Associated British Foods plc (ABF) Earnings Call Transcript & Summary

Should we get started? I'm noisy. Look, thank you all very much for turning up in person for coming here to this review of the interim results for the 24 weeks ended the 5th of March 2022, and welcome to all of you listening online as well. If I starts, if I may, with first half business highlights, these -- so it's really satisfying the sales and operating profits for the first half have returned to pre-COVID years. After 2 years of real struggle, we're back. In food, yes, we're affected by inflation, but the operational performance, the project management is all really resilient. Cost-reduction exercises and projects go on across the group, extensive pricing actions taken, but inevitably, there's a lag in financial recovery. Input cost inflation is very high, logistics supply chains are still challenged. And in some parts of the world, there are still COVID-related labor absences in our business, Australasia in particular. Sugar has had the first -- has a good first half. We're not everywhere victims of inflation. In sugar, high commodity prices benefit us. Then moving across to Primark. There's been strong recovery in sales and margins in the first half. We'll show you that. U.K. and Ireland is ahead of Continental Europe. So particularly, we're seeing more holiday travel expenditure, more socializing expenditure. Same-store sales compared with actually now 3 years ago are encouraging. Continental Europe, as I say, consumer footfall remains weak. We'll come back to that later. U.S. continues to trade well. And then it's well worth congratulating the teams involved on the successful implementation of the immense Oracle project. It's now operating in every store and every depot. We are rapidly transforming the digital capability of Primark, both the infrastructure of it, which Oracle represents but also the consumer-facing part of digital. The new website is launched, has been very well received. We're only 2 weeks in, but it gives us capability of linking physical stores to online consumer research and doing so really well. Let me then go down to the first half financial highlights, which are these. So group revenue, adjusted profit, adjusted profit per tax all well ahead. Adjusted earnings per share driving that an interim dividend that's up at 13.8%. Gross investment, GBP 450 million, and we ended the first half with net cash on the balance sheet of GBP 1.5 billion and net debt after lease liabilities of GBP 1.7 billion. Moving on to some of the cost inflation issues. Substantial cost inflation is raw materials, commodities, in particular, packaging, supply chain costs, energy. We have no businesses in Ukraine. As you would expect, we've stopped sales into Russia. But the consequences of the -- on the commodity sector of the Russian invasion have been felt to some extent and will continue to be felt into the future. Pricing to mitigate higher costs has been a major activity of our sales forces throughout the first half of the year. Job has been done well, but we're chasing accelerating inflation. I think in many areas, we will have to move prices up again. Both sugar and which I've mentioned and ABFI, have done well in the inflationary environment. ABFI Specialty Ingredients have been able to move prices often for the first time in years. They've had a good first half. The value of co-products coming out of the Sugar businesses, particularly energy related co-products, ethanol, electricity, in particular, are starkly seen in the first half performance in Sugar. It's a really nice hedge against higher gas prices. Primark, we're saying today, we'll implement selective price increases across some of the autumn/winter stock. So we'll begin to see higher prices on some items in -- from sort of mid-July, early August onwards. We will, of course, ensure that we maintain price leadership really whatever it takes. The full effect of the pricing actions that we've taken will be delayed, I think, into next financial year. So the margin this year, as John will spend more time explaining to you is -- will be squeezed both in Primark and also in food. But with that, let me move on to -- pass over to John.

