AmRest Holdings SE (EAT) Earnings Call Transcript & Summary

Dear ladies and gentlemen, welcome to the presentation of AmRest. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand you over to Lukasz Wachelko, Wood & Company, who will lead you through this conference. Please go ahead.

Good afternoon, ladies and gentlemen. As announced, my name is Lukasz Wachelko, I'm representing Wood & Company. And today, I have a pleasure of moderating the conference call with AmRest regarding their full year 2019 results. The company is represented by Mark Chandler, Chief Executive Officer; Eduardo Zamarripa, Chief Financial Officer; and Peter Kaineder, Chief of Strategy. Not to prolong too long, gentlemen, the floor is yours.

Lukasz, thank you very much. Good afternoon, everybody, and welcome to our year-end earnings call. Certainly, 2019 was an eventful year for me and also the company as we went through many changes. I'm really proud of the team, pleased with performance overall and also excited about the opportunities that lay ahead of us. And Peter will take you through that a little later on in the call. Since taken over nearly 1 year ago, we stabilized margins which, of course, was the focus I've talked to many of you about. We've also strengthened our management team, and that's continued also with building some talent pool at the manager level below exec. Also, as spoken before, we expanded our franchise development capabilities. We've added 2 senior people to the team. Also, we've added more discipline to M&A. M&A was very active in the last several years. This year, we took a pause, and that was because we wanted to focus more on integration. And finally, we also opened up our first shadow kitchen, and I'll talk a little bit about that later on. And also, one thing to add, we had one opening on the exec we've filled up. We've hired Ismael Sanchez as our new CPO. Ismael comes with 20 years of international experience, especially in the area of change management. I think that's something very important for us right now. And I'm very happy to have him on the team. We've also continued to spend heavily behind digital and technology, and we already realized the returns from this investment. The introduction of kiosks, which we've mentioned several times, has increased our average guest check and our markets anywhere from 10% to 20% and also helped us with our labor cost. We will continue this rollout this year to many more markets and also brands, because right now, it's been primarily KFC, so now we'll expand it to -- also to Burger King and Pizza Hut. Also a good indication of how important digital is to our business is by how we measure our share of digital transactions. For KFC, in our 3 largest countries in CE, that share of digital transactions rose from 5% at the beginning of 2018 to more than 25% by the end of last year. We've also partnered with Microsoft and launched a global BI tool that will help us in analyzing our customer data and also gives us insights which we all know will help us drive same-store sales. We're also working on better leveraging our cost structure through the merging of company back offices. That's happened in Germany and right now also in Paris. And also we're utilizing our Polish team for shared services. This has happened right now with German accounting, and we'll also look for other opportunities for our labor arbitrage. We're also starting to go through an organizational design process, and that will help us be more effective and also be more cost effective. But right now, our focus is in also leveraging better our G&A. With regards to our growth in 2019, we expanded our business by 26.8%. That was driven by store openings, healthy same-store sales and also the acquisitions in the year before. We've also decided, given the feedback from everybody, to give more visibility on our growth trends to the market by starting to report same-store sales growth for total AmRest. For 2019, we had grown comparable sales by 4.4% on local currency. It is also worth noting and very important that we've grown in every single major market. So -- and this has also started off in 2019, the same way, with the exception of China, which I'll talk about in a few minutes. I also said in the past -- that we've mentioned that we were going to focus on margins. Margins, over the past couple of years, have been dropping. And it was important for us to rebalance where we're at with the portfolio. We've been working hard in driving the core margins -- core business margins but also in integrating the new acquisitions, specifically on Sushi Shop. In terms of margins, we ended the year overall at 12.6%, which was substantially above our 2018 margin, 11.2%. Very importantly, we continue to drive up margins in our core markets. We have a very strong and healthy foundation as we move forward. Margins were also impacted by 2 major one-offs, one was the sale of Pizzaportal, and the other was the provision established to reset our Pizza Hut MFA commitments. Starting first with the sale of Pizzaportal to Glovo. We booked, in Q4, a gain from the sale of EUR 37 million and that, of course, pushed up our margins. We also, in the transaction, received EUR 20 million in cash. We also increased our stake in Glovo to 7.5% on a nondiluted basis. We also secured a Glovo Board seat. For us, we're still very pleased with the partnership we have today with Glovo. Additionally, in Q4, we addressed our Pizza Hut MFA requirements, and we've worked with Yum! to renegotiate our targets. We booked, in Q4, EUR 8 million provision to reset our development commitments for all Pizza Hut markets going forward. This will allow us to develop each of our regions on a more timely basis, which will also enable us to improve the long-term brand profitability. Adjusting for these 2 one-off items, the total year margin was 11.2%, which is flat with last year, and this is also the commitment that I made to each of you during the year. I know that many of you were looking at -- thought we'd come in slightly lower. But we've been working very hard, the whole team