L'Oréal S.A.

Thank you, Virginia. Ladies and gentlemen, good morning.

[Foreign Language] and welcome to this webcast and conference call for the release of L'Oréal's First Half 2022 Results. Let me introduce today's participants to the call.

We are together with Chief Executive Officer, Nicolas Hieronimus.

Good morning to everybody.

And with Chief Financial Officer, Christophe Babule.

Good morning.

The agenda of today's meeting is as follows: Christophe will start a presentation of the financial figures of the past semester. After this financial review, Nicolas will cover the main developments of our business and share with you his views and strategic perspectives.

After this presentation, you will be able to raise questions. Timing-wise, we expect to end the call by 10:15.

The press release, which was sent out yesterday and the slides shown this morning can be found on our website, loreal-finance.com and on the L'Oréal Finance app. A replay of the call will be available later today on the same website and app.

The French and English versions of the half year financial report will also be available at the beginning of next week. I wish you a good conference.

And I now hand over to Christophe.

Thank you very much, Françoise. So ladies and gentlemen, good morning.

the presentation of L'Oréal first half 2022 results will include information about sales, profits, cash flow and balance sheet. First, consolidated sales amounted to EUR 18.4 billion, up by a substantial 20.9% on a reported basis, by 13.9% at constant exchange rate and by 13.5% like-for-like.

Foreign exchange had a strong positive 7% impact. The impact was even stronger in the second quarter at plus 8.9% after a plus 5.1% in the first quarter.

The change in the scope of consolidation is positive by 0.4%. It is mainly due to the acquisition of the Californian professional skincare brand, Youth to the People.

The strong 13.5% like-for-like growth recorded in the first quarter continued at the identical pace of 13.4% during the second quarter despite the turbulences in China due to the 0 COVID policy. Note that the relocation of the Asian Travel Retail business unit on July 1, led to anticipate invoicing of EUR 90 million in June.

That is a positive impact on the group's like-for-like growth of 110 basis points in Q2 and 60 basis points in H1 that we reversed in Q3. On this table, the group's main invoicing currencies.

The U.S. dollar accounted for 23.6% of sales.

The Chinese yuan for 19.4% and the euro for 19.1%. The first half was marked by the weakness of the euro, the dollar, the yuan, the ruble and the Brazilian real rose by more than 10% against the euro over the period.

Among the major currencies only the Japanese yen fell 3%. Note that extrapolating the exchange rates of June 30, EUR 1 at around USD 1.04 until year-end,will have a positive impact on full year sales of approximately 6.9%.

Like-for-like sales by division. All divisions are growing rapidly.

Our selective divisions, including professional products, L'Oréal Luxe and Active Cosmetics all grew by double digits, both in the first half and in each of the 2 quarters. The Professional Products Division continues its strong momentum at plus 14.3% in the first half, driven by the success of its omnichannel strategy.

The Consumer Product division recorded a sharp acceleration in the second quarter at plus 9.1% and ended the half year with 8% growth. L'Oréal Luxe grows by a significant 16.4% in spite of turbulence in the Chinese market.

The impact on growth of advanced invoicing by Asian Travel Retail was 300 basis points in Q2 and 140 basis points in the first half. Last, the Active Cosmetics Division continues to lead the race up by 20.9%.

All regions posted double-digit growth at the end of June, and in the second quarter, both on a reported basis and on a like-for-like basis. In Europe, sales increased by 14.3%.

Business benefited from the lifting of health restrictions and from the enthusiastic return of consumers to stores in comparison to a still trouble start last year. In North America, L'Oréal achieved a good semester at plus 11.6% with an acceleration in Q2 of the Consumer Product division and of Active Cosmetics.

In North Asia, L'Oréal grew by a very strong 10.5%, the striking performance in a slightly declining beauty market. In Mainland China, the market contracted significantly at the beginning of the second quarter due to the lockdown, thanks to its robust supply infrastructure, L'Oréal achieved an outstanding double-digit growth in June and 7.8% growth in the first half, driven by a consistent 18% growth in e-commerce throughout the period.

The SAPMENA - SSA region accelerated in the second quarter and achieved the gross growth of plus 23%, driven by India, Malaysia and the Gulf countries. In Latin America, all countries and in particular, Mexico, contributed to the remarkable 22.3% growth in the region.

Business is very balanced by region. North Asia accounts for 30.6% of total sales and Europe for 30.3%; North America for slightly more than 25%; SAPMENA - SSA zone for 7.6%; and Latin America for 6.1%.

The contribution to the group's like-for-like growth is also evenly distributed between the different zones. With the Europe contributed to almost 1/3 to growth, North Asia and North America, each nearly a 1/4 and the emerging countries, meaning SAPMENA - SSA and Latin America, more than 20%.

Sales by category. All our major categories are growing double digits.

Perfumes grew 35%, showing very strong growth for the second consecutive year, driven by the success of our iconic brands and newly acquired signatures. They represented 10.4% of our total sales.

Haircare remains very dynamic at plus 14.1%. Makeup continues to recover at plus 13.3%.

Skin Care, our largest category recorded growth of 11.7% and hair coloring is growing by 6.2%. Let's move to the profit and loss account.

Gross profit increased by 18.6% to EUR 13.4 billion. Gross margin is 140 basis points below that of the first half of last year.

It stands at 73.1%, the level of 2020. Currency impacts, including conversion and transactions were negative by 70 basis points on the gross margin.

Thus, on a comparable basis, the gross margin only decreased by 70 basis points. The input cost inflation was nevertheless partially offset by the favorable value effect.

This value effect, combining price increases, revenue growth management and improved mix contributed to half of the sales growth. Research and innovation expenses increased by 10.3% to EUR 539 million.

They represented 2.9% of sales. Advertising and promotion expenses increased by 17% in value or by more than EUR 800 million and amounted to 31.5% of turnover.

We have, therefore, continued to invest significantly to support the growth of our brands. Our digital media spending continued to accelerate and represented 76% of our total media spending compared to 72% in H1 last year.

Selling and admin expenses continued their relative decline, down by 80 basis points. They demonstrate the strict management discipline in the context of strong growth and the improved efficiency of our organizations, thanks to the creation of hubs in various geographical areas.

In total, operating profit increased by 25.3% to EUR 3.7 billion. The operating profit margin stands at a new record for a first half at 20.4% of sales.

The margins rate 70 basis points higher than that of the first half of 2021. This year, in accordance with IFRS Interpretation Committee decision, the group expensed the cost of configuring and customizing software used in SaaS mode.

