Davide Campari-Milano N.V. (CPR) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Campari Group Full Year 2023 Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Bob Kunze-Concewitz, CEO of the Campari Group. Please go ahead, sir.

Thank you. Good afternoon or good morning, and thank you for joining us today. As you know, my 17-year tenure is coming to an end. I've actually, on an operational basis, passed the symbolic cocktail shaker to Matteo. Paolo and I will take and answer all of your questions today. Matteo is with us, and he will be in listening mode, but he'll say a few words of introduction at the beginning. Matteo?

Thank you, Bob, and good morning and good afternoon, everyone. Obviously, it's a real pleasure to be here with you today. And most importantly, I'm looking forward to meet you and answer all your questions in the coming weeks and forthcoming road show. For today's call, however, like Bob said, I will leave it to him and Paolo, who will entirely manage the presentation as well as the Q&A session. So thanks a lot. Look forward to meet you. And over to you, Bob. Thank you.

Thank you very much, Matteo. So if you join me on Page 3 of the presentation. As you can see, 2023 was another year of quite strong and profitable growth, where we are consistently delivered on strategy. I mean net sales at EUR 2.919 billion is actually best in class from an organic sales growth standpoint, leading to a 10.5% organic growth over the fiscal year. Q4 was also quite a strong quarter, where we ended up organically up by 10.6% on the top line. Clearly, we have solid brand momentum, which continues to be driven by aperitifs, tequila and bourbon. And this continued as well into Q4. We have a sustained and continued industry outperformance, which is underpinned by pricing across the portfolio, driven by the U.S., our core European as well as Asia Pacific markets. Adjusted EBIT came in at EUR 618.7 million. It's an organic growth of 15.5%. So a 90% -- sorry, 90 bps accretion over the year. But when we consider a normalized level of A&P -- as you know, during the summer, we had to cut quite a few of activations because of bad weather. Taking that into consideration, adjusted EBIT would come in at EUR 600.7 million which would result in an organic growth of plus 12.3%, which is also spectacular within this overall environment, leading to a 40 basis point accretion over the year. And this has been driven thanks to pricing and mix. Now the ForEx COGS were on our side, and we've had quite some headwinds. We had net negative ForEx effect on net sales of EUR 94.5 million over the year. And on the EBIT adjusted, the headwinds reached EUR 46 million. So clearly, quite an impact, and this is largely due to the transactional effect of the Mexican peso as well as the depreciation of the U.S. dollar. Net debt on EBITDA adjusted came in at 2.5x, a slight increase from the 2.4x we registered the prior year. Basic adjusted earnings per share came in at EUR 0.35, roughly flat versus previous year. And as is our habit every few years, we proposed a dividend increase. So we proposed a full year dividend of EUR 0.065 per share, which amounts to an increase of 8.3%. Now while we'll dive into the details of 2023 and dissect them, and I'm sure you'll have a lot of questions, I think it's also worth zooming out and looking at the bigger picture and what we've been able to accomplish since the pre-pandemic era. Now overall, our business scale increased by 60% versus 2019. This clearly reflects the strong momentum and creates for us now a new base across core categories and key markets, which will continue to be supported and enhanced by commercial capabilities and our boosted infrastructure. Looking at our top line growth between 2019 and 2023 on a compound annual growth rate basis. You'll see that our 3 most important categories have been growing solidly double digit: the aperitifs by 16.5%, bourbon by 10.7% and tequila up by 30.3%. And now if you look at it in terms of the overall growth over that period, our core aperitifs grew on an organic basis by 84%, representing today 40% of our sales. Bourbon grew by 50%. Tequila almost tripled. So clearly, it's quite a good performance. And importantly, we've had a nice diversification also from a geographic standpoint, thanks to the route-to-market build, which we executed in the past few years, most notably in Asia Pacific, which managed to double its value weight to 4% if we exclude Australia. Now with the strong growth of tequila, obviously, that had an impact on gross margin, as you can expect, due to the high cost and the increasing cost of agave in the past few years. So our gross margin at the end of 2023 remains still down 220 basis points organically, 270 reported. And as I said earlier, this is largely due to the increase in agave purchase price with the strong growth of Espolòn and the general input cost inflation increases, which we saw post-pandemic; as well as incremental depreciation, which is linked to our step-up in production capacity. Now over the time period, it must be also underlined that we've had strong pricing power, which more than offset COGS inflation in value. And clearly, we're quite confident regarding the potential for the gradual margin rebuild in the medium term. EBIT margin trends benefited also from significant operating leverage following sustained investment in brand building as well as business infrastructure. And we've had continued brand-building investments amounting to almost EUR 200 million over the period. And we've enhanced our route to market with 26 direct markets versus the 20 we had in 2019. Now all of this also added up in terms of total shareholder return. And it's interesting to see that if we look at 3 different periods, since our IPO in July 2001, since I took over in May 2007 as well as the last 5 years, we practically outperformed all of our benchmarks. We've outperformed the average spirits sector as well as the Euro STOXX 600 Food & Beverages. And with regards to since IPO as well since 2007, we've outperformed the MSCI Europe. So what is driving all of this? And what will we do going forward? Big picture, clearly. Now we believe that consistency is key, and we strongly believe that our group remains primed for the next stage of growth, thanks to the consistent strategic framework with focused core strategies. And this is our cocktail for growth and is built on 4 pillars: enhanced focus on core strategic markets and categories, continued brand building via proprietary marketing model, continued reinvestment and development of commercial capabilities to support the growth of our core categories, and last but not least, clearly, M&A remains a very important business priority for us, at the same level as organic growth. Starting with the first pillar, enhanced focus on core strategic markets and categories. We're very pleased to say that Espolòn is finally joining the Global Priority brand cluster, and we will be able to combine very strong U.S. presence. By the way, Espolòn U.S. is our largest brand market combination. And we'll be able to couple that with unconstrained volumes, enabling international opportunities. With regard to the aperitifs, we'll continue strengthening our leadership in this key category, leveraging our scalable model in both established, high potential as well as seeding markets. We will continue premiumizing and leveraging premiumization opportunities like our aged spirits portfolio, particularly in strategic markets like the U.S. and Asia. We see good opportunities for further step-up in the under-indexed APAC via strengthened commercial capability as well as the very positive expected impact of future Courvoisier acquisition. And by the way, this is a region that has also grown 80% organically since 2019. Last but not least, we're announcing something which we've already started executing and is in place since early January, which is a strategic organizational change via a partial business unit reconfiguration leading to one combined Europe, Middle East, Africa region for the next phase of our growth. And clearly, the key driver here is marketing and commercial synergies, and it makes a lot of sense. With regards to brand building, we'll continue to reinvest, leveraging the deflationary input costs in brand building and leveraging our sustained A&P investment behind our propriety model, which you know is quite distinctive compared to our peers. And it's based really on activations and events and then the digital propagation of that. We will focus on differentiated campaigns, and all of our brands have very clear and identified brand territories. And we will continue engaging across all our channels for our core brand building and occasional -- occasion ownership. With regards to commercial capabilities, we will further develop our digital capabilities across the organization with a view to accelerating our digital transformation programs, particularly leveraging data and analytics, pricing and RGM, revenue growth management. We will continue to make investments into route-to-market companies to increase our scale in local markets by effective commercial and marketing execution. And last but not least, we will bring to an end over time our focused CapEx programs to boost both our capacity expansion as well as support the expected brand growth trajectory in our core markets and core categories in years to come. Now with regards to M&A, this year, we will expand into premium cognac via Courvoisier. Clearly, what we're looking at is also at accelerating and improving integration. So we set up a strengthened organization and a very clear and multifunctional -- dedicated function responsible to accelerate the integration of the sales and marketing activities of the brand. And we will continue to focus on premium M&A. We both have the appetite and the means to do so, continuing to deliver superior returns for our investors. On Page 7, delving back into 2023. You see that we have positive growth across all of our regions, significantly outperforming our respective reference markets with clear drivers being the aperitifs, tequila and premium bourbon. In terms of regions, North, Central, Eastern Europe and APAC grew strongly double digit. And the rest of the world grew in the high single digits. So a very, very nice combination. Global Priorities grew by 10.8% and Regional Priorities by 13.4%. So clearly, we're running the right stuff. Moving on to Page #8, starting off with the Americas. The Americas, our largest region, 44% of sales, growing organically by 7.7%. We're actually very happy that our largest market, the U.S., grew double digit last year, which is a remarkable feat. Organic growth of 10.1% with an acceleration in Q4 to 12.8%. Your key drivers, as you can expect, are Espolòn; the aperitifs; Russell's Reserve, which is doing a great job premiumizing our bourbon offering; as well as Appleton Estate. Grand Marnier returned to growth in the last quarter, but clearly, destocking impacted the overall U.S. numbers. Now if we look at our performance from a consumption standpoint, we're also very pleased to underline that we've outperformed the overall market and our peers in terms of both Nielsen indicators as well as the NABCA sell-out indicators. One interesting statistic is that we are confirmed as a top value growth driver for -- as a supplier for our partner, Southern Glazer's Wine & Spirits. And as you know, they represent the best and the finest in the country, and even more so that Aperol and Espolòn were 2 out of the top 10 growth value drivers for Southern in 2023. So having 2 out of the top 10 brands is very positive. Jamaica only grew by 2.4%. Clearly, there was a very tough comp base. We grew by almost 30% last year. But also, the country was constrained from a product availability standpoint, particularly on Wray & Nephew White Overproof. The rest of the region grew also respectable 4.9%. Actually, we had very strong double-digit growth in Brazil and Mexico, which offset the weakness in Argentina, as you can expect, impacted by macroeconomic woes. Our second largest region, SEMEA, grew -- representing 28% of our sales, grew in high single digits, 6.8%. An overall positive performance in Italy, up 5.5% on an annual basis. So consistently outperforming the reference market, positive year-end. We were negatively impacted by weather in Q3. So we were able to regain momentum in the Q4 quarter. And again, here, the key driver is our strength in the on-premise and the outperformance of our aperitif portfolio, which was also boosted by pricing and the expansion of usage occasions. Our second largest market in the region, France, grew by a nice 7.2%. Q4 was a little bit softer due to a very tough comp base. Here, the drivers are the aperitifs as usual, Aperol and Campari, but also Riccadonna sparkling wines, Trois Rivieres rums, Picon, which we only acquired a short while ago and managed to return to growth, as well as Champagne Lallier. Regarding