has been. And I'm very pleased with coming in with a margin that's stabilized. And again, we talked about for next year, and Peter will go through slightly increasing our margins going forward. As anticipated during the last earnings call, we also slowed down our growth in new openings. And that was due to strength in our franchise team. We wanted to get 2 people in place. We also wanted to make sure our shadow kitchen model was proven. And also, we worked in trying to complete our integration plans. We had 264 gross openings this past year, and we expect that to increase to more than 300 openings in 2020. So of course, that number may be affected by what happens in China due to the coronavirus. And I'll talk about that also in a few minutes. In terms of a net number, we're looking more in the range of 290 for next -- for 2020. So it's going to be certainly a lot less closures than happened in 2019 because we were looking to clean up our portfolio this past year. Also, our pipeline for the year is very strong across the entire portfolio. And I'm very pleased with the immediate impact that we've had on the franchise side, thanks to the addition of 2 gentlemen that joined us at the end of last year. We're also working to streamline our development processes to make sure that we can deliver openings commitments. It has been a long work we've done with the teams to make sure that we're more accurate and also can advance, during the year, our openings because lately they've been more backloaded. Peter, in a few minutes, will also provide an update on the start to the year and also walk you through the outlook for 2020. I'm very confident that we're well positioned to succeed. We've got a great team in place across all our markets. We have really a unique portfolio of brands. We'll be intensifying efforts to leverage our scale across the organization. Our strategy has been and will continue to be people, brand and scale. Our digitalization and online delivery also will continue to play an important role, and I believe that we are in the forefront of understanding the trends. And finally, I'm very pleased with the results from our first shadow kitchen opening that happened in Poland at the very end of November. And we're encouraged to add more openings this year inside and outside of Poland. For us, the first shadow kitchen was only virtual brands. We have a big opening in the month of June in Krakow, which will add KFC and pizza also will be virtually introduced to the market. So we're very happy with the progress so far. The kitchen has exceeded our internal targets that we've had. And so we're looking next year probably at least 6 to probably 8 shadow kitchens that we'll add to our portfolio. And before I pass to Eduardo, I want to update you, of course, on the very important topic of coronavirus that's had a big impact in both our business and also in personnel. We've been in daily contact with our team in China. I have to say I'm very proud of the team we have there. They send us videos. Their spirits are high despite what's been going on. As you know, we finished 2019 very strong. It was actually my best performer versus the plan we had. And we also started off in the first 3 weeks with the index -- same-store sales index of 114 and we also opened 2 stores. Then once the virus hit, of course, things changed dramatically, I have to say that we've been working hard on a daily basis. We then also had some forced closures. And now though, we have only 6 stores right now closed of the 70 stores in China. But we also have -- because of the landlords and the government, we have 20 other stores that have been restricted only to delivery. Delivery right now represents 48% of our business. And so that is something that, for us -- was where we actually -- if there's any benefit that comes from this is that we were not very big in delivery before we started. I think once we come out of this crisis, delivery will certainly be a bigger part of our Chinese business, I think it's going to be -- help us as we move forward with that. Fortunately, we've had no illnesses within our team, and also none of our customers have reported any illness as well. So for us, it's been -- it's been certainly not an easy thing for us. We've seen, though, our sales versus last week improved by 35%. We just reopened our central kitchen so that's been as of today. And so we are still looking at updates what -- how it's going to impact the business. Of course, it's very difficult to determine where that's going to be. I've heard different things from the Chinese government. But for us, overall, we are seeing a pickup in the business and think that we'll be heading in a more positive direction going forward. But also, that outbreak has also impacted other parts of the world, as you know. And we've also taken precautions to ensure that both our staff and the customers are protected. We have taken action on our supply chain where we've been identifying backup suppliers in case there's any disruptions in our current suppliers. We've also built inventories of key items to ensure that we would have no disruption as well in the business. We've also established, both at a country and a global level, task forces, specifically working on the coronavirus topic. We've dealt -- established internal and external protocols for us. They meet daily. And also, we've given our procedures and guidelines to the staff in the restaurants, and they're also ready to address any issues that may arise with that. So it is -- as I said, once we have more information, I'll be able to update you. In terms of impact of the business outside of China, we have not seen any slowdown. They're still registering positive same-store sales as we had at the end of last year and also through January. So still, at this point, nothing we've seen to impact our European business. But again, we'll take it day by day. Certainly, later on, I'm happy to answer any of the phone calls or any questions on this one. So with that, I will actually pass it to Eduardo, who will take you through the update on finance.

