Imperial Brands PLC (IMB) Earnings Call Transcript & Summary

Okay. Good morning, everybody. Thank you very much for turning up for the Imperial Brands fireside chat. This morning, I have Stefan Bomhard with me, Chief Exec of Imperial Brands; and Lukas Paravicini, CFO. I'm the Director of Consumer Staples, I recently joined Deutsche Bank as part of the Numis transaction and recently picked up coverage of tobacco sector. I think Stefan is going to open with a few comments and followed by Lukas, and then we'll get into Q&A.

First, I mean, Damian, thank you very much for the invitation on behalf of Deutsche Bank. All I wanted to do is just kind of frame our conversation today a little. I mean it is now 3 weeks after we started our half year results for the year. And I think it's a great time to have a conversation about Imperial Brands, because I think it's now 3.5 years into our strategy with these half year results. And I think you as investors can see the progress that we're clearly making against our strategy. There were kind of 3 key things that I would want to highlight. The first 1 was about really making sure that we drive our core tobacco business into the right focus in especially our top 5 markets, which in the case of Imperial represents 70% of our business. And I think what's exciting here, 3.5 years on, in these top 5 markets that make 70% of our profits, we've been losing shares consistently year after year. Since the launch of our new strategy 3.5 years in, every single half year we've either gained market share or held market share with the ambition of our strategy being that we do not want to be the #1 [Audio Gap] and we've clearly seen that. And what you can see here on the chart, the reinvestment in our brands and in our sales capability to support our brands has allowed us to actually increase prices in half 1 by 9%. That should give you investors another sign of or another piece of evidence that the brand and how we go to market is now rejuvenated to a very different level than it was. The second piece, important in our industry is clearly also there is a focus on NGP on new growth products to reduce harm for us, yes? And I think what is exciting there is that especially with the half year results, you can now see the reality of our differentiated strategy in the marketplace because what we're seeing in these half year results, we grew our business according to the plan. We're present in all 3 product subcategories, whether that's vaping, heated tobacco or modern -- or in nicotine, where we've grown in all 3, where it started with scale, our gross margin was improved by 580 basis points. So we are now seeing after an investment of phasing and finding out what is the best way of positioning Imperial in the space of NGP, we can now start to see the positive results of that work. And as we are on our path to profitability of this business by the end of our current strategic plan, which is the end of fiscal year '25. And I think what you can also see in the numbers that we've reported is that discipline and rigorous approach that we talked in the past about, we're not here to copy what other people are doing. We're here to have a specific [Audio Gap] choosing very clearly the market we go into and the market we won't go into and what is our proposition that we offer to specific consumers. And the third point I would want to highlight, and it's quite less visible for U.S. investors, is the big change that we're driving on the culture of the company. What we've always talked about is a strategy to be underpinned by the culture of the company. And I think it is a key enabler for the new ways how we do things. And I think when we look at what has changed in the company in the last 3.5 years, the key is we're much more challenged in our industry today than we were 3.5 years ago as the smallest of the industry players, but we're quite excited. We're turning it into a competitive advantage because we should be more agile. And I think today, we find ourselves to be more agile and we do things differently. So we really have what we've achieved so far, but I think there's a lot more to come. With a lot more to come, let me briefly spoke about the half year results that I referred to before. This is a dashboard we've used virtually for the last 3.5 years with very clear KPIs. And I think what is exciting to see, the last half year is no exception to us delivering on our strategy. And I would want to just pick 2 KPIs from this 1 because I think they're highly relevant for you as shareholders. Number one, the 2.8% net revenue growth of the business. That is the highest sales growth Imperial has experienced and delivered in more than 10 years. Out of that, already 0.5% came from our NGP business. So it starts to make now a difference in our top line performance of the company, but also with the underlying performance of 2.3% of our combustible business is our best performance in modern day. And finally, the other number I take on this slide is simple, the adjusted earnings per share growth. At 7.7%, we can now see the effect of the core of the business overall delivering a better level of profitability. But combined with the capital allocation policy that Lukas will talk about in a second, you can see with the share buyback that's right there on top of the dividend yield we offer you, you can see with the retirement of our shares, you can see the effect this is having on the EPS. So I'll leave it there and pass it over to Lukas who will just give you a bit more on capital allocation.

