Inchcape plc (IJCA.F) Earnings Call Transcript & Summary

Good morning, everyone. I'm Duncan Tait, Group CEO, and I'm joined by our Group CFO, Adrian Lewis. Here's today's agenda. I'll give some context and an overview of our first half performance. Adrian will then run through our results, and then I'll sum up and discuss our outlook for 2025. Today's presentation is available on our website, and a recording of today's session will be available later today. After the presentation concludes, we'll then take your questions. [Operator Instructions] And Rob, our Head of IR, will ask them on your behalf. I'll start with some market context. Overall, with TIV or total industry volumes in our markets down 2% during the period, we operated against a mixed market backdrop with challenges in certain markets offset by more resilient trends in others. In the Americas, TIV in our markets were up 5%. While we are seeing pockets of strong growth, many markets remain at or around historical lows. Chile, our largest market by revenue, remains stable with growth of around 2% during the period. There was very strong growth from markets like Colombia and Peru, which saw market growth of 23% and 18%, respectively. Costa Rica is weakening, with negative growth of 6% after periods of very strong growth. Elsewhere across the region, our other markets saw growth of over 20% in aggregate. In Europe and Africa, TIV was down 4%. Southern Europe was stable, with markets like Greece and Bulgaria flat during the period. Central and Northern Europe were weak, with Belgium, our largest market in the region, down 8%. Economies in our African markets remain resilient, which is supportive of the automotive industry in those markets. In APAC, TIV was also down 4%. Certain Asian markets, particularly Indonesia and the Philippines, were weaker, mainly in the premium sector, with Indonesia down 10% in the half. Hong Kong was down 20% in the context of a tough economic backdrop and comparator. There was a continued upcycle in Singapore, driven by certificate of entitlement dynamics with the market up 25%. Both Singapore and Hong Kong continue to be very competitive markets. Australia, our largest market in the region, was slightly weaker in the first half when it was down by 4%, but remains overall resilient. With that context in mind, let's look at our overall performance during the first half and the execution of our Accelerate+ strategy. We continue to focus on delivering shareholder value. In March, we published our medium-term targets for the first time, helping shareholders to track our performance against a clear framework of metrics to the end of 2030. Our medium-term targets incorporated a refreshed capital allocation policy, which includes dividend payments of 40% of adjusted EPS and investment in value-accretive bolt-on acquisitions as well as a clear commitment to ongoing share buybacks. We are already delivering our capital allocation policy, having returned GBP 220 million to shareholders in dividends and share buybacks during the first half. Furthermore, over the last 12 months, we have repurchased around 10% of our issued shares through buybacks. We continue to deliver from a strategic perspective, scaling our business by winning 8 new distribution contracts on a net basis and signing our first acquisition for 2 years. The acquisition of Askja helps us to enter Iceland, an exciting new market for Inchcape, bringing with it a number of powerful OEM relationships, including a brand-new partner for Inchcape in Kia. We also continue to optimize our retail network during the period, selling a number of our own sites to third parties. Against the mixed market backdrop I mentioned, we delivered a robust performance in the first half with improving quarterly sequential organic revenue growth in the period. Our balance sheet remains strong with 0.6x leverage, and this will enable us to continue to allocate capital to create value. And finally, on this slide, we are today reiterating our guidance for 2025 of another year of growth with stronger growth in the second half as we had previously expected. Regarding product launches planned for the second half, we are increasingly confident about a strong second half performance with OEM supportive of supply and where products are already launched, web traffic, customer inquiries and our dealer partners' orders are trending well. The second half will also be supported by ongoing actions we are taking on costs, inventory management and working capital. That's all for me now. I'll hand over to Adrian.

