Half Year 2025 Diageo PLC Earnings Call - Q&A
It is thoughtful apply to this conference is being recorded we're now ready to start the <unk>. Please go ahead.
Speaker Change: Thanks, very much good morning, everyone and welcome to <unk> first half fiscal 'twenty five adult Q&A I'm finally, Gabrielle <unk> head of Investor Relations and I'm joined this morning by Deborah Cruise C N and Nick time Gianni CFO.
Speaker Change: Just to remind listeners on the call and then the discussion today the company may make certain forward looking statements, including those for our to our estimates plans and expectations. Please refer to this morning's announcement on the company's U K U S filing for more detail.
Speaker Change: Factors that could lead actual results to differ materially from those expressed in or implied by any such forward looking statements.
Speaker Change: Hopefully you've all seen this morning's press release and presentation for those listening to our webcast who'd like to ask a question. Please use the dial in details included in today's press release with that I'll hand, the call back to the operator for your questions.
Speaker Change: Thank you.
Speaker Change: Noted that spot followed by one on your telephone keypad philosophy question study.
Speaker Change: And our first question comes from Simon <unk> from Citi. Please go ahead. Your line is open.
Simon: Thank you Debra Nick so on yes.
Speaker Change: So two questions from me really.
Speaker Change: Firstly, just ask a little bit about the organic sales outlook into the second half clearly youll still talking about sequentially improve.
Speaker Change: How broad based.
Speaker Change: All your expectations. So the sequential improvement at the regional level and in particular do you still expect to be able to deliver positive organic sales growth in the U S. In the second half even if you begin to lap up against the successful launch of Crown bolt, Blackberry and perhaps associated with that and if you could talk a little bit about any innovation plans that you have.
Speaker Change: Specifically for the U S market in the second half.
Speaker Change: And then my second question was just around the H two.
Speaker Change: Organic margin and EBIT growth outlook.
Speaker Change: You've clearly flagged Mr. Nick in your presentation remarks, the ongoing investment to digital go to market stuff costs et cetera, all weighing on profitability in the second half, but we haul seeing hopefully that improvement in organic sales growth coming through and we should be seeing more productivity savings dropping through in the second half of the year. So I'm just trying.
Speaker Change: Just square the circle really as to why that's H to profit growth forecast is a little bit lower than we might have expected.
Debra: Hi, Good morning, Simon this is debra.
Yes, so I'll take I'll take this and then Nick may want to add in particularly on the on the second question.
Debra: First on organic kind of sales outlook.
Nick: Look we're very pleased to be back in back into growth and I would say when you. When you look at that at a regional level and four out of the five region I think APAC is still an area.
Debra: In China, specifically driving that.
Debra: Where I would say we continue to expect an outlook.
Debra: That is it is tougher.
Debra: Just from a macroeconomic conditions that being said I would.
Debra: I'd say everywhere else, where we would expect we've seen momentum we're seeing that resilient growth in Europe, and we're expecting that.
Debra: Also to continue on <unk> is really doing very well, even though we are lapping now this is the eighth consecutive quarter of double digit growth. So.
Debra: But we are really seeing some good strong growth behind Dennis as well as look in eastern Europe were also seen Johnnie Walker as well.
Debra: And then when you tick through Africa, despite the macro economy there.
Debra: <unk> seen.
Debra: Really good growth.
Debra: That's one where I would say once again momentum they're navigating a lot, but we are still feeling about our ability really good about our ability to deliver there in things like the asset light strategy really paying off for us when you look at how we're doing.
Debra: Particular, if you remember we just did in Nigeria.
Debra: Sales in Nigeria.
Debra: Really quite quite strong right away after the back.
Debra: The improved distribution system that we're now part of there.
Debra: When you go when you go in then to North America North America.
We expect to continue to.
Debra: To show improvement, Yes, we are.
Debra: Lapping Blackberry, but of course, Blackberry didn't come in until about halfway through the half last year and it came in under kind of a limited edition, where we are looking at making that a permanent skus. So that will certainly help us as well as we do have strong innovation pipeline. So we are feeling very good.
Debra: About the positive U S momentum, that's putting things like the tariff announcement aside which of course now has been paused for 30 days.
Debra: I would say that that's helping us feel better about that.
Debra: That outlook as well this is why before the tariff announcement, we were saying we expected sequential improvement.
Debra: From the first half into the second half and so I would describe that as fairly broad based.
Debra: As far as half to profit.
Debra: Yes, we expect those investments to continue.
Debra: As far as the benefit from those so things like supply agility, which is one of the main things that you would've seen our announcement on North America.
Debra: It just.
Debra: Came through on Alabama.
Debra: That's an investment in the second half that is not going to start seeing benefits really until fiscal 'twenty six.
Debra: And this is why once again pre the tariffs we were guiding in fiscal <unk>.
Speaker Change: <unk> 26, and beyond to start to really see operating leverage with organic operating profit outgrowing organic net sales I don't know, Nick if you might be.
Speaker Change: That's that's that's the critical point there I think we truly look at the future from an angle of being able to drive.
Speaker Change: True leverage through the P&L and that's whatever said free the tariff announcement, which obviously brings a little bit of uncertainty, but we're going to find ways to navigate through that and I'm sure we'll talk about that.
Speaker Change: 25 of those investments and remember.
Speaker Change: Please keep in mind that the investments that <unk> talked about that will start paying out but we did also call out clearly now if you look at the first half we are lapping this incentive piece that will also come through in the second half actually when you pull that out which is largely a one off.
Speaker Change: Half one was slightly ahead and I would say to you <unk>.
Speaker Change: Looking at the puts and takes if you excluded that in half two as well that would probably be a similar piece so right.
Speaker Change: <unk> got to keep that in context with plenty of one off and I would say to you.
Speaker Change: That's not the way we look at it going forward right, we would clearly look to offset that.
Speaker Change: With efficiencies with productivity and all areas that we might actually pulled back a little bit until we get back there. So for us it's really much more about phasing through what is some of the investments that have been made and those incentives, but clearly looking forward.
Speaker Change: Looking to growth at a higher level than our top line growth and Thats clear and that will continue on through.
Speaker Change: 26 and beyond.
Speaker Change: By the way Simon I, just realized I left out Latin America in Latin America has definitely has a clearly.
Speaker Change: And easier lap from last year as we were destocking. So I wouldn't forget about that I also.
Speaker Change: Another benefit speaking of Destocking that we would.
Speaker Change: We have on the North America front is also there was some retailer destocking if you remember from last year too so.