Thank you very much, Stefan. Good morning, everyone. And I think it's -- I just want to round up this brief introduction by going through the capital allocation of Imperial, a capital allocation policy that we presented together with the strategy, and which is a key value driver for Imperial. Our first priority remains to invest in our business to support the strategic delivery. And I think it is important that the dimension what that means investing in our business in terms of our strategy is largely an organic strategy. There might be some bolt-on and a good example is what we did last year in the U.S., which was a small bolt-on with a huge opportunity. Our CapEx is light, around GBP 350 million we have guided the market over the last few years, so that's not going to change. And we innovate together with our providers, and therefore, that is also very different from our competitors. So that gives you an idea of what we mean by investing in our business. Our second priority is to achieve a strong balance sheet. I think that has been helpful in the recent past as well, and we're very pleased to see Moody having upgraded us -- or, sorry, having put us on a positive outlook. But we have reached destination being at the lower end of 2x to 2.5x EBITDA to net debt ratio. The third priority is a progressive dividend. We have committed and we are committed to increase our dividend year-on-year. Lately at the half year, we committed to a 4% interim dividend for this year. And finally, we are committed to an ongoing multiyear share buyback with this year a commitment of GBP 1.1 billion share buyback, which we are well on track to deliver. Just to put this into context, if you add the dividend and share buyback together, we're well on track to deliver a GBP 6 billion cash return to shareholders over 3 years period, a significant amount. And I think our capital allocation actually underpins the value for shareholders in terms of what we can generate in returns. Our current free cash flow yield is 18.2%. Our dividend yield is more than 8%. It's more than twice the global FMCG average. And the dividend yield and share buyback this year equals roughly [ 15% ] return to shareholders. An attractive investment case for shareholders, and with that, I'll hand back to Damian. Thank you very much.

Thanks very much, Lukas. I did actually cover the tobacco names several years ago. And 1 of the biggest differences revisiting the companies is the shift in culture at imperial. And I think you mentioned in the opening remarks, Stefan, that there's more to come. Can you just talk about how far along the journey to becoming a full-on challenger you've come? And what should we expect going forward from here?

Sure. I mean I very much appreciate you picking up culture because I think for investors it's always 1 of the pieces that's really tangible, but I think it's 1 of the key drivers of this change in performance that we've seen. And I think what's exciting, to be honest, 3.5 years, 1 of the questions when I came in 4 years in the company we believe the strategy 3.5 year, is I think what's exciting that people are ready for a change, yes? So I found very little with this. And I think 1 thing that you covered the space a long time but I always remind people, this usually is a challenging industry, yes? When Gareth Davis built this company, we were #16 in the industry. And with the acquisition the company made, we came from #16 to be #4, yes? So that period of challenges, the little underdog from Bristol to challenge the bigger boys and the bigger companies, what's that? But it kind of gotten a bit lost in the meantime. So it was more a story of rejuvenating what was there and bringing the pride back to being the underdog in our industry. And I think there is still quite some way to go. But I think to me, there are 2 examples I would give you that give you some sense of what's different. The 1 in the core business I think Winston in the U.S., a brand that has consistently declined for a long period of time under different owners and also in the early phase when Imperial acquired it. And 1 of the things we said, look, what are we going to do differently? One of the things, we are clearly the smaller player in U.S. but what the team with that challenger mindset is saying, our key competitors have huge databases of their consumer base. We don't, we're smaller player. But who else has big data base? And the data base is what 70% of cigarettes being [Audio Gap] come in. And [indiscernible] have a huge databases. So 1 of the big impacts was why don't we partner with the communities. We also have, as you know, Winston was still with the Winston Cup in NASCAR. Historically, that's what the brand fit for. You can't go into NASCAR any longer. But the team in the [Audio Gap] what can we do? And they came up with this brilliant idea, we sponsor a car in NASCAR and with Winston, but we did [indiscernible] who will run it with our advertising and in exchange they allow us access to their database and [indiscernible]. So it was a great example. It's a great [Audio Gap] something is a challenge to my executives so that how we're doing different things to the other players and how do we leverage something that is 1 of our strengths. So I think it's for me a great example in this space. And I think also our NGP strategy is clearly different. But if you ask me, are we there yet? No. I think there are many more samples to go. And I think that's the more -- and I get this question internally what does it mean challenge amount to. Exciting thesis, I think our people increasingly understand what we want. I think we're increasingly building examples of it. So I really believe this will drive business performance for many years to come.

