Half Year 2025 Diageo PLC Earnings Call - Pre-Recorded

Backdrop in the first half of fiscal 'twenty five our results showed positive momentum organic net sales returned to growth of 1% with growth in four out of five regions, including North America.

While consumers remain cautious and the macroeconomic recovery is taking longer than expected, particularly in North America and China.

I am pleased with the results we have delivered in the half.

At the end of the last fiscal we shared our confidence that the actions we were taking would return us to growth as the consumer environment improves.

Today, our performance demonstrates that we are making meaningful progress, even though the environment remains challenging and will likely continue to be volatile given the recent tariff announcements.

Our focused strategy is delivering results.

Notably we have held or gained market share in 65% of our net sales in measured markets.

We also continued to effectively leverage the strength of our diversified portfolio across price tiers and geographies to respond to emerging consumer trends.

Looking ahead, we see opportunities to continue to outperform we are focused on strategic initiatives that will enhance our financial resilience driving sustainable long term growth and the ability to deliver positive operating leverage in the future more on this from Nick and me later.

One of the icos, great strength is our broad and diverse presence across regions and markets.

This provides resilience and the ability to participate in global growth opportunities through our globally recognized brands in our vibrant local portfolios.

Some brief highlights from the regions.

Returned to organic net sales growth in North America, albeit slight but a meaningful sequential improvement compared to the last fiscal year I'll come back to this.

Europe delivered resilient performance in a continued challenging environment with Guinness again, the key driver of growth in the region.

In Asia Pacific performance was negatively impacted by a weaker macroeconomic environment in greater China challenging trading conditions in South East Asia and the region was also impacted by the lapping of Swishing Fong supply replenishment in the prior year.

Latin America and Caribbean, our Lac region is back in growth, partly attributed to deliberate actions that we took across the region.

Destocking is now complete and we are also seeing a consumer environment that is modestly improving notably in Brazil, and we are also seeing some stabilization in Mexico.

Finally, we continued to deliver strong organic net sales growth in Africa, despite ongoing macroeconomic challenges.

Moving to market share in the first half we held or grew share in 65% of our total net sales in measured markets.

We have delivered share gains in almost all of our largest markets, including the U S. Most of Europe and greater China.

I'm, particularly pleased with our improved market share performance in the U S, which has shifted into solid share gain position driven by U S spirits.

A testament to our strong and focused in market execution.

These results are encouraging I continue to see opportunity for us to do more.

We are firmly focused on driving further improvement.

Our strategic investments in digital and route to market, which are progressing well should underpin future outperformance.

Digging in a bit deeper in the U S.

Despite a gradual improvement in consumer sentiment the U S broader consumer environment continues to be under pressure with grocery basket still at 30 year highs.

In this environment total beverage alcohol has been slightly declining with the U S spirits market modestly better but remaining flat.

Premium innovation in bottled spirits continues with Super premium plus priced products driving growth, while premium and below core price products are declining by low single digits.

With ongoing economic pressures, we've seen that consumers have opted for smaller pack sizes. In fact, four out of 10 of our largest share gainers have been in these smaller formats and.

Importantly, these formats have ensured that consumers stayed with our premium brands.

Our strategy in the U S is delivering results fully leveraging our innovation and targeted investment and driving stronger execution.

With circa 90% of our U S total net sales winning or maintaining TBA market share at the end of the half.

We focused our resources and investment in high growth categories and brands like Don Julio and Crown Royal and we're encouraged by early results from a regional investments as part of our route to market transformation announced in the last fiscal.

And whiskey Crown Royal share performance continued its momentum gaining share of U S. Total spirits market in the half driven by strong performance from Crown Royal Blackberry.

This initially launched as a limited time offer but has shown strong consumer demand and it's been the number one innovation of bottled spirits in Nielsen for the past seven months.

Because of the success to date, we've made it a permanent addition to our flavor portfolio as it attracts a distinct audience driving excitement and interest in the trademark and recruit new drinkers with one in five being new whiskey.

In Tequila, our portfolio delivered strong results led by aged variants of Don Julio, particularly Don Julio wrap us auto where organic net sales growth more than doubled in the half.

Don Julio maintained share leadership of the Tequila category and was the number one gainer in total spirits as well as the number one tequila category share gainer.