Yes. Thanks. George. Okay. So this half year, sales and adjusted operating profit for the group returned to the pre-COVID levels reached in the half year to the 29th of February 2020. Group revenue was GBP 7.9 billion, an increase of 28% on last year at constant currency. This was led by the strong recovery in sales in Primark, where trading was much improved following the relaxation of most government restrictions on store operations. Primark also drove the increase in adjusted operating profit, which at GBP 706 million was 92% higher than last year. Our businesses are experiencing logistics challenges, COVID-related labor absences and significant inflationary pressures. At the end of the period, this is the end of our half year, these inflationary pressures increase further following the Russian invasion of Ukraine. Our adjusted profit measure reflects the underlying performance of the businesses and excludes exceptional items, as well as the other items that are set out on this slide. Exchange rate movements had a minimal effect on adjusted operating profit in the first half, where the loss on translation of GBP 2 million. If exchange rates remain at current levels, we expect a translation gain of some GBP 10 million up for the full year. This period's unadjusted or statutory operating profit of GBP 666 million increased by 114% -- sorry, I said GBP 666 million -- GBP 686 million, increased by 114%. Last year included an exceptional charge of GBP 25 million. There were no disposals in the period. However, an asset which was classified as held for sale in the balance sheet of our last financial year is no longer likely to be sold. So the GBP 11 million noncash impairment disclosed as a loss on closure of business this year is a consequence of this. Lease interest was broadly in line between the 2 periods. The decline in net interest to GBP 44 million was largely driven by the repayment of some of the private placement notes. The improvements in other financial income to GBP 4 million was largely driven by the big increase in the surplus in the U.K.-defined benefit pension scheme between the 2 half year ends. Statutory profit before tax increased to GBP 635 million and profit before tax increased to GBP 666 million. Let's move on to tax. So as expected, the effective tax rate declined from the elevated level last year to closer to pre-COVID levels this half year. The effective rate of 23.2% was driven by the stronger profitability of Primark and the consequent change in the weighting of group profits by tax jurisdiction. With the expected recovery in Primark's profitability for the full year, we anticipate the effective tax rate for the full year to be close to that reported year for the half year. Looking ahead, I expect the group's tax rate to increase marginally from this level, and that's really reflecting the forthcoming increase in the U.K. corporation tax rate and the likely increase in the Irish corporation tax rate. Coming on to earnings and dividend. As a result of the doubling of the adjusted profit before tax and the much lower effective tax rate, adjusted earnings per share increased 154% to 63.8p. On a non-adjusted basis, earnings per share increased to 60.3p. The Board has declared an interim dividend of 13.8p per share at a total cost of GBP 109 million, and that compares to the interim dividend declared last year of 6.2% -- 6.2p, and that represents a return to our normal dividend practice. So moving now on to the balance sheet. Net assets increased to GBP 10.4 billion, and that compared to GBP 9.6 billion last year. The GBP 186 million increase in intangible assets is largely driven by the goodwill and intangibles arising from the acquisitions made since the last financial half year. The largest being Fytexia Group by ABF Ingredients. These intangible assets also include smaller amounts, but relating to the European emission trading scheme certificate that are held by the group. Not surprisingly, the cost of which has increased significantly over the last year. The decrease in right-of-use assets reflects the translation loss relating to our euro-denominated leases, as well as the depreciation charge being ahead of new leases added for the period. The decrease in working capital of GBP 408 million between the 2 balance sheet dates, I think, is striking, and it's been driven by the reduction in stock levels at Primark. And you'll remember that most of our stores have been closed for a period of 10 weeks leading up to the last half year-end. Of course, then the conversion of these higher stock levels into cash is then very evident when you look at the increase in net cash for the group. And that was from GBP 705 million to GBP 1.476 billion at this half year. The other main contributor to that increase, of course, is the higher profit that was made in the period. The reduction in lease liabilities, like right-of-use assets, reflected both the translation of euro-denominated leases and a year's reduction in existing lease liabilities. Other net financial assets comprised derivative positions arising from our usual hedging activities and the increase year-on-year reflects the volatility in our currency and energy positions in particular. The deferred tax liability increased a GBP 182 million and that's primarily due to the increase in the U.K. net pension asset since the last half year. And then also the enactment of the increase in the U.K. corporation tax rate from 19% to 25%, which, of course, will become applicable on the 1st of April 2023. The significant increase in the net pension assets was mainly driven by the increase in the surplus of the main U.K. defined benefit pension scheme. And that reflected the increases that we've seen in bond yields, and then, which in turn decreased the schemes at liabilities. But we issued our inaugural public bond this half year. This bond was for GBP 400 million. It's due 2034 with a coupon of 2.5%, and that was to diversify our sources of funding and extend the duration of our committed borrowings. Since September 2021, we've now repaid GBP 221 million of the GBP 297 million of private placement notes remaining at the last financial year-end. These notes carried an average interest rate of 4.1%, and so the lower financing cost of the bond is very evident. The group's net cash before lease liabilities was GBP 1.5 billion. Including lease liabilities, net debt was GBP 1.7 billion. I've included our definition of financial leverage for your convenience and appendix 2 to this presentation and it was 0.8x and at the half year-end. I expect a positive free cash flow from the group in the second half of this year in line with the pre-COVID full year cash flow seasonality, which reflects the building the Sugar inventories in the first half and then the sale of those in the second half. As a result, I would expect financial leverage to be lower at the year-end. But the payments of normal dividends has been resumed. And as a reminder, the special dividend relating to the last financial year was paid this January. The Board recognizes the uncertainty of the current economic environment, and we'll continue to evaluate the availability of surplus cash and capital. Let's now move on to cash flow. Free cash flow improved significantly this half year with an outflow of GBP 48 million which compared to an outflow of GBP 832 million last half year end. This was driven primarily by a smaller working capital this half year, and of course, the higher operating profit. Pre-COVID, we would normally see a working capital outflow in the first half, and that's driven by the build of sugar inventories in the Northern Hemisphere and this half year was no exception. The much larger outflow last half year, of course, was the result of the inventory build at Primark to which I've just referred. Primark capital expenditure in the half year of GBP 99 million, that was low, and that mainly reflected a much reduced spend on new stores. But George will outline our work on rebuilding the pipeline of new stores post-COVID, and I would expect capital expenditure to absolutely build from here. Capital expenditure for our food businesses increased by GBP 46 million, with spend on the recommissioning of the Vivergo bioethanol plant and the initial spend on our new sugar factory in Tanzania. We paid dividends of GBP 271 million in the half year, and that comprised the final dividend for the 2021 financial year and the special dividend of 13.8p, which was declared at the end of last year. Our spend on acquisitions was GBP 114 million in the half year, and the major part of that was Fytexia Group. Turning now to the performance analysis by business segment. The increase in group revenues is clearly driven by Primark. Sugar, Agriculture and Ingredients also delivered sales well above last year. The Food sales performance was delivered in the face of a number of challenges. And that, again, is supply chain disruption, COVID-related absences and a return, in some cases, to more normal levels of retail volumes from the COVID elevated levels of the last 2 years. Revenue in the first half for grocery was 1% below last year. Now that was not only affected by these challenges, but also a decline in Allied Bakeries volumes after exiting the co-op contract in April last year. Operating profit margin declined in our Food businesses this half year. It's the scale of inflation that has made this half year, particularly difficult. Cost reductions have been taken wherever possible and pricing has already been taken in this half year. More pricing is planned for the second half. However, there is a mismatch in the timing of the impact of input cost increases and the financial benefits of our pricing. As George said just a few minutes ago, our focus is on recovering the operating profit margin of our businesses, and the run rate effect of this will be now seen in our next financial year. AB Sugar traded strongly in the first half, with both sales and profit well ahead. Volume recoveries and price increases were the drivers of revenue growth and ingredients. Although ABF Ingredients was well ahead in both sales and profit, margins were lower in AB Mauri as a result of lower volumes of high-margin retail yeast and retail bakery ingredients. Turning to Primark. Sales and profit were not only significantly ahead of last year, but I'm pleased that our business model delivered a profit margin of 11.7% in the half year, and that's after the disruption of 2 years of COVID. I'll briefly cover the segmental analysis by geography. The improvement in sales and profit in both the U.K. and Europe were driven by the recovery in Primark in both regions. Profits in the Americas and Asia Pacific were mainly impacted by the performance of AB Mauri, where volumes of retail yeast and retail bakery ingredients declined from elevated COVID-19 levels and the benefit of pricing was delayed by some longer-term contract terms. George will now take you through the performance of each of our businesses in more detail. George?

