IG Design Group plc (IGR) Earnings Call Transcript & Summary

Welcome to the IG Design Group Full Year 2023 Results Webinar. First, began to play a prerecorded presentation. And after this, Paul Bal, and CFO, who's with us, will answer your questions. This webinar is being recorded. We'll now play the presentation.

Welcome to IG Design Group '23 full year results presentation. My name is Stewart Gilliland, I'm the Non-Exec Chair. Today, I'll be joined by Paul Bal, a recently promoted CEO, he was also covering the role of CFO at this moment in time. I'd now like to run through some of the highlights of our '23 results. And the most important thing to say, first of all, is that we returned to profitability. A lot of that has been through the progression we've made in terms of margins improvement. We have seen some foreign exchange drag that's impacted our Q4 revenues, particularly in the U.K. and the U.S. We'd already signaled our need to actually write-down the U.K. goodwill and that's now been confirmed in terms of the annual results. And regrettably, there's still be no final dividend. We're not yet in the financial position to be able to do that. If I then move on to talk really about our key stakeholders, our customers. Our customer relationships remain so, so strong. We sustained these over many, many years, and they remain very, very positive. We've won an award with Tesco for innovation in terms of their development on Paperchase. Pandemic shifts in the consumer that in many ways to reverted back to consumers' previous behavior in terms of shopping profile. The Eco Nature brand continues to progress, and we've got some excellent new distribution and new retailers in the U.K. And Smartwrap is a very interesting development in terms of our wrap without the shrink, which we've launched into the Dutch market. We're now moving into the U.K. market. and we believe there will also be opportunities in the U.S. In the Americas, and this really is where we've made a lot of progress, and I have to say on behalf of the Board, thank you to Lance for the outstanding leadership in doing this. We've got really strong progress in delivery on the plans that we outlined previously. We have continued to focus on reducing complexity, improving efficiency and rebuilding our margins within this very important market. And we've also now set ourselves up for future growth in terms of the structure of our category teams. In terms of our strategy, we've pivoted back to focus very much on the turnaround and the margin recovery. And you can see that it's working in terms of the number. The new strategy is still being evolved in the operating Board and the Board are working together to bring out some new details around this at the half year, but really, we're about the partner of choice winning with our customers. What I'm very pleased to say is that we really have been able to rebuild our senior team. I referenced before that Paul has now been appointed to the CEO role. Rohan joins us on the 3rd of July. We have a new CEO and Erik and a new CFO and Steve for DGA, and we've also got new managing directors for both the U.K. and Anker within our European business. And I'm delighted that both of those are internal appointments. And so we've really been able to manage the transition and rebuild our senior team back to, I think, the strongest we probably had in many, many years. So now looking to the full year '24 outlook. Most important things, we secured those new bank facilities, which gives us 3 years of security around our finances. The order book continues to progress ahead of the very important Christmas trading season, and every day, sales remain soft, probably directly resulting because of the cost-of-living crisis in both the U.S. and the U.K. And in the U.K., pricing remains a difficult challenge. We expect half 1, half 2 to rebalance more in line again with pre-COVID patterns of trading, but our full year margin improvement will be delivered. At this stage, I'd like to pass it over to Paul, who will go through a little bit more detail behind various points I've raised.