Okay. That's pretty clear. You touched on the sort of the U.S. performance. And I think we -- I mean, it's based on performance in the first half, I was just wondering if you could touch on some of the reasons -- I mean, obviously, partnering with sort of NASCAR was 1 of the underlying sort of strategies, but more broadly, what are the things that are going right for you in the U.S. and perhaps how we are going [indiscernible]?

I mean, if you look at the U.S., I mean, there's some very clear strategic pillars that underpin our performance. That's why since the launch of our strategy 3.5 years in the row, our U.S. business has grown net revenues, bottom line and market share, yes, despite what has been quite a volatile market in the U.S. But it underpins some very clear must win battles, what we've defined as part of our strategy, which was our reinvestment in our sales force and sales capabilities in quantity as well as quality and the reinvestment in our key brands, yes? And I think what -- why have we been able to outperform the market quite substantially in the last 3.5 years; a, we've started to address some clear gaps we had in our sales force coverage as well as the quality of sales force execution, and again, there's more to come. The quantity is quite finished, but I think the quality, I think we have hired more than 30% more sales force than ever before than what we have before. I think that is great. You see that in our numbers. But there's still a learning curve for the many use cases. At the same time we've invested in our brands, very specific positioning. Virtually, we used to have 1 advertising actually in the U.S. We now have agency program, which is more boutique agency, which really were focused on the plan with a clear understanding where the [indiscernible]. And structurally, what's always there, one benefit, one I think the competitive advantage we have, we have the most complete portfolio. We have brands at every single price point in the U.S. So we don't have the specialty brands across different price points because we have some specifically provisions and that is today, a competitive advantage.

Yes. And another market that's been growing reasonably well for you has been Spain. I mean, I think 50 basis points there in the first half?

Yes.

Yes. Again, you sort of -- can you just talk about what's happening in Spain to drive that performance?

Possibly, Lukas is a Spanish speaker, but he's going to talk in English.

No, I think Spain is a good example where historically, we have been focusing on international brands. But when you look at our strategy, and we're confident by putting the consumer first will tell you that actually, they love our local jewels, our local brands that we acquired over time. And then if you then look into -- and listen to the consumer, you then hone in on those local jewels. If you take for example, Nobel, which is very much linked to art and artists and music, we actually took that brand, innovated the packaging, linked it to artists, made limited time additions to support the pride festival, for example, and expanded the product range by introducing a slim line for female smokers. So by listening to the consumer, adapting or applying our strategy, that has done really well, and you can see the results in that market share growth.

Now one market that hasn't been going too well is Germany. And I think you had identified when you came in sort of 3.5, 4 years ago. We're still yet to see -- there's early signs of it starting to turnaround. But can you sort of provide an update on where we are on Germany?

