British American Tobacco p.l.c. ($BATS)

Good morning, everyone. I'm Victoria Buxton, Group Head of Investor Relations. And with me this morning are Tadeu Marroco, our Chief Executive; and Javed Iqbal, our Interim Chief Financial Officer. Welcome to our 2026 first half pre-close conference call. I hope that you are all well, and I would like to thank you for taking the time to join us this morning. Before we begin, I need to draw your attention to the cautionary statement regarding forward-looking statements as well as the notes and disclaimer contained in the trading update. Unless stated otherwise, our comments will focus on constant currency adjusted measures, which include adjustments related to the profit from our Canadian combustibles business and average year-to-date share data is to March 2026 versus full year 2025 average. I will now hand over to Tadeu with a reminder that as always, there will be an opportunity to ask questions later in the call.

Thank you, Victoria. Good morning, everyone, and welcome. We continue to drive momentum in 2026 and remain firmly on track to deliver our full year guidance. I would like to begin with our 4 key takeaways from today's update. First, we expect to deliver strong revenue and profit growth in the U.S. supported by ongoing combustibles delivery, growth in Vapour and an excellent performance in Modern Oral. We are now the fastest-growing company in total nicotine, reflecting the strength of our multi-category portfolio and execution in the world's largest value pool. Our broad-based momentum, together with the FDA's recent prioritization guidance improving market assets for scientifically substantiated reduced risk products reinforces my confidence in our sustainable financial delivery. Second, we expect New Category revenue growth to accelerate to mid-teens in H1 and for the full year, driven by Modern Oral in all 3 regions. A return to growth in Vapour for the first time in 2 years and continued traction with our innovation rollouts across New Categories. Third, we expect further improvement in New Category contribution, driven by Modern Oral and Vapour fully aligned with our quality growth discipline. And finally, we remain on track to reach our net debt to EBITDA leverage target of 2 to 2.5x by year-end while continuing to deliver sustainable shareholder value through our progressive dividend and a sustainable share buyback program with GBP 1.3 billion underway into 2026. So let's start with New Category dynamics. The global nicotine industry continues to transform and grow as adult smokers increasingly switch to New Categories. Effective regulation and enforcement are critical to supporting sustainable New Category growth and advancing tobacco harm reduction. We continue to engage proactively and on an evidence led basis with key stakeholders including government, health authorities and regulators to help shape effective regulatory enforcement frameworks for new categories. The tobacco harm reduction journey is already well advancing markets such as Japan, Sweden and the U.S., where the FDA has been at the forefront of recognizing the risk continued. We welcome the FDA's recently published prioritization guidance as an important step toward effective enforcement and expanding market assets for responsible industry players. We have long advocated for increased enforcement and a return to a regulated marketplace that is not overrun with illicit products, providing a clear and consistent pathway for scientifically substantiated less risky products to reach the market will support continued progress towards Smokeless America. We are reviewing the guidance in full assessing its implications and engaging with the FDA implementation, while actively evaluating our commercial and resource allocation priorities. Leveraging Reynold's significant U.S. scale, precision execution, deep trade relationships, strong operations footprint and expanding digital capabilities puts us in a unique position to capitalize on this opportunity, drive growth and capture outsized value in the U.S. We are actively preparing our future Modern Oral and Vapour portfolio for markets. Execution is scheduled to begin in H2 with a phased and disciplined rollout, balancing speed with rigor. We are scaling operational readiness and leveraging new regulatory pathways to accelerate delivery over time. Importantly, we remain committed to a science-led approach to ensure responsible and sustainable growth. Reaching the scientific review stage of the PMTA process represents a meaningful quality threshold, and we believe this approach can support a more level playing field more target enforcement against bad actors and greater transparency across the industry. We are confident in the strength of our science and portfolio. Through our continued participation in the Modern Oral PMTA pilots, we see a clear pathway to marketing authorizations for our leading higher moisture products. Additionally, we are encouraged that the Center for Tobacco Products has