Thank you, Duncan, and good morning, everyone. Before I go into our results, I wanted to touch on the latest tariff dynamics, and I'm pleased to say we are successfully and proactively managing what is a fast-moving situation through the efforts of our internal tariff task force. This slide shows the areas of potential impact for Inchcape and the actions we are taking as a group to manage the situation. Consistent with our initial assessment, we see the potential tariff impact in 3 areas. Firstly, the direct impact. We see no material direct impact on our business, particularly given we have no presence in the U.S. and only a small proportion of our volumes are produced in that market. So any reciprocal tariff changes are limited, and we have no substantial relationships with U.S. OEMs. The second area is supply, and we are not seeing any material changes in supply into our markets on stock from other OEMs that would distort the marketplace. However, we are seeing some disruption to supply-related logistics in certain markets, although these are not material in nature. The third area is consumer demand, and we continue to see a mixed market backdrop. And as Duncan noted, and we are seeing some impact on demand with weaker Asian markets, particularly in the premium segment. We are monitoring these dynamics very closely, as you would expect, and we continue to proactively manage this situation. Our actions include continued discipline on costs and cash. As such, we are in process on a number of structural cost reduction programs as part of the optimized pillar of our Accelerate+ strategy. We also remain conservative on inventory management, and this is supported by our data-led approach, leveraging our DAP investments and our core competence in sales and operational planning and in some cases, particularly in the faster-growing markets of the Americas, where our conservatism on inventory has had a small impact on market share, we continue to see this as the right approach. And finally, our proactive and collaborative approach with our OEM partners at all levels of management is supportive of constructive supply discussions. And now on to our results for the first half, where we generated revenues of GBP 4.3 billion, down 4% in constant currency and down 3% organically. We produced an improving quarterly sequential organic revenue performance during the period of minus 3% in Q2, an improvement from the minus 5% in Q1. Tracking revenue, adjusted profit before tax was down 4% in constant currency, with interest cost savings offsetting a lower operating profit as a result of lower revenues. Operating margins decreased by 50 basis points in constant currency to 5.7%, primarily due to the deleveraging effect of lower revenues. Our balance sheet remains strong with net debt of GBP 374 million and leverage of 0.6x EBITDA, which is an increase from the December closed position of 0.3x, and that's as a result of free cash flow of GBP 72 million and the GBP 220 million of cash outflow of dividends and share buybacks. Adjusted basic EPS was up 2% to 35.5p, supported by the share buyback, and we delivered a strong return on capital employed of 27%. In summary, our performance during the first half is a reflection of our continued operational focus on executing in a mixed market backdrop and our strategic progress against the fast-moving tariff backdrop. And now let's turn to the key drivers of our top line performance. Revenues of GBP 4.3 billion were down 3% organically, including the impact of lower market volumes, as Duncan noted, and a 1% impact from mix headwinds, which I will cover in more detail on the regional slides. On a reported basis, revenues were down 9%, including a 5% impact from translational currency headwinds and a 1% impact from the disposal of a noncore retail asset in the Americas at the end of last year. Operating margins were down 50 basis points in constant currency. Gross margins were well protected and were materially flat with the prior year. And while we continue to be disciplined on costs across the group, there was a deleveraging effect of lower revenues impacting operating margins. And as noted earlier, we are also engaged in a number of structural cost reduction programs to ensure a more efficient overhead base where we have seen structural changes in markets as well as a reduced central cost base. Adjusted profit before tax was down 4% at constant currency, tracking our revenue performance and supported by an improved net finance cost, which I will cover later. And this slide highlights the impact of translational FX on PBT. We saw a strengthening of the pound against our major currencies, particularly in the Australian dollar as well as the material impact from the substantial devaluation of the Ethiopian birr in the second half of last year. This had a GBP 7 million PBT impact in the first half of this year, given the difference between the comparative rate in half 1 2024 before the currency devalued. And our usual FX sensitivity analysis covering the key currency pairs is included in our results announcement today. So now let's look at each of the regions, starting with the Americas. In that region, we saw an ongoing improvement in trading and growth. Market volumes were up 5% and while our organic revenue increased 3% with some supply phasing impacting our relative performance. This supply phasing was the result of our disciplined approach to inventory management and in the context of the tariff situation. This meant that we lost some share in certain markets, but we see the opportunity with stronger product cycles in half 2 to recover this over time. Please also note the comparative in half 1 2024 includes around GBP 40 million of revenue related to the disposed noncore retail asset last year. Our organic