to the rest of the region, despite a very weak and actually negative performances in key markets such as Nigeria and South Africa, the rest of the region grew by 10.6%. So clearly, this was driven by the other key markets, particularly Spain and Greece, where we continue to generate very positive momentum, thanks to our aperitifs. Global Travel Retail also did very nicely. Moving on to the following page. North, Central, Eastern Europe, 21% of our sales, growing at very strong 18.7%. Now this region has gone from strength to strength, outperforming all reference markets across the board. No question. In Germany, outperformance across the board with very strong 23.9% growth. So clearly, this shows there's a very nice return on investments on the commercial capabilities boost we activated in the past 2 years, and you can see that in the results. Now moving on to the U.K., up 19.1% organically. Again, a very big delta versus their reference market, which was down around mid-single digit. So again, within the context of a tough consumer environment, we're able to perform very nicely with a very positive end of the year. Q4, we were up 32.6%. Key driver is aperitif but also our Jamaican portfolio, Magnum Tonic Wine and Wray & Nephew White Overproof. We actually had made a decision to allocate more product to the U.K. and constrain Jamaica as we're still in a building mode in that key market. The rest of the region, again, very good performance, double-digit growth across the board, 14.5%. Key driver is aperitif. Last but not least, APAC, our smallest but one of the fastest-growing regions, up 20.7%. Australia, nice 5.3% organic growth. Again, Aperol playing an important role as well as the Wild Turkey RTD, the bourbon and Espolòn off a small base. We had a weak Q4, but that is explainable via the very strong 2022 comp base, which was up by 31.1%. Now if we look at the rest of Asia, very positive growth with very nice traction in the highly profitable and premium South Korean market, driven by the high end Wild Turkey offering, GlenGrant, X-Rated and SKYY. China also registered positive growth overall, but that against an easy comp base. And key drivers here are SKYY and Aperol. And Japan, we're also excited to see it growing very strongly, thanks to our brown spirits, our SKYY ready-to-drink as well as Campari. Moving on to the sector performance by brands. We will start with our key brand, Aperol. And I think this chart is probably one of the most important ones of the whole presentation. You can see that 20 years post acquisition, we continue to grow this brand double digit. In 2023, it's up 23.1%, reaching 24% of our group sales. And we see that the growth is actually very broad based and came in despite the weaker Q3, which was impacted by unfavorable weather in Europe. Price repositioning and strong consumption obviously helped. Core Italy grew in the high single digits, 8.2%; Germany by whopping 32.9%; the U.S., and this is becoming a very, very meaningful market for the brand, grew by 52%; France, 11.7%; and the U.K. by 29%. Now this strong momentum is across all other markets in Europe, again, Spain, up 29%; Scandinavia, 32%; Austria, 16%; Belgium, 16%; Poland, 56%. So very nice traction. But what's even more, I think, encouraging is to see the next engines of growth reaching new heights, Mexico up 48%; Canada, 31%; and very strong growth across APAC. In Australia, where we returned to sponsor the tennis in Melbourne, returned to grow double digits, 27%, and growing triple digits in the rest of Asia. Now the most important, I think, chart is the one on the bottom on the left, where, as is our habit, we look at per capita consumption across our markets. But this time, we did it a little bit more interesting because, as you know, Aperol sources from beer are roughly 2/3 or 75% depending on the market of consumption is consumers moving over from beer. And even if you look at Italy, which is our most penetrated market from a PCC standpoint on the brand, Aperol's percent -- PCC as a percentage of beer, PCC, is only 1.2%. So this clearly shows there is still a long and an important opportunity ahead of us. And if you look at -- once we establish or set Italy as an index 100 in terms of Aperol's PCC, you see where all the other key markets are. And one of the largest markets, the second largest market on the brand from a volume perspective, Germany has only half of Italy's penetration. Now if we look at the third largest market, the U.S. We're only at 4% of Italy's penetration. And this, I think, sets in mind what I've been telling investors and analysts for a long time, is that we are really only at the beginning of the growth trajectory of this brand. Here are the markets which -- where we launched first. If we start looking into the Asia and South America of this world, you'll see that the opportunity is even stronger. Moving forward, Campari, our second largest brand with 11% of our sales, growing double digit, 10.7%. This despite weakness in Jamaica and particularly very, very poor results in Nigeria due to the overall environment. So very positive performance overall. This brand clearly also boosted by our successful repositioning, and our growth is driven by some key markets. Italy, high single digit, 8.9%; same with the U.S., 8.5%; Brazil, very, very vibrant for us, up 34.8%; Germany, up 18.1%. So the cocktail which we have -- or the cocktails which we have, which are a combination of the Campari spritz, which is a big volume driver, and then the image drivers like the Negroni are working very, very well for the brand. Now with regards to the Campari spritz, which is interesting to underline, is that if you look at a market like Italy, 25% of Campari's consumption comes from the Campari spritz. And what's even more interesting to see is that if you look at it in terms of does it cannibalize Aperol, only 15% of that consumption comes from actually Aperol spritz. So what we're doing is bringing in more consumer into the spritz category via Campari spritz and taking from beer as well as wine and other categories. Moving on to Wild Turkey, up high single digit, 8.8% on an organic basis, representing 8% of our sales. Here, we have strong brand momentum. In the premiumizing category, we're probably premiumizing faster than the rest. Since we've acquired the brand, we've taken it to another place. And we're seeing very positive performances across core markets as well as new markets such as South Korea and Global Travel Retail. As I mentioned at the beginning, the high-margin Russell's Reserve is going from strength to strength, clearly outperforming premium. Very strong double-digit growth in the core U.S. And as volumes become available, we start also seeding the brand in key markets such as Australia, South Korea and Japan. Moving on to our Jamaican rums. Despite some supply chain limitations, up high single digits, 7%, 5% of our growth. Very excited to see Appleton Estate growing double digit, 13.5%. So it's clearly becoming one of the leading brands in the aged dark rum category, which is where all the action is in rum with the exception of White Overproof. White Overproof was a little bit handicapped. But once we have our dunder treatment plant in line, functioning at the end of this year, early next year, I think we'll be able to really let this brand express its potential. So it only grew by 1.9% last year as it was severely constrained in the first half of the year. Moving on to Grand Marnier, that's the only [ sore note ], but it's hardly a surprise. And if we proactively decided to destock our distribution network on a shipments basis, we're down 16.5% organically. Clearly, this is all focused around the U.S. market. But despite the destocking, we continue building the brand for the long term, investing behind the right initiatives from a marketing standpoint and highlighting the incredible versatility of the liquid. With regards to premiumization, we very successfully continue that journey via the Cuvées across our core markets. Moving on to SKYY. I'm very pleased to report that actually, we managed to grow the brand, up 1.5%. And it only represents now 4% of group sales. That's a clear indication on how we've been able to diversify our portfolio successfully over the years. A key driver here obviously, our international markets, particularly China, Italy and Global Travel Retail, whereas in the U.S., it remains a challenged category. And most importantly though is that international is picking up pace. Now international represents 1/3 of the brand sales, and we expect that to continue growing going forward. Last but not least, new arrival to the Global Priority brands, Espolòn, up 35.7% organically in 2023. Again, I'm very proud to report 14 years of consecutive and significant double-digit growth behind the brand one after another. The core U.S. continues to do very well. We were up 30.9% in Q4 in the U.S. And we'll continue to gain market share, which is both a combination of volume share as well as positive pricing. International markets, now we're benefiting from the increased volume availability. So we started to successfully seed the brand in Australia, Canada and Italy. And soon, we'll expand it to more markets. So out of nowhere, this is really cooked in our own kitchen brand. It's grown in 14 years to represent 8% of our sales. And this is not the end of it because we do expect strong international growth. And also, it will become more appealing from a profitability standpoint as the agave prices have significantly come down. Moving on to Regional Priority brands. They represent 26% of our sales, and it grew 13.4% overall. Sparkling wine and vermouth benefited from clearly our cocktail strategy, the spritzes as well as the Negronis of this world. The Italian specialties were slightly down, 3.9%, behind significant price increases in the Italian market. But it's also good to see that our main priority, Braulio, despite the significant price increases continued to grow and helped offset quite a bit of the decline on the other ones. Crodino, up 3.6% organically. Aperol spritz, 6.6%. I'm nominating both together because these are 2 brands which benefited from significant pack architecture changes last year. So both in terms of the size as well as the number of bottles in the clusters. And clearly, this creates a little bit of a transition effect, particularly in the main market, Italy, which slowed down. But we expect that to regain momentum. The GlenGrant, benefiting from premiumization and the big focus in Asia, growing double digit, 13.8%. And Magnum Tonic Wine also doing very, very nicely, up 21.2%. Closing it up with our local brands, which now represent only 8% of our sales and have been growing 3.9%. Campari soda grew only by 2.3%. Again, here, pricing impacted it in Italy, but we'd expect that to recover in the medium term. Wild Turkey ready-to-drink, up 3.4%. We're starting to regain the promo slots we lost in '22 due to product and availability. So we'd expect us to build momentum. X-Rated up 4.3%, again, thanks to China and South Korea. And SKYY ready-to-drink, which maybe when we talk about the SKYY franchise, we should also include those numbers because we're talking about significant volume here, growing by a very strong 35.5%. This is it in terms of the top line performance. If you bullet point on our business development initiatives and new investments before handing over to Paolo. First of all, one important move is that we will transition to a new route-to-market model in China. And obviously, we're doing this ahead of the Courvoisier integration. So as of April 1, we will go direct to our customers and will no longer be distributing via [ Telford ]. So this will impact, I think, very positively our whole portfolio of brands as we believe that we have ample opportunity in China. With regard to Courvoisier, we're pleased to announce that yesterday, we signed a sales purchase agreement. And we're perfectly in line with our timing. We expect to close, obviously, this year and hopefully within Q3 as planned. Now one last item, and this will be news to the market. We've also decided to, over time, relocate the group's headquarters from Sesto San Giovanni back to Milan. This will require new investments in a real estate project. And the key reason why we're doing it is really where we need more space, particularly that now we are relocating the newly formed Europe, Middle East and Africa region, together with the group headquarters, together. And this will result in a fully modernized working environment. We'll be able to also leverage our proprietary brand houses and academies in the city center. I mean that will be particularly beneficial for the Campari brand to have the Galleria Campari in a stone's throw from the Duomo. And also, we believe that for the long term, I think, image of the brand and the company, reestablishing our bond with Milan is important. This is it from on our end, and I'll pass on to Paolo.

