Bodycote plc (BOY) Earnings Call Transcript & Summary

Good morning, everyone, and thanks for joining us for our 2026 half year results. I am James Fairbairn, the CEO, and with me is our CFO, Ben Feder. I'd like to do some brief introductory remarks. I'll set the context and give some highlights, and then I'll pass to Ben to go deeper into the financials. And I'll then come back and talk about how we are continuing to make progress in executing the strategy, and then I'll end with a comment on the outlook. And so to start with the highlights. We are pleased with our good performance in the first half. We are on track and on plan and we've reported core organic revenue growth of just under 10%, and we've seen strong demand in are and also IGT. Medical has also returned to growth, all of this has more than offset continued softness in automotive. And as we said, we would -- we have delivered margin improvement on the back of of volume growth and our successful optimized repositioning and restructuring. And I'll talk later about the pace of progress and optimize and how we intend to go further. So in summary, we are on track and pleased with progress in the first half, and we are happy to reconfirm our expectations for the full year. Let's look at the growth and also the momentum across the group. Across our total core markets, revenue grew 9.6% based and defense revenues were almost 25%, reflecting the strong demand at market, and this was particularly led by surface treatment on commercial engines. Industrial markets grew slightly as expected, but remains fragile. And at the same time, we have continued to see softness in automotive. It was down 4.4%. And with weakness across most areas of our portfolio and especially Western Europe. And then energy, which was up at 4.7% and within that IGT revenues, were up over 10%. Our oil and gas business has stabilized after a significant contract wins in 2024. And then we also saw strong revenue growth in Consumer Medical and other. It was up 14.8%, driven by semiconductor demand and a return to growth in Metco. So in overall terms, you can see the strong performance of some of our end markets and more than offsetting the softness in automotive and the good sequential growth, notwithstanding the softer prior year comparator. This then gives us the confidence that we are on track for 2026. I'll talk more about this later. And with that, I'll pass to Ben.