Sure. I mean, Germany, you're absolutely right. I mean 3.5 years ago, we were kind of asked, okay, of the top 5 markets that all kind of have been losing share, which 1 would take the longest and I said then it's Germany. And it is still, yes. So it's not really a surprise. But I think if I may also make the point, the strategy doesn't require us to have positive share growth in all 5. Actually, honestly, it isn't going to happen because it's unrealistic in such a highly competitive business. The strategy was about moving from being the #1 share in our industry in these top 5 markets combined to a position we would hold share or potentially sometimes gain share. And that we have achieved despite the continued share losses in Germany every single half year in the last 3.5 years. On Germany, reality is that Germany has -- why is Germany so complicated? Number one, it's been the 1 that declined before the longest. We've lost market share prior to the strategy starting for more than decades and every year around 80 basis points. Yes. It's also a very open market. So from a marketing perspective and sales force investment, and this is a market where we historically haven't invested in both. So the playbook that we've applied is very similar in Germany to the U.S. that we talked about before. It just takes longer in Germany because; a, the level of competitive intensity is quite strong. The reality is also to implement cultural structural changes in a German organization, it takes longer than it would in the U.S. So the exciting piece is that with these half year results, I didn't mention it, Germany saw a meaningful improvement in share performance. It still lost market share, but it lost 25 basis points market share when in the prior years, it would have lost 80 basis points. So with -- it's far too early to declare victory, but I think, from an investor perspective, this is what's exciting us that we always said Germany will get better. This is the first half year where we can show it.

Thank you. If we move then from sort of the combustible side to next-gen products, can you just sort of talk about -- a bit about what you changed when you came in and then specifically, if we look at your key initiatives in heated tobacco and vaping for a minute?

I think what's changed, I think the benefit when you come from the outside and can look at the data, it was very -- a couple of things. It's very clear, we are the smallest. So doing similar things to our larger in fact is not normally not a successful strategy. So we became very clear in saying we want to build a sustainable and profitable business and be much more selective where we wanted to compete and also become much more selective what target consumer we go after, which is possible for us because reality is, if we want to achieve our fair share of NGP, our ambition is significantly smaller because our NGP -- our market share in combustible is significant. So it's -- we selected a strategy that's appropriate for Imperial. That is probably the single biggest thing, yes? I think the -- if you look at vaping and heated tobacco, I think what we did, again, I think in vaping, the great news, many years of investments by the company in the blu brand was something that we could benefit from because it is 1 of the most well known brands. But what we did change across all 3 categories we believe big time in a modeling with partners. There's a lot of innovation in here. There's lots of people specifically out of China innovating in this space. And we said, let us partner with them, let us bring our consumer insights, our route to market, our brand capabilities to them, but let's partner with Chinese manufacturers who we use as suppliers, which has allowed us -- to be clear, the vaping market has changed since the last 3.5 years big time from a puff-based market primarily to a market that is a combination between a puff-based market and a big, big disposal model. And in that challenger mindset, we are today, and you can go into stores here in Paris, but also in London, what we have the 1 -- the blu bar with 1,000 puffs, which is the highest puffs and it's a very important consumer [Audio Gap] how many puffs is going to get out of the device of all traditional industry players with the ones with the high puffs out of our partnership with our Chinese partners. On a heated tobacco, I actually asked for that second category. On heated tobacco, I think we've also made good progress. We are today, we've done a lot of testing. It's a very competitive field. We've done a lot of testing to identify what is the consumer segment that we want to go after? What are they looking for? We've launched Pulze 2.0, it's the second version of our product, which offers you 25 consumption of sticks out of 1 device, which is important. If you're on the building side, if you don't have access to recharging your device, it is a really competitive advantage and we also launched iSenzia, which was 1 of the first non-tobacco sticks. So again, it just give you examples of where we are today, but I think what you should take away and what has changed in the last 3.5 years, we are now able to compete in this space because we're very clear who we want to go after, we work on that.

I should say, by the way, if anybody wants to ask a question, please just raise your hand and I'll put it in. Just moving on to modern oral. You've recently launched Zone in the U.S. Just wondering if you could sort of talk about how you see the development of the U.S. modern oral category and what you think it is that Zone brings in to help differentiate?