Thank you, Bob. If you follow me to Page 21, we have the analysis of EBIT performance. EBIT adjusted organic growth in full year 2023 accounted for 15.5% in value with 90 basis point organic margin expansion. If you look at the fourth quarter in isolation of last year, the EBIT adjusted organic growth accounted for 45.5% with 350 basis point EBIT margin accretion. Back into the comments for the full year. The EBIT -- the gross profit increased in value by 11.2% with 30 basis point margin accretion in full year. And if we look at the fourth quarter in isolation, gross profit grew in value by 13.7% with 160 basis point accretion. The positive uplift in gross profit as a percentage of revenues was supported by pricing, positive mix and initial benefit from the agave cost reduction. And those factors more than offset in total the persisting input cost inflation and incremental fixed production costs that are tied to the extraordinary CapEx program, which we've just commented. The A&P increased by 5.5% in value with 80 basis point margin accretion. And if you look at the fourth quarter in isolation, the [indiscernible] effect of the [indiscernible] revenues was worth 180 basis points. The increase -- sorry, the margin accretion driven by A&P was driven by reduced activations due to very poor weather condition in peak aperitif season as well as some A&P phasing that I will comment in a second. If you look at the -- on a normalized basis, aside of the reduced activation and the programs in the aperitif portfolio in the peak season, on a normalized level, the A&P would have been 20 basis points accretive. And to the right-hand side, you have the magnitude and value of the 60 basis point reduction in A&P on revenue that is EUR 18 million. So the reported EBIT of 618.7% adjust normalized by the EUR 18 million. A&P reduction accounts for EUR 600.7 million of EBIT adjusted and normalized for the reducing [ bit ]. Notwithstanding the adjustment, the delivery of EBIT normalized is still extremely positive with a 12.3% organic and 30 basis point organic margin expansion. If you look at the fourth quarter in isolation on a normalized basis, EBIT grew by 22.3% with 120 basis points accretion. On a reported basis, including ForEx and perimeter, EBIT grew by 8.6% in value. The negative ForEx effect accounted for 8.1% versus 3.5% negative impact of currencies on top line, and that was largely driven by transactional effect of the Mexican pesos as well as the depreciation of the dollar and other emerging currencies versus the euro. In perimeter, the positive contribution at the level of EBIT was 1.2%, in line with top line at 1.2%. And that clearly reflects the first-time consolidation of Picon acquisition as well as the Wilderness Trail Distillery acquisition. The EBITDA adjusted, I mean, at EUR 729 million with a reported change of a positive 10.4%, of which 15.5% comes from organic performance, 2.1% from perimeter, negative 6.1% due to ForEx. If we normalize the EBITDA results for the reduced A&P, EBITDA normalized would be EUR 710.9 million, up 12.7% organically as opposed to 15.5% organic on a reported basis. If you follow me to Page 22, the performance of the different regions. In the Americas region, where the regional profit accounts for 42.2% of the overall group profit. The increase in -- the organic increase in EBIT accounted for 9% with a margin accretion of 30 basis points. The gross margin as a percentage of revenues grew by 50 basis points due to favorable price mix that more than offset the COGS inflation. The accretive in the Americas region -- sorry, the A&P in the Americas region was slightly accretive, basically in line with top line, plus 10 basis points, whilst SG&A on revenues in the Americas region drove 40 basis point dilution due to sustained investments in particular in the front office in commercial and marketing infrastructure. In the SEMEA region, which accounts for 20.3% of the overall group. EBIT was up by 20.8% with margin improvement of 180 basis points. Gross margin expansion accounted for 20 basis points, driven by strong pricing that includes the increases introduced last fall as well as the favorable sales mix. And those 2 components more than offset the COGS inflation. The A&P in this region was highly accretive, 170 basis points, due to the cancellation of the summer activation programs due to very poor weather conditions. And this is all tied to [ 3 ] aperitifs. The A&P phasing into 2024 and some of the A&P phasing from, as I said before, from 2023 into 2024, the EUR 80 million. SG&A slightly dilutive by 10 basis points with the strengthening of commercial capabilities in key markets which the investments -- the dilutive effect of those investments was partly mitigated by the strong top line delivery in the SEMEA region. In Northern and Central Europe, which accounts for 35.9% of group EBIT. EBIT organically grew by 23.7% last year with a margin accretion again of 150 basis points, not far from the accretion we registered in SEMEA. The dilution in this case, at the level of gross margin at 70 basis points. And that was impacted by COGS inflation, which was partly offset by positive pricing. Also in this region, A&P was highly accretive by 150 basis points, again, due to the cancellation of summer activation programs due to poor weather conditions as well as some phasing of the A&P spend from 2023 into 2024. The SG&A were accretive by 80 basis points, again here due to very strong top line delivery in that market. In the APAC region, which accounts for 1.6% of the overall EBIT. The EBIT declined by 11.7% with a margin dilution of 2%. Actually, in this region, very solid results in terms of gross margin accretion, 210 basis points, thanks to extremely strong pricing, very favorable sales mix driven by continued premiumization of our offering in that market, which more than offset the COGS inflation. On the other hand, the disproportional investments in A&P as well as the investments in new route-to-market capabilities drove a drift in A&P and SG&A, which accounted for 50 and 360 basis points, respectively. If we move on to the following page, 23. The operating adjustments in fiscal year 2023 accounted for EUR 78.5 million, and those were mainly attributable to provisions linked to the restructuring initiatives, including a change in route-to-market; some nonrecurring costs connected to IT programs, CapEx programs, which were meant to strengthen our system supporting commercial and marketing organization; impairment of fixed assets and intangible; as well as last-mile long-term incentive schemes. The total financial expenses came in at EUR 75.6 million. It was a significant increase versus a year ago of EUR 44.9 million. If we carve out the unrealized exchange losses, the financial expenses came in at EUR 56.4 million versus EUR 21.4 million of last year and showing a EUR 35 million increase year-on-year. Such increase was due to the combined effect of, on one hand, a higher level of average debt, EUR 1.7 billion versus EUR 1 billion in fiscal year 2022; and on the other hand, a higher average cost of net debt, 3.3% versus 2.1% of last year. We then had unrealized exchange losses of EUR 19 million leading to cross-currency transactions involving intercompany transactions, involving certain emerging market currencies, particularly Argentine pesos, for which the hedging will not be cost efficient and hence has not been activated by the group. Hyperinflation and earn-out effects accounted for a positive EUR 10.3 million, whilst losses related to associates accounted for EUR 8.3 million. PBT, profit before tax on a reported basis came in at EUR 466.9 million, slightly lower than prior year at EUR 475 million. On an adjusted basis, PBT came in at EUR 544 million, up 1.2%. If we actually adjust the PBT also of the unrealized exchange losses, the adjusted PBT would be EUR 563 million with year-on-year growth of 3.8%. If you move on to Page 24. In year 2023, taxation totaled EUR 134 million on a reported basis with recurring income taxes amounting to EUR 151.8 million. The group net profit on an adjusted basis came in at EUR 390 million and was up 0.7%. The recurring tax rate came in at 27.9% in fiscal year 2023, 30 basis points lower than fiscal year 2022 when it came in at 28.2% due to favorable FX from Argentina. Now if you look into 2024, we flagged a deterioration of recurring tax rate of 200 basis points, of which 100 basis points are coming from lower deferred taxes and another 100 basis points is through the termination of certain tax incentives in the Italian market that were made to favor investments in infrastructures. Excluding the impact of noncash component linked to the deferred taxes in year 2023, the recurring cash tax rate stood at 24%, down 100 basis points, thanks to a combination of lower recurring tax rate and higher deferred taxes. Group net profit reported came in at EUR 330.5 million, slightly down, 0.7% down, EUR 349.7 million excluding the unrealized exchange losses with an increase of 3.6%. Basic EPS, earnings per share on an adjusted basis came in at EUR 0.35, up 0.5%. Basic earnings per share came in at EUR 0.29, down 0.9% versus a year ago. If you move on to Page 25. The recurring cash flow from operating activities before change in working capital came in at EUR 582 million, up EUR 19 million versus a year ago or 3.4%, as you can see to the right-hand side of the chart. Actually, the increase in the recurring cash flow from operating activities was driven by -- underpinned by an increase in EBITDA adjusted of EUR 68.6 million, up 10.4%, as you can see. We, of course, had higher taxes paid for EUR 67.7 million, reflecting, on one hand, the positive business performance, but on the other hand, unfavorable geographical mix and different phasing and also the timing of the tax disbursement from 2022 into 2023. The effects from hyperinflation accounting in Argentina and the impairment of brands is a positive of EUR 14.6 million, as you can see in the fiscal year 2023 recurring cash flow. And the variation in accruals and other changes from operating activities is worth another positive EUR 26.7 million, primarily related to the share-based incentive plan. The recurring free cash flow was positive at EUR 66.9 million, down significantly, EUR 293.6 million, versus a year ago. And the key drivers of that recurring cash flow compression are the factors that you can see below. A negative cash effect from operating working capital step-up that is worth, as we can see in a second, EUR 362 million, significantly higher than a year ago when the operating working capital increase accounted for EUR 83.9 million. Then we have higher net interest paid for the reason I've mentioned of EUR 40 million. Net interest paid of EUR 40 million, higher by EUR 29.5 million versus a year ago. We then have, in recurring CapEx, EUR 112 million. But we also flagged extraordinary CapEx in fiscal year 2023 of EUR 183 million, leading to the overall CapEx that is in the reported cash flow column of EUR 295.7 million. If you move on to Page 26. Operating working capital as a percentage of revenues came in significantly ahead of last year at 37.9% versus 28.8% in December 2022. The overall operating working capital increase accounted for EUR 327 million. Now if you look at the organic operating working capital drift, that accounted for EUR 362 million. If you look at the increase in inventory, which is most of the -- which speaks to most of the operating working capital increase. The inventory was up EUR 252 million with an increase of EUR 96 million in aging liquid across the whole portfolio, whiskeys, rum, tequila and cognac. But that was also coupled with a step-up of other inventory, primarily finished goods, that is worth EUR 149 million. And then additional step-up of other inventory is mainly consisted of additional product of finished goods due to the temporary safety stock that we built in connection with the significant CapEx -- extraordinary CapEx expansion program. So actually, here, we wanted to maintain business continuity in first quarter of this year. And so we wanted to clearly bridge any potential issue we may have as we go live in -- primarily in Europe with the new [indiscernible] lines and the new equipment. So this is all stock that is sitting in our owned warehouses and that we intend to run down in the first half of next year -- sorry, of this year. We then add cash outlay due to increase in receivables of EUR 80 million. That is clearly driven by positive business performance and another cash outlay due to decrease in payables of EUR 30 million. And then we have EUR 10.8 million of perimeter effect on operating working capital and EUR 24 million of ForEx. If you move on to Page 27. As said before, total CapEx accounted for EUR 295.7 million where extraordinary CapEx were EUR 183 million and the maintenance CapEx, EUR 112 million. We reiterate our commitment towards the 3-year extraordinary CapEx growth program that started last year and is meant to end next year in '25. Total amount of EUR 550 million to EUR 600 million. So basically, the EUR 183 million of that program has been spent in '23, and the remainder will be spent this year and next year. On top of that, we have additional CapEx to support the move to -- of the headquarter to Milan center, as Bob just mentioned. That is worth EUR 110 million plus the renovations. Page 28. Net indebtedness came in at EUR 1.853 billion, up EUR 298 million versus last year, reflecting the negative free cash flow of EUR 180 million, largely due to a cash absorption for inventory build-up, extraordinary CapEx as well as cash outlays for the dividend of EUR 67.5 million as well as acquisition of minority stakes and other investments for EUR 30 million. We're still sitting at December on a healthy cash position with the cash and cash equivalent of EUR 620 million. Worth noting the long-term euro bonds and term loan overall amounted to EUR 1.907 billion with an average coupon of 3.77. In terms of leverage ratio, net debt to EBITDA adjusted came in at 2.5x with a slight increase versus 2.4x of [indiscernible]. In terms of environmental, we've clearly scored pretty well. In 2023, we've been upgraded from CDP Climate Change from B to A-, which is well above the food and beverage processing sector average ranking of -- rating of B-. Looking at the single targets in terms of Scope 1 and 2 on greenhouse gas emissions intensity. Actually, we are 47% below reference year of 2019. The next target is to further squeeze the emissions to 55% by 2025. So there is another 8 points to go. With regards to Scope 1, 2 and 3 still on greenhouse gas emissions, we've compressed emissions by 19% versus 2019. And by year 2030, we need to squeeze emissions by 30%. So there is another 18 points to achieve. On renewable electricity, we achieved 93% from renewable sources, whilst the target was 90%. So we were ahead of that. Water usage intensity, compression of 54% versus '19. The next target is in 2025 where compression should be 60%. So another 6 points to go. Waste-to-landfill down 90%, so quite meaningful versus 2019. And target in 2025 is 0 waste-to-landfill. In terms of responsible practices, as you can see to the right-hand side, a lot of mandatory internal training on Code on Commercial Communication and responsible alcohol consumption. Our digital brand campaigns do contain responsible drinking messages. We've introduced QR codes on physical labels containing nutritional information, ingredients, and again, messages on responsible drinking. And of course, we're partnering with International Bartender Association to develop responsible serving initiatives for the bartenders that we serve. People and community, again, very positive results. Injury frequency index declined by 11%, and the severity index declined by 26%, so top scores here. We have a target of 40% for female representation at all managerial levels by 2027. And we did some nice progress. So we're at 36%. So definitely achievable. Voluntary turnover, again, positive scores, decreased from 9.2% to 7.4%. We have new and more inclusive parental leave policy that will be ready to go, has been released in 2024. We have a Gender Fair Pay program that is extremely important to us. And then, of course, in local markets, we operate in many emerging markets. So we have community projects that are extremely, extremely important. I think I'm done with the numbers [indiscernible]. I'll give the floor back to you, Bob, for conclusion and outlook.