Well, thank you to add my welcome to all of you. Thanks for what I understand is a reasonably busy morning this morning. So good to have you with us of our financial performance for the first half. Then I'll also touch on some of the more detailed aspects of our technical guidance as to what you should expect for the full year 2026. So let's start, as you can see here with the key highlights. Overall, a good performance in the first half that was in line with our expectations. I think the highlights were good levels of organic revenue growth, core margins that were up despite some cost headwinds we incurred in the period, strong EPS growth, good level of cash conversion and a balance sheet that remains in good shape and a good level of capital return to shareholders through a combination of the dividend and the ongoing GBP 80 million share buyback. We now let's dive into the numbers on the next slide in a little bit more detail. Firstly, in the top table here, you can see focusing on the ongoing core business. Core revenues were up 9.6% organically reflecting strong growth, as you heard from Jim, across aerospace, defense, industrial gas turbines and medical markets. Core operating profit rose 11% organically to GBP 60.4 million with core margins up 30 basis points to 16.2%. Although underlying core margins progressed much more strongly than this, that was impacted in the first half by variable pay, which normalized after an unusually low level in 2025 as well as the cost drag on some of the new program investments that are ramping up as we've opened a number of new sites and are transferring work to those. Each of those elements, the variable pay piece and the new investment ramp-up had about 100 basis point impact on the margin in the first half. Secondly, and in the lower table, you can see the numbers looked at through the group lens, which includes our noncore business, the noncore activities that we're exiting from. Revenues at that level were up 6.5% organically to GBP 31.2 million. Group operating profit GBP 61 million with margins of 16% and up 110 basis points on the prior year. And that reflected the benefits from the optimized program as well as the reduced revenue scale of our low-margin noncore activities. Adjusted EPS, as you can see here, rose a strong 18.3% to 25-point bp. And the interim dividend was increased by 4% and providing an increase to shareholders whilst also helping us to rebuild dividend cover. And I want to look at some of the key drivers of the group's operating profit performance. I'm going to cover the details behind the divisions in a moment. But as you can see here, divisional profit rose by a combined GBP 7 million from our 2 core divisions, reflecting that strong top line growth in Specialist Technologies of 16% as well as the good growth in precision heat treatment of 8%. The benefits from Optimize ramped up further in line with our expectations with around a GBP 2 million further profit improvement delivered in the first half of the year. And you can see those optimized benefits land in both the Precision Heat Treatment division. as well as in central costs. Noncore profit, as you can see here, reduced by GBP 1 million on a GBP 23 million reduction in noncore revenues, reflecting the execution on the site closures than disposals. Overall, we're pleased with what we are achieving and delivering on the optimized program, all of which is turning body coat into more of a rightsized better utilized and more efficient group. And the first half numbers, as you can see here, I think, show this quite clearly. Group revenues up 3% in total and up 6.5% or gas. With that leaner and more efficient cost base, enabling us to deliver that top line growth while at the same time, having 1% reduced labor cost on 4% lower head count, and 2% reduced utility costs with a 10% -- over 10% improvement in energy intensity, all of which combined has enabled us to deliver that group margin improvement of 110 basis points year-over-year. Now let's turn to look at the performance of our 2 core divisions in a little bit more detail. Firstly, with specialist technologies, as you can see here, which delivered a strong performance. Revenue is up 16.7% and profit up almost 17% organically, very much led by the 37% growth in aerospace and defense revenues, which is now of this division's revenue base. We renewed 2 important long-term agreements with customers in the period with 2 sizable U.S. Tier 1s. We -- although energy overall as a market was up only 2% in terms of revenue, that masked a much stronger 17% growth in industrial gas turbines, which largely offset the 15% decline we experienced in oil and gas markets. Those oil and gas declines are now easing us work our way through the difficult prior year comps. Medical, which you also may remember was softer last year, now back to growth, up 15% in Special Technologies in the first half. Industrial and automotive, you can see here, smaller parts of this division, representing only 20% of combined divisional revenues, but these markets remain challenging in the year. Margins overall for the division, healthy at 26.1%, up 10 basis points. Next, turning to Precision heat treatment. On an organic basis, revenue is up just over 6%, led again by the strong growth in aerospace and defense, which was 16% in this division. And operating profit rose just over 5% organically, with margins stable at 15%. Industrial, which represents about 25% of Precision Heat Treatment divisional revenues, was up 3.6%, and -- that was effectively stable on an underlying basis, which was then boosted by the optimized revenue transfers. In automotive, 26% of our Precision Heat Treatment division remained challenging. And here, even with the benefit of some of those optimized revenue that's from noncore into core, the organic revenue decline here was 4%, reflecting the ongoing structural challenges that a number of our automotive markets face, particularly in Western Europe. Let's turn to cash flow. And the group delivered a good level of cash performance in the first half, operating cash flow of GBP 41.6 million, up almost GBP 4 million over