnings despite ongoing currency headwinds.

Speaker Change: The success of our smoke-free transformation is reflected in our remarkable first-half performance with excellent underlying IQOS and ZinGrowth, very robust pricing, positive category mix, and step-up cost efficiencies.

Speaker Change: This puts us firmly on track for an exceptional 2024 with accelerated top-line growth and margin expansion.

Emmanuel Babeau: Our momentum is broadening across the business with exciting multi-category growth opportunities to further support the delivery of our 2024-2026 growth target. We remain highly focused on delivering performance in the dollar, and as shown in H1, we are taking measures to mitigate currency headwinds. Finally, we are steadfastly committed to returning cash to our shareholders.

Speaker Change: Our momentum is broadening across the business with exciting multi-category growth opportunities to further support the delivery of our 2024-2026 growth targets.

Speaker Change: We remain highly focused on delivering performance in dollar and as shown in H1, we are taking measures to mitigate currency headwinds.

Emmanuel Babeau: Finally, we are steadfastly committed to returning cash to our shareholders. Our growth outlook and strong cash flow generation underpins our capital allocation priorities to reinvest behind our rapidly transforming business alongside our progressive dividend policy.

Finally, we are steadfastly committed to returning cash to our shareholders. Our growth outlook and strong cash flow generation underpins our capital allocation priorities to reinvest behind our rapidly transforming business alongside our progressive dividend policy.

Operator: Our growth outlook and strong cash flow generation underpin our capital allocation priorities to reinvest in our rapidly transforming business alongside our progressive dividend policy. Thank you, and we are now very happy to answer your questions. Ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. To withdraw your question, please press star 11 again.

Speaker Change: Finally, we are steadfastly committed to returning cash to our shareholders. Our growth outlook and strong cash flow generation underpins our capital allocation priorities to reinvest behind our rapidly transforming business alongside our progressive dividend policy.

Emmanuel Babeau: Thank you, and we are now very happy to answer your questions.

Thank you, and we are now very happy to answer your questions.

Speaker Change: Thank you and we are now very happy to answer your questions.

Operator: Ladies and gentlemen, if you'd like to ask a question, please press Star 11 on your telephone. To withdraw your question, please press Star 11 again. Please stand by while we compile the Q and A roster. One moment for our first question.

Speaker Change: Ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And one moment for our first question.

Operator: Please stand by while we compile the Q&A roster. And one moment for our first question. And our first question will come from Gaurav Jain of Barclays. Your line is open. Hi, uh, good morning Emmanuel.

Operator: Our first question will come from Gaurav Jain of Barclays. Your line is open.

Our first question will come from Gaurav Jain of Barclays. Your line is open.

Speaker Change: And our first question will come from Gaurav Jain of Barclays. Your line is open.

Emmanuel Babeau: Hi, good morning Emmanuel.

Gaurav Jain: Hi, good morning Emmanuel.

Gaurav Jain: Good morning Gaurav. Hi, two questions from me. One is, you know, just on the cigarette pricing algorithm that you have. So if I look at your market share gains, clearly quite impressive, even excluding modern oral. And if I add that, then you're gaining almost 80 basis points of market share right now per annum. So, isn't that level of market share gain excessive and suggests that you are not monetizing your cigarette business as much as you should be, which would mean that you would increase the pricing growth in cigarettes from 7% to 8% to, let's say, 8% to 10%? and Then I have a follow-up.

Emmanuel Babeau: Hi. Two questions from me. One is, you know, just on the cigarette pricing algorithm that you have. So if I look at your market share gains, you know, clearly quite impressive even excluding modern oral. And if I add that, then you are gaining almost 80 basis points share right now per annum. So isn't that level of market share gain excessive? And suggest that you are not monetizing your cigarette business as much as you should be. And that would mean that increase the pricing growth in cigarettes from 7% to 8% to let's say 8% to 10%. And then I have a follow-up.

Hi. Two questions from me. One is, you know, just on the cigarette pricing algorithm that you have. So if I look at your market share gains, you know, clearly quite impressive even excluding modern oral. And if I add that, then you are gaining almost 80 basis points share right now per annum. So isn't that level of market share gain excessive? And suggest that you are not monetizing your cigarette business as much as you should be. And that would mean that increase the pricing growth in cigarettes from 7% to 8% to let's say 8% to 10%. And then I have a follow-up.

Yorob Jane: Hi. Good morning, Emmanuel. Morning, Gaurav.

Yorob Jane: I see two questions from me. One is, you know, just on the cigarette pricing algorithm that you have. So if I look at your market share gains, you know, clearly quite impressive, even excluding modern oral, and if I add that then you are gaining almost 80 basis point share right now per annum.

Speaker Change: So, isn't that level of market share gain excessive and suggests that you are not monetizing your cigarette business as much as you should be and that would mean that increase the pricing growth in cigarettes from 7% to 8% to let's say 8% to 10% and then I have a follow up.

Emmanuel Babeau: Thank you, Gaurav, for the question. Luke, let's be clear. We can always, you know, challenges on whether we could do even better in terms of price increase. The fact is that we are doing better than what we thought initially. We have this very strong performance, 8.7% price increase for combustible for H1. I think we all know that the inflationary environment is no longer what it was last year. So obviously this is a very strong performance. Please bear in mind I said it in my preliminary remarks. But around 3/4 of that is not coming from inflation.

Emmanuel Babeau: Thank you, Gaurav, for the question. Look, let's be clear; we can always, you know, challenge us on whether we could do even better in terms of price increases. The fact is that we are doing better than we thought initially. We have this very strong performance, an 8.7% price increase for combustibles for H1. And I think we all know that the inflationary environment is no longer what it was last year. So, obviously, this is a very strong performance.

Yorob Jane: Thank you, Gaurav, for the question.

Speaker Change: Let's be clear, we can always challenge us on whether we could do even better in terms of price increase. The fact is that...

Speaker Change: We are doing better than what we thought initially. We have this very strong performance, 8.7%.

Emmanuel Babeau: Please bear in mind, I said it in my preliminary remark, but around three-quarters of that is not coming from inflation in, in, oh sorry, from a price increase in a country with very high inflation. And this 8.7% in Q2 is largely driven by the markets where we are really driving prices on a kind of opportunistic basis, building on the strengths of our portfolio, and making sure that we are always optimizing the potential for price increases.

Speaker Change: Price increase for combustible for H1.

Speaker Change: I think we all know that the inflationary environment is no longer what it was last year. So, obviously, this is a very strong performance.

Speaker Change: Please bear in mind, I said it in my preliminary remarks, that around three-fourths of that is not coming from inflation in...

Emmanuel Babeau: From price increase in country with very high inflation. This 8.7% in Q2 is largely driven by the markets where we are really driving price on a kind of opportunistic basis, building on the strength of our portfolio, and making sure that we are ever optimizing the potential for price increase. So you can be absolutely sure that this is a very granular work, market by market. Each time as we signal, we take into account what is our position on smoke-free product on this market, what is the impact of increasing price. I think we can demonstrate that we have a very successful approach on this price increase. So I would tend to believe that we are optimizing this price increase potential in the current environment.

From price increase in country with very high inflation. This 8.7% in Q2 is largely driven by the markets where we are really driving price on a kind of opportunistic basis, building on the strength of our portfolio, and making sure that we are ever optimizing the potential for price increase. So you can be absolutely sure that this is a very granular work, market by market. Each time as we signal, we take into account what is our position on smoke-free product on this market, what is the impact of increasing price. I think we can demonstrate that we have a very successful approach on this price increase. So I would tend to believe that we are optimizing this price increase potential in the current environment.

Speaker Change: And this 8.7% in Q2 is largely driven by the markets where we are really driving price on a kind of opportunistic basis, building on the strengths of our portfolio and making sure that we are ever-optimizing the potential for price increase.

Emmanuel Babeau: So you can be absolutely sure that this is a very granular work, market by market, each time as we signal, we take into account what our position is on the smoke-free product in this market, what the impact of an increasing price will be, and I think we can demonstrate that we have a very successful approach to this price increase. So I would tend to believe that we are optimizing this price increase potential in the current environment. Sure, thank you.

Speaker Change: So you can be absolutely sure that this is a very granular work, market by market, each time as we signal we take into account what is our position on smoke-free products on this market, what is the impact of increasing price.

Speaker Change: And I think we can demonstrate that we have a very successful approach on this price increase. So I would tend to believe that we are optimizing this price increase potential in the current environment.

Emmanuel Babeau: You know, you mentioned that Zim's capacity will increase to 900 million times next year. So does that mean that by Q4 of this year, it will be 225 million cans per quarter? Thank you.

Emmanuel Babeau: Sure.

Gaurav Jain: Sure.

Matthew Smith: Thank you.

Thank you.

Emmanuel Babeau: You mentioned that ZYN capacity will increase to 900 million cans next year. So does it mean that by Q4 of this year it will be 225 million cans per quarter? Thank you, Gaurav. So I'm confirming that we have the objectives to be around 900 million cans of production capacity for next year. That for the full year 2025, we are gradually improving our capacity. And there is a number of steps that we are taking. I'm not going to elaborate on them, but there are several levers that we are pulling to increase this capacity. So I would say every quarter versus the previous one, we are improving the capacity. I'm not going to give a prediction on where we're going to be at the end of the year.

You mentioned that ZYN capacity will increase to 900 million cans next year. So does it mean that by Q4 of this year it will be 225 million cans per quarter? Thank you.

Speaker Change: Thank you. You know, you mentioned that ZIM capacity will increase to 900 million tans next year. So does it mean that by Q4 of this year, it will be 225 million tans per quarter? Thank you.

Emmanuel Babeau: Look, Gaurav, so I'm confirming that we have the objective to be around 900 million cans of production capacity for next year, that is, for the full year 2025. We are gradually improving our capacity, and there is a number of steps that we are taking. I'm not going to elaborate on them, but there are several levers that we are pulling to increase this capacity.

Emmanuel Babeau: Gaurav. So I'm confirming that we have the objectives to be around 900 million cans of production capacity for next year. That for the full year 2025, we are gradually improving our capacity. And there is a number of steps that we are taking. I'm not going to elaborate on them, but there are several levers that we are pulling to increase this capacity. So I would say every quarter versus the previous one, we are improving the capacity. I'm not going to give a prediction on where we're going to be at the end of the year.

Speaker Change: Look, Gaurav, so I'm confirming that we have the objective to be around 900 million can of production capacity for next year, that's for the full year 2025.

Speaker Change: We are gradually improving our capacity, and there is a number of steps that we are taking. I'm not going to elaborate on them, but there are several levers that we are pulling to increase this capacity.

Emmanuel Babeau: So I would say every quarter compared to the previous one, we are improving capacity. I'm not going to give a prediction on where we're going to be at the end of the year. We believe, given what we see from potential consumer demand today, that in terms of what we produce, you know, at a certain point in Q4 versus what the consumer of tech could be without restriction, we're going to be good.

Speaker Change: So I would say every quarter we are improving the capacity. I'm not going to give a prediction on where we're going to be at the end of the year. We believe, given what we see from...

Emmanuel Babeau: We believe, given what we see from the potential consumer demand today, that in terms of what we produce, you know, at a certain point in Q4 versus what the consumer off-take could be without restriction, we're going to be good and then we'll see exactly how we finish in terms of capacity at the end of the year. But I think what is more relevant and frankly more important is you have the picture of this 560 to 580 million cans. That is our goal for 2024. You know, that we have this capacity for 900 million cans for next year. Let's be clear, it's not a guidance on the volume for next year. We're just here giving the capacity on which we are working. And I think with that you have what is important.

We believe, given what we see from the potential consumer demand today, that in terms of what we produce, you know, at a certain point in Q4 versus what the consumer off-take could be without restriction, we're going to be good and then we'll see exactly how we finish in terms of capacity at the end of the year. But I think what is more relevant and frankly more important is you have the picture of this 560 to 580 million cans. That is our goal for 2024. You know, that we have this capacity for 900 million cans for next year. Let's be clear, it's not a guidance on the volume for next year. We're just here giving the capacity on which we are working. And I think with that you have what is important.

Speaker Change: The potential consumer demand today that in terms of what we produce.

Speaker Change: you know, at this point in Q4 versus what...

Speaker Change: The Consumer of Tech could be, without restriction, we're going to be good. And then we'll see exactly, you know, how we finish in terms of capacity at the end of the year. But I think what is more relevant and, frankly, more important is you have the picture of this 560...

Emmanuel Babeau: And then we'll see exactly, you know, how we finish in terms of capacity at the end of the year. But I think what is more relevant and, frankly, more important is that you have the picture of this 560 to 580 million cans that is our goal for 2024. You know that we have this capacity for 900 million cans for next year. But let's be clear, it's not the guidance on the volume for next year. We're just here to give you the capacity on which we are working. And I think with that, you have what is important. Thank you so much.

Speaker Change: to 580 million can that is our goal for 2024.

Speaker Change: You know that we have this capacity for 900 million cans for next year. It's not a guidance on the volume for next year. We're just here giving the capacity on which we are working. And I think with that you have what is important.

Emmanuel Babeau: Thank you so much. Thank you.

Gaurav Jain: Thank you so much.

Emmanuel Babeau: Thank you.

Operator: One moment for our next question.

Operator: And one moment for our next question. Our next question will be coming from Bonnie Herzog of Goldman Sachs. Your line is open. Thank you. Hi, Emmanuel.

Operator: One moment for our next question.

Speaker Change: Thank you so much.

Speaker Change: Thank you. And one moment for our next question.

Operator: Our next question will be coming from Bonnie Herzog of Goldman Sachs. Your line is open.

Our next question will be coming from Bonnie Herzog of Goldman Sachs. Your line is open.

Bonnie Herzog: Thank you. Hi, Emmanuel.

Speaker Change: Our next question will be coming from Bonnie Herzog of Goldman Sachs. Your line is open.

Emmanuel Babeau: Morning, Bernie.

Priya Ohri-Gupta: Good morning.

Bonnie Herzog: Good morning.

Bonnie Lee Herzog: Good morning. I had a question about your guidance. You raised your top and bottom line growth, but you lowered your HTU shipment volume outlook slightly, and you attributed this to a slightly greater than expected impact from the EU flavor ban. And you did touch on this, but, you know, maybe hoping for a little more color on that and any other impact on HTU volume that you're expecting in the back half. You know, are you expecting ICO's growth to remain robust in Japan in the second half, for instance? And then, finally, you mentioned your HTU guide assumes no volumes in Taiwan, so maybe an update there.

Bonnie Herzog: I had a question on your guidance. You raised your top and bottom line growth expectations, but you lowered your HTU shipment volume outlook slightly and you attributed this to slightly greater than expected impact from the EU flavor ban. And you did touch on this, but maybe hoping for a little more color on that and any other impact on HTU volume that you're expecting in the back half. Are you expecting IQOS growth to remain robust in Japan in the second half, for instance? And then finally you mentioned your HTU guide assumes no volumes in Taiwan. So maybe an update there in terms of timing.

I had a question on your guidance. You raised your top and bottom line growth expectations, but you lowered your HTU shipment volume outlook slightly and you attributed this to slightly greater than expected impact from the EU flavor ban. And you did touch on this, but maybe hoping for a little more color on that and any other impact on HTU volume that you're expecting in the back half. Are you expecting IQOS growth to remain robust in Japan in the second half, for instance? And then finally you mentioned your HTU guide assumes no volumes in Taiwan. So maybe an update there in terms of timing.

Bonnie Lee Herzog: Thank you. Hi, Emmanuel.

Bonnie Lee Herzog: Good morning. I had a question on your guidance. You raised your top and bottom line growth expectations, but you lowered your HTU shipment volume outlook slightly, and you attribute this to slightly greater than expected impact from the EU flavor ban, and you did touch on this, but

Speaker Change: You know, maybe hoping for a little more color on that and any other impact on HTU volume that you're expecting in the back half.

Speaker Change: Are you expecting ICO's growth to remain robust in Japan in the second half, for instance? And then, finally, you mentioned your HTU guide assumes no volumes in Taiwan, so maybe an update there in terms of timing.

Emmanuel Babeau: Sure, Bonnie. And thank you for maybe giving me the opportunity to further clarify the dynamic and the good dynamics that we are seeing behind IQOS. So we are indeed revising, first of all, our objective of adjusted in-market sales by around $2 billion. I've been clarifying that the majority of that is coming from Taiwan. Okay. So in fact it's really the fact that we were expecting Taiwan to start.

Emmanuel Babeau: Sure, Bonnie, and thank you for maybe giving me the opportunity to further clarify the dynamic and the good dynamic that we are seeing behind iCalls. So we are indeed revising, first of all, our objective of adjusted in-market sales by around two billion. I've been clarifying that the majority of that is coming from Taiwan, okay? So, in fact, it's really the fact that we were expecting Taiwan to start more than, you know, six months this year. And it's, at the end of the day, today. We are making the assumption here that at the end of the day, there's going to be zero volume in Taiwan. We thought it was a reasonable assumption.

Speaker Change: Sure, Bonnie, and thank you for maybe giving me the opportunity to further clarify the dynamic and the good dynamic that we are seeing behind iCalls.

Speaker Change: So we are indeed revising, first of all, our objective of adjusted in-market sales by around 2 billion.

Speaker Change: I've been clarifying that the majority of that is coming from Taiwan, okay? So, in fact, it's really the fact that we were expecting...

Emmanuel Babeau: More than six months this year. At the end of the day today, we are making here the assumption that at the end of the day it's going to be zero volume in Taiwan. We thought it was a reasonable assumption. Remember the law allowing for heated tobacco product was passed now 15 months ago. So we thought that during this period of time there was this capacity to get the approval from the regulator. And there is an administrative process asking questions. You have Q and A. It's just taking much more time than what we thought. But first and foremost, the reason for this 2 billion revision on adjusted IMS is Taiwan. Then in addition to that we have this few hundred million that is coming from Europe. So that's really all you should understand, the 2 billion.

More than six months this year. At the end of the day today, we are making here the assumption that at the end of the day it's going to be zero volume in Taiwan. We thought it was a reasonable assumption. Remember the law allowing for heated tobacco product was passed now 15 months ago. So we thought that during this period of time there was this capacity to get the approval from the regulator. And there is an administrative process asking questions. You have Q and A. It's just taking much more time than what we thought. But first and foremost, the reason for this 2 billion revision on adjusted IMS is Taiwan. Then in addition to that we have this few hundred million that is coming from Europe. So that's really all you should understand, the 2 billion.

Speaker Change: Taiwan to start

Speaker Change: And, you know, more than, you know,

Speaker Change: Six months this year and it's...

Speaker Change: At the end of the day, today, we are making here the assumption that at the end of the day, it's going to be zero volume in Taiwan. We thought it was a reasonable assumption. Remember...

Speaker Change: The law allowing for an e-tobacco product was passed.

Speaker Change: Now, 15 months ago, so we thought that...

Speaker Change: You know, during this period of time, there was...

Speaker Change: This capacity to get the approval from the regulator and there is an administrative process asking questions, you have Q&A, it's just taking much more time than what we thought.

Emmanuel Babeau: But first and foremost, the reason for this two billion revision on adjusted IMS is Taiwan. Then, in addition to that, we have this few hundred million that is coming from Europe. So that's really all you should understand about the two billion.

Speaker Change: But first and foremost, the reason for this...

Speaker Change: 2 Billion Revision on Adjusted IMS is Taiwan. Then in addition to that, we have this few hundred million that is coming from Europe . So that's really all you should understand the 2 billion.

Emmanuel Babeau: And because of Taiwan, we are indeed saying that when we were expecting to be above 140 billion in terms of shipments, we are now expecting to be around 140 billion. Again, that's the way you should understand the revision in the guidance. But let me take two minutes to explain the dynamic because I want to make sure that things are very clear. What we've been seeing in H1 is, in fact, an acceleration of the ICOs business outside Europe.

Emmanuel Babeau: Because of Taiwan, we are indeed saying when we were expecting to be above 140 billion sticks in terms of shipments, we are now expecting to be around 140 billion sticks. Again, that's the way you should understand the revision on the guidance. But let me take two minutes to explain the dynamics because I want to make sure that things are very clear. What we've been seeing in H1 is in fact an acceleration of the IQOS business outside Europe. So if you look at the adjusted in-market sales outside Europe, and we're talking about 60% of the business, the adjusted IMS were growing around 14% versus around 13% last year. So we've been growing faster in percentage. So you can imagine in terms of volume, of course that means a significant acceleration. And indeed what is behind this very nice dynamism is Japan.

Because of Taiwan, we are indeed saying when we were expecting to be above 140 billion sticks in terms of shipments, we are now expecting to be around 140 billion sticks. Again, that's the way you should understand the revision on the guidance. But let me take two minutes to explain the dynamics because I want to make sure that things are very clear. What we've been seeing in H1 is in fact an acceleration of the IQOS business outside Europe. So if you look at the adjusted in-market sales outside Europe, and we're talking about 60% of the business, the adjusted IMS were growing around 14% versus around 13% last year. So we've been growing faster in percentage. So you can imagine in terms of volume, of course that means a significant acceleration. And indeed what is behind this very nice dynamism is Japan.

Speaker Change: And because of Taiwan, we are indeed saying when we were expecting to be above 140 billion in terms of shipments.

Speaker Change: We are now expecting to be around 140 billion sick. Again, that's a way you should understand the revision on the guidance. But let me take two minutes to explain the dynamic because I want to make sure that things are very clear.

Speaker Change: What we've been seeing in H1 is, in fact, an acceleration of the ICOS business outside Europe .

Emmanuel Babeau: So if you look at the adjusted in-market sales outside Europe, and we're talking about 60% of the business, the adjusted IMS was growing around 14% versus around 13% last year. So we've been growing faster in percentage. And you can imagine, in terms of volume, of course, that means a significant acceleration.

Speaker Change: So if you look at the adjusted in-market sales outside Europe , and we're talking about 60% of the business, the adjusted IMS were growing around 14% versus...

Speaker Change: around 13% last year. So we've been growing faster in percentage. So you can imagine in terms of volume, of course, that means a significant acceleration. And indeed, what is beyond this?

Emmanuel Babeau: And indeed, what lies beyond this very nice dynamism is Japan. You have other developed markets, such as South Korea, but we've been seeing a number of new contributors to this growth. We mentioned Indonesia.

Emmanuel Babeau: You have other developed markets such as South Korea. But we've been seeing a number of new contributors to this growth. We mentioned Indonesia, we mentioned a number of markets in the Middle East. Mexico is also accelerating, and we enjoy also a nice performance in duty-free. So that's really what we are seeing outside Europe then. Europe absolutely as expected. I mean, we're going through what is a significant transition. We're moving away from flavor. It's still growing outside Italy; we have adjusted in-market sales growing close to double digit. So very strong dynamism despite the fact that many of the countries are going through this transition. And as we flagged, it is true that it's really great to see at the same time our champion markets, like we mentioned in Portugal, Greece, Hungary, that continue to do very well.

You have other developed markets such as South Korea. But we've been seeing a number of new contributors to this growth. We mentioned Indonesia, we mentioned a number of markets in the Middle East. Mexico is also accelerating, and we enjoy also a nice performance in duty-free. So that's really what we are seeing outside Europe then. Europe absolutely as expected. I mean, we're going through what is a significant transition. We're moving away from flavor. It's still growing outside Italy; we have adjusted in-market sales growing close to double digit. So very strong dynamism despite the fact that many of the countries are going through this transition. And as we flagged, it is true that it's really great to see at the same time our champion markets, like we mentioned in Portugal, Greece, Hungary, that continue to do very well.

Speaker Change: Very nice dynamism is Japan.

Speaker Change: You have other developed markets such as South Korea, but we've been seeing a number of...

Speaker Change: New Contributor to this Growth

Speaker Change: We mentioned Indonesia, we mentioned a number of markets in the Middle East.

Speaker Change: Mexico is also accelerating and we enjoy also a nice performance in duty-free so that that's really what we are seeing outside Europe .

Emmanuel Babeau: We mentioned a number of markets in the Middle East. Mexico is also accelerating, and we enjoy a nice performance in duty-free. So that's really what we are seeing outside Europe. And then Europe, absolutely as expected.

Emmanuel Babeau: I mean, we're going through what is a significant transition. You know, we're moving away from flavor. But it's still growing outside Italy.

Speaker Change: Then, Europe , absolutely as expected, I mean, we're going through what is a significant

Speaker Change: Transition, you know, we're moving away from flavor.

Emmanuel Babeau: We have adjusted in-market sales growing close to double digits. So, very strong dynamism, despite the fact that many countries are going through this transition. And as we mentioned, it is true that it's really great to see, at the same time, our champion market, you know, like we mentioned in Portugal, Greece, and Hungary, that continue to do very well. We have new markets that are really confirming their status as growth drivers for the future. We mentioned Germany, Spain, Romania, and Bulgaria.

Speaker Change: It's still growing. Outside Italy, we have adjusted in-market sales going close to double digit.

Speaker Change: So, very strong dynamism, despite the fact that many of the countries...

Speaker Change: are going through this transition, and as we flagged, it is true that it's really great to see at the same time.

Speaker Change: Our champion market, you know, like we mentioned in Portugal, Greece, Hungary, that continues to do very well.

Emmanuel Babeau: We have new markets that are really confirming their status of growth driver for the future. We mentioned Germany, Spain, Romania, Bulgaria. So it's important to have this new growth provider if you want. And then a number of markets exiting, I would say, as expected, the turmoil or the disruption, I would say, of a few weeks that is coming with.

We have new markets that are really confirming their status of growth driver for the future. We mentioned Germany, Spain, Romania, Bulgaria. So it's important to have this new growth provider if you want. And then a number of markets exiting, I would say, as expected, the turmoil or the disruption, I would say, of a few weeks that is coming with.

Speaker Change: We have new markets that are really confirming their status of growth driver for the future. We mentioned Germany, Spain, Romania, Bulgaria. So it's important to have this new growth provider if you want.

Emmanuel Babeau: So it's important to have this new growth provider, if you want. And then a number of markets exiting, I would say, as expected, the turmoil or the disruption, I would say, of a few weeks that is coming with the implementation of the flavor ban. And here we can mention Greece. We can mention Romania. We can mention Bulgaria. We can mention the Czech Republic.

Speaker Change: And then a number of markets exiting, I would say, as expected, the turmoil or the disruption, I would say, of a few weeks that is coming with

Emmanuel Babeau: With the implementation of the flavor ban. Here we can mention Greece, we can mention Romania, we can mention Bulgaria, we can mention Czech Republic. So a number of markets where things are happening absolutely as expected. Then you have Italy where we've been in fact overestimating the level of flavored product available with distributors and with retailers, and there was less than what we thought. Therefore, the consumption of HTU has been impacted quicker than what we were anticipating by the absence of flavored product after the implementation of the flavor ban. That has had some impact on the growth. At the same time, and no doubt that the two cumulating had some impact.

With the implementation of the flavor ban. Here we can mention Greece, we can mention Romania, we can mention Bulgaria, we can mention Czech Republic. So a number of markets where things are happening absolutely as expected. Then you have Italy where we've been in fact overestimating the level of flavored product available with distributors and with retailers, and there was less than what we thought. Therefore, the consumption of HTU has been impacted quicker than what we were anticipating by the absence of flavored product after the implementation of the flavor ban. That has had some impact on the growth. At the same time, and no doubt that the two cumulating had some impact.

Speaker Change: with the implementation of the Flavor Ban. And here we can mention Greece, we can mention Romania, we can mention Bulgaria, we can mention Czech Republic. So a number of market where things are happening absolutely as expected.

Emmanuel Babeau: So a number of markets where things are happening absolutely as expected. And then you have Italy, where we've been, in fact, not evaluating well the level of flavoured product available with distributors and with the retail, and there was less than what we thought, and therefore the consumer of tech has been impacted quicker than what we were anticipating by the absence of a flavour product after the implementation of the flavour ban, and that has had some impact on the growth, and at the same time, and no doubt that the two accumulating have had some impact, we've been increasing price by 30 cents on our consumables, and that has not been followed only very marginally by the competition, with some impact on our market share as it happens when we increase price in a meaningful manner, widening the gap with competition, and the competition not following.

Speaker Change: And then you have Italy, where we've been, in fact,

Speaker Change: Not evaluating well the level of...

Speaker Change: Flavoured products available with distributors and with the retail, and there was less than what we thought, and therefore the consumer of tech has been impacted quicker than what we were anticipating by the absence of a flavoured product.

Speaker Change: After the implementation of the flavour ban, and that has had some impact on the growth, and at the same time, and no doubt that the two cumulating have had some impact, we've been increasing price by 30 cents.

Emmanuel Babeau: We've been increasing price by $0.30 on our consumable, and that has not been followed or only very marginally by the competition, with some impact on our market share. As it happens when we increase price in a meaningful manner, widening the gap with competition and the competition not following. So that is really the picture. And now when we are looking at the second half. So we expect outside Europe situation to continue to do well. I'm not going to.

We've been increasing price by $0.30 on our consumable, and that has not been followed or only very marginally by the competition, with some impact on our market share. As it happens when we increase price in a meaningful manner, widening the gap with competition and the competition not following. So that is really the picture. And now when we are looking at the second half. So we expect outside Europe situation to continue to do well. I'm not going to.

Speaker Change: on our consumables and that has not been followed or only very marginally by the competition with some impact on our market share as it happens you know when we increase price in a meaningful manner widening the gap with competition and the competition not following.

Emmanuel Babeau: So that is really the picture, and now when we are looking at the second half, we expect outside Europe the situation to continue to do well, and we're going to name again all these very great countries where we are performing extremely well. We have the launch of Livia and Delia in a number of countries, and we expect Europe to accelerate as we are transitioning out of this phase of adjustment to the flavor ban, and Italy will be part of the market where we expect So I think this is really the complete picture, Bonnie. I hope this is helpful in answering your question. So that was definitely very helpful. I appreciate you going through all of that.

Speaker Change: So that is really the picture. And now when we are looking at the second half, so we expect outside Europe situation to continue to do well and are going to...

Emmanuel Babeau: In many of these very great countries where we are performing extremely well. We have the launch of ILUMA and DELIA in a number of countries, and we expect Europe to accelerate as we are transitioning out of this phase of adjustment to the flavor ban. Italy will be part of the market where we expect improvement, but I would say globally we expect more acceleration on all the markets that have been going through the flavor ban. So I think this is really the complete picture. Bonnie, I hope it is helpful in answering your question.

In many of these very great countries where we are performing extremely well. We have the launch of ILUMA and DELIA in a number of countries, and we expect Europe to accelerate as we are transitioning out of this phase of adjustment to the flavor ban. Italy will be part of the market where we expect improvement, but I would say globally we expect more acceleration on all the markets that have been going through the flavor ban. So I think this is really the complete picture. Bonnie, I hope it is helpful in answering your question.

Speaker Change: I just want to name again all these very great countries where we are performing extremely well. We have the launch of Livia and Delia in a number of countries and we expect Europe to accelerate as we are transitioning out of this pandemic.

Speaker Change: phase of adjustment to the flavor ban and Italy will be part of the market where we expect improvement but I would say globally we expect more acceleration on all the markets that have been going through the flavor ban.

Bonnie Lee Herzog: So I think this is really the complete picture, Bonnie, I hope it is helpful in answering your question.

Bonnie Herzog: That was definitely very helpful. I appreciate you going through all of that. And then, if I may, I just wanted to ask a question on IQOS ILUMA i in Japan. I guess I was hoping to hear a little more color on this device, which I believe is only available in Japan right now. And curious to hear how big of a lift it's been or essentially how incremental and really what you're seeing or hearing from consumers in terms of acceptance of the new device, impact on your growth margins, et cetera. And then finally your plans for further rollout of this device. Thank you.

Bonnie Lee Herzog: And then, if I may, I just wanted to ask a question about Illumi Eye in Japan. I guess I was hoping to hear a little more color on this device, which I believe is only available in Japan right now. And curious to hear how big of a lift it's been, or essentially how incremental, and really what you're seeing or hearing from consumers. Transcribed by https://otter.ai. Yeah, sure,

Bonnie Lee Herzog: That was definitely very helpful. I appreciate you going through all of that.