indicated it intends to use the learnings from this program to inform a broader replicable approach to expedite review beyond the Modern Oral category. Our sustainable growth in the expanding nicotine industry is driven by 6 core capabilities. These are underpinned by over 120 years of tobacco industry expertise, enhanced by our leading science, technology and strategic partnerships. By leveraging our deep cross category insights, world-class science and stewardship, unique R&D ecosystem, global distribution, regulatory expertise and digital capabilities. We have built a well-established and differentiated portfolio of global brands with premium products offerings across all 3 new categories. Modern Oral is by far the fastest-growing new category globally and the lowest risk containing 99% fewer toxicants when compared to cigarettes. We expect industry revenue to almost triple by 2030, with Velo outpacing category growth. Modern Oral is already a meaningful and growing contributor to group revenue and profit, supported by high levels of profitability and fast payback. This year, we expect to deliver strong double-digit revenue growth as Velo extends our category volume share leadership gaining 740 basis points year-to-date to reach 38.2% across top Modern Oral markets. In the U.S., Velo Plus the fastest-growing Modern Oral brand has strengthened its #2 share position and continues to drive material share gains. Year-to-date, we gained 10.4 percentage points of total volume share of Modern Oral to reach 28.4% and 9.9 percentage points of total value share reach 23.1%. Encouragingly, Velo Plus is capturing 100% of category value growth year-to-date and has already achieved category share leadership in 7 states. As a result, we expect strong U.S. Modern Oral financial performance this year. These excellent results reflect the strength of our products, branding and distribution capabilities, underpinned by a consistent 70% repurchase rate since launch at the end of 2024. In AME, we are the clear category leader selling at a premium price point and strongly outperforming competitors at close to 6x the scale of the nearest beer and we continue to capture over 60% of category growth, highlighting the further opportunity ahead. Our latest innovation Velo Shift is designed to reshape the modern or experience with a new comfort pouch design, 5 new distinct sensory flavors and the differentiated [ excan ] designed to stand out on the shelf. Trading at a premium to the core Velo range, Velo Shift is delivering incremental share gains in Sweden and early traction in Switzerland, supporting a target rollout strategy with further market expansion through 2026. We are global leaders in Vapour, which remains the largest new category in terms of number of adds consumers and continues to demonstrate strong conversion effectiveness. Vuse continues to extend global value share leadership in tracked channels across top markets, up 1.3 percentage points to reach 44.4%. While the Vapour category continues to be impacted by the proliferation of illicit products, we are encouraged by continued performance recovery in the U.S., the world's largest Vapour markets. Year-to-date, Vuse has gained 4.2 percentage points of value share to reach 56%, driving positive volume and revenue growth in H1. This recovery has been supported by a competitor exits last year, which benefited the second half and significant progress on state level enforcement which built through 2025 with Vapour directory and enforcement legislation covering around 50% of the industry by December versus just 8% in January. We now expect U.S. vapor to deliver double-digit revenue growth in H1 and full year. Looking forward, we are confident that Vuse is well positioned to benefit from strong enforcement over time at both federal and state levels. In AME, while our value share declined 1.5 percentage points, we maintained European leadership and continue to build a premium segment through Vuse Ultra. We expect revenue delivering H1 to be adversely impacted by regulatory headwinds in the U.K. and Poland. In APMEA, our performance will reflect the lapping of prior year strategic exits from markets where regulation enforcement do not support a responsible level and competitive playing field. Altogether, we expect mid-single-digit revenue growth in H1 and full year driven by the U.S. In heated products, gross volume share was down 1.6 percentage points in top markets. mainly driven by Japan, with APMEA down 2.1 percentage points. In EMEA, volume share was down 70 basis points. While there is more work to do, our focus is clear. delivering innovation-led performance improvement in the largest profit pools. We have streamlined our commercial footprint to accelerate scale with glo Hilo in priority markets. and initiated a hyper platform reset with hyper props in the value segment. We expect headline delivery to be adversely impacted by material inventory movements in Japan and continued competitive intensity in the value segment