These costs previously recognized as fixed assets had a negative impact of minus 20 basis points on the group's operating margin. On a comparable accounting basis, the group's operating profit margin will therefore have increased by 90 basis points versus that of H1 '21.

At this stage, every year, we point out that the L'Oréal Group is managed on an annual basis and that the half year division profitability cannot, therefore, be extrapolated for the full year. By division, the profitability of the Professional Products division improved by 70 basis points to 21.2%.

The Consumer Products division is unchanged at 20%. L’Oréal Luxe increased by 20 basis points to 24%, and Active Cosmetics division comes out at 27.7%.

Non-allocated expenses, consisting mainly of corporate and fundamental research costs were 60 basis points lower relative to sales at 2.3%. Overall, a record operating profit margin at 20.4%, up by 70 basis points.

Note that H1 this year, the operating profit margin of each division was impacted negatively by 40 basis points and that of the group by 20 basis points. This impact was driven by: first, the relocation of some central costs to divisions for minus 20 basis points in this division, offset by symmetry by a 20 basis point decline in the group's non-allocated expenses.

And second, the change in accounting method that was just mentioned, for minus 20 basis points in each division and therefore, at group level. Let's move from operating profit to net profit, excluding nonrecurring items.

The net financial result was negative by EUR 16.4 million. For the full year 2022, net financial expenses in the tune of EUR 52 million can be anticipated, all other things being equal.

Sanofi dividends amounted to EUR 468 million. This year, in addition to the annual dividend of EUR 393 million, Sanofi paid an additional dividend in kind in the form of newly listed Euroapi shares for an amount of EUR 74.5 million.

Income tax amounted to EUR 943 million, representing a tax rate of 22.5% above the tax rate of the first half of 2021, which was 21.9%. For the full year '22, we can anticipate the tax rate below 24%, all other things being equal.

Net profit, excluding nonrecurring items, amounted to EUR 3.25 billion and the corresponding earnings per share of EUR 6.05 showed a substantial 30.8% increase. The impact of the distribution by Sanofi of Euroapi dividend amounts to EUR 0.30 of the euro on the earnings per share.

To help you in estimating your EPS for the full year and taking into account the share buyback announced yesterday, I will recommend that you base your calculation on a diluted number of shares of 538 million. We will now complete the review of the profit and loss account.

Nonrecurring items and net of tax amounted to a limited negative EUR 31 million in H1 '22 compared to a negative EUR 237 million in the first half of last year. This year, they mainly include donations to charities as well as exceptional costs related to the Ukraine conflict.

After taking into account all nonrecurring items, net profit after noncontrolling interest came out at EUR 3.2 billion, up by a very strong 36.4%. Gross cash flow increased by 14.7% to EUR 3.8 billion.

As every year in the first half, working capital increased significantly. In 2022, it increased more sharply than in previous years due to some precaution stock building of raw materials and supplies, the prices of which have risen sharply and the finished products to mitigate supply chain disruptions.

Receivables also increased in line with the group's strong sales growth. Capital expenditure amounted to EUR 638 million and represented 3.5% of sales.

For the full year, this will reach a similar 3.5%. Net operating cash flow amounted to EUR 1.3 billion.

And lastly, after payment of dividends and redemption of the lease debt the receivable cash flow is negative at minus EUR 1.5 billion. The balance sheet remains robust with shareholders' equity of EUR 25.9 million.

In March '22, L'Oréal Group successfully issued its inaugural bond for a nominal amount of EUR 3 billion in 3 tranches, including a sustainably linked tranche of EUR 1.25 billion. The financial situation remains healthy.

At the end of June, net debt amounted to EUR 5 billion and to EUR 3.3 billion, excluding the financial lease debt. The gearing ratio comes to 19.3% and the financial leverage or net debt over the 12 months rolling EBITDA is EUR 0.6 million.

I thank you for your attention and hand over to Nicolas.

Thank you, Christophe, and good morning again to you all. Thanks to the commitment and talent of the L'Oréal teams around the world.

I think we can say we have achieved a brilliant second quarter and first half. Over the next few minutes, I'd like to review with you the key learnings of our very solid first half results and why they make us confident despite the global context.

First, as you have just seen, this has been a strong semester for L'Oréal, but also for the beauty market, which overall demonstrates once again its resilience. We estimate that the beauty market increased by more than plus 6% over the first half.

The pace of the market recovery remains, however, contrasted and is driven by the evolution of sanitary conditions and the comparison with the first half of 2021. Europe is benefiting from a favorable first half 2021 comparable yet versus 2019, the market has now fully recovered.

At plus 8%, North America is keeping its great pace with the bounce back of brick-and-mortar. China has experienced a complicated first half due to lockdowns in some cities, such as Shanghai.

The market was negative in April and May, but bounced back in June. Compared to 2019, the growth remains high at plus 9% in the first half.

Emerging markets are quite dynamic with reopening and e-commerce acceleration. In terms of category, each category is growing, but let me highlight the strong recovery of makeup at plus 8% with lipstick at double digits and the continuous acceleration of fragrance at plus 21%.

Within this context, L'Oréal is showing another quarter of spectacular over performance, growing more than twice the pace of the market. Sales were up plus 13.5% like-for-like and 20.9% reported.

Compared to 2019, L'Oréal is growing at a consistent pace of 20%. Looking ahead, I feel it's very important to highlight that L'Oréal is flying at cruising speed over a very uneven landscape with heavily varying comparatives.

So 2019 remains a good benchmark to monitor our pace. Once again, this first half, our performance is very balanced by division and region but also by channel.

In terms of channel, e-commerce continues to growth albeit at a slower pace at plus 10.6% after a couple of years of spectacular growth. Distribution is rebalanced by the acceleration of brick-and-mortar at plus 14.6%.

By region, we have during this first half, 4 almost equal growth contributors. Europe, the Chinese consumer as a whole, North America and the emerging markets are each bringing between 20% and 25% of our growth.

This is the ultimate proof of the success of our rebalancing or derisking strategy. Europe is the #1 growth -- is #1 in gross contribution at plus 14.3% and plus 8% versus 2019.

The group's performance is strong in most countries, boosted in Q1 by lockdown comparatives, our European business showed strong momentum in Q2, gaining share in all divisions outside of Russia, where we suspended almost all of our business. North America delivered a strong first half at plus 11.6%.