Yes. I think Zone is a great example of our strategy to exemplify for shareholders to see. A, it's an element of that, very, very kind of retro selection process, which markets we compete in. Reality is if you go back 3.5 years when we wrote our strategy, the modern or nicotine market in the U.S. was well below the threshold where we felt it's sizable enough for us to come in. But what's happened, it has become the fast-growing NGP segment in the U.S., and we could see as the growth curve accelerated that it would reach a point in time where it would be making sense for Imperial to compete in that market. And then challenger mindset came in that I talked before, with the management team said because you have the uniqueness of the regulation process and the approval process, yes, you had to find a product that was in the market before certain deadlines, but we wanted to have a differentiated product. Competing with a lead is normally not a successful flagship challenge. And after a long search, we found a partner who had a product in the marketplace that is a more moist product, more -- typically what we would be selling in Scandinavia. And we did a lot of consumer research and we clearly identified that the consumer segment that prefers this type of a product. As Lukas referred to, that was 1 of our bolt-on acquisitions. We bought the rights for these products in the United States from a Canadian company. We relaunched the brand under the name Zone, it had a different name before, the product is unchanged, changed the packaging and we now launched that into the marketplace. It's very early days, but I think it gives you a sense of the agility that we have, and it gives you a sense of how we do things differently. We didn't have to develop a product in-house. We partner again with somebody who has the right product, yes?

Yes. And in terms of the wider sort of profitability from NGP, I think maybe 1 for you, Lukas. I think you lost GBP 140 million last year. I think we're aiming to lose around about GBP 100 million this year. What's the path in the near term? And then perhaps longer term, what are the aspirations around NGP?

Yes. I think if you put the -- if you take the strategy that Stefan just explained, you can see that our objective is a sustainable, profitable NGP business over time. And that we would like to achieve, and we are achieving through scale. We're scaling up this year. And this half year, again, our gross margins have improved at half year over 500 basis points. You'll see towards end of your point, a further reduction of the losses because we are growing further our business. And towards the end of next year, that growth in scale and that's scaling up will mean that we will be exiting or breakeven the business in NGP. And our objective remains is to build a sustainable, profitable business in the future that will not end next year, but that is where we will break through the breakeven.

Thank you, Lukas. And I think, Stefan, you mentioned it in your opening comments as well that the amount of work that's gone on in the background in operations. You've recently talked about sort of implementing a new ERP system. I don't know who is best placed to talk about what are the benefits that could come through from that, where we're most likely to see that benefit in the business.

Sure. I mean I'll sort of pass it over to Lukas. So I think what's important -- I give you the point. I mean I think what -- it's a great example. If you look at it, you followed them such a long time, when we went from #16 to #4, we bought a lot of businesses, and these businesses weren't integrated to the level that you would have many other consumer goods company to integrate that, partly because the investment would have been significant. And there was -- people saw less of a benefit. But if you want to run it as 1 company, this is going to be one of what I'm so excited. There's such a self-help opportunity, which to be fair, our competitors have taken care of many years ago, but Imperial still has that opportunity. So that's kind of, for me, the big umbrella theme, that that's why I joined up here because this has such a great opportunity to deliver a better improved performance.

Yes. I mean that goes really at the heart to our strategy again. It is part of the simplified and efficient operations that we have stated and to catch up with the industry. We look at it as a business transformation on the back of probably, to your point, the ERP rollout, which is an S/4HANA rollout over the next 5 years, and a GBS model, which is the global business shared service center that we have built. And that is a progressive rollout. It will give us a constant flow of self-help, and what we're looking here is probably as a benefits case is the fact that we will have better and faster data, and therefore, also faster and better position taking processes in the company. That was important delivering our strategy going forward.

And what's the time frame, is it 3 years, 4?

So I mean I think it is an ongoing program. The ERP in itself, the S/4HANA is a 5-year program, roughly GBP 350 million investment, which will be covered in the envelope of the GBP 350 million CapEx that we mentioned before and GBS and all the rest that goes with it is also around for 5, 6 years.