in key markets. As a result, H1 and full year revenue is expected to be down low double digits with an improvement in H2 share performance driven by greater glo Hilo scale and phased hyperprols rollouts. Glo Hilo is designed to establish grow in the premium segment, which represents over 70% of industry value. We continue to focus on generating trials, targeting premium consumers in the combustibles and HP spaces through online and in-person activations. This is translating into premium share progress in key markets. reaching 2.6% in Japan, 8.8% in Poland, 1.5% in Italy and 1.1% in Romania in March. Glo Hyper Pro Plus further strengthens our value proposition, delivering meaningful upgrades to the consumer experience and reinforce competitiveness in the value segment. offering quick start, longer standard session left and connectivity. We are rolling out in Q2 in Italy, Romania and Greece with broader expansion planned through the second half to markets, including Japan. Turning to combustibles. While our volume share in top markets was down 30 basis points with value share down 20 basis points, we continue to deliver a resilient financial performance, offsetting volume declines with robust price mix and efficiency gains. Our U.S. value share declined 20 basis points and volume by 80 basis points, driven by growth in the deeper discount segment and heightened competitive activity in Q4 2025. Since January, we have held share as we continue to actively invest in our brands, increasing target promotions across all price tiers and expanding Doral in key states where the deep discount segment is more active. The pace of industry decline has moderated, down by around 5% year-to-date on a sales to retail basis, mainly driven by deep discount brands. Our portfolio continues to deliver value growth driven by our target commercial activities in the more profitable segments of the market. This is resulting in sustained positive momentum in both revenue and profit growth in H1. We expect our U.S. combustibles performance to be first half weighted as we lap a stronger prior year comparator in the second half, and we continue to invest in target commercial activities to drive sustainable value. In AME, we have continued to deliver a resilient financial performance with robust pricing driving revenue and operating profit growth, led by strong delivery in Brazil and Turkey. We have also taken actions to strengthen our portfolio in Germany and Romania. In APMEA, while progress has been slower than previously anticipated in H1, we expect a sequential improvement versus H2 2025 and our performance to stabilize through the year. Bangladesh remains a dynamic environment ahead of the upcoming budget. And while Australia continues to be a headwind, the drag is reducing year-on-year. Within our traditional portfolio, we expect a resilient H1 combustible performance to be partially offset by lower direct leaf sales versus the prior year reflecting our continued focus on higher return, more profitable areas. Turning to cash. BAT is a highly cash-generative business with operating cash conversion expected to exceed 95% again in 2026, reflecting our strong cash discipline and a clear focus on returns. Due to the time of [ LEAP ] repurchase and MSA payments, our cash flow is always second half weighted. Our financial flexibility continues to improve, and we are on track to deliver more than GBP 50 billion in free cash flow by the end of 2030. We continue to focus on the deleveraging, and we expect to be within our target 2 to 2.5x adjusted net debt to adjusted EBITDA range by year-end. As we transform, I remain committed to delivering sustainable shareholder returns through our progressive dividend which dates back 27 years and a sustainable share buyback program. To conclude, before we move to Q&A, our full year guidance remains firmly on track, led by continued U.S. delivered and New Category momentum. We continue to expect an H2 weighted group profit driven by stabilizing our performance in APMEA and the increasing realization of Fit2Win savings through the year. We are making good progress with our Fit2Win program and remain on track to deliver GBP 600 million of annualized savings by 2028, with GBP 500 million expected to be delivered by the end of 2027. We are closely monitoring developments in the Middle East. There is no significant impact on the group at this stage and we have comprehensive business continuity plans in place to manage cost and supply chain pressures. However, the broader macroeconomic and geopolitical backdrop is dynamic, increasing the risk of volatility in consumer sentiment should uncertainty persist. While there is more to do, I'm confident that the choice we have made and the actions we are taking position BAT well for the future. I'm excited about the opportunities ahead and confident in our ability to deliver long-term sustainable growth and value for our shareholders. Thank you for listening. Javed and I will now be very happy to take your questions.