Despite lingering supply chain disruptions, L'Oréal USA continues to pace ahead of the market driven by the confirmed momentum of Professional division and Active Cosmetics, a steady performance of CPD, notably driven by stellar makeup performance on both NYX Professional Makeup and Maybelline, whilst Luxe continues its fragrance drive. L'Oréal USA is gaining share in most categories.

I am very pleased to report a strong performance in emerging countries, at around plus 24% in the first half with our SAPMENA – SSA zone at plus 23%; and Latin America at plus 22%. You see here a set of countries showing stellar growth driven by our consumer division and demonstrating the power of our growth model supported by our new zone organization and e-commerce acceleration.

Travel Retail is showing strong growth with the major rebound of air traffic at triple digit in Europe, where we benefit from our fragrance strength. After a great Chinese New Year, Hainan came to a stop in April, May, but is accelerating again in June.

And as explained by Christophe, EUR 90 million of sales were anticipated from July to June due to the relocation of our Travel Retail Asia operations on July 1. Finally, I want to highlight the spectacular overperformance of our North Asia business in the context, we all know, growing by 40% versus '19 and plus 10.5% versus 2021.

Korea and Japan have both been dynamic and L'Oréal is gaining share, particularly in luxury. But as China with everyone's preoccupation and even a source of worry, I want to underline the capacity of our local teams to over-deliver.

In Continental China, which has been impacted by COVID restrictions and notably the Shanghai lockdown, leading to a negative market in Q2 at minus 7%, L'Oréal China has delivered net sales at plus 6% in Q2. In sellout, if you take China plus Hainan, we delivered a growth of plus 13% in the first half.

On a market where brick-and-mortar was down, our dominance of the online game, the agility of our supply and the power of our brands have allowed us to achieve this performance and to gain record market share in luxury hitting for the first time, 30% of the market. Our e-commerce was at plus 18.4% in H1, and we leveraged successfully all the key shopping festivals of May and June, notably 618.

So yes, China is a bumpy market right now, but L'Oréal constantly showed its capacity to increase its leadership in this context. To conclude on regions, we have enjoyed double-digit growth everywhere and confirm the power of balance.

Regarding divisions, our 3 selective divisions are growing double digits, and I'll get back to that, but I am particularly pleased to see the confirmation of the comeback of Consumer Products division. CPD is growing at plus 8% on the market at plus 5% after a super quarter at plus 9%.

The division is notably accelerating in emerging countries, plus 18% in SAPMENA – SSA and plus 21% in Latin America, and it is gaining share in the U.S.A. By category, CPD leads the makeup rebound at twice the market speed.

Now back to its precrisis level. Maybelline and NYX Professional Makeup are showing strong growth, thanks to initiatives such as Vinyl Ink and Bare with Me Concealer and Stylenanda 3CE topped the makeup ranking during Tmall 618.

Hair care is accelerating at plus 9% with great successes such as Hyaluron Plump by L'Oréal Paris. And when it comes to Skin Care, Garnier is growing at plus 13%, thanks to the rollout of great initiatives such as the Vitamin C Brightening Serum and its micellar waters.

This blend of successful premium innovations and advanced pricing analytics allows CPD to have a very balanced 50-50 split between volume and value. In a very challenging environment, the division has been able to invest strongly behind its brands and accelerate quarter after quarter whilst preserving its profit.

L'Oréal Luxe ends the half at plus 16% on a global luxury market at 11%. At Category, growth is driven by fragrances at plus 35% in a market at plus 21%.

On skin care, we outperformed the market by 10 points and makeup it's growing at plus 11%. Lancôme, YSL, Giorgio Armani and Helena Rubinstein are driving our growth.

To be noted, the success of our most recent acquisitions Prada, Valentino for Licenses and Takemi as well as the good integration of Youth to the People. Our portfolio stimulated the market with successful innovations such as Lancôme Triple Serum, YSL Lash Clash or Valentino Born in Roma.

On a comparable still strongly impacted by COVID the Professional Products division is achieving double-digit growth at plus 14.3% across all geographies, businesses and major international brands driven by its successful omnichannel strategy. The second quarter remained very dynamic at plus 11.3%.

Haircare at plus 18% is the main contributor to growth. Hair color is also growing strongly at plus 11%.

Our 4 global signatures grew double digit with a notable rebound of L'Oréal Professional at plus 17%. And I want to highlight the success of some key innovations such as Kerastase Chroma Absolu or Redken 10 minutes Color Gels Lacquers.

The first half was marked by a strong performance in both brick-and-mortar and e-commerce. Off-line sales came out at plus 10%, and e-commerce turnover is up by 28% for PPD.

SalonCentric continues to overperform in the U.S.A. and announced the creation of its first 100% professional B2B platform selling all the SalonCentric assortment plus the selection of services.

This is paving the way for PPD to become the #1 destination for all hair pros. Finally, ACD continues its impressive growth at plus 20.9% in a market at plus 8%.

The division is outperforming the market 2.5x. Compared to 2019, this division has grown by 81%.

Active Cosmetics main drivers remain efficacy, safety and transparency in the medical world driven by prescription. The division's first contributor to growth is La Roche-Posay boosted by Anthelios UVMune 400.

The newly Billionaire brand CeraVe, maintains a remarkable growth in the U.S.A., while pursuing its successful international expansion. Vichy posted double-digit growth behind the relaunch of Neovadiol and the acceleration of Dercos hair franchise.

So this semester, thanks to its superior innovations, once again, L'Oréal is strengthening its leadership in every region, all at double-digit growth and every division. Now if we look at the P&L, the beyond handsome improvement of our profitability by 70 basis points is linked to several structural and conjunctural factors.

First, as explained prior, demand for beauty remains high and drive the top line. Secondly, our sound and progressive valorization work powered by our cutting-edge RGM tools has allowed us to partly offset input cost inflation without impact on our volume growth.

During the first half, 50% of our growth came from volume and 50% from value. Our gross margin is at 73.1%, the same level as in 2019 prior to the inflation shock, yet below our record high '21 gross margin, which was very driven by mix effects.

As announced, we have been able to maintain and even increase the A&P support behind our brands at plus 17% resulting in further market share gains, yet lowering its basis points versus 2021 all-time high. Finally, we continue to control our SG&A despite stronger than usual pay raises.

We are reaping the fruits of multiple reorganization projects like country clustering, control headcount increases and of course, T&E, travel and expenses control. As you can see, compared to 2019, the P&L of L'Oréal is healthier than ever.

So this first half is pretty exceptional in both senses of the term. Now looking at the second half, we are both prepared and bullish.

