Dyno Nobel Limited (DNL) Earnings Call Transcript & Summary

Good morning, and welcome to Incitec Pivot Limited's market update. I'm joined this morning by Managing Director and Chief Executive Officer, Jeanne Johns; and Chief Financial Officer, Nick Stratford. The materials we'll be covering today have been lodged with the Australian Securities Exchange and can be found on the ASX and Incitec Pivot Limited's websites. At the end of the presentation today, we'll have time for questions, and an audio recording of this presentation will also be available on the company's website. Finally, I would like to draw your attention to the disclaimer found on Page 2 of the presentation. Thank you. And now I'd like to hand over to Jeanne.

Good morning, and thank you for joining us today. As we mentioned in our half year results, we wanted to provide you an update about Waggaman operations in early August. So today, I'll cover what we've done at Waggaman to improve operations, including our move to a regional manufacturing model that we announced to the market on the 13th of this month. I'll also talk more broadly about our manufacturing excellence strategy as well as talk briefly about our Explosives and our Fertilizer business. Before opening up for questions, I'll talk a little bit about a couple of highlights that have happened since our half year results. So I'd like to start with an overview of how the business is tracking. And our much improved manufacturing performance is capturing the pricing upside of a very firm commodity cycle, which is positioning us for our stronger-than-normal second half earnings SKU. Underlying this good performance is our 3 commercial businesses with their resilient end markets. Operating in 2 of the best mining markets in the world, our Explosive businesses serve leading resource companies and provide market-leading and premium technologies. Our Dyno Nobel Americas business has seen a return to growth in our quarry and construction sector and our base and precious metal volumes have continued to grow after a strong half year. Coal markets are recovering. However, market conditions in U.S. coal remain challenging. Following COVID disruptions, we've restarted our technology trials in Chile and are seeing very positive results and engagement from potential customers for our Delta E technology and our electronics. In our Dyno Nobel Asia Pacific business, we've continued to see a resilient performance across our quality customer base. The market outlook supports Dyno Nobel's continued operational performance and growth, led by customer demand for our premium technology and our brand strength. We're on track to deliver our strategic explosives growth plan. Customers are continuing to see the value in our leading world -- world-leading technology offers when it comes to both safety and productivity while reducing their carbon footprint. In our Fertilizer business, solid manufacturing performance continues to enable us to capture the upside from a much improved commodity pricing. With all our fertilizer plants, including Waggaman, running at capacity, we're now capturing the full potential of the strong commodity pricing across markets that we service. As we've updated the market a fortnight ago, our manufacturing plants are all running well. And I'd now like to turn to the regional structure that we announced at that time. As we continue to live with COVID, our new regional manufacturing model is being put in place to provide day-to-day accountability and oversight and to ensure appropriate technical and operational resources are available locally to deliver this. This will drive improved delivery of our manufacturing excellence strategy, which remains focused on the key objective of reliability. Given how prolonged the COVID pandemic has begun, changes were required to operate our global footprint where we're facing international travel restrictions, which are likely to persist for an extended period of time. While it worked well to run out of our global manufacturing headquarters in Brisbane before COVID, it has become increasingly challenging to do this without more expertise on the ground in our key markets. The importance of this structural change was reinforced in my recent visit to the U.S. in May and June when I visited a number of our plants, including Waggaman. I spoke to the people at our sites, including members of our Waggaman task force, to understand the challenges they were facing and operating through an extended global pandemic. A regional model will provide better responsiveness to the technical and operational issues and ensure there's more expertise on the ground, particularly in Americas. It provides simple and clear lines of accountability, along with the pragmatic aspect of working in the same time zone. Globally, we'll retain the accountability for common engineering standards and manufacturing processes to ensure best practices are shared and implemented. As we've previously advised, a global search for our manufacturing executive has begun. And in the interim, our regional manufacturing Vice Presidents will report into the Dyno Nobel President. The regional model is being actioned across the company and further refinements will be made in the coming months. Turning now to look at our Waggaman plant. And as we updated you earlier this month, the plant has been running well since the restart at the end of May. We're pleased to confirm that it's operated reliably at nameplate production. The task force is progressing the replacement of ammonia coolers that we've previously spoken about. We're also prioritizing the installation of a cogeneration unit which will provide better reliability for the plant's steam and power. And we've also refreshed the site leadership with new, strong maintenance and operations managers. In addition, Moranbah's current site leader is heading to the U.S. to lead Waggaman in the coming weeks. This is a strong team with a strong track record in safe and reliable operations and will focus on embedding the increased operating discipline and reliability mindset that's been established over the last few months. I'd now like to turn and look more closely at the task force. As you can see on this slide, the task force has made significant progress across all 3 expertise dedicated to the