Ansell Limited (ANN) Earnings Call Transcript & Summary

Good day, and welcome to the Ansell Limited FY '26 Full Year Results Briefing. [Operator Instructions] And finally, I would like to advise all participants this call is being recorded. Thank you. I'd now like to welcome Nathalie Ahlstrom, Managing Director and Chief Executive Officer, to begin the conference. Nathalie, over to you.

Thank you, operator, and welcome, everybody. It's a privilege to be here today together with Fred and walk you through our fantastic strong year, financial year '26, equally also then talking about the outlook and then having the Q&A together with you. So we'll start with looking at the performance and then as I said, coming to the Q&A. Starting with the purpose. We have a really strong purpose. It's an emotional purpose. It's a powerful purpose and this leading the world to a safer future. This is who we are. This is our business. This is what it's all about. And that's how we translated it then also to our financial year '26, and that's how we are bridging then the strong momentum to financial year '27. But let's start with the highlights of the year. As I said, the highlights is a very strong delivery in quite dynamic market conditions. The world is pretty, a lot is happening. But as I said, it's a strong delivery, and we grew the net sales by 5.7% adjusted in this environment. And where I'm especially proud is that our second half growth momentum, 9.2% growth really showed that we're also growing with volumes. So good strong momentum here. On the sales growth, we also see that it's -- the momentum is in strategic areas. And areas to call out is our Cleanroom, our scientific business grew by 10% for the full year. And also U.S., by far, the largest market, grew by 10%. So improving the mix, growing in the future strategic areas has really helped us deliver a strong financial year '26 and also a very strong second half where also volumes came back. So strong net sales growth, of course, translates into a strong EBIT delivery, an EBIT margin of 15%, and we grew by 90 basic points versus last year. The star is, of course, Healthcare, and I'll come to that soon. But you also see that our GPADE grew by 70 basic points. And that's, again, thanks to this that we are growing in the more strategic areas where we are having higher gross margins and our value addition to customers is higher. Also this financial year '26, as I said, it was a dynamic market, and our really decisive actions when it comes to U.S. tariffs and Middle East crisis, things that are in our own hand on sourcing actions and then also price increases helped to offset the impacts of both U.S. tariffs and Middle East crisis. So strong net sales growth, good EBIT margin, and that then also supported by a very strong cash conversion. Cash conversion of 113%. So we have a strong balance sheet in place compared to the financial year '25 when our cash conversion was 91%. Why this really mattered was in the Middle East crisis, and I'll talk about that a bit later. When Middle East crisis started, our focus was on enabling our customers to continue to serve, continue to ensure that we have availability. And that's where the strong balance sheet and strong cash conversion really supported us. And then finally, adjusted EPS at the top range of $1.486. That's a growth of 18.5% compared to last year. So we are very proud of it. And that also then translates into a higher dividend. We increased the dividend by 35.7%. So the full year dividend is $0.681. So strong top line, EBIT, cash conversion, EPS. And this all is thanks to our strong team that we are having globally and the strong partnerships we are having with our customers and our partners. So that's the highlight of financial year '26. Then going to Industrial. Industrial continued to perform on a high level. EBIT again grew, and we see that the EBIT margin grew to 9.7%, going from 17.3% to now to 18% EBIT margin. What we really see is that, of course, the net sales growth, especially Mechanical, where you see the Mechanical also grew much faster in the second half, 7%. That supported the net sales growth, supported, and then the overall higher growth in the second half. Moreover, what supported the continued improvement on EBIT is, again, what I'm talking about is moving the portfolio upwards, focusing on the strategic verticals, focusing on the strategic markets. And especially here in Industrial, it was, again, U.S., the strong performance in the U.S. and also the verticals, aerospace and defense that helped us to move the portfolio upwards. Then going to Healthcare. And I must say I'm so proud of the team to deliver this improvement in Healthcare, where you see a step change in the EBIT margin from 12.8% to 14.3% EBIT margin improvement over 1 year. Of course, what helps is, again, the volumes. Volumes is always helping. And here, you see the exceptionally strong growth in second half, and especially the star performer is Cleanroom again. So it shows that where we have strong positions, where we have very strong brands, we also can grow. And of course, the Cleanroom that turbocharged the growth, majority of that was from the U.S. So -- and as I said, in Healthcare, the second half growth of 12.3% really helped us. So both Industrial, Healthcare delivering Healthcare at a total new level. Then the dynamic world we are living in, looking at the U.S. tariffs. We have really offset the U.S. tariffs by sourcing optimization, where do we source, how are we serving the U.S. market and then price adjustments. We also saw then in the second half that our U.S. growth momentum continues despite the price adjustments we've done to the market and accelerated the growth in Industrial and scientific, the Cleanroom, as I've mentioned before. So this success in the U.S. tariff really has been enabled by the strong customer partnerships we are having in the U.S. I just came myself with Fred a few days ago from the U.S., and it's wonderful to see the good strong partnerships we're having with our customers. And at the same time, we are ready to respond to any further changes in the tariffs as we go forward. U.S. tariffs not the only thing. We also have Middle East crisis. And here, I'm really proud about the team. We went really decisive. We went quickly out to the market to offset the impact of the Middle East crisis. First, as I said, we focused on supply chain resilience. We wanted to ensure that we ensure availability to our customers. We have no disruptions in our production and serving the supply chain. As with the U.S. tariffs, we also saw that the branding price -- the brand pricing power is significant with Ansell. And I'm going to talk more about our brands because this really shows that we have the power of the brands, and we are really delivering added value services. So thanks to our brands, we were able to do the price adjustments and could offset one-to-one the cost of the Middle East crisis, and we will continue to be flexible with the pricing as the Middle East crisis evolves. And then finally, on balance sheet strength, as I mentioned, this was important because as prices were going up and down in March, April, May, we wanted to ensure that we have a strong balance sheet that we can serve our customers no matter what. And we are the trusted partner now and in the future to our customers that they can serve then going forward. So that's U.S., Middle East. It's in our hands. We reacted decisively to this. And finally, on sustainability, I'm really proud how we are improving on many fronts in sustainability. As a few examples, our safety, we reduced our accidents by 32% during the year. Another example is that today of the sourced energy, 58% is renewable energy. And that's, of course, a huge asset for us that we have 58% of our energy is renewable. So that also, of course, translates then into a financial impact that we, especially during the Middle East crisis, saw a benefit from. Then a more customer/consumer-facing area is that today, more than 90% of all our packaging is recyclable, reusable or compostable. So proud to be here to talk about the strong financial year '26 and what all the team and together with our customer partners, we've been able to accomplish. Now I'll hand over to Fred to talk more about the financial performance in detail. Over to you, Fred.

