JDE Peet's N.V.

Thank you, Caroline, and good morning, everyone, and welcome to JDE Peet's earnings call related to our financial performance of the first half year of 2024. With me, Luc Vandevelde, Interim CEO and Chair of the Board; and Scott Gray, CFO.

In a moment, Luc will take you through the operational and financial highlights related to our first half year business performance. After that, Scott will tell you more about the financial performance in the first half, and we'll update you on our outlook for full year 2024.

After that, we will be happy to answer your questions. Our press release was published at 7 AM CET this morning, the release as well as the slide deck related to this call are also available for download from the Investor Relations section on our website.

A full transcript of this conference call will also be made available in the same section on our website as soon as possible after this call. Before I hand over to Luc, I would like to direct your attention to the disclaimer regarding non-IFRS measures and forward-looking statements on slide 3.

We would kindly like to ask you to read this information carefully. And with that, I gladly hand over the call to you, Luc.

Thank you, Robin, and welcome thank you for joining us on this earnings call today. I'm very pleased with this strong set of results, which I believe should be a pleasant surprise for all of you, with the robust broad-based performance across top line profitability and cash flow, despite operating in a very challenging environment that continues to be characterized by rising green coffee prices and an increasing demand for more affordable offerings from our consumers.

Our two recent transactions are now consolidated and the integration and their performance is in line with the acquisition rationale. I'm also pleased with our sustainability program and results are on track, as is the search for my successor.

Given our strong performance in the first half and our expectations for the remainder of the year, including the ongoing inflation and volatility in green coffee prices, along with the additional pricing that this will require, we are confident in raising our full year outlook across top line profitability and cash flow, which will also enable us to bring down our net leverage to below 3 times EBITDA within 12 months following the completion of the two recent transactions. Scott will provide a more detailed overview of our financial performance shortly, I will highlight some of the key financial metrics of the first half of the year, our organic sales growth was broad-based particularly driven by our premium products, as I think best illustrated by the performance of both Peet's and L'OR Barista in a US market, which I think you know, is experiencing some softness.

But both brands are positioned in the premium end of the market and doing very well. Adjusted gross profit was up 9%.

Also broad-based, with all segments contributing positively. Affected cost control, coupled with a level of A&P that was slightly up organically, resulted in a 17% organic increase in our adjusted EBIT, which supported our strong free cash flow of EUR315 million, bringing our net leverage down to almost 3 times adjusted EBITDA.

This overall of strong performance underscores the strength of our business, bolstered by our multichannel approach, diverse, high-quality product offerings, powerful brands, leading our market position, and the resilience of our organization. So let me on the next slide provides you with some of my main observations since I became Interim CEO on the April 1, of this year.

Based on the input that I received, the numerous conversations I've had with leadership and others and my own assessment, I firmly believe that the company is rightly configured and has the right strategic direction, even though we can improve our execution, driving short-term performance, whilst investing for the long term. We are capable of attracting and retaining high-quality management and talent.

However, I think we can also improve our overall performance by fostering greater collaboration and breaking down [indiscernible] within the organization. Our brands, research and development and manufacturing facilities are very well invested and state-of-the-art, but there is a need to cultivate a stronger return on investment mindset across all areas including marketing and R&D.

As the leading pure-play coffee and tea company, we apply unique business model with a multichannel approach, a portfolio of strong brands and a very diverse product offering satisfying all coffee and needs and [indiscernible] This model is operated with a lot of local autonomy and accountability in the markets which drives operating strength, agility and resiliency. These strong fundamentals positions us very well for long-term value creation and to successfully navigate all kinds of challenges.

Nonetheless, I've also identified opportunities to better leverage our scale advantage, which could further enhance our performance and in particular, I believe that our decentralized organization structure has sometimes led to a lack of focus and thinly spread resources instead of leveraging our international scale. As I said earlier, in H1, we have consolidated Maratá's coffee and tea business as well as the Caribou CPG business.

The integration is progressing very well with both delivering results that are in line with expectations and in line with the acquisition rationale. To stay relevant for our consumers and address the evolving needs and preferences, we have continued to launch a diverse range of new product offerings in coffee and tea, of which you can find a few example on this slide.

We're very conscious that our future largely depends on the continued evolution of our product portfolio, and we take great responsibility and maintain the high quality standards that our customers our consumers expect from us whilst also adapting to their changing needs and preferences. Whereas lowering the cost of product by using lower quality coffee blends is very tempting in a high inflationary environment.