repair, the restart and the ongoing reliability of the plant. The repair team has successfully repaired the plant and its strong run since the restart is a testament to getting to the root cause and to enable reliable operations. The restart team has provided monitoring of these operations, along with additional coaching and training on the fundamentals of the plant, informing the operating routines and the rigor for the plant personnel to quickly identify and appropriately respond to any abnormal situation. And the reliability task force is continuing to improve the plant's resilience against trips. And increasingly, the key focus going forward is addressing longer-term reliability. We're confident of the work done during the turnaround and since will set us up for a continued reliable operation. I'd now like to look more broadly at the manufacturing excellence strategy. We remain committed to delivering $40 million to $50 million of earnings contribution by FY '23 as part of our manufacturing excellence strategy. Here on the left, you can see an update of the other 3 plants that contribute to this earnings uplift. We have now completed all of the FY '21 turnaround with Moranbah being completed since half year results and the plant running at nameplate capacity. Phosphate Hill and Cheyenne are both producing solid, reliable runs in the second half of the year in advance of their planned FY '22 turnaround. Continuous improvement remains a key plank of our manufacturing excellence strategy. And on the right-hand side, we've outlined how we're embedding reliability and operating discipline. This includes scalable resourcing of our engineering and other technical talent, particularly in the Americas, to troubleshoot complex reliability issues and address root causes, which will be enabled by the responsiveness of the regional model. We're also building the operating discipline and capability that underpins reliability, utilizing outside expertise that can provide us with cold eyes assessment. Outside experts, including KBR, have been particularly important at Waggaman to provide that fundamental knowledge of the plant's design and lessons from the original start-up. The upside from our manufacturing excellence strategy will pull through once the reliability has improved post the turnarounds, which I'll turn to next. We've spoken frequently about the importance of the turnarounds under our manufacturing excellence strategy to deliver the promise. Preparations are well on track for our FY '22 turnarounds at Phos Hill and Cheyenne with better detailed planning ongoing to ensure that we get better scope definition upfront, which will lead to improvements in schedule, cost and ongoing reliability. We're confident of the extensive preparations in place for these next 2 turnarounds and that they will deliver improved performance. The turnaround plan for FY '22 marked the end of the current turnaround cycle with the next turnaround cycle not beginning until FY '25. At the conclusion of the current turnaround cycle, we're expecting strong cash flows in FY '23 and '24. I'd like to now turn to a highlight of a couple of achievements in the half year as we continue to focus on providing our customers with technology solutions that provide practical and innovative solutions on the ground. We remain very pleased with the continued adoption of our industry-leading electronic detonators. A full premium technology offer will continue to differentiate our Dyno Nobel brand to our customers and provide them with the solutions they need for safe, efficient and environmentally sensitive operations. Part of this is our wireless offering, which will be invaluable to a number of specific applications. In June, our Dyno Nobel business completed the first ever underground wireless detonator blast in Western Australia, utilizing our groundbreaking wireless technology, CyberDet I. The blast produced outstanding results with our gold customer noting that CyberDet I was capable of delivering the safety benefits and operational efficiencies that it was looking for. We've since completed another blast in WA and had similar positive customer feedback. Further trials are now being planned in Australia with a number of customers expressing interest in our offering. We're also applying our technical know-how as we accelerate our efforts to create a lower carbon future. We're excited about the opportunities presented by green and blue ammonia for both our business and our customers. Given our world-class hydrogen and ammonia handling expertise and our ammonia assets capable of converting to blue and green ammonia, there's many opportunities for us and our customers in the medium term as we assess new technology to deliver these and longer-term benefits for our business and our customers. We have an expert team focused on creating new partnerships to pursue these medium-term opportunities, and we'll have a further update for you at full year results. So to conclude, I wanted to provide you with an update on how our strategy will deliver future earnings growth. This is a slide that you'll be familiar with, showing our 5 key building blocks. We're making significant progress in all of these areas, and we'll continue to deliver for our high-quality customers across our Fertilizer and our Explosive businesses. Progress continues on diversifying our end markets as we see resilient demand in explosives and fertilizers. And our discipline remains when it comes to executing against our response plan, which is continuing to deliver ahead of schedule. We're delivering value for our customers with our practical world-leading on-the-ground technology. And demand from our customers will continue to drive growth across our Explosives and our Fertilizer business. As I've outlined, we remain focused on executing our manufacturing excellence strategy as we implement our regional model and see good progress on our Waggaman task force. We're seeing the benefits of this with all of our plants running reliably. We'll continue to drive underlying performance across these 5 important building blocks and coupled with the current commodity tailwind, provide a strong outlook for the company with significant earnings upside over the next several years. So now I'll open it up for questions. Operator, over to you.