Thanks, Nathalie, and good morning, everyone. It's great to be speaking with you today. I'll spend the next few minutes talking through our financial performance for fiscal year '26, expanding on Nathalie's earlier comments. Firstly, on sales, we were pleased with the adjusted sales growth of 5.7%, which excludes the effects of foreign exchange and some minor product exits as well as the benefits we received from temporary order pattern favorability in both F '25 and F '26. In the second half of this year, we had $15 million in extra sales of Exam/Single Use products as customers increased purchases in response to the Middle East crisis. These sales will unwind in F '27, so we have excluded them from the adjusted sales growth calculation. Pricing was a key driver of sales growth for the year, particularly in the U.S., where we successfully offset the effects of higher tariffs. We also increased prices in the final months of the year to offset higher costs resulting from the Middle East crisis. Pleasingly, as Nathalie had mentioned before, we saw sales really accelerate in the second half of the year, supported by improved volume trends. Our GPADE margin improved by 70 basis points versus F '25, a great effort given the significant cost headwinds we faced throughout the year. We spoke at the half year results about margins being supported by sourcing productivity efforts and lower freight costs. We also saw benefits across the year from improved sales mix, particularly in Healthcare with accelerated sales growth in our higher-margin Cleanroom products. The net price and cost effects of U.S. tariffs and the Middle East conflict were moderately dilutive to our overall GPADE margin percentage. Moving down the P&L to SG&A. This was well controlled with growth of 2.7% on an organic basis. Higher employee costs from both wage inflation and strategic hires were partially offset by improved SG&A productivity and the KBU cost synergies we mentioned before, which are tracking in line with our business case. On FX, while exchange rates were favorable on an underlying basis, we had a loss of $13.8 million on our hedge book, which meant that the currency was a headwind to EBIT of $4.3 million this year. So when you put all this together, we achieved organic EBIT growth of 14.9% versus F '25 and a 90 basis point improvement in EBIT margin growing to 15%, which is really great to see. Below EBIT, we booked $1.4 million in significant items. This includes the APIP costs related to the upcoming ERP upgrades, largely offset by an initial refund of tariffs paid in the U.S. prior to the February Supreme Court ruling. The interest line was broadly the same as F '25, and our effective tax rate came in as guided at 24.1%. This all contributed to adjusted earnings per share of $1.486, an 18.5% increase versus last year on an organic basis and a result we're very happy with given the external challenges we had managed over the course of the year. Included in the adjusted EPS was a nonrecurring benefit of $0.033, which was largely due to the timing difference throughout the year between the cost that we've seen coming in through the P&L and the timing of when prices were adjusted in relation to the U.S. tariffs and the cost inflation from the Middle East. Now let's move to the balance sheet, which is in great shape. Working capital was lower than June 2025, largely driven by a reduction in inventory in the second half as sales accelerated, and we also made targeted reductions in safety stocks in response to the Middle East crisis. Debtors were higher largely due to the higher sales and payables fell with purchases from outsourced finished goods suppliers lower than at the same time last year. Looking at returns, we delivered return on capital employed or ROCE of 12.7% and return of equity of 10.6%. As we pointed out in the half year results, the nominal reduction in ROCE versus F '25 is due to the partial inclusion of KBU capital employed in the denominator in the F '25 calculation, noting that we calculate ROCE based on the average capital employed on a trailing 12-month basis. If you normalize for this KBU in the denominator, the F '25 ROCE would have been 11.2%, translating to a 150 basis point improvement in F '26 on a like-for-like basis. Turning next to cash flow, which was really strong in F '26. The biggest increase you see in statutory EBITDA was driven by our double-digit earnings growth, helped further by a large reduction in significant items, noting that we were booking KBU transactions and integration costs last year. Net receipts were significantly higher than F '25, driven by statutory earnings growth and the improvement in working capital I outlined on the previous page. With growth in net receipts outpacing EBITDA, our cash conversion came in at 113% compared to 91% in F '25, as Nathalie noted before. Net CapEx was $48.6 million, lower than F '25 following the completion of construction of our greenfield India surgical facility. We also took the decision to prioritize only our most strategic capital projects while we were navigating through the effects of the Middle East crisis in the latter part of the year. So with the strong growth in net receipts and a reduction in CapEx, we were able to deliver a substantial year-on-year increase in our operating cash flow. This gave us the ability to fund the on-market share buyback program to the tune of $118.4 million, while also reducing net interest-bearing debt by $52.3 million as well. So let me wrap up by saying a few words on our funding profile. Our net debt to EBITDA was 1.3x at the end of this year compared to 1.6x this time 12 months ago. And we have significant liquidity with $752 million of cash and undrawn bank facilities. Furthermore, the maturities of our debt are relatively long-dated, and we have approximately 2/3 of our facilities at fixed rates. So you could see that our funding position is healthy. Our maturity profile is well balanced, which gives us flexibility to continue to pursue value-accretive growth opportunities in addition to capital management initiatives. With that, I'll hand it back to Nathalie to talk about our strategic priorities and our outlook for F '27.