Thank you, Mark, and good afternoon, everybody. Now I will move to the financial highlights of the quarter. It's worth mentioning that the comments I provide during the call excludes the IFRS 16 accounting standard. You can review IFRS numbers in the slides included in the Appendix in our investor presentation. That being said, let's start with Slide #4 of the presentation. 128 restaurants openings in fourth quarter. We accomplished the very strong target that we set for the fourth quarter. The total stores count at year-end is 2,339 units. AmRest net sales for fourth quarter show a strong growth of 19.4% to EUR 521 million (sic) [ EUR 529 million ]. This solid growth is mainly driven by strong sales trends in comparable restaurants as well as M&A activity, specifically Sushi Shop. Excluding our M&A activity, our core business grew 17.6%. In terms of profitability, EBITDA for fourth quarter was EUR 90 million, which is 86.2% higher than last year, and margin stood at 17%. EBITDA in fourth quarter was supported by EUR 37.1 million gain from Pizzaportal sale, partially offset by the provision previously mentioned of EUR 8 million related to the MFA resettlement agreement. Excluding the above-mentioned one-offs, EBITDA margin was 11.5%, 60 basis points higher than last year. Net profit attributable to AmRest shareholders amounted to EUR 38.5 million with a margin of 7.3%. Moving to Slide 5. Year-to-date revenue reached EUR 1,961 million and were 26.8% higher compared to the previous year. Excluding our M&A activity, our core business grew 16.4%. During the year, the store openings reached 264 stores. The consolidated EBITDA amounted to EUR 247 million, representing a 43.1% increase over the prior year. The margin stood at 12.6%. EBITDA for the full year, as previously stated, was supported by EUR 37.1 million gain from Pizzaportal sale, partially offset by the assets described before. Excluding the above-mentioned one-offs, EBITDA margin was 11.2%, in line with our previous year. The core business profitability remains strong driven by favorable same-store sales. And on the other hand, we are facing higher labor cost, but we are able to offset part of those with several initiatives across the company. We maintained focus on costs and expenses following up through our Margin Committee across the countries. Let's move to segment information on Slide 6 for Central and Eastern Europe. Quarterly sales increased by 18.7%, mainly driven by mid- to high single-digit same-store sales trend in all CEE markets. During the year, we opened 127 stores, mainly KFC, Starbucks and Pizza Hut. The fourth quarter margin improved 0.9 percentage points to 14.7% or EUR 34.1 million, an increase of EUR 7.2 million versus last year. Total CEE generated 38% of total AmRest EBITDA in the quarter. We're experiencing some pressures in margin, mainly from cost of labor that we have been able to offset with cost of sales initiatives. Let's continue with Western Europe. The sales increase for the quarter is 17.3%, and EBITDA decreased by 16%. For the full year, EBITDA grew 23.1%. The biggest improvement is coming from France due to the inclusion of the Sushi Shop business and its positive contribution from acquisition and ongoing initiatives to fully integrate the acquired business. We continue with the integration of the company, and we are very excited about the opportunities and potential of the brand going forward. Moving to Spain. For the fourth quarter, sales increased 12.4%. We continue having pressures in margins due to increase in labor cost, and negative impact due to change in the mix. The sales growth is mainly coming from KFC. Germany posted positive margins for the quarter and continued showing improvements in the Starbucks business. We continue working with initiatives to improve the performance of KFC and Pizza Hut, including Shared Services Centers and supply opportunities. For Russia, sales for the fourth quarter increased 26.3% and 22.6% for the year. The EBITDA reached 10.5% margin for the year. In the quarter, 22 new openings occurred. Lower profitability in the markets come from dilutive impact from Pizza Hut business and ongoing reorganization as well as investments in delivery. Final region is China, which continues outperforming. In fourth quarter, sales increased 16.8%. The margin for the quarter reached 10.2%. 16 new opening stores were done during the year, and same-store sales are driven by the growth. Definitely, a market with great potential at the beginning of this year is facing huge challenges due to the impact of coronavirus. Now with regards to the balance sheet, net debt at the end of the year 2019, excluding the impact of IFRS 16 equals to EUR 616 million, which resulted in a comparable leverage at 2.9x. The cash provided from operating activities for the year amounted to EUR 325 million with IFRS, and the net cash used in investment activities amounted to EUR 220 million. Now I will turn the call to Peter for his remarks.