Speaker Change: There are some of those things in the background as well that just mechanically also help us, but we are feeling good about that the kind of broader based momentum ex China that we're seeing across the various regions.
Speaker Change: That's very helpful. Thank you guys.
Speaker Change: The next question is from century Downs from UBS. Your line is open. Please go ahead.
century Downs: Hi, Deborah next three questions from me, please firstly coming back to the U S. Can you just talk a little bit about what you're seeing across shipments depletions missile out it feels like Youre still out we're trending ahead of depletion. So are you still see retailer destocking in.
Speaker Change: In the first half of the year.
Speaker Change: Secondly, the unit can you just help us quantify the annualized impact on profitability.
Speaker Change: The mitigation of the tariff.
Speaker Change: If it does come through in this covenant.
Speaker Change: And thirdly in your prepared remarks.
Speaker Change: Quite a bit about stepped up focus on operating leverage in the business I think.
Speaker Change: GOP margins peak to around 32%.
Speaker Change: Reasonable kind of benchmark to think the business can get back into full at the pump. Thank you.
Speaker Change: Yes.
Speaker Change: I'll take the first one on the U S. So so far not seen so destocking there.
Speaker Change: One is I think.
Speaker Change: Absolutely in the appendix I think we've put in the one chart that showed the Nielsen naphtha data, which remember does only track it isn't it isn't a perfect to 40% roughly of the U S.
Speaker Change: And then our Depletions and NSP and we kind of brought that back by popular demand.
Speaker Change: I would say is that now we're seeing between Depletions NSV in NSP.
Speaker Change: These are running within a point of each other so they're very close.
Speaker Change: And our Depletions are generally running pretty close now when you look on a brand by brand basis to Nielsen naphtha.
Speaker Change: Difference, there quite honestly, especially a year.
Speaker Change: Is it depends upon how much that retailers bought in kind of prior to the holidays and then how the holidays actually do.
Speaker Change: So and remember also there is kind of a weird thing in Nielsen NAFTA This year, where new year's Eve is not in December near these actually in January data. So that really makes the difference of bidding fell out. So there is there's just some moving pieces in there, but I would say.
Speaker Change: Talking to the team on the ground. They would say retailers were a little more cautious in their buying but they wouldn't call. It a destock or anything it was more about just cautiousness.
Speaker Change: Going into the holidays. So we really feel like that is that's behind us and certainly I'll just remind our inventories are at levels, we're very comfortable.
Speaker Change: Very appropriate for the environment that we're in.
Speaker Change: Yeah.
Speaker Change: And then Ned.
Speaker Change: If you want to talk about Terra yes.
Speaker Change: So listen.
Speaker Change: It's a pretty fluid situation as we all know just given how the last 48 72 hours have played out.
Speaker Change: But if you look at the U S about 45% of fund net sales of products sold on maiden EBIT, Canada, Mexico, just given the geographic origin requirements.
Speaker Change: But when you also break that down further the vast majority of that so let me just give you some color on what we see today is kind of the.
Speaker Change: Gross exposure on an operating profit level. If you look forward now planning for March one so four months, we're talking about.
Speaker Change: Circa $200 million.
Speaker Change: Gross exposure on operating profit with 85% of that being largely on tequila, which is an industry wide issue right. So you've got in mind.
Now when we look at the fact that this is not something that we.
Speaker Change: We are sitting back and waiting on we were anticipating and scenario planning and so we feel today, we have good line of sight of being able to mitigate approximately 40% of that.
Speaker Change: But some of that would come in more <unk>.
And the inventory management I'll come back and talk about that in a moment some will take a little more time and that 40% is three and pricing decisions you might make right I'll come back on that as well so on the inventory management building months at this point there is no doubt.
Speaker Change: In our half one numbers in fact, particularly on the kilo when you look at it.
Speaker Change: Outflows and these sales have been so strong I would say back to Debbie's point I mean, yes, some of the distributor with a three tier system.
Speaker Change: Knowing that if such strong growth would probably be looking at that levels, but nothing unusual when you look at our overall.
Speaker Change: And Depletions right. So all good that what we did do is make a concerted effort as we went into the beginning of the year to bring in some some inventory and that's going to help us as we look forward.
Speaker Change: The other pieces that we're looking at is clearly some supply chain optimization with the U S team.
Speaker Change: More to come on that over time, but the other piece also is we've already been looking at overheads and what might be reallocate.
Speaker Change: In terms of spend.
Speaker Change: Across various buckets and all savings to be able to offset some of this and then the last piece as I said is the pricing dynamic.
Speaker Change: Before.
Speaker Change: That's 40% mitigation does not include anything on pricing the last time around debit or correct me if I'm right I think when the tariffs were put in we actually with all of that on pricing I was going to say last time, when we navigated tariffs I mean, we actually pushed it through 100 block that right on pricing so.
Speaker Change: But so it's good to see that we've got mitigation.
Speaker Change: Correct before we even have to consider that and I think particularly in this more cautious environment right now.
Speaker Change: That's not to say pricing isn't off the table, but it's just not the first thing that we would go forward given that we already have some mitigation and we'll look at the consumer environment. What competition is doing but also I think gauge the timelines of which these tariffs might stay Omar let's let's look at that too. So I think we're going to come back on that so hopefully that's clear.
Speaker Change: In terms of the impact to your last question around.
Speaker Change: What we wanted to do and what we want to drive in terms of operating profit leverage and the margin number I'm not going to comment on a specific margin target other than saying I don't think theres any structural changes in the business that would preclude that but having said that I think debra and I are.
Speaker Change: Fully aligned around how do we grow our absolute dollar of gross profit and operating margin as opposed to just percentages right. Because I think there are choices and decisions that are right for the business that we should be looking at that bring us incremental top line and incremental dollars.
Speaker Change: We're not playing in today.
Speaker Change: Thats ultimately, what we take to the bank and that's what we're committed to doing.
Speaker Change: We look forward to.
Speaker Change: Hopefully that's clear.
Speaker Change: Great. Thank you both.
Speaker Change: Yeah.
Speaker Change: Okay.
Andrea: The next question comes from Andrea <unk> from Bank of America. Your line is now open. Please go ahead.
Speaker Change: Thank you good morning, Deborah Sonya so two questions. Please probably a bit more for Nick then Deborah.
Speaker Change: So in the prepared remarks, you spoke about how you intend to improve the performance by applying more rigor and revenue management cost savings and how youre assessing the returns on marketing spend working capital. So basically shop, I think execution and a lot of areas.