While I'm pleased with results there is more work to do and we're not standing still one example of this is Carson egos, we're making progress on its turnaround we announced at the end of the last fiscal year that we're fully integrating the brand into our dedicated transformed distribution network. The team's focus has been on commercial execution and enhancing brand.

Awareness and we're encouraged by some of the early signs of success. Although it is still early days.

Looking ahead, while we are pleased to have returned to slight organic net sales growth in such a difficult environment.

We have more opportunity in front of us to emerge stronger.

We are confident that the actions, we're taking are working and this will enable us to continue to win if the U S consumer environment improves.

Moving onto our largest categories performance.

In Scotch we are proud of our advantaged position in our brands account for more than one in three bottles of Scotch sold globally and represent one quarter of our global net sales.

In the half Scotch organic net sales declined by 5% largely driven by softer industry performance in North America, and greater China, We saw some down trading within the category as a result of the macroeconomic environment and continued pressure on the consumer.

Importantly, while maintaining price discipline, we're gaining quality market share in the Scotch category in measured markets represent 70% of our total and a fee, including the U S. This was led by Johnnie Walker delivering strong share growth in the category.

Our success has been supported by fewer but larger and more impactful collaborations such as Johnnie Walker Black label, and squid game, and Johnnie Walker Blue label and ice chalet.

We continue to drive recruitment to the category and we've also focused on supporting innovation that attract younger L. P. A plus consumers and women. This includes the ongoing rollout of Johnnie Walker blonde and the introduction of Johnnie Walker Black Ruby.

We've continued our focus strategy on single malls with our priority brands gaining share globally.

And the latest data the Singleton our number one priority malt brand was the fastest growing single malt globally.

Tequila organic net sales were up 21% in the half with share gains across our business.

North America was the biggest driver of the growth or Don Julio Ultra premium brand has been the biggest driver of this growth specifically, Don Julio episodic as interest has accelerated and age tequila.

Don Julio <unk> 1942 growth was supported by strong interest in the 1940 to 50 ml bottles that we featured at the Oscars last year.

This launch alone drove more than 50% of the total 50 ml tequila market growth.

Our global rollout has continued throughout the half tequila organic net sales more than doubled in Africa, and we delivered double digit growth in Europe as well.

And the more established North America, and lack regions. We also delivered double digit growth.

Paloma cocktail continues to be our successful recruitment tool in Europe through Paloma tours fashion weeks and major international festivals, such as the British Summer time in London, and the cigarette festival in Budapest.

In the first half of the year, we served nearly 275000 Paloma cocktails into the hands of our European consumers.

I have spoken before about Gen Z in the U S being more likely to purchase spirits than millennials, where at the same age.

Within this what we also see is that Tequila is a significant driver of Gen Z penetration growth for core spirits, representing an exciting and promising growth opportunity for the ICL.

And Guinness continues to outperform Guinness has now achieved its eighth consecutive half of double digit growth delivering 17% organic net sales growth in the half.

Importantly, we held or grew share in our three largest markets.

Dennis is now the number one TBA brand in Ireland and in Great Britain, the number to TBA brand and number one beer brand.

Demand in Great Britain has surpassed our expectations with one in 10 pints sold now being against Us.

And while we are pleased by Genesis success, and its heartland with double digit growth in Europe and Africa. We are encouraged by its growing global momentum in the rest of the world.

Cultural engagement Activations like our partnership with the English Premier League.

<unk> strong social media engagement have driven impressive traction North America, Australia, and greater China.

In the U S. Guinness was the fastest growing major import beer in the on premise with distribution expanding well outside of our traditional home and the Irish pub into casual restaurants sports bars and neighborhood bars.

To meet the continued strong demand for gonna see Rosie ROE, we are doubling our original investment to expand capacity.

In the half and Europe, Genesee Rosy ROE continues its record almost doubling its topline growth gena.

Again, and see where zero now represents 12% of Guinness net sales in Great Britain.

I am motivated and inspired by the passion and pride that our teams around the world are bringing to this iconic brand.

We are looking forward to showcasing this at our event in May.

I will now hand, you over to Nick to take you through his first impressions of the business. He will also discuss our performance the recent tariff announcements and our near term outlook.