We take great pride in maintaining or improving our products continuously. I'm also proud to say that we continue to lead in our sustainability journey as evidenced by the recent [indiscernible] from EcoVadis as highlighted on the bottom of this chart.

If you're wondering how we transformed from a laggard to a leader over the last three years. I would attribute it to two things.

First of all, the outstanding leadership of [indiscernible] our sustainability lead and importantly, our commitment to measuring everything we do by its environmental impact. So when we, for instance, assess new product offerings like the ones I showed on the previous chart, we not only consider consumer relevance, financial returns, but also how these new products contribute to our sustainability goals.

To the same extent that return on investment should be as well. And last but not least, I would also like to remind you that in H1, we increased our greenhouse gas emission reduction ambition, increasing our targets to be net zero by 2006.

So on to the second half priorities, as far as I am concerned, our wealth -- I'm thoroughly enjoying my role as CEO as you can imagine, my top priority is to find the right permanent successor. The search and selection process is progressing very well.

And I do intend to contract the success of before the end of the year. But all organization, secondly, after two to three years of significant and persistent inflation leading to successive, price increases, many of our consumers are becoming more focused on affordability.

And at the same time prices of our green coffee and ocean freight unexpectedly spiked again in H1 of this year, with coffee futures for Arabica and Robusta up 13% and 54% respectively versus the same period last year. Leading to a record high levels for [indiscernible] for example.

The green coffee inflation of the last quarters will hit our P&L in the coming quarters and thus inevitably necessitating additional price increases and continued cost discipline, which I think are essential in protecting our gross profit so that we can ensure that we maintain the right level of investment behind our brands, our products and our channels. Which I think is crucial for the driving growth and shareholder value and that is both short term and long term.

Therefore, we will remain laser focused on achieving and hopefully even exceeding our increased outlook, which Scott will discuss in a moment. And with that, I'll hand over to Scott and I'll come back at the time of the Q&A.

All right. Thank you, Luc, and good morning to all of you.

I will now take you through the most important financial highlights of this semester. And after that, I will go as usual into a bit more detail on our sales, adjusted EBIT performance by segment as well as our performance related to profit and cash and then an update on the status of our balance sheet.

I will then provide you with a quick reminder of our capital allocation priorities, and we'll finish my part with some detail about our improved outlook for full year 2024, as mentioned by Luc. Let's now go to slide 13.

Our overall organic sales growth of 3.6% as mentioned by Luc and his business highlights was driven by an organic sales growth of 3.4% and in home and 4.2% and away from home. In terms of profitability, our adjusted EBIT increased organically by 17.5% versus H1 '23, which brings the five year organic CAGR for adjusted EBIT to 4.4%.

We delivered underlying earnings per share of EUR0.76. When it comes to cash and debt, we generated EUR315 million of free cash flow and our net leverage stood at 3.12 times after closing two transactions within the semester.

Let's now move to slide 14 to take a closer look at our sales. Our organic sales growth of 3.6% was driven by 1.2% growth in volume mix and 2.4% growth in price.

The organic sales growth was broad-based across markets, brands and channels, as you will see on the following slide. The foreign exchange impact of 1.8% was mainly driven by the depreciation of the Russian ruble and the Turkish lira.

The 3.9% contribution from scope reflects the consolidation of the coffee and tea business from Marata since the start of the year and the inclusion of Caribou CPG business since the end of March. As a result, our total sales increased by 5.6% to EUR4,210 million on a reported basis.

Let's now flip to slide 15 to look at our sales performance by geography, channel, brand and category. Developed markets delivered 1.1%, while emerging markets grew by 10.8% organically.

Our developed markets delivered stronger growth as the semester progressed, driven by an improvement in volume mix. Channel wise, our in-home channels grew sales organically by 3.4%, while our away-from-home channels increased sales by 4.2% organically, bringing the five year organic CAGR for in-home to 6.1% and 1.3% for away-from-home.

Brand-wise, our global brands grew by 4.7%, while our regional and local brands together delivered 2.8% growth organically. And when looking at sales performance, from a category point of view, sales of single-serve beans and other premium categories like premium instance, together increased by 3.2% driven by our Capsules business.

The rest of the brand portfolio grew by 3.9% organically. Let's now go to slide 16, to look in more detail at our adjusted EBIT performance.