Thank you, Paolo. With regards to the conclusion, I think it's really straightforward. Thanks to our very healthy brand momentum, we continued to achieve best-in-class organic top line performance, and this despite the economic situation remaining quite challenging and taking into account the expected consumption normalization after the exceptional post-pandemic growth. Our trend in operating margin reflected positive mix as well as the initial benefits from agave, which more than offset the persisting input cost inflation as well as the incremental fixed production costs linked, as you can expect, to the extra CapEx as well as the A&P phasing. Now looking at 2024, we expect to continue outperforming our industry by leveraging our strong brands and growing categories, albeit in a normalizing macro environment. The agave trends and moderating inflationary environment are expected to gradually reflect across the P&L from the second half of the year. On the other hand, they will be partially offset by incremental fixed production costs resulting from the step-up in production capacity as well as the carryforward effect related to the safety stock, which we built in 2023 with obviously higher input costs. The negative ForEx from the Mexican pesos will also continue to weigh. We will maintain sustained investments in brand building, reflecting also the A&P phasing from 2023. And we will provide investments in front-end infrastructure. You all know that we have a high comparable basis in Q1. We had significant price increases at the beginning of Q2. So in many markets, customers anticipated their orders to Q1, but this will [ figure ] out over the year. The negative ForEx trends are expected to continue, but they will ease though versus previous year. And the perimeter will start reflecting the addition of Courvoisier, hopefully, sooner than later. Clearly, we will put a very strong focus on integrating the brand and relaunching it. Now with regards to our medium-term outlook, we are quite confident in the continued healthy brand momentum in our key brand market combinations as well as to continue our industry outperformance, leveraging both the strengthened portfolio, our geographic exposure as well as our heightened focus on revenue growth management. We expect to have consistent operating margin expansion driven by sales mix, pricing, input cost inflation easing as well as operational efficiencies with -- enabling us also to have continuous reinvestment into brand building and marketing and commercial capabilities to fuel organic top line growth for the medium to the long term. So this is it on our side, and we're happy to take your questions.

[Operator Instructions] The first question is from Andrea Pistacchi with Bank of America.

I look forward to meeting you, Matteo. So as I think this is your last call, Bob, before the questions, I just wanted to really congratulate you for what you've achieved at Campari, which is impressive, of course, and just to say it's been a real pleasure to work with you over the years, get your valuable insights and perspectives. So I wish you a really enjoyable retirement and also with some good traveling and skiing in between Campari Board meetings. Now I have 3 questions, please. The first one is on top line. Now you've had another year of strong growth despite the more difficult environment. You seem quite confident about 2024. Of course, you don't give specific sales guidance, but could you maybe provide a bit of color on how you're thinking about growth in 2024? What regions are you more or less confident about? And also, what are you expecting directionally for volume growth? I think you've got an easier volume comp this year and directionally for pricing in terms of carryover and new pricing. And then the second question probably for Paolo is about trying to frame your medium-term, consistent margin expansion aspiration. Now you clearly flagged the potential to recover and continue to improve gross margin, but I wanted to ask about A&P and SG&A, which you've been growing well ahead of your peers in recent years, as, well, you said, the investment in capabilities, salespeople, et cetera. And I think you've grown SG&A around 10% CAGR since 2019. I mean does there come a point where SG&A growth normalizes, whether -- where you start to get leverage over SG&A? Is this part of that also consistent margin expansion medium term? And is the A&P still flat as a percentage of sales medium term? And then quickly, the last question is on the -- what you were saying about the China route-to-market changes. If you could put a bit more color on that, please? What will it mean for you in terms of feet on the ground and whether there could be any short-term disruption around that?