Thank you very much, John. And if I can start with our food businesses and sugar, where we have traded strongly on the back of higher sugar prices and good co-product prices. We had a good harvest, good sugar production in the U.K. in the first half. The commercial performance in Illovo gets better and better as well. And the Vivergo bioethanol plant, the cost of recommissioning that, have been very largely taken in the first half of this year as well. We expect to see from here on significantly higher raw material prices, particularly sugar beet, higher energy costs, but significantly higher also selling prices for sugar, and let me show you why I think the selling prices are going to continue moving up. The world sugar price on the left-hand side has nearly doubled in the last 2 years. The European sugar price has come off its lows of January '19 and is up close to EUR 450 per tonne. Spot rates actually are much higher than that at the moment, but they are just something in a moment of time. Why have the European sugar price has been going up? Well, it's not just because the world price has been going up. It's also because the European sugar market has been tightening. Europe now year-after-year consumes more sugar than we produce. We had a big surplus in 2017 in anticipation of deregulation of the sugar market. But those surpluses are thoroughly gone and we estimate that in the 2022 crop, which is now in the ground, the acreage across Europe given over to sugar will decline once more. So prices are underpinned by a tighter market than we've seen for some while. Sugar operations then, we produced 1.03 million tonnes of sugar in the U.K., up from the very disappointing 900,000 tonnes the year before. We had good growing conditions, which produced higher yields. We had much less disease in the crop this year than we had in the prior campaign. In this campaign -- the season's campaign is not commencing, the season's sowing is now complete. Our excellent growing conditions in place now, we'd like some rain, but so far, so good. In Spain, in the 6 months we're talking about production was significantly higher than the previous year. We produced a lot more sugar from -- by refining cane in the South of Spain than before. And then China, the crop was disappointingly lower as a consequence of subsidies given to potatoes in our growing area. Moving on then to Illovo. Higher sugar prices, good co-product prices, particularly for which comes out of our factory in South Africa. Good progress developing these domestic brands, particularly Tanzania, Zambia and Malawi. The construction of a major new factory in Tanzania is now well underway. And despite disruption that we've already had in this year's crop, we expect full year production of sugar in Illovo to be in line with last year. And let me just turn to that disruption. The flooding in Malawi after Cyclone Ana hit us very squarely. We were sort of ground zero for Cyclone Ana. A number of people in the area lost their lives to the flooding. No one who worked for us or who lives around us died as a consequence of the flooding. However, we did an extremely good job working with local communities and local government to provide shelter, really important to supply potable water to those without it. We work with the government to restore electricity power very quickly to the area. And then we've also been working to repair local roads in the area as well, where you have capability to help out, you surely must do so. We'll talk more about co-products coming out as sugar in the ESG session in May. But I just wanted to flag to you all that our sugar business is now about a lot more than simply sugar production. Everything from pharmaceutical, great cannabis to bioethanol, and various animal feed specialty products coming out of our businesses. But as I say, more later. It's a really good hedge against the commodity side of the sugar business -- commodity pricing in the sugar business. Let me then go on to groceries, where despite revenue actually being down despite inflation in prices, we saw decent sales growth, good sales growth in Twinings Ovaltine, Tip Top in Australia, Westmill, Stratas and ACH. So a good part of the portfolio did see a decent sales performance. Some product volumes, particularly home baking products normalized or return to normal after COVID booms. John mentioned the -- this was the anniversary of the exit from the co-op bread contract. COVID-related operational challenges still exist, particularly in Australasia, which we have been very shorted staff in bakeries, in the meat factory and elsewhere as well. And then really across the world, supply chains have been really difficult. We've spent the best part of 30 years getting just-in-time supply chains carefully tuned and we're learning all the old tricks of life in the '70s with unreliable supply of raw materials and actually our logistics as well. It's getting a bit better, but it's still a reality. Okay. Focusing on the -- focusing then on Twinings Ovaltine where profits once more were ahead and once more the marketing investment went up. The new ranges, new well-being ranges in Twinings are performing extremely well all around the world. We're delighted with them. And in Ovaltine, we're delighted with the sales recovery, particularly in ready-to-drink products in Thailand. Thailand is our biggest market for Ovaltine. And then also sales growth in Germany, which is significant because it's a much bigger market than the original Swiss market. But the Swiss market, our business also performs -- goes from strength to strength. It is now the second -- Ovaltine is the second most recognized brand in the Swiss market of all consumer products and brands. This is just the last frame from an ad that we decided we wouldn't show you. It's -- it speaks to the Ovaltine growth in the Swiss and German markets. You may remember we're talking about changing routes-to-market in Germany. All that's done, and it's now working well. It's also -- well, it's my job to plug the Ovaltine Crunchy Cream yet again, on the bottom line made without palm oil, of course. And the capacity that we installed in the Swiss factory some years ago is now all utilized, and we are putting capacity into China to support product growth -- sales growth in that part of the world. So Crunchy Cream doing very well. The whole Swiss Ovaltine business doing really, really well. In a non-growth market, it's a tremendous achievement. Okay. Staying within grocery are chasing another good period of brand building around Mazzetti. Supply chain disruptions in that business, quite hard to get containers in Italy at the moment. World Foods, good brand development, also internationally with Patak's, Blue Dragon and good development of our sales in new North African food brand. Good development of sales in the U.K. Westmill Foods had a good period with the recovery of the Indian and Chinese restaurant sectors, in particular, and then take-away as well. Jordans Ryvita, some good work on packaging, good brand work. We've been working on the supply chain now for several years, it's really good to see the return to brand building, which really should sit at the heart of Jordans Dorset Ryvita. Bakeries. It's hard to imagine a product that is more directly impacted -- more widely impacted by inflation than bread. So we take wheat. We mill it. We then add natural gas to it in the baking process, and then we put it on a truck and distribute it. Revenue and volumes are well down as a consequence of us leaving the Co-op contract. The input cost inflation, as I say, is really huge. We've taken significant price actions to recover that. The shelf price of Kingsmill has gone from about 85p a loaf to GBP 1.10. But I think we're going to have to move prices again as a consequence of the invasion of the Ukraine. So bread is a -- is always a tough world. And this half year, it's been particularly difficult. Not so life in Stratas where profits are well ahead. Stratas, just to remind you, as a joint venture edible oils business we have in the States. There has been really good work done managing rising commodity costs in that business, really good material -- raw material procurement, really good pricing action. And then ACH also, we've done a very good job recovering corn oil price inflation. The margins are back where they should be already, and we'll see the benefit of that in the second half. Retail yeast volumes quintupled during lockdown as a high-margin product, they're back to just about normal. Okay. George Weston Foods, which is a business in fine fettle. Tip Top traded well throughout. It's done a very good job through the lockdown challenges. The innovation in gluten-free is significant for us. It's a really nice niche sector that's growing about 10% a year in sales. And we are by some way now market leader in that sector. Don had a miserable time with COVID. It's recovering. When I was there a few weeks ago, it was 200 people short. And the volumes were constrained because of that reality. Brand development, new product launches and new means both in dips and also in meat-free are really encouraging. And then Dad’s Pies is a smallish but really nice synergistic acquisition we've made in New Zealand. At some point, they're bound to let me in to go and see it, but maybe not just yet. Okay. Moving across to Ingredients, which is really is a tale of the 2 different parts of the Ingredients portfolio. Mauri sales are well ahead as pricing actions begin to come through. But in the first half, the delay in price recovery has pulled the margin back somewhat as is the decline in retail use sales in countries as diverse as China, Brazil and then actually also in the United States and in parts of Europe. The specialty plant that we're building in Hull is nearing completion. It's an important part of our capability to play more in the non-bakery specialist yeast ingredient space. We are a major supplier of speciality yeast, for example, into the spirits industry in this country and overseas. That was Mauri. Here's ABF Ingredients, where revenues are significantly ahead on the back of volume increases and price increases. The enzyme business goes from strength to strength, it really does. It's lovely to see volumes coming back in the protein crisp business in California. A lot of the product goes into cereal bars, which people stopped eating when they could no longer go outside, but that's all come back. Good progress in the first half and actually for a couple of years now in supplying the meat alternative sector with both flavors out of Ohly, our yeast extract business, but also textures. Again, out of Ohly, but also increasingly, we think, out of PGPI. Our confidence in the sector, our confidence in our leadership in this part of ABF is what really sits behind our decision to acquire the Fytexia Group. And let me just spend a couple of minutes talking about that. It's a fast-growing life science company based in France and Italy. It supplies the dietary supplements segment with polyphenol-based active ingredients, which have the particular benefit of being backed by clinical -- by good clinical studies. Fytexia is one of the leaders in the running of clinical studies in the polyphenol sector. It's high growth, it's high margin. It also gives us a good route-to-market for products which have relevance to health and nutrition sectors which we produce in other parts of the specialty ingredients business. So it's a good acquisition in its own right. And it's a good acquisition for what it does for the rest of ABFI. Just touching on agriculture quickly because Primark is coming up, and I'm sure you don't want to wait any longer than you have to. Higher prices reflecting commodity inflation. U.K. feed market has been strong. The European piglet market has been very weak. That's cost us a bit. Crop inputs have started well. The sales of them are particularly sort of spring -- made in spring, that's going well at the moment. And then the new feed mill in China was successfully commissioned and then has really struggled with COVID-related disruption to inbound and outbound logistics, but it's there and it's in place. Right. Primark. I suppose a year on, it's almost -- we almost forget just how awful it was to be sitting in a company with cash bleeding out at a horrendous rate that was this time last year or the first half last year as it was the second half of the year before. The strong recovery in sales and profits in this half despite a little bit of disruption, has been enormously heartening. We've seen particular improvement in the U.K. and Ireland. As I said before, weaker footfall in Continental Europe, but I'm sure it will come back. And then the supply chain challenges, which were much reported in the autumn are -- they haven't completely gone away, but they are disrupting us a lot less. So a stock cover of spring/summer ranges is much better than autumn/winter stock cover was in the lead up to Christmas. We, of course, have to keep our eye on what is going on in China with COVID. At the moment, we are not seeing any product either not being made or not being shipped. But as I say, we need to be aware of it. The inflation in the first half was broadly mitigated by good cost reduction rates work and a favorable U.S. dollar. And the margin of 11.7% is broadly in line with where we would have been before COVID. The Oracle implementation has taken the best part of 5 years, John. And we're -- as I say, it's in everywhere. It's part of the underpinning of that digital transformation, the most visible part of which is the new website, which is launched and been well received. And then we've seen the first half very effect in the states yet, but still with positive like-for-like growth, and that gives us lots of confidence in our -- for our prospects in the United States. Right. So as I did last time, I wanted to break down the drivers of future growth into 3 -- the return of growth in the period into 3: the return to normal trading post disruption, post-COVID; the development of the customer proposition; and then the acceleration of selling space in the major growth markets. And if I start with the return to normal trading, shopping behavior is changing. Tourism and holidays are increasingly back and the supply chain is easier. And let me start with shopping behavior. Well, pink is when we were shut. And sorry, pink is a year ago in the period and then both ends. You can see we lost some stores in the Netherlands and Austria in back end of December and into January. But by and large, we've had just about everything open through the period. But we still have restrictions. So again, pink is where there is a restriction. Masks actually in the shops now are limited to Italy, but Spain and Portugal only fell away last week. Masks on public transport are still very much in evidence in actually in most of our markets. And specific social distancing rules, how many people you can have in stores and such like are still in place in important markets where we trade. As they fall away, our sales will improve in those markets. The 2-year like-for-like sales then on these are minus 10 for the group, which is a significant improvement on the final quarter of 2021, but split between the U.K. at minus 8 and Continental Europe at minus 14. And more recently, that gap to now 3 years ago in the U.K. is much smaller than minus 8, but Continental Europe is still down there in the minus teens. And the U.S. with plus 1, I think, is a good performance. Next, then. This is significant. These are the dozen or so destination stores, which make up about 10% of our total sales across the group. And you can see this is gap to like-for-likes in the appropriate market. So the last 2 weeks have seen -- we haven't seen a minus 6 in 3 -- in 2.5 years. So that is good. Oxford Street is busy, for example, Liverpool is busy. Mary Street is busy. And with the return of tourists, I think there is more to come here. It's one of the big gaps in the like-for-like performance. As has been last year, holiday essentials, both closing and things such as luggage. Given we haven't been using our suitcases for 2.5 years, it surprised me somewhat that the March sales of suitcases across the group were 27% higher than 3 years ago when we didn't have any when the COVID was still in front of us. But nonetheless, travel-related, both in February and March, suitcases really good. Flip flops, way ahead of 3 years ago. So a big missing part of our sales is coming back, particularly in the U.K. and Ireland, and it's encouraging for the second half. As is the return of some of the fashion ranges, smart casual tailored clothing, we found really hard to sell for 2 years. It's now performing really well. Lashes, nails, other products in health and beauty, again, have recovered very, very well. And as we invite people around to our houses again, the expanding home entertainment ranges are performing well, too. So all areas where return to normality gives us a sales uplift. Okay. We never stand still in Primark, and let me take you through some of the developments of the customer proposition and let's just go on to the next slide. So the edit investment pieces, higher price points, but still absolutely fantastic value are an increasing feature of our fashion ranges in store and are performing well. And then the great outdoors, again, you wouldn't have thought of buying a full length wetsuit from Primark previously. The adult wetsuits sells at GBP 38, which is a really high price point for us but represents astonishing value in the market. Again, we attract a new sort of customer to both and a new sort of purchase from existing customers as well. The marketing -- the Greggs phenomenon was just that. It was a tremendous piece of marketing insights and marketing implementation. The Greggs ranges sold out within about a fortnite, the performance of the restaurant in -- the Greggs restaurant in the Birmingham Store has been really good, but a lovely piece of collaborative marketing with another iconic brand in this country. Let me also -- Primark Cares has a customer aspect to it. Of course, it does. It's also an important thing that we are doing regardless of the commercial impact. When we launched Primark Cares, 25% of the product we sold in store came from recycled or sustainably sourced materials. That's now at 39% and 27% of our cotton was either organic, recycled or came from the Primark sustainable cotton program that's now 33%. We have a target of having 160,000 farmers trained in the sustainable cotton methodologies by the end of 2022. We're already up at 150,000 and we will go well beyond that 160,000 target before the end of the calendar year. Transforming digital capability, really important. Let me just play a slide of what the website looks like and feels like. [Presentation]