Our organic adjusted EBIT increased by 17.5%. What you see in the bridge on this slide is that our gross profit increased driven partly by sustained or higher pricing in response to this recent significant inflation and green coffee prices in H1 '24 that will impact our P&L in future months as a result of our hedging and higher landed cost of green coffee.

Given the development of coffee prices and the continued persistent increase in the total landed cost of coffee. It is important to have the right cadence and consistency when putting through price increase.

Our GP benefited from good category mix in the period. And we also had a one-off insurance payout related to a warehouse issue that had negatively impacted Peet's in 2023.

Our A&P spend was slightly up organically, while our other SG&A expenses rose moderately, reflecting our continued investments in our strategic growth opportunities and the ongoing inflationary pressures, particularly in areas such as freight and labor cost, which we partly offset through strong cost control and efficiency measures. Fluctuations in foreign exchange decreased adjusted EBIT by 2.4% and the consolidation of both Marata and Caribou increased adjusted EBIT by 4.1%, resulting in a reported adjusted EBIT growth of 19.2%.

On the next slide, slide 17, you see an overview of the organic sales and adjusted EBIT performance by segment. Looking at the top line performance per segment, you can see that all four segments delivered positive organic sales growth with three out of four segments delivering positive volume mix growth.

The only exception was APAC where the main markets experienced soft market conditions in both in-home and away-from-home. When it comes to profitability, all segments delivered strong growth except for LARMEA.

Let's now take a closer look at each segment one by one. In Europe, pricing remained relatively stable year over year, while volumes were impacted by retailer disruptions during the price negotiations as customers adjusted to the unfortunate reality of continued inflation in green coffee.

Most notably in the February to April timeframe. However, volume mix growth witnessed a significant rebound in the last three months versus the first three months semester, markets such as France, the Nordics and Italy and brands, including L'OR, Gevalia and Les 2 Marmottes drove organic sales growth.

The adjusted EBIT increased organically by 14.1% to EUR539 million in H1, reflecting the interplay of the phasing of inflation and pricing as well as a relatively low base of comparison in H1 '23. Europe's five year organic CAGR for adjusted EBIT was minus 0.9% as we gradually restore profitability in Europe.

In LARMEA, organic sales growth was driven by 2% volume mix and 9.8% price growth. Volume mix was softer due to challenging market conditions in Brazil.

While the strong price growth reflected the additional price increases required to offset the recent material price increase and green coffee prices. L'OR Barista continued its positive trajectory from H2 '23 into H1 '24, while at the same time, we maintained greater discipline in our investments related through this rollout.

Adjusted EBIT decreased organically by 10.1% to EUR125 million in H1, which mainly reflects transactional ForEx impact and the carryover effect of the brand transition in Russia in 2023 as anticipated. LARMEA's five year organic CAGR for adjusted EBIT was 12.6%.

And APAC organic sales growth of 0.8% was driven by an increase of 4.4% in price, which was largely offset by a decline of 3.7% and volume mix, reflecting overall market softness and the carryover impact from last year's SKU rationalization as well as softness in APAC's away-from-home business. Sales performance was geographically mixed, with strong performances in countries such as Malaysia and China, offset by softer performances in markets such as Australia and New Zealand.

The adjusted EBIT for APAC increased organically by 60% to EUR85 million, mainly reflecting a low base of comparison related to one-off costs from a temporary supply chain disruption and H1 '23 connected to one of our main manufacturing facilities in the region. Two, the interplay between pricing and the usage of lower priced, green coffee from inventories.

And three, the positive effect from last year's SKU rationalization. APAC's 5-year organic CAGR for adjusted EBIT was 13.9%.

It feeds the in-home and away-from-home businesses contributed quite evenly towards organic sales growth of 4.3%, driven by a 2.3% increase in volume mix and a 2% increase in price. Peet's in home business continued to deliver competitive growth and a continued soft market environment for most food and beverage categories and with good momentum as this semester progressed.

And Peet's US coffee retail stores, same store sales and ticket sizes were up. And China continued to deliver strong double-digit organic sales growth.

Adjusted EBIT increase increased organically by close to 42% to EUR97 million in H1' 24, reflecting strong operational performance, cost efficiencies and a EUR16 million insurance payout related to a warehouse issue that impacted Peet's performance and H1 '23. Peet's 5-year organic CAGR for adjusted EBIT was 16%.