Yes. Well, first of all, thank you very, very much for your kind words, Andrea. I mean it's really been a pleasure for me as well as a privilege. I know we'll be able to spend some time together next week, so I look forward to that and we can lift a few Negronis to our good health and other things as well. Now with regards to adding some color, I think if you look at all of our top brands, market combinations, the top 20 of them. I mean they're all very extremely healthy. If you look at the internal, we look at brand health, we track and monitor them constantly. We see that they're improving over time. At the same time, we're really probing our marketing team to raise the bar constantly and to improve ROI on our investments as well as to stay one step ahead of competition in terms of what we do with regards to brand building. So when you put all those together, I think the good momentum will continue. Now clearly, as I had also mentioned, in the previous call a few months ago. We were also not living on Mars, so we're part of an industry and the industry is normalizing and there are certain headwinds. So net-net, there is no question that we'll continue outperforming our industry. But clearly, it will normalize versus the immediate years post pandemic. With regards to volume versus value, clearly, 2023 value was a bigger driver than volume. We've taken between '22 and '23 quite a bit of pricing across the board and very successfully also in very tough markets such as Germany and France. Now moving forward, I think it's more at the time that we return to normal pricing. So we're talking probably 1% to 2% and it's much more price/mix in RGM, which will impact the overall value headline, and we expect volume to start accelerating. This is it. I think on the first question. Now with regards to the second question, do we expect any disruption? Probably not. We've, over the past 18 months, significantly strengthened our team, both in terms of capabilities as well as in terms of headcount in China preparing for this day to come. Courvoisier, the acquisition clearly enables us to accelerate that. And we are already have signed agreements with our Tier 1 distributors. They're ready to go. We're finalizing the hiring of the sales folks who will be actually hitting the pavement as of Q1 to start dealing with the Tier 2 wholesalers. So might there be here and there, some hiccup, yes. But overall, I think the situation is pretty much in control. And importantly, this will benefit not only Courvoisier, but also the rest of the portfolio.

Yes, Andrea, vis-a-vis the margin guidance prior to tackling the midterm margin guidance vis-a-vis A&P and SG&A that to your point, I think it could be fair and nice to set a solid ground vis-a-vis 2024 margins and thereafter project, our expectations. So -- and so in that I'm a little bit preempting, Paola Carboni who I'm sure will ask for margin guidance for the year 2024. So on margins, it always boils down to net sales, COGS and A&P. These are the 3 factors that we all know may make the difference. So looking into '24, net sales, yes, clearly, the 2 drivers, pricing mix, of course, volume as you pointed out, might be an opportunity given the poor weather conditions on operatives in Q2 and Q3. But on price, on the other hand, we signal lower price effect. We've had, as Bob just said, 2 consecutive years, 2023 and 2022 with a high single-digit price increase. And actually, the first quarter of last year, it surprised us on the positive side where the price came in stronger than even expected. And for the full -- for the whole last year, we had a very low prom intensity. And of course, in fourth quarter, also a very positive mix, driven by strong performance of aperitifs. Now looking into 2024, and I said price is what Bob just mentioned 1% to 2%. And honestly, we believe probably the prom intensity might be a notch higher than what we saw last year. On the mix, clearly, we're all dependent on -- particularly on the aperitifs that are very high margins, on the weather condition in their peak season, Q2 and Q3. But ideally, we see mix as a positive even at the easier comp in 2023. As follow-on, worth noting and then I'll talk to the agave driver is -- in 2024 is still dilutive, is still lagging behind for very good reasons. So the staggering growth of this brand at 30% still drives dilution, although at a more moderate pace. Looking into COGS, of course, you have, as always, tailwinds and headwinds. Among the tailwinds, the biggest one are agave. And on agave clearly, we had a very good year in 2023, where as a reference versus the MXN 29 per kilo average 2022 we landed with an average peso per kilo of MXN 25 last year with an overall procurement saving of EUR 25 million in 2023. Now if you look in 2024, what we're targeting is an average procurement peso per kilo of MXN 15. Now we -- here we need to distinguish between procurement savings and COG saving. COG savings is what we see in the P&L. That takes into consideration basically, the carryforward effect of '22 high cost into -- sorry, '23 high cost into '24 and the negative effect as well of the low 2024 second half cost that our, say, Q4 costs that are capitalized in the balance sheet as you have distilled liquid that is not still sold but is sitting in tanks or in finished products. So basically, hypothetically, the saving on agave might be EUR 50 million in 2024. But EUR 20 million of those EUR 50 million has to be seen as a phasing effect into 2025. So this is still a tailwind, agave, EUR 30 million, but not to its full potential because EUR 20 million are sitting in '25. Worth noting that the spot price on agave at the moment is around MXN 10 per kilo. So directionally from 2025 onwards on top of the EUR 20 million I've mentioned, there is another tailwind that plays in our favor. And then on top of the agave amount of tailwinds, you have a number of our positive impact on raw materials and packaging, including glass. On the other hand, there are a number of headwinds. For example, we have a lower fixed production cost as such that is due to the fact that as we run down the stocks -- the high stocks of last year, we use less production. And therefore, fixed production costs remain unabsorbed. This is worth a negative EUR 15 million this year. That is clearly a positive in 2020 -- in 2025. Then we have higher depreciations that are tied to the extraordinary CapEx about EUR 15 million. We have, again, on the safety stock, the rundown of last year's safety stock that has been produced at high cost, at the 2023 high cost. And this is headwind vis-a-vis 2024. And then, of course, you have the aged liquid impact because on brown spirits, the inflation for us, we're less exposed to its spirits but -- on brown spirits, but the inflation is normally capitalized on your balance sheet and is visible in your P&L whenever you damper the liquid. Not to mention the negative impact of Mexican pesos versus euro that is creating another EUR 50 million negative impact in our P&L. So on COGS, there are tailwinds, there are headwinds and there are -- there is also a phasing effect from '24 into '25. On the A&P, clearly, you've seen last year, the A&P as a percentage of revenues came in 60 basis points below. So the intent is depending on weather condition in '24 and consumer confidence is to rebuild this saving into 2024 and 2025. So that's take it as a reference year before when we project the midterm. So coming to your point, how do we see A&P as a percentage of revenues in, say, 2025 onwards flat. So we think the business model we've implemented this is a solid one. It's paying big dividends. So there's no reason why to change it. And on SG&A, as a percentage of revenues, as you pointed out the 10% CAGR, which is clearly high. This has been led by -- driven by our investments in commercial capabilities, marketing capabilities and new route-to-market. Most of the new route-to-market initiatives have been completed. We did Greece recently. So do not expect a meaningful drift in SG&A as a percentage of revenues. Cautiously, we can assume those to grow in line with top line, but potentially, there might be opportunities of containing the SG&A increase below the top line gross rates.

Yes, yes, no, very exhausting. Since on the fixed cost absorption and the higher depreciation, did you say those were headwinds of EUR 15 million each? Is that what you said?

Yes.

The next question is from Mandeep Sangha with Barclays.

Bob and Paolo and Matteo as well. I'd also like to echo Andrea's comments just earlier in the call, and congrats on your private Campari and all the best for retirement. I guess really sort of my first question is probably continuing on the COGS theme. You previously mentioned that glass would be a tailwind for 2024 when we spoke at the 3Q results, you said you're in the process of finalizing your glass contracts. I don't think you singled out glass in your answer to Andrea's question. So could you maybe share some color on the glass benefit for 2024 and whether they should expect any phasing for 2025 also? And my second question is actually looking at Espolòn. You pointed out that you will now join one of your global priority brands. The brand has benefited in the U.S., particularly from some down trading so we can see that in the industry data. How do you think about the competitive dynamics in the category particularly as agave prices comes down in 2024 and potentially the U.S. consumer continues to normalize through 2024? Those are my 2 questions.

Thank you for the question. And taking on the first one on COGS. Yes, all COGS component, most of the COGS components, they are clearly declining as the commodity prices are coming down, including logistics. On glass, the way the contracts are structured is basically as you very well know, those contracts are indexed to reference indexes. And basically, you have a phasing effect of the positive impact into the following year. So the adjustment of the glass price is delayed by 1 year. So basically, if you look at 2024, so basically, we would be benefiting, actually, of the COGS compression of the benchmark index that is as the base of 2023 year. With that said, there is an opportunity of pulling forward early adjustment of the price if for 3 consecutive months, the index falls below a given threshold, which triggers the anticipation of the contract review. This is what exactly happened 2 years ago when following the hyperinflation effect on TTF index, the glass manufacturers knocked at our doors to ask for price increase. So we'll see how it goes, but idea there might be opportunities of pulling forward that revision, we will see. But yes, overall, the inflation is over. Costs are coming down. Here I think the message that we wanted to be good is more, didn't the magnitude of the opportunity, but a little bit of the phasing of that opportunity from 2024 into 2025. That's the overall message. Clearly, visibility is still low. And this is why we're not signaling a precise operating margin target for year 2024.