Speaker Change: Are you going to ensure that this really filtered down through the organization do you need to change any processes incentive schemes appraisal process and when do you expect to start to see some of these benefits.
Speaker Change: Then.
Speaker Change: Definitely for Nick here.
Speaker Change: If we dig a little bit deeper on what you'd like to do on working capital cost savings can you talk about where you see the main opportunities here for extracting efficiencies. The point here is that the <unk> has had some strong CFO over the years going back to the edge recast Kathy Nichols and they've already done a lot on cost savings on working capital so as.
Speaker Change: INTL opportunity.
Andre: Yes, so actually Andre I'm going to I'm going to answer the first one on <unk>.
Speaker Change: Operator.
Speaker Change: So look I think there are so many opportunities and and I think from the.
I've said this many times to several.
Speaker Change: Investors have asked me I think one of the reasons I was excited when I met Nick as I felt like it would be perfect for the ico.
Speaker Change: In this moment and it's.
Speaker Change: He has gone out and looked at the business.
Speaker Change: Independently at times and then it's come back we've been Super aligned on where we see opportunities.
Speaker Change: Because to your point look we've had a lot of programs.
Speaker Change: I will also say that there is so much more opportunity here. So I mean revenue growth management is it good.
Speaker Change: Is it good place to start at the top of the P&L beyond pricing, we've got so many opportunities and pack price architecture, I mean, one of the things driving our our great momentum in the U S are things like small sizes.
Speaker Change: The $3 75 sizes that we've launched and Don Julio and <unk> and 1942. These had incredible momentum and that is helping us in that with that consumer that is cash strapped right now be able to afford our.
Speaker Change: Premium brands for the amount from their wallet that they want to spend on an alcohol and so.
Speaker Change: I think things like pack price architecture quite honestly in this industry.
Speaker Change: Just it's kind of nascent compared to what it could be.
Speaker Change: Hello optimization, we've got a lot of opportunities across the world there as well as.
Speaker Change: Even in trade terms in certain markets when we look at Cogs.
Our Cogs are still higher than pre COVID-19 levels and so we do see.
Speaker Change: Our supply team has a big productivity agenda and many of those things are starting we are starting to see particularly around remember we've made investments in supply agility those benefits really start hitting the P&L in fiscal 2006 and beyond so that will those will.
Speaker Change: That'll be a big.
Speaker Change: Part of that productivity agenda. We also made investments in digital things like discuss intelligence platform that is helping us optimize inventory.
Speaker Change: When you look at the amount of digital investments that we've made into marketing and we already see everywhere, we're putting the systems and it's helping us everything from AI, helping us do Biddable media, helping us.
We have creative X, that's helping us now reduced our non working costs as we create we can.
Speaker Change: Create thousands of.
Speaker Change:
Speaker Change: Creative around the world and to be able to test. These in some cases before you even put them on their digital platforms.
Speaker Change: A lot of opportunity in our creative development process.
Speaker Change: And reducing non working I think Nick mentioned that in his script, we actually have restructured you asked about what do you need to do and incentives.
Speaker Change: Structure et cetera, our marketing team has actually moved into more of these agile brand communities, we're calling them and conscious create teams, helping us to more effectively.
Speaker Change: Produce creative that will be customer.
Speaker Change: Customized inappropriate for various markets, but we can do it faster we can do it cheaper and and we've already started that.
Speaker Change: Certainly.
Speaker Change: The team is very well in since it around not only investing for growth, but also to increase the resilience and.
Speaker Change: Both are our financial P&L as well as our balance sheet.
Speaker Change: And I think look next helped us and really taking a look and stepping back on.
Speaker Change: You mentioned working capital, but also just in our are our choices and pacing of some of our other investments in capex.
Speaker Change: And so the team is really behind that as well, which will also help us with just agility and resilience. During this uncertain time, making sure we make the right investments for the long term, but also paying careful attention to what we're seeing in the <unk>.
Speaker Change: <unk>.
Speaker Change: Nick absolutely well understood I'm, just going to build on a few of Deborah points is the great thing is.
Speaker Change: I think firstly I would I would echo what Deborah said when I came in I started going up and every time I would say something too she's like yes, yes. That's what we do see margin percentage was a perfect example of us when I spoke to hub literally after four weeks of being here.
Great margin business, but as always in some way a margin percent obsessed business endeavor immediately say, yes, when I said I want to focus on cash and cash margins right.
Speaker Change: <unk> dollars as you'd like that's the way we go to go. So there is a lot of alignment as we've gone through this right. So <unk> is a great example, right that was talked about it but I think what we're trying to do is now bring it together in a more a lack of a better would codify and structured way with sharing of the best.
Speaker Change: This is that we can move on quickly right and build more central capabilities marrying up with the local capabilities right. So I think that's one of the things that we've kicked off right away.
Speaker Change: I think when you look at it from an angle of commercial excellence right. We both come from a consumer goods environment, where I think we have a lot of opportunity left.
Speaker Change: Look at what we're doing in store, but also on premise right.
Speaker Change: I was looking at some data points, we've got now data on premise in 40% of our markets based on NSV.
Speaker Change: And clearly with just that data and the focus in seven of those 10 markets actually been able to drive much better metrics in terms of displays on menus back bars Haas sales et cetera, as it comes back to when you have the data and you bumped. The focus you go do it right and theres going to be a lot more that we're doing.
Speaker Change: In that space.
Speaker Change: As you look at our A&P spend I think there was talked a lot about the <unk> side and everything that we're doing on media the conscious create teams, which are really bringing global and local teams together.
Speaker Change: That gets a lot more buying right right at the top efficiencies AI et cetera, but I actually think we have a big opportunity as you also look at the.
Speaker Change: The promotional spend piece and are we getting truly the best returns on those dollars are we investing them in the areas that are going to give us the best returns in a short period of time right. So I think there is opportunity there as we look forward.
Speaker Change: I think to your point around clearly listen im not coming in and seeing that we've got a huge amount of space and all that when you look at overheads as a percentage of MSP actually yes.
Speaker Change: <unk> is in a great place.
Speaker Change: That doesn't necessarily mean, we're doing things as effectively and efficiently and leveraging what we have for instance in terms of all.
Speaker Change: Integrated shared service centers that are out there.
Speaker Change: In Bangalore in Delhi in Manila in in.
Speaker Change: Budapest in an integrated way to really leverage on where we want to have best in class capabilities that differentiate us and how we might think for instance around things that are.
Speaker Change: No most of the business, but do we really need to have.