Let's now take a look at underlying profit in absolute terms and per share on the next slide, slide 18. As you can see on this slide, our underlying earnings per share benefited from stronger organic operational performance in H1 '24, despite higher net financing costs.

Due to a temporary increase in debt related to the early refinancing of some maturities, which was partly driven by the timing of the closing of Marata and Caribou and the higher average cost of debt. And also by higher taxes.

Overall, the underlying EPS decreased by EUR0.09 to EUR0.76 in the first half of 2024, which was mainly driven by an unfavorable non-cash, non-tax deductible impact of EUR113 million from a change in the fair value of our equity derivatives related to the share price decline since year end. Excluding the aforementioned fair value change, the underlying effective tax rate would have been around 25% and underlying profit would have been EUR483 million or 17.5% higher than in H1 '23.

Let me now share a bit more detail on our free cash flow and net debt developments on slide 19. In the first half of 2024, our business generated EUR315 million of free cash flow.

This healthy cash flow performance reflects strong operational performance while absorbing slightly higher CapEx behind selected investments. Our working capital normalized over the course of the semester following our reduction of stock levels predominantly in 2023, while, inventory values increased in the period as a function of the significant increase of green coffee prices across the globe.

When taking a multiyear view, as we always do and averaging the last 12 month periods of free cash flow of the last three years, our average free cash flow conversion rate equals 65%. Looking at the net debt bridge on the right hand side, of the slide, it shows that our net debt position increased by EUR890 million, simply reflecting the transaction considerations related to Marata and Caribou.

On the next slide, slide 20, you can see the evolution of our debt and leverage. Well, as expected, our leverage increased from year end.

The increase in our net debt is again solely due to the two recent transactions. However, thanks to the combination of our strong free cash flow profile and EBITDA growth in the period, our leverage was already reduced steadily during the course of the semester, resulting in net leverage of just above 3 times.

So quickly trending back towards our optimal leverage target range of around 2.5 times. And as shown on slide 21.

Our debt has a strong maturity profile, with an average maturity of 4.2 years as the coming two towers have already been refinanced. We have no immediate funding needs as we focus on deleveraging.

Additionally, all future maturities are well below our three-year average free cash flow level. Our average cost of debt remains stable at 1.16%, which is among the most attractive cost of debt in the broader consumer sector, maintaining our competitive position in this high rate environment.

Furthermore, as a reminder, none of our debt contains financial covenants. Our total liquidity remained high at EUR2.7 billion at the end of H1 '24, comprising of a cash position of EUR1.2 billion and fully undrawn RCF facilities of EUR1.5 billion, which do not mature until 2028.

On the next slide, slide 22, I would like to briefly remind you of our capital allocation priorities, which remain unchanged. Our capital allocation framework guides us as we create long-term value.

Our first capital allocation priority is to reinvest in our brands and the growth opportunities within our business. Our second priority is to deleverage as we target an optimal leverage of around 2.5 times.

Our third priority is to continue to pursue inorganic growth opportunities, but always in line with our highly selective business and financial criteria. And fourth priority is to use excess cash to contribute to shareholder remuneration through stable dividend flows that we expect to sustainably grow over time.

And while our leverage is above our optimal level of around 2.5 times, we do not prioritize share repurchases. Before moving to Q&A, I'd like to briefly take you through our improved outlook for the year, on my last slide, slide 23.

Our strong financial performance in H1 '24 as well as our expectations for H2, including the continued inflation and volatility in green coffee prices and the additional pricing this will require give us confidence and further visibility to increase our outlook for 2024 across top line profitability, cash flow and leverage as follows. We now expect our sales to grow organically at the higher end of our medium term range of 3% to 5%.

We expect our adjusted EBIT to grow organically by around 10%. Next to that, we now expect to deliver free cash flow of at least EUR850 million.

And given the steady progress towards deleveraging since two recently closing the Marata and Caribou transactions, we are confident to also bring our net leverage at the end of 2024 to below 3 times. Lastly, we intend to pay a stable dividend versus last year.

So this brings me to the end of our prepared remarks and with that, I will now turn it over to the operator, so we can start the Q&A.

Yes, good morning. Luc, maybe a question to you, just on in terms of what you said broadly about the company and the search for a successor you effectively given the fact you're saying it's pretty much a rally configured and you're pretty much rolling out a major restructuring program, even when a new CEO comes on board and it will be in line with your own ideas.

And I guess, you know, as Chairman, you're speaking on behalf of the of the Board as well. If you could just maybe elaborate a little bit on that.