the prior year. That reflected the high level of EBITDA year-on-year. some temporary phasing effects on CapEx, which saw CapEx actually modestly lower in the first half and a working capital outflow that reflected the strong organic revenue growth. Operating cash conversion overall was stable at 68% versus the prior year. And restructuring spend, as you can see here, increased to GBP 9.5 million, as we had expected. -- reflecting further execution and delivery on the optimized program. Cash tax was up GBP 5 million versus the prior year. That reflected a lower level of tax refunds that we have benefited from in the first half of 2025. And we expect a much more balanced H1-H2 pattern to cash tax this year. Overall, left free cash flow of GBP 14.5 million, about GBP 3.5 million lower than the prior year. Now let's turn to look at capital allocation. We ended the period with net debt of GBP 135.2 million, leverage still low at 0.7x. And we very much maintained and will maintain our balanced approach to capital allocation. So in the first half, that saw us deploy GBP 33.5 million on capital expenditure, close to GBP 28 million on dividends to shareholders and close to GBP 18 million on the share buyback with just over GBP 12 million deployed on the new GBP 80 million buyback that we launched in March. On M&A, we closed 1 transaction in the first half not a huge acquisition at GBP 5.5 million, but Spectrum thermal processing is a very nice business, a nice quality addition to our U.S. aerospace footprint and capability, and it's performing very well. And we continue to build the M&A pipeline, as Jim will touch on a little bit later. And finally, an update on some of the more detailed technical guidance points for 2026. So I'm not going to step through all of these, but just to flag the 2 or 3 that have changed since we last presented this to you in March. Firstly, CapEx continue to expect it to be higher year-over-year with a ramp-up in the second half reflecting project phasing. For the full year, we now expect CapEx to be at or towards the lower end of our GBP 80 million to GBP 90 million previous guidance range. Secondly, finance cost, small item and a small change, but around about GBP 10 million a little bit than we previously guided. And finally, tax rate, expected to remain in line with the first half 23.5 percentage points level, which is about 100 basis points lower than we'd originally flagged in March. And as a reminder, as you model margins for the second half in those 2 headwinds, which we'll maintain variable pay as well as the new investment ramp-up costs. At the same time, we expect further volume leverage and further optimize improvements to come through in the second half year. And with that, I'll hand back to Jim to update more on strategy and on outlook. Thank you, Ben. So we've continued to make good thing on our strategy. As you know, it's focused on 3 key areas: optimize where we have been best carriage our portfolio portfolio rationalization and are now looking to go further perform where we're driving improvement through the deployment of Lean our lighthouse operational excellence sites are now up and running, and we are much in the rollout phase, which is all about being smart with our capability and capital and a focus on commercial wins and M&A. Let's look more closely at the benefits we're getting from the Optimize program. The program delivery is on track. -- we expect the majority of the planned footprint actions. That's 29 out of the 31 sites to be completed by the end of the year. We're really pleased with the results. The financial cost saving benefit last year was around GBP 4 million, and we expect the same again this year. With our full run rate benefit of at least $15 million by the middle of 2027. And so with the sale of the French sites, the net cash costs will be around $10 million to $15 million. With now a successful playbook for this activity, including ensuring that we retain the revenues that we want. A lot has been done in some of the more straightforward and obvious and so holidays, whether we're clean or clear opportunities have been done. And we are exploring potential options to expand the program and go even further. And this is focused on the parts of our auto business that remain in structural decline, and we'll have more to say in due course. And then on to perform I'm also very happy with the early successes that we're seeing and in particular, for Foresight has intense training hubs, so we've launched our Edge lean system and are fully deploying it in our showcase sites. And people around the group can visit these sites and see what extent looks like and absorb the key learnings and carry best practice into the rest of the organization. So let's look at 1 example in Lighthouse site number one, it's a very large site. It's a U.S. hip site. We've set ambitious 2-year targets in areas such as turnaround time and also margins. And week-long Kaizen events already we've achieved a 30% reduction in introduction. SP-2 Our target end markets comprise aerospace and defense, IGT, medical and also electronics. And these now account for 48% of group revenues and are seeing good growth. 2 years ago, they were only 35% of group revenues. But we're not finished yet. And a key priority is to go further to improve portfolio quality, setting us up for strong underlying growth. with organic acceleration plus investment. It's supplemented by more M&A, together with driving further on the optimized program. And lastly, to cover outlook. We are mindful of the geopolitical and macroeconomic situation, but a full year outlook remains unchanged. And we expect to deliver core organic revenue growth led by aerospace defense, IGT and also Medical. The pace of growth will moderate in the second half due to the comparators. And -- we also expect to increase our group operating margins as we see increasing benefits from our optimized program. This success and optimize and our focus on performing growth also mean that we remain confident in the delivery of our medium-term financial targets. So with that, I'll say thank you and then open up to questions.