Speaker Change: House, but how do we automate that quickly before we start thinking about the ability to to potentially think about what we do in house versus outsource and actually use the capabilities that we have to have something to build up more differentiated.
Speaker Change: Capabilities over time.
Speaker Change: I do think on working capital there are some opportunities I think <unk> touched a little bit on inventory I think as we look at our investments in maturing liquid as we look forward we have to leverage what we have we have the best stage liquid for sure right and we've got to look at that from a positive in terms of what we can do on pricing.
Speaker Change: To differentiate ourselves right, we won't bring broader pricing discipline into how we think about what we do each year, but also on the elements of how we think about the investments of laying down further and how we deploy and how we bundle et cetera, and what we're holding in terms of.
Speaker Change: You know what.
Speaker Change: Was let's be honest built on much higher growth forecast, we have an opportunity to look at that I think is an opportunity we need to look I think the procurement teams have done a phenomenal job on AP right, but I do think we have an opportunity on that I am working with the commercial team on in terms of how do we actually build that in so theres going.
Speaker Change: To be pockets of stuff in each of these areas that we're going to go off the hot because ultimately it's about what are the things that we can do that are self help with with urgency and speed to help us build operating leverage bill more resiliency dropped Eni and ultimately drive stronger cash flows to help us deleverage and get.
Speaker Change: A more flexible balance sheet.
Speaker Change: Okay. Thanks for all this color.
Speaker Change: Yes.
Speaker Change: The next question comes from Mitch Collett from Deutsche Bank. Your line is open. Please go ahead.
Mitch Collett: Thanks Deborah.
Speaker Change: Good morning.
Mitch Collett: Yes.
Mitch Collett: It is.
Speaker Change: Alright, the U S consumer appears pretty healthy in some other categories. So I'd love to get your perspectives on why spirits overall remains soft and I appreciate you've done better than the market in recent months.
Speaker Change: What do you think is holding spirits back because there's still a post COVID-19 unwind.
Speaker Change: Or is there something else happening, which I guess.
Speaker Change: So my second question, which is I'd love to get your latest thoughts on some of the perceived structural headwinds to that.
Speaker Change: That's great for ready to drink <unk>.
Speaker Change: <unk> said in kind of this and I guess, what seems to be a growing narrative around our core motor racing to help do you think those are real risks and if so what are your plans to offset those potential challenges.
Mitch Collett: Okay. Thanks Mitch.
Mitch Collett: Look I think so let's talk a little bit about because youre, absolutely right coming out of.
Mitch Collett: If you look at North American and particularly the headline macro numbers.
Mitch Collett: They are certainly improving and I think give us a lot of.
Mitch Collett: I guess cautious optimism.
Mitch Collett: On.
Mitch Collett: Wages are growing faster than that inflation and have them for some time now youre seeing jobs and I know in the latest jobs report actually restaurants, and hospitality where the ones.
Mitch Collett: No.
Mitch Collett: Most jobs where gain.
Mitch Collett: So that's certainly good.
Mitch Collett: We are continuing to see and have continued to see for a while now and just gradual improvements on sentiment we've gotten beyond the election.
Mitch Collett: With a clear result.
Mitch Collett: So all of these things were are quite positive at a headline level I will say, what's holding us back I do think you have to take down to the household level and thats really where and it's not just us we're seeing this broadly across the consumer kind of industry in the sense that.
Mitch Collett: Remember, we're still looking at if you're at your household Youre still looking at grocery basket prices that are at 30 year highs consumer prices. If you look across kind of all consumer goods. There are about 25% higher than what it was in 2019.
Mitch Collett: Credit card debt levels are are increasing and have increased really since 2022, I think they're up something like 30%.
Mitch Collett: <unk> got borrowing cost because you know we're not seen rates come down interest rates come down. So that means. It's these are highest interest rates in 20 years, it's just taking a while for consumers to dig out of that.
Mitch Collett: So I think it's less about post COVID-19 at this point, but more about that call. It the inflationary.
Mitch Collett: Inflation is Doug in for and has persisted.
Mitch Collett: Over a good amount of time here and people have acquired debt that now it's just going to take a while to come out of it. So I will say, though from an industry standpoint, we are seeing improvement so youre seeing across consumer goods, you're seeing volumes start to improve a little bit certainly they are not as negative as what they were.
Mitch Collett: When you look at the industry I know I was saying six months ago, when I reported on fiscal our fiscal 'twenty four.
Mitch Collett: The industry was growing low single digits volumes were down 2%.
Mitch Collett: Actually in the last half volumes now are starting to recover their down like a half a point versus being down 2%. So volumes are starting to recover now the total industry value has suffered because.
Mitch Collett: This mix has come down to kind of.
Mitch Collett: Help buttress that that volume recovery. This is where we cut differently. We are outperforming here, we're doing something different or volumes are also recovering you can see in Nielsen naphtha on a 12 month basis.
Mitch Collett: Our volumes were down 2% in the last three months they've been down about one.
Mitch Collett: However, at the same time, our price mix is holding so.
Our price mix across this time period has helped.
As to grow and that's because of the strong mix and premium innovation of what we're selling.
Mitch Collett: So.
Mitch Collett: So I think that.
Mitch Collett: That's kind of when you take a look at what we're seeing in the industry. We still look at this and say this is really largely more cyclical than it really is structural.
Mitch Collett: The other thing I'll point out is the success of the small sizes I think this really points to I keep coming back to this because it just shows you. If you look at the category once again, what's recovery in volumes right now in total industry is at the higher end and it's because of the small sizes. So it is the $3 75, and the 50 ml of 1942.
Mitch Collett: Sure.
Mitch Collett: Which is quite an interesting phenomenon because you are still spending a fair amount of money for that bottle, but it just shows you that people are still a little low cash strapped and so that's that's what's helping kind of butter soft MRI guided capital of RG Emily at work absolutely.
Mitch Collett: And then look you wanted me to comment on the structural versus cyclical some of those structural arguments that are out there I mean Gen Z and we've talked about this before a little bit there is a state of preference.
Mitch Collett: For moderation that being said, we are still seeing household penetration for that generation plus 3% theyre coming into spirit.
Mitch Collett: Faster than millennials did by the way that household penetration number I'm talking about is household penetration for spirits. So this comes back to the offset for us in particular.
Mitch Collett: Even if their per caps are down so to speak they are coming into spirit faster and so that ultimately is helping us.
Mitch Collett: And then look every new generation theres different preferences and things that they do we see some of this kind of zebra striping behavior as opportunity for us actually particularly in several markets. So I would say Europe is really where we're seeing the most growth in non alcohol.