Prepared because we are conscious of the high level of uncertainty and volatility of the economic current outlook of the fears of recession, of the potential impact of inflation on consumption and of the continuation of tension on supply chain. We have shown during the COVID that in case of a downturn, we know how to outperform the market and maintain our profitability.

We are agile. We have flexibility in our A&Ps.

We have a large price piano to be able to adapt to any consumer behavioral change and our proven business balance allows us to mitigate regional crisis. Yet, we remain confident for the second half and of course, in the future of the beauty industry and L'Oréal prospects.

Firstly, beauty is constantly growing. Over the past decade, the global beauty market has grown by 4%, 5% per year.

The beauty market also has a long track record of withstanding periods of economical difficulties. As you know, according to the lipstick index theory, even in hard times, people want to indulge themselves and beauty is the most affordable and one of the easiest ways to do so.

Our strong innovation capacity allows us to stimulate consumption and to indulge consumers with affordable pleasures. Our second half has a few good surprises for them as does 2023.

Our own consumer targets are the upper middle and upper classes who are generally less impacted by the economic turmoil. And this middle and upper classes continue to grow, especially in the emerging markets and China.

By 2030, experts estimate that the middle and upper classes will grow by an additional 1 billion in the world, including 250 million in China and 300 million in India. This is why we remain ambitious in India -- in China, sorry.

We remain ambitious in China, all the more as our penetration there is still low with 100 million consumers out of today's addressable target of 400 million. Yet, I'm conscious that we can't only rely in China and that's why our acceleration in emerging markets, our growing strength in the USA and our solidity in Europe are so important to me.

Finally, we are confident in our ability to overcome the inflationary context. We will be taking further price increases in the second half.

Furthermore, our innovations are accretive, and they give us a strong pricing power as our products and services offer a superior performance to consumers. Looking ahead, I am confident and ambitious for L'Oréal.

In the current context, we are prepared for the worst, but we are planning for the best as we very well know that playing offense is what drives consumption, market share gains and growth. We are stronger today than before the COVID and our balanced model constitutes the best vaccine in a VUCA world.

L'Oréal keeps transforming to guarantee long-term and sustainable growth. L'Oréal is transforming into a beauty tech leader, a data-driven company that provides personalized products and services and AI-powered formulas.

L'Oréal is transforming its research towards green sciences to reconcile performance safety and sustainability. L'Oréal is transforming its whole business to be every day more sustainable and fully net 0 carbon by 2050.

This July, we have announced that all our sites in the North Asia zone have achieved carbon neutrality on scope 1 and 2 by using exclusively renewable energy, less than 1 year after the U.S.A. And of course, L'Oréal pledges to remain at the forefront of diversity, equity and inclusion to be true to its values of humanism, generosity and profit sharing in a world where there is so much tension and divide.

Our solidarity sourcing program or our commitment to implement the living wage in our businesses, but also within our strategic suppliers is an illustration of this. These values encapsulated in our sense of purpose to create the beauty that moves the world are probably why Lorealians are so committed.

In a post-COVID world, where many people seem to be wanting a change of life or job, L'Oréal is seeing increased engagement from its employees around the world, and job applications are reaching record high. So as you can see, L'Oréal has all it takes to weather the short-term difficulties related to the macroeconomic context.

Short term and even though the second half will not look as handsome as the first one due to comparatives and one-offs, we are very confident in our ability to beat the market and deliver another year of growth in sales and profits. Mid and long term, I can tell you that beauty is a safe bet and that L'Oréal is the best bet in beauty.

Thank you very much.

Two questions for me, please. The first one on China.

So you mentioned double-digit growth in June. Just wondering if you've seen some continued momentum since -- or June was maybe flattered by some favorable one-off like the 618 shopping festival and maybe some pent-up demand.

And still on China, you also mentioned some record market share for the Luxe division. Do you think in the short term, this is a sustainable level of market shares or you could give some of that back, as one of your key competitors is fixing it's supply chain challenges.

And then my second question is on operating margin development. I mean in the last decade, we've been more used to see modest annual operating margin development at L'Oréal.

Now I appreciate 2021 was somehow a peculiar year because it was a recovery post-COVID. But last year, we had 50 basis points.

In the first half of this year, we've got 70 basis points of , if I understand well, on an adjusted basis 90 basis points. So my question is, is there a bit of a mindset change at L'Oréal, whereby reporting significant increase in profitability is no longer a taboo.

Or maybe should we just look at the first half performance and think you're building some P&L buffer ahead of the uncertain second half.

So I'll take the first 1 or the first 2 actually because this one on the market share, and I'll let Christophe answer on the operating margin. As far as China is concerned, obviously June was a strong month, it's the month of the famous 618 festival where our brands were really super performing, L'Oréal Paris, #1 brand, Stylenanda #1 in makeup.

We had 2 -- 3 brands in the -- 2 brands in the top 3. So it was a great moment for L'Oréal.

And of course, a moment of rebound for the market was also the reopening of Hainan that was closed with barely any visitors in April, May. So my vision, and that's what I've said, and of course, the lockdowns have a little bit changed the first half.

But my vision and the vision of our team there is that the Chinese market should continue to grow at mid-single digits. And of course, we intend to over perform that mid-single-digit performance.

As far as our market shares are concerned, we don't intend to give them back. Clearly, whether competitors are going to be fighting back very clearly, too.

But I think we've proven and our teams there, which -- whom I really want to pay tribute to have proven there, they are very competitive. And we have the brands, the portfolio, and we are -- we have more and more brands in China, and I think it's going to be hard to take some share back, but it will be a tough fight, and we like competition.

Christophe, on operating margin?

Yes, on operating margin. So first, yes, Guillaume.

If we take into account the change of methodology, yes, the profit would be at plus 90 basis points this semester. But what you have to know is that we are in a quite exceptional moment.

I mean we have seen a very strong growth this first semester. I remind that it's above 20% in published terms.

So it is obvious that we can benefit from that from a positive effect, and it's what it is reflected now in the P&L. But the first semester doesn't give the full picture of this year.

And you know that when we listen to the perspective in terms of macroeconomics, we probably have difficult months ahead. So it's normal that we keep also what it needs to fight in the second semester.

So we keep with our objective is, of course, every year to increase on a regular basis or margins. And historically, it has been growing by 30, 40 basis points depending on the year.

So we are a little bit in advance in the first semester. We have plenty of ammunition for the second half.

So if the weather is more complicated, we will have all what it takes to keep beating the market.