Speaker Change: And then if I may, I just wanted to ask a question on Illumii in Japan. I guess I was, you know, hoping to hear a little more color on this device, which I believe is only available in Japan right now. And I'm curious to hear how big of a list it's been or, you know, essentially how incremental.

Speaker Change: You know, seeing or hearing from consumers in terms of acceptance of the new device, you know, impact on your growth, margins, et cetera, and then finally your plans for further rollout of this device.

Emmanuel Babeau: So you're right, ILUMA-I, so the latest generation of iQOOS ILUMA. It hasn't changed the fundamental technology, but the device is offering a number of additional functionalities. It's, for the time being, only present in Japan, although there is the launch in a few other countries that is planned for H2. And it's always difficult to say what this new product is triggering, but we've been clearly seeing new acquisitions of IQOS users. We've been seeing consumer sentiment going up with some very good reactions to this product.

Emmanuel Babeau: Sure, Bonnie. So you're right. ILUMA i, so the latest generation of IQOS ILUMA. So it's not changed the fundamental technology, but the device is offering a number of additional functionalities, is for the time being only present in Japan. There is the launch in a few other countries that is planned for H2. And it's always difficult to say what this new product is triggering, but we've been seeing clearly a new acquisition of IQOS users. We've been seeing consumer sentiment going up with some very good reaction to this product. So I would say we continue to have more ammunition to convert smokers to IQOS, to improve the experience, to improve customer satisfaction that is triggering, of course, more loyalty that can have some impact on the average daily consumption. So a number of positive effects. That's what we have seen in Japan.

Speaker Change: Thank you.

Speaker Change: Sure, Bonnie, so you're right, ILUMA-I, so the latest generation of I-Cos ILUMA, so it has not changed the fundamental technology, but the device is offering a number of additional functionalities, is for the time being only present in Japan. There is the launch in a few other countries that is planned for H2.

Speaker Change: And it's always difficult to say what is.

Speaker Change: New product is triggering, but we've been seeing clearly a new acquisition of IQOS user. We've been seeing consumer sentiment going up with a some very good reaction to this product.

Emmanuel Babeau: So I would say we continue to have more ammunition to convert smokers to IQOS to improve the experience, to improve customer satisfaction that is triggering, of course, more loyalty that can have some impact on the average daily consumption, so a number of positive effects. That's what we have seen in Japan. It is difficult for me to tell you exactly by how much this has been further accelerating growth in Japan, but now I say that this was positive for the market. All right, thank you. I'll pass it on.

Speaker Change: So I would say we continue to have more ammunition to convert smokers to ICOs to improve the experience.

Speaker Change: To improve customer satisfaction, that is triggering, of course, more loyalty, that can have some impact on the average daily consumption, so a number of positive effects. That's what we have seen in Japan.

Emmanuel Babeau: Difficult for me to tell you exactly by how much this has been further accelerating the growth in Japan, but no doubt that this was a positive for the market.

Difficult for me to tell you exactly by how much this has been further accelerating the growth in Japan, but no doubt that this was a positive for the market.

Speaker Change: Difficult for me to tell you exactly by how much this has been further accelerating the growth in Japan, but now that this was a positive for the market.

Bonnie Herzog: All right, thank you.

Operator: I'll pass it on.

I'll pass it on.

Emmanuel Babeau: Thank you.

Matthew Smith: Thank you.

Bonnie Herzog: Thank you.

Operator: One moment for our next question. Our next question will be coming from Matt Smith of Stifel. Your line is open, Matt.

Speaker Change: All right, thank you. I'll pass it on. Thank you. Thank you.

Operator: Thank you. Thank you. And one moment for our next question. Our next question will be coming from Matt Smith of CIFU. Your line is open, Matt.

Speaker Change: And one moment for our next question. Our next question will be coming from Matt Smith of CFO . Your line is open, Matt.

Matthew Smith: Hi, Emanuelle.

Matthew Edward Smith: Hi Emmanuel, good morning. Could you provide a little more detail on the growth in oral pouches in international markets? You highlighted some early success in several markets. Are you continuing to expand distribution there? Are there any capacity constraints for those international markets outside of the U.S.? Sure.

Emmanuel Babeau: Morning, Matt.

Matthew Smith: Good morning. Could you provide a little more detail on the growth in oral pouches in international markets? You highlighted some early success in several markets. Are you continuing to expand distribution there? Are there any capacity constraints for those international markets outside of the US?

Matthew Edward Smith: Hi, Emmanuel.

Matthew Edward Smith: Good morning. Could you provide a little more detail on the growth in oral pouches in international markets? You highlighted some early success in several markets. Are you continuing to expand distribution there? Are there any capacity constraints for those international markets outside of the U.S.?

Matthew Smith: Sure.

Emmanuel Babeau: Sure.

Emmanuel Babeau: So, as a coincidence, I suppose, but it is true that in H1, the growth in nicotine pouches outside the U.S. was very similar to the one in the U.S. No, you know, watch out. It's, you know, we talk about 10% only of the volume in the U.S. But that is including, it's not totally nothing, because that is including the Nordics. And what we are clearly seeing is that there is some interest and attraction in many countries from the nicotine user.

Emmanuel Babeau: So as a coincidence, I suppose. But it is true that in H1 the growth in nicotine pouch outside the US was very similar to the one in the US, no. Watch out. We talk about 10% only of the volume in the US that is included. It's not totally nothing because that is including the Nordics. And what we are clearly seeing is that there is from the nicotine user some interest and attraction in many countries. And I tend to really put three buckets of possible growth for these markets. You have, of course, the Nordic country that has the knowledge, the understanding, and the culture of this product and where the nicotine pouch category is dynamic, and here we want to take our fair share of the growth.

So as a coincidence, I suppose. But it is true that in H1 the growth in nicotine pouch outside the US was very similar to the one in the US, no. Watch out. We talk about 10% only of the volume in the US that is included. It's not totally nothing because that is including the Nordics. And what we are clearly seeing is that there is from the nicotine user some interest and attraction in many countries. And I tend to really put three buckets of possible growth for these markets. You have, of course, the Nordic country that has the knowledge, the understanding, and the culture of this product and where the nicotine pouch category is dynamic, and here we want to take our fair share of the growth.

Speaker Change: Sure. So, as a coincidence, I suppose, but it is true that in H1, the growth in nicotine pouch outside the U.S.

Speaker Change: was very similar to the one in the US. No, you know, watch out. It's, you know, we talk about 10% only of the volume in the US. That is included, it's not totally nothing, because that is including the Nordics.

Speaker Change: And what we are clearly seeing is that...

Speaker Change: There is, from the nicotine user, some...

Emmanuel Babeau: And I tend to really, you know, put three buckets of possible growth for this market. You have, of course, the Nordic countries that have the knowledge, the understanding, the culture of this product and where the nicotine pouch category is dynamic. And here we want to take our fair share of the growth. Then you have Europe, where the category is not relevant in all markets, but we can already flag a number of countries, such as Austria, the UK, Switzerland, where we believe that there is potential and we see growth. And then you have, I would say, the global market, the international market. We can name Pakistan, we can name South Africa, we could talk about Indonesia, maybe the Philippines, where we see potential for these nicotine pouches.

Speaker Change: Interest and Attraction in Many Countries

Speaker Change: I tend to really, you know, put three buckets of possible growth for this market. You have, of course, first the Nordic countries that have the knowledge, the understanding, the culture of this product, and where the nicotine pouch category is dynamic. And here we want to take our fair share of the growth.

Emmanuel Babeau: Then you have Europe, where the category is not relevant in all markets, but we can already flag a number of countries such as Austria, the UK, Switzerland, where we believe that there is potential and we see the growth. And then you have, I would say, global market, international market. We can name Pakistan, we could name South Africa, we could talk about Indonesia, maybe Philippines, where we see potential for these nicotine pouches. You may have some culture already of oral product, and we see some development of the product. I could add Mexico to the list, by the way, where we are starting nicely, the development of ZYN. So we see that this product maybe because of the US influence. I think in the case of some country like the UK, it's clear that's a category that would grow its awareness, I would say, interestingly and rapidly.

Then you have Europe, where the category is not relevant in all markets, but we can already flag a number of countries such as Austria, the UK, Switzerland, where we believe that there is potential and we see the growth. And then you have, I would say, global market, international market. We can name Pakistan, we could name South Africa, we could talk about Indonesia, maybe Philippines, where we see potential for these nicotine pouches. You may have some culture already of oral product, and we see some development of the product. I could add Mexico to the list, by the way, where we are starting nicely, the development of ZYN. So we see that this product maybe because of the US influence. I think in the case of some country like the UK, it's clear that's a category that would grow its awareness, I would say, interestingly and rapidly.

Speaker Change: Then you have Europe , where the category is not relevant in all markets, but we can already flag a number of countries such as Austria, the UK, Switzerland, where we believe that there is potential and we see the growth.

Speaker Change: And then you have, I would say, global market, international market. We can name Pakistan. We can name South Africa. We could talk about Indonesia, maybe Philippines, where we see potential for these nicotine pouches. You may have some culture already of oral product.

Matthew Edward Smith: You may already have some culture of oral products, and we see some development of the product. I could add Mexico to the list, by the way, where we are starting nicely with the development of Zin. So we see that this product, maybe because of the US influence, I think, you know, in the case of some countries like the UK, it's clear that this is a category that could grow in awareness, I would say, interestingly and rapidly, and we want absolutely to make sure that we're going to capture our fair share of this opportunity. Thank you.

Speaker Change: And we see some development of the product. I could add Mexico to the list, by the way, where we are starting nicely the development of Zin. So we see that this product, maybe because of the U.S. influence. I think, you know, in the case of some countries like the U.K., it's clear.

Emmanuel Babeau: We want absolutely to make sure that we're going to capture our fair share of this opportunity.

Speaker Change: That's a category that could grow is awareness, I would say, interestingly and rapidly, and we want absolutely to make sure that we're going to capture our fair share of this opportunity.

We want absolutely to make sure that we're going to capture our fair share of this opportunity.

Matthew Smith: Thank you for that. And just a quick follow-up. Is there any capacity limitation on that international business or is that?

Emmanuel Babeau: And just a quick follow-up. Is there any capacity limitation on the international business, or is that, Transcribed by https://otter.ai, Thank you, Emmanuel. I'll leave it there. Thank you, Matt. Coming from Faheim Bay of UBS, your line is open. Hi Emmanuel, thanks for the question. I've got two as well, one on the VEPA category and one on ZIN.

Speaker Change: Thank you for that and just a quick follow up. Is there any capacity limitation on the international business or is that?

Matthew Smith: Capacity not constrained like what you're seeing in the US?

Capacity not constrained like what you're seeing in the US?

Emmanuel Babeau: No, there is no capacity issue that I have to report at that stage.

Speaker Change: Capacity not constrained like what you're seeing in the US? No there is there is no capacity issue that I have to report at that stage.

Matthew Smith: Thank you, Emmanuel. I'll leave it there.

Emmanuel Babeau: Thank you, Matt.

Operator: One moment for our next question.

Speaker Change: Thank you, Emmanuel, I'll leave it there. Thank you, Matt.

Operator: Our next question will be coming from Faham Baig of UBS. Your line is open.

Speaker Change: And one moment for our next question.

Speaker Change: Our next question will be coming from Fahim Bey of UBS. Your line is open.

Mirza Faham Ali Baig: Hi, Emmanuel, thanks for the question.

Mirza Faham Ali Baig: I've got two as well. One on the vapor category and one on ZYN. I know you're looking to expand with your VEEV product, but how do you see the development of the vapor category, particularly outside of the US? What profile of users is the category attracting, for example, in Europe? I'm just trying to understand whether consumers that use vapor see it as an alternative to heated tobacco. Or are the two categories attracting a different profile of consumers, particularly post the flavor ban?

I've got two as well. One on the vapor category and one on ZYN. I know you're looking to expand with your VEEV product, but how do you see the development of the vapor category, particularly outside of the US? What profile of users is the category attracting, for example, in Europe? I'm just trying to understand whether consumers that use vapor see it as an alternative to heated tobacco. Or are the two categories attracting a different profile of consumers, particularly post the flavor ban?

Speaker Change: Hi Emmanuel, thanks for the question.

Mirza Faham Ali Baig: I've got two as well, one on the VEPA category and one on ZIN.

Faheim Bay: I know you're looking to expand with your Veve product, but how do you see the development of the vapor category, particularly outside of the US? What profile of users is the category attracting? For example, in Europe, I'm just trying to understand whether consumers that use vapor see it as an alternative to heated tobacco, or are the two categories attracting different profiles of consumers, particularly post the flavor ban in Europe?

Mirza Faham Ali Baig: I know you're looking to expand.

Mirza Faham Ali Baig: with your VEVE product.

Mirza Faham Ali Baig: But how do you see the development of the vapor category, particularly outside of the U.S.? What profile of users is the category attracting? For example, in Europe , I'm just trying to understand whether...

Speaker Change: Consumers that use vapor see it as an alternative to heated tobacco or are the two categories attracting a different profile of consumers particularly post post the flavor ban in in Europe ?

Mirza Faham Ali Baig: In Europe?

In Europe?

Emmanuel Babeau: Sure. And you want to ask a question on ZIN now, or do you want to come back on ZIN after? Why don't I come back after your answer on vaping?

Operator: Sure.

Emmanuel Babeau: Sure.

Emmanuel Babeau: You want to ask a question on ZYN now or you want to come back on ZYN after?

You want to ask a question on ZYN now or you want to come back on ZYN after?

Speaker Change: Sure and you want to ask a question on ZIN now or you want to come back on ZIN after?

Mirza Faham Ali Baig: Why don't I come back after your answer on vaping?

Emmanuel Babeau: Okay, so on the vaping category, I think what we are seeing is that what we've always been saying the vaping category is a legitimate category to be an alternative to people who would otherwise smoke. And therefore that is a category that is growing not necessarily faster than heat-not-burn, not faster than nicotine pouch for sure. But of course the basis for nicotine pouch is smaller and we know that the vaping category is more appealing for people legal age and above that want to start consuming nicotine and it's much more difficult to convert smokers and that clearly what IQOS and the heat-not-burn category is doing much better. So yes, vaping can be appealing for some legal age and above nicotine user more difficult to convert smokers.

Faheim Bay: Okay, so on the vaping category, I think what we are seeing is that we've always been saying the vaping category is a legitimate category to be an alternative to people who would otherwise smoke. And therefore, that is a category that is growing, not necessarily faster than Eat Not Burn, not faster than nicotine pouch, for sure, but of course, the basis for nicotine pouch is smaller. And we know that the vaping category is more appealing for, you know, people on the legal limit and above that want to start consuming nicotine, and it's much more difficult to convert smokers.

Speaker Change: Why don't I come back after your answer on vaping? Okay, so, on the vaping category, I think what we are saying is that we've, what we've always been saying, the vaping category is a legitimate category to be an alternative to people who would otherwise...

Speaker Change: smoke and therefore that is a category that is growing not necessarily you know faster than it not burn

Speaker Change: Not faster than nicotine punch for sure, but of course.

Speaker Change: The basis for the nicotine pouch is smaller, and we know that the vaping category is more appealing for people legal age and above that want to start consuming nicotine, and it's much more difficult to convert

Faheim Bay: And that clearly what Icos and the Eat Not Burn category is doing much better. So yes, vaping can be appealing for some legal edge and above nicotine user, more difficult to convert smokers, very clearly, we haven't seen any meaningful report of people moving to vaping and the change of kind of, you know, dynamic in the category, following the implementation of the flavor ban in Europe, of course, we are monitoring that, but that there is nothing that we can obviously report on that trend, which probably could confirm that we talk about people that are probably with different profiles.

Speaker Change: Smokers, and that's clearly what ICOS and the It's Not Done category is doing much better.

Speaker Change: So yes, vaping can be appealing for some legal edge and both.

Emmanuel Babeau: Very clearly we haven't seen any meaningful report of people moving to vaping and the change of kind of dynamic in the category following the implementation of the flavor ban in Europe. Of course we are monitoring that, but at that time there is nothing that we can obviously report on that trend which probably could confirm that. We talk about people that are probably with different profile, but that's something that we will have to keep monitoring, of course. So we've always been saying that the concern with the vaping category is that if the products are not properly developed and marketed, if there is an unreasonable appeal to flavor, well, that can trigger unintended usage. And that is a problem for the category.

Very clearly we haven't seen any meaningful report of people moving to vaping and the change of kind of dynamic in the category following the implementation of the flavor ban in Europe. Of course we are monitoring that, but at that time there is nothing that we can obviously report on that trend which probably could confirm that. We talk about people that are probably with different profile, but that's something that we will have to keep monitoring, of course. So we've always been saying that the concern with the vaping category is that if the products are not properly developed and marketed, if there is an unreasonable appeal to flavor, well, that can trigger unintended usage. And that is a problem for the category.

Speaker Change: nicotine user

Speaker Change: More Difficult to Convert Smokers

Speaker Change: Very clearly we haven't seen

Speaker Change: Any meaningful report of people moving to vaping and the change of kind of, you know, dynamic in the category.

Speaker Change: Following the implementation of the flavour ban in Europe , of course, we are monitoring that, but as I said, there is nothing that we can obviously report on that trend, which probably could confirm that we talk about

Speaker Change: people that are probably with different profiles but that's something that we will have to keep monitoring of course.

Emmanuel Babeau: But that's something that we will have to keep monitoring, of course. So we've always been saying that, you know, the concern with the vaping category is that if the product is not properly developed and marketed, if there is an unreasonable appeal to flavor, well, that can trigger unintended usage. And that is a problem for the category.

Speaker Change: So...

Speaker Change: We've always been saying that, you know, the concern with the vaping category is that if the product are not

Speaker Change: properly developed and marketed.

Speaker Change: If there is an unreasonable appeal to flavor, well, that can trigger unintended usage.

Emmanuel Babeau: We are very happy with our growth because we do that in a very responsible manner, both in terms of development of our product, development of our marketing activity, and we are developing this responsible approach very much based on our commercial strength and a great product. I think VEEV ONE is a great product and strong partnership with the trade that is giving this very good start. As we mentioned, the number one position in five countries for closed pods. That's really what I can share with you at that stage.

Faheim Bay: And we are very happy with our growth because we do that in a very responsible manner, both in terms of the development of our product and the development of our marketing activity. And we are developing this responsible approach, very much based on our commercial strength and a great product. I think VivOne is a great product and a strong partnership with the trade that is giving this very good start, as we mentioned, you know, the number one position in five countries for closed ports. That's really what I can share with you at this stage.

We are very happy with our growth because we do that in a very responsible manner, both in terms of development of our product, development of our marketing activity, and we are developing this responsible approach very much based on our commercial strength and a great product. I think VEEV ONE is a great product and strong partnership with the trade that is giving this very good start. As we mentioned, the number one position in five countries for closed pods. That's really what I can share with you at that stage.

Speaker Change: And that is a problem for the category, and we are very happy with our growth because we do that in a very responsible manner, both in terms of development of our product, development of our marketing activity, and we are developing this responsible approach.

Speaker Change: Very much based on our commercial strength and a great product, I think Viv1 is a great product and strong partnership with the trade that is giving this a very good start as we mentioned, you know, the number one position in five countries for closed ports.

Emmanuel Babeau: Yeah, that's that's helpful. And then secondly, on ZIN in the US. Now, according to the scanner data, some of which we received today as well, ZIN's momentum from a volume perspective, potentially falling, albeit very, very low single digits, would you have an estimate of what volumes could potentially look like? And in the back half, when you are expecting an acceleration in volumes, is that implying that you begin to gain market share? Or is that largely driven by further acceleration in the overall category?

Mirza Faham Ali Baig: Yeah, that's helpful. And then secondly on ZYN in the US now, according to the scanner data, some of which we received today as well, ZYN's momentum from a volume perspective is sequentially falling, albeit very low single digits. Would you have an estimate of, if you did not have the capacity constraint, what volumes could potentially look like? And in the back half, when you are expecting an acceleration in volumes, is that implying that you begin to gain market share or is that largely driven by further acceleration in the overall category?

Speaker Change: That's really what I can share with you at that stage.

Speaker Change: Yeah, that's helpful. And then secondly, on ZIN in the U.S. Now, according to the scanner data, some of which we received today as well, ZIN's momentum from a volume perspective is

Speaker Change: It's sequentially falling, albeit very...

Speaker Change: Very low single.

Speaker Change: digits.

Speaker Change: Would you have an estimate of, if you did not have the capacity constraint, what volumes could potentially look like? And in the back half, when you are expecting an acceleration in volumes, is that implying that you begin to gain market share?

Speaker Change: largely driven by further acceleration in the overall category.

Faheim Bay: Look, on ZIN, I think we mentioned the fact that we are clearly with some restrictions, so I'm not sure that what you read in Nielsen, which corresponds to the availability, is going to be reflected in the trend and the consumer demand. We are gradually improving, and we expect to see that in the coming months. Today, we clarify that we are working with a target of around 900 million cans capacity for next year.

Emmanuel Babeau: Look, on ZYN, I think we mentioned the fact that we are clearly with some restrictions. So I'm not sure that what you read in the Nielsen, which corresponds with the availability, is a going view on the trend and the consumer demand. We are gradually improving and we expect to see that in the coming months. The availability today, we clarify that we are working with a target of around 900 million can capacity for next year. So we are creating very nice headroom for growth for the coming quarters and we think it's really important. I'm not going to be able to tell you because frankly it's impossible to say what would have been the growth rate without the limitation.

Speaker Change: Look, on ZIN, I think we mentioned the fact that we are clearly with some restrictions, so I'm not sure that...

Speaker Change: What you read in the Nielsen which corresponds to the availability is a growing view on the trend and the consumer demand. We are gradually improving and we expect to see that in the coming months, the availability. Today we clarify that we are working with

Faheim Bay: So we are creating very nice headroom for growth for the coming quarters, and we think it's really important. But I'm not going to be able to tell you that because, frankly, it's impossible to say what the growth rate would have been without the limitation.

Speaker Change: We have a target of around 900 million can capacity for next year, so we are creating very nice headroom for growth for the coming quarters.

Speaker Change: And we think it's really important. I'm not going to be able to tell you because, frankly, it's impossible to say what would have been the growth rate without the limitation.

Emmanuel Babeau: Please bear in mind that there was some competitors move in terms of pricing last year that trigger an acceleration in our market share, and that now the effect is now behind us. So it is also having some impact on the year on year comparison. So that's what.

Please bear in mind that there was some competitors move in terms of pricing last year that trigger an acceleration in our market share, and that now the effect is now behind us. So it is also having some impact on the year on year comparison. So that's what.

Emmanuel Babeau: Please bear in mind that there were some competitors' moves in terms of pricing last year that triggered an acceleration in our market share and that none of the effect is now behind us. So it is also having some impact on the year on year comparison. So that's what we can film on Zoom.

Speaker Change: Please bear in mind that there was some competitors' move in terms of pricing last year that triggered an acceleration in our market share and that the effect is now behind us. So it is also having some impact on the year-on-year comparison.

Emmanuel Babeau: We can say on ZYN.

We can say on ZYN.

Mirza Faham Ali Baig: If I could quickly squeeze in one more. Is there any update on the review of the ZYN sales post a recent subpoena in the District of Columbia that is ongoing and forced you to close your ZYN.com sales, and when that might recover?

Faheim Bay: If I could quickly squeeze in one more question. Is there any update on the review of the Zin sales post a recent subpoena in the District of Columbia that is ongoing and forced you to close your Zin.com sales and when that might recover? Yes, Faramno, there is nothing new. We keep working and fully cooperating, of course, with the Attorney General, and at that stage, it's impossible to say how long the work will take or what the outcome will be. And There is nothing new today.

Speaker Change: We can film on Zoom.

Speaker Change: If I could quickly squeeze in one more, is there any update on the review of the Zin sales?

Speaker Change: Post a recent subpoena in the District of Columbia that is ongoing and forced you to close your Zin.com sales when that might recover.

Emmanuel Babeau: Yes, Faham. No, there is nothing new. We keep working and fully cooperating, of course, with the Attorney General, and at that stage it's impossible to say how long the work will take or what will be the conclusion. There is nothing new today.

Speaker Change: Yes, I know there is nothing new. We keep working and fully cooperating, of course, with the Attorney General. And at that stage, it's impossible to say how long the work will take or what will be the conclusion. And there is nothing new today.

Mirza Faham Ali Baig: Thanks Emmanuel.

Emmanuel Babeau: Thanks, Emmanuel. Thank you. And one moment for our next question, and our next question will be coming from Owen Bennett of Jeffries. Your line is open. Morning, Emmanuel. Hope you're well.

Emmanuel Babeau: Thank you.

Operator: One moment for our next question.

Emmanuel Babeau: Thanks Emmanuel. Thank you.

Speaker Change: And one moment for our next question.

Operator: Our next question will be coming from Owen Bennett of Jefferies. Your line is open.

Our next question will be coming from Owen Bennett of Jefferies. Your line is open.

Speaker Change: And our next question will be coming from Owen Bennett of Jeffries. Your line is open.

Owen Bennett: Morning Emmanuel. Hope you're well.

Owen Bennett: Hi. I just had a couple of questions on the US pouch dynamics. So first, and I would assume this is due to certain retailers trying to fill the supply gaps, I have been seeing some Scandinavian ZYN available in certain stores. So I was wondering how you can get on top of this to make sure that's not happening. And then second, I'm also now seeing other modern oral brands appearing that I assume do not have a PMTA submitted. So how do you see the risk? We could see a similar scenario developing in pouches in the US similar to what we're seeing in vape with illegal products. Thank you.

Hi. I just had a couple of questions on the US pouch dynamics. So first, and I would assume this is due to certain retailers trying to fill the supply gaps, I have been seeing some Scandinavian ZYN available in certain stores. So I was wondering how you can get on top of this to make sure that's not happening. And then second, I'm also now seeing other modern oral brands appearing that I assume do not have a PMTA submitted. So how do you see the risk? We could see a similar scenario developing in pouches in the US similar to what we're seeing in vape with illegal products. Thank you.

Owen Michael Bennett: Hi, I just had a couple of questions on the U.S. pouch dynamics. First, and I would assume this is due to certain retailers trying to fill the supply gaps, I have been seeing some Scandinavians available in certain stores, so I was wondering how you can get on top of this to make sure that's not happening. And second, I'm also now seeing other modern oral brands appearing that I assume do not have a PMTA submitted, so how do you see the risk that we could see a similar scenario developing in pouches in the U.S. and to what we're seeing in vape with illegal products?

Owen Michael Bennett: Morning, Manuel. Hope you're well.

Owen Michael Bennett: Hi, I just had a couple of questions on the U.S. pouch dynamic.

Owen Michael Bennett: First, and I would assume this is due to certain retailers trying to fill the supply gaps, I have been seeing some Scandinavian Zin available in certain stores, so I was wondering how you can get on top of this to make sure that's not happening.

Owen Michael Bennett: And then second, I'm also now seeing other more than oral brands appearing that I assume do not have a PMTA submitted. So how do you see the risk we could see a similar scenario developing in pouches in the U.S. and to what we're seeing in vape with illegal products? Thank you.

Owen Michael Bennett: Thank you, um so you're alluding to product that would come from non-US market correct that's what yes i'm assuming certain retailers or distributors are buying them online from scandinavia to try and sell or supply that so i have been i'm just wondering how you can get on top of that to make sure that's not happening look i don't have any information about that so i i i cannot make any comment or report i think we're doing everywhere we can our utmost to ensure that you know the flows are appropriate and not you know going where they should not be going um and we are working very hard uh with this objective and you know i i don't have any data and i cannot you know react uh on on on that but our position is very clear we are very strict on doing everything we can to make sure that uh these parallel flows are not happening on your question on. If I understand you well, Owen, could we see the same kind of phenomenon on nicotine pouches as the one we are seeing on vaping, which is illicit parallel flow that would be entering the U.S. market? Yes, I'm starting to see brands that I am assuming do not have the MTS.

Emmanuel Babeau: So you're alluding to product that would come from non-US market, correct?

Speaker Change: So, you are alluding to products that would come from non-U.S. markets, correct? Yes. Is that a machine? Yes.

Matthew Smith: That's what.

That's what.

Operator: Yes.

Owen Bennett: Yes.

Owen Bennett: I'm assuming certain retailers and distributors are buying them from Scandinavia to try and fill the supply. That, I was wondering, how you can get on top of that to make sure that's not happening.

I'm assuming certain retailers and distributors are buying them from Scandinavia to try and fill the supply. That, I was wondering, how you can get on top of that to make sure that's not happening.

Speaker Change: certain retails or distributors are buying them online.

Speaker Change: from Scandinavia to try and fill the supply gap. So I have been just wondering how you can get on top of that to make sure that's not happening.

Emmanuel Babeau: Look, I don't have any information about that, so I cannot make any comment or report. I think we are doing everywhere we can our most to ensure that the flows are appropriate and not going where they should not be going. We are working very hard with this objective, and I don't have any data, and I cannot react.

Speaker Change: Look, I don't have any information about that, so I cannot make any comment or report.

Speaker Change: I think we are doing everywhere we can our utmost.

Speaker Change: to ensure that, you know, the flows are appropriate and not, you know, going where they should not be going. And we are working very hard with this objective.

Speaker Change: And, you know, I don't have any data and I cannot, you know, react on that, but our position is very clear, we are very strict on doing everything we can to make sure that these parallel flows are not happening.

Emmanuel Babeau: On that. But our position is very clear. We are very strict on doing everything we can to make sure that these parallel flows are not happening. On your question, if I understand you well, Owen, could we see the same kind of phenomenon on nicotine pouch as the one we are seeing on vaping, which is illicit parallel flow that would be entering the US market?

On that. But our position is very clear. We are very strict on doing everything we can to make sure that these parallel flows are not happening. On your question, if I understand you well, Owen, could we see the same kind of phenomenon on nicotine pouch as the one we are seeing on vaping, which is illicit parallel flow that would be entering the US market?

Speaker Change: on your question on...

Speaker Change: If I understand you well, Owen, could we see the same kind of phenomenon on nicotine powder as the one we are seeing on vaping, which is illicit parallel flow that would be entering the U.S. market?

Owen Bennett: Yeah, exactly. I'm starting to see brands that I'm assuming do not have the PMTA. Just wondering how you see the risk around that today?

Owen Michael Bennett: Yeah, I'm starting to see brands that I am assuming do not have the MTX, just wondering how you see the risk around that. Today, from what we can monitor in the market,

Emmanuel Babeau: Just wondering how you see the risk around that. Today, from what we can monitor in the market, we do not have the feeling that there is anything material at that stage. But of course, we are monitoring that very carefully. If it was to become material, I think what we are clearly seeing today is that the authorities take that seriously. And they are starting to have much more action and be much more alert on the topic. So I would expect them to have the same behavior when it comes to nicotine pouches.

Emmanuel Babeau: From what we can monitor in the market, we are not having the feeling that there is anything material at that stage, but of course we are monitoring that very carefully if it was to become material. I think what we are clearly seeing today is that the authorities take that seriously, and they are starting to have much more action and be much more alert on the topic. So I would expect them to have the same behavior when it comes to nicotine pouches. So to summarize, I don't think we're seeing anything meaningful today to be certainly watched, and if it was to become the case, we would expect the authority to have the same, I would say proactive behavior that they, I think they are starting to implement on vap.

Owen Michael Bennett: We are not having the feeling that there is...

Speaker Change: Anything material?

Speaker Change: at that stage, but of course we are monitoring that very carefully.

Speaker Change: If it was to become material, I think what we are clearly seeing today is that the authorities take that seriously and they are starting to have much more action and be much more alert on the topic.

Owen Michael Bennett: So to summarize, I don't think we are seeing anything meaningful today to be certainly watched. And if it was to become the case, we would expect the authority to have the same proactive behavior that they are starting to implement with vaping. Okay, thank you, sir.

Speaker Change: So, I would expect them to have the same behavior when it comes to nicotine pouches.

Speaker Change: To summarize, I don't think we're seeing anything meaningful today to be certainly watched and if it was to become the case, we would expect the authority to have the same, I would say, proactive behavior that they, I think, as they are starting to implement on the IP.

Owen Bennett: Okay, thank you sir. Appreciate it.

Emmanuel Babeau: Thank you.

Operator: One moment for our next question.