growth rate reflects the underlying growth of the region. The Chile market remains stable as was our market share with the successful replacement of the exited brands last year, and this reflects our strategy of a multi-brand portfolio creating resilience in our business model. There was very strong growth in key markets, including Colombia and Peru. Operating profit was flat year-on-year with operating margins down 10 basis points from half 1 '24 to 6%. The optimized pillar of our strategy includes a focus on optimizing our retail network. And in half 1, the Americas took steps to exit a number of retail locations where a more effective route to market was available, typically through third-party dealers. As such, these disposals generated a mid-single-digit gain on disposal, and you can expect us to continue with this strategy of optimizing our retail network to underpin our disciplined approach to costs and help us further drive market share. Looking ahead for half 2 2025, we continue to remain cautious regarding an accelerated market recovery in certain markets. However, please note the normal seasonality we anticipate to be further supported in the Americas with new product launches. Operating margins for the regions in half 2 are expected to remain resilient. Now let's turn to APAC, where we are seeing pockets of weakness in some markets, which have been exacerbated in the premium segment, where we are seeing more material headwinds. Our first half performance in the region is also lapping strong comparators, which will ease as we progress through the year. Market volumes across the region were down 4%. Our volumes were down 11% as we lap strong comparators and phase into highly competitive dynamics, particularly in Hong Kong and Singapore. Organic revenue was down 15%. Revenue was impacted beyond volume due to the weaker premium segment, where our business tends to over-index in the region, resulting in lower average selling prices. I want to be clear, this is a mix impact rather than any underlying deflation and was particularly visible in our results in Indonesia, the Philippines and Hong Kong. Our business in Australia remains resilient, and we increased our market share sequentially during the first half. And while the market is slightly weaker year-over-year, we are pleased with our relative performance in the context of a product cycle skew into half 2. And against strong comparators, our operating profit was down 29% with adjusted operating margins down 130 basis points to 6.4%. This was a consequence of the deleveraging impact of lower revenues, particularly in the premium segment, partially offset by our ongoing focus on cost management across the region. We continue to expect this year's performance to be weighted towards half 2, supported by new product launches in key markets, including the Subaru Forester in Australia, which has historically contributed around 50% of Subaru's volumes in that market. In addition, a number of Toyota products are being launched across the region, including the Noah and the Corolla Cross in Singapore. We are already seeing robust demand for these products based on our latest demand data and we, therefore, expect these product launches to be supportive of a better performance and market share in APAC in the second half. Finally, on the regional section, Europe and Africa. Market volumes were down 4% in our markets across the region, against which we delivered market share gains in certain markets. Our organic revenue was flat with a sequential quarterly step-up in growth during the period, supported by some price/mix tailwinds. This offset the impact of an inflated comparator driven by a strong order bank unwind last year. Our performance was strong in Southern Europe and the Balkans with the performance also supported by the ongoing maturity of the distribution contracts we have won over the last 4 years, including in Africa, where our business remained resilient. Against the impact of a substantial order bank in the prior year, operating profit was flat, with operating margins of 4.9%. This was a robust margin performance in the context of some dilution from new distribution contracts. For the second half, we expect to deliver moderate revenue growth compared to the prior year. There will also be an initial but relatively immaterial contribution from the Askja acquisition in Iceland in the second half following its expected completion during quarter 3. And this slide shows our income statement for the period. The group delivered adjusted operating profit for the period of GBP 247 million. Adjusted net finance costs declined to GBP 48 million from GBP 74 million in the prior year, driven by efficient working capital management, which drove lower average net debt and higher interest income in the Americas from improved cash balances. Net finance costs also benefited from lower interest rates. Adjusting items amounted to an expense of GBP 14 million. This included one-off items related to acquisition and integration costs of GBP 4 million and restructuring costs of GBP 6 million related to the structural cost programs I mentioned earlier. There were also adjustments in relation to the finalization of last year's disposal of a non-genuine spare parts business in Chile of GBP 4 million. Adjusted PBT was GBP 200 million, 4% lower on a constant currency basis than last year. The effective tax rate decreased to 29.5% with changes to profit mix resulting from the evolution of our strategy. And adjusted EPS was up 2% to 35.5p due to the impact of our share buyback program, which have reduced the share count by 10% over the last 12 months. Our net debt at the end of the period amounted to GBP 374 million. We generated GBP 72 million in free cash flow. Included in this was a GBP 53 million working