That linking of online search with physical retail is a really important step for us to have taken. The initial customer response is very strong. The technology that sits behind it is very flexible, very modern. We've had certain advantages, I think, in going late in the installation of technology. It will be in all markets by the autumn. It's very important that we roll it out everywhere. There are enhancements to the customer experience to come the closer integration with Primark's social channels, which has been such a source of strength for us over the years is an important development that we haven't got to yet. Behind this sits significant investment in people and processes to utilize customer data that we're going to be capturing for the first time. It will allow us to target our marketing much more precisely, for example, than we've ever done before. As I suggested, it's only one part of the digital transformation. Oracle is the other one. I suppose it's been the project that's kept John and me awake at night more than almost anything else ABF has done over the last few years. And now it's sort of done. By the end of the year, we'll have EPOS point-of-sale terminals in all the stores as well. That will give us a lot more flexibility at point of purchase than we have ever had before. And again, it's a nice advance in the technology space. We are, of course, obsessed by price at Primark. We always have been, we always will be. We are absolutely committed to price leadership and to everyday affordability. Nonetheless, the inflation -- the weight of the inflation in just about everything leaves us with no choice but to recover some of it in price from consumers. So we've been very selective in our pricing decisions. We've gone product by product, range by range, country by country in deciding what we can -- what prices we can increase while maintaining point 1, that commitment to price leadership. We will see some price increases coming through in the autumn/winter stock, which will begin to arrive at July and early August. So finally, the acceleration of selling space expansion in those major growth markets. Here first are some stores that we've opened in the first half, 3 in Spain and a lovely store in Sicily. I think it's a fact I've used before, but the population of Sicily is as big as that of the South Island. It's a potentially quite significant market for us, really well received in all these in all these locations. Since the half year ended, we opened our flagship in Italy, in Via Torino just around the corner from the Duomo. As all our flagships are, it's an absolutely magnificent shop fit, lovely location and it's been trading its socks off since we cut the ribbon with the mayor of Milan, cut the ribbon just a few weeks ago. In the second half, on top of the Milan store, another store -- another 2 stores in Italy, The Queens store in New York. Jamaica Avenue will be a really good one for us. I'm sure our second store in the Czech Republic and then important store for our Irish business. The pipeline though is good and growing, and we have no reason at all to doubt our ability to get to 530 stores in the now 4.5 years, we have before that target is tested. The growth markets, U.S., France, Iberia, Italy, the pipeline is good in all of them. There's a strong opening program in the first part of the next financial year. A lot of stores will open in the run up to Christmas. Next year as well, we'll go into 2 new markets in Slovakia and Romania. In the U.S., we've announced 6 new leases already, and there are 3 new ones to talk about today. Buffalo, the nearest -- a major U.S. city to Canada, that will be interesting for my cousins. Jersey Gardens in New Jersey, again, an important mall, it will be great. And then the second store in Chicago. We're already having to give ourselves more space in Sawgrass Mills in Florida really even before the overseas visitors come back in any great numbers. So Florida is encouraging. Outlook then. So commodity energy prices have increased further following the Russian invasion of Ukraine. The full margin, as a consequence, is expected. Full margin recovery has been delayed into next financial year. The rest of the year, we'll see a continued good performance in sugar. In the second half of Primark, we expect the sales to be ahead of the pre-COVID second half of 2019. Now it's slightly ancient history, but -- and there have been a number of stores -- a lot of stores opened since that period, but sales will be ahead in total. And then the operating profit in the second half of this year, we still expect we'll be above the operating profit in the second half of last year, which was less COVID-affected. The full margin for Primark -- sorry, the full year margin for Primark will be some 10% through the rest of the year. So expected growth in adjusted operating profit in the second half despite all the inflation consequences. And just as a reminder of where we've come from, we expect to see significant progress in the adjusted operating profit and earnings per share for the full year. Please do come to the briefing, ESG briefing on the 18th of May or dial in for us. We're focusing on the most important environmental factors, particularly energy plans across the whole of the group. There is a lot of great information to be laid in front of you at that session. It's an important one. Thank you all very much. It's been a long presentation and over to you now for questions and hopefully answers.