Speaker Change: Thank you Debra and thank you all for joining us today.

Nick: I'm very excited to be with you to discuss my first set of financial results as the company's new CFO as Deborah mentioned earlier, it's a volatile and uncertain time for the sector and the market, but that uncertainty creates a lot of opportunity for us and as such I'm very excited to be joining at a moment in the company's history, where the.

Speaker Change: The entity has never been greater.

Speaker Change: Before I delve deeper into these results I'd like to share a few reflections on my first few months with the business.

Speaker Change: It's truly been a whirlwind and I've literally traveled around the world immersing myself in the ASO and the broader spirits business.

Speaker Change: I visited four continents on which I've spent time with the local teams in New York, Miami, Amsterdam, Milan, Capetown, Bangalore, Singapore, Nairobi, Shanghai, and Chengdu and also with the teams here in London.

Speaker Change: And most importantly, I have visited with all of our executive teams in their local markets.

Speaker Change: This is clearly a company with amazing brands that are full of history and heritage and amazing people, who are passionate about those brands and quite rightfully. So.

Speaker Change: I'm, particularly grateful for the openness with which I've been welcomed and with the relationships have started to build especially with Debra the executive team My CFO leadership team and the board as we work in partnership.

Speaker Change: I'm also grateful for the feedback that both investors and analysts have shared with me on this journey and rest assured the importance of consistency of performance through top line delivery and positive operating leverage has been heard loud and clear.

Speaker Change: Let me reinforce that we are committed to doing the right thing and are firmly focused on what we can control and manage through this more challenging industry backdrop, including the evolving situation on tariffs.

Speaker Change: While this is a business with very attractive margins and one which is highly cash generative.

Speaker Change: That is more for us to do.

Speaker Change: An immediate priority will be to strengthen the balance sheet and deleverage. So that we can add more flexibility and I'll go into these in more detail after going through the results.

Speaker Change: So let's start with the half year highlights we are very pleased to be back in growth with an improvement in organic net sales up 1% in the house.

Speaker Change: We drove not only incremental topline improvement, but also gross margin improvement and lower absolute M. P reinvestment.

Speaker Change: However, overhead costs, including staff costs, and incentives and strategic investments largely one offs negatively impacted our profitability and organic operating profit declined one 2%.

Speaker Change: More on this in a moment.

Speaker Change: Pre exceptional EPS declined about 10% to 97.7 cents per share primarily due to the performance of my Hennessey and which we have a noncontrolling interest and also unfavorable foreign exchange.

Free cash flow increased by 125 million to circa $1 $7 billion, driven by working capital management more on this and leverage later.

Speaker Change: Finally, as you will have seen we have today also announced a dividend of 14 and a half since for the half. This is flat on last year, which we think is the prudent thing to do given the current environment.

Speaker Change: We do remain committed to growing our dividend over time, and we will also look to maximize total shareholder returns a key priority for us.

Speaker Change: So let's get into a bit more detail.

Speaker Change: Looking at the topline organic net sales grew 1% a sequential improvement from the second half of fiscal 'twenty for the.

Speaker Change: The primary driver of the growth in organic net sales was price mix with four out of our five regions delivering positive price mix, which was great to see.

Speaker Change: We must look to achieve broader discipline around pricing going forward.

Speaker Change: Starting with volume now Europe and lock also volume declines given the cautious consumer sentiment in light of ongoing macroeconomic volatility and inflationary pressures. This was only partially offset by positive volume growth in Asia Pac, particularly in India and Africa.

Speaker Change: While we're not relying on a return to positive volume in the short term we acknowledge its importance in driving improved net sales performance going forward.

Speaker Change: Looking ahead as consumer confidence improves we would also expect volumes to come back move.

Speaker Change: Moving to price mix in North America positive price mix was driven by tequila with consumers increasingly moving towards age liquids, whilst in Europe Guinness was the main driver of the growth.

Speaker Change: We saw a good turnaround in lack of price mix as the region recovered from the period of consumer down trading.

Speaker Change: In Asia Pacific price mix decline driven by consumer down trading in South East Asia, and China in particular, a double digit decline in Vietnam more than offsetting premium amortization in India from prestige and above.