I think I picked up that you closed the Maybelline stores in China, I mean just -- or busy closing those stores. I just want to understand a bit more the details on what's happening as a shift in distribution strategy in China on Maybelline, but maybe also more broadly on what to expect?

The second one is on one of your slides, I think you were breaking down the CPD growth between pricing and volume, but it said excluding India. And just to confuse me what particular -- peculiar about India, why you would have to exclude it?

Could you just comment on that, please?

I'll start with the second one. The reason why we excluded India is that in India, most of our units are in monodose sachets.

And therefore, if you put the India numbers, and we've had a very strong growth in India, it is artificially the picture towards volume with the acceleration of India. So the fair -- the first assessment of the real valorization strategy, pricing volume strategy of CPD is excluding India because of that sachet phenomenon.

As far as India -- as China is concerned on Maybelline, this was -- actually, this information was incorrect, and we had it corrected. What happens -- the distribution strategy of Maybelline in China is very simple.

It's, of course, e-commerce, and it's true that the makeup mass market in China is 80% e-commerce. But we have a brick-and-mortar presence.

We have thousands of stores where Maybelline is present, thinking of Watsons stores, for example. What the article you read probably in WWD misunderstood is what we are closing is we had 14 freestanding stores of Maybelline, which are not productive anymore considering that the market has heavily shifted towards e-commerce.

So these are the ones we are closing. So we'll probably be on Maybelline China on that 80% e-commerce and 20% in brick-and-mortar retailers, drug stores.

So my first question is on a question is on -- question I asked in fact, at full year results, you were guiding at a time at 4% to 5% market growth for Beauty for this year and H1 came stronger. Just want to know if that 4% to 5% still remains and whether that is part of the tough comp, you are mentioning when you talk about H2.

In fact, your comment, we're talking about tough comp and one-off for yourself. So if you could give us a bit color of what exactly you're expecting specifically for L'Oréal as impact for the second half?

And my second question, I hear your point about the offensive strategy versus what market that may weaken a bit. Can you, first of all, see -- tell us whether you've seen any early signs of that market weakening?

And what exactly are initiatives that you would do to be offensive there?

Okay. So several questions there.

First, on the market. I think for me, the 4% to 5% growth remains true.

It's both based on history, and it's also true that right now, as mentioned, the comparative year after year are quite challenging to really replicate from one period to another because as illustrated in my presentation, the history is very uneven. You've had great periods with rebounds, others with new lockdowns.

That's why we're comparing ourselves to 2019. And if I -- and to give you our quarterly performance versus 2019, it's interesting to see that last year, our first half, this is L'Oréal Group, we grew plus 6.6% versus 2019.

And then we started accelerating. Third quarter was plus 14% and fourth quarter was plus 17%.

So these were very high rebounding quarters. Now on the first part of this year.

So compared to a lower basis last year, we did plus 19% and plus 23% versus 2019. So again, if I take the sequence versus '19, we did 7% in the first half last year plus 15%, plus 17% and this half, we do plus 20%.

So we see we are in -- still in this kind of 20% progression versus '19, and that's how we measure our performance because rightfully so, there's so much variation from one month or from 1 quarter to another. That's why, unfortunately, we still have to refer to 2019.

As far as the market evolution is concerned, to date, we have seen very little signs of slowdown. We've just seen the month of July was softer in the U.S.A., and that's the only part of the world where we've seen that.

It was softer in the U.S.A. in July, but I remember that we were also very soft in January and then picked up in February.

So 1 month is too soon to say, but that would be the only part of the world where I see that because in China after the lockdown, people are progressively going back to consumption, emerging are very dynamic. Europe is both full of tourists with obviously a strong appetite for beauty and for indulgence after the COVID.

So the landscape right now confirms that, of course, we have to be always on the alert, and that's why I said we had to be prepared for anything. But overall, I still continue to perceive that consumers want to indulge themselves with different things, including beauty.

I got 2 questions, please. First, you've been gaining share across all categories and all regions, which is a really good habit to have, yet your marketing as a percentage of sales came down.

So how do you reconcile this with the strong market share that you had this half? And is that level of marketing as a picture of sales at roughly 31.6%, a more normalized level going forward?

And secondly, Nicolas, Christophe, you've both been at L'Oréal for more than 35 years, if I'm not mistaken. If the U.S.

does enter into a recession later this year or next year, can you tell us how L'Oréal is different today. The lesson you've learned from the 2008-2009 recession and why do you see is a key risk for your business, if any?

So first question, I'm very happy that you asked your question because I read a few comments that had misinterpreted what looked like an apparent percentage -- it's not apparent, it's a percentage reduction of our A&Ps. But in reality, it's an increase of our A&P spend, which is plus 17% in published numbers.

It's at plus 10% in comparable, and that's over a very high because -- a very high comparative because first half 2021 was, as we mentioned it last year when we published our numbers, pretty exceptional because all the mix effects were aligned, all the stars were aligned, I think that the way I presented it that led us to this above 70% gross margin and we are back to the -- as far as gross margin is concerned, we are back to the levels of 2019, which were very good. But in A&P, we are still 130 basis points above 2019.

And as I said, again, progressing by 17%. So the gain in market share is due to the fact that we continue to have strong innovations.

We invest strongly behind this innovation. Probably what we have changed and improved, and that's what we commented at the end of last year, is that every year, we are, every month, we are refining the quality of our targeting, the measure of our ROI and our ability to make sure that our every dollar and euro we spend on this, on A&P and on media in particular is effective.

And therefore, that's what allows us alongside the quality of our branded products to gain market share. So looking ahead, I think, yes, it's a good number.

But as Christophe said, we are -- we are piloting this very beautiful plane with a lot, both a long-term perspective but also a strong reaction capacity. So we have flexibility in our P&L.

And if we need to accelerate, to spend more, we'll do it. And if we feel we need to spend a bit less, we can do it, too.

But overall, our priority remains to fuel our brands' growth, fuel their desire and brand love, and that's precisely why in countries like China or the U.S.A., we see -- we continue to see great potential and great results. And your question was about -- the second question was about...

Yes, maybe if I can add 1 thing, just for everybody to remember. So last year, in fact, first half, we had put an addition of EUR 960 million on top of the previous year.

And this year, we are adding another EUR 800 million versus the previous year. So what is very important is to look at how many bucks we put in the market and a bit less the percentage.

So we are still gaining market share because we are still investing quite heavily.

And as far as the U.S. market is concerned, I think what has changed since pre-COVID, in reality is our distribution strategy and also our category balanced.