Mitch Collett: Appearance and beer and so where we're taking advantage of that and that's actually part of our growth as well is you have to think about the opportunities non out presents US then I think things like cannabis.
Mitch Collett: Look with cannabis and particularly in some states now has been legal almost 10 years. So we've been able to look a lot at I would call the legalized cannabis market.
Mitch Collett: You know and we really don't see a material impact outside of the fact that that does take a percentage of their wallet.
Mitch Collett: So it's just like any other consumer good, but we're not really seeing a big impact, particularly on spirit. There is this hemp derived THC.
Mitch Collett: I would say.
Mitch Collett: That category that has exploded in some areas.
Mitch Collett: What I would say that it's you know it's quite early as soon as regulatory kind of gray area. Some of that's been brought in the mail and other things.
Mitch Collett: Once again is gaining distribution and trial anecdotally retailers are telling us that.
Impacting RTD sales more than anything else, just because of the format more than anything else and it's.
Mitch Collett: And there is a bit of a maybe a wellness angle to it like I said, it's early days on it we're watching it but that's what I would say about that one and then <unk> one.
Mitch Collett: That's another one early days, we're monitoring it but I think it's something like 40 million Americans.
Mitch Collett: So certainly you would expect to be seen as in the data in a greater way if it were having huge impact what.
Mitch Collett: What I would say is it's hard to see a distinct impact from just overall moderate moderation trends that we've been seeing and kind of following for decades, which is people want to drink better not more there.
Mitch Collett: There are some limited studies out there theyre, showing not really material impact, particularly for premium spirits.
Mitch Collett: If they have an impact it's more on.
Mitch Collett: Volume kind of base, which is certainly not something that we promote them.
Mitch Collett: Within our industry.
Mitch Collett: And I think I've covered all yes. Thank you.
Speaker Change: The next question comes from Gen crossover BNP Paribas John Your line is open. Please go ahead.
John: Good morning, Thank you for questions, Hi, Deborah Nick and Sonya a.
John: A couple from me just reading some of the presentation slides it seems that youre pointing to more of a focus on cash generation returns in operating leverage even more rigorous review of Capex plans and investments and maturing liquids.
John: When I come back to the messenger messaging before would it be fair to say this reflects a lower mid terms sales growth opportunity in some of your categories.
John: A link to this I know you talked about some of the structural versus cyclical arguments.
John: Second it goes to the last question, but.
John: Could you just say if your confidence in the U S spirits market returning to its historical 45% value growth algorithm has changed at all.
John: Finally, if I could just ask a quick one on the dividend.
John: And what consensus estimates are pointing to dividend cover being below your one eight to two two times target range for the foreseeable future.
John: There is obviously before any potential impact from tariffs. So I guess my question is to what extent does the dividend target cover.
John: Really matter.
John: Yes.
John: Keith.
John: Yes, I'll take the first couple of questions and then if you can talk about the dividend I think.
John: Look on maturing liquid.
John: Remember that we there's a couple of things that have happened within that that we had to invest incremental money. If you remember first is.
John: Coming out of the Covid Super cycle, we had depleted a lot of call. It the the reserves kind of within that.
John: And so I think particularly on the Scott side, there was a bit of a catch up there was also we had shut down some distilleries.
John: At the early part of Covid as well that also there was a bit of a recovery.
John: Of that Scotch maturing liquid.
John: As you know call it a bit of a one timer in the sense of it's making up for that.
John: That super cycle.
John: There was also at that same moment. There has also been the acceleration of tequila and particularly the acceleration of age liquids. So guys I mean within tequila things like revenue side is now 30% of the category.
John: So of course, these things arent, aged as long, but certainly it goes into our maturing stock numbers and that build up particularly as we were bringing in house a lot of the distilling and building up our capabilities down in <unk>.
John: And that also had a.
John: A massive impact on that maturing liquid growth and then of course also even things like Ron where aging realm as well.
John: Not just Scotch.
John: And then also bringing in and you know and up the distilleries.
John: For Bourbon.
Speaker Change: For bullet. So there was there was quite a bit going on in the maturing inventory space I think what what Nick is talking about is he really brought a nice kind of scenario planning around some of this because not all of this liquid is 10.
Speaker Change: 10 year, plus Scotch some of this is of course and in fact, a lot of these other categories. None of them are really that as long and so there is a.
Speaker Change: A bit more flexibility around that and also with the softness in volume over the last.
Speaker Change: Call It 18 months or so it does present opportunities.
Speaker Change: So that's the type of thing we're looking at it doesn't necessarily point to lower growth what it points to though is just optimizing that for the right time and.
Speaker Change: But hopefully this assures you line is that we continue to look at that and make sure that we've got.
Speaker Change: The optimal investment in that area onto your question about.
Speaker Change: Nam and kind of North America, and kind of getting back to a mid single digit.
Speaker Change: Growth for spirit, what I would say is.
Speaker Change: Remember the things that underpin historically that mid single digit growth. So first on volume it's really about.
Speaker Change: Total beverage alcohol and the LDA plus population that agents into that.
Speaker Change: That's a pretty steady trend for decades, and there is nothing that has changed and that we're actually not seeing <unk> being generation.
Speaker Change: Dollar generation, so we're actually seeing from a population growth coming in there is nothing that would undermine that.
Speaker Change: It's gaining share from beer and wine.
Speaker Change: I would say is as most recently has probably been a bit more wine versus beer. It's also it's not.
Speaker Change: Sourcing quite as fast some of this is just the law of large numbers.
Speaker Change: Household penetration now for spirits is about 70% versus 77, Theres still an opportunity.
Speaker Change: But it is.
Speaker Change: I would say is we're still gaining from beer and wine, albeit it's a little bit slower, but once again, that's only ever accounted for about a half a point to a point. So you have kind of on volumes I would say there is nothing structurally there going on.
Would prevent you from getting there and then you are already seeing like even look at our price mix for the half at 3% I mean, that's a pretty good price mix.
Speaker Change: For history, and I would expect that for the rest of the industry as the volume start to recover. He will also see that price mix comes back anytime people are buying more whiskey and tequila like they are in our portfolio. It does help overall price mix and in the category I will also point out things for us like Ketel one.
Speaker Change: <unk> is doing well and Thats certainly a super premium.
Speaker Change: Vodka so.
Speaker Change: Theres nothing in there that I'm seeing that says it can't get back there I do think the caution is just in the broader consumer.
Speaker Change: Kind of macro environment.
Speaker Change: It's a tough environment and it's and I think look I think there's a lot of things that are going to improve there, but it's just it's just a matter of time.