[Operator Instructions] The first question is from Andrei Andon from Jefferies.

Two for me, please. Firstly, in the release today, you cited some down-trading trends in H1 '26 in U.S. combustibles. Could you perhaps give us a bit more color on how you expect these trends in U.S. combustibles to evolve in H2 '26? And then secondly, in U.S. next-generation products, where is the company at the moment in terms of production capabilities for Velo Max and also for age-gated flavored vapes? And then could you also perhaps give us an indication about the expected timing of these innovations as to when they hit the market and then when we could potentially be seeing a tailwind from these innovations?

Yes, thank you Andrei for the question. On the U.S. combustible, what we saw at the end of last year was a very, very, I would say, intense competitive activity in the market. And on top of a lot of the activations of brands in the deeper discount throughout 2024 -- 2025, sorry. So the reflection on the share that you see in our numbers now in H1, in reality, materialized from these activities that happened more in Q4 last year. And since January, we start taking actions on that. One of those is related to the rollout of Doral, where it makes sense. I always said that we have been very thoughtful in terms of how to deploy Doral because 95%, 93% of the value of the category combustible seats outside the deeper discount. And we were very, very conscious not to promote a value destruction movement within our own portfolio. But we are confident with the pilots that we have done that there are opportunities to expand Doral in a value accretive basis, and we are doing this right now. We also have been much more active in terms of promotions to cope with this intense activity that we saw in the market. And our shares a consequence has been stable since January. So I'm not expecting to see any different trend for the rest of the year. So I would expect the share to be stable at the back of all the initiatives that we have been taking on the combustible side. In terms of the next generation, obviously, we have very, I would say, supportive of the latest movement done by the FDA. It's clearly is a regulatory pathway that should help to restore more balance regulated markets, reducing the impact of illicit products over time. As you know, we have always consistent advocate for strong enforcement and the progression to scientific review represents a meaningful quality threshold with a more level playing field. So we are actively engaged with the FDA, like I mentioned in my opening here. And the idea is to bring Velo Max, as we said before, to the market. We should be in a position to do that by summer. The idea is to do between August, September. And we are also enhancing our age verification controls targeting high compliance retail environments and maintaining a clear audit focused position in order to activate flavor Vapour commercialization in order to ensure a responsible growth aligned with the regulatory expectation. So we expect to see some flavors in Vuse in Q3 this year. And that's one of the reasons why, together with the higher levels of enforcement that is already happening at the state level, but now with the FDA now willing to publish a list of products that should be allowed in the market that should be contributing to enforcement as well on top of allowing products in scientific review. And we do have flavors vapor products in scientific review. We are at the back of that raising our expectations some of performance of vape in the U.S. to double digit, which should translate into mid-digit growth for the group for the first time in the last 2 years, which is quite favorable for the whole New Category momentum.

I think just one addition that in terms of the question on capacity, we have done enough capacity investments across U.S. supply chain footprint. So we don't foresee any challenge of supplying the continuous growth of Velo Plus or any future launches in the second half of this year. So there is no capacity challenge we foresee right now. .

Our next question is from Faham Baig from UBS.

Team, hope you can hear me clearly. I have 2 questions as well. Firstly, on your expectations on the FDA guidance on enforcement priorities. Could you maybe remind us of how you assess the size of this opportunity, particularly in Vapour, we were, as you said earlier, the illicit products currently dominate? And the second question, is really on guidance. You've clearly delivered a strong start to the year, especially in New Categories. Could you maybe expand on your assumptions regarding the potential impact from Middle East uncertainties in the second half? And whether this is a conservative assumption given the limited disruption you have seen thus far.

Okay. Look, on the Vapour market, we always saw, and we have assessed, that the vast majority of the Vapour market in the U.S. is dominated by the responsible illegal players. And we always quote a number close to 7%. This hasn't changed. This translates into a number around GBP 7 billion of value related to that. And we clearly see that states have passed some isolation, and remember that I referred to 50% of the Vapour market today sits in states where some sort of hesitation has passed, but they vary among states. For those that have implemented a very comprehensive enforcement tools with directors and with fines and were clearly enforcement in place we clearly saw a decline in the illegal market and the consequence return to growth of the legal markets in a more meaningful way. And this is very encouraging because even those states that hasn't been as comprehensive legislation, we can always refer back to those that has been more successful. So they are open to lysate and they'll probably be taking measures as we go along to improve even further. So this is very supportive at federal level now with publishing a very clear list of products that are in the discretion of the FDA not to enforce, which are basically in scientific reviews or MGOs that they have in place, we will allow, for example, products that we are still seeing traditional channels be taking out completely. So these are very supportive. Obviously, the more important measure on this is allowing the responsible players that have a products and scientific review to introduce in a responsible manner, some flavors back to the market with improves the level playing fields and emerging regulatory mechanisms such as the supplemental PMTAs provide also opportunities to expand portfolios more efficiently. So these are all very positive and the size of the price, like I said, is very high. In terms of the guidance, we are -- what we are -- the reason why we are keeping the low end, we refer to the Middle East. You rightly point out that what I said, and we declared that in the trade update. We haven't seen a meaningful impact so far. Remember that in terms of supply chain costs, 2/3 of our costs are either labor or leaf related that not immediately get impacted by the high energy cost of freight cost. But on the other hand, our major concern is impact on consumer sentiment. And despite the fact that we haven't seen any material change in that direction. So far, we are all aware that there is correlation between gas price, for example, and sales of cigarettes in the U.S. And this is a watch out that we have to see how we progress through the year. And I'm not sure if I would call conservative. I think that we are sticking to what we said in terms of guidance. We have delivered exactly what we said and the scenario is still very uncertain in that direction. The other element for that I mentioned is the fact that [ me ] recover is not as fast as we first thought. We expect the region to stabilize throughout the year. And so H1 in '26 will be better than H2 '25. And the H2 '26 will be better than H1 '26. But -- and it's a drag. It's still a drag for 2026 which we don't expect to be the case anymore in '27 onwards. And that's the reason why we are keeping the guidance, which is exactly what we said.