Three questions, please. Can we start with optimize. Clearly, we're making good progress, but you've tempted us with an opportunity for some maybe some more optimized. Can you just give us a flavor for maybe the scope of what you're thinking about for the next leg of what may come within that optimized expansion? -- and maybe timing and just basically how you're thinking about just a bit more detail. Second question is on the M&A pipeline. Clearly, Spectrum was a nice little deal. -- we've had activity in the market with Kitty Hawk recently going. So I was just wondering, your pipeline apparently is building quite nicely, but the broader market activities. So just really a bit of a flavor for how you're seeing the M&A backdrop. And then lastly, 1 for Ben. We've got some variable costs coming back into the business as you guys have discussed in 2016. How does that flow through to 2017 and '20? I'm assuming that you still have a bit more in 2017 and then all kind of disappears by 28? Or should we not get too excited about 27 and 28 because there'll be more greenfields more investment in specialist tax? I just want to make sure that we're not getting too carried away or maybe we should. Okay. I'll take the first 2 and then Ben can take the third one. So in terms of optimize, we're still doing the work and analysis. I think we're a month or 2 before we really decide where we're going to go with that. Two things I would say. I think the first thing is that we're responding to markets that remain structurally challenged. And I think that's a good thing. I don't think we anticipated previously, the depth of that structural challenge. And so I think the fact that we're responding is actually positive. The other thing I would say is that with more conviction on being able to execute and optimize. We some of my prepared remarks, I mean, you would have heard that we said the amount we were on track. We put a lot of program management and focus and team focused around being able to execute that. the model just as a closing site. It's also about, I mean, retaining revenues. We also said previously that we would remain, I mean agile and -- and I think that's a very important point. I think the last point I'd make is that, as Ben alluded to, with a lot of the low-hanging fruit within the organization, especially within AGI, I mean, has all been done. So as we look out for potential further restructuring, consolidations, then it will be a bit more difficult. So you shouldn't necessarily expect the same returns. But at some point, Ben can update on that. On acquisitions, I mean, we continue to build a pipeline. Our preference always is not to like be part of a process and build the relationship build the relationships through time, through family owned enterprises, and that's what we're doing. In fact, the math it next to your left is now responsible for M&A, and he's doing a good job about building these relationships. It is our aim every year to do several acquisitions. As you know, it's dependent on negotiations. Sometimes, these are opportunistic. I think what you want to know is that we have a funnel, we've got an active funnel. All of us in the leadership team are tasked with looking at new opportunities and building these relationships, making business cases and that is all actually happening. And it needs to be aligned to the strategy as well, which we so acquisitions are very much part of the strategy going forward. It's a big focus within the company, within the Board. And I'm confident in the short to medium term, we'll do more. I couldn't be happier with the integration of the spectrum in the Lake City. I think both of these are actually outperforming, which is actually true. And I think that's a testament to the team who've actually taken over and also the process that we build behind them, and it's the same regulatory process and identifying and nurturing the pipeline. So I'm confident that we'll do more at some point. Just pick up the 1 on the new project investment costs. Your question on that, if I've understood it correctly. So Firstly, just a quick context -- remember what's behind those. It's some of the -- if you wind back to the slides that we shared in March, you've got a new site in Mexico, Greenfield in South Korea. You've got some A&D site expansions and replacement of legacy sites in the U.S. and also some additional hip capacity that we're putting in 2 sites in the U.S. and 1 site in Europe. So there's quite a bit on our plate at the moment around some of these things, which is necessary for lots of good reasons because we want to drive more growth in the business. At the same time, we're also going to be mindful that financial outcome is not entirely possible. And it means in the early years, as you carry out those investments and those new sites start getting up and running, there is a cost to doing that. As we alluded, it's probably around about 100 basis points to margin headwind in the first half, stays at about that level in the second half. That clearly starts to abate as you go through '27 and '28. It won't all go away in '27. chunk of it does. Chunk of it goes away in 2028. It then does depend on your -- the second half to your question, is there more new investment coming thereafter. There will be a bit more -- but at the same time, as you go through 27 and 28, you've got the building elements of the drivers coming from more savings and optimize perform starting to deliver and hopefully some ongoing volume growth in the underlying markets. So think of it in that way. Two to get a hub for that investment? .