Emmanuel Babeau: Appreciate it. Thank you. And one moment for our next question. Our next question will come from Callum Elliott, of Bernstein, your line is. Hi, thank you very much for the question. It's actually a follow-up, quite a similar question to what you just had from Owen, but I want to push you a bit further because we also, like ONC, pretty widespread evidence now that European moist versions of ZIM that do not have pre-market approval, as far as I'm aware, and weren't in the market as of August 2016, are available for sale on a widespread basis across New York City, but also the online form suggests that this has become a pretty widespread issue across the US as a whole.

Operator: One moment for our next question.

Speaker Change: Okay, thank you sir, appreciate it. Thank you.

Operator: Our next question will come from Callum Elliott.

Our next question will come from Callum Elliott.

Speaker Change: And one moment for our next question.

Operator: Of Bernstein. Your line is open.

Of Bernstein. Your line is open.

Speaker Change: Our next question will come from Callum Elliott.

Matthew Smith: Hi, thank you very much for the question. It's actually a follow-up quite similar question to what you just had from Owen. But I want to push you a bit further because we also, like Owen, see pretty widespread evidence now, like European moist versions of ZYN that do not have premarket approval as far as I'm aware, and weren't in the market as of August 2016.

[Company Representative]: Hi, thank you very much for the question. It's actually a follow-up quite similar question to what you just had from Owen. But I want to push you a bit further because we also, like Owen, see pretty widespread evidence now, like European moist versions of ZYN that do not have premarket approval as far as I'm aware, and weren't in the market as of August 2016.

Speaker Change: Of Bernstein, your line is open.

Callum Elliott: Hi, thank you very much for the question. It's actually a follow-up, quite a similar question to what you just had from Owen, but I want to push you.

Speaker Change: A bit further, because we also, like ONC, pretty widespread evidence now that European moist versions of Zin that do not have pre-market approval, as far as I'm aware, and weren't in the market as of August 2016.

Matthew Smith: Are available for sale on a widespread basis across New York City. But also the online forum suggests that this has become a pretty widespread issue across the US as a whole. So I guess two questions. Can you just confirm for us that those products weren't in the market at 8 August 2016 and that they are being sold in breach of FDA regulations? And then I guess secondly.

Are available for sale on a widespread basis across New York City. But also the online forum suggests that this has become a pretty widespread issue across the US as a whole. So I guess two questions. Can you just confirm for us that those products weren't in the market at 8 August 2016 and that they are being sold in breach of FDA regulations? And then I guess secondly.

Speaker Change: are available for sale on a widespread basis across New York City, but also the online form suggests that this has become a pretty widespread issue across the U.S. as a whole. So I guess two questions. Can you just confirm for us that those products weren't

Emmanuel Babeau: So I guess, two questions. Can you just confirm for us that those products weren't on the market on the 8th of August 2016 and that they are being sold in breach of FDA regulations. And then, I guess, secondly, what can you do, and what are you doing to stop them?

Speaker Change: in the market at 8th of August 2016, and that they are being sold in breach of FDA regulations.

Matthew Smith: Building upon what Owen asked, presuming that you're not selling illicit product directly to US retailers yourselves.

Building upon what Owen asked, presuming that you're not selling illicit product directly to US retailers yourselves.

Owen Michael Bennett: And then, I guess, secondly, building upon what Owen asked, presuming that you're not selling illicit product directly to U.S. retailers yourselves.

Matthew Smith: What can you do and what are you doing to stop European e-commerce retailers selling this product? Because it strikes me that this presents a pretty meaningful potential risk to your US ZYN business if this illicit product continues entering the US market in this way.

What can you do and what are you doing to stop European e-commerce retailers selling this product? Because it strikes me that this presents a pretty meaningful potential risk to your US ZYN business if this illicit product continues entering the US market in this way.

Callum Elliott: European e-commerce retailers selling this product because it strikes me that this presents a pretty meaningful potential risk to your U.S. business if this illicit product continues entering the U.S. market in this way. Thank you, Callum. Look, again, I don't have any data on what you're saying, so it's very difficult for me to report. I think, you know, we know what products benefit from the situation and the positioning in 2016 on the market and that, therefore, are legally being commercialized.

Speaker Change: You know, what can you do and what are you doing to stop...

Speaker Change: European e-commerce retailers selling this product because it strikes me that this presents a pretty meaningful potential risk to your US in business if this illicit product continues entering the US market in this way.

Emmanuel Babeau: Thank you, Callum. Look, again, I don't have any data on what you're saying, so it's very difficult for me to report. I think we know whether the product that benefit from the situation and the positioning on 2016 in the market, and that therefore are legally being commercialized.

Speaker Change: Thank you, Callum. Look, again, I don't have any data on what you're saying, so it's very difficult for me to report. I think, you know, we know what are the products that...

Speaker Change: benefit from the situation and the positioning in 2016 in the market and that therefore are legally being commercialized.

Callum Elliott: As you can imagine, I'm going to repeat only what I said. We are doing everything we can to control the flows. I don't have any information today saying that, you know, you have these flows of product. If we knew, we would certainly tackle that, and we would try to understand where it's coming from. And what I can certainly repeat is that our objective is to do our utmost, everything we can to be compliant with the regulations. And there is nothing else I can really say, really.

Emmanuel Babeau: As you can imagine. I'm going to repeat only what I said. We are doing everything we can to control the flows. I don't have information today saying that you have these flows of product. If we knew, we would certainly tackle that and we would try to understand where it's coming from. What I can certainly repeat is that our objective is to do our utmost, everything we can to be compliant with the regulation. There is nothing else I can say, really.

As you can imagine. I'm going to repeat only what I said. We are doing everything we can to control the flows. I don't have information today saying that you have these flows of product. If we knew, we would certainly tackle that and we would try to understand where it's coming from. What I can certainly repeat is that our objective is to do our utmost, everything we can to be compliant with the regulation. There is nothing else I can say, really.

Speaker Change: As you can imagine, I'm going to repeat only what I said. We are doing everything we can to control the flows.

Speaker Change: I don't have information today saying that, you know, you have this.

Speaker Change: flows of product. If we knew we would certainly tackle that, and you know, we would try to understand where it's coming from. And what I can certainly repeat is that our objective is to do our utmost, everything we can to be compliant with the regulation.

Emmanuel Babeau: Okay, thank you.

[Company Representative]: Okay, thank you.

Emmanuel Babeau: Okay, thank you. And maybe to follow up, I guess, as you think about bringing supply back online in the U.S., bringing you Supply Online to meet them all. What gives you this confidence that we're going to see the upward lift of ZIM guidance today implies a very significant back half hockey stick in terms of positive inflection in the growth rate? What gives you the confidence that now that consumer awareness for these other brands has grown as a result of your supply chain issues, you're going to immediately win? Look, Callum, this is obviously coming from a mix of consumer demand perception that we have, and we believe that That's the first element.

Matthew Smith: Maybe just a follow up, I guess. As you think about.

[crosstalk] Maybe just a follow up, I guess. As you think about.

Speaker Change: And there is nothing else I can say really.

Speaker Change: Okay, thank you. And maybe to follow up, I guess, as you think about...

Matthew Smith: Bringing supply back online in the US or bringing new supply online to meet demand, what gives you this confidence that we're going to see the upwards lift? Of ZYN guidance today implies a very significant sort of back half hockey stick in terms of positive inflection in the growth rate, which to Faham's earlier question, we see sequential declines in growth now, quarter to date. So what gives you the confidence that the consumers are switching to? On consumers who are switching to Rogue. Some of the consumer reviews for some of these competitive products are sometimes better than for ZYN. So what gives you the confidence that now that consumer awareness for these other brands has grown as a result of your supply chain issues, that you're going to immediately win those consumers back once supply comes online again?

Bringing supply back online in the US or bringing new supply online to meet demand, what gives you this confidence that we're going to see the upwards lift? Of ZYN guidance today implies a very significant sort of back half hockey stick in terms of positive inflection in the growth rate, which to Faham's earlier question, we see sequential declines in growth now, quarter to date. So what gives you the confidence that the consumers are switching to? On consumers who are switching to Rogue. Some of the consumer reviews for some of these competitive products are sometimes better than for ZYN. So what gives you the confidence that now that consumer awareness for these other brands has grown as a result of your supply chain issues, that you're going to immediately win those consumers back once supply comes online again?

Speaker Change: and bringing supply back online in the U.S.

Speaker Change: Bringing New Supply Online to Meet Demand.

Speaker Change: What gives you this confidence that we're going to see that the upwards lift of Zim guidance today implies a very significant back half hockey stick in terms of positive inflection in the growth rate?

Speaker Change: Which to Farhan's earlier question, we see sequential declines in growth now, quarter-to-day. So, what gives you the confidence that the consumers are switching to on, consumers are switching to rogue?

Speaker Change: Some of the consumer reviews for some of these competitive products are sometimes better than for Zin. So what gives you the confidence that now that consumer awareness for these other brands has grown as a result of your supply chain issues, that you're going to immediately win those consumer reviews?

Emmanuel Babeau: Look, Callum, this is obviously coming from a mix of consumer demand perception that we have. We believe that if we can produce them, there is a space to get to 518 million can shipments. That's the first element. That's what our sensors are telling us about what consumers would be happy to buy if it was available. At the same time, of course, our measures to increase production capacity, as I said, I'm not going to elaborate on the various levers, but we're pulling a number of levers to progressively increase the capacity for ZYN production in the US. That's really the combination of the two.

Speaker Change: Look Callum, this is obviously coming from a mix of consumer demand perception that we have and we believe that if we can produce them, there is a space to get to 518 million can shipments.

Callum Elliott: And that's, you know, what our sensors are telling us about what consumers would be happy to buy if it was available. And at the same time, of course, our measures to increase production capacity, where, as I said, I'm not going to elaborate on the various levers, but we're pulling a number of levers to progressively increase the capacity for Zin production in the US. So that's really the combination of the two.

Speaker Change: That's the first element, and that's what our sensors are telling us about what consumers would be happy to buy if it was available, and at the same time, of course, our measures to increase...

Speaker Change: production capacity, where, as I said, I'm not going to elaborate on the various levers, but we're pulling a number of levers to progressively increase the capacity for Zin production in the U.S. So that's really the combination of the two.

Operator: Okay, thank you, thank you, thank you. And our last question will be coming from Priya Ohri-Gupta of Barclays. Your line is open.

[Company Representative]: Okay, thank you.

Emmanuel Babeau: Thank you.

Operator: Thank you. And our last question will be coming from Priya Ohri-Gupta of Barclays. Your line is open.

Emmanuel Babeau: Thank you. And our last question will be coming from Prya Ori Gupta of Barclays. Your line is open. Great, thank you so much for taking the question. Emmanuel, I was wondering if you could give us a little bit more color on the icosaluma test that you're planning for the U.S., diverse geographically across the U.S., and what are some of the Unlock features, and how could this be different than what we saw initially several years ago? www.cdc.gov.au Sure, Priya. Well, that's a very broad question, although a very important one, of course.

Speaker Change: Okay, thank you. Thank you.

Speaker Change: Thank you.

Speaker Change: And our last question will be coming from Priya Ori Gupta of Barclays. Your line is open.

Emmanuel Babeau: Great.

Priya Ohri-Gupta: Great.

Priya Ohri-Gupta: Thank you so much for taking the question, Emmanuel. I was wondering if you could give us a little bit more color on the IQOS ILUMA test that you're planning for the US. It sounds like just a few cities. Will those be sort of diverse geographically across the US, and what are some of the learnings that you're hoping to, I think, unlock? And how could this be different than what we saw initially several years ago with some of the standalone stores that were put in place?

Thank you so much for taking the question, Emmanuel. I was wondering if you could give us a little bit more color on the IQOS ILUMA test that you're planning for the US. It sounds like just a few cities. Will those be sort of diverse geographically across the US, and what are some of the learnings that you're hoping to, I think, unlock? And how could this be different than what we saw initially several years ago with some of the standalone stores that were put in place?

Speaker Change: Thank you so much for taking the question. Emmanuel, I was wondering if you could give us a little bit more color on the icosaluma test that you're planning for the U.S.

Speaker Change: cities. Will those be sort of diverse geographically across the U.S. and what are some of the learnings that you're hoping

Speaker Change: To I think unlock and how could this be different than what we saw initially several years ago with some of the standalone Stores that were put in place, and then I have a follow-up. Thanks

Bonnie Herzog: I have a follow-up.

I have a follow-up.

Priya Ohri-Gupta: Thanks.

Thanks.

Mirza Faham Ali Baig: Sure.

Emmanuel Babeau: Sure.

Emmanuel Babeau: Priya. Well, that's a very broad question, although a very important one, of course. So given where we are, I'm going to make a short answer on that one. First of all, we clarify the fact that we go for a scale launch only once we get the PMTA for ILUMA. And as I said in my preliminary remarks, we are still today targeting to get this approval in the second half of 2025. Once we are there, then we have the right product to really go broader in the US and at that stage we will have been learning with a number of things that we're going to do between Q4 and the moment where we go with ILUMA. And you're asking, okay, what are you going to do differently?

Priya. Well, that's a very broad question, although a very important one, of course. So given where we are, I'm going to make a short answer on that one. First of all, we clarify the fact that we go for a scale launch only once we get the PMTA for ILUMA. And as I said in my preliminary remarks, we are still today targeting to get this approval in the second half of 2025. Once we are there, then we have the right product to really go broader in the US and at that stage we will have been learning with a number of things that we're going to do between Q4 and the moment where we go with ILUMA. And you're asking, okay, what are you going to do differently?

Speaker Change: Sure, Priya. Well, that's a very broad question, although a very important one, of course. So, given where we are, I'm going to make a short answer on that one. First of all, we clarify the fact that we'll go for a scale launch only once we get the PMTA for ILUMA. And, as I said in my preliminary remarks,

Prya Ori Gupta: So, given where we are, I'm going to give a short answer on that one. First of all, we clarify the fact that we'll go for a scale launch only once we get the PMTA for ILUMA. And as I said in my preliminary remarks, we are still targeting to get this approval in the second half of 2025. Once we are there, then we have the right product to really go deeper in the US.

Speaker Change: We are still today targeting to get this approval in the second half of 2025.

Speaker Change: Once we are there, then we have the right product to really go broader in the U.S.

Prya Ori Gupta: And at that stage, we will have been learning a number of things that we're going to now do between Q4 and the moment when we go with ILUMA. And it's, you know, you're asking, OK, what are you going to do differently? Let's be clear.

Speaker Change: And at that stage, we will have been learning with a number of things that we're going to now do between Q4 and the moment where we go with Illuma. And it's, you know, you're asking, okay, what are you going to do differently? Let's be clear. We don't believe that ICOS has never been launched.

Emmanuel Babeau: Let's be clear, we don't believe that IQOS has never been launched in a kind of serious, consistent, and profound manner. We believe that what makes IQOS so popular outside the US is going to resonate with a number of smokers among the around 30 million smokers in the US, so we're going to develop what has been working elsewhere. It will be about, of course, going to the smokers, explaining what IQOS is about, explaining the experience, why IQOS is a better product than smoking. I think it will be, as always, very important to create the image, the brand territory, but also talk about closely with the smokers. Okay. This is a journey to move away from smoking and to go to a better product.

Let's be clear, we don't believe that IQOS has never been launched in a kind of serious, consistent, and profound manner. We believe that what makes IQOS so popular outside the US is going to resonate with a number of smokers among the around 30 million smokers in the US, so we're going to develop what has been working elsewhere. It will be about, of course, going to the smokers, explaining what IQOS is about, explaining the experience, why IQOS is a better product than smoking. I think it will be, as always, very important to create the image, the brand territory, but also talk about closely with the smokers. Okay. This is a journey to move away from smoking and to go to a better product.

Emmanuel Babeau: We don't believe that ICOS has never been launched in a kind of serious, consistent, and profound manner. And we believe that what makes ICOS so popular outside the US is going to resonate with a number of smokers, you know, among the around 30 million smokers in the US. So we're going to develop what has been working elsewhere. It will be about, of course, going to smokers, explaining what ICOS is about, explaining the experience, and why ICOS is a better product than smoking.

Speaker Change: in a kind of

Speaker Change: Serious, consistent, and profound manner. And we believe that...

Speaker Change: What makes ICO so popular outside the U.S.?

Speaker Change: is going to resonate with a number of smokers, among the around 30 million smokers in the U.S.

Speaker Change: So we're going to develop what has been working elsewhere. It will be about, of course, going to the smokers, explaining what IQOS is about, explaining the experience, why IQOS is a better product.

Prya Ori Gupta: I think it would be, as always, very important to create the image, the brand territory, but also, you know, talk about it closely with the smokers. OK, this is a journey to move away from smoking and to go to a better product than ICOS. We will have the same commercial machine, I would say, that has been successful in so many markets by developing our own retail sales points. We will have a strong partnership with a number of independent and third-party retailers.

Speaker Change: than smoking. I think it would be as always very important to create the image, the brand territory, but also, you know, talk about

Speaker Change: Closely with the smokers, okay, this is a journey to move away from smoking and to go to a better product, to IQOS.

Emmanuel Babeau: To IQOS, we will have the same commercial, I would say, machine that has been successful in so many markets with developing our own retail sales point. We will have a strong partnership with a number of independent, and third-party retailers. So we're going to pull all the levers and something that has not been done in the US because until now it has been only a very limited launch in a few cities with limited action. So everything is going to start at that moment for IQOS and there won't be any magic. We're going to use what has been working so well elsewhere, of course, adapting it to the US market.

To IQOS, we will have the same commercial, I would say, machine that has been successful in so many markets with developing our own retail sales point. We will have a strong partnership with a number of independent, and third-party retailers. So we're going to pull all the levers and something that has not been done in the US because until now it has been only a very limited launch in a few cities with limited action. So everything is going to start at that moment for IQOS and there won't be any magic. We're going to use what has been working so well elsewhere, of course, adapting it to the US market.

Speaker Change: We will have the same commercial, I would say, a machine that has been successful in so many markets.

Speaker Change: with developing our own retail sales point where we'll have a strong partnership with a number of independent and third-party retailers so we're going to pull all the levers

Prya Ori Gupta: So we're going to pull all the levers and do some things that have not been done in the US because until now, it has been only a very limited launch in a few cities with limited action. So everything is going to start at that moment for ICOS, and there won't be any magic. We're going to use what has been working so well elsewhere, of course, and adapting it to the US market. That's really helpful.

Speaker Change: And some things that have not been done in the U.S. because until now it has been only a very limited launch in a few cities.

Speaker Change: with limited action. So everything is going to start at that moment for ICOs.

Speaker Change: And there won't be any magic, we're going to use...

Speaker Change: What has been working so well elsewhere, of course, adapting it to the U.S. market.

Priya Ohri-Gupta: That's really helpful. And I guess just a follow on to that is you talked a lot about the development of IQOS outside the US, maybe broad strokes, how do you think that product could play out in the US and at what point would you think, think about filing PMTAs and then broadening the availability of that in the US. Thanks.

Emmanuel Babeau: And I guess just a follow-on to that, talks a lot about the development of IcoSpeed outside the U.S. In broad strokes, how do you think that product could play out in the US? And what about filing PMTAs and then the availability of that. Look, for the time being, we don't have the plan to file a PMTA on Viv.

Speaker Change: That's really helpful. And I guess just a follow on to that is you talked a lot about the development of Icospeed outside the U.S. Maybe broad strokes, how do you think that product could play out in the U.S. and at what point would you

Speaker Change: to think about filing PMTAs and then broadening the availability of that in the U.S. Thanks.

Emmanuel Babeau: Look, for the time being we don't have the plan to file a PMTA on VEEV. We are very much focusing on IQOS. I think that VEEV's success is just at the beginning today. It's great to have already five markets where we are number one on the closed pods system. But it's just the beginning. We're going to keep learning, developing how we can develop a successful profitable business on vaping, and then we will see whether in due course it makes sense to have some thoughts for VEEV in the US, but we are not at that stage today.

Speaker Change #100: Look, for the time being, we don't have the plan to file a PMTA on these.

Prya Ori Gupta: We are very much focusing on ICOS. I think that Viv's success is just at the beginning today. It's great to have already five markets where we are number one in the closed pod system, but it's just the beginning. We're going to keep learning and developing how we can develop a successful, profitable business in vaping, and then we will see whether, in due course, it makes sense to have some thoughts for Viv in the US, but we are not at that stage today. One final, I think, housekeeping item: you talked about your interest expense. A billion. Does that reflect, I guess, the issuance you've done to date and that there would be headwinds?

Speaker Change #100: Focusing on ICOS.

Speaker Change #101: I think that VIV's success is just at the beginning today. It's great to have already five markets where we are number one on the closed pod system, but it's just the beginning. We're going to keep learning, developing how we can develop.

Speaker Change #101: a successful profitable business on vaping and then you know we will see whether in due course it makes sense to have some thoughts for VIV in the US but we are not at that stage today.

Priya Ohri-Gupta: Thank you. Just one final, I think, housekeeping item. You talked about your interest expense being at the low end of your prior range, $1.3 billion. Does that reflect, I guess, the issuance you've done to date, and should we anticipate that there wouldn't be any incremental interest expense headwinds, that is, potential scope for any other refinancing or pre-financing that you might consider? Thanks.

Speaker Change #102: Thank you. Just one final, I think, housekeeping item. You talked about your interest expense being at the low end of your prior rate, $1.3 billion. Does that reflect, I guess, the issuance you've done to date? And should we anticipate that there wouldn't be any incremental

Speaker Change #103: Interest expense headwinds, i.e. potential scope for any other refinancing or prefinancing that you might consider. Thanks.

Emmanuel Babeau: No, I think the improvement in the estimated financing costs for the year is reflecting a better situation on, first of all, the level of the debt with the cash flow generation. Second, with how we are financing the group, and that is coming with this. You said it. I mean, we are in the low end of the initial bracket, and I don't think you should expect some kind of revolution in the way we are financing the company. Nothing on the agenda.

Speaker Change #104: No, I think the improvement in the estimated financial cost for the year is reflecting a better situation on...

Speaker Change #105: First of all, the level of the debt with the cash regeneration. Second, with how we are financing the group.

Speaker Change #105: And that is coming with this, you said it, I mean, we are in the low end of the initial bracket. And I don't think you should expect some kind of revolution in the way we are financing the company. Nothing on the agenda.

Mirza Faham Ali Baig: Thank you.

Priya Ohri-Gupta: Thank you.

Priya Ohri-Gupta: Appreciate that.

Appreciate that.

Emmanuel Babeau: Thank you.

Operator: I would now like to hand the call back to James Bushnell for closing remarks.

Speaker Change #106: Thank you. Appreciate that. Thank you.

Speaker Change #106: I would now like to hand the call back to James Bushnell for closing remarks.

Emmanuel Babeau: That concludes our call today.

James Bushnell: That concludes our call today.

James Bushnell: Thank you for joining us. If you have any follow up questions, please contact the PMI investor relations team. Thank you again and have a great day.

Thank you for joining us. If you have any follow up questions, please contact the PMI investor relations team. Thank you again and have a great day.

James Bushnell: That concludes our call today. Thank you for joining us. If you have any follow-up questions, please contact the PMI Investor Relations team. Thank you again and have a great day.

Emmanuel Babeau: Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

James Bushnell: Thank you.

Speaker Change #107: This concludes today's conference call. Thank you for participating. You may now disconnect.

Matthew Smith: Sa.

Sa.

Emmanuel Babeau: Sam.

Sam.

Priya Ohri-Gupta: Sa.

Sa.

Speaker Change #108: Thank you for watching!

Operator: Sa.

Sa.

Matthew Smith: It.

It.

Matthew Smith: Sa.

Sa.

Speaker Change #109: . . . . .

Speaker Change #109: [inaudible]

Matthew Smith: Sa.

Sa.

Speaker Change #110: Good day and thank you for standing by. Welcome to the Philip Morris International Inc. 2024 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

Emmanuel Babeau: For any other reason, No, I think the improvement in the estimated financial cost for the year is reflecting a better situation on, first of all, the level of the debt with the cash regeneration, and second, how we are financing the group. And that is coming with this, you said it. I mean, we are in the low end of the initial bracket, and I don't think you should expect some kind of revolution in the way we are financing the company. There is nothing on the agenda.

Operator: Good day and thank you for standing by. Welcome to the Philip Morris International Inc. 2024 Second Quarter Results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

James Bushnell: Thank you. I would now like to hand the call back to James Bushnell for closing. That concludes our call today. Thank you for joining us. If you have any follow-up questions, please contact the PMI Investor Relations team. Thank you again, and have a great day.

Speaker Change #111: To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Emmanuel Babeau: To withdraw your question.

To withdraw your question.

Operator: Please press Star one one again. Please be advised that today's conference is being recorded.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Bonnie Herzog: I would now like to hand the.

I would now like to hand the.

Operator: Conference over to your speaker today, James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead.

Conference over to your speaker today, James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead.

Operator: [inaudible]. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ... © The Ultimate Parody Site! Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

James Bushnell: Welcome. Thank you for joining us. Earlier today we issued a press release containing detailed information on our 2024 second quarter results. The press release is available on our website at pmi.com. A glossary of terms including the definition for smoke-free products as well as adjustments, other calculations, and reconciliations to the most directly comparable US GAAP measures for non-GAAP financial measures cited in this presentation are available in Exhibit 99.2 to the Company's Form 8-K dated 23 July 2024 and on our Investor Relations website.

James Bushnell: A glossary of terms, including the definition for smoke-free products.

James Bushnell: As well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures for non-GAAP financial measures cited in this presentation are available in Exhibit 99.2 to the company's Form 8K dated July 23, 2024 and on our Investor Relations website.

Operator: Good day, and thank you for standing by. Welcome to the Philip Morris International Inc. 2024 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 1-1 on your telephone.

Emmanuel Babeau: Or forward-looking statements.

Or forward-looking statements.

James Bushnell: It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel.

It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel.

James Bushnell: It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel. Thank you, James, and welcome everyone.

Emmanuel Babeau: Thank you, James, and welcome everyone. Our business delivered another outstanding performance in the second quarter of 2024. Our categories were strong across the board to deliver a record H1 on organic top line growth and on organic operating income growth excluding the pandemic recovery year of 2021. The strong underlying momentum of IQOS continued in Q2 with shipments and adjusted in-market sales volume growth above or in line with our expectations. This reflects another quarter of strong progress in Japan and robust fundamentals in Europe. Despite the volatility of the characterizing flavor ban.

James Bushnell: You will then hear an automated message advising that your question has been submitted. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead. Welcome.

Emmanuel Babeau: Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2024 second quarter results. The press release is available on our website at www.pmi.com. A glossary of terms, including the definition of smoke-free products, as well as adjustments, other calculations, and reconciliations to the most directly comparable U.S. GAAP measures for non-GAAP financial measures cited in this presentation, are available in Exhibit 99.2 to the company's Form 8K dated July 23, 2024, and on our Investor Relations website.

Emmanuel Babeau: Our business delivered another outstanding performance in the second quarter of 2024.

Emmanuel Babeau: The strong underlying momentum of ICOs continued in Q2, with shipments and adjusted in-market sales volume growth above or in line with our expectations.

Emmanuel Babeau: This reflects another quarter of strong progress in Japan and robust fundamentals in Europe despite the volatility of the characterizing flavour ban.

Emmanuel Babeau: With pricing, manufacturing efficiency, and scale benefit, the expanding profit contribution of IQOS is driving excellent growth for PMI. ZYN continued its impressive growth trajectory with Q2 US volumes growing by over 50% despite recent supply tensions and increased pricing. In addition to IQOS and US ZYN, I am pleased to report building multi-category momentum while still early days. VEEV has already become the closed-pod leader in five European markets and is firmly on the path to profitability. While international nicotine pouch volumes grew over +60% in H1, matching US growth rates. This progress of smoke-free products is reflected in a rapidly growing consumer base with around 36.5 million estimated adult users as of 30 June and our products now available across 90 markets worldwide.

With pricing, manufacturing efficiency, and scale benefit, the expanding profit contribution of IQOS is driving excellent growth for PMI. ZYN continued its impressive growth trajectory with Q2 US volumes growing by over 50% despite recent supply tensions and increased pricing. In addition to IQOS and US ZYN, I am pleased to report building multi-category momentum while still early days. VEEV has already become the closed-pod leader in five European markets and is firmly on the path to profitability. While international nicotine pouch volumes grew over +60% in H1, matching US growth rates. This progress of smoke-free products is reflected in a rapidly growing consumer base with around 36.5 million estimated adult users as of 30 June and our products now available across 90 markets worldwide.

Emmanuel Babeau: With pricing, manufacturing efficiency, and scaled benefits, the expanding profit contribution of ICOs is driving excellent growth for PMI.

Emmanuel Babeau: Zim continued its impressive growth trajectory, with Q2 US volumes growing by over plus 50% despite recent supply tensions and increased pricing.

Emmanuel Babeau: In addition to ICOs and US ZIN, I am pleased to report building multi-category momentum.

Emmanuel Babeau: Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements. It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel.

Emmanuel Babeau: This progress of smoke-free products is reflected in a rapidly growing consumer base with around 36.5 million estimated adult users as of June 30th and our products now available across 90 markets worldwide.

Emmanuel Babeau: Our combustible business also overdelivered with a return to gross margin expansion ahead of plan EQ2 after two years of significant inflationary headwinds.

Emmanuel Babeau: This was driven by stable H1 volumes and category share despite robust pricing in addition to cost efficiencies.

Emmanuel Babeau: This broad-based delivery translated into double-digit organic operating income growth with significant margin expansion.

Emmanuel Babeau: Following this exceptional first half performance, we are increasing our 2024 full year forecast on all organic dimensions and for adjusted diluted EPS on both a currency neutral and US dollar basis. This reflects our strong H2 outlook with accelerating adjusted IMS growth for IQOS, sequentially higher ZYN volumes, and a step up rate of USD EPS growth at prevailing exchange rate.

Following this exceptional first half performance, we are increasing our 2024 full year forecast on all organic dimensions and for adjusted diluted EPS on both a currency neutral and US dollar basis. This reflects our strong H2 outlook with accelerating adjusted IMS growth for IQOS, sequentially higher ZYN volumes, and a step up rate of USD EPS growth at prevailing exchange rate.

Emmanuel Babeau: This reflects our strong H2 outlook with accelerating adjusted IMS growth for ICOs, sequentially higher ZIN volumes and a stepped up rate of USD EPS growth at prevailing exchange rates.

Emmanuel Babeau: This reflects another quarter of strong progress in Japan and robust fundamentals in Europe, despite the volatility of the characterizing flavor ban. Through pricing, manufacturing efficiency, and scaled benefits, the expanding profit contribution of ICOs is driving excellent growth for PMI. Zinn continued its impressive growth trajectory with Q2 US volumes growing by over 50% despite recent supply tensions and increased price. In addition to ICOs and US ZIN, I am pleased to report building multi-category momentum.

Emmanuel Babeau: Looking at our headline financials, strong total shipment volume growth of +2.8% drove Q2 organic net revenue growth of 9.6% or 5.6% in dollar terms. Robust top-line growth, positive smoke-free margin mix, and ongoing cost efficiencies enable us to deliver adjusted diluted EPS of $1.59. This represents +10.6% growth excluding a larger-than-expected unfavorable currency variance of $0.18, which includes a small transactional impact from exchange rate volatility at quarter end. This better-than-expected ex-currency performance reflect the improving profitability of IQOS, ZYN, and combustible, which I will come back to.

Looking at our headline financials, strong total shipment volume growth of +2.8% drove Q2 organic net revenue growth of 9.6% or 5.6% in dollar terms. Robust top-line growth, positive smoke-free margin mix, and ongoing cost efficiencies enable us to deliver adjusted diluted EPS of $1.59. This represents +10.6% growth excluding a larger-than-expected unfavorable currency variance of $0.18, which includes a small transactional impact from exchange rate volatility at quarter end. This better-than-expected ex-currency performance reflect the improving profitability of IQOS, ZYN, and combustible, which I will come back to.