As we said -- pre-COVID, we had a very long tail of I would say, sleepy department stores, unproductive department stores for L'Oréal Luxury. We had -- we're probably not really playing our role in the mass market on Amazon.

So on e-commerce in general. So COVID allowed us to reshuffle our resources to more dynamic channels.

It's proving effective in both divisions, although I think we still have some room to grow in Luxury, in particular, where we can continue to accelerate, but the market share gains are there, and I think we are better in line where consumers want to shop today than we were pre-COVID.

I wonder could you just help us understand the effects of the EUR 90 million invoicing, please. How much of that was seen in China?

Was that in China, 6% growth rate? And is there associated costs with that?

So could you say what the profit impacts of that actually is from an accounting perspective, please? And just related on China is, do you feel -- I mean I wish you got quite a high level of flexibility on China in the cost base versus other regions.

Do you think you went a little too far at all in terms of China flexibility down? And will that have to be feathered back in H2?

And then sorry, briefly just on skin care. Would you be able to talk about the outlook of skincare, ex Active, please?

And just what you're seeing in pricing and volume there?

So maybe I will take the first question related to the EUR 90 million. So -- you have already the impact on total group and luxury.

And what you have to know is that the impact for North Asia is for the first half, 180 basis points. But it's not impacting China.

When we speak about China, it's Mainland China, and we keep Travel Retail separately. So that does not impact the growth that we mentioned before on Mainland China.

And as far as your questions about -- I'm not sure I understood your question, is that -- are you inquiring about promotions or what was your question about...

I think you have previously said you obviously don't permanently employ all of the staff that you have in China. So when there were lockdowns, did you cut some of those temporary staff or long-term staff?

And do they -- is there a bit more of an increase in H2 that hasn't come through because that was quite significant or not?

No, no, we didn't cut any staff in China during -- was, in the end, relatively a short lockdown, even though for my teams in Shanghai was long and tough moments to be confined in their homes, but our teams activating e-commerce actually are not based in Shanghai. And overall, we didn't make any staffing reductions.

So it was business as usual, not life as usual, but business as usual. So on that, there is no specific -- anything happening in the second half.

As far as skin care is growing. So as you know, our ACD is doing great.

As I mentioned in my presentation, L’Oréal Luxe is growing twice the speed of the market on skincare. And CPD, the Consumer Products division is around plus 4% in skin care, which is a very quite a contrasted situation between Garnier that is really flying double digit with its vitamin C serum and it's with acceleration in emerging.

And L'Oréal Paris, which is doing globally great in Europe but struggling in North America from service levels. That's one of the remaining pain points we have on service in skin care.

We've solved most of our CeraVe issue, which has been commented on several calls by adding production capacity lines in Mexico, in Europe, et cetera. But we have been struggling on components and production on L'Oréal Paris skin care.

And of course, a little bit of the Chinese effect on L’Oréal Paris. So probably, we intend to come back stronger on L’Oréal Paris.

All the other brands are doing great. And I want to insist also as I was talking about the L'Oréal Luxe performance, we have a fantastic performance of our premium skin care, both Helena Rubinstein, but also the absolute sub-brand of Lancôme, which are both flying at a very high speed.

A couple of questions from me, if I may. I wondered if you could talk a little bit about what's happening in Brazil, Mexico and India, which are countries that have sort of recently received more emphasis as part of your diversification of growth, the execution there, what's happened to step up the improved performance that we've seen in recent quarters.

And then just secondly, to clarify, if I understood you correctly on the margin, you were saying that we shouldn't be extrapolating the very strong performance in the first half into the full year, but that you'd sort of consciously left yourself a buffer for investments in the second half if it was required. I'm just checking that I understood you correctly there.

And also, if I could have a final one, any update on Helena Rubinstein and how big that brand is now and how well it's done in the last couple of years would be very helpful.

Okay. So you want to start with the -- because that's the one you were -- want on the margin to clarify, and then I'll take the question on emerging markets.

Yes. so I confirm that what is important is to manage our brands and the group on a long period with a long-term view.

So what happens in the first half, again, a strong growth, but we've been putting the right amount of money to fly at twice the market. We put the right amount of mid investments to keep speed and gain market shares.

And we didn't want to overspend in the first half because, again, I foresee in the coming months probably in the U.S., but who knows some difficulties, and it's very important to support our brands also when the weather is less sunny. So we'll see what will happen.

What I can tell you is that we have all what it takes to protect our market shares and keep growing where the market is dynamic. And that's the case not only in China, but as you've seen in Europe also, the market has been pretty good in the first half.

Switching to emerging markets and to the performance there. It's true it's been a stronger area of focus.

And I think the time is right for us to accelerate in emerging markets because, as I said, e-commerce and digital are really changing the game for us. We're really not competent or good enough to have at least an economically viable way to supply our products to all the little mom-and-pop stores across big countries and the rise of e-commerce, the possibility for consumers to shop on Shopee, on Lazada, on Mercado Libre in Latin America to have access to our products, to our virtual trials, to our advertising on their phones on what is a very young population and growing middle classes makes it the right moment.

And we got organized to make it happen with our new zone organization. We have made this very big but very consistent SAPMENA zone, which starts in Thailand and goes all the way to the Middle East, where you have all these young population, have the same climate, the same skin issues, the same needs in terms of products and typically a product like Vitamin C, the brightening serum from Garnier was developed for Southeast Asia and was spread across both SAPMENA, but also Latin America at really higher speed that we wouldn't never have imagined before is one of the consequences of this organization.

You have dynamic markets, and we've really come up with great product innovations. I was talking about the Vitamin C serum from Garnier, but we have also the hialurón plant shampoo from Elvive that has -- it's hialurónico in Latin America, and it's got another name in Indonesia, but they are big successes.

We have, I think, also some markets that are bouncing back strongly like India, which we mentioned earlier on. And overall, we have very -- both great teams and great mood in this country.

When you live in Western Europe, you are bombarded by the media with all the fears of recession, and of course, the terrible situation in Western Europe with the Ukraine invasion. I went to Mexico 1.5 months ago to see the teams there.

And the mood of the country has nothing to do with what we experience in France. These guys, they want to go back to life after the pandemic.

They want great products and you go to store their full of young people who want to indulge themselves with beauty. So it's a good moment, a good mood.

And I think we're now better organized with better innovation. And that's why typically, if I take our Consumer Products division in emerging markets, it grew twice the speed of the market.