So we got people, obviously, both here in the room and virtually. So with your agreement, we'll take questions, first of all, here in the room and then move on from there. So Warwick Okines? Thank you.

It's Warwick Okines from BNP Paribas Exane. George, I imagine you're not going to tell us what the price inflation is in Primark. But just conceptually, as we think about 2023 and beyond, are you happy to run the business at a single-digit margin because with around 10% this year and not fully recovering the prices, it does sound like you might be prepared to run it like that.

We want to get margins back to the historic levels. It may -- I don't know how long it's going to take. That is -- will be a consequence as much of the macroeconomic circumstances that will buy our actions -- of our actions. But we're not planning a long term or forecasting a long-term reduction in those margins at Primark.

We'll go with Anne Critchlow here.

Anne Critchlow from Societe Generale. Two questions on Primark. Thinking about current trading since the half year end, has the like-for-like trend versus 2 years ago actually improved since then? And also if you could talk a bit about Germany and the Netherlands a bit as well. But in Germany, have you now resolved fully the problems of over spacing and the range issues that you had?

Taking that second one first, there's further work to be done in Germany getting the store size down to the trade that's available to us. So there's more work to be done. The sales in the -- since period end, no -- are still down, it's now on 3 years ago, but by a much smaller quantity in the U.K. and Ireland than, as I said, than 3 years ago. So we're still on negative like-for-likes, but small. And then Continental Europe is still down in the sort of low teens.