Emmanuel Babeau: While still early days, VIV has already become the closed pod leader in five European markets and is firmly on the path to profitability, while international nicotine pouch volumes grew by plus 60% in H1, matching U.S. growth rates. This progress of Smokefree products is reflected in a rapidly growing consumer base with around 36.5 million estimated adult users as of June 30th, and our products are now available across 90 markets worldwide. Our combustible business also overdelivered, with a return to gross margin expansion ahead of plan E2-2 after two years of significant inflationary headwinds.

Emmanuel Babeau: This was driven by stable H1 volumes and category share despite robust pricing in addition to cost efficiency. This broad-based delivery translated into double-digit organic operating income growth with significant margin expansion. As we have outlined previously, delivering robust growth in dollar terms is a key priority, and we are taking proactive steps on pricing and cost efficiency to mitigate currency headwinds. This is clearly evident in our H1 Adjusted Diluted Earnings Per Share delivery of mid-single-digit growth despite a currency headwind of over 12%, as essentially all of the expected full-year impact fell in the first. Following this exceptional first half performance, we are increasing our 2024 full year forecast on all organic dimensions and for adjusted diluted EPS on both currency neutral and US dollar basis.

Emmanuel Babeau: Looking now at the first half. Overall, our volumes grew by 3.2% and organic net revenue by +10.2%, our highest growth since the 2008 spin. Strong performance from both smoke-free and combustible drove operating income growth of +17% with margin expansion of 230 basis points organically and +7.1% growth in dollar terms. We expect continued robust OI growth on both a reported and an organic basis in the second half.

Looking now at the first half. Overall, our volumes grew by 3.2% and organic net revenue by +10.2%, our highest growth since the 2008 spin. Strong performance from both smoke-free and combustible drove operating income growth of +17% with margin expansion of 230 basis points organically and +7.1% growth in dollar terms. We expect continued robust OI growth on both a reported and an organic basis in the second half.

Emmanuel Babeau: Looking now at the first half overall, our volumes grew by three 2% and organic net revenue by plus 10, 2% our highest growth since the 2018.

Emmanuel Babeau: This reflects our strong H2 outlook with accelerating adjusted IMS growth for ICOs, sequentially higher VIN volumes, and a stepped-up rate of USD EPS growth at prevailing exchange rates. Looking at our headline financials, strong total achievement volume growth of plus 2.8% drove Q2 organic net revenue growth of plus 9.6% or plus 5.6% in dollars. Robust top-line growth, positive smoke-free margin mix, and ongoing cost efficiencies enable us to deliver adjusted diluted EPS of $1.59. This represents plus 10.6% growth, excluding a larger-than-expected unfavorable currency variance of $0.18, which includes a small transactional impact from exchange rate volatility at quarter-end.

Emmanuel Babeau: Strong performance from both Mercury and Compostable drove operating income growth of plus 17% with margin expansion of 230 basis points organically and plus seven 1% growth in dollar terms.

Emmanuel Babeau: This better-than-expected ex-currency performance reflects the improving profitability of ICOs, ZIN, and combustibles, which I will come back to. Looking now at the first half overall, our volumes grew by plus 3.2 percent and organic net revenue by plus 10.2 percent, our highest growth since the 2008 spin. Strong performance from both smoke-free and combustible cigarettes drove operating income growth of plus 17%, with margin expansion of 230 basis points organically and plus 7.1% growth in dollar terms.

Emmanuel Babeau: We expect continued robust OI growth on both a reported and an organic basis in the second quarter. H1 adjusted deleted EPS grew by an impressive plus 16.8% in constant currency and by plus 4% in dollar terms. The $0.38 unfavorable H1 currency variance includes $0.08 of non-recurring transactional impact from Egypt and Russia.

Emmanuel Babeau: We expect continued robust oi growth on both reported and an organic basis in the second.

Emmanuel Babeau: It's one adjusted diluted EPS grew by an impressive 16, 8% in constant currency and <unk>, 4% in the Lockdowns.

Emmanuel Babeau: The 38 unfavorable each one currency variance includes <unk> <unk> of nonrecurring transactional impact from Egypt and Russia.

Emmanuel Babeau: Focusing now on volume, total shipment growth in both the quarter and H1 overall reflect smoke-free share gains in a resilient international industry which grew by more than 1% in both periods, and even excluding oral and e-vapor, Q2 HTU shipments of 35.5 billion units exceeded our prior outlook, notably driven by continued strong performance in Japan, robust underlying growth in Europe, and promising growth in newer markets such as Indonesia. In addition to underlying momentum, Q2 saw an incremental phasing impact of around 0.5 billion units primarily related to Red Sea disruption.

Focusing now on volume, total shipment growth in both the quarter and H1 overall reflect smoke-free share gains in a resilient international industry which grew by more than 1% in both periods, and even excluding oral and e-vapor, Q2 HTU shipments of 35.5 billion units exceeded our prior outlook, notably driven by continued strong performance in Japan, robust underlying growth in Europe, and promising growth in newer markets such as Indonesia. In addition to underlying momentum, Q2 saw an incremental phasing impact of around 0.5 billion units primarily related to Red Sea disruption.

Emmanuel Babeau: Focusing now on volume, total shipment growth in both the quarter and H1 overall reflect small pre-share gains in a resilient international industry, which grew by more than 1% in both periods, even excluding oral and e-vape. Q2 HTU shipments of 35.5 billion units exceeded our prior outlook, notably driven by continued strong performance in Japan, robust underlying growth in Europe, and promising growth in newer markets such as Indonesia. In addition to underlying momentum, Q2 saw an incremental phasing impact of around 0.5 billion units, primarily related to the Red Sea disruption. Q2 HDU adjusted IMS volume grew by plus 10.2%, in line with our expectations.

Emmanuel Babeau: Focusing now on volume total shipment growth in both the quarter and each one overall reflect smoke free share gains in a resilient international industry, which grew by more than 1% in both periods, even excluding overall and E vapor.

Emmanuel Babeau: Q2, SGU shipments of $35 5 billion units.

Emmanuel Babeau: Ceded our prior outlook, notably driven by continued strong performance in Japan robust underlying growth in Europe.

Emmanuel Babeau: And promising growth in newer markets such as Indonesia.

Emmanuel Babeau: In addition to underlying momentum Q2 saw an incremental phasing impact of around 0.5 billion unit primarily related to receipt disruption.

Emmanuel Babeau: Q2, <unk> adjusted IMS volume grew by plus 10, 2% in line with our expectation.

Emmanuel Babeau: This includes the impact of the characterizing flavors ban in Europe, most notably in Italy This quarter.

Emmanuel Babeau: Total smokefree adjusted in market sales volume grew plus 11, 2% in Q2, and plus 13, 1% in each one.

Emmanuel Babeau: This includes our oral smoothly portfolio powered by <unk> with Q2 box unit volumes up by plus 20%.

Emmanuel Babeau: US ZYN shipment grew by 50% to 35.1 million cans.

US ZYN shipment grew by 50% to 35.1 million cans.

Emmanuel Babeau: U S and shipment grew by plus 50% to $35 1 million ton.

Emmanuel Babeau: This does not include the promising result of our e-vapor business where volumes grew strongly to the equivalent of 0.7 billion units on a year-to-date basis. Cigarette shipment grew by 0.4% with notable positive contribution from Turkey and North Africa. This reflects a stable category share excluding market mix despite step-up pricing. With such a positive H1 volume performance, we are raising our full-year forecast for total cigarette, HTU, and oral unit volumes to +1% to 2%, which would mark our fourth consecutive year of volume growth.

This does not include the promising result of our e-vapor business where volumes grew strongly to the equivalent of 0.7 billion units on a year-to-date basis. Cigarette shipment grew by 0.4% with notable positive contribution from Turkey and North Africa. This reflects a stable category share excluding market mix despite step-up pricing. With such a positive H1 volume performance, we are raising our full-year forecast for total cigarette, HTU, and oral unit volumes to +1% to 2%, which would mark our fourth consecutive year of volume growth.

Emmanuel Babeau: This does not include the promising result of our e-cigarette business, where volume grew strongly to the equivalent of 0.7 billion units on a year-to-date basis. Cigar achievement grew by plus 0.4%, with notable positive contributions from Turkey and North Africa. This reflects a stable category share excluding market mix despite step-up prices. With such a positive H1 volume performance, we are raising our full-year forecast for total cigarette, HTU, and oral unit volumes to plus one to plus two percent, which would mark our fourth consecutive year of volume growth. The power of our multi-category smoke-free transformation and recovery in combustibles is clearly illustrated on this slide, as both areas contributed strongly to double-digit organic OI growth of plus 12.5% for the group in Q2.

Emmanuel Babeau: This does not include the promising results of our Egypt business, where volume grew strongly to the equivalent of 0.7 billion unit on a year to date basis.

Emmanuel Babeau: Cigarette shipment grew by plus 0.4% with notable positive contribution from Turkey, and North Africa.

Emmanuel Babeau: This reflects a stable category share excluding market mix, despite the step up pricing.

Emmanuel Babeau: With such a positive <unk> volume performance.

We are raising our full year forecast for total cigarette HEU and overall unit volumes two plus one two plus 2%.

Emmanuel Babeau: Which would mark our fourth consecutive year of volume growth.

Emmanuel Babeau: The power of our multi-category smoke-free transformation and recovery in combustibles are clearly illustrated on this slide as both areas contributed strongly to double-digit organic OI growth of +12.5% for the group in Q2. Smoke-free continued its excellent momentum with +18% organic growth in net revenue and +22% in gross profit driving +220 basis points organic gross margin expansion. This reflects the strong performance of ZYN and the growth and scale effect of IQOS including manufacturing productivities and an increasing albeit smaller contribution from VEEV. Expanding smoke-free gross margin continue to widen the gap versus combustibles gross margin enhancing the very positive mix effect of our transformation. However, combustibles gross margin expansion is also a key objective.

The power of our multi-category smoke-free transformation and recovery in combustibles are clearly illustrated on this slide as both areas contributed strongly to double-digit organic OI growth of +12.5% for the group in Q2. Smoke-free continued its excellent momentum with +18% organic growth in net revenue and +22% in gross profit driving +220 basis points organic gross margin expansion. This reflects the strong performance of ZYN and the growth and scale effect of IQOS including manufacturing productivities and an increasing albeit smaller contribution from VEEV. Expanding smoke-free gross margin continue to widen the gap versus combustibles gross margin enhancing the very positive mix effect of our transformation. However, combustibles gross margin expansion is also a key objective.

Emmanuel Babeau: The power of our multi category Smokefree transformation and recovering convertible are clearly illustrated on this slide.

Emmanuel Babeau: As both areas contributed strongly to double digit organic oi growth of plus 12, 5% for the group in Q2.

Emmanuel Babeau: Smokefree continues its excellent momentum with plus 18% organic growth in net revenue and plus 22% in gross profit, driving plus 220 basis points of organic growth margin expansion. This reflects the strong performance of ZIN and the growth and scale effect of ICOS, including manufacturing productivity and an increasing, albeit smaller, contribution from VIV. The expanding smoke-free growth margin continues to widen the gap versus the combustible growth margin, enhancing the very positive mixed effect of our transformation.

Emmanuel Babeau: <unk> continued its excellent momentum with plus 18% organic growth in net revenue and plus 22% in gross profit.

Emmanuel Babeau: Driving plus 220 basis points organic gross margin expansion.

Emmanuel Babeau: This reflects the strong performance of <unk> and the growth and scale effect of Iqos, including manufacturing productivity is at an increasing owned by smaller contribution from these.

Emmanuel Babeau: Expanding smoothly gross margin continued to widen the gap versus convertible gross margin and then seeing the very positive mix effect of our transformation.

Emmanuel Babeau: However, combustible gross margin expansion is also a key objective. After seven quarters of contraction, we are very pleased to report +50 basis point expansion and gross profit growth of +5.5% on an organic basis, providing a meaningful contribution to total PMI profitability. This reflects resilient volume, despite very strong pricing, in addition to ongoing efficiencies and reduced headwinds on our cogs, notwithstanding continued tobacco leaf inflation. We also expect combustible gross margin expansion in H2.

Emmanuel Babeau: However, convertible gross margin expansion is also a key objective.

Emmanuel Babeau: After seven quarters of contraction, we are very pleased to report plus 50 basis point expansion and gross profit growth of plus 5.5% on an organic basis, providing a meaningful contribution to total PMI profitability. This reflects resilient volume despite very strong pricing, in addition to ongoing efficiencies and reduced headwinds on our COGS, notwithstanding continued tobacco leaf inflation. We also expect combustible gross margin expansion in H2.

After seven quarters of contraction, we are very pleased to report plus 50 basis point expansion and gross profit growth of plus 5.5% on an organic basis, providing a meaningful contribution to total PMI profitability. This reflects resilient volume despite very strong pricing, in addition to ongoing efficiencies and reduced headwinds on our COGS, notwithstanding continued tobacco leaf inflation. We also expect combustible gross margin expansion in H2.

Emmanuel Babeau: After seven quarters of contraction. We are very pleased to report plus 50 basis point expansion and gross profit growth of plus five 5% on an organic basis, providing a meaningful contribution to total PMI profitability.

Emmanuel Babeau: This reflects resilient volume despite very strong pricing in addition to ongoing efficiencies and reduced headwinds on our Cogs notwithstanding continued tobacco leaf inflation.

Speaker Change #112: We also expect computing to convertible gross margin extension in <unk>.

Emmanuel Babeau: Okay.

Emmanuel Babeau: Combined with a very strong first quarter. The year-to-date picture is even more compelling with double-digit organic net revenue, gross profit, and OI growth. This is driven by the same dynamic as Q2 with an impressive 390 basis points gross margin expansion and +29% gross profit growth for our smoke-free business.

Combined with a very strong first quarter. The year-to-date picture is even more compelling with double-digit organic net revenue, gross profit, and OI growth. This is driven by the same dynamic as Q2 with an impressive 390 basis points gross margin expansion and +29% gross profit growth for our smoke-free business.

Emmanuel Babeau: Combined with a very strong first quarter, the year-to-date picture is even more compelling with double-digit organic net revenue, gross profits, and operating income growth. This is driven by the same dynamic as Q2, with an impressive plus 390 basis point growth margin expansion and plus 29% gross profit growth for our smoke-free business. Our H1 revenue performance again demonstrates the powerful drivers of our financial model with an unparalleled combination of positive volumes, robust pricing, and the very favorable category mix of our smoke-free products.

Emmanuel Babeau: Combined with the very strong first quarter of the year to the picture is even more compelling with double digit organic net revenue gross profit and Oi growth. This is driven by the same dynamic as Q2 with an impressive plus 390 basis point gross margin expansion and plus <unk>.

Emmanuel Babeau: Seven 9% gross profit growth for our smoke free business.

Emmanuel Babeau: Our H1 revenue performance again demonstrates the powerful drivers of our financial model with an unparalleled combination of positive volumes, robust pricing, and the very favorable category mix of our smoke-free products. As mentioned, volume grew by 3.2%, pricing contributed plus 6 points of growth, including 8.3% pricing on combustibles and around 2% on smoke-free. Smoke-free category mix added 2.5 points to the top line, reflecting the higher net revenue per unit of IQOS and ZYN. While still small, VEEV also contributed positively to the overall mix. I also note that all smoke-free products added plus 2 points to organic net revenue progression, underlying the continued accretion from the Swedish Match acquisition.

Our H1 revenue performance again demonstrates the powerful drivers of our financial model with an unparalleled combination of positive volumes, robust pricing, and the very favorable category mix of our smoke-free products. As mentioned, volume grew by 3.2%, pricing contributed plus 6 points of growth, including 8.3% pricing on combustibles and around 2% on smoke-free. Smoke-free category mix added 2.5 points to the top line, reflecting the higher net revenue per unit of IQOS and ZYN. While still small, VEEV also contributed positively to the overall mix. I also note that all smoke-free products added plus 2 points to organic net revenue progression, underlying the continued accretion from the Swedish Match acquisition.

Emmanuel Babeau: Okay.

Our <unk> revenue performance again demonstrates the powerful drivers of our financial model with an unparalleled combination of positive volumes.

Emmanuel Babeau: <unk> pricing and the very favorable category mix of our smoke free product.

Emmanuel Babeau: As mentioned, volume grew by plus 3.2%, and pricing contributed plus 6 points of growth, including plus 8.3 on combustible and around plus 2% on smoke-free. Smokefree Category Mix added plus 2.5 points to the top line, reflecting the higher net revenue per unit of ICOs and ZIN. While still small, VIV also contributed positively to the overall mix. I also note that the oral smoke-free product added plus two points to organic net revenue progression, underlying the continued accretion from the Swedish Match acquisition. As in recent quarters, the geographic mix was negative.

Emmanuel Babeau: As mentioned volume grew by three 2% pricing contributed six points of growth, including plus eight three pricing on convertible and around plus 2% on smoke free.

Emmanuel Babeau: Smokefree category mix added plus two five points to the top line, reflecting the higher net revenue per unit of Iqos and Zim.

Emmanuel Babeau: While still small also contributed positively to the overall mix.

Emmanuel Babeau: I also note that oral smoothie product added plus two points to organic net revenue progression underlying the continued accretion from the Swedish match acquisition.

Emmanuel Babeau: As in recent quarters, geographic mix was negative. This is primarily due to cigarette volumes increasingly skewed to lower margin markets where smoke-free alternatives are small or not available. With higher margin markets over-indexed to cannibalization, we expect this dynamic to be less impactful in 2024 than last year.

As in recent quarters, geographic mix was negative. This is primarily due to cigarette volumes increasingly skewed to lower margin markets where smoke-free alternatives are small or not available. With higher margin markets over-indexed to cannibalization, we expect this dynamic to be less impactful in 2024 than last year.

As in recent quarters geographic mix was negative.

Emmanuel Babeau: This is primarily due to combustible ware volumes increasingly skewed to lower margin markets, where smoke-free alternatives are small or not available, with higher margin markets over-indexed to cannibalization. We expect this dynamic to be less impactful in 2024 than last year. Now, let's focus on the mechanics behind our H1 margin delivery. Gross margin increased organically by 140 basis points and by 80 basis points in dollar terms. This was driven by our higher margin smoke-free business, pricing, and ongoing productivity savings across the value chain. As expected, SG&A cost growth stepped up in Q2, increasing 9.8% organically after a very modest increment in Q1 due to the planned phasing of commercial spend.

Emmanuel Babeau: This is primarily due to convertible where volumes increasingly skewed to lower margin markets, where smoke free alternative a small or not available with higher margin markets over indexed to cannibalization.

Emmanuel Babeau: We expect this dynamic to be less impactful in 2024.

Emmanuel Babeau: Last year.

Emmanuel Babeau: Now let's focus on the mechanics behind our H1 margin delivery. Gross margin increased organically by 140 basis points and by 80 basis points in dollar terms. This was driven by our higher margin smoke-free business pricing and ongoing productivity savings across the value chain. As expected, SG&A cost growth stepped up in Q2, increasing 9.8% organically after a very modest increment in Q1 due to planned phasing of commercial spend. The resulting 5.8% organic increase in H1 was below the rate of top line growth, driving plus 1 percentage point of margin expansion. With our successful back office program able to mitigate some of the investment step-up with a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net revenue growth for the year.

Now let's focus on the mechanics behind our H1 margin delivery. Gross margin increased organically by 140 basis points and by 80 basis points in dollar terms. This was driven by our higher margin smoke-free business pricing and ongoing productivity savings across the value chain. As expected, SG&A cost growth stepped up in Q2, increasing 9.8% organically after a very modest increment in Q1 due to planned phasing of commercial spend. The resulting 5.8% organic increase in H1 was below the rate of top line growth, driving plus 1 percentage point of margin expansion. With our successful back office program able to mitigate some of the investment step-up with a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net revenue growth for the year.

Speaker Change #113: Now, let's focus on the mechanics behind our H one margin delivery.

Gross margin increased organically by 140 basis points and by 80 basis points in <unk>.

Speaker Change #113: This was driven by our IR margins Smokefree business.

Speaker Change #113: Icing and ongoing productivity savings across the value chain.

Speaker Change #113: As expected SG&A cost growth step up in Q2, increasing nine 8% organically after a very modest increment in Q1 due to planned phasing of commercial spend.

Emmanuel Babeau: The resulting 5.8% organic increase in H1 was below the rate of top-line growth, driving plus one percentage point of margin expansion, with our successful back-of-feed cost program able to mitigate some of the investment stakes. With a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net-driven growth for the year. I am pleased to report we delivered over $300 million in H1 growth cost efficiency across both COGS and SG&A as we proactively drive bottom-line growth.

Speaker Change #113: The resulting five 8% organic increase in each one was below the rate of top line growth driving plus one percentage point of margin expansion.

Speaker Change #113: With our successful <unk> program able to mitigate some of the investments step up.

Speaker Change #113: With a range of important commercial activities in Q3, we expect SG&A to remain elevated but continued to target inorganic increase below the rate of net revenue growth for the year.

Emmanuel Babeau: I am pleased to report we delivered over $300 million in H1 gross cost efficiency across both COGS and SG&A. As we proactively drive bottom line growth, we expect an acceleration in H2 savings notably from manufacturing as we progress towards our $2 billion target for 2024-26 period.

I am pleased to report we delivered over $300 million in H1 gross cost efficiency across both COGS and SG&A. As we proactively drive bottom line growth, we expect an acceleration in H2 savings notably from manufacturing as we progress towards our $2 billion target for 2024-26 period.

Speaker Change #113: Okay.

Speaker Change #114: I am pleased to report we delivered over $300 million in each one gross cost efficiency across both Cogs and SG&A as we proactively drive bottom line growth.

Speaker Change #113: We expect an acceleration in H two savings, notably from manufacturing as we progress towards our $2 billion target for 2004 2006 period.

Emmanuel Babeau: The combination of these factors drove a 230 basis points expansion in our organic operating income margin. Despite a significant H1 skewed currency headwind, adjusted OI margin were stable on a dollar basis.

The combination of these factors drove a 230 basis points expansion in our organic operating income margin. Despite a significant H1 skewed currency headwind, adjusted OI margin were stable on a dollar basis.

Speaker Change #113: The combination of these factors drove a plus 230 basis point expansion in our organic operating income margin.

Speaker Change #113: Despite a significant H, one skewed currency headwind adjusted Oi margin were stable on a dollar basis.

Emmanuel Babeau: Moving to our smoke-free business, we estimate there were 36.5 million adult users of PMI smoke-free product as of 30 June 2024, reflecting an additional 3.2 million during H1. This includes an estimated 30.8 million IQOS user, 5.2 million oral users, and 0.8 million VEEV users. The increase in both total and IQOS user was broad-based with notable progress in Japan, Europe, and newer growth markets such as Indonesia. In addition to ZYN's strong traction with legal-age nicotine user in the US, our smoke-free products are now present in 19 markets following recent launches of IQOS, ZYN, and VEEV.

Moving to our smoke-free business, we estimate there were 36.5 million adult users of PMI smoke-free product as of 30 June 2024, reflecting an additional 3.2 million during H1. This includes an estimated 30.8 million IQOS user, 5.2 million oral users, and 0.8 million VEEV users. The increase in both total and IQOS user was broad-based with notable progress in Japan, Europe, and newer growth markets such as Indonesia. In addition to ZYN's strong traction with legal-age nicotine user in the US, our smoke-free products are now present in 19 markets following recent launches of IQOS, ZYN, and VEEV.

Speaker Change #113: Yeah.

Speaker Change #115: Moving to our smoke free business.

Speaker Change #113: We estimate there were $36 5 million adults user of PMI smokefree product as of June 30th.

Speaker Change #113: Reflecting an additional $3 2 million during each one.

Emmanuel Babeau: This includes an estimated 30.8 million ICOS users, 5.2 million ORAL users, and 0.8 million VIEWs. The increase in both total and high-cost users was worldwide, with notable progress in Japan, Europe, and newer growth markets such as Indonesia, in addition to seeing strong traction with legalized nicotine users in the U.S. Our smoke-free products are now present in 90 markets following recent launches of Icos, Zyn, and Ve Focusing now on ICOS in Europe, where fundamental dynamics are developing very well, including the user growth I just mentioned. First, we see robust recoveries in markets where the characterizing flavor ban has passed the initial adjustment phase.

Speaker Change #113: This includes an estimated 38 million iqos user $5 2 million all road users and 0.8 million <unk> users.

Speaker Change #113: The increase in both total and Iqos user was broad based with notable progress in Japan, Europe, and newer growth markets such as Indonesia. In addition to the strong traction with legal age nicotine user in the U S.

Speaker Change #113: Our smoke free products are now presented in 19 markets. Following the recent launches of Iqos Zim entities.

Speaker Change #113: Focusing now on Iqos in Europe, where fundamental dynamics are developing very well, including the user growth I just mentioned.

Speaker Change #113: First we see robust recoveries in market, where the characterizing flavor ban as past the initial adjustment phase.

Emmanuel Babeau: Second, there is continued excellent growth in markets where ICOS is already well-established, such as Portugal, Hungary, and Greece. Last, new growth leader markets are emerging with accelerating momentum in Germany, Spain, Bulgaria, and Romania, in addition to a recovery in Poland following the launch of Delia. Our Q2HTU share increased by 0.8 points year-on-year despite the impact of the fever ban. However, due to the usual seasonal factors and a resilient combustible market, our Q2 share was sequentially below Q1.

Speaker Change #113: Second there is continued excellent growth in market, where iqos is already well established such as Portugal, and Gary and Greece.

Speaker Change #113: Last new growth leader markets are emerging with accelerating momentum in Germany.

Speaker Change #113: Again, good Gaia and Romania. In addition to a recovery in Poland. Following the launch of Dahlia.

Emmanuel Babeau: Our Q2 HTU share increased by 0.8 points year on year despite the impact of the flavor ban. Due to the usual seasonal factors and a resilient combustible market, Q2 share was sequentially below Q1 HTU. Adjusted IMS volume demonstrated robust growth, growing by 0.8 billion units sequentially to reach 12.9 billion on the four-quarter moving average. As expected, adjusted in-market sales growth of 6.8% was slower than in Q1 due to higher comparison and the initial impact of the characterizing flavor ban, notably in Italy. Growth excluding Italy was close to 10%.

Our Q2 HTU share increased by 0.8 points year on year despite the impact of the flavor ban. Due to the usual seasonal factors and a resilient combustible market, Q2 share was sequentially below Q1 HTU. Adjusted IMS volume demonstrated robust growth, growing by 0.8 billion units sequentially to reach 12.9 billion on the four-quarter moving average. As expected, adjusted in-market sales growth of 6.8% was slower than in Q1 due to higher comparison and the initial impact of the characterizing flavor ban, notably in Italy. Growth excluding Italy was close to 10%.

Speaker Change #113: Our Q2 HBU share increased by 0.8 points year on year, despite the impact of the flavor ban.

Speaker Change #113: Due to the usual seasonal factors and a resilient convertible market.

Speaker Change #113: Q2 share was sequentially below Q1.

Emmanuel Babeau: HTU-adjusted IMS volume demonstrated robust growth, growing by 0.8 billion units sequentially to reach 12.9 billion on the four-quarter moving average. As expected, adjusted in-market sales growth of plus 6.8% was slower than in Q1 due to higher comparisons and the initial impact of the characterizing flavor ban, notably in Italy. Growth excluding Italy was close to 10%. The impact of the ban is progressing in line with our prior estimate in the majority of markets. Though the implementation in Italy during Q2 was slightly more pronounced than anticipated, this was primarily driven by earlier sell-through of affected SKUs and concurrent prices.

Speaker Change #113: <unk> adjusted IMS volume demonstrated robust growth growing by 0.8 billion units sequentially to reach $12 9 billion on a four quarter moving average.

Speaker Change #113: As expected adjusted in market sales growth of plus six 8% was slower than in Q1 due to higher comparison and the initial impact of the characterizing flavors ban notably in Italy.

Speaker Change #113: Growth, excluding Italy was close to 10%.

Emmanuel Babeau: The impact of the ban is progressing in line with our prior estimate in the majority of markets, though the implementation in Italy during Q2 was slightly more pronounced than anticipated. This was primarily driven by earlier sell through of affected SKUs and concurrent pricing. It is important to note this is a transitory dynamic and I'm pleased to report a recovery in markets such as Greece, Czech Republic, Bulgaria, and Romania where the ban was implemented previously following an initial period of consumer adjustment. Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe adjusted IMS growth in the second half. This is supported by the planned step up in commercial activity behind IQOS including the introduction of DELIA and LEVIA HTUs to an increasing number of markets.

The impact of the ban is progressing in line with our prior estimate in the majority of markets, though the implementation in Italy during Q2 was slightly more pronounced than anticipated. This was primarily driven by earlier sell through of affected SKUs and concurrent pricing. It is important to note this is a transitory dynamic and I'm pleased to report a recovery in markets such as Greece, Czech Republic, Bulgaria, and Romania where the ban was implemented previously following an initial period of consumer adjustment. Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe adjusted IMS growth in the second half. This is supported by the planned step up in commercial activity behind IQOS including the introduction of DELIA and LEVIA HTUs to an increasing number of markets.

Speaker Change #113: The impact of the ban is progressing in line with our prior estimate in the majority of market share.

Speaker Change #113: Those implementation in Italy during Q2 was slightly more pronounced than anticipated.

Speaker Change #113: This was primarily driven by earlier sell through of affected skews and concurrent pricing.

Emmanuel Babeau: It is important to note this is a transitory dynamic, and I'm pleased to report a recovery in markets such as Greece, the Czech Republic, Bulgaria, and Romania, where the ban was implemented previously, following an initial period of consumer adjustment. Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe-adjusted IMS growth in the second half. This is supported by the planned step-up in commercial activity behind ICOs, including the introduction of Delia and Livia HTUs to an increasing number of markets.

Speaker Change #113: It is important to note. This is a transitory dynamic and I'm pleased to report a recovery in markets, such as Greece, Czech Republic, Bulgaria, and Romania, where the ban was implemented previously following an initial period of consumer adjustment.

Speaker Change #113: Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe adjusted <unk> growth in the second half. This is supported by the planned step up in commercial activity behind Iqos, including the introduction of <unk> and Lithia urged us to an increasing number of markets.

Emmanuel Babeau: Another illustration of our continued progress in Europe is in our key cities of Czech share. Strong gains in cities with already high IQOS adoption such as Budapest, Bucharest, Bratislava, Lisbon, and Sofia and historically slower growth markets such as Madrid, London, and Amsterdam highlight the enduring growth potential in the region.

Another illustration of our continued progress in Europe is in our key cities of Czech share. Strong gains in cities with already high IQOS adoption such as Budapest, Bucharest, Bratislava, Lisbon, and Sofia and historically slower growth markets such as Madrid, London, and Amsterdam highlight the enduring growth potential in the region.

Emmanuel Babeau: Another illustration of our continued progress in Europe is in our key city of TechShare: strong gains in cities with already high high-cost adoptions, such as Budapest, Bucharest, Bratislava, Lisbon, and Sofia. And historically slower growth markets, such as Madrid, London, and Amsterdam, highlight the enduring growth potential in the region. Kapan demonstrated impressive I-code growth in the quarter, with adjusted HTU-IMS growth of plus 12.5%, representing the seventh consecutive quarter of double-digit progression. Adjusted IMS volumes continue to grow sequentially, reaching 10.5 billion units on a four-quarter moving average.

Speaker Change #113: Another illustration of our continued progress in Europe is in our key city offtake share.

Speaker Change #113: Strong gains in city with already Iqos adoption, such as bid FASB carries Bratislava, Lisbon, and Sophia and historically slower growth markets, such as Madrid, London and Amsterdam.

The enduring growth potential in the region.

Emmanuel Babeau: Japan demonstrated impressive IQOS growth in the quarter with adjusted HTU IMS growth of 12.5%, representing the seventh consecutive quarter of double-digit progression. Adjusted IMS volumes continued to grow sequentially, reaching 10.5 billion units on the four-quarter moving average. Total tobacco share for our HTU brands increased by 3.1 points year-on-year to 29.4%, with national offtake share exceeding the impressive milestone of 30% in June.

Japan demonstrated impressive IQOS growth in the quarter with adjusted HTU IMS growth of 12.5%, representing the seventh consecutive quarter of double-digit progression. Adjusted IMS volumes continued to grow sequentially, reaching 10.5 billion units on the four-quarter moving average. Total tobacco share for our HTU brands increased by 3.1 points year-on-year to 29.4%, with national offtake share exceeding the impressive milestone of 30% in June.