Thank you, Stewart. Let me start by saying that it's an honor to have been selected Design Group CEO to lead it through the next stage of its development. I thank my Board colleagues for their vote of confidence in me and I look forward to their ongoing support. Given that I was CFO for most of the year, let me start by covering the financials for the year to 31 March 2023 and I'll then transition to covering how the business performed in overall terms during that time. And finally, I'll share with you a first look at our new growth-focused group strategy. So on to a summary of the financials on Slide 3. The group's reported 8% top line decline was partially driven by adverse foreign exchange rates, notably the strong U.S. dollar. At constant exchange rates, the decline would have been half that at 4%. That 4% was driven by lower sales volumes in the DG Americas division. The combination of weaker everyday sales in the second half of the year and the result of our strategic decision to exit unprofitable contracts entered into in the past in the U.S. This more than offset continued good growth in the DG International division, which was up a strong 10% in constant currency terms. Growth was driven mainly by our Continental European businesses, which did pivot their mix to more lower-value products, especially as many of our customers in those markets do relatively well in tougher economic times. This allowed consumer demand to remain more resilient than in our other markets. And this more than offset the marked Q4 slowdown in everyday sales experienced in the U.K. Turning to profitability. It was pleasing to deliver an adjusted profit before tax, about a year ahead of our expectations. While cost headwinds continue to have an impact, they had a lesser impact than the year before, partly because we have also become better at managing them. Underlying overheads were kept pretty flat, a good result given the high inflationary environment. Similarly, you can see that our adjusted EBITDA has also improved alongside margin improvement at all levels of the income statement gross margin, operating profit margin and EBITDA margin. Our underlying operations were a lot more cash generative, and the group ended the year further net cash positive. Working capital levels have been reduced over and above the impact of the high inflationary environment we're operating in. Slide 4 sets out a graphical overview of the drivers behind the group's revenue performance in the year. Adverse foreign currency movements were a big drag resulting from translating our non-U.S. dollar revenues using the strong U.S. dollar exchange rate. It was pleasing to see catch-up pricing in the U.S. to recover some of the margins lost in the year before as well as offset the impact of continued high inflation in certain input costs. Similarly, we were able to achieve pricing gains in our DG International businesses. Early in the year, we identified that DG Americas was partly to some contracts and relationships that were unprofitable. The local team embarked on an extensive exercise to identify these and is attempted to make them profitable, where this was found to be impossible, we exited these arrangements as quickly and as responsibly as we could. This review is now complete, and the material issues have been uncovered and addressed. Nevertheless, the changing economics of recent times means that more commercial arrangements could become irredeemably unprofitable going forward and require a reassessment unless better pricing has agreed. Finally, as mentioned already, we saw softness in consumer demand for everyday products in the second half of the year, especially in the post-Christmas 2022 last quarter. This was essentially felt in the U.K. and U.S. markets as the cost-of-living crisis took hold. Within DG International, DG U.K.'s reduction was more than offset by the growth in Continental Europe. Let's now get into more detail on our sales. Looking at our performance across our categories on Slide 5 on the left side. The mix across the categories has been relatively stable over the year. Most of our exits from unprofitable contracts in the U.S. have been in the Celebrations category. We also believe that the pandemic boom in Craft & creative play has now reversed with that category stabilizing. Gifting sales largely benefited from our continued progress Continental Europe. Looking at the same performance through the lens of seasonality in the box on the right, there is a noticeable drop in everyday products. This was felt, especially in Q4 in DG U.K. and DG Americas as consumer demand dropped after Christmas 2022. We're offsetting this, it is pleasing to see progress with our campaigns across the minor seasons such as Easter, Father's Day and Graduation. Turning now to the profit and loss account on Slide 6. I have already covered the key dynamics in revenue. Essentially, in reported revenue terms, both divisions, the DG Americas and DG International were down 10% and 3%, respectively. However, as adverse foreign currency movements heavily impacted the International division's results. Sales in constant currency terms were actually up a strong 10%. Through better management of input cost increases, which were not as shocking as the year before, both divisions were profitable. This was a solid turnaround for DG Americas, which had posted a loss in the year before. Maintaining underlying overhead levels essentially flat was a creditable performance in the high inflation environment that persisted last year, and which continues. This resulted in significant improvement in operating profit, with an overall 140 basis point improvement in operating profit margin to 1.8%. EBITDA was also markedly up. As we had anticipated, interest costs were markedly higher, reflecting the post April 2022 amend and extend of our previous bank facilities, but also rising market rates, but the rise was tempered by our stronger cash management to keep drawing as low as possible. Adjusting items were a net charge of $28.1 million contributing to the reported loss before tax of $18.9 million. Besides the amortization of acquired intangibles, these are the combination of mainly the $29.1 million noncash goodwill impairment write-down in the U.K., following the Q4 decline in everyday sales already mentioned as well as the lower outlook for pricing. There was insurance recovery related to prior year acquisitions. Restructuring gains in DG Americas the surplus sites were closed and that business footprint reorganized. And finally, the cost of restructurings and headcount reductions in both DG Americas and DG U.K. Stripping these out turns the reported loss before tax into an adjusted profit before tax of $9.2 million versus the year before loss of $1.3 million. The tax charge continues to be distorted by prudent nonrecognition of U.K. deferred tax assets, given the projected future results in that jurisdiction. The chart on Slide 7 graphically illustrates the key driver behind the year's