Speaker Change: Now turning to operating profit organic operating profit in the first half of fiscal 'twenty five declined one 2% versus the first half of fiscal 'twenty four.

Speaker Change: As I said the decline was primarily due to increased overheads due to staff costs, including incentives and wage cost inflation as well as strategic investments.

Speaker Change: Excluding the impact of reinstating incentives clearly a one off organic operating profit would have been slightly up.

Speaker Change: This reflects our current assumption of recovery off the lower bonuses for the last few years, given the improving performance as well as the need to acknowledge with broad employee engagements.

Speaker Change: Going forward, we would often navigating the disruption of the evolving situation in the U S expect to more than offset these increases through positive operating leverage including through productivity and efficiency savings.

Speaker Change: Gross profit increased $83 million driven by topline performance and gross margin increased 19 bps as a result of our supply efficiency initiatives and aided by easing inflationary pressures.

Speaker Change: A&P investment declined by $37 million or 2% organically, primarily driven by lower investment in Asia back mainly in China.

Speaker Change: We do remain agile with our A&P spend ensuring that we invest as and where appropriate for instance, we deliberately increased investment and Don Julio and the U S and getting us in Europe and both delivered strong results in the house.

Speaker Change: Across the rest of the globe. The majority of A&P efficiencies were reinvested back into the business, but more on this approach as we look forward.

Speaker Change: So onto cash year over year free cash flow improved by $125 million, largely driven by working capital improvements, resulting from the movement in creditors and a reduction in investment in maturing stock.

Speaker Change: Alaska is not expected to be repeated in the second half and we haven't said anything to indicate that you should expect a dramatically different increase in maturing stock for full year fiscal 'twenty five compared to the last year at this point.

On working capital excluding maturing stock looking ahead to the full year I'm mindful of the strong working capital performance the team delivered in fiscal 'twenty for while.

Speaker Change: While I do see an opportunity to deliver more from working capital over time for fiscal 'twenty five I expect any EMEA, a free cash flow benefit to be more muted.

Speaker Change: Capex was over $600 million, a small increase from last year due to continued projects to support tequila expansion investments in digital capabilities and our supply agility program, particularly in North America, which was announced on Thursday last week.

Speaker Change: As a reminder for fiscal 'twenty five we guided to Capex at the higher end of the guidance range, implying higher capex to come in the second half.

Speaker Change: I noted earlier that EPS pre exceptionals declined almost 10% compared to the first half of fiscal 'twenty four and this was largely driven by our noncontrolling stake in Tennessee.

Speaker Change: Additionally, FX resulted in a material adverse impact on operating profit.

Speaker Change: Looking at head on FX, we're looking at our hedging policy and will revert on this for next year.

Speaker Change: The changes that we're looking to make will be focused on reducing volatility and providing more clarity on our hedging approach.

Speaker Change: Impact of lower tax was also beneficial to EPS.

Speaker Change: Moving to the balance sheet. We finished the first half with average net debt of $21 $7 billion, an increase of $1 $1 billion on last year, mainly due to the share buyback impact in the second half of fiscal 'twenty four.

Speaker Change: Closing net debt however was relatively flat.

Speaker Change: Given the lower EBITDA year on year, our leverage ratio increased to three one times ahead of where we ended in the prior fiscal year and above our target range of two and a half to three times.

Speaker Change: Really there's a lot of work to do here and reducing this is one of our key priorities going forward as I said earlier.

Speaker Change: Now moving to tariffs. Unfortunately, this adds complexity to providing forward looking guidance today, while we'd hope to shed before last weekend's news of building momentum in fiscal 'twenty six with further sequential improvement in organic net sales growth and positive operating leverage. This is now on hold.

Speaker Change: Pending greater visibility on how the situation evolves.

Speaker Change: As you will know president Trump in one of his three separate executive orders announced the implementation of 25% tariffs on goods imported into the U S from Canada and Mexico.

Speaker Change: The U S executive orders further stated that should any reactive tariffs be imposed by such nations. This would in turn attract further retaliatory tariffs. It is clear that the situation is still extremely fluid.

Speaker Change: Particularly around the implementation and timing of any retaliatory tariffs and the impact and of course any potential response to that retaliation.

Speaker Change: Importantly, Dr. Just starts from a position of strength with our broad global portfolio across categories and geographies and we have demonstrated agility and navigating tariffs in the past.