Thanks, Eduardo. Good afternoon, ladies and gentlemen. Adding to what Mark and Eduardo has been saying, I'd like to give some color on our plans going forward but also on trends we see in the first 2 months of this year. Starting with store openings. After last year's 264, we are aiming at 320 this year. And unlike in 2019, we are now excluding shadow kitchens from that target given the stage of development of this project and also learnings from last year. We talked about this in the last call. Our focus in shadow kitchens is to find the right model, prove the concept and do it right from the start rather than scale too early and figure out potential issues later. And there's no blueprint or best practice anywhere. We are taking one step at a time, but we also understand that we're uniquely positioned to run shadow kitchens successfully. As Mark indicated before, we are pleased with the better-than-expected results in shadow kitchens and the virtual brands we launched. To give you some idea on the potential scale of this year's shadow kitchen rollout, we think we can open between 6 and 8 kitchens with 5 to 6 brands each, so an equivalent of around 30 to 50 kitchens. Most of those will be in Poland, but we plan to start testing them in Spain, France and U.K. towards the end of the year. So if you roll those out and would include them in the 320 guidance, you might be looking at one opening a day on average this year, which I believe would be a very nice milestone for us. In terms of the 320 openings, we both try not to have them clustered around the last 4 weeks of the year like in 2019, but the large majority will again be happening in the second half, and you will see only a slow ramp-up in the first and second quarter. Looking at underlying trends this year. Same-store sales look encouraging. With the exception of China, we see solid growth especially coming from franchise brand and, so far, don't see any slowdown or even signs of slowdown caused by the coronavirus in our comparable sales numbers, which we are closely monitoring on a daily basis. However, we are fully aware that the further spread of the virus and government actions taken might temporarily result in changing consumer behavior and potentially affect sales. We are very pleased that Tagliatella Spain has returned to meaningful comparable top line growth in 2020. And as far as we can tell, we are strongly outperforming the overall casual dining segment in Spain by a significant margin, and it's something close to 400 basis points according to the numbers we see. And unlike many of our competitors, we are achieving that result without giving promotions, which clearly shows the strength of our brand. We also see strong growth coming out of our largest market, Poland, where comparable sales growth is at high single digits this year and is setting a very good base for dealing with wage cost pressures. So where does this put us in terms of growth? I think it's pretty obvious that without M&A, it will most likely be a challenge to hit the 20% growth target we set a few years back. Organic growth alone most likely won't get us there. Is the organization ready for M&A? Yes, we are. So in principle, we are open to engage, but we will also not force M&A for the sake of growth. It has to be the right asset at the right price and there are not many assets meeting all of our requirements. And also, we will not make concessions. Types of M&A can be market consolidation, so buying out other franchisees in franchise brands, adding countries we operate or by entering a new market. Also, the addition of another equity brand is possible, although not the primary focus as we feel pretty comfortable with the portfolio and categories we run currently. Should we grow our portfolio of equity brands, the focus will be on Class A brands, and we will look at champions in their respective category only. And those can be regional or local champions. But we also think that it should be acceptable, especially after growing close to 30% in 2019 to show a year of slightly slower growth than the 20% in case of no M&A and put our focus and commitment on profitability. On margins, clearly, very top of our priority list this year. We are pleased with the 11.2% achieved last year, excluding the one-off items and delivering on promises we made to you last year. Despite the well-known headwinds around wages in some of our markets, we believe that we can improve margins in 2020. The negative impact we've seen so far from the coronavirus in China does not make us so far less confident in terms of this target. But it's obvious that the achievement will be linked to further developments around the coronavirus, and we will update you with the first quarter on where we stand. Overall, the key levers for margin uplift will be digitalization, especially around the rollout of digital ordering screens in stores, which we call kiosks; labor scheduling tools, we're implementing better terms on food supply and other procurement; and efficiency gains, not only in-store, but also on G&A. Overall, we're aiming a 20 to 30 basis points improvement in margin year-over-year so at a level of 11.4% to 11.5% target margin, which is still on a non-IFRS basis. So overall, we're in very good shape. We see consumer trends in our markets and categories supporting us. On top of that, we believe that we can further improve efficiency in multiple areas in the organization. And with that, I would like to hand back to the operator and open the floor for questions.