improvement in adjusted operating profit and margin. There is an overall net value gain from the catch-up pricing retrieve, offset by the reduced volumes we have experienced in the U.S. With global supply chain was stable, the impact of cost headwinds was less of a drag on results than the year before. The main issues being energy price-driven increases in raw materials such as paper as well as in our brought-in products. The year has benefited significantly from savings coming from the various transformational initiatives undertaken since early last year in DG's Americas. They are focused on simplifying the business and making it more efficient, thereby restoring our margins. The year has seen supply chain re-planning, surplus sites consolidated, headcount reduce, more effective procurement and improved efficiencies in manufacturing and distribution. Following last year's closure and winding up of the Value Creation Scheme, a more standard long-term incentive plan, or LTIP, was established to align senior management interests more closely to shareholder value creation over a sustained period. The cost-of-living crisis required us to respond to ensure our workforces and their families were reasonably protected from the sudden and more extreme inflationary effects. This cost, combined with higher bonuses earned on the year's stronger performance are included within other costs. Finally, the foreign exchange drag resulting from a higher proportion of non-dollar revenues and dollar-based purchases during a time at exchange rate positivity. Turning now to the cash flow on Slide 8. Clearly, higher profits meant more cash was generated. As the upper table on the right of the slide shows, this was boosted by the business operating with overall lower levels of working capital, driven by significant reductions in inventory levels and better receivables management. This was a big achievement by our teams given the inflationary backdrop. The group remains well capitalized. The notable investment early in the year was the acquisition in the U.S. was a 49% stake held by our partner in anchor play products as required by the shareholder agreement. The higher tax payments reflect the geographic mix of where the group made its profits. The higher interest reflects the higher margins associated with our previous banking facilities following the April 2022 amend and extend as well as the higher market rates since then. The strong cash flow generation and cash management resulted in lower average borrowings than anticipated and is well recognized by the banks supporting us. And on the financing front, as we recently announced earlier in the month, we entered into new banking facilities. The details of what has changed are set out on Slide 9. You will recall that we wanted to undertake a comprehensive exercise that would consider refresh how to more efficiently finance the group's seasonal working capital needs. The result of our work determined that an asset-backed arrangement would better meet our requirements. We are also pleased to have retained our close relationship with 2 of our existing core banks, HSBC and NatWest. The new facilities run to June 2026 and are linked to our U.S. receivables. As you will note, we also took the opportunity to reduce the absolute amount of facilities that we require based on our past and projected cash needs. This reduction in facilities combined with the benefit of having seasonality built into the facility, which lowers nonutilization charges as well as with the lower margins. All this should help us to manage our finance charges as market interest rates continue to rise. The covenant regime only applies when certain liquidity thresholds across. Moving on to Slide 10 and looking at DG's Americans. I have already referred to the revenue dynamics of our DG's Americas division. We believe the Craft & creative play category may have stabilized since coming off its highs during the COVID-19 pandemic lockdown. And Stationery is increasingly a focus category for us in the U.S. market, especially with calendars and diaries. Since the challenges of the year before, we have been successful in securing catch-up pricing to recover margins lost that year. The various turnaround initiatives were also instrumental in delivering profit growth, notwithstanding the top line pressures. Walmart, our largest customer across the group awarded DG Americas, Giga-Guru status with respect to its collaborative contribution to its Project Gigaton aspiration to reduce its carbon footprint. In terms of our business operations, we have recruited a new CEO and CFO for the division, both being U.S. nationals, who also have years of experience with selling into the U.S. consumer retail environment. I'll introduce you to them shortly. So to the turnaround initiatives embarked upon by the team in our DG's Americas business last year. This represented a return to focusing on the fundamental aim of simplification, efficiency and margin growth. The aim is to drive an improvement and the financial performance of DG's Americas to an operating margin of about 5% to 6% by fiscal year 2025. The key initiatives yielding the most return in the year was supply chain replanning, a headcount reduction of 100, driving process efficiencies in our manufacturing and distribution and obtaining procurement savings. This time last year, I mentioned that more footprint rationalizations were planned for the year. We closed 4 regional offices in the year and have recently started the exit from the Clara City district center in Minnesota consolidating into other sites such as Shorewood, Illinois. Some of this is resulting in more work being passed to our contract manufacturer in Mexico. Finally, you will recall that very early in the year, we acquired the remaining 49% of anchor play products business as required by the shareholder agreement. On to Slide 11 and our international businesses. Again, I have covered the revenue dynamics already. So far, we're not seeing across Continental Europe, a softening we recently saw in the U.K. and now also Australia. And I have already covered the DG U.K. pricing outlook for the forthcoming season, resulting in the noncash goodwill write-down. On a more positive note, Eco Nature, our signature brand covering a circular economy range of recycled, recyclable plastic-free gift bags and cards continues to grow among our U.K. retail customers. It is also clear that a lot of our success in the year in Continental Europe reflects our customer mix, which is well suited for the tougher economic environment facing the consumer in those markets. I'm proud to say that last week, we received in the U.K., Tesco's Supplier Innovation Award. The collaborative work with them in category development following their purchase in the Paperchase brand. We move on to discuss the new strategy, you will understand the importance of this to us. And finally, a very happy birthday to the Christmas cracker, invented by Tom Smith, 175 years ago, and