Speaker Change #113: Japan demonstrated impressive <unk> growth in the quarter with adjusted HEU IMS growth of plus 12, 5%, representing the seventh consecutive quarter of double digit progression.

Speaker Change #113: I, just said I am as volumes continued to grow sequentially, reaching $10 5 billion unit on a four quarter moving average.

Emmanuel Babeau: Total tobacco share for our brand increased by 3.1 points year-on-year to 29.4%, with national off-tech share exceeding the impressive milestone of 30% in June. We also maintain an off-tech share of over 35% in Tokyo, despite seasonal factors, where the overall category continues to track at over 50% of total off-tech and grow sequentially, demonstrating the continued potential in this important market. Our continuous innovation is a key driver of this growth, with Q2 seeing a strong step-up in user acquisition following the launch of Illuma Eye and further innovative Thera variants such as Capsule Consumables.

Speaker Change #113: Total tobacco share for our <unk> brand increased by three one points year on year to 29, 4% with national offtake share exceeding the impressive milestone of 30% in June.

Emmanuel Babeau: We also maintain offtake share of over 35% in Tokyo despite seasonal factors where the overall category continued to track at over 50% of total offtake and grow sequentially, demonstrating the continued potential in this important market.

We also maintain offtake share of over 35% in Tokyo despite seasonal factors where the overall category continued to track at over 50% of total offtake and grow sequentially, demonstrating the continued potential in this important market.

Speaker Change #113: We also maintained offtake share of over 35% in Tokyo, Despite seasonal factors.

Speaker Change #113: The overall category continued to track at over 50% of total offtake and grew sequentially demonstrating the continued potential in this important market.

Speaker Change #113: Our continuous innovation is a key driver of this growth with Q2 seeing a strong step up in user acquisition. Following the launch of Illumina and further innovative stereo variants such as capsule consumables.

Emmanuel Babeau: Taking a more global view, we continue to see very promising IQOS growth across a broad range of geographies, including low- and middle-income markets, as highlighted by key cities like Tokyo. Accelerating growth in Indonesia, the world's largest cigarette market by volume, excluding China, is leading the way with increasing geographic reach and clove HTU innovation.

Taking a more global view, we continue to see very promising IQOS growth across a broad range of geographies, including low- and middle-income markets, as highlighted by key cities like Tokyo. Accelerating growth in Indonesia, the world's largest cigarette market by volume, excluding China, is leading the way with increasing geographic reach and clove HTU innovation.

Emmanuel Babeau: Taking a more global view, we continue to see very promising high-cost growth across a broad range of geographies, including low- and middle-income markets, as highlighted by key city-of-texture. Accelerating growth in Indonesia, the world's largest cigarette market by volume, excluding China, leads the way with increasing geographic reach and clove-HTU innovation. Markets across North Africa and the Middle East are also a growing weight and source of growth. We show Saudi Arabia, Lebanon, Morocco, and Tunisia here, in addition to Egypt, where performance in Cairo remains robust despite recent pricing and a recovery in the combustible market.

Speaker Change #113: Taking a more global view, we continue to see very promising iqos growth across a broad range of geographies, including low and middle income market as highlighted by key city offtake shares.

Speaker Change #113: Accelerating growth in Indonesia, the world's largest cigarette market by volume.

Speaker Change #113: <unk>, China leads the way with increasing geographic reach and clove HEU innovation.

Emmanuel Babeau: Markets across North Africa and the Middle East are also a growing weight and source of growth. We show Saudi Arabia, Lebanon, Morocco, and Tunisia here in addition to Egypt where performance in Cairo remains robust despite recent pricing and a recovery in the combustible market. I am also pleased to report very good progress in the UAE and Jordan following the recent launch of ILUMA. Growth in Mexico City is very promising and the East Asian market of South Korea and Malaysia continue to perform well. Also worth highlighting is a successful contribution of duty-free where we are increasingly leveraging our multi-category portfolio to expand share and in a growing market as travel recovers in Asia.

Markets across North Africa and the Middle East are also a growing weight and source of growth. We show Saudi Arabia, Lebanon, Morocco, and Tunisia here in addition to Egypt where performance in Cairo remains robust despite recent pricing and a recovery in the combustible market. I am also pleased to report very good progress in the UAE and Jordan following the recent launch of ILUMA. Growth in Mexico City is very promising and the East Asian market of South Korea and Malaysia continue to perform well. Also worth highlighting is a successful contribution of duty-free where we are increasingly leveraging our multi-category portfolio to expand share and in a growing market as travel recovers in Asia.

Speaker Change #113: Markets across North Africa, and the Middle East are also growing weight and source of growth.

Speaker Change #113: We chose Saudi Arabia, Lebanon, Morocco, and Tunisia year. In addition to Egypt, where performance in Cairo remains robust despite recent pricing and a recovery in the convertible market.

Speaker Change #113: I am also pleased to report very good progress in the UAE and Jordan.

Speaker Change #113: Following the recent launch of Illumina growth in Mexico City is very promising and the East Asian market of South Korea, and Malaysia continued to perform well.

Speaker Change #113: Also worth highlighting is the successful contribution of duty free where we are increasingly leveraging our multi category portfolio to expand share in a growing market as travel recovers in Asia.

Emmanuel Babeau: Our fundamental HTU growth outlook for the year has not changed. H1 adjusted IMS growth of 11.4% reflect the strong dynamic I described across Japan, Europe, and global markets, partly offset by the transitory impact of the EU flavor ban. Indeed, growth excluding Europe accelerated compared to the last year and we expect this to continue.

Our fundamental HTU growth outlook for the year has not changed. H1 adjusted IMS growth of 11.4% reflect the strong dynamic I described across Japan, Europe, and global markets, partly offset by the transitory impact of the EU flavor ban. Indeed, growth excluding Europe accelerated compared to the last year and we expect this to continue.

Speaker Change #113: Our fundamental HQ growth outlook for the year has not changed.

Speaker Change #113: Adjusted <unk> growth of plus 11, 4% reflect the strong dynamic I described across Japan, Europe and global markets.

Speaker Change #113: Offset by the transitory impact of the EU flavor ban.

Speaker Change #113: Indeed growth, excluding Europe accelerated compared to the last year and we expect this to continue.

Emmanuel Babeau: However, we see an incremental headwind of around 2 billion units to our full year adjusted IMS forecast, the majority of which is driven by the ongoing delay in approval for commercialization in Taiwan, which was previously expected around the midpoint of the year. We also factor in an impact of a few hundred million units for a slower recovery from the characterizing flavor ban in Europe, principally in Italy. I would note that our revised full year forecast for adjusted IMS growth of around 13% represents the same absolute volume increase as 2023 despite the EU headwinds. We accordingly forecast full year HGV shipment volume of around 140 billion units with shipments as usual expected to be a few billion units higher than adjusted IMS given continued offtake and user growth.

However, we see an incremental headwind of around 2 billion units to our full year adjusted IMS forecast, the majority of which is driven by the ongoing delay in approval for commercialization in Taiwan, which was previously expected around the midpoint of the year. We also factor in an impact of a few hundred million units for a slower recovery from the characterizing flavor ban in Europe, principally in Italy. I would note that our revised full year forecast for adjusted IMS growth of around 13% represents the same absolute volume increase as 2023 despite the EU headwinds. We accordingly forecast full year HGV shipment volume of around 140 billion units with shipments as usual expected to be a few billion units higher than adjusted IMS given continued offtake and user growth.

Speaker Change #113: However, we see an incremental headwind of around 2 billion unit to our full year adjusted IMS forecast the majority of which is driven by the ongoing delay in approval for commercialization in Taiwan.

Speaker Change #113: Which was previously expected around the midpoint of the year.

Speaker Change #113: We also factor in an impact of a few hundred million unit for a slower recovery from the characterizing flavor ban in Europe, principally in Italy.

Emmanuel Babeau: I would note that our revised full-year forecast for adjusted IMS growth of around 13% represents the same absolute volume increase as 2023 despite the EU headwind. We accordingly forecast full-year achieved shipment volume of around 140 billion units, with shipment, as usual, expected to be a few billion units higher than adjusted IMS given continued offtake and user growth. Importantly, we expect very strong H2 delivery in adjusted IMS on both a sequential and year-on-year basis, between plus 14 and plus 15 percent growth.

Speaker Change #113: I would note that our revised full year forecast for adjusted <unk> growth of around 13%.

Speaker Change #113: Represents the same absolute volume increase as 2023, despite the EU Edwin.

Speaker Change #113: We accordingly forecast full year achieve shipment volume of around 140 billion unit with shipment as usual expected to be a few billion unit higher than adjusted IMS, given continued uptake and user growth.

Emmanuel Babeau: Importantly, we expect very strong H2 delivery in adjusted IMS on both a sequential and year-on-year basis to between 14% and 15% growth. This is supported by a notable step up in commercial activity, continued momentum in Japan, and increasingly dynamic global market. This includes the market I just mentioned and the ongoing acceleration in duty-free for Europe. A broadening of growth through acceleration in Germany, Spain, the UK, and Romania adds to the ongoing momentum in geographies such as Portugal and Greece. H2 should also see several markets start to rebound from initial fever ban impact, including a gradual recovery in Italy.

Importantly, we expect very strong H2 delivery in adjusted IMS on both a sequential and year-on-year basis to between 14% and 15% growth. This is supported by a notable step up in commercial activity, continued momentum in Japan, and increasingly dynamic global market. This includes the market I just mentioned and the ongoing acceleration in duty-free for Europe. A broadening of growth through acceleration in Germany, Spain, the UK, and Romania adds to the ongoing momentum in geographies such as Portugal and Greece. H2 should also see several markets start to rebound from initial fever ban impact, including a gradual recovery in Italy.

Speaker Change #113: Importantly, we expect very strong edge to delivery in adjusted items on both a sequential and year on year basis to between <unk>, 14, and plus 15% growth.

Speaker Change #113: This is supported by a notable step up in commercial activity.

Speaker Change #113: Continued momentum in Japan, and increasingly dynamic global market.

Speaker Change #113: This includes the market I, just mentioned and the ongoing acceleration in duty free.

Speaker Change #113: For Europe, a broadening of growth through acceleration in Germany, Spain, the UK and Romania.

Speaker Change #113: As to the ongoing momentum in geographies, such as Portugal and Greece.

<unk> should also see several markets start to rebound from initial favorable impact, including a gradual recovery in Italy.

Emmanuel Babeau: Turning now to ZYN, where very good US progress continued in Q2 with close to +70% growth in 12-month rolling shipment. As we shared earlier in the year, strong demand dynamics have created short-term supply chain constraint, which has impacted volume growth as shown on this slide. This has resulted in a temporary slowdown of the category. ZYN's premium positioning and superior brand equity remain strong while maintaining very robust category volume and value share. Despite these availability challenges and the recent price increase, we also remain highly focused on marketing ZYN responsibly to prevent unintended use.

Turning now to ZYN, where very good US progress continued in Q2 with close to +70% growth in 12-month rolling shipment. As we shared earlier in the year, strong demand dynamics have created short-term supply chain constraint, which has impacted volume growth as shown on this slide. This has resulted in a temporary slowdown of the category. ZYN's premium positioning and superior brand equity remain strong while maintaining very robust category volume and value share. Despite these availability challenges and the recent price increase, we also remain highly focused on marketing ZYN responsibly to prevent unintended use.

Speaker Change #113: Turning now to <unk> were very good U S. Progress continued in Q2 with close to plus 70% growth in 12 months rolling shipments.

Speaker Change #113: As we shared earlier in the year strong demand dynamics have created short term supply chain constrained, which has impacted volume growth.

Speaker Change #113: As shown on this slide this resulted in a temporary slowdown of the category.

Emmanuel Babeau: Zin's premium positioning and superior brand equity remain strong, with Zin maintaining very robust category volume and value share despite these availability challenges and the recent crisis. We also remain highly focused on marketing ZIN responsibly to prevent unintended use.

Zane: Zane its premium positioning and superior brand equity remained strong within maintaining very robust category volume and value share. Despite this availability challenges and a recent price increase.

Zane: We also remain highly focused on marketing as in responsibly to prevent unintended use.

Emmanuel Babeau: We are making good progress on expanding production and continue to expect a gradual improvement through Q3, with sequentially higher volume, and for production volumes to meet expected consumer demand during the course of Q4. We expect the ongoing expansion of the existing facility in Kentucky to provide around 900 million cans of capacity for 2025. We also recently announced a planned investment in a new plant in Colorado, which is due to begin preliminary operation by the end of next year. Together these plans support our US and growth ambitions for the coming years.

We are making good progress on expanding production and continue to expect a gradual improvement through Q3, with sequentially higher volume, and for production volumes to meet expected consumer demand during the course of Q4. We expect the ongoing expansion of the existing facility in Kentucky to provide around 900 million cans of capacity for 2025. We also recently announced a planned investment in a new plant in Colorado, which is due to begin preliminary operation by the end of next year. Together these plans support our US and growth ambitions for the coming years.

Zane: We are making good progress on extending production and continue to expect a gradual improvement through Q3 with sequentially higher volume and for production volumes to meet expected consumer demand during the course of Q4.

Zane: We expect the ongoing expansion of the existing facility in Kentucky to provide around 900 million tons of capacity for 2025.

Zane: We also recently announced the planned investment in the new plant in Colorado, which is due to begin preliminary operation by the end of next year.

Emmanuel Babeau: Together, these plans support our U.S. growth ambitions for the coming year. For 2024, we are now forecasting a US shipment range of 560 to 580 million cans to reflect strongly increasing demand from adult nicotine users and the progress made on increasing our production capacity.

Zane: Together these plans support our user growth ambitions for the coming years.

Emmanuel Babeau: For 2024, we are now forecasting a US shipment range of 560 to 580 million cans to reflect strongly increasing demand from adult nicotine user and the progress made on increasing our production capacity.

For 2024, we are now forecasting a US shipment range of 560 to 580 million cans to reflect strongly increasing demand from adult nicotine user and the progress made on increasing our production capacity.

Zane: For 2024, we are now forecasting U S shipment range of $5 60 to 518 million cans to reflect strongly increasing demand from either negating user and the progress made on increasing our production capacity.

Emmanuel Babeau: I will now take a moment to update you on the international expansion of our smoke-free business. Our multi-category approach is gaining momentum as we unlock new horizon of growth with the increasing commercialization of IQOS, ZYN, and VEEV across markets. Our focus strategy for VEEV is showing very good early results in Europe. Closed pods are accelerating within the dynamic e-vapor category. We are seeing strong traction of our VEEV ONE product, achieving a number one closed pod position in five markets within the first year of launch, including Italy, the Czech Republic, and Romania.

I will now take a moment to update you on the international expansion of our smoke-free business. Our multi-category approach is gaining momentum as we unlock new horizon of growth with the increasing commercialization of IQOS, ZYN, and VEEV across markets. Our focus strategy for VEEV is showing very good early results in Europe. Closed pods are accelerating within the dynamic e-vapor category. We are seeing strong traction of our VEEV ONE product, achieving a number one closed pod position in five markets within the first year of launch, including Italy, the Czech Republic, and Romania.

Zane: Yeah.

Zane: I will now take a moment to update you on the international expansion of our smoke free business.

Zane: Our multi category approach is gaining momentum as we unlock new aurizon of growth with increasing commercialisation of iqos in and across markets.

Speaker Change #117: Our focused strategy for Veeva is showing very good early results.

Speaker Change #117: In Europe close spuds are accelerating within the dynamic E vapor category, we are seeing strong traction of our <unk>, one product achieving a number one close but position in five market within the first year of launch, including Italy, The Czech Republic and Romania.

Emmanuel Babeau: We continue to observe good repeat purchase and conversion rate, which is often a challenge for this category. We expect continued volume momentum in H2 supported by ongoing geographic expansion and to reach profitability in Q3. For ZYN, there is a large opportunity outside of the US, which we are working to capture. Our international nicotine pouch volume including the Nordics grew by over 60% in H1, matching us in growth. We see promising results in a number of markets including Mexico, South Africa, Pakistan, and the important UK market where we have seen strong traction with only limited distribution so far. Our expansion of the IQOS portfolio remains active as we innovate to broaden and enhance our offer for both existing users and switching adult smokers.

We continue to observe good repeat purchase and conversion rate, which is often a challenge for this category. We expect continued volume momentum in H2 supported by ongoing geographic expansion and to reach profitability in Q3. For ZYN, there is a large opportunity outside of the US, which we are working to capture. Our international nicotine pouch volume including the Nordics grew by over 60% in H1, matching us in growth. We see promising results in a number of markets including Mexico, South Africa, Pakistan, and the important UK market where we have seen strong traction with only limited distribution so far. Our expansion of the IQOS portfolio remains active as we innovate to broaden and enhance our offer for both existing users and switching adult smokers.

Yeah.

We continue to observe good repeat purchase and conversion rate, which is often a challenge for this category.

Speaker Change #117: We expect continued volume momentum in its two supported by ongoing geographic expansion and to reach profitability in Q3.

Speaker Change #117: Closing there is a large opportunity outside of the U S, which we are working to capture.

Emmanuel Babeau: Our international nicotine port volume, including the Nordics, grew by over plus 60% in H1, matching U.S. income. We see promising results in a number of markets, including Mexico, South Africa, Pakistan, and the important UK market, where we have seen strong traction with only limited distribution so far. Our expansion of the IQOS portfolio remains active as we innovate to broaden and enhance our offer for both existing users and switching adult smokers. Further market launches are planned in H2, including Delia and Livia H2Us and the new Illuma Eye device range, which is currently only available in Japan.

Speaker Change #117: Our international nicotine pouch volume, including the Nordics grew.

Speaker Change #117: <unk> grew by over 60% in each one matching U S Ingalls.

Speaker Change #117: We see promising results in a number of markets, including Mexico, South Africa, Pakistan and the important UK market, where we have seen strong traction with only limited distribution so far.

Speaker Change #117: Our extension of the Iqos portfolio remains active as we innovate to broaden and enhance our offer for both existing user and switching adult smokers further market launches are planned in its two including Dahlia and Lithia Ht us as the new Illumina.

Emmanuel Babeau: Further market launches are planned in H2 including DELIA and LEVIA, HTUs, and the new ILUMA i device range which is currently only available in Japan.

Further market launches are planned in H2 including DELIA and LEVIA, HTUs, and the new ILUMA i device range which is currently only available in Japan.

Speaker Change #117: Device range, which is currently only available in Japan.

Emmanuel Babeau: We also continue with our preparation for ICO CILUMA in the US, and we are underway with consumer engagement for our first city pilot in Austin, Texas, with the ICO3 system, which we expect to start in Q4. As mentioned previously, commercialization will be initially limited in scope and focused on direct activation of select legal edge brokers in a few cities, allowing us to experiment with different elements of the commercial model. The main purpose is to fine-tune our approach and readiness in anticipation of the full launch of ILUMA.

Emmanuel Babeau: We also continue with our preparation for IQOS ILUMA in the US and we are underway with consumer engagement for our first city pilot in Austin, Texas with the IQOS 3 system which we expect to start in Q4. As mentioned previously, the commercialization will be initially limited in scope and focused on direct activation of select legal-age smokers in a few cities, allowing us to experiment with different elements of the commercial model. The main purpose is to fine tune our approach and readiness. In anticipation of the at scale launch of IQOS ILUMA, we continue to assume an authorization from the FDA in the second half of 2025.

We also continue with our preparation for IQOS ILUMA in the US and we are underway with consumer engagement for our first city pilot in Austin, Texas with the IQOS 3 system which we expect to start in Q4. As mentioned previously, the commercialization will be initially limited in scope and focused on direct activation of select legal-age smokers in a few cities, allowing us to experiment with different elements of the commercial model. The main purpose is to fine tune our approach and readiness. In anticipation of the at scale launch of IQOS ILUMA, we continue to assume an authorization from the FDA in the second half of 2025.

Speaker Change #117: We also continue with our progression for Iqos in the U S and we are underway with consumer engagement for our first city pilot in Austin, Texas with the Iqos three system, which we expect to start in Q4.

Speaker Change #117: As mentioned previously the compensation will be initially limited in scope and focused on direct activation of select legal age smokers in a few cities, allowing us to experiment with different element of the commercial model.

Speaker Change #117: The main purpose is to fine tune, our approach and readiness in anticipation of the launch of Illumina.

Emmanuel Babeau: We continue to assume an authorization from the FDA in the second half of 2025. Focusing now on combustibles, our portfolio delivered robust organic net revenue growth and a very positive profit contribution, as I covered earlier. This reflects resilient volume despite very strong Q2 pricing of plus 8.7%, including our proactive action to maximize growth. It is worth noting the large majority of our pricing is derived from regular pricing action unrelated to significant currency devaluation.

Speaker Change #117: We continue to assume an authorization from the FDA in the second half of 2025.

Speaker Change #117: Yeah.

Emmanuel Babeau: Focusing now on combustibles, our portfolio delivered robust organic net revenue growth and a very positive profit contribution. As I covered earlier, this reflects resilient volume despite very strong Q2 pricing of 8.7% including our proactive action to maximize growth. It is worth noting the large majority of our pricing is derived from regular pricing action unrelated to significant currency devaluation. Factoring a strong H1 and favorable outlook, we now forecast an increased fully combustible price variance of 7 to 8%. Our cigarette category share was stable in H1 and down 0.2 points in Q2 or stable excluding market mix impact. Lower share in Egypt and Indonesia was offset by positive contribution from Turkey, India, and the Europe region. Again, despite strong pricing, our global brand grew category share in the quarter with Marlboro gaining plus 0.3 points to 10.1%.

Focusing now on combustibles, our portfolio delivered robust organic net revenue growth and a very positive profit contribution. As I covered earlier, this reflects resilient volume despite very strong Q2 pricing of 8.7% including our proactive action to maximize growth. It is worth noting the large majority of our pricing is derived from regular pricing action unrelated to significant currency devaluation. Factoring a strong H1 and favorable outlook, we now forecast an increased fully combustible price variance of 7 to 8%. Our cigarette category share was stable in H1 and down 0.2 points in Q2 or stable excluding market mix impact. Lower share in Egypt and Indonesia was offset by positive contribution from Turkey, India, and the Europe region. Again, despite strong pricing, our global brand grew category share in the quarter with Marlboro gaining plus 0.3 points to 10.1%.

Speaker Change #118: Focusing now on combustibles, our portfolio delivered robust organic net revenue growth and a very positive profit contribution as I covered earlier.

Speaker Change #118: This reflects resilient volume despite very strong Q2 pricing of plus eight 7%.

Speaker Change #118: Including our proactive action to maximize groups. It is worth noting the large majority of our pricing is derived from regular pricing action unrelated to significant currency devaluation.

Emmanuel Babeau: Factoring in the strong H1 and favorable outlook, we now forecast an increased fully combustible price variance of plus seven to plus 8%. Our cigarette category share was stable in H1 and down 0.2 points in Q2, or stable excluding market mix impact. Lower share in Egypt and Indonesia was offset by positive contributions from Turkey, India, and the European region. Again, despite strong prices, our global brand group category share in the quarter was Marlboro gaining plus 0.3 points to 10.1% on a global basis.

Speaker Change #118: Factoring the strong H, one and favorable outlook, we now forecast an increase fully convertible price variance of plus seven to plus 8%.

Speaker Change #118: Our cigarette category share was stable in each one and down zero point to point in Q2, our stable excluding marketing mix impact.

Speaker Change #118: Lower share in Egypt, and Indonesia was offset by positive contribution from Turkey, India, and Europe region again, despite strong pricing.

Speaker Change #118: Our global brands grew category share in the quarter with Marlboro, gaining plus 0.3 points to 10, 1%.

Emmanuel Babeau: On a global basis, our leadership in combustible is a critical enabler to maximize switching to smoke-free products, and we target a stable category share over time. As mentioned previously, we evaluate our strategy on a market-by-market basis and have the flexibility to adapt our approach where smoke-free products have already reached critical mass.

On a global basis, our leadership in combustible is a critical enabler to maximize switching to smoke-free products, and we target a stable category share over time. As mentioned previously, we evaluate our strategy on a market-by-market basis and have the flexibility to adapt our approach where smoke-free products have already reached critical mass.

Speaker Change #118: On a global basis.

Emmanuel Babeau: Our leadership in combustibles is a critical enabler to maximize switching to smoke-free products, and we target a stable category share over time. As mentioned previously, we evaluate our strategy on a market-by-market basis and have the flexibility to adapt our approach where smoke-free products have already reached critical mass. Taking a more holistic view of the business, our transformation and Smokefree Journey are backed by a strategy that seeks to embed sustainability in all that we do.

Speaker Change #118: Our leadership in convertible is a critical enabler to maximize switching to smoke free product.

Speaker Change #118: We target a stable category share overtime.

Speaker Change #118: As mentioned previously we evaluate our strategy on a market by market basis, and I have the flexibility to adapt our approach where smoke free products have already reached critical mass.

Emmanuel Babeau: Taking a more holistic view on the business. Our transformation and smoke-free journey are backed by a strategy that seeks to embed sustainability in all that we do. We are making strong progress towards our product transformation targets. Our smoke-free products are now available in 90 markets, placing us on track for our aspiration of 100 by 2025. We are also moving nicely towards our objective for low- and middle-income countries to comprise over 50% of smoke-free product market. The rapid growth of our estimated SFP user base, which now stands at around 36.5 million adult users as previously described, is further testament to this progress.

Taking a more holistic view on the business. Our transformation and smoke-free journey are backed by a strategy that seeks to embed sustainability in all that we do. We are making strong progress towards our product transformation targets. Our smoke-free products are now available in 90 markets, placing us on track for our aspiration of 100 by 2025. We are also moving nicely towards our objective for low- and middle-income countries to comprise over 50% of smoke-free product market. The rapid growth of our estimated SFP user base, which now stands at around 36.5 million adult users as previously described, is further testament to this progress.

Speaker Change #118: Taking a more holistic view on the business our transformation and smoke in Germany are backed by a strategy that seeks to embed sustainability in all that we do.

Speaker Change #118: We are making strong progress towards our product transformation targets, our smoke free products are now available in 19 markets.

Speaker Change #118: <unk> is on track for our aspiration of standard by 2025.

Speaker Change #118: We are also moving nicely towards our objective for low and middle income countries to comprise over 50% of Smokefree product market.

Speaker Change #118: The rapid growth of our estimated SSP user base, which now stands at around $36 5 million adults user as previously described.

Speaker Change #118: Is further testament to this progress.

Emmanuel Babeau: With regard to our operation, decarbonization is an important focus area, and we are very pleased to have been awarded the top spot on the Forbes 2024 net zero leader list, which highlights the 100 US public company best positioned to reduce their greenhouse gas emission. It also follows the announcement earlier this year of CDP awarding us a AAA rating for our disclosure and efforts on climate change, forest, and water security.

With regard to our operation, decarbonization is an important focus area, and we are very pleased to have been awarded the top spot on the Forbes 2024 net zero leader list, which highlights the 100 US public company best positioned to reduce their greenhouse gas emission. It also follows the announcement earlier this year of CDP awarding us a AAA rating for our disclosure and efforts on climate change, forest, and water security.

Speaker Change #119: With regard to our operation de Carbonization is an important focus area and we are very pleased to have been awarded the top spot on the Forbes 2024, net zero leader list, which <unk> hundred U S public company best position to reduce their greenhouse gas emission.

Speaker Change #119: It also follows the announcement earlier this year of CDP awarding us a triple a rating for our disclosure and efforts on climate change forest and water security.

Emmanuel Babeau: This recognition reflects our continued focus on our sustainability performance and robust reporting as we continue to work towards a smoke-free future.

This recognition reflects our continued focus on our sustainability performance and robust reporting as we continue to work towards a smoke-free future.

Speaker Change #119: This recognition reflects our continued focus on our sustainability performance.

Speaker Change #119: <unk> robust reporting as we continue to work towards a smoke free future.

Emmanuel Babeau: This brings me to our outlook for 2024.

This brings me to our outlook for 2024.

Speaker Change #119: This bring me to our outlook for 2024.

Emmanuel Babeau: Following an excellent H1 performance and strong business momentum, as we start the second half, we are raising our full year currency-neutral and US dollar growth forecast. This is supported by accelerated total volume growth and pricing, and reflects the very strong outlook for ZYN. Despite short-term supply constraints and the increasing profitability of IQOS due to operating leverage, manufacturing efficiencies, and pricing, we continue to target close to $15 billion in smoke-free net revenue for the year. Taking these factors into account and robust combustible performance, we are increasing our organic net revenue growth forecast to a range of +7.5% to 9%.

Following an excellent H1 performance and strong business momentum, as we start the second half, we are raising our full year currency-neutral and US dollar growth forecast. This is supported by accelerated total volume growth and pricing, and reflects the very strong outlook for ZYN. Despite short-term supply constraints and the increasing profitability of IQOS due to operating leverage, manufacturing efficiencies, and pricing, we continue to target close to $15 billion in smoke-free net revenue for the year. Taking these factors into account and robust combustible performance, we are increasing our organic net revenue growth forecast to a range of +7.5% to 9%.

Speaker Change #119: Following an excellent H, one performance and strong business momentum as we start the second half.

Speaker Change #119: We are raising our full year currency neutral and U S dollar growth forecast.

Speaker Change #119: This is supported by accelerated to deliver growth and pricing and reflect the very strong outlook foreseen. Despite short term supply constrained and the increasing profitability of iqos due to operating leverage manufacturing efficiencies and pricing we.

Speaker Change #119: We continue to target close to $15 billion.

Speaker Change #119: Smoke free net revenue for the year.

Speaker Change #119: Taking these factors into account and robust convertible performance.

Speaker Change #119: Our increasing our organic net revenue growth forecast to a range of plus seven five to plus 9%.

Emmanuel Babeau: In addition to strong top-line growth, the positive smoke-free mix effect, combustible recovery, and further cost efficiency enable LC margin expansion. We are accordingly raising our organic operating income growth forecast to 11% to 13% for the year. We continue to target adjusted gross margin expansion for both smoke-free product and combustible, and adjusted OI margin expansion for total PMI all in both organic and dollar terms.

In addition to strong top-line growth, the positive smoke-free mix effect, combustible recovery, and further cost efficiency enable LC margin expansion. We are accordingly raising our organic operating income growth forecast to 11% to 13% for the year. We continue to target adjusted gross margin expansion for both smoke-free product and combustible, and adjusted OI margin expansion for total PMI all in both organic and dollar terms.

Speaker Change #119: Yeah.

Speaker Change #119: In addition to strong top line growth and the positive smoke free mix effect convertible recovery and further cost efficiency enable.

Speaker Change #119: Margin expansion.

Speaker Change #119: We are accordingly, raising our organic operating income growth forecast to plus 11, two plus 13% for the year.

Speaker Change #119: We continue to target adjusted gross margin expansion for both smoke free product and compostable.

Speaker Change #119: And adjusted Oi margin expansion for total PMI, all in both organic and their outcomes.

Emmanuel Babeau: Consequently, and also factoring a lower forecast net financing cost, we are raising our forecast for currency-neutral adjusted diluted EPS growth to 11% to 13%. This translates into a range of $6.33 to $6.45 including an unfavorable currency impact of $0.34 for the year at prevailing rate. The increased currency headwind versus prior guidance is primarily due to the Q2 impact already described, as shown by the increase in our forecast USD EPS growth to 5% to 7%. The underlying strength of our business and proactive mitigating actions have allowed us to more than compensate for this, and we expect to deliver on our objective of strong growth in dollar terms.

Consequently, and also factoring a lower forecast net financing cost, we are raising our forecast for currency-neutral adjusted diluted EPS growth to 11% to 13%. This translates into a range of $6.33 to $6.45 including an unfavorable currency impact of $0.34 for the year at prevailing rate. The increased currency headwind versus prior guidance is primarily due to the Q2 impact already described, as shown by the increase in our forecast USD EPS growth to 5% to 7%. The underlying strength of our business and proactive mitigating actions have allowed us to more than compensate for this, and we expect to deliver on our objective of strong growth in dollar terms.

Speaker Change #119: Consequently, and also factoring in a lower forecast net financing cost we are raising our forecast for currency neutral adjusted diluted EPS growth to plus 11, two plus 13%.