I'll take the second question regarding Espolòn. Now first of all, I think it's worth underlining, as I said during the presentation, that Espolòn has been growing at very strong double-digit rates for the past 14 years, year in and year out, irrespective of where the price of agave was and what the competitive pressure is. The reason for that, it is a very unique and distinctive proposition with excellent liquid. And we've developed, as I said, also a proprietary marketing model, which is very different from our peers, and we'll continue doing that. Now with the agave prices coming down, could there be more competitive pressure in the category? Most probably, yes. The $30 to $40 range where we're positioned is actually the one benefiting the most. Our aim is to continue building brand image and building value. At the same time, I wouldn't be surprised if some of the celebrity named brands, which have been launched to be pumped up and sold to industry players down the road, use that as an opportunity to aggressively build volumes. We'll see what it is. But I think just the brand is very solid and will continue to do well.

The next question is from Simon Hales with Citi.

Bob, Matteo and Paolo. I'd also just like to wish you all the very best job for the future. And of course, Matteo, a very warm welcome to you. Three questions on my side, if I can. I mean, Bob, I wonder if I could come back and ask you to talk a little bit more about the strategic organizational changes you're making in EMEA. I just wondered what are we talking about in terms of the potential scale and the sort of benefits you hope to see from that move? Secondly, just on shorter-term trading trends. As we come into Q1, I think we've all seen some recent European Nielsen data last week that suggested some sharp slowdowns in the performance of some of your brands. You've clearly flagged the tougher comps that we know you're facing in Q1. Is that all that's driving that Nielsen data that we've seen? Is there anything else we should be aware of? And then maybe a final one for Paolo around financial expenses into 2024. Clearly, 2023 expenses were a little bit higher than I think the market expected largely due to some of those EM FX losses. How should we think about the financial expenses line for 2024? I know there's a lot of moving parts in there given Courvoisier coming in and everything else. But any more color you could give us on that would be helpful, Paolo.

Thank you, Simon. With regards to the organizational change, what we were doing is effectively, we've merged North Central Eastern Europe with SEMEA, the European part of SEMEA. And that is a very important move, I think, from a marketing and commercial standpoint. It will bring quite a bit of synergies that will enable us, I think, to interact in a more efficient way with our European customers. And it will also enable us to allocate A&P, I think, in a more interesting way. I mean, if you think about it now, for the aperitifs, the summer is a major recruited moment, we'll be able to more consistently, I think, invest across the Mediterranean in all the right resorts overinvest there so that the sender countries benefit for it after time. These are things which can happen more efficiently when it's one business unit.

Vis-a-vis the question on Q1 comp. I think last year, we disclosed precisely the number of relate in terms of net sales and EBIT relating to the phasing effect, which was due to some accelerated shipment phasing ahead of our huge price increases that we've introduced probably in the European markets, some restocking in the U.S. market that clearly makes our first quarter comp extremely tight as well as early Easter calendar. So the impact was EUR 35 million on top line, EUR 22 million on the bottom line. So this is the normalized level of Q1 last year. . In terms of expectations on the interest charges, clearly, as you correctly pointed out, there are many, many moving parts, including the most importantly, the closing date that is still unknown because on the liquidity, the extra liquidity we got on the back of the accelerated book offering and the convertible bond launch. We have excess cash that is -- which is getting in a very interesting yield. But assuming a ballpark at closing in Q3 of this year, the total interest, including the positive effect of the investments would be in the region of EUR 85 million.negative interest. And if you take as a base year 2025, what you have the full year effect of the negative interest excluding the positive effect of the liquidity investments, the total interest would be in the region of EUR 105 million. So it's EUR 85 million for this year and EUR 105 million for '25.

Yes, Simon, sorry, I forgot to answer your question with regard to the European Nielsen. I mean, as you know, the Nielsen do not actually cover the on-premise which particularly in Europe and particularly in large markets like Italy are really the bulk of our sales. So I can assure you that the momentum of the brands is good. We're seeing some strange one-off things with regards to off-premise sales in different countries. I think that is more retailer related than consumer-related.

The next question is from Mitch Collett with Deutsche Bank.

Bob, Paolo and Matteo. And I'd also like to say, Bob, congratulations on your tenure and thanks for all your help over the last decade or more, I don't think there's been many CEOs who've created more value for shareholders in their time than you have. So my first question is on the slightly different wording of the medium-term outlook. And I just wondered, should we read anything into the use of the words consistent margin expansion. And underpinning that, this time, you've added a few extra words. I think last time, it was about mix and cost inflation easing. And now you're talking about mix pricing inflation easing and also operational efficiencies? So that's my first question. And then I guess my second one is, given that you held back on some of your marketing activities in the peak summer season, how easy is it to turn those activities back on and get that reinvestment back up? And I guess given that you managed to achieve double-digit organic sales growth without that peak season without that investment, I suppose I could ask why would you need to step it up again?

Yes. Thanks, Mitch. I'll first take the second question because I'm not so sure I understood the first one. But it's age, bear with me, 17 years as is old. Now with regards to the marketing activities, I mean these are clearly large-scale activations and events and these are all planned for this year. So they will start kicking in from Q2 onwards, and we don't expect to have any issues. To prepare them, obviously, there's some phasing coming in from the prior year. That's about EUR 6 million, which we will invest additionally this year. But we feel good. And then hopefully, we won't have 2 summers in a row where the weather is bad. Now with regards to the double-digit growth rate, it's to a large extent due to -- one, the usage extension of our aperitifs, which is going -- which are going outside of the aperitifs moment becoming a whole day phenomenon and particularly go into other moments such as such as meals and whether it's raining outside or not, people like to have a little bit of sunshine in their glass. The other point was that Germany was -- which is the second largest market which was particularly strong. And that's due to the fact that Germany is an off-premise market. And I think the weather has been consistently bad over the summers there. So it has less of an impact on consumer psyche and the Southern Europe, Mediterranean where also tourists are affected when the weather is bad.

Yes. On the margin question, I think if I get it correctly, a little bit understanding from Mitch from your end, what are the key changes, if any, vis-a-vis where we stood before. So nothing macro. The point that we wanted to highlight is on one end, we had 2 consecutive years of extremely high price increases that have been implemented. On average, in 2 years with basically lifted pricing by 15%, 1-5 it is a lot in 2 years with very solid volume momentum across the whole portfolio. If you look at 2024, so clearly, the lever of price is less strong. That's a fact. Still the good news is that we're not going backwards we're progressing on price, but this is not what really moves the needle in 2024. On the other hand, we remain extremely diligent because the market is becoming more and more competitive. That's a fact, particularly for some of our -- for some of other market participants. So we are embedded in our numbers a higher prom intensity than we were originally forecasting. On the mix, mix has always been a positive factor in our development model. It has to stay like that because the aperitifs are in good health. Perspectively, Espolòn will no longer be a dilutive brand. That said, a little bit of the question mark is when we look at the peak season, Q2 and Q3 could be essential to have very good weather conditions because this is where we can really extract positive gross margin expansion as well as, of course, as always, very positive consumption pattern across consumer confidence, I would say. On the cost side, managing agave in Mexico is clearly not the useless things in the world. So what has changed the compression of the spot price is still there. This is slightly where we were thinking should go, and probably there is a phase effect right into 2025 because it's not easy to extract or not easy as we expected to extract the efficiencies and the savings with the timing that we had in mind. So there might be a little bit of drift into 2025. This is also due to the fact that technically, what I've alluded to is the carryforward effect of last year high agave cost into this year and the carryforward effect of low agave costs in Q3 this year into 2025. That's technical. But aside of that, there is also the fact that we took commitments with long term agreements with loyal suppliers that we want to honor. So this is clearly delaying the benefit. And then I've mentioned things that are new, the fact that we landed with high inventory levels is causing the double whammy of having on one hand, the higher cost of last year finished goods that would be sold this year and secondly, the lower absorption of fixed production costs in 2024 because we will produce less given the existing stock available. And on top of that, the higher depreciation that was in the map. Among the other headwinds, clearly the Mexican pesos, we have 2 consecutive years of negative transactional effect is, to a certain extent, eroding the positive agave effect. As I said, SG&A, we don't see that as a big mover while the A&P, clearly, the base of last year is higher as we -- on a normalized basis, there is EUR 18 million contribution to the EBIT that is coming from reduced A&P spend. So this is clearly a negative looking forward between '24 and '25. So I think these are -- if I understand it well, what are the key changes vis-a-vis where we last stood when we met.

The next question is from Sanjeet Aujla with UBS.

Bob, Paolo and Matteo. My congratulations to you as well, Bob, for the last 17 years and best wishes in retirement. Two questions, please, for me. Firstly, on the U.S. Can you share a little bit about where you are on distribution on Aperol, if you're able to share any KPIs and how you're feeling about distribution build into 2024 against a weaker industry backdrop? And then my second question is just on the heightened focus on revenue growth management, you alluded to in the medium term. Can you just share a little bit about what sort of capabilities you're building there, where you see the opportunities coming through on that?