now we're mortalized in the premium brand bearing his name. Alongside that name, the brand continues to support the Woodland Trust and never more relevant than now the Trussell Trust, food bank network. On the operational side of the business, the tougher conditions in the U.K. market required us to revisit the business model and cost base and reduce our headcount by 31. Against this, we continue to invest growth, for example, with investment in more flexible bag-making capacity. There's younger gifters, especially for the convenience of a bag to the dexterity required in gift wrapping. Faithful to our reduce, reuse, recycle philosophy, we continue to develop our shrink-free gift wrap packaging with our Dutch team inventing an innovative solution called Smartwrap, which should further minimize labeling as well as reducing roles being damaged in transit and in store. Our plastic Anchor photo frames range now has 100% recycled plastic frames. And this is very heartened to see our overall efforts in the sustainability space continue to be recognized. The past 18 months saw a lot of disruption in the group's senior leadership. And I'm pleased to now say that we are almost back to full complement with just a recruitment with the DG International CEO to go. What's this based on that one. In filling the talent gaps, we have been fortunate in attracting high-caliber candidates in every recruitment process. I guess this is tangible proof of what our recent and first group-wide employee engagement survey to us. But our businesses are generally great places to work. Therefore, I am very happy to have 2 strong leaders join us in DG's Americas in recent, strengthening the team to lead that business onto a stronger footing and to profitable growth. They both bring multi-experience and fresh insights. Erik Sjogren is an accomplished leader joining from the Georgia-Pacific Corporation. Steve Linville is a very commercial CFO, who joined from Newell brands, both know the U.S. retail trade environment very well. Personally, it rather selfishly, I'm also very pleased to have Rohan Cummings join the group in a couple of weeks' time to take over my CFO responsibilities, an experienced U.K. listed company CFO through his time with Devro, Rohan has been roles with SAB Miller before that. In addition, we have recently announced new MDs for the U.K. business and one of our Dutch businesses. They resulted from internal promotions, showing us that we do also have some depth in our internal talent pool. With Rohan onboard soon, I look forward to focusing on the group's wider performance and our growth agenda using the framework of the new strategy, which incidentally, Erik and DG's Americas has helped formulate. Turning then from the team to the new strategy with Slide 13. Last year's quick pivot to focus on some fundamental areas of the business have enabled a faster recovery in profitability and stronger cash generation than we had anticipated this time last year, even with the tougher Q4 conditions experienced in the U.S. and the U.K. Those initiatives, coupled with the turnaround work already initiated in DG's Americas provided a strong driver to the results we announced today. They will also continue to provide further momentum. But nevertheless, this cannot be a substitute for a forward-looking strategy for the group. And that strategy needs to look beyond the immediate turnaround and recovery and address how the business should grow beyond. We have worked with outside professional help to develop a growth-focused strategy. Today, I am introducing you to our new strategy and sharing its highlights. Our teams are now translating the strategy into local priorities and actions. When we report our half year results in November 2023, we shall share further details with you of our aspirations, our plans and the key initiatives. Further down the line, we can also share case studies highlighting our progress. Slide 14, encapsulates on the page, our new strategy in a simple graphic. It has 2 parts to it. First, the top 2 rows. A focus on what we consider to be the 6 key attributes that will make us the partner of choice for customers when it comes to generating value from our categories. The second part, in the last 2 rows, takes these essential attributes and covers how we use them to do our magic. Let me cover all this in a bit more detail on the following slide. Let's take the 6 attributes and the 2 focus areas from the previous slide one by one. Being strategic in our thinking and planning, clear on purpose, focused on value creation and value add, adapting when things change, whether suddenly or over time through redesign and innovation in order to stay relevant, on trend, even setting trends. Demonstrating staying power through being dependable to earn customer and consumer trust through our resilient supply chains that deliver quality products, whatever the challenge in our uncertain world. And we'll do so as needs evolve as we all take more responsibility for the planet we share. Demonstrating our strength through our talented, creative, smart people who are underpinned by a flexible manufacturing and supplier base that supports their creativity. Our success comes from matching our creativity with our customers' requirements and the consumers' desires, impulses and needs. This requires us to collaborate, both within our group and beyond with open minds that are learning and developing. This also requires smart use of data overlaid with our experience to bring our unique insights to bear on providing the right products and solutions for every occasion. That's just the first part, the what. Turning then to the second part, the how. First, it's about being clear on what responsibilities our partnering role covers. This is somewhere on the spectrum ranging from the essentials of excellent key account management, all the way across to taking more ownership of how our categories develop and create more value for all concern. And finally, it's a reminder that at the heart of it all, everything should start and end with the consumer in mind. It's in the products that will excite them, that will appeal to them, that will enrich their lives and experiences and perhaps that say something about them, yet it's more than that, too. It's also about their experience as they engage with our products. As well as how they navigate the product ranges and categories that we offer, be it at the shop shelf or on the screen. In its essence, our new strategy is a call to keep all of these winning attributes at the forefront of our minds, ensuring that we are always at the top of our game in these critical 8 dimensions of the new strategy. This means on this appraisal and challenging ourselves, taking feedback and learning, and then changing and investing where we identify, we fall short. As I said, more detail on this as well as our initial progress will come in November when we report on the first half. For now, I thank you for listening, and I hand back to Stewart.