[Operator Instructions] The first question is from João Pinto, JB Capital Markets.

The first one. You mentioned 290 net openings for 2020, if I understood correctly, just to confirm again, this does not include shadow kitchens, right? Also on these plans, just on round numbers, what will be the portion of franchisees and equity stores in these openings? My second question on shadow kitchens. You said you're happy with first results. What are the biggest challenges before you can roll out faster? And that's all.

Okay. Let me see if I can address this and please, gentlemen, add anything you want. With the 290 net openings, yes, that is correct. We're looking at roughly 320 in terms of openings. Again, this is excluding the topic of China because that's in that number. And we're looking at probably no more than 30 closures. I think we should do less than that, but just to be conservative. So that's a 290 there. The shadow kitchens are not in the numbers, and that's something we decided to do because the one, the first test out where we're at -- and because there are some challenges as well with the shadow kitchens. And the biggest one actually is electricity because to power a 5 or 6 or 7 kitchen unit requires a facility that can handle electricity. And that's actually, believe it or not, it has been our biggest challenge. Think from a brand standpoint, how we're organized, we have a delivery platform there. We've got, I think, a well-organized team, very organized team that's opened up the first one. So we feel that the biggest challenge was probably finding the site that is big enough and can handle that situation there. In terms of the equity franchise part, we're going to have a little bit more than 40 franchise openings this year. I actually believe that, that number could probably shift higher given the team we have, but the team has just been in place since the end of last year. So difficult to push them any higher yet, but the pipeline is getting quite strong. And so that is, right now, our target -- minimum target is at least 40 openings in franchise.

At the moment, there are no further questions. [Operator Instructions]

Okay. So maybe taking the privilege of the moderator, I would ask a few questions. First of all, if you could walk us through the impairments of the fourth quarter last year because they were fairly sizable, so the breakdown for what kind of assets they were. And if you could also help us to understand the EUR 8 million provisions related to Pizza Hut deal, that would be the first question of mine.

Well, thank you. The impairment that we have is for the amount of EUR 13 million is mainly in Germany, France for the franchise business that we have over there. And it's the test related to the result that we have over there and mainly related to some goodwill that we registered in the moment of those acquisitions.

And I think that the -- it ties in a little bit that the EUR 8 million provision was really, as I'd call, resetting the MFA. As you know, we signed an agreement several years ago with probably pretty aggressive targets in terms of Pizza Hut. For me, it was important to have probably a little bit more balance in terms of the targets that we had and also how we allocated our capital. You see, of course, the opportunity to grow at CE. I think France also has proven to be one that's so difficult, we see a lot of opportunity. And probably a little bit less, I see, going of Russia and also Germany. So what we've been able to do is rebalance those commitments that we have. So we're building restaurants, I think in the -- in how we would like to allocate the capital. So we've been able to work with Yum! on that, and very pleased with the partnership we have with them, and so that is kind of resetting everything. And I think for our profitability going forward, I certainly believe that we'll have a better overall profitability in Pizza Hut as a result of this resetting of the MFA.

Okay. And shall I understand that now after the write-down of the franchise agreements in Germany and France, you have clearly -- establishing down, well, taking the opportunity with the positive one-offs, and you are now going forward with clean sheets? Or there are still some problematic restaurants and from getting deals, which may well call for a further write-downs going forward?

No, I think you're right. I mean, it was a cleanup. We took the same -- also, at the same time at the end of the year also with the Pizzaportal and Glovo transactions and the revaluations of Glovo investment to do that. So we did eliminate the goodwill that was out there for Pizza Hut France and also for KFC Germany. So those are the 2 areas that we wanted to take care of. So we have a very clean balance sheet moving forward. And again, with the resetting of the MFAs, I feel quite good about where we're at because as I promised everybody, we were looking at each of the businesses, region by region, brand by brand, and also our focus is still on margins. So I wanted to take the opportunity to clean up a few things at the end of the year. And again, also, we finished very strong with our brands, so it enabled us to do that.

Okay, great. And the last question of mine would be, well, coming back again to the virus case. Can you be a bit more specific what kind of decline of revenues have you seen in China and maybe last week or last 1.5 weeks what you've observed in Europe? Do you have any numbers on that or not really?