It probably is -- it's the combination of humping those investments and the variable pay rebalancing, now that variable pay piece, that doesn't unwind in 27. It's found a new base level. It's back to its normal base level, I should say. And therefore, that doesn't unwind, but it just hopefully doesn't get worse.

Three questions from me as well, please. Firstly, can I just come back to optimize and obviously increasing the scope there. You're going to focus on the areas that are structurally challenged within industrial and also automotive. . Can you just break out how much of industrial you think is structurally challenged? And also how much of automotive is this strategy challenged as well? And like you say that in terms of the payback, it is going to be lower, but can you just give us a feel for what kind of levels of payback we could get on the next round? That was the first one. The second 1 was just in terms of North America industrial. Obviously, it has lagged. It's like the PMI isn't really picking up. I think we would have expected that to be better. I know there's a mix effect there. Can you tell us what parts of Industrial and U.S. are really sort of holding you back there? And obviously, the views into the second half? And then the third question, just in terms of 1 of your smaller end markets, but semicon, obviously growing really well. Can you just give us a flavor for the growth of that business in H1? And what can you do to really expand your exposure to semi Comitan Bodycote?

So let me take the first 1 then, Ben. In terms of optimize, we're very much seeing that the structurally challenged area of the business is actually automotive. And let me put some color to that, Jonathan. We're down 4.4% as we say. But it is a different picture and regions. And I mean, hopefully, this will give you some color and kind of point you to what we're thinking. North America, Eastern Europe and Turkey showed actually modest growth during the period. Western Europe was actually down high single digit. So that leads us to the where I'd say that 1 of the focus areas that we are and will be looking at going forward. China was also down. I mean, light vehicle production was actually down 5%. And -- we were doing slightly more than that. But if you look at P5 and P6, there's a bit of a recovery in China. So I think we're not really seeing industrial. We're really focusing on auto. Ben can come back about the payback in a second. I'll take the North American industrial. If we look at it on a kind of global basis, the submarket, and 50% of our industrial markets is a machinery manufacturing, that was like just flat to slightly down, whereas tooling and tool steel increase -- and also construction and agriculture were actually slightly up. So that's where we are as a total industrial market. And actually, America, if we look at kind of regional, Europe was actually slightly up. North America was actually down. Our kind of key weak spot in North America was actually heavy truck and bus equipment. That's really the industrial supply chain to that. That's really where we saw the weakness. Do you want to take the payback question.

Yes. and semis -- so look, on the payback, as you saw on the slide that we shared on screen earning, the payback on this program has been actually very good, I think, with around about a 1 for 1 in terms of the net cash cost to achieve and the expected profit benefit that we're still ramping up to deliver, but confident that we will deliver that at least GBP 15 million improvement by the middle of 2027. Of course, with the initial program scope, it was also helped from a net cash cost perspective by the fact we were able to package off and sell those French sites. -- which brought in around GBP 19 million of proceeds and would have been far more expensive, how do we close those. I think in terms of orders of magnitude, it's hard to be too precise because at the moment, the scope of the program is still being worked out. So it would be premature for me to sit here and come out with a number on payback. However, as Jim mentioned, it won't surprise you that the lowest hanging fruit was achieved and delivered in the first stage of the program. That's not to say it won't be attractive, if it's not attractive, we wouldn't be doing it, but it's probably more likely to be somewhere in that arguably 2 to 3x range between cash cost to benefit. So it gives an attractive payback, but just not as low-hanging attractive as the first stage. But give us time to work it through. We need to do more work to precisely define the scope of it, precisely define the reach of it and the execution mechanism as to how we do it. which closures, potential disposals, combination of those. And as Jim mentioned, we'll come back to you later in the year when we've done that work and when we're ready to give you some more concrete numbers on that. On semis, your question on that, Jonathan. Look, it's growing nicely, not surprisingly. I think it was up about 25% or something in the first half. It is a relatively small part of the group. It's about 2% of revenues today in semis. And with some very niche exposures that we have there in the chip manufacturing supply chain process. for equipment -- capital equipment that goes into chip manufacturing through 2 or 3 different parts of processes, a bit in 3P, a little bit in precision heat treatment and a little bit in hot isostatic pressing. It's hard to grow dramatically organically in that, but it's probably more likely through some -- if there are selective M&A opportunities and there is 1 early stage in that area. It's very small, but that we're looking at. And the likelihood is, if it is M&A in that, it will be through pretty small bolt-ons. But there is 1 in the pipeline at the moment. that we'll see where that 1 gets to that would further enhance our reach into some of the electronic components and semis with more of an aerospace and defense buyers to it. Thanks, Joe.