Thanks, Paul. So in summary, what we saw in '23 was a return to profitability ahead of expectation helped by the focus on turnaround initiatives, particularly within the DGA Americas. Despite the challenging economic backdrop, our key customer relationship remains so strong, and we had excellent sales in Europe with continued challenges in the U.S. and also increasingly in the U.K. We have better working capital management, which has led to much stronger cash generation. We've now strengthened the Board and filled all the senior management positions. I'm very confident the teams working together now will actually ensure that we can move this business forward on to growth. The worsening economic backdrop is a challenge, and it's reducing consumer demand in many of our markets and pricing opportunities will be very challenging, particularly in the U.K. and the U.S. There will be a normalization of our H1 and H2 phasing, but our order book is extremely strong and confirms that there is great customer loyalty. And so we expect that we'll have a good trading period. Momentum in the turnaround initiatives is expected to continue and will deliver profit and margin growth in full year '24. The successful 3-year refinance to the group at our lower cost is a big step forward. And our new growth focused strategy will build more resilient business and ensure that we can deliver on our aspirations going forward. So I'd like to thank you all for joining me today, and thank you for your continued support.

So if you have a question for Paul, click on the Q&A button and type your question. And we've got a question here. Are there any comments on changes in market share in the U.S. and the U.K?

Thank you for that, Thomson. I don't see a material change in the market shares in either of those 2 markets. I think we've been pretty successful in holding on to our share. It's been small parcels of business that we have lost in the U.K., but we've equally gained parcels of business as well. So overall, I think it's pretty static across both markets.