Thank you, Fred. So now talking about the strategic priorities, and this is really important for us, how do we drive higher growth, how do we drive higher profitability and then also what's the capital allocation to it? When we look at our strategic priorities, our focus is really how do we increase customer centricity and accelerate profitable growth. To this, we have 3 levers. Two of them are growth levers and the final one is funding the growth lever. We're starting with commercial excellence. Commercial excellence, how can we enhance the value we are driving to customers? And I will on all these levers also come back to you and show an example and a proof point what we delivered in financial year '26. So commercial excellence. Secondly, the growth lever, really looking at focus on our strategic markets. So which are the key markets and verticals where we have higher margins, we have higher profitability, and we see the verticals are also having organically better growth, and we are focusing on these and also the capital allocation on these. So better returns. And finally, funding the growth lever where we talk about operational excellence, and I'll give a few examples about that. But how can we increase our return on capital employed and at the same time, ensure that we are closer to customers, we are serving our customers much better because we are a true believer that the better we have a supply, the more intimate we are to customers, the more our demand and growth will be. Good. Then going to the commercial excellence. And it's an area where we have a lot of opportunities going forward and a few proof points already from financial year '26. When we look at our top 5, only 5 brands that we are having in the company, they account for 58% of the net sales. So we really are a brand-driven safety company where our brands do deliver value. And we also see that, of course, thanks to the pricing adjustments we have had to make in U.S. tariffs and also in Middle East that the brands do count. So these 5 brands, in total, they grew 1.2x faster than the whole company. So they are really delivering value. Secondly, the top 5 brands, the gross margin is 220 basic points higher than Ansell average. So growing faster and accretive to our profitability as we go forward. And of course, as we go forward, we will focus on how can we generate more value to our customers and how can we also make the big brands bigger because that's where we get the scale benefit of our large portfolio. So it's not only about the brands. We're also having our Guardian tool that we've spoken about in the past. And with the Guardian tool, that's our main global sales tool where we can show the safety benefits, the safety impact our products are having on our customer and customer sites. And we see that when we use the Guardian, we have 50% higher sales on newly converted accounts. Not only Guardian, then, of course, innovation. Innovation is hugely important for us and will continue to be so. And now when we talk about the strategic verticals and strategic markets, it's easier also to target the focus on the innovation. And as an example, we see that in Mechanical, in our gloves and products in Mechanical, we had 18% of the sales last year came from new products launched only in the last 5 years. So innovation does matter. So commercial excellence continue to drive value for the customers. Then secondly, focus on strategic markets. And I mentioned U.S. many times during this call, and I will continue to do that in the years to come. Today, U.S. is 43% of our total net sales. It's, of course, the most dynamic booming market in the world if you look at the totality. And by focusing on the U.S. and also our other in total, top 5 countries, we see that we are going to be able to allocate capital and drive growth much better and being closer to customers. So in total, U.S. grew 1.8x faster than the whole company, Ansell. And that's really driven by our strong brand presence and our strong end user partnerships like I spoke about that we are having in the U.S. And of course, the prime example is Amazon, a huge end-use customers for us. We are very proud of the innovation and the very close cooperation we are having with Amazon to continuously develop new solutions, not only product solutions, but many other solutions to ensure that we have a structurally made partnership with Amazon going forward. And with this, in the last year, we -- thanks to the good cooperation, we helped to reduce 65%, 65% of all hand injuries that Amazon had in their warehouses, in their sites. So this is a true example of where we double down on customers, we focus on the strategic markets, we focus on strategic verticals, we grow faster than the company, and we deliver