Okay. Perhaps 1 for you, Lukas. In order to sort of hit current FY '24 guidance, we need to see an acceleration in the second half. What are the things that sort of give you confidence to say that you will be able to deliver that sort of improvement?

Good question. I think it is also going back a little bit to what we said last year and the beginning of this year that we tend to be more back loaded with the profitability. And I mean this first half is actually very good. And so we are on track to deliver the full year. I think there's probably the normal sort of effects that we expect, pricing going ahead of volume decreases. We had very strong pricing in the first half that will carry on into the second. We will continue to do pricing as regular in the second half as well, but you have that boost of the first half. You have the ongoing NGP losses reduction, as we pointed out before. We expect it to be lower than last year again. And you have a specific effect this year, which is, as we pointed out at the half year, our AAACE region is AAA, Central Eastern Europe region has had a more difficult year first half because of this very strong comparator. Let's not forget that AAA and Central Eastern Europe have grown significantly ahead of everybody else in the 2 previous years, therefore, have a strong comparator. But that also has been compounded by the Middle East effect that we have through the geopolitical situation. But we do expect that to be normalized by the end of this year. So you will get a boost in the second half by that region normalizes. So operational gearing, NGP reducing and AAACE normalizing, that is where we look at the full year guidance.

Okay. Thank you. And I don't know whether you want to share it. This is in 2 parts, this question, on capital returns. So I mean, you committed to sort of growing the dividend and an ongoing buyback. So first question is, what could delay your course on delivering those shareholder returns? And then secondly, how do you think about the trade-off between dividends and share buybacks?

Let me do the first question, I leave second to Lukas. What could delay our course? I think we have a very robust program. I think we have a saying what is important to understand, this isn't 1 pillar that drives the strategy. This is quite a model with several drivers of performance. And I think I step back and look at it, I mean, it isn't that the last 3.5 years we haven't dealt with some unexpected headwinds. I mean as we're here in the consumer goods conference, the level of cost inflation we had all to deal with was unprecedented. I haven't seen it in 30 years in the consumer goods industry, yes? And we have to deal with that, and we still delivered the numbers that we promised 3.5 years, but we're completely ignorant what would be happening. And number two, in our case also, you will be aware that we are 1 of the few companies in the consumer goods space in our industry with less pressure, yes? I mean a lot of time have to be invested of extracting ourselves from Russia and also of sort of other countries. So it isn't that there weren't certain kind of storms that we had to master the last 3.5 years. I always want to be humble. You don't know what the storms that lie in front of us. But I still believe that given that our strategy really rests on several pillars, yes, I can't see anything that would blow us off course in any material way for the next 1.5 years and beyond, yes?

And if I may just build on that and then I'll come to the second comment or question, I think you've seen that we have a strong profitability now and a strong cash flow. We have a disciplined capital allocation as well. And I hope you've seen that we also tend to be cautious in terms of keeping always a bit of headroom where we go out and do the share buyback announcement. And I think that makes me very confident that we can support a year -- a multiyear share buyback going forward. Now to your second question on how do we look at dividends and share buyback, Stefan and myself, we look at this as an and company. We -- given where we are, as I just said, our strong balance sheet as well, we are confident that we can deliver both. And there are shareholders who value both elements, a dividend policy and a share buyback. And as I said before, I think we are committed to that progressive dividend policy and the share buyback on a multiyear dimension. And we will come back every year in terms of what the value is of those programs to make sure that we get it right for the company, but also for the shareholders.

Okay. Just on illicit trade, I mean I think Australia is probably the market where you're most impacted by illicit trade. How do you work with governments to change their -- the way they approach their regulation? What more can you do, what more can they do?