Great. And do your contracts have more inflation factored into the pricing? Or have you raised prices accordingly giving room for potential margin expansion in the case of input cost deflation?

As we highlighted on Slide 4, I think fiscal year '23 was a pretty good year for us in terms of pricing. Now I emphasize a lot of that was catch-up pricing because if you recall back in fiscal '22, we had a number of challenges relating to input costs, particularly in the area of supply chain. And in '23, we were seeking to recover some of that margin that was locked, and I think it's fair to say that we did a pretty good job in being able to achieve that. So some clear pricing gains in both the DG Americas, but also in the international business. I think potentially is a reflection of our success there and potentially in reflection of the cost-of-living crisis that we're now experiencing in a number of markets that has made obtaining similar price rises in the current year more challenging. And that's exactly what we have sort of signaled in the near-term. But I think we can look back on '23 as having been a pretty successful year in terms of recouping some of that pricing and therefore, the margin.

Tremendous. Could you provide a bit more color on the product mix guidance. Do you see strength or weakness in specific product lines?

Overall, I think we've got a pretty diverse portfolio, which enables us to provide segmented sort of value to the consumer. And we've seen a clear example of that over on the continent where our customers, which are sort of perhaps more focus on the sort of value segment have done rather well. And we have supported that success through pivoting our own portfolio more to become suited to that sort of kind of offer. So that's helped us to continue to progress and penetrate in the European markets. It's something that we are looking at doing better in some of our other markets like the U.K. and in the U.S. were, of course, we're seeing similar pressures from the consumer.

And what's the strategy to improve operating margins going forward? And what's your sort of time frame on that?

So far, I think as we've demonstrated on the operating profit margin bridge, which is on Slide 7 of the presentation, a significant amount of value this year was delivered through pricing, as I mentioned already. A significant amount of value has also come through from the various restructuring initiatives that were undertaken in the U.S. over the last 18 months. I think we will continue to see momentum from the restructuring initiatives. They will continue to provide operational leverage and that, in turn, improves the margin that we will be generating, particularly in the U.S. market. As I mentioned, I think pricing may be a little tricky in some markets, not all markets, but in some markets. And so consequently, I think the main driver of the value gain this year will be really the continuation of value coming from transformation. That's exactly why it's right that we begin to look at a strategy now, which will bring growth back into particularly the U.S. market and with that profitable growth. So hence, over the summer, the teams and I and not just in the U.S. but across the whole group, we're going to be looking at how do we put value back into the categories that we sell? And how can we begin to improve our margins through profitable trading just as much as we're improving our margins so far through the various restructurings that are taking place, particularly in the U.S. and more lately in the U.K.

Great. And do you have concerns about Christmas trading in the U.K. because of the rising mortgage rates?

Not really. I would say, look, we saw from the experience during the awful COVID pandemic, that Christmas still continued. And I've no doubt that Christmas will still continue yes, things are tougher. We have got the cost-of-living crisis. But as I mentioned, the range of our portfolio, the range of our segmentation of product enables us to be able to still offer value to consumers and that's exactly what we're looking to do across not just the U.K. market where things are probably right now the most difficult. But of course, the European markets, too, through differentiated offers that can appeal to all budgets and across the entire spectrum of value.

Tremendous. Can you say a little bit more about what you consider a partner of choice and how you qualify that?

So what we're looking to address through this new strategy is to redemonstrate to our customers, the entirety of the value that we offer. The value that we offer isn't just the value that we offer through our products, which ultimately is a value to the consumer, but it's also the value that we provide to our customers, the retailers through the margin that they earn and through the service that we provide in terms of bringing excitement back to the category. I think the big challenge that our industry has faced over the years has been a steady commoditization of the category. And this is something which we need to address. And certainly, a big intention of our strategy is about putting value back into the category and providing not just that value, as I said, to the consumer, but also value back to our customer and also our share of that value gain as well. That's pretty much the sort of the big intent behind this. It's a return and a refocus to the fundamental basics of our business. It's about what makes us successful. It's about our USP, it's reminding ourselves of what made us great in the past and going back to that and rediscovering that and executing that better than we have done in recent years. So that we can begin to go back to profitable growth across all of our markets.

Great. And can you provide a bit more detail on the management changes and what skills each person will bring to the team?