Yes. Thank you for your question, Sanjeet. I'll take the one on Aperol. Now with regards to off-premise distribution, I mean, Aperol is widely distributed in the U.S. That's not an issue. Clearly, there are opportunities on the on-premise because we're much more skewed to the coast. I mean all our activities, our activations, our events, they're all around the eastern coast and the Western Coast and as well as in the Chicago area. So that is where we're continuing to concentrate. That's in line with our growth model. We'd like to build the brand through a certain penetration in the regional markets where we go. And once we achieve that, we move on to other markets. But they're coming also a lot faster because obviously, the brand has a lot of appeal and the 2 major, let's say, sponsorships we had last year for Coachella and the U.S. open have significantly boosted trial rates and made the brand visible and available to people coming from all over the United States. So now what we're starting to see is actually also in the heartland of the U.S., on-premise customers asking for the brand. So there's still quite a bit to do, but I think we're going in the right trajectory. And most importantly, we're right on trends because, clearly, the lower ABV refreshing bubbly drinks are where the action is right now, and the Aperol is a very distinctive proposition in that area.

With regards to the RGM, revenue growth management, at Campari it all starts with the marketing, with the global strategic marketing as it all starts defining what is the adequate, the appropriate price for any given brand. So this is what we did, for example, in the last 2 years when we repositioned Aperol and Campari is seeing a big opportunity. So the brand equity of those 2 brands. People thought that we were -- of course, there was inflation, but in reality was also an opportunity in terms of price point for our brands in the relevant market. So once we identified the target price point in the competitive side, then it comes to the execution. It is more channel and customer marketing team, still central. So basically, we define the product architecture, the price architecture, the country mix, the channel mix, the customer mix so on and so forth. And then so to optimize the gross margin essentially with the products that are available. That was particularly true in periods where we had products and allocations, know they were extremely powerful to offset the shortages of product. But even in the future, clearly, there are opportunities of improving the mix. And then when it comes to the execution is the promo and the prom efficiency. So we measure for each and any promo that we run, the effect in terms of volume uplift, gross profit uplift in comparison to the money that has been spent to generate that volume uplift, and we measure the canalization effect following the promotion and essentially the sellout data. So we are a company that is driven by external data by sellout. So basically, whatever is not delivering accelerated sell-out data, sustainable is basically, as you know, canceled. And we had the funds against the things that make the pie bigger and not shifting the shipments from 1 quarter to -- or 1 month to the other month. So this is the revenue growth management organization. And of course, we have 50 brands, 27 geographies and so we have multiple of initiatives that are coordinated by a central team of people.

And clearly, channel SKU as well as pack size architecture also play quite a role.

Next question is from Rashad Kawan with Morgan Stanley.

Bob, Paolo and Matteo, congratulations again, Bob. Two for me. One, first one on Courvoisier. As you approach the closing of a deal, how firm are your execution plans at this point for the brand once it falls under your umbrella in terms of the A&P pipeline, innovation, et cetera? And in terms of the overall cognac market, do you have any updated thoughts as to when you think the market will recover in the U.S. in terms of retail consumption? And then my second question, just on kind of your broader M&A focus areas, you said you'll continue to focus on premium M&A. With cognac now in play, where else will you be focused going forward, both kind of category and geography-wise?

Yes. Thank you for your question. And the second one is pretty straightforward. If at all, we're always very consistent. So we've always said we want to focus on super premium and apt brands that are skewed to the on-premise and geographically really focused around the U.S. and then APAC. So clearly, this means the whiskey arena. With regards to Courvoisier, I mean we're doing -- running currently our health checks. We're looking at how the brand is positioned versus competition. We have some initial ideas on what we want to do from a brand range impact architecture standpoint. But clearly, all of these we will start actioning them much more forcefully once there is closing. And at the same time, we're maximizing our cognac knowledge via both our Board members as well as our executive managers who have extensive cognac experience. And last but not least, we're also looking at hiring, clearly, a dedicated team with significant -- marketing team with significant cognac experience. So this is all happening, and it looks pretty good at this stage.

The next question is from Edward Mundy with Jefferies.

Bob, Paolo. I need few for me. Huge congratulations on many of your successes over the past 17 years and leaving the business in such a good shape. Three questions, please. First is on Aperol, continued very strong momentum. It's just a bigger picture question. I mean it's one brand. It's one serve, there's very little innovation other than the ready-to-enjoy and you essentially have a huge amount of focus in what you do well. Could you talk about how you keep the brand fresh and new in a world where semi consumers can be quite whimsical and cycles can come and go quite quickly? Second of all, coming back to Courvoisier, like appreciate you don't have the key as yet, but as you get ready for that business, are you seeing anything in the external data that gives you confidence in the timing of your acquisition? Either in consumption or inventory, how are you looking at it? And then finally, on Courvoisier, Paolo, are you able to help us a little bit on the scope impact, assuming you are able to consolidate this from the beginning of the second half, on what that impact might be on EBIT?

Well, look, I mean, clearly, we're interacting very closely with our distribution partners in the U.S. who really have a very deep knowledge and data into the category. I think they're pretty much seeing the end of destocking within Q1 and then expect stability in Q2 and then category to return to growth in Q3. Now the good thing is there was a lot of apprehension that cognac was losing overproportionally to Tequila, but actually, the data would show us that it's losing only its fair share. Yes, I mean Tequila is essentially sourcing much, much more overproportionally out of vodka. Within -- regarding to the brand itself, we've been looking at liquid quality and doing all sorts of benchmarks and test and those are very reassuring. And clearly, direct us towards what we would like to do over time. It's not going to happen overnight, but which is to premiumize the brand and really work on the range and price positioning. The brand heritage is there, the liquid is there. We've got to work on range, packaging and pricing. With regards to Aperol, one brand, one serve, and I'll say that's probably the main reason why the brand has been so consistently successful over the years. I mean the worst thing you can do -- and I'm a marketeer myself, and I know how impatient marketeers get and after 2 years, they want to reinvent the wheel. The big success of Aperol was about building a success model and consistently executing it day in, day out and really focusing on the quality of the perfect serve. The right glass, right proportion, right garnish, right ice, et cetera. And again, a big part, I think, of the success is that we are having confused consumers by launching tactical flankers, limited editions, all sorts of things. It is really about the brand that is about that serve which we know is still underpenetrated. I mean the data which we show on the chart clearly shows that even in Italy we're totally underpenetrated versus beer. So our whole emphasis is on trial, trial, trial, retrial, retrial and to keep our content fresh. It's -- what we do -- I mean we're almost an entertainment company. I said that many a times, and the onus is really on our marketeers and trade marketeers to surprise our consumers and really engage them. And that's where the whole focus is, and that's where the whole focus will remain because we're not going to get into the deadly spiral of launching flankers of this things or adding 10 different cocktails on the brand. Having said that, there are also a few other successful cocktails, which have come out. I mean let's talk about the Paper Plane, for instance. It's fine if the bar community does that. But again, our focus will remain on Aperol Spritz. I hope that answers you.

Yes. And with regards to your question on the impact of potential first-time consolidation of Courvoisier in year 2024, but this is very difficult to say, first and foremost because we don't know when we close. So that's the biggest conundrum. And secondly, because as we did with Grand Marnier, when we bought it, we strongly believed at the beginning, you need to destock the market and make sure that the level of -- on the inventory is appropriate. And clearly, that's something we'll find out as we close. Secondly, you do a cleanup of the offering. So basically, you may remember with Grand Marnier with cachaça, Courvoisier in Germany. So that comes at a price. So in terms of contribution at the EBIT level, overall, in perimeter, I would be surprised if the contribution was higher than EUR 8 million to EUR 10 million in total. So it would be still time in 2024. I think important to do the right things to start off 2025 with as you said, all the initiatives in place, the market that has been cleaned up in all geographies and also with key decisions around the SKU offering and what stays and what's dropped. So that's more to cap. But clearly, at this stage, for us, it's very difficult to say also because given that we're not yet closed, we cannot exchange much information with the sellers. So the very basic points. So more to come as we take control of the business.

The next question is from Cedric Lecasble with Stifel.

Yes, congrats. Most of my questions have been answered. I just have 1 left about the industry and A&P spending specifically in '24. Some competitors and some large ones are stepping up A&P. Do you think '24 will be from your perspective, a normal year where you might simply rebound in A&P because of the summer, which was special last year? Or do you see structurally more pressure on adding A&P to be competitive in a little tougher market where players involve more marketing intensity?

Thank you for your question. I mean, for us, the name of the game is more on how do we get a higher ROI on the A&P, which we spend as opposed to the absolute level and that's where the focus is. I'm not going to comment on what competitors do. But if there's 1 thing I've learned from over for 30 years as a marketeer, is that what makes the difference is not the A&P in any given year, but it is the consistency of your spend over years and the consistency of your messaging. You can have very high A&P that change the message every year, and you will not get anywhere. So think hard, not many people listen to that advice and they fall into the trap. We've been very, very consistent, and we'll continue to do so.

The next question is from Trevor Stirling with Bernstein.

Bob, Paolo and Matteo. And let me just add my congratulations, Bob, on the 17 years or almost 17 years. Thanks for all your patience over those years and best wishes for the next chapter.

Thank you so much. Look forward to catching up around with few drinks with you as well.

Yes. Absolutely, personally with Bob. The -- a few questions in that, a lot has been answered, but there's a couple of things struck me. The first one, Bob, Aperol Germany, up 33%. I mean this -- no Aperol market is really mature, but this is a relatively developed Aperol market. And is this all done to occasions and new occasions? Or is there something else going on in Germany as well? Second question probably for 2 or 3 for Paolo more. There was a massive acceleration in EBIT in 4Q Paolo and you highlighted that you highlighted that a good chunk of that was done through A&P phasing. What then I presume is a contribution from the stock build and the operating leverage on the production fixed costs. Is there anything else then behind that acceleration? And the final question, probably the last time I can ask this, is when I look at the margins in Northern Europe compared to Southern Europe, there's a massive difference between the 2 regions. And maybe, Paolo, you could just explain a little bit about why Northern Europe has been so much more profitable while I can still ask you the question.