value to our end customers. So commercial excellence, focus on end use selected strategic markets and finally, operational excellence. This is the funding the growth lever that I was talking about earlier. So the funding the growth lever, we are looking at 3 building blocks. And these 3 building blocks, how can we simplify Ansell and that way, serve our customers faster and be more agile and also, of course, always be competitive. And these 3 building blocks in operational excellence are, how can we simplify our product portfolio and brands? I spoke earlier about make the big brands bigger. How can we simplify our supply chain and how can we simplify ways of working? And these are areas we're going to continue to work on, and I'll continue to talk about this to you as we go forward in the months and years to come. Then look at a few examples on the next slide. We had APIP that we have delivered and that's -- and delivered the $50 million recurring savings that are already achieved. Now with these 3 building blocks on operational excellence to fund the future growth, with a simplified product portfolio and brands, with a supply chain and ways of working. We will continue this really good work. And I'll give just a few examples that we already executed now in the second half of the year. As an example, our TouchNTuff product, we've reduced the areas of touch points between our sites and also how we produce it and make it in a more streamlined, simplified way, and that has led to a 66% reduction in lead time to our customers. Another area is HyFlex. Doing a bit opposite instead of simplifying to one place, HyFlex, we have instead of only producing in one place, we're now producing in 3 places to be closer to the customers, and that has reduced our lead times by more than 90%. So again, customer centricity is at the key of everything we do. Then another one where we talk not only about lead times, but of course, also on cost competitiveness is in Kimtech in our Cleanroom space where our goggles, we used to have 4 suppliers, and we are moving to 1 supplier. And that, again, with the scale, reduces our lead time by more than 68%. So we'll continue to work on this to ensure that we are able to serve and able to be close to our customers. And as I said, in this dynamic world, it's really about supply and availability and supply creates demand. So on the strategic priorities, really to sum up, we have 3 levers, 2 are growth, commercial excellence, selected markets and verticals that we are focused on and then the funding the growth lever, operational excellence. And we'll continue to talk about this. We'll continue to bring you up to speed and bring you examples of how we are advancing so that you can see the impact that we are driving through the strategic priorities. And of course, there's a capital allocation element to it as well. So with the strong financial year '26, I think it's a good segue to go to the outlook. So our outlook adjusted EPS for the year, financial year '27 is in the range of $1.58 to $1.70. And this outlook, really, the assumptions behind it is as we are seeing that our sales, the sales momentum will continue both from a volume and value point of view, the strong momentum we had in the second half. Secondly, our strategic priorities, where we're focusing on the more higher value-added products, the faster-growing verticals and markets will also support the sales growth going forward. On the negative side, of course, we can't ignore the very dynamic macroeconomic market we have around us, the macroeconomic uncertainty. So that's always a downside that we will have to navigate as we go forward. Assumptions then on earnings is that the commercial excellence will continue to drive profitable sales growth. And as I said also, this how do we focus on moving the portfolio upwards towards higher gross margin product. Operational excellence will enhance productivity. And as I said, we'll bring more examples as we go forward. And then in addition, we assume a $9 million FX benefit versus financial year '25. Then on capital allocation, as Fred was saying, we came down in financial year '26, and we are continuing on this level, this much lower level in financial year '27. We are continuing to invest in growth. However, what we have now layered in is a strategic capital allocation in the areas that matter to drive growth in the selected markets, the selected verticals and also in the innovation related to this. And then we'll continue to do the existing share buy (sic) [ buyback ] program. So very excited of financial year '26, and at the same time, we have to be realistic. We live in a very dynamic world, and we'll continue to tackle it as we go forward. With that, I hand over to Q&A. Thank you.