[Operator Instructions] We have multiple questions in the queue. Our first question comes from Grant Saligari from Credit Suisse.

Nice update, Jeanne. First question, just around some of the fertilizer pricing. The realized pricing is somewhat lower than the average pricing for the Q3, that's the average benchmark pricing. I just wonder whether you can comment on that, particularly around ammonia and urea. I mean the debt pricing is not that dissimilar.

Yes. Thanks for that question, Grant. And as you know, there's a lot of aspects, including timing, that goes into the realized price versus the spot price. I think the one to point out in particular is the ammonia price with the elevated pricing. We have about, as we've said before, Cornerstone and Trammo are third parties that take the majority of our product and about 160,000 tonnes of it goes to our plants in LOMO. And of our third parties, those get a 5% to 10% discount off the benchmark. And at higher commodity prices, it's towards that higher end. For our own volume, however, we transfer that at a through cycle pricing. And so that includes a manufacturing fee and a rise and fall associated with gas pricing. So at these very elevated levels, that does make the discount look larger.

Okay. So just to confirm, that realized price that you've quoted there for the Q3, that includes your internal volumes which are transferred, as you said, through the cycle price?

That's correct. That's correct. And there is a 1-month lag as well on the pricing. So obviously, in a rising market, that comes through later.

Okay. Just a second question, if I could. You mentioned coal remain challenging in the U.S., which is probably not a surprise. Any deviation in the outlook for the other markets such as quarrying and construction, for example, at the half? You indicated you were expecting I think, mid-single-digit growth in Q&C to continue. So any comments around the other markets would be helpful.

Yes. I mean, I think we obviously still have a number of months to run in them in this year's season. But we're pleased to say that quarrying and construction from the first half has returned to growth in the second half. So we continue to see growth in line with the market in our numbers. We see ourselves as retaining discipline, in targeting both quarry and construction customers that value the technology and see the value proposition. So -- and I would say that if you look at our -- while coal remains challenging, the upside from our metal basin precious metals and quarry and construction far outweigh that -- the coal softness.

Okay. And just finally, if I could, just from me. The -- your competitors called out cost of goods. And obviously, there's a delay in the timing of past any cost of goods increases through into end-to-end prices. Now I think you're in a better position in the U.S. just given your own internal supply more fully meet, I guess, your end market needs. But is there any caution we should have there in terms of cost pressures from a cost of goods side in thinking about the second half?

We're not seeing any material flow-through of increased costs. Obviously, there is some pressure in the marketplace, but we haven't seen any material.

Our next telephone question comes from Brook Campbell from JPMorgan.

Just a follow-up on Grant's point that the internal pricing from Waggaman to Dyno. What sort of benchmark should we use for that? You're saying through cycles. So if you can just be a bit more specific about that. Is it sort of 5-year historical averages, 10 year? And anything else you can help us so we can get it more accurate going forward?

I was thinking maybe of handing that one over to Nick. He used to run the Americas business as to how to guide you on that.

Yes. Thanks, Jeanne. Look, it's a 10-year average and it's set at a level where we got -- where we make our return on capital target hurdle rate as well. So if you go back through history, you'll see that. And I think if you look through recent history, that price has been above realized price for most of the time that we've been operating the plant.

Great. And then sort of a longer-term question where you talked about the opportunity to convert some of your ammonia production to blue and green, which sounds quite good. Any sense at this stage, the cost per tonne potentially to convert or upgrade those assets?

Yes. I think those are all the things we're looking through now in our medium-term plan. It's about finding customers and partners that help make those economics work for us. And so different plants will have different solutions. Some plants seem to be a logical fit for blue ammonia, some for green ammonia, and we're pursuing all of those in -- we're pursuing them in the short term, but they're medium-term solutions.

Our next telephone question is from Sophie Spartalis from Bank of America.

Jeanne and Nick and team, a few questions from me. Firstly, the miners have all reported their quarterly operational results, and they've certainly been calling out high ammonia prices and the related cost inflation that they're receiving there. Can you just talk through the mechanisms that exist within those newer contracts to pass on higher prices in this kind of environment, please?