Speaker Change #119: This translates into a range of $6 33 to $6 45, including an unfavorable currency impact of 34 for the year at prevailing rates.

Emmanuel Babeau: The increased currency Edwin versus prior guidance is primarily due to the Q2 impact already described. As shown by the increase in our forecast U.S. EPS growth to plus 5 to plus 7 percent, the undying strength of our business and proactive mitigating actions have allowed us to more than compensate for this, and we expect to deliver on our objective of strong growth in dollars. Focusing on the second half in more detail, we expect another strong performance driven by excellent high-cost adjusted IMS growth, the progressive improvement in ZIN volume, and continued positive impact from our actions to drive bottom-line growth. For Q3, we forecast a record-high quarterly adjusted diluted EPS of $1.77 to $1.82 despite a significant step up in commercial spending and an unfavorable currency impact of $0.02 at prevailing rates.

Speaker Change #119: The increased currency headwind versus prior guidance is primarily due to the Q2 impact already described.

Speaker Change #119: As shown by the increase in our forecast use EPS growth to plus five to plus 7% at the end.

Speaker Change #120: <unk> strengths of our business and proactive mitigating actions have allowed us to more than compensate for this and we expect to deliver on our objective of strong growth in drop downs.

Emmanuel Babeau: Focusing on the second half in more detail, we expect another strong performance driven by excellent IQOS adjusted IMS growth, the progressive improvement in ZYN volume, and continued positive impact from our actions to drive bottom line goals. For Q3, we forecast a record high quarterly adjusted diluted EPS of $1.77 to $1.82 despite a significant step up in commercial spending and an unfavorable currency impact of $0.02 at prevailing rates. This is in contrast to a forecast currency tailwind of $0.04 for H2 overall, which enable us to target accelerated US dollar adjusted diluted EPS growth. We include a table of estimated currency impact by quarter in the appendix.

Focusing on the second half in more detail, we expect another strong performance driven by excellent IQOS adjusted IMS growth, the progressive improvement in ZYN volume, and continued positive impact from our actions to drive bottom line goals. For Q3, we forecast a record high quarterly adjusted diluted EPS of $1.77 to $1.82 despite a significant step up in commercial spending and an unfavorable currency impact of $0.02 at prevailing rates. This is in contrast to a forecast currency tailwind of $0.04 for H2 overall, which enable us to target accelerated US dollar adjusted diluted EPS growth. We include a table of estimated currency impact by quarter in the appendix.

Speaker Change #120: Focusing on the second half in more detail, we expect another strong performance driven by excellent Iqos adjusted IMS gross the progressive improvement in volume and continued position impact from our actions to drive bottom line growth.

Speaker Change #120: For Q3, we forecast a record quarterly adjusted diluted EPS of $1 77 to $1 82, Despite a significant step up in commercial spending and an unfavorable currency impact of <unk> at prevailing rates.

Emmanuel Babeau: This is in contrast to a forecast currency tailwind of $0.04 for H2 overall, which enabled us to target accelerated USD-adjusted diluted EPS growth. We include a table of estimated currency impact by quarter in the app. This Q3 forecast notably reflects another quarter of dynamic growth with HTU shipment of 34-35 billion units and an acceleration in HTU-adjusted IMS growth. Given expectations for a strong four-year profit delivery, we are forecasting operating cash flow of around $11 billion, which is at the upper end of our previous forecast range, at the prevailing exchange rate, and subject to year-end working capital requirements. We expect this improvement to more than offset an increase in capital expenditure to around 1.3 to 1.4 billion dollars as we further accelerate zinc capacity expansion.

This is in contrast to forecast currency tailwind of <unk> for each to overall, which enable us to target accelerated U S dollars adjusted diluted EPS growth. We include a table of estimated currency impact by quarter in the appendix.

Emmanuel Babeau: This Q3 forecast notably reflects another quarter of dynamic growth with HTU shipment of 34.35 billion units and an acceleration in HTU adjusted IMS growth. Given expectation for a strong full-year profit delivery, we are forecasting operating cash flow of around $11 billion, which is at the upper end of our previous forecast range at prevailing exchange rate and subject to year-end working capital requirement. We expect this improvement to more than offset an increase in capital expenditure to around $1.3 to 1.4 billion as we further accelerate ZYN capacity expansion. Last, we continue to target a 0.3x to 0.5x improvement in our net debt to adjusted EBITDA ratio in 2024, driven by profit growth and strong cash flow generation.

This Q3 forecast notably reflects another quarter of dynamic growth with HTU shipment of 34.35 billion units and an acceleration in HTU adjusted IMS growth. Given expectation for a strong full-year profit delivery, we are forecasting operating cash flow of around $11 billion, which is at the upper end of our previous forecast range at prevailing exchange rate and subject to year-end working capital requirement. We expect this improvement to more than offset an increase in capital expenditure to around $1.3 to 1.4 billion as we further accelerate ZYN capacity expansion. Last, we continue to target a 0.3x to 0.5x improvement in our net debt to adjusted EBITDA ratio in 2024, driven by profit growth and strong cash flow generation.

Speaker Change #120: This Q3 forecasts, notably reflect another quarter of dynamic growth with HD shipment of $34 35 billion units and an acceleration in HEU adjusted IMS growth.

Speaker Change #120: Given expectations for a strong full year profit delivery, we are forecasting operating cash flow of around $11 billion, which is at the upper end of our previous forecast range at prevailing exchange rate and subject to year end working capital requirement.

Speaker Change #120: We expect this improvement to more than offset an increase in capital expenditure to around one three to one 4 billion.

Speaker Change #120: As we further accelerate <unk> capacity expansion.

Emmanuel Babeau: Last, we continue to target a 0.3 to 0.5 times improvement in our net debt to adjusted EBDA ratio in 2024, driven by profit growth and strong cash flow generation. As of June 30th, we have already improved to a ratio of three times on a 12-month trading basis as compared to 3.2 times at the end of 2023. This represents good progress towards our target of around two times by the end of 2026. We intend to reconsider shared repurchase, subject to board approval, once we are within sight of this goal. I will now conclude today's presentation with some closing remarks.

Speaker Change #120: Lastly, we continue to target a 0.320 facetime improvement in our net debt to adjusted EBITDA ratio in 2024, driven by profit growth and strong cash flow generation.

Emmanuel Babeau: As of 30 June we have already improved to a ratio of 3x on a 12-month trailing basis as compared to 3.2x at the end of 2023. This represents good progress towards our target of around 2x by the end of 2026. We intend to reconsider share repurchase, and subject to board approval, once we are within sight of this goal.

As of 30 June we have already improved to a ratio of 3x on a 12-month trailing basis as compared to 3.2x at the end of 2023. This represents good progress towards our target of around 2x by the end of 2026. We intend to reconsider share repurchase, and subject to board approval, once we are within sight of this goal.

Speaker Change #120: As of June 30 years, we have already improved to a ratio of three time on a 12 month trailing basis as compared to three two times at the end of 2023.

Speaker Change #120: This represents good progress towards our target of around two times by the end of 2026.

Speaker Change #120: We intend to reconsider share repurchases subject to board approval. Once we are within sight of this goal.

Emmanuel Babeau: I will now conclude today's presentation with some closing remarks. The powerful combination of strong underlying business momentum and our own proactive steps enable us to generate best-in-class growth across key metrics. Our strategy is delivering on volumes, pricing, cash flow, and dollar earnings despite ongoing currency headwinds. The success of our smokefree transformation is reflected in our remarkable first half performance with excellent underlying IQOS and HTU growth, very robust pricing, positive category mix, and step-up cost efficiencies. This puts us firmly on track for an exceptional 2024 with accelerated top-line growth and margin expansion. Our momentum is broadening across the business with exciting multi-category growth opportunity. To further support the delivery of our 2024-2026 growth targets, we remain highly focused on delivering performance in SG&A, and as shown in H1, we are taking measures to mitigate currency headwinds.

I will now conclude today's presentation with some closing remarks. The powerful combination of strong underlying business momentum and our own proactive steps enable us to generate best-in-class growth across key metrics. Our strategy is delivering on volumes, pricing, cash flow, and dollar earnings despite ongoing currency headwinds. The success of our smokefree transformation is reflected in our remarkable first half performance with excellent underlying IQOS and HTU growth, very robust pricing, positive category mix, and step-up cost efficiencies. This puts us firmly on track for an exceptional 2024 with accelerated top-line growth and margin expansion. Our momentum is broadening across the business with exciting multi-category growth opportunity. To further support the delivery of our 2024-2026 growth targets, we remain highly focused on delivering performance in SG&A, and as shown in H1, we are taking measures to mitigate currency headwinds.

Speaker Change #120: I will now conclude today's presentation with some closing remarks.

Emmanuel Babeau: The powerful combination of strong underlying business momentum and our own proactive steps enables us to generate best-in-class growth across key metrics. Our strategy is delivering on volumes, pricing, cash flow, and dollar earnings despite ongoing currency headwinds. The success of our smoke-free transformation is reflected in our remarkable first-half performance with excellent underlying high-cost ending growth, very robust pricing, positive category mix, and step-up cost efficiency.

Speaker Change #120: The powerful combination of strong underlying business momentum and our own proactive steps enable us to generate best in class growth across key metrics.

Speaker Change #120: Our strategy is delivering on volumes pricing cash flow and earnings despite ongoing currency headwinds.

Speaker Change #120: The success of our small fleet transformation is reflected in our remarkable first half performance with excellent underlying iqos and in growth very robust pricing positive category mix and step up cost efficiencies.

Emmanuel Babeau: This puts us firmly on track for an exceptional 2024 with accelerated top-line growth and margin expansion. Our momentum is broadening across the business with exciting multi-category growth opportunities to further support the delivery of our 2024-2026 growth target. We remain highly focused on delivering performance in the dollar, and as shown in H1, we are taking measures to mitigate currency headwinds. Finally, we are steadfastly committed to returning cash to our shareholders.

Speaker Change #120: This puts us firmly on track for an exceptional 2024 with accelerated top line growth and margin expansion.

Speaker Change #120: Our momentum is broadening across the business with exciting multi category growth opportunity to further support the delivery of our 2020 for 2026 of those targets.

Speaker Change #120: We remain highly focused on delivering performance in dollars and as shown in each one we are taking measures to mitigate currency headwinds.

Speaker Change #120: Finally, we are steadfastly committed to returning cash to our shareholders our growth outlook and strong cash flow generation.

Speaker Change #120: The teams our capital allocation priority is to reinvest behind our rapidly transforming business alongside our progressive dividend policy.

Emmanuel Babeau: Thank you and we are now very happy to answer your questions.

Thank you and we are now very happy to answer your questions.

Speaker Change #121: Thank you and we are now very happy to answer your questions.

Operator: Ladies and gentlemen, if you'd like to ask a question, please press Star 11 on your telephone. To withdraw your question, please press Star Star 1 1. Again, please stand by while we compile the Q and A roster. One moment for our first question.

Ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone to withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.

Gaurav Jain: Please stand by while we compile the Q&A roster. And one moment for our first question. And our first question will come from Gaurav Jain of Barclays. Your line is open. Hi, uh, good morning Emmanuel, good morning Gaurav.

Speaker Change #122: One moment for our first question.

Operator: Our first question will come from Gaurav Jain of Barclays. Your line is open.

Our first question will come from Gaurav Jain of Barclays. Your line is open.

Speaker Change #123: And our first question will come from Rob Jane of Barclays. Your line is open.

Emmanuel Babeau: Hi, good morning. Emmanuel, Gaurav. Hi. So two questions from me. One is, you know, just on the cigarette pricing algorithm that you have. So if I look at your market share gains, clearly quite impressive, even excluding modern oral, and if I add that, then you are gaining almost 80 basis points share right now per annum. So isn't that level of market share gain excessive and suggest that you are not monetizing your cigarette business as much as you should be? And that would mean that increase the pricing growth in cigarettes from seven to eight to let's say eight to 10%. And then I have a follow up.

Gaurav Jain: Hi, good morning. Emmanuel, Gaurav. Hi. So two questions from me. One is, you know, just on the cigarette pricing algorithm that you have. So if I look at your market share gains, clearly quite impressive, even excluding modern oral, and if I add that, then you are gaining almost 80 basis points share right now per annum. So isn't that level of market share gain excessive and suggest that you are not monetizing your cigarette business as much as you should be? And that would mean that increase the pricing growth in cigarettes from seven to eight to let's say eight to 10%. And then I have a follow up.

Rob Jane: Hi, good morning, Emmanuel monograph.

Gaurav Jain: Hi, two questions from me. One is, you know, just on the cigarette pricing algorithm that you have. So if I look at your market share gains, clearly quite impressive, even excluding modern oral. And if I add that, then you're gaining almost 80 basis points of share right now per annum.

Rob Jane: Hi, two questions from me one is just on the cigarette pricing algorithm that you have so if I look at your market share gains nuclear linked quite impressive even excluding modern Orlando, if I add back that youre, gaining almost 80 vessels planned share right now per annum.

Emmanuel Babeau: So, isn't that level of market share gain excessive and suggests that you are not monetizing your cigarette business as much as you should be? And that would mean increasing the price growth in cigarettes from 7 to 8 to let's say 8 to 10%, and then I have a follow-up. Thank you, Gaurav, for the question.

Speaker Change #125: Within that level of market share gain access event that we're not monetizing.

Speaker Change #126: As much as it should be and that will mean that increase the pricing both in soft goods from 700 to let's say 10%.

Speaker Change #127: I have a follow up.

Emmanuel Babeau: Look, let's be clear; we can always challenge ourselves on whether we could do even better in terms of price increases. The fact is that we are doing better than we thought initially. We have this very strong performance, 8.7% price increase for combustibles for H1. I think we all know that the inflationary environment is no longer what it was last year. So, obviously, this is a very strong performance.

Emmanuel Babeau: Thank you, Gaurav, for the question. Look, let's be clear. We can always challenge us on whether we could do even better in terms of price increase. The fact is that we are doing better than what we thought initially. We have this very strong performance: 8.7% price increase for combustible for H1. I think we all know that the inflationary environment is no longer what it was last year. So obviously this is a very strong performance. Please bear in mind, I said it in my preliminary remarks, but around 3/4 of that is not coming from inflation.

Speaker Change #128: Thank you for the question Luke.

Speaker Change #129: Let's be clear, we can always challenges on.

Speaker Change #130: Whether we could do even better in terms of price increase. The fact is that we are doing better than what we thought initially we have is very strong performance eight 7% price increase for convertible for each one.

Emmanuel Babeau: Please bear in mind, I said it in my preliminary remark, but around three-fourths of that is not coming from inflation in 2020, but, oh sorry, from a price increase in a country with very high inflation. And this 8.7% in Q2 is largely driven by the markets where we are really driving prices on a kind of opportunistic basis, building on the strengths of our portfolio, and making sure that we are always optimizing the potential for price increases.

Speaker Change #130: I think we all know that the inflationary environment is no longer where it was last year. So obviously this is a very strong performance. Please bear in mind I said it in my preliminary remarks, but around three fourths of that is not coming from inflation.

Speaker Change #130: In.

Emmanuel Babeau: From price increase in country with very high inflation. This 8.7% in Q2 is largely driven by the markets where we are really driving price on a kind of opportunistic basis, building on the strength of our portfolio and making sure that we are ever optimizing the potential for price increase. So you can be absolutely sure that this is a very granular work, market by market. Each time as we signal, we take into account what is our position on smoke-free product on this market, what is the impact of increasing price. I think we can demonstrate that we have a very successful approach on this price increase. So I would tend to believe that we are optimizing this price increase potential in the current environment.

From price increase in country with very high inflation. This 8.7% in Q2 is largely driven by the markets where we are really driving price on a kind of opportunistic basis, building on the strength of our portfolio and making sure that we are ever optimizing the potential for price increase. So you can be absolutely sure that this is a very granular work, market by market. Each time as we signal, we take into account what is our position on smoke-free product on this market, what is the impact of increasing price. I think we can demonstrate that we have a very successful approach on this price increase. So I would tend to believe that we are optimizing this price increase potential in the current environment.

Speaker Change #130: In Oh, sorry from price increase and in country with very high inflation and this eight 7% in Q2 is largely driven by.

Speaker Change #130: The markets, where we are really driving pricing kind of opportunistic basis building on the strength of our portfolio and making sure that we are a we're optimizing the potential for price increase. So you can be absolutely sure that this is a very granular work market by market each time as we signaled we taken.

Speaker Change #130: To account what is our position on smoke free product on this market what is the impact of increasing price and I think we can demonstrate that we have a very successful approach on this price increase so I would tend to believe that.

We are optimizing this price increase potential in the current environment.

Matthew Smith: Sure. Thank you.

Gaurav Jain: Sure. Thank you.

Gaurav Jain: You know, you mentioned that ZIM's capacity will increase to 900 million times next year. So does that mean that by Q4 of this year, it will be 225 million cans per quarter? Thank you.

Emmanuel Babeau: You know, you mentioned that ZYN capacity will increase to 900 million cans next year. So does it mean that by Q4 of this year it will be 225 million cans per quarter?

You know, you mentioned that ZYN capacity will increase to 900 million cans next year. So does it mean that by Q4 of this year it will be 225 million cans per quarter?

Sure. Thank you.

Speaker Change #131: You mentioned that <unk> capacity will increase to 900 million tons next year. So does it mean that by Q4 of this year it will be 225 million tons per quarter. Thank you.

Matthew Smith: Thank you.

Thank you.

Emmanuel Babeau: Look, Gaurav, I'm confirming that we have the objective to be around 900 million cans of production capacity for next year. That, for the full year 2025, we are gradually improving our capacity. There is a number of steps that we are taking. I'm not going to elaborate on them, but there are several levers that we are pulling to increase this capacity. So I would say every quarter versus the previous one, we are improving the capacity. I'm not going to give a prediction on where we're going to be at the end of the year.

Speaker Change #132: So I am confirming that we have the objective to be around 900 million can of production capacity for next year that for the full year 2025, we are gradually improving our capacity and there is a number of steps that we're taking are not going to elaborate on them, but there are several levers that we.

Speaker Change #132: We are pulling to increase its capacity. So I would say every quarter vessel previously and we are improving the capacity and not going to give a prediction on where we're going to be at the end of the year. We believe given what we see from.

Operator: So I would say every quarter compared to the previous one, we are improving capacity. I'm not going to give a prediction on where we're going to be at the end of the year. We believe, given what we see from potential consumer demand today, that in terms of what we produce, you know, at a certain point in Q4 versus what the consumer of tech could be without restriction, we're going to be good.

Emmanuel Babeau: We believe, given what we see from the potential consumer demand today, that in terms of what we produce at a certain point in Q4 versus what the consumer offtake could be without restriction, we're going to be good, and then we'll see exactly how we finish in terms of capacity at the end of the year. But I think what is more relevant and frankly more important is you have the picture of this 560 to 580 million cans. That is our goal for 2024. You know that we have this capacity for 900 million cans for next year. Let's be clear; it's not a guidance on the volume for next year. We're just here giving the capacity on which we are working. And I think with that you have what is important.

We believe, given what we see from the potential consumer demand today, that in terms of what we produce at a certain point in Q4 versus what the consumer offtake could be without restriction, we're going to be good, and then we'll see exactly how we finish in terms of capacity at the end of the year. But I think what is more relevant and frankly more important is you have the picture of this 560 to 580 million cans. That is our goal for 2024. You know that we have this capacity for 900 million cans for next year. Let's be clear; it's not a guidance on the volume for next year. We're just here giving the capacity on which we are working. And I think with that you have what is important.

Speaker Change #132: Potential consumer demand today that in terms of what we produce.

Speaker Change #132: Disappoint in Q4 versus what the consumer of that could be without restriction, we're going to be good.

Operator: And then we'll see exactly, you know, how we finish in terms of capacity at the end of the year. But I think what is more relevant and, frankly, more important is that you have the picture of this 560 to 580 million cans that is our goal for 2024. You know that we have this capacity for 900 million cans for next year. It's not guidance on the volume for next year; we're just here giving the capacity on which we are working. And I think with that, you have what is important. Thank you so much.

Speaker Change #132: And then we'll see exactly how we finish in term of.

Speaker Change #132: Capacity at the end of the year, but I think what is more relevant and frankly more important is you have the picture of this $5 60 to $5 8 million can that is our goal for 2024.

Speaker Change #133: You know that we have this capacity for 900 million for next year is the case that the guidance on the volume for next year with just giving.

Speaker Change #133: Given the capacity on which we are working and I think with that you have.

Speaker Change #133: What is important.

Emmanuel Babeau: Thank you so much. Thank you.

Gaurav Jain: Thank you so much.

Emmanuel Babeau: Thank you.

Thank you so much.

Operator: One moment for our next question.

Bonnie Lee Herzog: And one moment for our next question. Our next question will be coming from Bonnie Herzog of Goldman Sachs. Your line is open. Thank you. Hi, Emmanuel.

Speaker Change #135: Thank you.

Operator: One moment for our next question.

Speaker Change #134: One moment for our next question.

Operator: Our next question will be coming from Bonnie Herzog of Goldman Sachs. Your line is open.

Speaker Change #134: Yeah.

Speaker Change #136: Our next question will be coming from Bonnie Herzog of Goldman Sachs. Your line is open.

Bonnie Herzog: Thank you. Hi, Emmanuel.

Thank you Hi, Manuel Miranda.

Bonnie Herzog: Good morning. I had a question on your guidance. You raised your top and bottom line growth expectations, but you lowered your HTU shipment volume outlook slightly. You attribute this to slightly greater than expected impact from the EU flavor ban. You did touch on this, but maybe hoping for a little more color on that and any other impact on HTU volume that you're expecting in the back half. Are you expecting IQOS's growth to remain robust in Japan in the second half, for instance? Then finally you mentioned your HTU guide assumes no volumes in Taiwan. So maybe an update there in terms of timing.

Good morning. I had a question on your guidance. You raised your top and bottom line growth expectations, but you lowered your HTU shipment volume outlook slightly. You attribute this to slightly greater than expected impact from the EU flavor ban. You did touch on this, but maybe hoping for a little more color on that and any other impact on HTU volume that you're expecting in the back half. Are you expecting IQOS's growth to remain robust in Japan in the second half, for instance? Then finally you mentioned your HTU guide assumes no volumes in Taiwan. So maybe an update there in terms of timing.

Bonnie Lee Herzog: Good morning. I have a question about your guidance. You raised your top and bottom line growth expectations, but you lowered your HTU shipment volume outlook slightly, and you triggered this for a slightly greater than expected impact from the EU flavor ban. And you did touch on this, but, you know, maybe hoping for a little more color on that and any other impact on HTU volume that you're expecting in the back half. You know, are you expecting ICO's growth to remain robust in Japan in the second half, for instance? And then, finally, you mentioned your HTU guide assumes no volumes in Taiwan. So maybe there will be an update there.

Bonnie Lee Herzog: I had a question on your guidance.

Grace: Grace your top and bottom line growth expectation that you lowered your.

Speaker Change #138: Shipment volume outlook slightly and you trigger that slightly greater than expected impact on the flavor ban and you did touch on this but maybe hoping for a little more color on that and any other impact on HQ volume that you're expecting in the back half yes.

Speaker Change #139: Second iqos growth to remain robust in Japan in the second half for instance, and then finally you mentioned in your guidance you know volumes in Taiwan for maybe an update there in terms of timing.

Emmanuel Babeau: Sure, Bonnie, and thank you for maybe giving me the opportunity to further clarify the dynamic and the good dynamic that we are seeing behind IQOS. So we are indeed revising first of all our objective of adjusted in-market sales by around 2 billion. I've been clarifying that the majority of that is coming from Taiwan. Okay. So in fact it's really the fact that we were expecting Taiwan to start more than six months this year. And at the end of the day today we are making here the assumption that at the end of the day it's going to be zero volume in Taiwan. We thought it was a reasonable assumption. Remember the law allowing for heated tobacco product was passed now 15 months ago. So we thought that during this period of time there was this capacity to get the approval from the regulator.

Emmanuel Babeau: Sure, Bonnie, and thank you for maybe giving me the opportunity to further clarify the dynamic and the good dynamic that we are seeing behind ICOs. So we are indeed revising, first of all, our objective of adjusted in-market sales by around 2 billion. I've been clarifying that the majority of that is coming from Taiwan, okay? So, in fact, it's really the fact that we were expecting Taiwan to start more than, you know, six months this year. And it's, at the end of the day, today. We are making the assumption that at the end of the day, there's going to be zero volume in Taiwan. We thought it was a reasonable assumption.

Speaker Change #140: Sure and thank you for maybe giving me the opportunity to further clarify the dynamic and the.

Speaker Change #140: The good dynamics that we are seeing behind Iqos.

Speaker Change #141: So we are indeed, revising first of all our.

Speaker Change #141: Objective of adjusted in market sales by around $2 billion.

Speaker Change #142: I've been clarifying that the majority of that is coming from Taiwan. Okay. So in fact, it's really the fact that we were expecting Taiwan.

Speaker Change #142: To start.

Speaker Change #142: More than.

Speaker Change #142: Our six months this year and it's at the end of the day to day, we're making the assumption that at the end of that is going to be zero volume in Taiwan, We thought it was a reasonable assumption remember.

Emmanuel Babeau: Remember, the law allowing for an e-cigarette product was passed now 15 months ago. So we thought that, during this period of time, there was this capacity to get approval from the regulator. And there is an administrative process, there are some questions, you have Q&A, it's just taking much more time than we thought. But first and foremost, the reason for this 2 billion revision on the adjusted IMS is Taiwan. Then, in addition to that, we have this, a few hundred million that are coming from Europe. So that's really all you should understand about the 2 billion.

Speaker Change #142: The low allowing for.

Speaker Change #142: Tobacco product was passed now 15 months ago, So we sold that.

Speaker Change #142: During this period of time there was.

Speaker Change #142: Our capacity to get the approval from the regulator and there is an administrative process of asking the question you ask Q&A is just taking much more time than what we thought but but first and foremost the reason for this $2 billion revision on adjusted IMS is Taiwan. Then in addition to that we have.

Emmanuel Babeau: There is an administrative process asking question. You have Q and A. It's just taking much more time than what we thought. But first and foremost, the reason for this 2 billion revision on adjusted IMS is Taiwan. Then in addition to that, we have this, a few hundred million that is coming from Europe. So that's really all you should understand, the 2 billion. And because of Taiwan, we are indeed saying when we were expecting to be above 140 billion in terms of shipments, we are now expecting to be around 140 billion sticks. Again, that's the way you should understand the revision on the guidance. But let me take two minutes to explain the dynamic because I want to make sure that things are very clear. What we've been seeing in H1 is in fact an acceleration of the IQOS business outside Europe.

There is an administrative process asking question. You have Q and A. It's just taking much more time than what we thought. But first and foremost, the reason for this 2 billion revision on adjusted IMS is Taiwan. Then in addition to that, we have this, a few hundred million that is coming from Europe. So that's really all you should understand, the 2 billion. And because of Taiwan, we are indeed saying when we were expecting to be above 140 billion in terms of shipments, we are now expecting to be around 140 billion sticks. Again, that's the way you should understand the revision on the guidance. But let me take two minutes to explain the dynamic because I want to make sure that things are very clear. What we've been seeing in H1 is in fact an acceleration of the IQOS business outside Europe.

Speaker Change #142: Just a few hundred million that is coming from from Europe. So that's really all you should understand the $2 billion and because of Taiwan. We are indeed say when we were expecting to be above 140 billion stick in terms of shipments. We are now expecting to be around <unk> 40 billion.

Emmanuel Babeau: And because of Taiwan, we are indeed saying that when we were expecting to be above 140 billion in terms of shipment, we are now expecting to be around 140 billion. Again, that's the way you should understand the revision in the guidance. But let me take two minutes to explain the dynamic because I want to make sure that things are very clear. What we've been seeing in H1 is, in fact, an acceleration of the ICOs business outside Europe.

Speaker Change #142: Again, that's the way you should understand the revision on the on the guidance, but let me take two minutes to explain the dynamic because I want to make sure that things are very clear.

Speaker Change #142: What we've been seeing in each one is in fact, an acceleration of the Iqos business outside Europe. So if you look at the adjusted in markets outside Europe, and we're talking about 60% of the business.

Emmanuel Babeau: So if you look at the adjusted in-market sales outside Europe, and we're talking about 60% of the business, the adjusted IMS were growing around 14% versus around 13% last year. So we've been growing faster in percentage. So you can imagine in terms of volume, of course that means a significant acceleration. And indeed what is beyond this very nice dynamism is Japan. You have other developed markets such as South Korea. But we've been seeing a number of new contributors to this growth. We mentioned Indonesia, we mentioned a number of markets in the Middle East. Mexico is also accelerating, and we enjoy also nice performance in duty free. So that's really what we are seeing outside Europe then. Europe, absolutely, as expected. I mean, we're going through what is a significant transition. You know, we're moving away from flavor, it's still growing outside Italy.

So if you look at the adjusted in-market sales outside Europe, and we're talking about 60% of the business, the adjusted IMS were growing around 14% versus around 13% last year. So we've been growing faster in percentage. So you can imagine in terms of volume, of course that means a significant acceleration. And indeed what is beyond this very nice dynamism is Japan. You have other developed markets such as South Korea. But we've been seeing a number of new contributors to this growth. We mentioned Indonesia, we mentioned a number of markets in the Middle East. Mexico is also accelerating, and we enjoy also nice performance in duty free. So that's really what we are seeing outside Europe then. Europe, absolutely, as expected. I mean, we're going through what is a significant transition. You know, we're moving away from flavor, it's still growing outside Italy.

Adjusted IMS, we're growing around 14% versus around 13% last year. So we've been growing faster in percentage. So you can imagine in term of volume of course that means a significant acceleration and indeed what is beyond this.

Emmanuel Babeau: And indeed, what is behind this very nice dynamism is Japan. You have other developed markets, such as South Korea, but we've been seeing a number of new contributors to this growth. We mentioned Indonesia. We mentioned a number of markets in the Middle East. Mexico is also accelerating.

Speaker Change #142: <unk> and Amazon is Japan.

Speaker Change #142: Other developed markets, such as South Korea, but we've been seeing a number of new contributor to this growth we mentioned, Indonesia, We mentioned a number of markets in middle East.

Speaker Change #142: Mexico is also.

Speaker Change #142: Accelerating and we enjoy or saw a nice performance in duty free so that's really.

Emmanuel Babeau: And we also enjoy a nice performance in duty-free. So that's really what we are seeing outside Europe. Then Europe, absolutely as expected.

Speaker Change #142: What we are seeing outside Europe than Europe, absolutely as expected I mean, we're going through what is a significant transition we are moving away from flavor.

Emmanuel Babeau: I mean, we're going through what is a significant transition. You know, we're moving away from flavor. But it's still growing outside Italy.

Speaker Change #142: Still growing outside Italy, we have adjusted in market share is growing.

Emmanuel Babeau: We have adjusted in-market sales growing close to double-digit. So very strong dynamism despite the fact that many of the countries are going through this transition, and as we flagged, it is true that it's really great to see at the same time our champion market, like we mentioned in Portugal, Greece, and Hungary, that continue to do very well. We have new markets that are really confirming their status of growth driver for the future. We mentioned Germany, Spain, Romania, and Bulgaria. So it's important to have this new growth provider, if you want to, and then a number of markets exiting, I would say as expected, the turmoil or the disruption, I would say, of a few weeks that is coming with.

We have adjusted in-market sales growing close to double-digit. So very strong dynamism despite the fact that many of the countries are going through this transition, and as we flagged, it is true that it's really great to see at the same time our champion market, like we mentioned in Portugal, Greece, and Hungary, that continue to do very well. We have new markets that are really confirming their status of growth driver for the future. We mentioned Germany, Spain, Romania, and Bulgaria. So it's important to have this new growth provider, if you want to, and then a number of markets exiting, I would say as expected, the turmoil or the disruption, I would say, of a few weeks that is coming with.

Speaker Change #142: Close to double digits, so very strong in <unk>. Despite the fact that many of the countries are going through through this transition and as we flagged.

Speaker Change #142: It is true that.

Speaker Change #142: It's really great to see at the same time, our champion market like we mentioned in Portugal, Greece, and Gary that continue to do very well, we have new markets that are really key.