[Operator Instructions] And your first question comes from the line of Dan Hurren from MST.

Look, if we sort of look at the sales outside of the U.S. and sort of adjust that a little bit, it looks like you've done low single digit ex U.S. So I was just hoping you could talk about your experience in markets that may have seen some competitor product directed away from the U.S. and into those other countries and what the experience has been.

Thanks, Dan. And I would say U.S., as we mentioned so many times on this call, has been the highlight of the second half and the whole financial year. And I would say that also comes back not only our focus on the products and our customer relationships there, but it's also the underlying economy. And we also see a strong growth in Cleanroom in other markets and in Europe, in our selected focus areas. And when I talk about these top 5 countries, the ones that really move the needle, the rest of the countries are in Europe. But at the same time, we know that the Industrial or macroeconomic situation in Europe and the Rest of the World is not as booming as it is in the U.S. So that's why the U.S. really stands out. The good news about that is, of course, that we continue to see strong macroeconomic momentum in the U.S., and we are well positioned to be there and benefit from our scale of 43% of our net sales in U.S. already today. Fred, anything you want to add?

No, I think you summed it up really well. The only thing I would add to that is that there's -- competition is clearly intensified through the Middle East crisis. However, our strong brands have really come through loud and clear, and our differentiation of those stronger brands have come through loud and clear in this pricing power, not only that, but also in the volume growth we're seeing in the second half.

Perhaps a question for Fred. We're still getting to the bottom of it, but it looks like in the accounts, there's a $25 million impairment that is associated with the Indian plant. Can you give us any details on that and if this is within underlying earnings? And of course, I'm only asking because the impairments were excluded from underlying earnings in '25. I'm just trying to understand if that's been a consistent treatment.