Thank you.

Thank you very much for that question. As I said in my opening remarks, the search is going extremely well, we're now down to a very short list of candidates who are going to meet some more members of the Board and possibly some of our shareholders.

And definitely before the end of the year, we will have somebody in place. And as also said, I think that the company basically is in good shape.

I mean, we've got extraordinary talent. I think we can improve in working together, but there's definitely no need for changes in the organization.

And definitely not in a strategy. I think it's going to be a lot more about better execution, but within the established strategy.

And as you can imagine, I am very close to our board who all share my point of view. And as I say, in the choice of being staying as Chairman, you can imagine that the choice of the CEO is somewhat in line with my own management style.

And I think that that is coming over today very well with the team. So I don't expect any major changes after the CEO joins us.

And just as a follow up, you've seen in some other companies, the interim CEO, I yourself, could actually stay for a while and do you have any desire to sort of stay in that position as well for a while? Or is it really full, i.e., are you a candidate as well to become CEO.

Or is it really full steam ahead looking for a separate CEO.

As I said, I'm really thoroughly enjoying the role as CEO, but I've learned in life not decline this same Mountain to many times. And so I'll be very happy to hand over to my successor.

And again, I'm lucky to be able to stay as Chairman. So I can follow and hopefully help the incoming CEO in some areas where he or she may not have the level of expertise yet.

So I know, but I'll be very happy to hand it over to the successor.

Thanks taking my question. Just a question on the balanced investment and profitability.

Are you continuing the investment in the US coffee machine or it stays too costly that you decide and reallocate those back to other categories division and performed in terms of growth in the past and does A&P spending in H1 reflects the less investments into the US L'OR Barista? Thanks.

Yeah, it's somewhat overall the A&P investment is about the same as last year, slightly above. And indeed that includes a reduction of the investment in the United States behind the lower Barista launch.

It's actually relatively easy to explain in the sense that last year was the initial year of launch and your first year you tend to overspend. This year we are I think, as I said in my remarks, we are being more efficient in the marketing spend in the United States and the results are actually better than the ones we were hoping for with a higher budget.

So things are clearly our spending in the US is more efficient than it was last year, and we intend to maintain that level more or less the same.

Thanks for taking my question. Can you touch on the cost inflation outlook, please?

I think a few months ago that was said low single-digit, but given coffee inflation we've seen year to date. What's your expectation for the cost inflation considering coffee inflation and many other cost buckets now for FY24, please?

Yeah, I think as Scott pointed out, I think we were looking at slightly lower costs in the first half of the year, at least the first semester. And looking at quite substantial increases again from the second half of the year.

As I said earlier, we're looking at year on year price increases in green coffee of 13% for Africa and 54% for Robusta. And that translates into a substantial cost increase in the second half of the year, which will be compensated by a loss with the pricing going to actually we are pricing up as we speak.

And I would say that increases the expectation for the full year, the outlook for the full year in terms of inflation, and I would probably call it mid-single digit inflation driven by the factors that we've just called out.

Okay, can I ask you follow-up please. You mentioned in the press release, there are some ongoing productivity in Europe and cost efficiency in peak.

And can you provide more color on that and maybe quantify the cost savings you have so far and maybe the rest of the year.

And in our manufacturing units, we are continuously looking at productivity improvements and that's ongoing. So right now, fortunately, for us, every year, we could count on a substantial amount of productivity, which compensates part of the inflation that we see in our raw material and packaging materials.

So and not just in manufacturing, I guess I could say or across the board with SG&A, our selling operations and manufacturing. But the precise number, I don't think we publish now.

And of course, we had, as Luc said, it's ongoing, so it's not a particular restructuring program or something of that nature. And as you remember, we have over time, announce several different initiatives, like, for example, in Europe, in terms of bringing the away-from-home businesses and the in-home businesses into one single business, right.

And you start to see the kind of constant efficiencies and productivities that come through on that as we look to also extra to restore some profitability that has been gradually lost over a period of time, given all the disruptions to go on and the broader environment.

Yes, hi, good morning all. A couple of questions.

The increase in your free cash flow guidance implicitly, I think it's more than EUR300 million of provision. You said to at least achieve last year's free cash flow, now you target for at least EUR850 million.

Apart from adjusted EBIT, EBITDA what are the main drivers for this raised expectation? Or is it only the operating results?