Thank you, Trevor. I'll take your first question. I mean Aperol, Germany. First of all, as I said, Germany is much more of an off-premise market. And what we've done in Germany is in the past 2 years, we've invested actually quite a bit to strengthen our commercial capability. So that means having more feet on the ground, more people in the stores, making sure that we have the right shelf space, making sure that when we're out of stock because with the high rotation on Aperol, that's an issue we face in many markets and particularly in Germany, make sure we get the product back on the shelf. And at the same time, from a strategic marketing standpoint, really go into the other usage occasions. And we're only at the beginning in Germany of going into meals and all of those things. So there's more to come. The data is quite clear. The per capita consumption is only -- is a little bit less than half of what we have in Italy. And Italy compared to beer is very low and you know what a large beer market Germany is. So this year, we'll have the tail end of our commercial capabilities reinforcement in Germany. And I think that getting the full year benefit of that will also be very, very important.

With regard to the acceleration of results in the back end of the year, Q4. So basically, the price was actually better than what we were envisaging the very low prom intensity. That's a fact, that's us cutting the promo plan. The mix was equally extremely positive. You've mentioned the very solid performance of Aperol in Germany. That's an example. So operatives were extremely strong in back end of the year. And then clearly, COGS, and among COGS, which is with plus minus 60 basis point basically is agave positive effect. And in order to achieve the MXN 25 per kilo, which I've alluded to for the full year have a meaningful compression in the back end of the year, a significant one, due to the fact that the price started falling off the cliff from, I would say, June, July onward. So with an acceleration in October, November and December. So these are the key drivers of strong delivery in the back end of the year.

Trevor, actually, one more point on Germany, which I forgot to mention, it's -- we've really put a big focus on the scale of the activation. So we've had probably less activations, but in a larger scale, in more strategic areas, and that has certainly paid off.

The next question is from Emma Letheren with RBC.

I just wanted to ask, could you talk a bit more about your plans going forward in Asia? You mentioned you've doubled its value rate. Where do you think this business could get to in another 5 years? And you mentioned a lot of investment in its commercial capabilities there. Where is investment still needed in Asia to support growth over the next few years? And then secondly, I think you said pricing has been high single digit in 2023. I'm wondering if you could be a bit more exact about this and just break up pricing mix and volume growth and how each of those looked in 2023?

Let me start with our plans in Asia. I mean, as I've repeated in the past, Asia is the only, let's say, region which we've identified as a must win battle. Here is 8% of our sales. So half of that is in Australasia. So there is a lot of opportunity there. What has changed? What has changed is really the portfolio our ability to really offer a wide range to Asian consumers going from high energy with X-rated vodka to the emergence of the aperitifs now, but most importantly, high-end premium aged brown spirits, which we've been really focusing on and developing by both innovation as well as acquisitions. So -- and clearly, Courvoisier is part of that strategy. We've put ahead of time the route-to-market there. We're all the key markets with our own dedicated organization. Now China is the last one, which will enter that and we've also done quite a bit in terms of raising the capability of the teams across all of the markets. So all ducks are in the right row and if things go right, hopefully, we'll be able to double the weight of Asia as a percentage of our net sales on the mid- to long-term range.

Okay, the question was on the price mix and volume components in 2023, if I get it well. So we had high single-digit price increase, as I mentioned before. We had low single-digit volume uplift. And basically, the mix was extremely poor given the real effect of Espolòn and the big season on operative that was not as successful as we hoped. Looking at 2024, clearly, the price is 1% to 2%, which Bob just alluded to, the volume might be more benign this year given that we're not suffering also from the headwind of the significant price increase that we've taken and the means so we hope will be higher than last year. But I think there is a question that I've not answered from Trevor on the difference in EBIT margin of the Northern and Central Europe versus SEMEA. And the answer is the cost of the headquarter structures that are sitting in SEMEA. So once that's planned that I think that it will become 1 region with an average marginality combined of the 2.

The next question is from Alessandro Tortora with Mediobanca.

I have 2 quick questions on my side, but clearly, thanks, Bob, for your time spent with us all these years. Considering, let's say, the current level of working capital on sales but also the ongoing capacity expansion plan. I would like to understand, we believe a realistic ratio on working capital sales or should we assume for the next 2 years, Paolo? And the second question is on -- sorry to come back to this but to the 2024 the EBIT margin, considering all the moving parts you explained before, I understand providing a number is difficult today. But it is fair to say that the combination of plus and minus, you explained before, leads to some margin expansion here?

Vis-a-vis the operating working capital on sales. Clearly, we want to go back to 32%, 33% operating working capital on revenues. Part of it is clearly attributable to the finished goods with vision of the EBIT margin guidance, no guidance, is no guidance. So we cannot say what it goes. As the time goes by, clearly, once the peak season is under our back, clearly, we'll shed more light on it.

The next question is from Chris Pitcher with Redburn Atlantic.

Again, can I add my congratulations Bob, a couple of quick questions. In terms of your global priority brands, you'll be bringing in 2 Espolòn and Courvoisier that dilute those gross margins, the old rule, where they were significantly ahead of the group average. Should we assume that the Espolòn through agave cost movement should be able to get back to that sort of level? And over time, Bob, you talk about the repositioning of Courvoisier, the Courvoisier could aspire to that sort of level? And then second follow-up on your comment about having to hire a dedicated cognac marketing team, and Matteo takes over a very different business to the Campari that you took over. There's obviously the huge Aperol engine there. But in terms of the aged stocks and the aged products that you're doing, do you have sufficient skill set within the group once you've got that cognac team in place to deliver on that.

Yes. Thank you for your questions, Chris. I mean with regard to capabilities on age spirits significantly upped the game over the years, both not only from a marketing standpoint but also from a supply chain standpoint. The other good news is that, that was Matteo's bread and butter when he was working for Diageo. So I think he will be a significant upgrade versus me and going in the right direction. Now with regards to the Espolòn and the Courvoisier margins, clearly our objective going forward will be to improve the gross margins of those brands. And Espolòn is a question much more, I think, of agave pricing, fully hitting the P&L. And that will -- it's just a question of time. It's not a question of if. With regard to Courvoisier, it's going to take that reengineering the brand, but we've done this in the past. And with the right team and the right support, I don't see why we should be able to do that again in a mid- to long-term view.

Yes. With regards to Courvoisier, worth mentioning the fact that the first time consolidation of the brand into our own P&L. Of course, it drives some gross profit dilution in the fact that the price -- the brand is not correctly priced. Probably there is an opportunity of doing better in terms of price. At least we see that has an opportunity. On the other hand, the additional SG&A tied to the first time consolidation of the brand quite minute. So overall, it will be accretive to the big collab. So that said, the opportunity of improving the brand gross profit as a percentage of revenues is there and now we see that not for year 2025, for sure, as it would be on the first year, but thereafter the potential is absolutely there.

Could I follow up on one thing. You mentioned you haven't had much ongoing contact with the seller on Courvoisier, do you have a closing 2023 sales number? Because you gave us the down -- the fall at the 9-month stage. Do you have a closing '23 figure?

We do not and we cannot have any figures beyond those which are publicly available, then. There is a clean team in place that is treating the data with the utmost confidential. That's something we want to flag.

The next question is from Paola Carboni with Equita SIM.

Yes. Bob and Paolo. And Matteo I hope to have the chance to know your directive very soon. I have a very quick question. The first one is on the promotional environment. You have mentioned, which is probably a little bit ahead of what you were anticipating. I was wondering to what extent do you expect to follow this promotional environment given the positioning of your product? And in any case, if we should think about some pressure also on the off-trade channel? Or were you just referring to -- sorry, on the on-trade channel or were you just referring to the off-trade channel and which market are you seeing most pressure in this respect? And another question is instead more on the broader picture let's say in last year, you have highlighted very well the fact that you were focusing your growth on 3 key pillars, i.e. aperitifs, bourbon and Tequila and then you are now adding cognac and possibly another whiskey going forward. So I was wondering in a longer-term perspective, what is the desirable exposure to aperitifs you would like to have for the group?

Yes. Look, I think aperitif is what differentiates us from all the peers. We're clearly category captains. We've broadened our range. We also have now French aperitifs. And for all you know, we might diversify further going on. It's clearly going to remain one very key, I think, building block for this company. That's where our expertise are a great businesses, high gross margins, high cash generation. So clearly, count on us developing this business very nicely going forward. Now on your question regarding the promotional environment, I think you need to bear in mind that in '22 -- well, '21, '22 and a certain part of '23, with all the constraints to work, so products weren't available. They were all limited, et cetera, across categories. We basically cut back our promotions pressure back to 0. Now we're not a very promotionally driven company. But having said that, for each brand and the right moment of seasonality, there is the right promo pressure. And the right promo value-adding activities. And we're -- now that we have -- we don't have those capacity constraints anymore. Clearly, in a more competitive environment, we're going to return to what we were used to in the past. Obviously, as Paolo said, via revenue growth management, we constantly look at upping our game and improving the ROI on what we spend in that area.

[Operator Instructions]

Thank you. I guess this is the longest session I've had in 17 years. This has been, honestly, over the years, both a privilege as well as a pleasure. I certainly took a lot out of our interactions. It really means a lot to us. And thank you so much to all of you for your support as well as your challenges. Please do stay well, and most importantly, stay long. Take care.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.