So it's like a plus 16% or plus 8%, which is, I think, a proof that we're on the right track. But still, we have a lot to do because it's -- I was talking about the SAPMENA zone.

It's 40% of the world's population. And I think it's 10% of our business.

Our market share there is low. So it's just the beginning of our acceleration in this emerging.

And finally, your bonus question on Helena Rubinstein, I think Helena Rubinstein is probably one of the greatest success stories or transformation stories inside L'Oréal because this brand, when I joined took over L'Oréal Luxe in 2011 was really -- had been for years and years in difficulty. And there was a strategic decision that was made by the brand President and of course, by the division's management to transform that brand, which was a multi-category, beauty player, A La, Lancôme or Estée Lauder into a premium skin care specialist.

It means that for years, we eliminated our makeup offer and focused on premium skin care. And this transformation, of course, which was coinciding with the rise of China and the appetite of Chinese consumers for skin care and premium skin care in particular, has really allowed this brand to take off.

So year-to-date, the brand is growing more than 40%, and that was the same last year. And I think in the race to become the next billionaire brands, Helena Rubinstein is one of the contenders.

Two areas. I mean, one on the margin for the second half?

And the second one is following up on the July U.S. trend you mentioned.

So on the margin, you talked about A&P being up 10% year-on-year underlying, but you kind of alluded to more innovation in the second half? And I guess I wonder whether some of your projects in terms of investments were delayed because of the supply chain issue.

So the question is, would you see more investment underlying year-on-year in A&P in the second half as things stand today? You made the point about the weather may change.

But as things stand today, is that a logical conclusion? And I guess, similarly, the other side of that, the gross margin 140 bps down.

I'm assuming pricing is still building a maybe input cost headwinds of a little bit less severe second half. So would you be confident that the gross margin performance in the second half wil be better than 140 basis points.

And then just a quick follow-up on the U.S.A. July comment.

I mean can you be a little bit more specific about which categories particularly you've seen a slowdown in July. Is that more consumer, to your point earlier about luxury being a little bit more resilient.

Is it more of a consumer dynamic or would you say it's consistent across luxury and consumer?

All right. All right.

So we'll go one by one. First, I want to remind to everybody that when you look at the history, you've seen always margin that is higher in the first half than the second half.

There is always a gap between at least 100 basis points up to 200 basis points between S1 and S2. This is because, as you know, in the second half, we have all those big momentum in terms of consumption, i.e., of course, Christmas, but also we have the big operations in some areas and namely famous 11/11 operation in China.

So obviously, naturally, we tend to have a higher investment in the second half. So this year will be like a regular year.

So that's why I was mentioning that we have a good amount of media for the second half.

And just to clarify, we did not delay anything in the first half. I mean just that last year, you have to remember that last year was kind of the reignition of consumption and we overspent last year.

This year, we are still way above the level of 2019. And I can tell you that if I look at my share of voices, whether it's in off-line or traditional media or online media, we're above our global market share, and we are really investing behind our brands.

So that I wouldn't want to leave you under that false impression that we've either reduced or delayed anything. We're on yield trends all the time.

We are at a full speed mode. It's true that last year, we had to shake up the market.

So that's why we are investing a lot in the second quarter. But since the beginning of this year, besides some turbulences in China, we've been really flying full speed with all our launches on time and managing some logistics, sometimes disruptions.

So of course, we have a heavy launch plan in the second half, and of course, we will be defending and making the right amount of investment for this. I just want also to remind that every year, we are still becoming more digital in the way we invest.

So this gives 2 advantage. First, even more flexibility to react, that's very important in the current situation.

And second, a better return of investment, and that also has an impact mainly in China.

As far as the U.S. market is concerned, it's really early to say -- to enter in too much detail.

We saw a reduction in the traffic in hair salons for example or in SalonCentric that's really where we saw this slowdown. And then the rest is a bit -- a little bit across everything, but nothing really super material.

I don't know if it's because all Americans are in Paris right now because the dollar is so high versus euro, and we see a lot of them in the stores here. But it's just -- it's 1 month, so we'll keep an eye on it.

But the first time was really about in salons and SalonCentric.

And just on the gross margin?

Yes. On the gross margin, that's a mix of, of course, additional cost in the production side, but also our capacity to create value through price increases, through revenue growth management and through mix.

So what you can expect is, first when it comes to valorization, we've been valorizing quite significantly again this first semester. That's a very important point because remember that first semester, half of the growth is volume, half of the growth is value, okay?

And what we can expect is that some of the price increase has been coming up not everything on January 1. It has been staged across the first semester.

So of course, we will have mechanically higher price value in the second half that will help to mitigate any further increase, if any, when it comes to production costs. So I'm quite confident that on the second half, there should not be a big disruption or eventually a slight improvement in the gross margin, but we will see because a lot of uncertainties are still in the market.

And if I may add something, I think for me, I think it's very important that all the growth doesn't come from value. We are there to recruit new consumers, to increase the penetration of our brands, whether in China, the rest of the world, and as I mentioned in our last call, we've invested into revenue growth management capacities and technology.

And we have this -- we have, frankly, the capacity now to anticipate the impact on volumes of our price increases in a pretty scientific manner. And of course, it's getting more accurate every time.

So we're very much piloting this at the SKU level, at the brand level to try to manage to get the best equation for the P&L of L'Oréal, but also for the top line growth. And I think this year's -- this first half results demonstrate that the recipe seems to be working.

So that's -- you will see more value because some of the price increases we're taking after the -- in the middle of the first quarter. But we continue to do that in a very tailor-made way.

And long-term vision because we don't want to lose our consumers.

I do have 1 question with regards to a category Fragrances. And a couple of questions when it comes to business models that will be SalonCentric and Hainan.

So when fragrances continue to lead very lapping, very strong comps much stronger than makeup. Why is that?

What do you think fragrances is so strong? Does it have to do with the technicality that Travel Retail reopened in Europe.

So that will be the category question. The business model question has to do with, how is different this marketplace that you are doing with SalonCentric, what does it mean?

What was -- how does it differ from the business model that you had before? And so the second business model question is when it comes to Hainan.

You include Hainan 2 ways within China and then through the Travel Retail. So I understand that it's both.

But essentially, did Hainan, could you give us a sense of how Hainan performed specifically, not because traffic was down. So essentially, if this would have been the traditional Travel Retail, Hainan probably would have declined much further than it did.

So if you can give us -- help us understand how is Hainan. Is this because one of your peers in Paris sometimes refer Hainan to gray markets.