I mean I think it's a great question. And then in principle, we try. I mean reality is that nobody is benefiting apart from the wrong organizations, I mean, criminal organizations from this. In reality, the government loses tax revenue. The consumer gets a product that might be cheaper, but nobody has ever control whether this is a safe product to consume, yes? So let's be clear, this is the right thing to do, yes? What you would have, in many markets, the governments work with the industry, which is the right thing to do because ultimately it's just not something the industry can address and honestly what the regulator finds this hard to address, I think Australia is a bit -- on the continuum a bit more to the left, unfortunately, because you have a government that has a quite negative attitude towards the industry, yes? And therefore, has, in the past, quite collaborated less with the industry to stop the inflow of illicit products. What we're encouraged about, what we see the last 12 months, there's clearly, based on the public interest, a lot more pressure on the Australian government to do more about it, and we see more activities from the government. And wherever we can help, we'll help because I think there's a win-win situation for all parties involved.

Just checking if there are any questions from the audience. If not, I'll carry on. I think you said at the start, we're sort of 3.5 years in to a 5-year plan. So we're coming towards the end of that first phase. So a couple of parts to this question. What can we expect for the next phase? Will it be more of the same, do you think? Or are there some big opportunities out there which you feel Imperial would be able to sort of take advantage of once you've got through the first?

I mean you will know what you get as an answer, that is there's still 1.5 more years to run in the current strategy where this management team is absolutely focused on delivering because I think that's about our credibility, that's about the promise we make to our shareholders. We will deliver this strategy. That's where the attention goes, priority #1. Now we have 1 of the behaviors about inventing the future, building the future. So in the parallel, we are now looking at what the next years will look like for the company. But it would be too early to say what it looks like. I just leave you with 1 thought of it because you've known the industry a long time and you have observed us. I think what is exciting if look at the mix of the team is the Imperial that was part of the new strategy period in October 2025 is a different Imperial than the 1 that started this current strategy. We're better placed as a company within our industry, our core business is in a better place to run and grab opportunities. And I think, especially when we finish this current strategic plan, in the fall of next year, we will also be in a better place on our NGP business. And I think that culture change will probably be as difficult to prove to you in a 1.5 years' time, but it will have progressed further. So I'm quite excited that this is a rejuvenated Imperial, looking at the opportunities that will present itself in '25 and beyond to take advantage of it.

And then just on Imperial being in a better place, are you seeing that with your customers as well, the people that you deal with, are you seeing a different reaction to how they engage with you?

Yes they do. I tell you -- I can give you example. I've spent in the U.S., which is the largest market with 35%, there's a North American convenience store conference, yes? And 1 of the benefits if I now come and join the team on occasion, I talk with the key customers. And the #1 line they say to me is that, look, Imperial's woken up. You are really now a great partner. They would still want to get a better price, they will still want to have better conditions, but I think what is exciting and I think it's a wonderful validation of that challenger mindset, I've worked for challengers before. I worked for Burger King, trust me, when you're compete against McDonald's, you know what the challenge is, yes? The reality was I always believed in the industry that is just highly concentrated as ours, where our category is super important, if you're a U.S. convenience store, tobacco is a very important category, yes? And in many -- given that how concentrated our industry is, our trade partners typically crave for challengers because it keeps the industry honest, make sure that you as a retail partner get the right trade terms from everybody involved. So to certain extent, I felt we were running in an open door in many of our markets. Let's say, Hallelujah, finally Imperial is delivering what it's supposed to do. So I can keep some of the other players in check. And I think that's exciting. You feel that it's different today. It doesn't mean we're perfect. I want to be very clear. There's still quite some way to go and certain things we can't do because we're smaller, yes? But the exciting piece is that we're much more seen as a partner by our trade partners. And we talked about the Zone launch. Honestly, the great news was we're coming in a very crowded field, but there wasn't a single customer who said, no, I'm not interested. These things come, can I have it faster, and that's, for me, a validation that we are playing our role as a challenger.

Yes. As I said at the start, I think the shift in culture has been an excellent job. So I think there's only about a minute left on the clock. I don't have any questions. If there are any questions in the room, happy to take them. But I think there, I will end it. Thank you very much, Stefan. Thank you very much, Lukas. And thank you very much, everybody else.

Thank you, Damian.

Thank you.