It's Harry Philips of Pound. Just a couple of questions, please. Just thinking about the M&A environment and you've got 2 sort of well-known competitors who've set out very clear agendas to expand in similar markets and what have you. So just wondering against that backdrop, you've got a whole list of companies in the States, many of them was actually looking at elisiother day. I mean I think 8 of the top 15 are family owned still and what have you. So I'm sure they're also wining and dining all the same people. So what's the body coke proposition apart from cash to get those family businesses into your portfolio rather than other people. And when you look around capital allocation and you say you've got these competitors wanting to grow at a real rate. Just sort of do you feel you need to sort of reappraise how you sort of execute there? And then secondly, just looking at the the chart, which you very nicely sum up, Jim, where I think it was 48% of revenue come from those high-growth markets. So let's say those high-growth markets can do you mid-high single digits. That should mean core body coke grows at 3%, 4% with no growth in industrial, auto under pressure, et cetera, et cetera. I mean is that the sort of -- I mean, if you go back to the Capital Markets Day in December 24, that sort of puts the capital market sort of proposition almost at sort of low case, if you like, given if you've got short 50% of sales in the higher-growth markets, is that too simplistic or what negative headwinds are missing in that please?

Okay. Well, let me Thanks, Harry. Let me take the 2 of them and Ben can comment on the second 1 as well. I think in terms of M&A, I mean, we're very selective Kitty Hawk got mentioned earlier, we knew the owners at Kitty Hawk. We spoke to them. We -- but we decided actually not to bid for for different reasons, we're not going to go in there. So we are building every relationship that you would expect us to build, okay, with all these family-owned companies. . And then we, as a team, take our ideas to the Board, we have a big debate and how it should be. I think for family companies, I think, like from Bodycote is that we're the market leader. We take a real interest in the longevity of actually their asset. We talk to them. I always ask the question, why are we the best buyer. And therefore, we actually articulate that to the family company. And we have some good opportunities in the medium to long term of actually working with family-owned companies because we -- we put a lot of currency on people, talent, development, how we think operationally service levels, make sure that we serve the customer. We spend a lot of time actually doing that. So I think building that relationship is actually very important. The 1 thing that I've learned you've been doing this for 25 years is that you can never tele family company when they have to sell the older side. And that's actually why someone early on in my career said, you've got to wear out shoe leather. And that's what would embarrass you who's is sitting there, that in what we do. And we all do trips, be everyone, I mean to build these relationships. So I think the proposition for us is actually definitely around being the market leader, our values, our people and why we've been able to articulate the reason why we are the best buyer -- and maybe, Ben, kind of what could add to that in a second. Your second question around pretty much -- we said at the Capital Markets Day, a mid-single-digit growth through the cycle. One way to get there is exactly what you're seeing, half the business is in higher growth markets -- and through time, that will increase. So you're not missing anything. I think we will continue to pivot the portfolio through time. to increase that percentage and that's a reasonable proposition. If you want to add anything to any of these 2 questions.