Yes. Good question, Dan. So we did have selected lines that we impaired as we look to optimize our supply chain and optimize the supply in our network to drive our cost down, especially with the Middle East crisis, having a better cost position is really, really important here. And so we did take a noncash write-off of some selected manufacturing lines and the Indian plant had one as well.

But just the treatment of that, I mean you pulled impairments out from last year, but they appear to be included this year. Is that correct?

No. So the impairment -- so I talked about the $0.033 of onetime nonrecurring EPS in F '26. Those noncash impairments were sitting in that $0.033 of EPS.

Your next question comes from the line of Saul Hadassin from Barrenjoey.

I was wondering about the second half growth within the Cleanroom Gloves segment and that 17% growth. I wonder if you could talk to how much of that was volume versus price? And then as a follow-up, clearly, there's been some timing -- favorable timing as it relates to price increases in the back end of fiscal '26. As we look into FY '27, do you still get favorable pricing coming through relative to what's happening in the Middle East? Or will you temper some of that pricing based on what's happened to, say, input costs in the last month or so?

Thank you. I can start and then hand over to Fred. Thanks for the question. I would start with the Middle East pricing question. What we promised to the customers, and we speak about this a lot, is that the cost inflation we saw in the Middle East crisis, we passed on to customers. But when cost inflation is coming down, we're also going to adjust our prices. So we are going to be very flexible here and just reflect the cost inflation that we are having. Then your question about the Cleanroom growth. And as I said -- and as you said, it was very strong in second half. And that kind of very strong growth, you don't only get by pricing and value, this volume as well. And this total financial year growth of 10%, majority of that came from the U.S. Fred, do you want to add?

Yes. Just to expand on the Middle East pricing. So we did start to price into the market in that May, June time frame. So you will see the impacts as we move into F '27 of that full year effect of pricing in the Middle East. And on the Cleanroom, Nathalie is exactly right. There were strong volumes being seen. And I think this speaks volumes to the KBU acquisition we had done over 2 years -- almost 2 years ago now, where we're seeing the power of that brand, the power of the Ansell brand together, really unlocking a lot of opportunities in the marketplace.

And sorry, can I just follow up with that 10% Cleanroom growth, are you willing to split out what was volume versus price?

Yes. We won't talk to exact numbers, but I can tell you that there were strong volumes probably to the tune of almost half of that being volume impacts.

Your next question comes from the line of David Bailey from Morgan Stanley.

Yes. I was sort of interested in that the top 5 accounting for 58% of revenues. Just strategically, how you think about growing that going forward? Obviously, there's a gross margin benefit associated with that. But in terms of thinking about growing those brands further, what's the strategy here? And do you think that will continue to grow over the next -- over the coming years?

Thank you. Very good question, and that ties to the strategic priorities with the top 5 being 58% of our net sales. And as we continue in the, what I said, the operational excellence to simplify our product portfolio and brand portfolio, that means that we are focusing on these big brands and making them bigger, because then we are just much more efficient, and we also make our life much easier to our customers when we have certain big brands that matter and support our customers. Now I talk about the distributor customers as they go and represent us forward. Also, the innovation investments will be into these big brands. So again, focus on scale, make the big brands bigger and also enhance the value they are delivering to the customers. So yes, we will see that they are going to drive growth faster than the rest of the company. And that is the key of being very strict on strategic priorities and capital allocation to really drive the growth -- profitable growth momentum. And as I promised, I'm going to come back to these kind of examples every time we meet.

Yes. Understood. Just in terms of the guidance, I mean, it looks relatively clean. There's a $9 million of FX benefit coming through. Is there anything else to sort of call out in relation to the guidance range of $1.58 to $1.70 in terms of movements within particular lines to think about?

No. No, it's just execution.

Your next question comes from the line of [ David Philip Nathan ] from Goldman Sachs.

Just wanted to touch on your guidance. If we sort of think about the FX movements and also the share buyback into '27, I think my numbers would suggest the NPAT grows about mid-single digits at the midpoint that is. If I then think about the composition between sales and margin, also considering that, I guess, the FY '26 period had a sort of a one-off benefit that you're calling that's timing related. So if you think about the FY '27 split between sales and margin, like could you give us a sense then on what's happening? You sort of expect margins to stay flat? Does it grow? That will be pretty helpful to think about your sales performance.