Yes. I do. I mean, we -- as I mentioned, we started out at the end of 3 weeks, we're at 113.5 was the -- actually, the same-store sales number. And of course, it dropped down to almost nothing at some point simply because we were forced to close restaurants. And also, we wanted to make sure that we took the proper actions with the team. This last week, our same-store sales was at 22. It seems low, but it's 35% up versus the previous week. And then we've also seen, in the last couple of days now, approaching in the high 20s. So the number is coming up fast. And I think, again, we have to go to delivery of 20 stores simply because the government landlords requested that, but we have only 6 closures right now. It was at some point 20-something closures. And so we have 6 only that are closed officially, and those -- well, some of those will be opened up. Whereas the one in Wuhan will not be opening up shortly, but we are seeing increased traffic. We have all the measures in place in terms of measuring people's temperature when they come in, not only our staff, but also our customers. And I think the people are starting to feel, I think, a little bit more comfortable to go out. But as I've said, it's -- I think the couple of things will happen out of this, certainly, it's been a -- it's been tough on the team, and it's been tough for us as a business. But as I've said, the important thing is nobody has been affected in our team and our customers. But I think we'll see more sites become available for us that we probably didn't see before. And I think also delivery, as I said, has not -- has been a very small part of our business in China. And now being 48%, which is not the normal number going forward, but we certainly have better capabilities than ever before. So I think we'll come back quite strong. The team has experienced SARS before, so they're used to this situation. So I've never seen a team so strong and ready to go. So it is for us still not the numbers we expected, but we're getting there.

And on Europe, as I said, checking the numbers, the most recent numbers. And as I said, we track comparable sales on a daily basis. In Europe, we don't see any impact, at least so far. So it seems like consumers are not avoiding restaurants, at least not our restaurants. So we don't see any impact so far.

Okay. And for China, would it be fair to say that you've -- well, you've seen like 30% so far overall declining revenues -- or I think all those numbers? Or I'm just -- I'm exaggerating?

Well, I think it's hard to say because I think it has -- well, I think -- remember, January was -- 3 weeks of January were actually -- we were fine. So I think -- since then, it certainly has dropped off, so it's going to be hard to say how much that's going to be. Certainly, we're down in revenue, and we're taking actions in terms of how to offset on the cost side, but we didn't open up our shadow kitchen -- or excuse me, our central kitchen until today because we didn't need to, so we didn't get the staff go in. And we've been also able to, from our team, we've been able to work with the government on how they can also work on at this point in terms of finding other jobs for them on a temporary basis like in supermarkets and that. But on a year-to-date basis, we're probably around 52, 53 index. And of course, we were coming off of over 100 at the end of last year. So -- but that number is starting to rise. And as I said, it's -- we just got to wait and see how fast we can pick up. I really -- it's been very hard to see. But again, we're in the mid-20s and rising and transactions are also increasing as well. So it's heading in the right direction after a pretty strong dip.

In terms of our exposure, China represents around 5% of our business. So that's what we have in the table from this market.

And we're running scenarios, as we say, as to actually just different types of things that can happen in terms of 1 week can actually probably get back to full strength again. So we're still trying to figure out what the impact's going to be, but we'll let you know on the first quarter call. We'll have a lot more insights into what's going on.

Okay. So for the sake of clarity, you say index of 52. So it means that actually so far revenues have halved pretty much?

Yes.

On China market only? Yes.

Yes. It's rising so it's good.

At the moment, we have no further questions via the telephone lines. [Operator Instructions] And we received another question. It is from Emmanuel, LBV Asset Management.

It's Emmanuel from LBV Asset Management. I just have a question on what sort of like-for-like growth rates you need to maintain margins in Western Europe and in Eastern Europe? That's all.

I guess to maintain margins, you're looking probably in the 102%, 103% range, though, I think we're looking to increase margins slightly, as Peter said. But of course, it has a lot of factors. But we're still seeing, from our brands so far in the first 2 months, good, strong across the portfolio. So I think we're looking at probably, I think, if you get 102%, 103%, it, for sure, will stabilize margins and that will slightly increase, and I think we're -- we still believe we can at least achieve that and hope to do better in some other markets.

There are no further questions, so I would like to hand back to the speakers for some closing remarks.

Well, first, I want to thank everybody for participating. I know it's been a sort of a year, as I said, a lot of change for us, but we're very pleased with it. We will certainly update you on what's going on with coronavirus. Also, we look forward to seeing people to update you. I guess some of our road shows have been temporarily delayed because of the -- we banned travel for some of the people going around. But Peter and Eduardo and myself are always available to talk. I still also travel to different places. So we encourage you to come visit us. And again, we are off to a good start this year, and hopefully, we can continue that. So I want to thank everybody for attending today's call.

Thank you very much.

Thank you.

Thank you.

Bye.

Bye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.