So if you help us understand Hainan, how Hainan performed within a very tough quarter, as we all know. But if you can explain that, that would be great.

I'm sorry for the 3 questions, okay?

With great pleasure. So I will try to be -- time is running out, I will try not to be too long in my answers.

First of all, fragrances -- well, the fragrance market is bouncing back globally at plus 20%, and it's both the result of, I would say, a new appetite for this category that has developed during COVID, where people have kind of discovered this like self-tempering well-being good mood field that brought by fragrance that has been increased by, of course, the end of the lockdown and to go back to social life because fragrance is good for well-being, but it's also a part of seduction. And third point is that the Chinese market is really now excited about fragrance and the premium fragrance brands are growing fast in China, one of our small brands like Maison Margiela is doing fantastic in China.

So there is this growth of the market. And why are we performing so much better, I think we are -- we've developed over the years a really strong know-how on how to create fragrances that are both very good fragrances, we're putting more money in the quality of the juice, working really in affinity with the brand.

And we have spectacular successes. Of course, you know Lavia Bell, the fragrance that was launched more recently like [ Lebor ] from Estée Lauder is now in a worldwide top 5, which is phenomenal.

We have, of course, the Armani that are doing great. We also have strength in masculine fragrances with Armani, YSL and more recently with Prada, with Luna Rossa, and that's where there is extra contribution to our growth to the fact that -- both by the fact that we have new licenses.

Valentino is successful with Born in Roma and now Prada, which, by the way, as part of the new launches -- of the new launches that's going to be brought to the market in September. You have the first feminine fragrance developed by L'Oréal for Prada, which is called Paradox, maybe an interesting name and with, of course, who's going to be heavily supported.

So we intend to continue to grow even though this is one of the categories where there are supply chain tensions because of the capacity of glass manufacturers. Your second question was on SalonCentric platform.

In the end, SalonCentric, which was -- has been a progressive acquisition for L'Oréal has been -- has become really a determining factor of our success in the professional market in the U.S.A. It's actually taken over.

This year, it's #1 competitor BSG. And that's --that this is where hairdressers are buying whatever they need for their salons and all for their individual craft because one of the huge phenomenon that has happened in the U.S.

and probably in some parts of the world, that stylists are becoming more and more independent. So they don't stay in one salon.

They have work in salon suites. They change cities and sometimes they go to people's homes.

So they have to have a place to where they can buy our products, but also -- we sell at SalonCentric, some competitors' products, some sundries, some aprons, some cottons and we decided to take it to the next level is to offer these salons because we have the traffic at SalonCentric on the e-commerce part of SalonCentric to offer something more than products services that could be booking softwares, insurance. I don't know -- yes, all types of services, of course, training.

And that has 2 benefits for the stylist that they will have a one-stop shop where they can buy everything. And of course, if they buy our products, we'll get the money for our products.

If they buy other services or other products, we'll get a commission on these sales like any platform would do. And of course, if you expand from products to services, you potentially double the size of the addressable market in the U.S.

So it's a new venture. It's just beginning.

We started it, I think, in February or March this year. And so it's progressively building.

But I think from a customer centricity point of view, it's very, very powerful. And finally, on Hainan, Hainan is a conscious decision from the Chinese government to create a tourism and a duty-free destination for Chinese that used to go and buy many products in Hong Kong, in Korea, outside of China.

And it's -- so it's -- I've been there. It's an incredible island with hotels and shopping centers, and that's it, and beach where the sea is a bit dangerous, by the way.

So it is growing and it's constantly being developed. They are just about to open at the end of -- beginning of September.

Totally new mall that's called [ Xing Yi Gong ] in New Harbor. It's going to be 25,000 -- 29,000 square meters of beauty and fashion shopping.

And so it is a very dynamic business. It was negative during April and May.

So there was no business when COVID prevented people from going there, and it has reaccelerated in June. And the way we manage it is we have -- we look at the -- today, it's consolidated, of course, it's in Travel Retail, but consolidating in our North Asia zone when we publish our numbers.

But what we try to do is always we'll try to look at the Chinese consumer as a whole. And we have a team that's managing the China and Hainan business together.

They are coordinating constantly because obviously, we wouldn't want value from the domestic Chinese market to be taken away by unhealthy sales in Hainan. So there's a tight control of this.

We know that many of the consumers that go to China, to Hainan from Tier 4, 5 cities, and that's also a way for them to discover our brands. So it is managed.

It is controlled. And I will give you one number, which I think -- because I hear all these questions.

If I take Travel Retail Asia overall, that includes, of course, Korea, which used to be the #1 destination for Chinese buyers and has now been replaced by Hainan. And if I take the Hong Kong Duty-Free, if I take the period during -- between 2019 and now 2021, we've increased our sales in value by 30%, but we've decreased the units by 15%.

So it's a huge valorization work, which still shows you that we are far from being degrading the value of our brands and creating -- shooting ourselves in the foot. On the contrary, we're managing both the capacity of Travel Retail to recruit new consumers and to present our brands in the best possible way.

But at the same time, we're managing the fact that we have a domestic market to protect. So I hope that answers your question.

And I hope when you get a chance to visit Hainan with this new -- I'm looking forward to this new incredible mall. It's is going to be another experience.

If I may add on what Nicolas was saying. Travel Retail is a fantastic place that means Hainan to showcase our brands visibly.

So probably it's one of the parts in the world where our brands are the most beautifully exposed in those incredible shopping malls, and I can tell you that the new one that will be opened is really amazing.

That should be the locale for your Analyst Day.

Good idea.

It should be a relatively short one. It's to do with China, based on the answer that you gave to Guillaume's question earlier on the call where you highlighted your expectation for mid-single-digit growth.

It seems a little conservative considering the penetration opportunity, i.e., the fundamentals which you highlighted, the easing of restrictions, potentially some stimulus. So I just wanted to better understand why you're assuming the relatively low market growth prospects for China.

Well, because overall, this is -- the market has reached the size that warrants more mid- to high single-digit growth. And I'm just being careful.

But in the end, it's not the expectation. The growth expectation I have for my own business in China because we want to beat this number.

So we'll try to do better than that.

The market was at minus 5% first half. So it already takes 10% to be at the middle single-digit growth for the full year.

So 10% is not a bad assumption for the market.

Okay. Well, I guess we will thank you all for your attention and questions, and wish you for those who are lucky enough to go on holiday, a great holiday; and for the others, a good time of work.

Thank you, everybody.

Thank you. Thank you, everyone.

Thank you.