We'll now turn to our next question from Pallav Mittal from Barclays.

A couple of questions. Firstly, on APMEA. So I mean, you have mentioned the performance is sequentially better, but it has been slower progress than expected. So can you just help us understand which markets have been worse versus your expectation? And then what gives you this confidence that you can stabilize the operations in the second half? That's the first one. And then secondly, on heat-not-burn, low double-digit decline for the full year. Is it fair to assume -- does the change from low single-digit, mid-single-digit decline earlier to this low double-digit sort of guidance is mainly due to the issues in Japan destocking. And can you also comment within by whether Europe heat-not-burn is growing? Or is that declining as well?

Let me address the heat-not-burn and then I touched on the APMEA. Yes, heat-not-burn our underlying performance, which is a share loss of 1.6 percentage points. It's basically a consequence of the fact that we had launched glo Hilo just at the very end of last year. That's the first thing. So we didn't have the presence in the premium subcategory as we do now. And also that we saw a much increased competitive activity and mainly in the value side of the category where we were pretty much present and dominant with the hyper pro. And just now that we are now updating our offer in that particular subcategory. So we expect, as a consequence, to see share improvement in HP as we move along throughout the year. Hilo is doing the role that they were supposed to do, and this is growing in every single market that we have launched and the new hyper pro device, and together with consumers, will give us what we believe a very strong position on that. Obviously, we are also taking some measures in terms of coping with this competitive activity with more discounts that end up impacting also the top line of the category. But the major driver behind this low double-digit decline is related to the adjustment in stocks in the main distributor in Japan. I don't think that will be a it will be a one-off, but it will not be a rebound in the second half. So this will carry on throughout the year. and that's the reason behind the low double-digit revenue decline in HP. Now in terms of APMEA, Bangladesh is the market that is already suffering the consequence of a massive excise hike last year, in a way, it's not a big surprise. We also need to see how the government will address the budget season that is coming out in a few weeks' time. And but we are seeing a lot of softness in the market to a point that our global cigarette forecast now has reduced to -- from 2% to 2.5% is exactly Bangladesh driven. And obviously, we exposed it because of the leadership position that we have in Bangladesh. And this is the major reason for a lower pace of recovered. As we come along the second half, we'll be lapping big issues that we face in Australia, that most of the decline we saw last year happened in the second half. So the comparator will be much softer compared with the first half of this year. And on top of that, we still -- we are seeing good progress in other markets in APMEA that give us the confidence to see stabilization as we go along through the year.

Sure. If I can just squeeze one more in. A question on views in the U.S. So clearly, at the full year results, you were talking about flattish expectations for the full year. So now given that you are expecting double-digit growth, is it mainly due to the new product launches that you were highlighting could come in the third quarter? Or is the underlying market sort of improving?

No. The underlying market is actually improving. The level of enforcement that we are seeing from the state levels mainly is really having a favorable impact and give us some confidence that combined with the new offers we've come to the market as we go along. But remember that this year will be more the last quarter of the year. But -- so we will not be the driver behind the double-digit expectation but will be helpful, obviously. But the underlying performance is the one that is supporting that.

We will now take our next question from Emanuele Sartori from Kepler Cheuvreux.