I mean for us, we don't really buy ammonia and then sell on explosive. So we're not exposed to that differential. So the higher ammonia price doesn't impact our input costs. So we don't pass that on to our customers. So we try and offset any of our inputs with our outputs, but we generally -- we're generally converting gas to ammonia and we price that accordingly.

Yes. So Jeanne, sorry about that. It was ammonia and ammonia-related items, which I interpreted as being the ammonium nitrate prices. So have you seen or have you been able to pass on higher prices with those newer contracts that you've signed?

Well, the newer contracts that we signed, we signed them in light of our cost input. And so therefore, our cost inputs haven't changed. And so we're not differentiating between the two.

Okay. And then just in terms of the turnarounds with Phos Hill and Cheyenne into '22. What are the key risks for those turnarounds from the sort of early planning that you've done today? And I guess you talked around in your earlier commentary that you have been sending key personnel between Australia and North America. Will anyone from that Waggaman task force come to Australia to, I guess, handhold and ensure that the Phos Hill turnaround is completed smoothly?

Yes. I mean, in general, our international transfer of talent has been Australia to the U.S. and that's because we have our global center here in Australia. So we've had 2 or 3 senior Australian technical talent move to the U.S. in order to set up our regional and Waggaman operations. So we've had good support here in Australia, so that hasn't really been changed. And both Cheyenne and Phos Hill, those are plants that we've turned around any number of times. The early indications, we go through a stage-gate process. They've passed all their stage-gate processes very well. And so those are all being progressed to plan.

Okay. And then just a final question from me. Just in terms of the overall portfolio and growth, be it organic or inorganic. Where do you see the most efficient allocation of capital today across the portfolio?

Yes. I mean we're seeing our choices in capital allocation is really towards our customer-facing explosives space, whether that's the technology investments, the Chile expansion. But it's really those premium technology, the Delta E, the electronic detonators. That's where our preference for capital investment is. That's where we see the highest returns. And that's where we're really differentiated in the marketplace.

Okay. So is there still a quest to expand that geographical footprint like you have done in Chile?

Yes. I mean we're starting in Chile, and we'll likewise look for other opportunities. Chile is a particularly interesting one with the electrification of the world in the climate change scenario. With their vast copper deposits and our technology, it's a really nice fit. So that's where our focus is first.

Our next telephone question is from Richard J. Johnson from Jefferies.

Jeanne, just following on from Sophie's question about the turnarounds coming next year. I was kind of thinking about it in a slightly different way. In a sense, I was just wondering whether you've changed your approach to those 2 turnarounds because of your experiences you've had this year at Waggaman. Or do you sort of think about Waggaman as site-specific issues? And then really, the reason I ask is certainly a Phos Hill turnaround from the past haven't always been that smooth.

Yes. No, thanks, Richard. I think the turnaround process was redesigned as part of our manufacturing excellence strategy. And Phos Hill will have the benefit of having been in the new program from the very start. So I think that sets up Phos Hill quite well. Obviously, as we have gone through the other turnarounds, any lessons learned have been embedded in that global processes and those systems. And so Phos Hill have the benefit both of being on the improved planning process as well as any lessons learned. But I do think that most of the Waggaman lessons learned were really more tied to the first-ever turnaround, the discovery phase and the cold start-up, which were first at Waggaman. That won't be the case for Phos Hill.

Great. That seems logical. And then just a couple of quick ones for Nick, if I might. Nick, I was wondering if you could just give us a sense of how cash flow is looking in the second half and where you think it might end up at the year-end?

Thanks, Richard. So look, as Jeanne talked about, a huge focus being on converting commodities into earnings. There's likewise an equal focus on earnings into cash. And so key drivers I can talk about is big focus on underlying working capital and good progress there. We've reported the $320 million assessment CapEx at half year that's unchanged. And then while the other one that will impact, it was an impact at the half year, won't change from half year to year-end is the reduction of working capital facilities. So there was a negative cash flow drag in the first half as we reduce those facilities. The level we've reached at the half year will remain now. That's a level we're comfortable with. So there will be no further impact to that in the second half. I think while we're talking about, the final thing is, we have now removed all of our noncash balance sheet hedges, so you'll see those come out of year-end as well, but that's not cash.

Fabulous. And then just finally, on Waggaman for cash -- I'm sorry, I beg your pardon, the gas conversion, do we automatically assume it just normalizes with production running at nameplate in the second half?