Second question, you mentioned the difference in organic sales growth in developed and emerging markets, quite a difference and obviously that is for big part of pricing I assume can you also provide the volume mix split between these two segments, please? And I was wondering in APAC, you mentioned a benefit from pricing in combination, which with the usage of lower-priced green coffee from inventories.

Why is this a factor here and not also in other divisions?

Thanks. So let me start and then Luc can jump in and complement.

I would say on first of all, on your on the question on the free cash flow guidance and increasing by a few hundred million, what we said on terms of our guidance at the beginning of the year was greater than that in 2023, which I believe was EUR522 million. So I mean, like I say, we've improved it by EUR300 million, but we wanted to get more visibility in terms of cash flow, we knew that the cash flow would be a good number.

And now we have more conviction on the level of that. And I would say what drives that is the general operating performance, nothing specific and then also as we start to get the normalization that we had on the reduction of stock levels for '23.

And we start to see the normalization of working capital, which happened during the course of H1, and that's what we had said would happen. But exactly when that happened, it's hard to call out.

So I would say, but generally, it's driven by stronger operational performance. And then the third question, in terms of the an APAC where we talk about one of the drivers and it's not the be the primary driver but we call out one of the things in terms of driving it is we're working off the lower priced coffee stocks.

I mean, you see that and across the markets actually I think we call it out there, but it's across the markets, the timing of the price increases as we tried to have a persistent price increases and we don't want to be adjusting prices down when we know we have to go back up. So we tried to provide the right cadence and consistency there for the price increases.

And so like some other areas, they do get a bit of a tailwind on the on the GP there as well. But the drivers for APAC were driven by a number of things, including the better margins from the SKU rationalization that we did last year.

We also had a warehouse issue last year where we had a lot of one-off cost in APAC and we got, as we mentioned, and full year results in H2 that was more normalized. So now we're lapping that and there was that just the general low comp it was there last year.

So it's a number of factors driving the APAC profitability, but that is one of them. And I believe you had a maybe a third or fourth question on the volume mix of emerging markets and developed markets.

I mean, first of all, in developed markets, we're seeing it looked a little bit less. And of course, when you look at developed markets, you have to think about, of course, Europe plays a big role in there and we called out what the volume mix for Europe is the other market where you would be in developed markets, which you would have, for example, Peet's.

So most of that is Peet's and the US and then you have some markets like Australia and New Zealand, for example, where we called out that was a little bit softer. And we've that in those markets, we progressively got better on volume mix as the semester evolved and I think it's very notable, for example, in Europe, and we mentioned that in terms of the first few months of the year versus the latter few months of the year.

So I would say in emerging markets it was more price and in developed markets it was more balanced in terms of the drivers behind that 1.1% that we called out.

And good mix, the particularly excellent performance in volume of our capsule business in Europe.

That is very clear. And if I may, one additional question in LARMEA, you mentioned the brand transition in Russia.

I think that started in the second half of last year. So we were preparing for a tough comparison in H1 which turned out to be pretty okay.

Is that still a factor in the second half of the year or are you--

I think that's over the transition is over we have, indeed, obviously a bit of a hit, but things are normalized by now.

Absolutely. Yeah, that's the carryover effect from the second half.

So it's annualized now.

Okay, very clear. Thank you.

Hey, good morning, Luc. Just on the volume impacts from retailer discussions, is there any potential for further impact of pricing negotiations impacting volumes in the second half?

And is that something that's captured by the new organic sales growth guidance? Thanks.

Yeah, this is not one never knows until the negotiations are actually ongoing right now. We seem to be getting better reception this time around than we did in previous occasions.

First, actually, the first quarter of this year was hit by some retailer retaliation three as we call it. And but that leveled out quite nicely in the second quarter.

So I think that things are going quite well. So we shouldn't expect any major volume impact in the second half of the year, especially not, although we are, of course, looking at comparables with last year, second half, which was pretty good.

So the volume progression probably is going to be slightly less in the second half than in the first half. But I think that at least from the pricing perspective, things are going quite well.

And sorry, just to be clear on that, the guidance includes that kind of flexibility for those discussions?

Yeah, absolutely.

Okay. Thank you.

Thank you, Caroline. Ladies and gentlemen, thank you very much for attending today's earnings call and for taking part in discussion about our results.

If you have any additional questions, please do not hesitate to contact the IR team. We are happy to answer your questions.

And again, thank you very much and enjoy the rest of your day.