I have just two, please. So the first one on New Categories, and particularly U.S. Modern Oral, can you help us bridge the acceleration between volume and pricing? I'm pleased to see that Velo Plus driving very strong share gains, but how much of the expected mid-teens new categories revenue growth is volume-led versus pricing? Or is there any promotional normalization? And especially in the U.S., just trying to see are you seeing value share converging towards volume share? Or there's still a meaningful gap and a strong promotional activity? And my second one then will be on the global cigarette industry volume that you now see down [ 2.5% ] compared to the previous guidance at 2%. I hear you mentioned Bangladesh. Are you just -- is that the main driver? Or are there any key drivers behind the update?

Thank you for the question. So in the last one, yes, it's basically Bangladesh. The major reason behind this revised guidance for the global combustible business. On Velo Plus, I would say that most of the growth is volume driven, and we have -- remember that we have started Velo with the price index to the leading brand that's 65% because we need to activate the brand, and we need to generate trial. And today, we sit between 90% to 95% of the price index. And obviously, this also has helped us to reduce the gap between market share and value share [ court ], both of them in my script. We are in 28-ish in terms of market share, 23-ish in terms of value share. So it's much closer than it was before. But I have to say that most of the driver behind is the revenue generation is volume driven. The forms are pretty strong on a weekly basis.

If I just may add a follow-up there. Do you have any target in mind on market share in U.S. Modern Oral in the next?

Look, I think that -- the more exciting part of this category is the growth of the category as a whole. And this is a category that I have been saying that for a while. The potential of growth in terms of incidence growth and also average daily consumption growth is really -- is expressive in the U.S. because in terms of every average daily consumption, we see in the Nordics an average of 8 to 10 [ ports ], 12 [ ports ] in the Nordics in the likes of Sweden, and we see something like 6 to 8 in Europe. And today, it's still 3.6 [ ports ] per day on in the U.S. So we know that as the category gets better products and now with the pilot and the latest guidance from the FDA, you'll probably be seeing overall better products in the U.S. market. We expect the category to carry on growing and growing very fast. And that's what will be behind our expectation to see the category to triple by 2030. That's for me is more important. We have taken leadership worldwide of the category. So Velo is the leading brand worldwide, with 38% category share in the major markets. And we have all the possibility to carry on in that leading position. And that's for me what's important and being -- having the fastest growing brand in the fastest-growing category of new categories in the world today.

[Operator Instructions] Our next question is from Bastien Agaud, Bank of America.

You just talked about both consumer and the difference between Europe and the U.S. Just on Europe, do you I mean the category growth that you see, is it no more driven by a slight increase in [indiscernible] consumer? Or do you still manage to grow the consumer base? And the second part of my question is since the U.S. should have better quality product, as you mentioned. Do you think that over the long term, the potential for the U.S. in terms of [indiscernible] consumer per consumer it's possible that it can be higher than in Europe.

Sorry, can you repeat the second question?

Sure. Is it possible that number of pouch consumer in the U.S. could be higher than in Europe over the long term, given that we should have a higher quality product in the U.S. -- yes.

I see. I see. I see what I mean. Okay. Look, just to address your first point, there is an increase in the base of consumption in the U.S. And actually, that's what is behind our numbers of noncombustible uses that we have this target of GBP 50 million, reach GBP 50 million by 2030, we are well on track on that. And if you see the amount of users that we grew last year. We saw a lot of that coming from Modern Oral specifically in the U.S. So clearly, there is an expansion of the base, not just the everyday consumption. If you go back when we launched Velo Plus where the early date concern was around 2.6 pouch, today is 3.6 pouch. So it's not the major driver behind it. The driver is actually the base of consumer of consumers. So that's the first thing. The second thing, the U.S., like the Nordics is a market where traditional auto was already present. And when I say that Europe has an average of 6 pouch per day, there are a number of markets in Europe that has no oral tradition, like the U.K., for example, which is part of that. So in Sweden, there was a world tradition is a 12p per day. So it wouldn't be impossible to imagine that U.S. that has a traditional oral base to go beyond Europe at 6p per day. So if I have to guess, I would say something between what Europe is today and Sweden is today.

And we will now take our final question today from Simon Hales from Citi.