think just on the medium-term growth, mid-single-digit point, the only dimension I would add -- and I can't fault your math as much as I'd love to, if half the business is serving markets that are growing 6%, 7%, 8% per annum long term. I mean let's also remember, aerospace brilliant growth IGT, very strong growth. But if you look out 5 years plus, you can't extrapolate the first half performance forever. But nonetheless, they will still be significantly higher growth in a number of the other end markets. But it gets you to maybe that 3% to 4% you talked about. The other dementias just to throw into the mix is that auto -- is it really going to grow. And certainly, this is where the optimized expansion program that does mean you maybe need to feed into your overall mix, the fact that potentially the scale of our core revenues may have a little bit of a further reduction as we put more businesses into noncore in the event of an expanded optimized program. Now that doesn't diminish the future rate of growth, but it just depends on your revenue start point when you're working out where your CAGR is, but you maybe need to lower it before you then have more of that confidence around mid-single digit and even slightly higher than mid-single-digit growth in the longer term, if you had a portfolio that was even more biased towards aerospace, IGT, medical, semis, et cetera.

I guess is if you start to take -- let's just use auto as the example, you start to take some revenue out of that. And is it then the capital allocation on the other side has got to be if M&A is sort of driven by the very sort of factors outside directly your control, do things like buybacks sort of get accelerated as a consequence of that because you sort of if you raise funds through focus and concentration, leverage is obviously on demanding where you are, et cetera, et cetera. Does the balancing item of capital allocation, does a drop in auto come with a reject to broader capital allocation. .

Well, I think it fundamentally depends upon how we can execute an expansion of the optimized program. Your question inherently assumes it will be through disposals that release capital. I hope it might be. But as you can imagine, you're looking at selling some of these businesses, with an end market mix that may not be quite as favorable from a disposal perspective as your question might allude. But that doesn't mean we're not going to try damn hard. But it depends how you execute the program, whether it's your disposals or whether it's through closures and consolidations. In reality, maybe a mix of the 2.

Tom Egor from Deutsche. You miss. I think 3 sort of areas I just want to ask a question on. So I think starting on A&D, I mean, clearly, very strong growth at the start of the year. I think it would be great if you could touch on the pricing contribution as part of that and whether you can disaggregate the volume and sort of 2 parts of that? And I guess, secondly, on A&D thinking about any additional color you can provide on market share within the first half? Obviously, very strong to in the business. And obviously, the changes that you've made, Jim, in terms of the sort of go-to-market strategy in A&D. So would be great to sort of get an update on that. So I'll pause there and come back.

Okay. I'll take the second part of that, Ben. So in terms of market share, what we've done in the last 18 months is actually really strengthened aerospace and the financial team. We brought in a new President. She has changed probably 75% of our team. Part of that was to bring in ahead of commercial that works with all our front line, really bringing new process and talent into looking at our commercial organization go-to-market strategy and also how we win business. And the business -- so the Aerospace & Defense business had been suffering a little bit from some service level issues. Well, they have all been resolved now. And Ben referenced 2 major renegotiate renegotiations of LTAs both very much in our favor, and that will bring us market share. So I'm very confident that we have the rigor in terms of commercial focus just around the aerospace and defense team, and it's obviously showing within the numbers. Now obviously, the majority of that is actually market growth. If you think of the beginning of actually last year, there was congestion in the supply chain, 4 months earlier, we had the Boeing strike. We didn't have an easy first 3 or 4 months last year. And I think aerospace and defense during the half year last year grew at 3%, yes. So obviously, we're not -- the second half we're going to moderate as you would expect. But we've actually professionalized I mean that -- I mean the whole team, but clearly, the majority of that is we're rising to the market. Why do you talk about pricing?