Speaker Change: While tariffs can be quite disruptive in the short term, we generally can mitigate long term impact with our broad and resilient portfolio.

Speaker Change: However, in the U S circa 45% of our net sales of our products sold must be made in either Canada or Mexico, given geographic origin requirements to.

Speaker Change: The key products, which would see this impact input cost would be tequila, which must be made in Mexico and of course Canadian whiskey.

Speaker Change: Majority of our net sales impacted is from Mexico.

Speaker Change: As a reminder, tariffs will be on the input cost not the retail price.

Speaker Change: The introduction of tariffs wasn't anticipated scenario, albeit the effective immediate timeline does create additional uncertainty.

Speaker Change: We have done considerable contingency planning over the last few months focused on what we can control and on the potential depth and timing of tariffs.

Speaker Change: Given our extensive supply chain and broad and advantaged portfolio. There are a number of possible actions to help mitigate the potential impact, including pricing and promotion management inventory management supply chain optimization and reallocation of investments.

Speaker Change: Some of these actions can be implemented rapidly and in fact, some have including on inventory management, but others will take time.

Speaker Change: We will continue to be agile and respond with speed as key details are confirmed as well as look to providing updated guidance as and when appropriate.

Speaker Change: Let me now talk to a reshape priorities to deliver long term sustainable performance. We have adapted these priorities based on my prior experiences and importantly to also reflect a slower market recovery given the current macroeconomic and geopolitical uncertainty.

Speaker Change: We expect these renewed long term priorities to drive both increased agility and resilience across the business.

Speaker Change: While these priorities aren't entirely new to <unk>, they will have a clearer and more prominent focus across the organization going forward.

Speaker Change: First we will be dedicated to delivering sustainable top line growth supported by continued outperformance against the market.

Speaker Change: Second we are committed to deliver operating leverage not just through efficiencies, but also by being more effective in how and what we do.

Through increased operating leverage we intend to maximize free cash flow, thereby deleveraging and creating more flexibility and we see a number of opportunities here, which I will discuss in a moment.

Speaker Change: Finally through all of this we will continue to optimize our returns not just for the business, but also ultimately for shareholders.

Speaker Change: Let me take you through all of this in a bit more detail.

Speaker Change: So to start we will be focused on driving sustainable topline growth with the right balance of volume price and mix, we intend to drive volume growth through capture and growth from the longer term favorable macroeconomic drivers and underlying fundamentals and leveraging the strength of our portfolio and brand building capabilities.

Speaker Change: I believe a really best in class and of course supported by World Class innovation, Although we will be rigorous and applying disciplined pricing across all markets and as market leader, there's more that we can and should be doing for this we will be using both existing digital tools and price pack architecture across some.

Speaker Change: Markets and Deborah Who's already talked to some of the benefits we're already seeing from this with the small sizes in the U S and a lot more growth to capture here.

Speaker Change: There's much more we can do to learn best in class our G M capabilities from a consumer peers, which both Debra and I had been well exposed to.

Speaker Change: <unk> our capabilities here will underpin and support a sustained top line growth.

Speaker Change: Finally, we will be looking at the RTD and our T. S category, an area, where perhaps our strategy has been less clear to date, we believe that in selected markets. This can be a strategic advantage.

Speaker Change: Strong driver recruitment for L. P E plus adults and ultimately by offering a great entry point into spirits.

Speaker Change: Let's now turn to operating leverage.

Speaker Change: Deborah and I see great opportunity to drive sustainable positive operating leverage.

Deborah: She has talked about the $2 billion productivity program. The intention is to re cut this and apply across the full of business, but importantly on this we are also committed to sharing the expected benefit that we would like to drop to the bottom line to support operating leverage growth.

While I remain fully committed to investing for both the short and long term with A&P spend we will be adding more rigor on measuring the effectiveness of the spend.

Deborah: This includes fully leveraging data using our updated catalyst two and ensuring that were ruthless in allocating the right level of spend of nonworking in working marketing dollars with.

Deborah: With the latest technology developments, we clearly see opportunities to reduce nonworking spend.

Deborah: Marketing teams are now structured around conscious create an agile Brian communities teams on a global brands to help embed this focus around the globe.