Speaker Change: And then you want to think dividend, yes, Im just going to.
Speaker Change: In some ways I think it builds a lot from what you said right I don't think.
Speaker Change: Firstly anything that we're doing to drive.
Speaker Change: Better cash generation means that we don't see growth right. So just to be very clear.
Speaker Change: We would expect to see growth and we would expect to see growth coming back to <unk> point, it's more just about the shorter term visibility issue.
Speaker Change: We're focused and then on what can we do and the big things that we should be doing all focused on cash generation, improving our leverage making choices and decisions on where we allocate and spend money being a lot more focus on returns I mean, those are all great things from a financial discipline perspective, which.
Speaker Change: Doesn't in any way mean that even as growth comes back we wouldn't keep that focus right. So I actually want to make sure that that's clearly understood.
Speaker Change: I think it's a highly ash.
Speaker Change: Cash generative business, but we can do more and that's some of the things that we're focused in on.
Glenn: We reviewed it Glenn.
Glenn: And then made that active decision to keep that dividend flat I think it's a prudent thing to do in this current environment, but having said that over time, we want to remain committed to growing our dividend in a sustainable manner and we will also look to maximize total shareholder returns, which I think is a key priority for US right. I think you asked about the dividend.
Glenn: Cover.
Glenn: It's a fair point in terms of what it looks like but I think for us it's much more around how do we grow that over time sustainably, but get the balance right as well with total focus on maximizing shareholder returns. So I think thats all I would say for now on that piece.
Glenn: Thank you okay. Thank you very much.
Speaker Change: The next question comes from Edward Mundy from Jefferies. Your line is open. Please go ahead.
Edward Mundy: Good morning, everyone. Thanks for taking my question.
Speaker Change: Three please.
Speaker Change: When you read the presentation.
Speaker Change: Clearly, you're seeing broad based recovery and there's an awful lot cooking below the surface to drive consistency operating leverage cash returns, but it has a slightly tight given this tariff overhang.
Speaker Change: Something that's very very dynamic.
Speaker Change: I guess, if tariffs were to disappear.
Speaker Change: How do you think about a reasonable framework and the very broadest of terms.
Speaker Change: Relative to CPG I mean, do you think you can grow that sort of top quartile Endo CPG is the first question.
Speaker Change: With operating leverage.
The second is on Jim.
Speaker Change: People really want to characterize and trade down, but the bipolar pack given it's quite a big out of pocket.
Speaker Change: If people are buying a little bit of volume how do you ensure you get the volume throughput so important operating leverage for the model to work.
Speaker Change: And then finally on the U S. Clearly you are outperforming the industry.
Speaker Change: I think the growth is quite concentrated in two brands can you talk about some of the plans into next year.
Doug justify your growth streams, so having more windows, maybe cutting some of the losers and how do you think about diversifying your growth streams.
Speaker Change: Through the second half and beyond.
Speaker Change: Yeah, perfect I mean, I think so.
Speaker Change: Yeah look I mean the tariff.
Certainly the announcement over the weekend did create a little hand certainty about what that is and we were we certainly welcome to pause.
Speaker Change: Then.
Speaker Change: Was announced in the last 24 hours.
Speaker Change: That being said ex the tariff.
Speaker Change: We said this quite clearly in the presentation, we would you know.
Speaker Change: If that goes away altogether.
Speaker Change: We were very prepared to talk about sequential improvement.
Speaker Change: In the second half.
Speaker Change: With strong market share we were prepared to talk about fiscal 'twenty, six and outperforming TBA.
Speaker Change: With modest sequential improvement versus fiscal 'twenty five with operating profit ahead of of organic sales growth. So that is what we were you know very much prepared to do and and so had talked about it in that.
Speaker Change: In that sense.
Speaker Change: And then also we have committed and I think this is important and maybe.
Speaker Change: Okay.
Speaker Change: People haven't have forgotten this or.
Speaker Change: Lost it in the in the presentation, because I know, we put out a lot of information but.
Speaker Change: In the interim until we can come back and give you more definitive medium term guidance.
Speaker Change: We are committed to coming back to you more freight with more frequent updates to make sure that in this uncertain environment, we're giving you as much help and transparency as we can.
Speaker Change: To help kind of bridge this gap of.
Speaker Change: Of uncertainty so.
Speaker Change: I think that's all I can really say about that on the RG endpoint and small size is actually we're not overly dependent upon volume.
Speaker Change: So we feel very good about.
Speaker Change: These small sizes. We know these are great margins for us theyre, great cash for us.
375 bottle of 1942 is still a $100 so.
Speaker Change: It's a good.
Speaker Change: This is a good business for us and we feel good about it I think.
Speaker Change: On the U S and.
Speaker Change: Look I'm very pleased and that you know aside from <unk>.
Speaker Change: Brown I mean first of all crown, our largest brand being back into growth is.
Speaker Change: Is tremendous and we're gaining share in both the category and spirit Blackberry has certainly more runway run way to go as well as.
Speaker Change: Look it is really stabilizing the rest of crown as well, it's been quite incremental one.
Speaker Change: It's one in every five kind of buyers is actually new to Winski in this so this is.
Speaker Change: This is.
Speaker Change: This is a great things for crown.
Speaker Change: So I would say that Don Julio and <unk>, we're not done with those I mean, Don Julio.
Speaker Change: Yeah.
It only has household penetration of 5%.
Speaker Change: So there is a lot of runway for growth there household penetration ski was 33%.
Speaker Change: So lots of opportunity to build <unk> as double 1942 has done incredibly well, but we still have opportunities in the rest of the portfolio.
Speaker Change: And you know kind of more to come there <unk>.
Speaker Change: This is one that we are we brought if you remember at the end of the year, we announced we're bringing it into our dedicated division in stores. This is it's a turnaround. So this is a process that in stores, where we have actually implemented the right pricing strategy.
Speaker Change: We are seeing improvements we also have distributed $3 75, and 175 sizes.
Speaker Change: S Skus are growing as well in helping us.
Speaker Change: Stemmed some of the losses on costs EMEA.
Speaker Change: So we are feeling good we've launched a new campaign I would say on <unk>. So this is one off so that gives us if we can turn the tide on that would be an opportunity I mentioned ketel, one is doing really well.
Speaker Change: Certainly.
Speaker Change: Smirnoff in the second half, we've got some incremental innovation coming in.
Speaker Change: We are gaining share of Scotch even if Scott is the category.
Speaker Change: Is challenged right now, but most of that challenge is actually in the single malt area.