Yes. So let me start perhaps with the 3 senior leaders on Slide 12 of the presentation. If you take, Erik, Erik is our new CEO in the U.S. business. And just to remind everybody, the U.S. business is about 2/3 of the sales of the group. So absolutely a critical role. Erik brings with him not just years of experience of operating in the U.S. retail trade environment through his experience with the Georgia-Pacific Corporation in particular, sort of the Dixie Product. But also, he brings years of seasoned experience in terms of leadership. And that's absolutely important right now in the U.S. organization. As that organization comes back and settles down after 18 months of quite a lot of disruption as a result of all the transformation. Now the transformation journey isn't complete. But as it sort of progresses and we look to future growth, it's important that we're organized in the right way and that we're collaborating in the right way. We're working as one business in the U.S. And one of Erik's particular skills is his ability to bring people together, and that's going to be very important as we begin to sort of work more as one organization and leverage the scale of all the resources and all the talent that we have in the U.S. business. So I'm very pleased to have Erik on Board. As I said also, Erik has been very helpful, obviously, in helping us shape the new strategy that we talked about earlier. Moving over to Steve. Steve Linville is the new CFO in that business. And instead, we have a very commercial CFO, who's had years of experience also in the U.S. retail environment and he's been working there through Newell Brands, and that's a number of sort of products, which are very close to the products that we have in our portfolio. Same kind of dynamic, same kind of consideration. So very relevant experience he brings. As a commercial CFO, he's going to be partnering with our category teams and improving our commercial capabilities particularly in areas like pricing and cost to serve and also addressing some of our challenges in the data space to make sure that our commercial decision-making is rightly underpinned with good data. Moving over to Rohan, who will be joining in a couple of weeks' time as the new CFO. Again, I'm looking for a seasoned commercial CFO, somebody who is well schooled, has a good awareness of not just governance, but processes and disciplines. And of course, he's picked that up through his time with SAB Miller. But again, somebody who's commercial who's going to work alongside the senior team in terms of sort of developing our commercial agenda. So I'm very excited about all 3 of them and the recent additions. But more than that, if we sort of look beyond that, we've had recently 2 promotions within the group, 2 new MDs for the U.K. business and also one of our Dutch businesses. And these 2 individuals bring a lot of experience from within our organization, a lot of commercial energy to bear, to revitalize the leadership of both of those businesses, and I'm very excited about that. What I haven't talked about too much is the last -- is the last gap, and that is the leadership of the DGI division and very close to completing the recruitment on that, and again, looking to bring on Board energetic talent, but in this case, talent, which is very experienced in the marketing arena, you would have seen from our strategy, a number of the gaps that we highlight, a number of our aspirations are in the marketing space, whether it's in brand marketing or category management or key account management. And this last individual who will be joining my team, hopefully within the coming months will play to some of those gaps and help us develop our capabilities there further.

Tremendous. And that's the end of questions. Do you have any closing remarks?

Only to say that, look, yes, there are some challenges as we sort of look ahead in the landscape, largely driven by consumer sentiment as a result of the economic environment. And that, it's difficult to say at this stage as to how long that will continue. It's driven, obviously, by some of the macroeconomic factors, interest rate rises in particular as well as obviously the persistent high inflation. But we made tremendous progress on our journey to recovery last year. I expect us to continue with momentum. It may be slightly less momentum than we had anticipated for this year, but we have the benefit of greater-than-expected momentum from last year. So overall, I'm confident that we're on track in terms of our aspirations to have restored our margins by the end of '25 -- fiscal '25. What's now going to be sort of taking up more of my time is really addressing what comes next and the exciting world after that, having recovered our margins, having developed greater operational efficiency, how do we leverage that in terms of then sort of creating more profitable growth, particularly in the U.S. business. So that's the sort of challenge that I'm looking forward to concentrating on once Rohan is on Board to take some of the existing load on my shoulders.

Many thanks, Paul. And to everyone listening, you'll be taken to a web page to give feedback on today's presentation. If you can't complete it now, you'll receive a follow-up e-mail, we'd be really grateful if you could take a few minutes to complete. Many thanks for joining us. This is the end of the webinar.