Yes. I think that, that would be the assumption. It's been running reliably, and the gas conversion tends to be pretty predictable with a good reliable run that we've seen for the last 2 months.

Our next telephone question is from Nathan Reilly from UBS.

This first question just in relation to your fertilizer distribution volumes. Can you give us a bit of an update on how they've tracked through the third quarter? I think they're flat coming out of the first half. So just an update there, please.

Yes. Well, I think the important thing on the Fertilizer business is the big story of the year has been this huge swing in the commodity price. You can see that in the numbers, but it has climbed and climbed and climbed. So we've been focused on maximizing profitability in light of changing global flows, commodity prices and the distribution volume. So -- but it's really focused on the overall EBIT of the segment. And so it's always that you've got the winter season, that is September, October, it can fall on either side. So it's really too early to know too much about the volumes. But like I said, our focus has really been on capturing as much of the commodity upcycle as we can.

Got it. And then just with respect to the Phos Hill turnaround. Are you still targeting a 7-week turnaround period there? Or are the lessons from Waggaman caused you to sort of push out timing?

We'll probably provide you an update at year-end, but there's nothing that we know of now that's materially changed. But it is going through its stage-gate processes, and we'll continue to evaluate whether there's any change in the guidance. At this point, the guidance hasn't changed.

Okay. And final question, just in relation to Gibson Island. Can I have an update on your current thinking with respect to that plant, please?

Yes. Well, as you know, the Gibson Island has a gas contract through the end of 2023. And so we are getting close to going out to tender for gas beyond the 2023 time horizon. So that's likely to come in the coming weeks, and it will be open for a while. It's a substantial gas contract, and it will take some time to look through the possibilities there. So we will certainly have, I would expect, an update at year-end at Gibson Island at that time.

The next telephone question is from John Purtell from Macquarie Group.

Jeanne and Nick, look, had 3 questions, please. Look, the first one on WALA. Thanks for the color. So the plant obviously got through the restart successfully. Jeanne, are you more confident now of reliable production ahead? And obviously, the plant has reached a good cadence. So theoretically, that should sort of mean [ far more ] orders.

Yes. So on that question, I mean, I'm really pleased with the strong 2-month run that we've seen at Waggaman. I think it speaks for the quality of the repair team. They clearly got to the bottom of the root causes, got those fixed. And as you say, we're beyond any cold start issues and 2 months in. So it's -- the plant continues to run very well. And at this point, there's nothing known that gives me cause for concern at the plant.

Second question on Dyno. Just in terms of the outlook comments. Just to clarify that you're expecting 10% EBIT growth for Dyno overall between '20 and '22 is how to read that. And what you're assuming in fiscal '22 for that to occur?

That is the right way of reading it. That's a third building brick of our route value proposition. And that's the one that we still feel we have good line of sight, and we're tracking as expected towards that.

Got it. And final question, just in relation to blue and green ammonia. Do you have a comment on to what extent a partnership is being explored here, so that we can take advantage of opportunities potentially without deploying significant amounts of capital?

That's right. That's right. I mean, obviously, as I mentioned earlier, our preference for capital is in our customer-facing explosives and technology offering. It's not about retrofitting plants with green and blue ammonia. And there's a lot of green funding available and partners that are looking for our capabilities, and I believe some of our plant capacity. And so we're looking at partners that align with the role we can play and the role they would play.

Our next telephone question is from Andrew Scott from Morgan Stanley.

Nick, maybe just one for you. I note on the last slide, your reference prices that you have there actually listing DAP China. For as long as I can recall, which is quite a long time, unfortunately, it's been DAP Tampa and that includes back at the first half results. So just interesting in the change and the reason for the timing of the change now because it is quite a differential in that price there.

Yes. Thanks, Andrew. I think the Australian market moves to -- I mean, going back 10 years, it was -- Australia was priced off Tampa, but probably 3 or 4 years ago, I think it moved to the China index. So it's just reflecting what market pricing is in Australia. Obviously, we do export into North America, as Jeanne alluded to, and we've been very focused on trying to capture some of the arbitrages that present itself this year. So you'll see that as we come out for year-end.

Okay. And in terms of where your export product is going at the moment, obviously, you do have that differential with the U.S. Can you sort of give us an idea of how much product is finding its way into that market?