Speaker Change: Versus Johnnie Walker is actually gaining.
Speaker Change: <unk> share and doing well, particularly in black and Red. So this comes back to the brilliance of kind of Johnnie Walker's that we do span.
Speaker Change: Very broad priced across various price tiers and lack in particular is doing very well for us.
Speaker Change: We are also gaining share of gen.
Speaker Change: Category and we're also gaining share in the cores with daily. So we are seeing from a share standpoint very broad based.
Speaker Change: But what you are of course seeing is still an industry. That's under some pressure and so versus spirits that tequila growth has to go somewhere and but we are we do look at how we're doing versus categories and we're feeling good that we are diversifying and the team is certainly has strong plans.
Speaker Change: Across our key trademarks.
Speaker Change: I'm just kind of been on a couple of comments that were made so I think you asked a question specifically around unit can we be in the top quartile of <unk>.
Speaker Change: CPG growth and I would say categorically and absolutely yes, alright. So that is clearly focus on getting back then I think.
Speaker Change: What I would read today's announcement back to withdrawing the medium term guidance.
Speaker Change: Is more just around what that risk is.
Speaker Change: The pace of recovery and this was exacerbated by the tariff announcements, which clearly is very smooth as we've talked about right.
Speaker Change: But do we see favorable long term trends in the U S and beyond.
Speaker Change: Do we see anything structural no.
Speaker Change: It's just a question of timing.
Speaker Change: And to build on <unk> point, then what did we think was best now was to be focused more on the near term, particularly on things that we can manage and control right and that goes back a little bit too stuff, we've talked about on driving better operating leverage and focus that what we're doing in terms of cash generation et cetera.
Speaker Change: And more frequent communication has ever said as well right. So we'll be putting out in Q3 trading update.
Speaker Change: On May 19 in advance of that meeting.
Speaker Change: Investor event that we're doing in Dublin to showcase Guinness, which is actually where I'm gonna be find my first.
Speaker Change: With you guys. So I'm excited about that.
Speaker Change: Full year, we're going to be out with you August 5th.
Speaker Change: And then we're already planning for Q1 trading update probably in early November.
Speaker Change: There's going to be several touch points, where you might have seen that bromine Sonya.
Speaker Change: Youre going to have to deal with right. We're.
Speaker Change: We're going to be telling you more so I just think we have the ability to help.
Speaker Change: Shape the narrative as we go along.
Speaker Change: And hopefully continue to provide you good.
Speaker Change: Proof points of what we're doing to be able to take and manage what we can control.
Speaker Change: Great. Thank you.
Next question comes from Celine <unk> from JP Morgan. Your line is open. Please go ahead.
Speaker Change: Thank you and good morning, everyone.
Speaker Change: Question is on <unk>.
Speaker Change: Having the discussion on tariffs.
Speaker Change: I mean, clearly you do have what I would call them exclusive grew sounds Don Julio and you mentioned.
Speaker Change: The smaller pack as it has.
Speaker Change: How do you look at the sustainability of that growth and why is it that maybe cause semigloss has not done as well.
Speaker Change: And then I'd be path.
Kevin: Thank you Kevin.
Speaker Change: Hi.
Speaker Change: I want to loop price, if I gave me and the high inventory of Tequila, how do you see.
Speaker Change: Pricing environment across different price tier.
Speaker Change: And what I'm seeing in the U S.
Speaker Change: Sorry, just on that point to what you mentioned earlier on tariff given that the Mexican peso as weekend do you need at all to raise prices at this stage if Debbie if were to be implemented. So that's my first question.
Speaker Change: My second question could you talk a bit about Europe, excluding them.
Speaker Change: It seems that it does decelerated.
Speaker Change: And yeah, we'd like to get your thoughts on whats going on in terms of our pricing and fully I mean that region. Thank you.
Speaker Change: Yeah, So I'll start with them year to queue of questions. So.
Speaker Change: Yes, we really have seen explosive growth on on Don Julio that being said there.
Speaker Change: There is.
Speaker Change: Huge opportunity so fiscal year to date, if you look at the category.
Speaker Change: Growing about 6%.
Speaker Change: Don Julio within that and I'm going to just use the the Nielsen naphtha. So that way you have even comparison, they're growing 48%.
Speaker Change: Vast majority of that 80% of our portfolio now with Don Julio is an aged variants.
Speaker Change: So really where we're seeing a lot of the promotional aspects some of the things that you that you mentioned about.
Speaker Change: Promotional intensity a lot of the promotions actually happening at Blanco.
Speaker Change: And Thats.
Speaker Change: What I would say is is that we've got quite a different now.
Speaker Change: Now portfolio then.
Speaker Change: A lot of other competition and particularly within Don Julio.
Speaker Change: The aged variance now it's like.
Speaker Change: 80% of the portfolio.
Speaker Change: You can you can look at that on a Nielsen and see that so.
Speaker Change: So look I think we've got a lot of room to grow I mentioned in the household penetration is only at 5%.
Speaker Change: If you actually dig in to Don Julio State by state.
Speaker Change: What we start to look at and we there is opportunities, but we're still not number one in certain states and basic hela drinking state so.
Speaker Change: So we still feel like we've got a lot of room to grow there even though it has been quite a quite a good run for for Don Julio.
<unk> I will say a couple of years ago, we were extolling the amazing things in Hakkasan because it's it was growing at a 70% CAGR I think between fiscal 19 in fiscal 'twenty three.
Speaker Change: And one of the fastest growing spirits, not just into <unk>, but one of the fastest growing spirits brands ever.
Speaker Change: Absolutely also exploded, but I wouldn't say that.
Speaker Change: Within <unk> it was more of a blanco if it's more of a 50 50 between aged variants.
Speaker Change: And.
Speaker Change: And Blanco and.
Speaker Change: I would also say because of its success I think competitors targeted at its a newer brand.
Speaker Change: And then also we did not have the pricing strategy because of various out of stocks and other things that happened during COVID-19.
Speaker Change: We those out of stocks meant that a lot of retailers were taking margin and are frankly, our pricing strategy at shelf for consumer got quite out of whack from where it needed to be particularly on certain sizes.
Speaker Change: And certainly we have felt the impact of that.
Speaker Change: It was also one that we had staffed and lockup issues and we didn't have great visibility at shelf through has that was managed.
Speaker Change: So this is the opportunity as we brought it in house and have really been able to get them when you're in the general division of some of these distributors they are distributing.