We'll go with Adam.

Adam Cochrane, Deutsche Bank. A couple of questions on the food business, if I can. In terms of when you're talking about the price increases and the input cost inflation, would you just be able to run through when the prices are sort of agreed when -- just how the process works and why it's not possible just to increase them straightaway just in terms of that? And then the second one, it's slightly related. How does the price versus volume within that food business. Within the sales you reported, what is the price versus volume? And as you look forward into the next half or the next year, is there any issues with X and price but negative volumes. Is there a sort of operational deleverage in the food business that might be a concern?

George, can I preface?

Yes.

Maybe just a comment. So I think one of the things to look at in ABF is just the breadth of our operations. So it is -- we are B2B food as well as B2C food. And quite honestly, as you look across the range of business and across the geographies, it varies, Adam. So yes, why is it not like simultaneous? I wish, right? So but -- so first of all, we've been looking at this absolutely for a year or more. Yes, we have. So it ranges from in some of our businesses, I mean I'm thinking particularly of animal feed where actually pricing has taken place every month. In some businesses, in ingredients, for example, we have, and we've seen this in our yeast business, longer-term contracts where you're in there for a number of months, and it takes time for those contracts to run off. And indeed, that's the case for AB Sugar, where a number of the U.K. businesses were in annual contracts that were agreed last summer. You then come through to FMCG, which is the -- this is then a discussion negotiation with the retailers and the retailers are not just the U.K., but obviously, North America and Australia. So one of the things that -- I'm not looking for sympathy on this, so I'm trying to explain it, is you've got to see the inflation that's coming through. And then you work out the quantum of it. It then takes time basically to negotiate and agree and then implement. And as much as I'd like it to be short term, those things often will take months. So that's why I think the pricing and certainly with some customers and some retailers, it isn't just 1 round. You're into a few rounds and that's happening. And that's the reality of it. So George, do you want to take...

John's introduction has left me with very little to say. But it's absolutely right. It's in the nature -- the answer is in the nature of the contract that you have and the nature of the person, your counterparty. Walmart demand 100-day phase-in for a new -- for a product launch. That is the reality of the situation with that customer. In some other areas where monthly pricing in some of the ingredients businesses, Specialty Ingredients, where we are in that happy position of being able to say to customers, this is the price you wanted or not. It's all in the power of the competitive position that your business is in. Having said that, we've always thought really important to have good, strong brands. So in the end, you can get the price recovery that you need. But it is -- in grocery, it almost always takes time. You have an arm wrestle, and then you have a delay. And in the meantime, what we found is we've had another round of inflationary costs increases. So we found ourselves having thought originally that we'd get the pricing done and the margin recovery established for the second half, we then found ourselves actually chasing the next round of inflation, and that's what sits behind the point about delaying the full margin recovery into the second half. Now something that we're also really aware of is it's not just enough to get the cash margin back. You've got to get the percentage margin back. Otherwise, the real value of your earnings comes down by inflation. So you've got to reestablish that, too. Retailers all around the world are doing what they do best, which is trying to defend the interests of their consumers and probably trying to mix some of your margin on the way through. So some and some. But -- as John said, there's such wide -- such diversity across the group and the nature of the business and the nature of the contracts that we have in the business that there's no single answer. In terms of -- on sort of deleveraging, every time you move off of an established price point, you're going -- almost bound to see some sales reaction from the customer. It then builds back over time in most cases. In a circumstance where the consumer may well be cash-squeezed, of course, you're going to find people shopping more affordably. You get all the changes that we see every time there's been a recession, multi-buys become less relevant, absolute prices, key, own label, where people shop changes, what they buy in-store changes, their willingness to take chances with things which are new changes. So all that is increasingly evident. And one of the [ sad loss ] just on a kind of ESG point, I suppose, is that one 1 of the things that less affluent families save on really early on is fresh fruit and vegetables because they've got to drive waste out of their family budget. And it's the brown bananas that they can't stand seeing going in the bin. So we don't buy.

So we'll go to Richard Chamberlain on the back.

Richard Chamberlain, RBC. A couple for me, please. So on the sugar side, guys, what were the start-up losses booked for Vivergo in the first half? And is that it now? Or is there more to come in the second half here? What's your expectation for that business for the second half? And then I wonder if you can make a comment on Primark's sort of inventory composition. I mean I presume you're quite happy with it and all the sort of winter hibernated stock has sort of come out now, but is that actually causing now a margin or some margin impact in the second half, I guess, because I guess the stuff was bought at much lower prices previously?

No, well spotted. Some of the margin support in the first half was a consequence of stock holdover. Not a great deal, but an element. The whole supply chain is moving slightly slower. Ships have taken extra 2 weeks to get here. The working capital impact of that, but you can adjust to it in time. So we're not short of stock except in narrow areas in certain markets. So it's feeling a whole lot better than it was. Sorry, I'm -- you could go...

Yes. Somewhat over 10 million. This cost is expensed in that first half sugar number which, of course, was not there in the prior half year.

It's not fully up and running. It's running at about 50% at the moment. Our first sales of ethanol should be this week, quite an exciting moment.

We'll take Simon Irwin at the front.

Three questions from me. Firstly, just in U.K. sugar, how do you persuade farmers to keep planting when oil seed rate prices are going through the roof, fertilizer and other inputs are going up? Is there a danger that you just lose those volumes potentially in the long term? And then just on Primark, can you just describe what capability you get now from -- particularly from the EPOS systems as it goes in? Is there work to do on loyalty and maybe you can talk a bit more about marketing. And finally, we're now a couple of years into Eastern Europe, what have you learned through opening stores in what, 5 or 6 different markets in Eastern Europe about the rollout potential.

Yes. The farmers first. We're going to have to buy acres with price. So the sugar beet price, I have no doubt has to -- will go up. We are well aware of what the profitability of other crops is in the U.K., particularly in a world of inflating input cost. Sugar beet is a lower user of nitrogen fertilizer than cereals. So there's an advantage to farmers who are worrying about fertilizer costs, it's an attraction in sugar beet. But we've got to be competitive. This was, as I said earlier, that sugar beet prices will go up just as our energy prices will go up. But as we have confidence in the selling price to compensate for them. EPOS capability, John, do you want to start with that one?