Deborah: We will continue to be highly focused on media efficiencies, which will enable us to get a more balanced approach to reinvest savings back into the business, but also dropped to the bottom line where appropriate.

Deborah: Internally, we're also increasing the focus on commercial excellence across the business. This is a real opportunity to do more ensuring that our brand activation is increased at point of sale in what is typically a crowded store environment.

Deborah: And increasing our presence in the on premise as well with for instance, more listings on menus with cocktail offerings without terrific brands and greater displays on the backhaul.

Here too we will look at the spend to drive more rigor on returns and maximizing value for each dollar invested.

Deborah: Finally, underpinning all of these actions will be a need to ensure that the Asa has the right capabilities not just for today, but also for the future as well.

Deborah: Let's now move to maximizing free cash flow.

Deborah: There's clearly headroom to improve free cash flow in an area, where I'm extremely focused on as we move forward.

Deborah: Consistent with ensuring our business is well placed for the long term. The team has clearly invested quite heavily in recent years, which Diaz, who previously guided would normalize from 2027.

We will be reviewing all capex commitments and future Capex plans to assess any needs to re prioritize and or re phase using clear and consistent IRR and payback metrics for all future Capex, but also drive greater asset utilization and efficiencies from our existing asset base.

Speaker Change: Are you really trying to sweat our assets a lot more.

Speaker Change: I'm also fully aware of the importance of laying down the grid and the significance of maturing stocks for future business needs.

Speaker Change: This offers us a huge competitive advantage Debra and I have initiated a deeper review with scenario planning around recovery time lines for the categories and future growth potential in the short and long term, particularly in whiskey and the gombe liquids to ensure that the spend here is balanced and leverages.

Speaker Change: The significant step up in investment over the past number of years, we had some of the best age liquid inventory to the team's credit and we will need to leverage this differentiated profile as we think about our pricing looking forward.

Speaker Change: And also while the team has unlocked a lot of value from working capital improvements as I said earlier, we will continue to look to deliver further sustainable improvement in working capital.

Speaker Change: Finally, we have a best in class supply team and I are jointly we can unlock a lot of future value.

Speaker Change: All of the work I've, just talked through should ideally position us to optimize returns for our shareholders. We will be ensuring that the business has the right balance of investments for the long and short term, but also where appropriate and consistent with our evolving strategy, we will be more rigorous and pursuing disposals, where it is in the.

Speaker Change: Best interests to book, the Azure as well as our shareholders.

This will clearly support our immediate focus to deleverage our balance sheet.

Speaker Change: As you've seen more recently with the disposal of our shareholding in Guinness, Nigeria, and didn't get as Ghana, which was announced last week. These disposals have gone beyond the more normal active portfolio management with individual brands and we will continue to explore further opportunities through multiple value equation lenses as we.

Speaker Change: Move forward.

Speaker Change: These actions will be undertaken with a view to improving flexibility whilst at the same time maximizing shareholder returns.

Speaker Change: We also remain committed to delivering value to shareholders and you should expect us to do this through dividends and buybacks.

Speaker Change: Where relevant we will continue to take advantage of selective M&A and we have built a strong track record on this in both tequila and non outlook for example, but we will be both disciplined where we do this and where we see compelling strategic opportunities to support our future growth plans.

Speaker Change: We expect all of these actions, we're undertaking will drive improved returns and importantly, we're doing this with speed.

Speaker Change: Collectively these actions will support our deleveraging to return back to within our target leverage range.

Speaker Change: Look forward to coming back and updating you on our progress as well with more detail as we move through the year.

Speaker Change: With that I'd like to take you through guidance for the remainder of fiscal 'twenty five.

Speaker Change: So for the full year fiscal 'twenty five we expect to build on the momentum in the first half before taking into account any impact from the tariffs in the U S. We would expect a continued strong market share performance with the sequential improvement in organic net sales growth compared with the first half of fiscal 'twenty five.

Speaker Change: However, tariffs could impact this building momentum.

Speaker Change: Again ahead of the impact of tariffs, we expected a slight decline in organic operating profit in the second half broadly in line with the decline in the first half, reflecting highest staff costs than in the prior year and continued strategic investments, including in digital and U S route to market.