Speaker Change: <unk> of Tequila now in our dedicated division is getting the loving care, along with Don Julio and you know our other three tequila. So it's it is definitely getting a lot more focus and attention we're seeing more execution getting back on the menus again.
Speaker Change: And so early days, but I would say, we're feeling good about that.
Speaker Change: And then look on the Mexican peso I mean this is one of the reasons why I think Nick gave you the.
Speaker Change: The mitigation strategies before pricing clearly pricing is something you would want to do when we do quite strategically and so theres a lot of factors that we would look at and really trying to understand what exactly we need to mitigate particularly in this consumer environment.
Speaker Change: But that means that we do feel like we we have invested heavily on the brand as well we do think it's a strong brand and it is the brand that can't take pricing if it needed to.
Speaker Change: Moving onto Europe.
Speaker Change:
Speaker Change: On Europe, what I would say is a couple of things. So again it is really the driver.
Speaker Change: Along with actually Eastern Europe, and Johnnie Walker, we are seeing a premium innovation kind of slowdown, particularly in northern Europe and southern Europe.
Speaker Change: Remember our portfolio in Europe is quite a standard price portfolio actually our long term opportunity is still to get more premium innovation into Europe.
Speaker Change: But actually in this environment.
Speaker Change: It stands up quite well.
Speaker Change: That being said, we have taken some pricing that we needed to take in northern Europe in particular.
Speaker Change: And that has held us back.
Speaker Change: I mentioned non alcohol earlier, our nonalcoholic portfolio in Europe is plus 56%.
Speaker Change: So we've launched in GB and in Northern Europe, We've got a captain Morgan's zero zero, we've got Tangerang zero zero Thats broadly across Europe.
Of course are getting zero zero in GB.
Speaker Change: Into these numbers as well.
Speaker Change: But we're absolutely the leader in non out.
Speaker Change: And.
Speaker Change: That's been a huge driver for us.
Speaker Change: For Europe.
Speaker Change: Yeah, and I would just add to that.
Speaker Change: It is anecdotal, but when I came into <unk>. It actually did surprise me.
Speaker Change: Around the fact that we didn't have a stronger premium business is beverages pulled out in Europe right now.
Martin: As Martin premium in Latin America.
Martin: Then it is in Europe, and that really surprised me right and I think the Denver said, that's going to be a strong focus on the two vectors of premium innovation as well as the non uptrend and are continuing to grow.
Martin: But I honestly think when you look at the spirits category here that will normalize and I think <unk> point around southern Europe remember what will suggest going into France now you've seen the announcement around the fact that we've come out of that JV. We've just set up an IMC that I think with the.
Martin: Focus I wasn't Italy, and the team of what they are doing that I think we're going to see a much different trajectory as we look forward.
Martin: Europe and amortization.
Martin: Spirits in particular, yes, France is a great whiskey market than we were.
Martin: Well ended about where we should be so big opportunity there.
Martin: Thank you.
Martin: Thank you.
Speaker Change: Our final question today comes from James that Jones from RBC. James. Please go ahead. Your line is open.
Speaker Change: Thank you.
Speaker Change: Couple of quick ones. Please you've told us to 45% grew U S businesses catering.
Speaker Change: Can you just.
Speaker Change: Just to round things off can you tell us how much the U S business is coach as well.
Speaker Change: And secondly, I don't know if you already said this I missed it.
Speaker Change: You talked about working capital what about capital expenditure.
Speaker Change: I think it's a steady state level of capital expenditure.
Speaker Change: Cros.
Speaker Change: I'm sorry can you see can you repeat the second question that you say, what's the likely capex that capex stays say okay.
Speaker Change: Yeah. So on your on your first question you asked about sort of Scotch.
Speaker Change: Yes, it's a 45% of the portfolio, we talked about this tequila Canadian whiskey.
Speaker Change: <unk>.
Speaker Change: How will we will break this out and actually more of just a Europe because I'm. Assuming your question is really around tariffs and sort of if tariffs were to come to Europe, and our U K nine those.
Speaker Change: Yes.
Speaker Change: Just just it'd be helpful. If 45 cents or tequila Canadian whiskey, how much just how much of your script I would say just looking at the numbers broadly <unk> points I mean, we're looking at costs in single malts as a percentage of the U S business being another 9% yes.
Speaker Change: So the bulk really of where we would see the hit or the impact is on tequila, yeah. So in Mexico, which was our biggest.
Speaker Change: Quite honestly.
Speaker Change: So yes, so Scott and then you do have look we have things like tank array we've got.
Speaker Change: Ketel one.
Speaker Change: I don't think it can come from Europe, and Baileys. So there's there's other kind of things going on we have scenario planned around all of them, though and I think just reassuring.
Speaker Change: Everyone. We've kind of we're also talking to people on all sides of this but.
Speaker Change: But hopefully that answers that question and then Capex yesterday, just to give that that that point on Deborah as we've talked about the broader piece when we've talked about that 45% being tequila and Canadian whiskey, you're talking about roughly 60% to 65 in total when you think about non U S. So we're not talking about a big piece and I'll start.
Speaker Change: Remember as I, just said spots in single months is roughly half of that.
Speaker Change: Right.
Speaker Change: <unk>.
Speaker Change: On steady state Capex, I mean, I'm ready to take this.
Speaker Change: We're looking at this with the team, but as we get through this hump and.
Speaker Change: Leverage and sweat the assets more I would like to see us more in that.
Speaker Change: Five and a half ish round number type of range of NSV going forward. So call. It a five to six type of range, but we will continue to hone that and come back with.
Speaker Change: Clearly a clearer outlook as we look to reposition and re prioritize.
Edward Mundy: That's great. Thank you Brooks.
Speaker Change: Perfect. Thanks.
Speaker Change: I'll now hand, the call back to Tamara Fischer for closing remarks.
Tamara Fischer: So thanks, everyone for joining today, our performance reported today demonstrates that we're making meaningful progress even though the environment remains challenging and will likely continue to be volatile given the recent tariff announcements as I said in the webcast. This morning, we are firmly focused on what we can control.
Tamara Fischer: We remain confident in favorable long term industry fundamentals and more importantly in our ability to outperform the market and we've shared today. Some of the actions we are taking to drive sustainable performance.
Tamara Fischer: This is an exciting time for <unk> and we look forward to updating you in our more frequent communication as we move through the year.
Speaker Change: I also look forward to meeting with many of you over the coming weeks and a cagny at the end of the month. If you have any other questions do let Sonya and the IR team now thank you.
Tamara Fischer: Yes.
Tamara Fischer: This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
Tamara Fischer: Yeah.