Yes. Thanks, Dave. I'll start and then hand over to Dave -- not Dave, Fred. Sorry, Dave. Yes, of course, a healthy growth and the momentum we've had in second half of this year supports it. At the same time, we have to be realistic. I think that it's a very uncertain dynamic world around us. But with our focus on the strategic markets, the strategic verticals where we see underlying faster growth and where we also see that our brands are having a stronger power, by focusing on that, we will see a continued growth momentum. Then, of course, that translates into continued margin enhancement. And like I said on that assumption slide, it's really the commercial excellence that how do we make the big brands bigger, how do we translate the value we're driving to the customers and talk about that and then the operational efficiencies that we're going to get in, in our focus on the funding the growth lever, on simplifying the portfolio, supply chain simplifications and ways of working. Fred?

Yes. And maybe I can add on the SG&A line, we're continuing to look at productivity initiatives within that line. We grew 2.7% year-on-year in F '26. We're looking to even be around that same level in F '27 because we know that it's really going to be important to leverage the scale that we're seeing on the top line, both in SG&A. And then we also have on the GPADE line, a lot of productivity initiatives, both in the supply chain and also in the commercial networks that are going to help drive that GPADE percentage faster up.

Yes. Okay. That's useful. And then on the Healthcare segment, I would say the Exam and Single Use sort of part of the portfolio did really well in that second half period, even if you exclude the stocking that you called out. Could you give us a sense of what's been driving that? Is it largely just price increases? Or is there any volume dynamics or market share implications we should be considering as well, please?

Yes. Thanks. That's a really good question. I have myself been intimately involved in the customer meetings when we did the Middle East price adjustments. And I would say what really resonates with our customers, our distributor and end users is that in this kind of global disturbances, when you are a strong player, you have a strong balance sheet and you say we are here to focus to serve you, and we are here to ensure availability, that goes a long way. And I would say that's behind the faster volume growth in Exam and Single Use as we could -- we had the financial strength to buy the raw materials even when they were higher cost and ensure that our customers all the time had their products. So again, supply equals demand.

Great. Can I just follow up on a point on that? Do you feel the share gains that you made in that part of the business is sustainable into '27?

I would say it's too early to say. Too early to say, and we are very focused on looking at the point of sales data that how are they moving both in Industrial and in Healthcare to see how we are doing. And at times of crisis, customers tend to lean to the ones who can deliver security like we did with availability. But I think it's too early to tell if what is the stickiness and then also what is the next crisis around the corner.

Your next question comes from the line of Laura Sutcliffe from Citi.

Could you talk a little bit about the significance of your biggest customers? I know you probably can't give us a lot of detail about the Amazon contract specifically, but maybe if you could just talk in general about those big contracts? And you talked about your biggest brands, but how much overlap is there between your biggest customers and your biggest brands?

Yes. Amazon is a huge customer for us. And where we are focused -- I actually just came out of Amazon working meeting last week in the U.S. Where we are focused in on is not just selling a product, selling an innovation. We're really looking at how can we systematically in a partnership tie ourselves together for the long term. And it's not only about, as I said, just moving the product forward. It's about much bigger solutions that we are looking to ensure that Amazon can drive their safety culture and their needs going forward. So as you said, I can't tell too much about it, but maybe in the future, I can also continue to give examples about the Amazon partnership, which is fantastic. So as I said, it's not only product-based, it's not only innovation-based, it's really about looking at the total go-to-market, looking at the total solutions, how we can partner together and make that into a structural setup that we have together. When you asked about the brands, they only buy one brand from us.

And then second question, I'm sorry if this was mentioned earlier and I missed it, but did you have to buy in much product over the course of the year just gone to smooth the effect of raw material cost availability, inventory bouncing around?

You mean in the Middle East crisis?

Just in general, but yes, I suppose I was thinking about it being rooted in the Middle East, yes.

Yes. As it's been such a dynamic world, our operations team have done a fantastic job actually being daily in meetings with our biggest suppliers to ensure that we get the right quality product, not only that we get the right raw materials, but we get the right quality product and also that financially, we have the balance sheet strength to get it. But Fred, do you want to build?