Yes. I mean, we look at where the arbitrages are. It has been in the U.S., but it has been elsewhere as well. So we have moved it around, and we don't really disclose exactly where we send it to. But predominantly, it was to the U.S. earlier in the year, but then arbitrages actually tightened up. And so we take advantage of where we can get the best netback.

Okay. And last for me, Jeanne, I just want to ask a bigger picture one. If we roll back, it's obviously been a very difficult period through this sort of stage. Can you highlight a couple of the learnings here? Because we've heard a few things along the lines of, well, it wasn't great. We had a fixed price turnkey contract. I mean, usually, certainly at the time, that was touted as a positive. What are the learnings that you do different when you come to either a turnaround or whenever we are thinking about building a new plant that we actually sort of see things done differently?

Yes. I mean, I think that -- I think with the Waggaman, I mean, there's no doubt that there were trade-offs made between the different contract choices and some of the issues we had to deal with this year. I mean what we're focused on now at Waggaman is how to deal with those. And so I think we've kind of whittled down that list to a couple of key projects that we're working on. And we've also increased our operating discipline and operational capability on the ground to deal with some of these anomalies, so that the day-to-day operations know how to respond when you do have a complex plant like we do. I don't think that we're likely to build another big plant. But if we were, obviously, I think we'd be more aware of the trade-off between the pay me now or pay me later and consciously make those choices. But what we're really focusing now on is the way forward. We feel very good about where we're at. The list is not growing. We know what the major issues are, we're dealing with those. And the day-to-day operations are running very well. And the capability of the plants improved and we've refreshed the leadership, and we have a regional model to respond to when -- if they need more resource. So I feel like we've addressed the challenges with running with Waggaman, and we've learned a lot through the year.

And our next question is from Scott Ryall from Rimor Equity Research.

Maybe Jeanne, I was hoping to ask something that's of a similar vein. Just to confirm on the regional manufacturing side, please. It seems very sensible to move to a regional model. So that would be what I would have thought would be the best way to manage risks associated with operations going forward. But I wonder, can you just clarify, in the release a couple of weeks ago, you said you had a global search for a manufacturing lead that had commenced. And here you've talked about search for an executive for manufacturing has commenced. What -- if the responsibility has shifted to the regions, what will that person do, please?

Yes. I think the -- we have started search for a manufacturing executive. I think the role and definition will be based on, at that time, what we feel we need. The manufacturing, we went to maximum regionalization given the restrictions in international travel that exists and the limits for doing things remotely in this environment. And so we're unlikely to go revert to the old model, but the new model will be right for the times when we recruit in that talent. But it really is to provide that deep technical expertise on operating, operating standards, operating processes that will help guide the regional day-to-day accountabilities.

Okay. And is that -- will that be reportable -- reporting directly to yourself?

That's what we're recruiting for now. We will see when the time comes how that plays out. But yes, we're recruiting it as a direct report.

Okay. But it won't -- but the role will not have as many of the accountabilities as previously has been the case because those have shifted to the regions and probably won't shift back?

That's correct. It won't have the same range of accountability.

Okay. Great. And then the second question I had was on low-carbon ammonia, which obviously is a topic that we've written a fair bit about. Could you just define the medium term, please, when you're assessing medium-term opportunities? I think I'd just like you to quantify that in terms of number of years, please?

Yes. I mean...

You can give a range, right? That's fine. I'm just trying to get a sense of is it this decade, is it 3 to 5 years, is it -- what do you define as medium term.

Yes. I mean we've talked about our ambition to be net 0 by 2050 and to do it as soon as practical. And so in that, we have a road map. And we haven't strictly divided it into short, medium and long, but most of the medium opportunities we would talk about in this decade. And like I said, if we have opportunities to go faster, we absolutely will.

Okay. So your current goal of reducing emissions by 5% by 2025, which you know I think needs to be extended, but that -- would you define that as a medium-term opportunity? Is that the medium term or is that just the near term?

Well, every year, it's getting closer and closer to the near term. We'll do a full update at year-end about how we're thinking about that 5%. But I think your point -- well, my point would be is that the 5%, step 1, and there needs to be steps 2 and 3, and we'll be talking about that at full year.

Thank you. There's no further questions at this time. I'd like to hand the call back to today's presenters for closing remarks. Please go ahead.

Okay. Well, I think I'll close it down with that. Thanks for joining us today. I hope you found some of the insights and color around our manufacturing helpful. And certainly, we're feeling very confident and pleased to have a tailwind in which to deliver this performance and look forward to talking to you at half year.

Thank you for participating. You may all disconnect. Have a great day. Goodbye.