Speaker Change #142: Confirming their status of growth driver for the future, We mentioned, Germany, Spain, Romania, Bulgaria. So it's important to have this new growth provider. If you. If you want and then a number of market exiting I would say as expected.

Speaker Change #142: Tom oil or the disruption I would say of a few weeks.

Speaker Change #142: That is coming with.

Emmanuel Babeau: The implementation of the flavor ban. And here we can mention Greece, we can mention Romania, we can mention Bulgaria, we can mention Czech Republic. So a number of markets where things are happening absolutely as expected. And then you have Italy where we've been in fact evaluating the level of flavored product available with distributor and with the retail, and there was less than what we thought.

The implementation of the flavor ban. And here we can mention Greece, we can mention Romania, we can mention Bulgaria, we can mention Czech Republic. So a number of markets where things are happening absolutely as expected. And then you have Italy where we've been in fact evaluating the level of flavored product available with distributor and with the retail, and there was less than what we thought.

Speaker Change #142: With with implementation of the flavor ban and here we can mention.

Emmanuel Babeau: So a number of markets where things are happening absolutely as expected. And then you have Italy, where we've been, in fact, not evaluating the level of flavored product available with distributors and with retail, and there was less than what we thought. And therefore, the consumer of tech has been impacted quicker than we were anticipating by the absence of a flavor product after the implementation of the flavor ban, and that has had some impact on growth.

Speaker Change #142: <unk>, we can mentioned, Romania, we can mention Bulgaria, we can mentioned Czech Republic, So a number of market where things are happening.

Speaker Change #142: <unk> as expected.

Speaker Change #142: And then you have Italy, where.

Speaker Change #142: We've been in fact.

Speaker Change #142: Evaluating where the level of flavored product available with distributor and with the retail and there was less than what we thought and therefore, the consumer offtake has been impacted quicker than what we were anticipating by the absence of a flavor product after the introduction of the flavor ban.

Emmanuel Babeau: Therefore, the consumer of tech has been impacted quicker than what we were anticipating by the absence of flavor product after the implementation of the flavor ban, and that has had some impact on the growth. And at the same time, no doubt, the two cumulating had some impact. We've been increasing price by $0.30 on our consumable, and that has not been followed, or only very marginally, by the competition, with some impact on our market share, as it happens when we increase price in a meaningful manner, widening the gap with competition, and the competition not following. So that is really the picture. Now when we are looking at the second half, so we expect outside Europe situation to continue to do well. I'm not going to.

Therefore, the consumer of tech has been impacted quicker than what we were anticipating by the absence of flavor product after the implementation of the flavor ban, and that has had some impact on the growth. And at the same time, no doubt, the two cumulating had some impact. We've been increasing price by $0.30 on our consumable, and that has not been followed, or only very marginally, by the competition, with some impact on our market share, as it happens when we increase price in a meaningful manner, widening the gap with competition, and the competition not following. So that is really the picture. Now when we are looking at the second half, so we expect outside Europe situation to continue to do well. I'm not going to.

Speaker Change #142: And that has had some impact on.

Speaker Change #142: On the growth and at the same time and no doubt that the two cumulative impact we've been increasing price.

Emmanuel Babeau: And at the same time, and there's no doubt that the two combined have had some impact, we've been increasing prices by 30 cents on our consumables. And that has not been followed, or only very marginally by the competition, with some impact on our market share. As it happens, you know, when we increase prices in a meaningful manner, widening the gap with competition, and the competition doesn't follow. So that is really the picture

Speaker Change #142: By 30.

Speaker Change #142: On our call.

Speaker Change #142: Consumable and that has not been followed or only very marginally by the competition with some impact on our market share as it happens when we increase price in a meaningful manner widening the gap with competition and the competition. That's flowing so that is really the picture and now when we're looking at the second as we.

Emmanuel Babeau: And now when we are looking at the second half, we expect outside Europe the situation to continue to do well, and we're going to, you know, name again all these very great countries we are in where we are performing extremely well. We have the launch of Livia and Delia in a number of countries. And we expect Europe to accelerate as we are transitioning out of this phase of adjustment to the flavor ban.

Speaker Change #142: We expect outside Europe situation to continue to do well and we're going to.

Emmanuel Babeau: Name again all these very great countries where we are performing extremely well. We have the launch of ILUMA and DELIA in a number of countries, and we expect Europe to accelerate as we are transitioning out of this phase of adjustment to the flavor ban. Italy will be part of the market where we expect improvement. I would say globally we expect more acceleration on all the markets that have been going through the flavor ban. I think this is really the complete picture. Bonnie, I hope it is helpful and.

Name again all these very great countries where we are performing extremely well. We have the launch of ILUMA and DELIA in a number of countries, and we expect Europe to accelerate as we are transitioning out of this phase of adjustment to the flavor ban. Italy will be part of the market where we expect improvement. I would say globally we expect more acceleration on all the markets that have been going through the flavor ban. I think this is really the complete picture. Bonnie, I hope it is helpful and.

Speaker Change #143: Name again, all this very great country, we are where we are performing extremely well we have the launch of Lithia and <unk> in a number of countries and we expect Europe to accelerate as we are transitioning out of this.

Emmanuel Babeau: And Italy will be part of the market where we expect improvement. But I would say globally that we expect more acceleration on all the markets that have been going through the flavor ban. So I think this is really the complete picture, Bonnie.

Speaker Change #143: Phase of adjustment to the flavor ban.

Speaker Change #143: In Italy will be part of the market, where we expect.

Speaker Change #143: Improvement, but I would say globally, we expect more acceleration on northern market that has been going through the flavor ban.

Speaker Change #143: So I think this is really the complete picture, but I hope it is helpful. In answering your question.

Bonnie Lee Herzog: I hope it is helpful in answering your question. So that was definitely very helpful. I appreciate you going through all of that.

Bonnie Herzog: Answering your question that was definitely very helpful. I appreciate you going through all of that. And then if I may, I just wanted to ask a question on ILUMA i in Japan. I guess I was hoping to hear a little more color on this device, which I believe is only available in Japan right now. And curious to hear how big of a lift it's been or essentially how incremental and really what you're seeing or hearing from consumers in terms of acceptance of the new device, impact on your growth, margins, expense, and then finally your plans for further rollout of this device. Thank you.

Answering your question

Bonnie Herzog: That was definitely very helpful. I appreciate you going through all of that. And then if I may, I just wanted to ask a question on ILUMA i in Japan. I guess I was hoping to hear a little more color on this device, which I believe is only available in Japan right now. And curious to hear how big of a lift it's been or essentially how incremental and really what you're seeing or hearing from consumers in terms of acceptance of the new device, impact on your growth, margins, expense, and then finally your plans for further rollout of this device. Thank you.

Speaker Change #144: Yes that was definitely very helpful. I appreciate you going through all of that.

Bonnie Lee Herzog: And then, if I may, I just wanted to ask a question about Illumii in Japan. I guess I was hoping to hear a little more color on this device, which I believe is only available in Japan right now. And curious to hear how big of a list it's been, or essentially how incremental, and really what you're seeing or hearing from consumers. Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change #145: And then if I may I just wanted to ask a question on Alere I.

Speaker Change #145: Japan I thought it was.

Speaker Change #146: Hoping to get a little more color on this device, which I believe is only available in Japan right now.

Speaker Change #147: Is there how big of a lift.

Speaker Change #147: Essentially how incremental.

Speaker Change #147: Yes.

Speaker Change #147: Sure.

Speaker Change #148: In terms of acceptance of any device impact on your gross margin drop.

Speaker Change #149: And finally your plans for the rollout of the Tonight.

Emmanuel Babeau: So you're right, ILUMA-I is the latest generation of iQOOS ILUMA. It hasn't changed the fundamental technology, but the device is offering a number of additional functionalities. It's, for the time being, only present in Japan.

Emmanuel Babeau: Sure, Bonnie. So you're right. ILUMA i, so the latest generation of IQOS ILUMA. So it's not changed the fundamental technology, but the device is offering a number of additional functionalities, is, for the time being, only present in Japan. There is the launch in a few other countries that is planned for H2. And it's always difficult to say what this new product is triggering, but we've been seeing clearly a new acquisition of IQOS users. We've been seeing consumer sentiment going up with some very good reaction to this product. So I would say we continue to have more ammunition to convert smokers to IQOS, to improve the experience, to improve customer satisfaction. That is triggering, of course, more loyalty that can have some impact on the average daily consumption. So a number of positive effects. That's what we have seen in Japan.

Speaker Change #150: Sure Bonnie so youre right Illumina I saw the latest generation of Iqos <unk> matter has not changed the fundamental technology, but the device is offering a number of additional functionalities.

Emmanuel Babeau: There is the launch in a few other countries that is planned for H2. And it's always difficult to say what this new product is triggering, but we've been seeing clearly a new acquisition of IQOS users. We've been seeing consumer sentiment going up with some very good reactions to this product. So I would say we continue to have more ammunition to convert smokers to IQOS to improve the experience and to improve customer satisfaction that is triggering, of course, more loyalty that can have some impact on average daily consumption. So a number of positive effects. That's what we have seen in Japan.

Speaker Change #150: As for the timing only present in Japan, there is as a launch in a few other countries that is planed for four H two.

Speaker Change #150: And it.

Speaker Change #151: It's always difficult to say what this new product is triggering but we've been seeing.

Speaker Change #151: Clearly, our new acquisition of <unk>.

Speaker Change #151: Iqos user we've been seeing consumer sentiment going up with some very good reaction to this product. So I would say we continue to.

Speaker Change #151: As more ammunition to convert smokers to iqos to improve the.

Speaker Change #151: The experience to.

Speaker Change #151: To improve customer satisfaction that is triggering of course, the more loyalty that can have some impact on the.

Speaker Change #151: On the average daily consumption. So the number of positive effect, that's what we have seen in Japan difficult for me to tell you exactly by our much. This has been further accelerating the growth in Japan, but no doubt that it was a positive for the market.

Emmanuel Babeau: Difficult for me to tell you exactly by how much this has been further accelerating the growth in Japan, but no doubt that this was a positive for the market.

Difficult for me to tell you exactly by how much this has been further accelerating the growth in Japan, but no doubt that this was a positive for the market.

Bonnie Lee Herzog: It's difficult for me to tell you exactly by how much this has been further accelerating growth in Japan, but now that this was a positive for the market. All right, thank you. I'll pass it on.

Bonnie Herzog: All right, thank you.

Operator: I'll pass it on.

Speaker Change #152: Alright, Thank you I'll pass it on.

Emmanuel Babeau: Thank you.

Matthew Smith: Thank you.

Thank you.

Operator: One moment for our next question. Our next question will be coming from Matt Smith of Stifel. Your line is open.

Operator: Thank you. Thank you. And one moment for our next question. Our next question will be coming from Matt Smith of CIFU. Your line is open, Matt. Hi, Emmanuel.

Speaker Change #152: Thank you.

Operator: One moment for our next question. Our next question will be coming from Matt Smith of Stifel. Your line is open.

Speaker Change #153: One moment for our next question.

Speaker Change #154: Our next question will be coming from Matt Smith of Stifel. Your line is open Matt.

Priya Ohri-Gupta: Matt.

Matthew Smith: Matt.

Matthew Smith: Hi, Emanuelle.

Hi, Emanuelle.

Emmanuel Babeau: Good morning.

Matthew Smith: Matthew, good morning. Could you provide a little more detail on the growth in oral pouches in international markets? You highlighted some early success in several markets. Are you continuing to expand brand distribution there? Are there any capacity constraints for those international markets outside of the US?

Matthew Edward Smith: Hi, Emmanuel.

Matthew Edward Smith: Good morning could you provide a little more detail on the growth in oral pouches in international markets. You highlighted some early success in several markets are you continuing to expand distribution. There are there any capacity constraints for those international markets outside of the U S.

Matthew Smith: Sure.

Emmanuel Babeau: Sure.

Emmanuel Babeau: Sure. So, as a coincidence, I suppose, but it is true that in H1, the growth in nicotine pouches outside the U.S. was very similar to the one in the U.S. No, you know, watch out. It's, you know, we talk about 10% only of the volume in the U.S. But that is including, it's not totally nothing, because that is including the Nordics.

Emmanuel Babeau: So as a coincidence, I suppose. But it is true that in H1, the growth in nicotine pouch outside the US was very similar to the one in the US, no, you know, watch out. It's, you know, we talk about 10% only of the volume in the US that is included. It's not totally nothing because that is including the Nordics. And what we are clearly seeing is that there is from the nicotine user some interest and attraction in many countries. And I tend to really put three buckets of possible growth for this market. You have, of course, the Nordic country that have the knowledge, the understanding, the culture of this product and where the nicotine pouch category is dynamic. And here we want to take our fair share of the growth. Then you have Europe, where the category is not relevant in all markets.

So as a coincidence, I suppose. But it is true that in H1, the growth in nicotine pouch outside the US was very similar to the one in the US, no, you know, watch out. It's, you know, we talk about 10% only of the volume in the US that is included. It's not totally nothing because that is including the Nordics. And what we are clearly seeing is that there is from the nicotine user some interest and attraction in many countries. And I tend to really put three buckets of possible growth for this market. You have, of course, the Nordic country that have the knowledge, the understanding, the culture of this product and where the nicotine pouch category is dynamic. And here we want to take our fair share of the growth. Then you have Europe, where the category is not relevant in all markets.

Speaker Change #155: Sure so.

Speaker Change #156: As a coincidence.

Speaker Change #157: I suppose that is true that in each one the growth in nicotine pouch outside the U S was very similar to the one in the U S.

Speaker Change #158: We took about 10% only of the volume in the U S.

Speaker Change #159: That is increased statutory nothing because that is including the nordics.

Matthew Edward Smith: And what we are clearly seeing is that there is, from the nicotine user's point of view, some interest and attraction in many countries. And I tend to really, you know, put three buckets of possible growth for this market. You have, of course, the Nordic countries that have the knowledge, the understanding, the culture of this product and where the nicotine pouch category is dynamic. And here we want to take our fair share of the growth.

Speaker Change #159: And what we are clearly seeing is that there is from.

Speaker Change #159: The nicotine user some interest and attraction in many countries.

Speaker Change #159: I tend to really put three buckets of placebo gross four for these market you have of course first the Nordic country that as the knowledge understanding the culture of this product and where the nicotine pouch category is dynamic and we want to take our fair share of the growth than U S. Europe, where the category is not relevant in.

Matthew Edward Smith: Then you have Europe, where the category is not relevant in all markets, but we can already flag a number of countries, such as Austria, the UK, Switzerland, where we believe that there is potential and we see growth. And then you have, I would say, the global market, the international market. We can name Pakistan, we can name South Africa, we could talk about Indonesia, maybe the Philippines, where we see potential for these nicotine pouches.

Emmanuel Babeau: But we can already flag a number of countries such as Austria, the UK, Switzerland, where we believe that there is potential and we see the growth. And then you have, I would say, global market, international market. We can name Pakistan, we could name South Africa, we could talk about Indonesia, maybe Philippines, where we see potential for these nicotine pouches. You may have some culture already of oral product, and we see some development of the product. I could add Mexico to the list, by the way, where we are starting nicely, the development of ZYN. So we see that this product maybe because of the US influence. I think in the case of some country like the UK, it's clear that's a category that could grow its awareness, I would say, interestingly and rapidly.

But we can already flag a number of countries such as Austria, the UK, Switzerland, where we believe that there is potential and we see the growth. And then you have, I would say, global market, international market. We can name Pakistan, we could name South Africa, we could talk about Indonesia, maybe Philippines, where we see potential for these nicotine pouches. You may have some culture already of oral product, and we see some development of the product. I could add Mexico to the list, by the way, where we are starting nicely, the development of ZYN. So we see that this product maybe because of the US influence. I think in the case of some country like the UK, it's clear that's a category that could grow its awareness, I would say, interestingly and rapidly.

Speaker Change #159: In all markets, but we can already flagged a number of countries such as Austria, The UK, Switzerland, where we believe that there is potential and we see the growth and then you have I would say global market international market.

Speaker Change #160: We named Pakistan, We remain South Africa, we can talk about.

Emmanuel Babeau: You may already have some culture of oral products, and we see some development of the product. I could add Mexico to the list, by the way, where we are starting nicely with the development of Zin. So we see that this product, maybe because of the US influence, I think, you know, in the case of some countries like the UK, it's clear that this is a category that could grow in awareness, I would say, interestingly and rapidly, and we want absolutely to make sure that we're going to capture our fair share of this opportunity. Thank you. And just a quick follow up. Is there any capacity limitation on international business, or is that not it? Transcribed by https://otter.ai. Thank you, Emmanuel.

Speaker Change #160: Indonesia, the Philippines, where we see potential for these nicotine pouches you may have some cultural already of oral product and we see some development of the product accrued at Mexico to the list by the way, where we are starting a nicely the development of <unk>. So we see that this product maybe.

Speaker Change #160: Because of the U S influence I think in the case of some countries like the UK, it's clear that as a category that could grow is awareness I would say interestingly and rapidly and we want absolutely to make sure that we're going to capture our fair share of this opportunity.

Emmanuel Babeau: And we want absolutely to make sure that we're going to capture our fair share of this opportunity.

And we want absolutely to make sure that we're going to capture our fair share of this opportunity.

Speaker Change #160: No.

Matthew Smith: Thank you for that. Just a quick follow up. Is there any capacity limitation on that international business or is that?

Speaker Change #161: Thank you for that and just a quick follow up is there any capacity limitation on that international business or is that.

Matthew Smith: Capacity not constrained like what you're seeing in the.

Capacity not constrained like what you're seeing in the.

Emmanuel Babeau: US, no, there is no capacity issue that I have to report at that stage.

Speaker Change #162: Absolutely not constrained like what youre seeing in the U S. No. There is there is no capacity issue that I have to report at that stage.

Matthew Smith: Thank you, Emmanuel. I'll leave it there.

Speaker Change #162: Thank you Emmanuel I'll leave it there thank you Matt.

Emmanuel Babeau: Thank you, Matt.

Operator: One moment for our next question.

Speaker Change #163: And one moment for our next question.

Operator: Our next question will be coming from Faham Baig of UBS. Your line is open.

Our next question will be coming from Faham Baig of UBS. Your line is open.

Faheim Bay: I'll leave it there. Thank you, Matthew. Coming from Faheim Bay, WBS, your line is open. Hi Emmanuel, thanks for the question. I've got two as well, one in the VEPA category and one on ZIN.

Speaker Change #164: Our next question will be coming from <unk> <unk> of UBS. Your line is open.

Mirza Faham Ali Baig: Hi Emmanuel, thanks for the question.

Speaker Change #164: Hi, Michael Thanks for the question.

Michael: I've got I've got two as well.

Speaker Change #166: One of the vapor category.

Speaker Change #166: One on Zen.

Faheim Bay: I know you're looking to expand with your Veve product, but how do you see the development of the vapor category, particularly outside of the U.S.? What profile of users is the category attracting? For example, in Europe, I'm just trying to understand whether consumers that use vapor see it as an alternative to heated tobacco, or are the two categories attracting different profiles of consumers, particularly post the flavor ban in Europe?

Speaker Change #167: I know you are looking to expand with UV product.

But how do you see the development of the vapor category, particularly.

Speaker Change #167: Outside of the U S.

Speaker Change #168: Profile of users is the category attracting for example in Europe, I'm, just trying to understand whether.

Speaker Change #168: Consumers that use they see it as an alternative to heated tobacco or are the two categories, attracting a different profile of consumers, particularly.

Speaker Change #168: Post post the flavor ban.

Mirza Faham Ali Baig: In Europe?

In Europe?

Speaker Change #168: In Europe.

Faheim Bay: Sure. And you want to ask a question on Zine now, or do you want to come back on Zine after? Why don't I come back after your answer on vaping?

Operator: Sure.

Emmanuel Babeau: Sure.

Speaker Change #168: Sure.

Emmanuel Babeau: You want to ask a question on ZYN now or you want to come back on ZYN after?

You want to ask a question on ZYN now or you want to come back on ZYN after?

Speaker Change #170: You want to ask a question on Z now or you want to come back comes in after.

Mirza Faham Ali Baig: Why don't I come back after your answer on vaping?

Speaker Change #169: Why don't I come back after okay.

Matthew Smith: Okay.

Emmanuel Babeau: Okay.

Faheim Bay: Okay, so on the vaping category, I think what we are seeing is that we've always been saying, the vaping category is a legitimate category to be an alternative to people who would otherwise smoke. And therefore, that is a category that is growing, not necessarily faster than eat not burn, not faster than nicotine pouch, for sure, but of course, the basis for nicotine pouch is smaller. And we know that the vaping category is more appealing for, you know, people on the legal limit and above that want to start consuming nicotine, and it's much more difficult to convert smokers.

Emmanuel Babeau: So on the vaping category, I think what we are seeing is that what we've always been saying, the vaping category is a legitimate category to be an alternative to people who would otherwise smoke. And therefore that is a category that is growing not necessarily faster than heat-not-burn, not faster than nicotine pouch for sure. But of course the basis for nicotine pouch is smaller and we know that the vaping category is more appealing for people legal age and above that want to start consuming nicotine. And it's much more difficult to convert smokers and that clearly what IQOS and the heat-not-burn category is doing much better. So yes, vaping can be appealing for some legal age and above nicotine user more difficult to convert smokers.

So on the vaping category, I think what we are seeing is that what we've always been saying, the vaping category is a legitimate category to be an alternative to people who would otherwise smoke. And therefore that is a category that is growing not necessarily faster than heat-not-burn, not faster than nicotine pouch for sure. But of course the basis for nicotine pouch is smaller and we know that the vaping category is more appealing for people legal age and above that want to start consuming nicotine. And it's much more difficult to convert smokers and that clearly what IQOS and the heat-not-burn category is doing much better. So yes, vaping can be appealing for some legal age and above nicotine user more difficult to convert smokers.

Speaker Change #169: Okay. So onto the vaping category I think what we're seeing is that with what we've always been saying the vaping category is a legitimate category to be and then tentative to people who would otherwise.

Speaker Change #169: Smoke and therefore that is a category that is growing not necessarily faster then it not burn not faster than nicotine pouch for sure but of course the <unk>.

<unk> is smaller and we know that the vaping category is more appealing for people legal edge and above that we want to start consuming nicotine and it's much more difficult to convert.

Faheim Bay: And that clearly what Icos and the eat not burn category is doing much better. So yes, vaping can be appealing for some legal edge and above nicotine user, more difficult to convert smokers, very clearly, we haven't seen any meaningful report of people moving to vaping and the change of kind of, you know, dynamic in the category, following the implementation of the flavor ban in Europe, of course, we are monitoring that, but that there is nothing that we can obviously report on that trend, which probably could confirm that we talk about people that are probably with different profiles, but that's something that we will have to keep monitoring, of course.

Speaker Change #169: Smokers and Thats, clearly, what iqos and heat not burn category is doing much better. So yes, vetting can be appealing for some legal edge and above.

Speaker Change #169: Nicotine user more difficult to convert smokers very clearly we havent seen.

Emmanuel Babeau: Very clearly we haven't seen any meaningful report of people moving to vaping and the change of kind of dynamic in the category following the implementation of the flavor ban in Europe. Of course we are monitoring that, but at that stage there is nothing that we can obviously report on that trend which probably could confirm that. We talk about people that are with different profile, but that's something that we will have to keep monitoring, of course. So we've always been saying that the concern with the vaping category is that if the products are not properly developed and marketed, if there is an unreasonable appeal to flavor, well, that can trigger unintended usage and that is a problem for the category.

Very clearly we haven't seen any meaningful report of people moving to vaping and the change of kind of dynamic in the category following the implementation of the flavor ban in Europe. Of course we are monitoring that, but at that stage there is nothing that we can obviously report on that trend which probably could confirm that. We talk about people that are with different profile, but that's something that we will have to keep monitoring, of course. So we've always been saying that the concern with the vaping category is that if the products are not properly developed and marketed, if there is an unreasonable appeal to flavor, well, that can trigger unintended usage and that is a problem for the category.

Speaker Change #169: Any meaningful reports of people moving to vaping in the change of kind of new dynamic in the category. Following the implementation of the flavor ban in Europe of course, we are monitoring that that <unk> is nothing that we can obviously.

Speaker Change #169: We report on that trend, which probably could confirm that we talk about <unk>.

Speaker Change #169: People that are already with a different profile, but that's something that we will have to keep monitoring of course, so we've always been saying that the concern with the vaping category is that if the product or not.

Emmanuel Babeau: So we've always been saying that, you know, the concern with the vaping category is that if the product is not properly developed and marketed, if there is an unreasonable appeal to flavor, well, that can trigger unintended usage. And that is a problem for the category. And we are very happy with our growth because we do that in a very responsible manner, both in terms of the development of our product and the development of our marketing activity.

Speaker Change #169: Properly developed and marketed if there is.

Speaker Change #171: Unreasonable appeal to flavor.

Speaker Change #171: Can trigger unintended usage and that is a problem for the category and we are very happy with our growth because we do that in a very responsible manner. Both in term of development of our product development of our marketing activity.

Emmanuel Babeau: And we are developing this responsible approach, very much based on our commercial strength and a great product. I think Viv1 is a great product and a strong partnership with the trade that is giving this very good start, as we mentioned, you know, the number one position in five countries for closed ports. That's really what I can share with you at that stage.

Speaker Change #171: And we are developing is responsible approach very much based on our.

Speaker Change #171: Our commercial strength and a great product.

It is a great product and strong partnership with the trade.

Speaker Change #171: That is giving this a very good start as we mentioned and as the number one position in five country for close, but that's really what I can share with you at that stage.

Faheim Bay: Yeah, that's helpful. And then secondly, on ZIN in the U.S. Now, according to the scanner data, some of which we received today as well, ZIN's momentum from a volume perspective will fall very, very low single digits. Would you have an estimate of if you did not have the capacity constraint? What volumes could potentially look like?

Mirza Faham Ali Baig: Yeah, that's helpful. And then secondly on ZYN in the US now, according to the scanner data, some of which we received today as well, ZYN's momentum from a volume perspective is sequentially falling, albeit very low single digits. Would you have an estimate of if you did not have the capacity constraint, what volumes could potentially look like? And in the back half when you are expecting an acceleration in volumes, is that implying that you begin to gain market share or is that largely driven by further acceleration in the overall category?

Yeah, that's helpful. And then secondly on ZYN in the US now, according to the scanner data, some of which we received today as well, ZYN's momentum from a volume perspective is sequentially falling, albeit very low single digits. Would you have an estimate of if you did not have the capacity constraint, what volumes could potentially look like? And in the back half when you are expecting an acceleration in volumes, is that implying that you begin to gain market share or is that largely driven by further acceleration in the overall category?

Speaker Change #172: Yeah. That's that's helpful. And then secondly on on Zain in the U S. Now according to the scanner data some of which we will receive today as well.

Emmanuel Babeau: And in the back half, when you are expecting an acceleration in volumes, is that implying that you begin to gain market share, or is that largely driven by further acceleration in the overall category? Look, on ZIN, I think we mentioned the fact that we are clearly with some restrictions, so I'm not sure that what you read in Nielsen, which corresponds to the availability, is going to be based on the trend and consumer demand.

Speaker Change #173: Since momentum from a volume perspective.

Speaker Change #174: Sequentially falling, albeit very very low single.

Speaker Change #175: Digits would you would you have an estimate of if you did not have the capacity constraint what volumes could potentially look like.

And in the back half when you are expecting an acceleration in volumes is that is that implying that you begin to gain market share or is that largely driven by further acceleration in the overall category.

Emmanuel Babeau: Look, on ZYN, I think we mentioned the fact that we are clearly with some restrictions. So I'm not sure that what you read in the Nielsen, which corresponds with the availability, is an ongoing view on the trend and the consumer demand. We are gradually improving, and we expect to see that in the coming months. The availability today, we clarify that we are working with a target of around 900 million cans capacity for next year. So we are creating very nice headroom for growth for the coming quarters, and we think it's really important. I'm not going to be able to tell you because frankly it's impossible to say what would have been the growth rate without the limitation.

Speaker Change #176: Look on <unk> I think we mentioned the fact that we are clearly with some restrictions so I'm not sure that what you read in the Nielsen, which corresponds with the availability is agreeing with you on the trend in the consumer demand, we are gradually improving and we expect to see that in there.

Emmanuel Babeau: We are gradually improving, and we expect to see that in the coming months. Today we clarified that we are working with a target of around 900 million cans of capacity for next year, so we are creating very nice headroom for growth for the coming quarters, and we think it's really important. I'm not going to be able to tell you because, frankly, it's impossible to say what the growth rate would have been without the limitation.

Speaker Change #176: Coming months the availability today, we clarified that we are working with.

Speaker Change #177: A target of around $900 million can capacity for next year. So we are creating very nice headroom for growth for the coming quarters.

And we think it's really important I'm not going to be able to tell you because frankly, it's impossible to say what would have been the growth rate without the limitation. Please bear in mind that there were some competitors move in terms of pricing last year that trigger an acceleration in our market share.

Emmanuel Babeau: Please bear in mind that there was some competitors move in terms of pricing last year that trigger an acceleration in our market share, and that none of the effect is now behind us. So there is also having some impact on the year-over-year comparison. So that's what.

Please bear in mind that there was some competitors move in terms of pricing last year that trigger an acceleration in our market share, and that none of the effect is now behind us. So there is also having some impact on the year-over-year comparison. So that's what.

Faheim Bay: Please bear in mind that there was some competition move in terms of pricing last year that triggered an acceleration in our market share, and the effect is now behind us, so it is also having some impact on the year-on-year comparison. We can film on Zoom. If I could quickly squeeze in one more question, is there any update on the review of the Zin sales post a recent subpoena in the District of Columbia that is ongoing and forced you to close your Zin.com sales and when that might recur?

Speaker Change #177: And that none of the effect is now behind us. So that is also having some impact on the year on year comparisons. So that's what.

Emmanuel Babeau: We can say on ZYN.

We can say on ZYN.

Speaker Change #177: We can we can say on zim.

Mirza Faham Ali Baig: If I could quickly squeeze in one more. Is there any update on the review of the ZYN sales post the recent subpoena in the District of Columbia that is ongoing and forced you to close your ZYN.com sales, and when that might recover?

Speaker Change #177: If I could quickly squeeze in one more.

Speaker Change #178: Any update on the review of this in sales.

Speaker Change #179: Post the recent subpoena and the district of Columbia that that is ongoing and force you to close Joseph Dotcom.

Speaker Change #180: So when that Mira rig.

Emmanuel Babeau: Yes, there is nothing new. We keep working and fully cooperating, of course, with the Attorney General, and at that stage it's impossible to say how long the work will take or what will be the conclusion. There is nothing new today.

Faheim Bay: Yes, I know there is nothing new. We keep working and fully cooperating, of course, with the Attorney General. And at that stage, it's impossible to say how long the work will take or what the conclusion will be. And there is nothing new today. Thanks, Emmanuel.

Speaker Change #180: Okay.

Speaker Change #181: Yes, no there is nothing new we keep working and fully cooperating of course with the autonomy general and at that stage, it's impossible to say how long the work will take or what will be the conclusion.

Speaker Change #181: And there is nothing new today.

Mirza Faham Ali Baig: Thanks Emmanuel.

Emmanuel Babeau: Thank you.

Speaker Change #182: Thanks, so much thank you.

Faheim Bay: Thank you. And one moment for our next question, and our next question will be coming from Owen Bennett of Jeffrey's. Your line is open. Morning, Manuel. Hope you're well.

Operator: One moment for our next question.

Speaker Change #183: And one moment for our next question.

Speaker Change #183: Yeah.

Operator: Our next question will be coming from Owen Bennett of Jefferies. Your line is open.

Our next question will be coming from Owen Bennett of Jefferies. Your line is open.

Speaker Change #184: And our next question will be coming from Owen Bennett of Jefferies. Your line is open.

Owen Bennett: Morning, Emmanuel. Hope you're well.

Owen Michael Bennett: Good morning, Monte <unk> and <unk>.