Yes. I mean EPOS capability, it's very much about the efficiency of really the checkout. So these terminals are way, way more efficient. So in terms of that efficiency because, I mean, obviously, there's quite a large cost for us in terms of the number of people that are doing the checkout of Primark. So I think we'll get to -- that is the major driver of the benefit of that.

But there's a lot more flexibility. We've never been able to do a multi-buy, for example, and we will with EPOS. We've never been able to do remote checkout. So you kind of have someone wandering around under the old system, you can with EPOS. And -- what was the other one of that, of the capability. Yes, it also enables things like self-service checkout. We've been running -- we're now into our second trial of self-service. So there's quite a lot of cost that can be...

Yes, that can be done.

Released.

And when you're looking at efficiency in store, it's obviously the area that we'll be looking at going forward. Well, we're looking at it all the time. But the -- it's a technology-led level of efficiency that can come out of there and EPOS is the start of that, I think.

Eastern Europe?

Sorry, Eastern Europe. Eastern Europe is going well. It's -- there's more good competition, particularly in children's wear in Eastern Europe. And so we have to fight harder. But price is a very strong driver of decision-making in the slightly less affluent parts of the world, we are doing well. COVID remains quite a big restriction in Czech here and some of the other markets. But our road map is unaltered.

The overall return you're getting on stores in Eastern Europe is...

It's very good. Yes...

It's comparable. We would take Clive Black.

Clive Black. Two questions, if I may. Firstly, on food, both before and after Ukraine, do you think food security is becoming a more strategic issue where actual value is within the business and where you may allocate more capital, both working and physical? And then secondly, Primark price leadership. What does that actually mean or flesh out what Primark price leadership means, please?

Let me do that one. What it doesn't mean is the basket will be cheaper than the others. It's every product as it's always been. We will be the most competitive on everything we sell on a kind of like-for-like basis. And our tolerance of people being undercutting us with product which isn't quite as good, is very low. We'll go look at the sweatshirt and that might be a less good sweatshirt, but we're going to beat that price. That's what price leadership means. Food security is one of these things that comes -- what we get reminded of every 15 years or so. And I think in good abundant times, we think we can muck around with the food system without any consequence. We see the consequence. And that mucking around can either be making imports from certain countries more difficult or it can be putting too much into renewable fuels or renewable chemicals. Everyone's got to remember that feeding people comes first. Another thing, food security right now is also being threatened by countries banning exports of certain things or subsidizing in the case of one of our major markets, the price of chicken in the local market. In a short crop, there has to be a shock absorber. And that mustn't be starvation for the least affluent. It's got to be meat consumption. It's got to be bioethanol consumption. It's got to be these things which have a less dramatic effect on the well-being of the less affluent. But it's probably a good thing that we're reminded sometimes the food security sits really -- is part of the bedrock of civilized world. Well -- one of the -- COVID was an enormous threat to food security. We got through it really well because we have supply chains that are very resilient. We have choice in them. India got shut down for a while and imports got shut down, but we could get product from Eastern Europe. It probably means that we should have a little bit more stock in the system than we've had in the past, and we should have -- also have redundant production capacity. I think we've narrowed down our -- I think we've gone too much just in time and tried to match average demand to productive capacity too much. And we could increase our supply of little bags of retail flower packs by about 50%, well, demand went up by 400. We didn't have the capacity to run with it and perhaps in the future, to have a packing facility that runs on 1 shift normally rather than 3 isn't going to be a great cost impost.

So last one in the room, Bruce Hubbard.

[ Bruce Hubbard at Brook Asset Management ]. I do this one at a time. First one is very simple. Typical store opening might be 80, 90, 100 index sales as it matures over 2 or 3, probably 3 years. What about your flagships? Has anything changed there given your description of Milan?

Well, the flagships are the most -- are likely with the most COVID affected. So the previous flagship we opened is in Barcelona, lovely, lovely, lovely store. There are still way fewer tourists.

Sorry, it wasn't a COVID question. It was COVID in the rearview mirror. When you open a mega new store like a Milan, does it open at a mature sales? Does it mature over several years?

It often opens above the long-term sales. Birmingham certainly did that, for example, and then settles back a little.

And if I could do a secondary one is if you were...

Before you go there, sorry, the one rider to that is I still think the U.S. still is one of growing awareness. So I would still put the likelihood of positive like-for-likes even opening well-known locations. We've seen that. I'm very pleased with Miami, which is we're now needing more space that's growing. So I think in Europe, yes, I think in the U.S., the likelihood of a further increase, I think, is still there for a few years yet.

If you're a food retailer, I could ask you a basket cannibalization, switching space as a driver of your like-for-like. Primark by universal consent had stunning switching behaviors in the Great Recession on top of space and maturity. So I've got 2 questions on that. One is, how much do you know on those categories in Primark? And what are your thoughts, positives and negatives, about how you might benefit from switching in the current squeeze versus the Great Recession? It seems particularly focused on lower-end customers.

Some of the IT systems that are going in place, some of the digital capability will tell us a lot more about those sorts of issues that we've been able to work out in the past. I would go back in my own head and share it with you the words of Arthur Ryan, which was if you worry about the goods in the store, what you choose to put in the store and you worry about the price, everything else sort of takes care of itself. In other words, don't overanalyze your world. It will just slow you down. So we will never be as analytically capable as companies whose business is in selling the same stuff over and over and over again. We're selling different the whole time, and that's what we need to be best at. But we will know more. Discounters either suffer less or do better in recessionary times, of course, they do. So I think there is real opportunity for Primark in a consumer squeeze to attract new customers, to attract people who shop with us sometimes but not often to do so more. So you've got customer attraction on one end and the other end are really important, less affluent shopper having less money. How that balances up, I think we just wait and see.

Thanks, Bruce. Okay. We've got a couple of questions online. So we could take the first one, first online question, please.

This question comes from the line of Roland French from Davy.

I've got 3 questions, if I could, 2 on Primark and one on the food business. Just maybe just starting with pricing at Primark and how you're thinking about the level of pricing that you're taking in the second half context of like-for-likes and volumes, i.e., is the algorithm there? Are you solving for margins and trying to maintain that double-digit full year target? Or is the starting point looking at competitors' pricing corridors? Some insight there would be useful. And then maybe a second one on Primark for John. Just dialing into the margin expectations for the second half. So full year, broadly, it's coming back 100 basis points. Clearly, that's higher on a H2 basis. Can you help us locate the driver of that across [ Primark's ] price, distribution, energy, et cetera? And then finally, maybe just on the food business, for the H2 profit expectations. Can you give us some guidance or hence around your expectations for margin or even absolute operating profit? I'll leave it with that?