Speaker Change: This couldn't be further impacted by tariffs, although we will seek to mitigate where possible.

Speaker Change: Combination of our outlook and continued investment means that we expect to end fiscal 'twenty five with a leverage ratio above our target range and ahead of leverage at the end of the first half of fiscal 'twenty five.

Have already referenced on need to address this.

Speaker Change: Our focus and commitment on driving growth for the future outperforming the market and in managing what we control remains unchanged.

Speaker Change: When we can more accurately assess the impact on future financial performance from tariffs, we will update as appropriate.

As Deborah said the long term fundamentals of the TBA category is still very attractive and while consumer preferences always evolve we remain confident on growth.

Speaker Change: Clearly, we have low visibility today in terms of the timing of the recovery given the impact of the prolonged inflation and resulting affordability as well as the evolving dynamics across the Americas.

Speaker Change: Throughout this period with firmly focused on what we can manage and control and building on the early first inflection we have seen in the first half importantly, we remain confident in our ability to outperform the market while at the same time in time also driving sustainable operating leverage.

Speaker Change: We have as you've seen removed on medium term guidance of 5% to 7% organic net sales growth given the current macroeconomic and geopolitical uncertainty in many of our key markets, which is impacting the pace of the recovery. We will however update you more regularly and provide near term guidance in the interim.

Speaker Change: And until we have more visibility on the pace of recovery.

Speaker Change: We also believe that the work that both Debra and I have talked to that we're doing at the ICU means that we will be better placed than peers when the market recovers we remain.

Speaker Change: <unk> committed to maintaining a robust investment grade balance sheet and returning to within our leverage target range of two and a half to three times net debt to EBITDA.

Speaker Change: We intend to do this through stronger profit delivery accelerating productivity initiatives tighter capital discipline. After the recent period of increased investment and appropriate selective disposals in line with our strategy.

Speaker Change: Deborah and I clear about the importance of leveraging our strong leadership position in the market to drive consistent and sustainable improvement in our underlying performance with the right balance of a growth oriented vision, but with appropriate financial discipline, we want to continue to use our solid free cash flow generation.

Speaker Change: To deliver competitive returns to our shareholders, while giving us the flexibility to invest in the business not just for today, but for the future as well.

Speaker Change: As I've, just said, we will come back as and when appropriate to update on the expected impact on the evolving situation in the U S.

Speaker Change: In the meantime, we very much look forward to seeing you at our Guinness Investor event. Following a trading update released on the 19th of May.

Debra: We now hand back to Debra for some closing comments.

Debra: Thanks, Nick.

Debra: No doubt 2024 has been a tough year for the entire sector.

Debra: Industry performance in several of our key markets theres been impacted by a cautious consumer environment and geopolitical uncertainty.

Debra: And considerable uncertainty remains notably on tariffs.

Debra: While it is challenging to predict the timing of a full recovery. We are confident in our ability as market leader to build on the momentum of the first half to continue to outperform the TBA market critically important in this environment.

Debra: The confirmation that the weekend on the implementation of tariffs in the U S. While if not unanticipated could however, very well impact there's building momentum.

Speaker Change: As Nick discussed.

Nick: And Unfortunately also adds further to complexity and our ability to provide updated forward looking guidance today, given this is a new and dynamic situation.

Nick: We are taking a number of actions to mitigate the immediate impact and disruption to our business that tariffs may cause.

Nick: And to support our distributor partners and customers in both the on and off trade, who rely on our brands, while continuing to manage our business for the long term.

Nick: We will also continue to engage with the U S administration on the broader impact that this will have across the U S hospitality industry, including consumers employees wholesalers restaurants bars and retail outlets.

Nick and I have been working closely together and as you just heard Nick to tell we are energized and excited about the significant opportunity to strengthen and drive improved performance at the ico, creating a more agile culture, well, we drive better end to end accountability.

Nick: We are convinced that we are taking the right actions to drive sustainable outperformance.

Nick: We are firmly focused on what we can control now more than ever. We also believe that the actions, we're taking will ideally position us to benefit when the market recovers and also ahead of our peers.

Nick: Even against the current uncertain backdrop. This is an exciting time for the ICL and we look forward to updating you in our more frequent communication as we move through the year.

Nick: Thank you.