Owen Bennett: Hi. I just had a couple of questions on the US pouch dynamics. So first, and I would assume this is due to certain retailers trying to fill the supply gaps. I have been seeing some Scandinavian ZYN available in certain stores. So I was wondering how you can get on top of this to make sure that's not happening. And then second, I'm also now seeing other modern oral brands appearing that I assume do not have a PMTA submitted. So how do you see the risk? We could see a similar scenario developing in pouches in the US and to what we're seeing in vape with illegal products. Thank you.

Hi. I just had a couple of questions on the US pouch dynamics. So first, and I would assume this is due to certain retailers trying to fill the supply gaps. I have been seeing some Scandinavian ZYN available in certain stores. So I was wondering how you can get on top of this to make sure that's not happening. And then second, I'm also now seeing other modern oral brands appearing that I assume do not have a PMTA submitted. So how do you see the risk? We could see a similar scenario developing in pouches in the US and to what we're seeing in vape with illegal products. Thank you.

Owen Michael Bennett: Hi, I just had a couple of questions on the U.S. pouch dynamics. First, and I would assume this is due to certain retailers trying to fill the supply gaps, I have been seeing some Scandinavian Zin available in certain stores, so I was wondering how you can get on top of this to make sure that's not happening. And then second, I'm also now seeing other modern oral brands appearing that I assume do not have a PMTA submitted, so how do you see the risk that we could see a similar scenario developing in pouches in the U.S. and to what we're seeing in vape with illegal products? Thank you.

Owen Michael Bennett: Hi, I just had a couple of questions on the U S pouch dynamic so.

Speaker Change #185: And I would assume <unk>.

Speaker Change #186: Certain retailers trying to fill the supply gap might have been seeing some scandinavian than available and set in stone. So I was wondering how you can get on top of this to make sure thats not happening and then second I'm also now seeing all that modern oral brand appearing I assume do not have the PMT as to make it. So how do you see the race.

Speaker Change #186: We could see a similar scenario developing in pouches in the us and what we're seeing in weight with a legal products. Thank you.

Owen Michael Bennett: So you're alluding to a product that would come from a non-US market, correct? Yes, I'm assuming that retailers and distributors are buying them online from Scandinavia to try and solar supply that. I'm just wondering how you can get on top of that to make sure that's not happening.

Emmanuel Babeau: So, you're alluding to product that would come from non-US market. Correct? That's what.

Speaker Change #187: So you are alluding to product that would come from non U S market correct, that's what yes.

Owen Bennett: Yes. I'm assuming certain retailers or distributors are buying them online from Scandinavia to try and fill the supply gap. So I have been wondering how you can get on top of that to make sure that's not happening.

Speaker Change #188: Yes <unk>.

Thank you Buck.

In Scandinavia anti clientele with supply.

Speaker Change #189: I was just wondering how you can get on top of that to make sure that's not happening.

Emmanuel Babeau: Look, I don't have any information about that, so I cannot make any comment or report. I think we're doing everything we can our utmost to ensure that the flows are appropriate and not going where they should not be going. We are working very hard to achieve this objective. I don't have any data, and I cannot react to that, but our position is very clear. We are very strict about doing everything we can to make sure that these parallel flows are not happening, in your question.

Emmanuel Babeau: Look, I don't have any information about that, so I cannot make any comment or report. I think we are doing everywhere we can our utmost to ensure that the flows are appropriate and not going where they should not be going. And we are working very hard with this objective. And I don't have any data and I cannot react.

Speaker Change #190: I don't have any information about that so.

Speaker Change #191: I cannot make any comment or report I think we are doing everywhere. We can our most to ensure that the flows are appropriate and not going where they shouldnt be going.

Speaker Change #191: And we are working very hard with the subjective and I I don't have any data and I cannot react.

Emmanuel Babeau: On that. But our position is very clear. We are very strict on doing everything we can to make sure that these parallel flows are not happening. On your question on if I understand you well, Owen, could we see the same kind of phenomenon on nicotine pouch as the one we are seeing on vaping, which is illicit parallel flow that would be entering the US market?

On that. But our position is very clear. We are very strict on doing everything we can to make sure that these parallel flows are not happening. On your question on if I understand you well, Owen, could we see the same kind of phenomenon on nicotine pouch as the one we are seeing on vaping, which is illicit parallel flow that would be entering the US market?

Speaker Change #191: But our position is very clear we are very strict on doing everything we can to make sure that.

Speaker Change #192: This pilot flows are not opening on.

Speaker Change #193: Your question on <unk>.

Owen Michael Bennett: If I understand you well, Owen, could we see the same kind of phenomenon on nicotine powder, the one we are seeing on vaping, which is illicit parallel flow that would be entering the US market? Yes, I'm starting to see brands that I am assuming do not have the MTX. I was just wondering how you see the risk around that. Today, from what we can monitor in the market, we do not have the feeling that there is anything material at that stage.

Speaker Change #193: If I understand you well when could we see the same kind of phenomenon on nicotine pouches. The one we are seeing on <unk>, which is elicit pilot flow that would be entering the U S market.

Owen Bennett: Yeah, exactly. I'm starting to see brands that I'm assuming do not have the PMTA. Just wondering how you see the risk.

Speaker Change #193: Yes.

Speaker Change #194: The key brands that I am machine in <unk>, just wondering how you see the risk around that.

Emmanuel Babeau: Around that today, from what we can monitor in the market, we are not having the feeling that there is anything material at that stage, but of course we are monitoring that very carefully if it was to become material. I think what we are clearly seeing today is that the authorities take that seriously and they are starting to have much more action and be much more alert on the topic. So I would expect them to have the same behavior when it comes to nicotine pouches. So to summarize, I don't think we're seeing anything meaningful today to be certainly watched. And if it was to become the case, we would expect the authority to have the same, I would say, proactive behavior that they, I think they are starting to implement on vaping.

Speaker Change #195: Today from what we can monitor in the market.

Speaker Change #196: We are not having the ceiling.

Speaker Change #197: Anything material at that stage, but of course, we are monitoring that very carefully.

Owen Michael Bennett: But of course, we are monitoring that very carefully. If it was to become material, I think what we are clearly seeing today is that the authorities take that seriously. And they are starting to take much more action and be much more alert on the topic. So I would expect them to have the same behavior when it comes to nicotine powder.

Speaker Change #198: It was to become material.

Speaker Change #198: I think what we are clearly seeing today is that the authorities take that.

Speaker Change #198: Seriously and they are talking to.

Speaker Change #198: I have much more action and be much more alert on the topic. So I would expect them to us the same behavior. When it comes to nicotine pouches. So to summarize I don't think were seeing anything meaningful today to be certainly.

Emmanuel Babeau: So to summarize, I don't think we're seeing anything meaningful today to be certainly watched. And if it was to become the case, we would expect the authority to have the same, I would say, proactive behavior that they are starting to implement with vaping. Okay, thank you, sir. I appreciate it.

Speaker Change #198: Watched.

Speaker Change #198: And if it was to become the case, we would expect <unk> to have the same I would say proactive.

David: The other day I think as they are starting to implement on David.

Owen Bennett: Okay, thank you, sir. Appreciate it.

Speaker Change #200: Okay. Thank you Sir appreciate it.

Emmanuel Babeau: Thank you.

Operator: One moment for our next question.

Owen Michael Bennett: Thank you. In one moment for our next question. Our next question will come from Callum Elliott. On Bernstein, your line is:

Speaker Change #200: You.

Operator: One moment for our next question.

Speaker Change #201: And one moment for our next question.

Operator: Our next question will come from Callum Elliott of Bernstein. Your line is open.

Our next question will come from Callum Elliott of Bernstein. Your line is open.

Speaker Change #201: Our next question will come from Callum Elliot.

Speaker Change #202: Of Bernstein Your line is open.

Matthew Smith: Hi, thank you very much for the question. It's actually a follow-up, quite similar question to what you just had from Owen. But I want to push you a bit further because we also, like Owen, see pretty widespread evidence now that European moist versions of ZYN that do not have pre-market approval, as far as I'm aware, and weren't in the market as of August 2016.

[Company Representative]: Hi, thank you very much for the question. It's actually a follow-up, quite similar question to what you just had from Owen. But I want to push you a bit further because we also, like Owen, see pretty widespread evidence now that European moist versions of ZYN that do not have pre-market approval, as far as I'm aware, and weren't in the market as of August 2016.

Callum Elliott: Hi, thank you very much for the question. It's actually a follow-up, quite a similar question to what you just had from Owen, but I want to push you a bit further because we also, like Owen, see pretty widespread evidence now that European moist versions of Zin that do not have pre-market approval, as far as I'm aware, and weren't in the market as of August 2016, are available for sale on a widespread basis across New York City, but also the online form suggests that this has become a pretty widespread issue across the US as a whole.

Callum Elliott: Alright. Thank you very much for the question, it's actually a follow up similar question to what you just asked for a moment, but I want to pursue.

Speaker Change #203: Further because we also.

Speaker Change #204: Like RNC pretty widespread evidence now that European moist versions of sand that do not have pretty market equivalents farther away.

Speaker Change #204: Once in the market as it was 2016.

Matthew Smith: Are available for sale on a widespread basis across New York City. But also the online form suggests that this has become a pretty widespread issue across the US as a whole. So I guess two questions. Can you just confirm for us that those products weren't in the market at 8 August 2016 and that they are being sold in breach of FDA regulations? And then I guess secondly.

Are available for sale on a widespread basis across New York City. But also the online form suggests that this has become a pretty widespread issue across the US as a whole. So I guess two questions. Can you just confirm for us that those products weren't in the market at 8 August 2016 and that they are being sold in breach of FDA regulations? And then I guess secondly.

Speaker Change #204: Our available for sale.

Speaker Change #204: Widespread basis across New York City.

Speaker Change #204: But also the online form suggesting this has become a pretty widespread issue across the U S. As a whole so.

Callum Elliott: So I guess I have two questions. Can you just confirm for us that those products weren't in the market on the 8th of August 2016 and that they are being sold in breach of FDA regulations? And then, I guess, secondly, yeah, what can you do, and what are you doing to stop it?

Speaker Change #205: I guess two questions can you just confirm for us that those products weren't in the market.

Speaker Change #205: <unk> 2016.

Speaker Change #207: But they are being sold in breach of the regulations.

Speaker Change #206: And then I guess secondly.

Matthew Smith: Building upon what Owen asked, presuming that you're not selling illicit product directly to US retailers yourselves.

Building upon what Owen asked, presuming that you're not selling illicit product directly to US retailers yourselves.

Speaker Change #208: Maybe like a promo presuming that youre not selling.

Speaker Change #209: Directly to U S retailers yourselves.

Speaker Change #210: What can you do and what are you doing to stop you.

Emmanuel Babeau: European e-commerce retailers selling this product because it strikes me that this presents a pretty meaningful potential risk to your U.S. business if this illicit product continues entering the U.S. market in this way. Thank you, Callum. Look, again, I don't have any data on what you're saying, so it's very difficult for me to report. I think, you know, we know what products benefit from the situation and the positioning in 2016 on the market and that, therefore, are legally being commercialized.

Speaker Change #211: European ecommerce retailers selling this product because it strikes me that this presents a pretty meaningful potential risk to your U S business. If this illicit product continues entering the U S market in this way.

Emmanuel Babeau: Thank you, Callum. Look again, I don't have any data on what you're saying, so it's very difficult for me to report. I think we know whether the product that benefit from the situation and the positioning on 2016 in the market and that therefore are legally being commercialized.

Speaker Change #211: Thank you Kayla look again I don't have any data on what youre, saying, so it's very difficult for me to report I think we we know what are the product of that.

Speaker Change #211: Benefit from.

Speaker Change #211: Situation in the positioning in the 2006 and 2016 in the market and that therefore.

Speaker Change #214: There are literally being commercialized.

Emmanuel Babeau: As you can imagine, I'm going to repeat only what I said. We are doing everything we can to control the flows. I don't have information today saying that you have these flows of product. If we knew, we would certainly tackle that and we would try to understand where it's coming from. And what I can certainly repeat is that our objective is to do our utmost, everything we can to be compliant with the regulation. And there is nothing else I can say, really.

As you can imagine, I'm going to repeat only what I said. We are doing everything we can to control the flows. I don't have information today saying that you have these flows of product. If we knew, we would certainly tackle that and we would try to understand where it's coming from. And what I can certainly repeat is that our objective is to do our utmost, everything we can to be compliant with the regulation. And there is nothing else I can say, really.

Emmanuel Babeau: As you can imagine, I'm going to repeat only what I said. We are doing everything we can to control the flows. I don't have information today saying that, you know, you have these flows of product. If we knew, we would certainly tackle that, and, you know, we would try to understand where it's coming from. And what I can certainly repeat is that our objective is to do our utmost, everything we can to be compliant with the regulations. And there is nothing else I can really say.

Speaker Change #212: As you can imagine I'm going to repeat only what I said, we are doing everything we can to control. The flows I don't have information today, saying that you have this.

Speaker Change #211: Flows of product.

Speaker Change #213: We knew we would certainly.

Speaker Change #213: Cycle that we would try to understand where it's coming from.

Speaker Change #213: What I can certainly repeat is that our objective is to do our utmost everything we can to be compliant with the regulation.

Speaker Change #213: And there is nothing as I can say right.

Emmanuel Babeau: Okay, thank you.

[Company Representative]: Okay, thank you.

Callum Elliott: Okay, thank you. And maybe just to follow up, I guess, as you think about bringing supply back online in the U.S., bringing you Supply Online to meet them all. What gives you this confidence that we're going to see that the sort of upward lift to ZIM guidance today implies a very significant sort of back half hockey stick in terms of sort of positive inflection in the growth rate? We see sequential declines in growth, now quarter to date.

Matthew Smith: Maybe just a follow up, I guess. As you think about.

[crosstalk] Maybe just a follow up, I guess. As you think about.

Speaker Change #215: Okay. Thank you and maybe just to follow up I guess as you think about.

Matthew Smith: Bringing supply back online in the US or also bringing new supply online to meet demand, what gives you this confidence that we're going to see the sort of upwards lift, as in guidance today implies a very significant sort of back half hockey stick in terms of positive inflection in the growth rate, which to Faham's earlier question, we see sequential declines in growth now quarter-to-date. So what gives you the confidence that the consumers are switching to on consumers who are switching to Rogue. Some of the consumer reviews for some of these competitive products are sometimes better than for ZYN. So what gives you the confidence that now that consumer awareness for these other brands has grown as a result of your supply chain issues, that you're going to immediately win those consumers back once supply comes online again?

[Company Representative]: Bringing supply back online in the US or also bringing new supply online to meet demand, what gives you this confidence that we're going to see the sort of upwards lift, as in guidance today implies a very significant sort of back half hockey stick in terms of positive inflection in the growth rate, which to Faham's earlier question, we see sequential declines in growth now quarter-to-date. So what gives you the confidence that the consumers are switching to on consumers who are switching to Rogue. Some of the consumer reviews for some of these competitive products are sometimes better than for ZYN. So what gives you the confidence that now that consumer awareness for these other brands has grown as a result of your supply chain issues, that you're going to immediately win those consumers back once supply comes online again?

Speaker Change #215: Bring supply back online in the U S. We're also.

Speaker Change #223: Bringing new supply to meet demand.

Speaker Change #220: It gives you this components that we're going to see that.

Speaker Change #216: Upward lift of zinc guidance today implies a very significant sort of backhaul hockey stick in terms of positive inflection in the growth rate.

Which to Bob's earlier question, we see sequential declines.

Speaker Change #217: Product gross now quarter today is what gives you the confidence that the consumers are switching to all consumers switching to run.

Emmanuel Babeau: What gives you the confidence that the consumers who are switching to ON, consumers who are switching to Rogue, some of the consumer reviews for some of these competitive products are sometimes better than for Zin. What gives you the confidence that now that consumer awareness for these other brands has grown as a result of your supply chain issues, you're going to immediately win? Look, Callum, this is obviously coming from a mix of consumer demand perception that we have, and we believe that if we can produce them, there is a space to get to 580 million can shipments.

Speaker Change #218: Some of the consumer views reviews with some of these competitive products are somehow.

Sometimes better in Brazil. So what gives you the confidence that now that consumer awareness for these other brands has grown as a result of your supply chain issues.

Speaker Change #219: We're gonna immediately when those consumers back log supply comes from the line again.

Emmanuel Babeau: Look, Callum, this is obviously coming from a mix of consumer demand perception that we have. We believe that if we can produce them, there is a space to get to 580 million can shipments. That's the first element, and that's what our sensors are telling us about what consumer would be happy to buy if it was available. At the same time, of course, our measures to increase production capacity, where, as I said, I'm not going to elaborate on the various levers, but we're pulling a number of levers to progressively increase the capacity for ZYN production in the US. That's really the combination of the two.

Speaker Change #218: Luke This is obviously coming.

Speaker Change #218: From a mix of.

Speaker Change #221: Consumer demand perception that we have and we believe that if we can produce them there is a space too.

Speaker Change #222: Get to 518 million can shipment.

Emmanuel Babeau: That's the first element, and that's what our sensors are telling us about what consumers would be happy to buy if it was available, and at the same time, of course, our measures to increase production capacity, where, as I said, I'm not going to elaborate on the various levers, but we're pulling a number of levers to progressively increase the capacity for Zim production in the US. So that's really the combination of the two.

Speaker Change #222: First element and Thats, what our our sensors are telling us about what consumer would be IP to buy if it was available and at the same time of course, our measures to increase production capacity, where as I said I'm not going to elaborate on the various levers that we're pulling a number of levers.

Speaker Change #222: To progressively increase the capacity.

Speaker Change #222: <unk> is in production in the U S. So that's really the combination of the two.

Operator: Okay, thank you, thank you, thank you. Our last question will be coming from Priya Ohri-Gupta of Barclays. Your line is open.

[Company Representative]: Okay, thank you.

Emmanuel Babeau: Thank you.

Operator: Thank you. Our last question will be coming from Priya Ohri-Gupta of Barclays. Your line is open.

Speaker Change #224: Okay. Thank you. Thank you.

Callum Elliott: Okay, thank you. Thank you. And our last question will be coming from Priya Ori Gupta of Barclays. Your line is open. Great; thank you so much for taking the time to answer the question. Emmanuel, I was wondering if you could give us a little bit more color on the Ico-Soluma test that you're planning for the U.S., sounds like just a few cities, diverse geographically across the U.S., and what are some of the Unlock features and how could this be different than what we saw initially several years ago, https://www.cdc.gov.au Sure, Priya. Well, that's a very broad question, although a very important one, of course.

Speaker Change #224: Thank you.

Prior Gupta: And our last question will be coming from prior <unk> Gupta of Barclays. Your line is open.

Priya Ohri-Gupta: Great. Thank you so much for taking the question. Emmanuel, I was wondering if you could give us a little bit more color on the IQOS ILUMA tests that you're planning for the US. It sounds like just a few cities. Will those be sort of diverse geographically across the US and what are some of the learnings that you're hoping to, I think, unlock? And how could this be different than what we saw initially several years ago with some of the standalone stores that were put in place? And then I have a follow up. Thanks.

Gaurav Jain: Great. Thank you so much for taking my question.

Gaurav Jain: I was wondering if you could give us a little bit more color on the iqos tests that youre planning for the U S South.

Gaurav Jain: Yes.

Speaker Change #227: Well no.

Jay Marsh: Jay Marsh geographically across the U S and what are some of Nomura.

Jay Marsh: Sure.

Jay Marsh: Okay.

Speaker Change #229: It's different than what we.

Speaker Change #230: We saw originally several years ago with some of the Standalone stores that were put in place and then I have a follow.

Speaker Change #229: Thanks.

Operator: Sure.

Emmanuel Babeau: Sure.

Emmanuel Babeau: Well, that's a very broad question, although very important one, of course. So given where we are, I'm going to make a short answer on that one. First of all, we clarify the fact that we go for a scale launch only once we get the PMTA for ILUMA. And as I said in my preliminary remarks, we are still today targeting to get this approval in the second half of 2025. Once we are there, then we have the right product to really go broader in the US and at that stage we will have been learning with a number of things that we're going to do between Q4 and the moment where we go with ILUMA. And you're asking, okay, what are you going to do differently? Let's be clear.

Well, that's a very broad question, although very important one, of course. So given where we are, I'm going to make a short answer on that one. First of all, we clarify the fact that we go for a scale launch only once we get the PMTA for ILUMA. And as I said in my preliminary remarks, we are still today targeting to get this approval in the second half of 2025. Once we are there, then we have the right product to really go broader in the US and at that stage we will have been learning with a number of things that we're going to do between Q4 and the moment where we go with ILUMA. And you're asking, okay, what are you going to do differently? Let's be clear.

Speaker Change #229: Sure <unk>.

Speaker Change #231: Very broad question, although very important one of course.

Speaker Change #232: Given where we are going to make a short answer on that one first of all we clarify the fact that will go for a scale launch only once we get the PMT for Illumina and as I said in my preliminary remarks, we are still today.

Speaker Change #233: <unk> targeting to get this approval in the second half of 2025.

Speaker Change #233: Once we are there then we have the right product to really.

Speaker Change #233: Go broader in the U S and at that stage, we will have been learning with a number of things that we're going to not do between Q4 and the moment, where we go with Illumina and its youre asking okay. What are you going to do differently, let's let's be clear, we don't believe that iqos.

Emmanuel Babeau: We don't believe that IQOS has never been launched in a kind of serious, consistent, and profound manner. We believe that what makes IQOS so popular outside the US is going to resonate with a number of smokers among the around 30 million smokers in the US, so we're going to develop what has been working elsewhere. It will be about, of course, going to the smokers, explaining what IQOS is about, explaining the experience, why IQOS is a better product than smoking. I think it will be, as always, very important to create the image, the brand territory, but also talk about closely with the smokers. Okay. This is a journey to move away from smoking and to go to a better product.

We don't believe that IQOS has never been launched in a kind of serious, consistent, and profound manner. We believe that what makes IQOS so popular outside the US is going to resonate with a number of smokers among the around 30 million smokers in the US, so we're going to develop what has been working elsewhere. It will be about, of course, going to the smokers, explaining what IQOS is about, explaining the experience, why IQOS is a better product than smoking. I think it will be, as always, very important to create the image, the brand territory, but also talk about closely with the smokers. Okay. This is a journey to move away from smoking and to go to a better product.

Emmanuel Babeau: We don't believe that IQOS has never been launched in a kind of serious, consistent, and profound manner. And we believe that what makes IQOS so popular outside the US is going to resonate with a number of smokers, you know, among the around 30 million smokers in the US. So, we're going to develop what has been working elsewhere. It will be about, of course, going to smokers, explaining what IQOS is about, explaining the experience, and why IQOS is a better product than smoking.

I've never been launched in the kind of serious consistent and pro formed manner and we believe that what makes <unk>. So popular outside the U S is going to resonate with a number of smokers amongst.

Speaker Change #233: Around 30 million smoker in.

Speaker Change #233: In the U S. So we're going to develop what has been working and square it will be about of course going to the smokers, explaining what iqos is about explaining the experience while iqos is a better product.

Speaker Change #233: Then a smoking.

Emmanuel Babeau: I think it will be, as always, very important to create the image, the brand territory, but also talk closely with smokers, OK, this is a journey to move away from smoking and to go to a better product, IQOS. We will have the same commercial, I would say, a machine that has been successful in so many markets, with developing our own retail sales points. We will have a strong partnership with a number of independent and third-party retailers.

Speaker Change #233: I think it will be as always very important to create.

Speaker Change #233: Image brand territory, but also talk about closely with smokers. Okay. This is a journey to move away from smoking and to to go to a better product to Iqos. We will have the same commercial I would say a machine that has been successful in so many markets.

Emmanuel Babeau: To IQOS, we will have the same commercial machine, I would say, that has been successful in so many markets with developing our own retail sales point. We will have a strong partnership with a number of independent, and third-party retailers. So we're going to pull all the levers, and something that has not been done in the US because until now it has been only a very limited launch in a few cities with limited action. So everything is going to start at that moment for IQOS, and there won't be any magic. We're going to use what has been working so well elsewhere. Of course, adapting it to the US market.

To IQOS, we will have the same commercial machine, I would say, that has been successful in so many markets with developing our own retail sales point. We will have a strong partnership with a number of independent, and third-party retailers. So we're going to pull all the levers, and something that has not been done in the US because until now it has been only a very limited launch in a few cities with limited action. So everything is going to start at that moment for IQOS, and there won't be any magic. We're going to use what has been working so well elsewhere. Of course, adapting it to the US market.

Speaker Change #233: We are developing our own retail sales.

Speaker Change #233: Sales point, we will have.

Speaker Change #233: <unk> partnership with a number of independent.

Prya Ori Gupta: So, we're going to pull all the levers and do something that has not been done in the US, because until now, it has been only a very limited launch in a few cities with limited action. So, everything is going to start at that moment for IQOS, and there won't be any magic.

And third party retailer, so we're going to pull all the levers.

Speaker Change #233: And something that has not been done in the U S. Because until now it has been only a very limited launch in a few cities.

Speaker Change #233: With limited action, so everything is going to stop at that moment for Iqos and there won't be any magic, we're going to use what has been working so well elsewhere of course adapting it to the U S market.

Emmanuel Babeau: We're going to use what has been working so well elsewhere, of course, and adapting it to the US market. That's really helpful. And I guess just a follow-on to that, talks a lot about the development of IcoSpeed outside the U.S. In broad strokes, how do you think that product could play out in the US? And what about filing PMTAs and then bringing about the availability of that. Look, for the time being, we don't have the plan to file a PMTA on VIVE.

Unknown Executive: That's really helpful, and I guess just a follow-on to that, it talks a lot about the development of Igos vs. outside the U.S.

Priya Ohri-Gupta: That's really helpful. And I guess just a follow on to that is you talked a lot about the development of IQOS VEEV outside the US, maybe broad strokes. How do you think that product could play out in the US and at what point would you think about filing PMTAs and then broadening the availability of that in the US? Thanks.

Speaker Change #234: That's really helpful and I guess, just a follow on to that.

Speaker Change #235: Can you talk a lot about the development of Iqos outside the U S.

Unknown Executive: Maybe broad strokes. How do you think that product could play out in the U.S.

Speaker Change #236: Just broad strokes, how do you think that product could play out in the U S and at what point would you think about filing PMT.

Unknown Executive: and at what point would you think about filing PNPAs and the project availability of that P.S.

Speaker Change #236: But the availability of that plastics.

Unknown Executive: thinks?

Jacek Olczak: Look, for the time being, we don't have the plan to file a PNPA on Vs. We are very much focusing on Igos. I think that Vs success is just at the beginning today. It's great to have already five markets where we are number one on the close pod system, but it's just the beginning. We're going to keep learning, developing how we can develop a successful, profitable business on vaping. And then, you know, we will see whether in Yukos, it makes sense to have some thoughts for this in the U.S. But we are not at that stage today.

Emmanuel Babeau: Look, for the time being we don't have the plan to file a PMTA on VEEV. We are very much focusing on IQOS. I think that VEEV's success is just at the beginning.

Speaker Change #237: Look for the time being we don't have the plan to file our PMT here on these.

Emmanuel Babeau: We are very much focusing on ICOS. I think that VIVE's success is just at the beginning today. It's great to have already five markets where we are number one in the closed pod system, but it's just the beginning. We're going to keep learning and developing how we can develop a successful, profitable business around vaping. And then, you know, we will see whether, in due course, it makes sense to have some thoughts about VIVE in the US.

Speaker Change #237: Are very much focusing on.

Speaker Change #238: On Iqos.

Speaker Change #238: I think that this success is.

Mirza Faham Ali Baig: Today.

Emmanuel Babeau: It's great to have already five markets where we are number one on the closed pods system. But it's just the beginning. We're going to keep learning, developing how we can develop a successful profitable business on vaping, and then we will see whether in due course it makes sense to have some thoughts for VEEV in the US, but we are not at that stage today.

Speaker Change #238: At the beginning today, it's great to have already five markets, where we are number one on the on the closed spuds system, but it is just the beginning we're going to keep learning developing all we can develop a successful profitable business on <unk> and then we will.

Speaker Change #238: Whether in due course, it makes sense to have some thoughts for this in the U S. But we are not at that stage today.

Prya Ori Gupta: But we are not at that stage today. And just one final, I think, housekeeping item: you talked about your interest expense being at the low end of your prior. Does that reflect, I guess, the issuance you've done to date? Headwinds.

Unknown Executive: Thank you.

Unknown Executive: Just one final item, housekeeping item. You talked about your interest expense being at the low end of your prior range, $1.3 billion.

Speaker Change #238: Thank you.

I'd now like housekeeping items, you talked about your interest expense.

Speaker Change #239: At the low end of your prior range $1 3 billion.

Unknown Executive: Does that reflect?

Emmanuel Babeau: I guess the issue if you've done today and should we anticipate that there wouldn't be any incremental interest expense had with a potential scope for any other resenencing or presenencing that you might consider? No, I think the improvement in the estimated financial cost for the year is reflecting a better situation on first of all the level of the debt with the cash for generation seconds with all we are financing the group.

Speaker Change #240: Does that reflect I guess the issuance you've done today.

Should we anticipate that there would be.

That's all.

Speaker Change #240: Interest expense headwind.

Emmanuel Babeau: For any other reason, No, I think the improvement in the estimated financial costs for the year is reflecting a better situation on, first of all, the level of the debt with the cash regeneration, and second, how we are financing the group. And that is coming with this. You said it. We are in the low end of the initial bracket. And I don't think you should expect some kind of revolution in the way we are financing the company.

James Bushnell: There is nothing on the agenda. Thank you. I would now like to hand the call back to James Bushnell for closing. That concludes our call today. Thank you for joining us. If you have any follow-up questions, please contact the PMI Investor Relations team. Thank you again, and have a great day. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change #240: Scott.

Speaker Change #241: Any other.

Speaker Change #241: Nancy <unk>, Nancy you might consider.

Emmanuel Babeau: No. I think the improvement in the estimated financial cost for the year is reflecting a better situation, on first of all the level of the debt with the cash flow generation. Second, with how we are financing the group, and that is coming with this. You said it. I mean, we are in the low end of the initial bracket, and I don't think you should expect some kind of revolution in the way we are financing the company. Nothing on the agenda.

Speaker Change #242: No I think the improvement in the estimated financial cost for the year is reflecting a better.

Speaker Change #243: Nutrition on first of all the level of the debt with the cash flow generation second we are we are.

Speaker Change #243: Our financing group.

Emmanuel Babeau: And that is coming with this; you said it, and we are in the lower end of the initial bracket. I don't think you should expect some kind of revolution in the way we are financing the company; nothing on the agenda.

Speaker Change #244: And that is coming with this you said it I mean, we are in the in the low end of the initial bracket.

Speaker Change #244: And I don't think you should expect some kind of revolution in the way we are financing the company.

Speaker Change #245: Nothing on the agenda.

Unknown Executive: Thank you; appreciate that. Thank you.

Priya Ohri-Gupta: Thank you. Appreciate that.

Speaker Change #247: Thank you I appreciate that.

Emmanuel Babeau: Thank you.

Speaker Change #246: Thank you.

Operator: I would now like to hand the call back to James Bushnell for closing remarks.

James Bushnell: I would now like to hand the call back to James Bushnell for closing remarks. I conclude our call today. Thank you for joining us. If you have any follow-up questions, please contact the PMI Investor Relations team. Thank you again, and have a great day. Thank you.

Speaker Change #246: I would now like to hand, the call back to James <unk> for closing remarks.

Emmanuel Babeau: That concludes our call today.

James Bushnell: That concludes our call today.

James Bushnell: I conclude that concludes our call today. Thank you for joining us if you have any follow up questions. Please contact the PMI Investor Relations team.

James Bushnell: Thank you for joining us. If you have any follow-up questions, please contact the PMI investor relations team. Thank you again and have a great day.

Thank you for joining us. If you have any follow-up questions, please contact the PMI investor relations team. Thank you again and have a great day.

James Bushnell: Thank you again and have a great day.

Emmanuel Babeau: Thank you.

James Bushnell: Thank you.

Unknown Executive: This concludes today's conference call. Thank you for participating. You may now disconnect.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

This concludes today's conference call. Thank you for participating you may now disconnect.

Q2 2024 Philip Morris International Inc Earnings Call

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