Okay. So we've got -- we're trying to do 2 things with Primark pricing. And just before I tell you what they are, just to remind you, very little of it will be in the second half. It's the autumn/winter stock, not spring/summer. Spring/summer doesn't move. The most important thing is that we remain the most competitive clothing retailer on the high street or online. That's the thing that just doesn't move. At the same time, however, we need to recover some of this cost inflation. So we will push some prices up. If we have to bring them down because we're no longer competitively where we need to be, we'll do that. But it's all about -- we'll get a fair chunk, I hope, of the inflationary cost back. We have no choice but to go after it, but not at the long-term cost of the business.

Yes. Shall I go on to...

You do 2 and 3.

Yes. Yes. Yes, exactly. So the first one, you're asking about the movers of margin in Primark in the second half. Look, by and large, the bought-in margin is pretty well set. So as you can imagine, the spring/summer stock that we are selling now will have been bought back in the late autumn last year. So -- and the currency basically for that bought-in margins is pretty well there. You're aware that as far as sea freight is concerned, there is some top-up costs that the carriers are requesting, what we call bunker, bunker fuel or whatever. So there's some elements of that. But by and large, we've known pretty well what that is. Where the margin has been hit is it's actually the cost of operating our stores. It's the cost of energy of operating our stores. And then probably higher than you would have imagined a few months ago in terms of the store labor costs, which certainly have seen quite a hike. We knew about, obviously, the increase in minimum wages. But I think otherwise, costs have risen more than we would have expected there. You've asked about food margin. So food margin is clearly coming down this year, a bit more than we would have expected, and that's obviously the reason we're bringing your margins down for the full year. Everything else being equal, you would see We're getting a number -- and this is the case for Primark. The timing of pricing is, in the case of Primark, the end of this financial year. So we'll get the benefit of that pricing into the next financial year, but we'll also get the hit of the full year effect of cost increases this year or where some of the hedges have come off. The same applies to food. So I think where we are with food, we -- certainly, our pricing is not over. We've done some, we're doing some, and we will do some. If I can paraphrase it like that where towards the end of this financial year, we'll have further prices coming through that will run into next year. So that's a very broad answer, Roland, but hopefully, that gives you a feel. We'll get another couple. So we'll take the next question online, please.

The next question comes from the line of Warren Ackerman from Barclays.

Warren Ackerman here of Barclays. Hope you can hear me okay. I've got a couple as well. The first one is on palm oil. Can you say how much you spend on palm oil or what percentage of COGS palm oil is and what impact are you seeing from the Indonesian export ban. Do you have any alternative suppliers in Malaysia, just interested in where we're at on palm oil specifically for your business? The second one is on Primark market shares. Are you able to offer any data points as to what is happening to market share, we can obviously see the exit rates for Primark. But in terms of how you're doing vis-a-vis competition as your stores are open, that would be helpful or anything you can share. And then the third, if I can squeeze one in on currency. I heard the point about the bought-in margin on transactional FX, but what about translation? Because obviously, currencies have been moving around significantly euro weakness, dollar strength. Any kind of stair as to the translation impact on EBIT for Primark in the second half and into next year would be helpful.

Yes. Okay. Warren, let me start with palm oil. We use very little palm oil. It's low numbers of tens of thousands of tonnes. So the consequence of our -- on our own cost directly of palm oil is small. Of course, it's the cost of the palm oil -- sorry, of the alternative oils going up so much because of that export ban that does impact us. And that -- the biggest users of edible oil, of course, our U.S. businesses, ACH, and then also Stratas. We've demonstrated a good track record so far of recovering increased vegetable costs driven from where they might have come from, but increasingly by shortages of palm, but it's not a direct effect. Market shares, John, you want to...

Yes. So market shares, Warren. So I mean, again, the best market that we've got is the U.K., which is Kantar data. So the latest Kantar, remember, this is a 3-month period. And this is our share of the overall market, so it includes online. The latest data which I think is into March. So again, remember, includes the more Omicron effect at the beginning of the year shows us with value share in line with pre-COVID levels. In fact, it's [ bang in line ]. So I think it's about 6.2%, whatever by value. Our volume share is down, I think, 1 percentage point. So that -- for that period. I would imagine that as the Omicron falls out of the earlier months, then that will come through. So for me, certainly by value share, that would say that we've retained our share of the overall market.

And then currency translation, a stronger dollar benefits us through translation more than it costs us in transaction at Primark. So it's a net positive.

And the euro weakness?

Yes. So translation, yes. So I mean, look, I mean, if I have that pecking order is, at the moment, dollar strength, sterling's in the middle a bit and the euro is weaker. So we will see a translation loss, I think, on the euro earnings of Primark in the second half. Obviously, it's in things like ingredients and our other businesses where we'll see a translation gain from dollar strength. So we'll come through that. So yes, I mean, it's a few percent that will come off the euro earnings of Primark in the second half. Thanks, Warren. We'll go on to our very last question, if we may, which is online. Thank you.

The next question comes from the line of Georgina Johanan from JPMorgan.

I just wanted to come back on the fiscal '23 Primark margin, please. George, I appreciate your comments with regards to longer term wanting to get back to historic margins. But first, fiscal '23, obviously, you've got price being positive from a margin perspective. But on my understanding, incremental FX headwinds and incremental cost inflation coming through. So should we actually expect the fiscal '23 margin to progress positively versus the second half of this year, please?

Could I go there? Look, if we're guiding to 10% for the full financial year, then we'll really say margins will be a little below the 10% clearly in the second half, I would expect next year to be ahead of the second half of this year, okay? So this is going back, I think, to you, Warwick, which is that's a single-digit number. So that's not -- but look, I mean let's -- I know we're all looking for clarity here. There are a big number of moving parts, and you really said those. But I think pricing is a big positive. The other one, which I don't want to lose is, I would -- even if there is some tempering of consumer demand in the first half of the next financial year, I would expect sales densities coming out of COVID to improve in some markets as well. So those are the tailwinds. The headwinds are obviously the currency moving back, so that's the dollar strength. And then obviously, full year inflationary impacts, okay? Great. I think that's it. So thank you very much, everybody. And come back to us, please, if there are any further follow-up questions on this. Thank you very much this morning.