Two or three for me, if you don't mind, please. Firstly, today, obviously you said with regards to the Middle East, you haven't seen any significant impact to date. I suppose where you have potentially seen some impact is probably around the duty-free business. Am I right to assume that's what you mean by no significant impact so far? Or have you seen any impact in changing or changing consumer behavior in the U.S. as a result of the movement in gas prices we've seen? So that's the first question. Secondly, on the U.S., obviously, you've talked about the rollout, the selective rollout of Doral in the deep discount segment. How do we think about that as we move into the second half? Is the more you're going to do there? Or do you think you've made the selective rollout that you need to do? And then just the final question was around profitability on the New Categories business, particularly U.S. for Velo and Vuse as we look forward, given that you're hopefully going to have Velo Max in the market in the second half at some point, some these flavors on books. Should we expect to see some impact on profitability? From those products.

Okay. So the first point, just to be very clear, we haven't seen any impact so far in terms of the U.S. consumer behavior as a consequence of the higher price of gas. I was just referring that the past records. Now if you go back, we saw some correlation around higher gas price and a more soft consumption. And that's the, I would say, watch out that we have to bear in mind. You're absolutely right. The biggest impact has been [indiscernible] that end up impact APMEA as well. It's one of the reasons why we have seen some of the big cover, not be as speed as we first thought. And obviously, some costs in the supply chain, which is more related to freight and some of these energy costs that start to flow through some of the raw material, which is not really at this point, meaningful for the business. And given my point about most of the cost sits within labor and leaf, we don't see a major impact on the cost side this year. The only watch out is on the consumer confidence and hence, these previous correlation that we saw before. But again, it's still to be materialized. We haven't seen this yet. So that's the first point. The second one, the rollout of Doral will be accelerated or not depending on the economics. As we have some price increase in some states, for example, we turn into a position where it becomes more feasible from our perspective to launch a deeper discount. So I would expect the rollout to states to carry on in the second half of the year. We are already seeing -- we had the 2 pilots in last year. We are now rolling out in additional 6 states. And I wouldn't discount to roll out to more states as we go along, depending on the economics of all that. And obviously, it's not just about the Doral activation but also how we activate the rest of our portfolio. And -- but my point before is that we don't expect to see any further deterioration of our share position given the reaction that we have read start taking. And lastly, in terms of the profitability, we don't see major change in terms of gross margin. If we have read a very, very healthy gross margin business in Vapour in the U.S., not just at the gross margin level, but EBITDA level. So these will be very accretive in terms of overall category contribution. And Velo Max also will have a dynamic which will be similar to Velo Plus on a per pouch base. So we are not expecting to see and we just probably be benefiting for more volume because this will be complementary to our portfolio in terms of the offers. And I think that we'll be working on that direction of strengthening our portfolio of Modern Oral in the U.S. which is exactly what we want. I always get questions about, well, are you concerned about the competitive, the higher level of competitive in Modern Oral market in the U.S.? And the answer is no because I have paced out this competition outside the U.S. And we have been able to carry on leading the category outside the U.S. So I don't see why there is no reason of not achieving that in the U.S. if we have the right level playing field. So I welcome that. And of course, we are very confident in the portfolio that we have.

This was the last question today. With this, I'd like to hand the call back over to Tadeu for any additional [ workloads ] remarks. Over to you, sir.

Okay. Thank you for joining us today and for your questions. I'd like to leave you with this key message. The first, our U.S. business continues to drive strong revenue and profit growth driven by a truly moot category performance. This broader based momentum together with FDA recently published prioritization guidance providing a clear and consistent pathway for scientifically substantiated less risky products to enter the market, reinforce my confidence in our sustainable future delivery. Second, our New Categories are gaining traction. We expect revenue growth to accelerate to mid-teens to both H1 and the full year, led by Modern Oral and the return to growth in Vapour for the first time in 2 years, alongside further improvement in profitability. Third, we are on track to achieve our 2 to 2.5x net debt-to-EBITDA leverage target by year-end while continuing to deliver sustainable shareholder value through our progressive dividend and sustainable share buyback program. And finally, while there is more to do with this momentum, I'm confident that we are -- we will sustainably deliver our midterm algorithm. Thank you again for joining us, and I look forward to update you further at our half year results on July 3. And I hope many of you will join us at our Capital Markets Day at our U.S. headquarters in Whiston state at the end of September.