capital outflow. This is in the context of an increase in inventory from certain OEMs as we manage planned production outages to allow for assembly line upgrades where we are having to hold some stock for slightly longer than we would normally. This is very normal and helps us to ensure continuity of product offer in the market, and we anticipate that this will unwind. You see this more clearly on the balance sheet, where inventory increased from the end of last year from GBP 1.9 billion to GBP 2.1 billion. Cash outflows of GBP 220 million related to dividends and share buybacks and GBP 36 million to FX and other items. It is worth noting that we generated GBP 9 million in cash flow from capital recycling, in particular from the sale of noncore retail assets and property during the period. This will continue to be a regular feature of our financial dynamics as we look for opportunities to optimize our infrastructure base and our route to market as we further leverage the third-party retail network. This will free up capital to further invest in growth and drive returns. Group leverage was 0.6x at the 30th of June 2025, up from the 0.3x at the end of FY '24, when leverage was particularly low following the receipt of proceeds from the sale of our U.K. retail business last year. Given our usual second half skew on cash flow and this year, the particular half 2 weighting of revenues and profits, we expect to deliver 100% conversion of profit after tax to free cash flow for the full year, in line with our medium-term guidance. Now on to capital allocation, which we updated in March. We will continue to pay dividends at 40% of earnings. Our policy is then to balance capital allocation between our commitment to ongoing share buybacks and value-accretive acquisitions. We are executing on both of these elements. Having recently signed our first acquisition in nearly 2 years, we completed a GBP 150 million share buyback program earlier this year. We have also acquired around 150 million shares of our current GBP 250 million buyback program. We remain disciplined on capital allocation and we'll continue to carefully assess the balance between share buybacks and M&A, and this will help to drive EPS growth and value for shareholders. I will conclude my section with a view for the full year on key modeling items in the context of our second half-weighted performance this year against easing comparators as we progress through 2025. Firstly, in line with our medium-term guidance, we expect to deliver resilient operating margins of around 6% and profit after tax to free cash flow conversion of around 100%. We expect net interest to be lower than the prior year, with the drivers impacting our performance for that metric in the first half are expected to continue into the second half. And on currency translational effects, if today's FX rates are rolled forward for the second half, it would have a negative impact of around GBP 15 million on profit before tax for the second half. And this follows an impact of GBP 17 million in half 1, as I mentioned earlier. And finally, we continue to expect our effective tax rate for this year to be around 30% to 31%. And finally, for me, here is a reminder of the medium-term targets we announced in March. Inchcape is well placed to deliver on these medium-term targets, supported by a highly diversified and scaled business. During the first half, in context of a fast-moving tariff situation, we continued to execute against our Accelerate+ strategy with our disciplined capital allocation approach, helping to deliver our target of more than 10% EPS compound growth rate over the medium term. That's it from me. I'll now hand back to Duncan.

Thank you, Adrian. Let's sum up and discuss the outlook. Firstly, let me remind you about the key elements of our Accelerate+ strategy, which we launched last year. Accelerate+ has been designed to help scale our business through value-accretive acquisitions, new distribution contracts and our expansion into adjacent segments. The strategy is also focused on optimizing key elements of our business to be the most efficient and effective route to market for Inchcape and our OEM partners. By scaling and optimizing, we aim to deliver on our goal of achieving 10% market share across our markets. Accelerate+ is supported by our ongoing investment in technology, which enables smarter decisions and deeper insights to support Inchcape's OEM partners in each region. We are already implementing Accelerate+ across our business with good strategic progress in the first half of 2025. And we'll continue to access growth through distribution contract wins; and over the last 3.5 years, we have won 53 new contracts. In the first half, we were awarded 9 distribution contracts, with existing OEM brands, including New Holland in Ethiopia and Kenya, BYD in Lithuania and Latvia, DFSK in Honduras as well as a new partner, Smart in Colombia, Uruguay and Ecuador. We also closed Iveco in Hong Kong. We continue to rationalize our brand portfolio to optimize our market presence and leverage our infrastructure in the most efficient way, with a view to ensuring our contracts provide value and growth for Inchcape and for our OEM partners. To that end, in H1 2025, we mutually exited an immaterial contract with Komatsu in Ethiopia, and we expect to exit further immaterial contracts in the second half and beyond. On M&A, we have a healthy pipeline of value-accretive bolt-on acquisitions to help support future growth. Earlier this month, we announced the bolt-on acquisition of Askja and associated businesses, Iceland's leading automotive distributor with a 16% market share. Iceland is an exciting new market for Inchcape, with this acquisition further scaling our geographic footprint and strengthening the group's OEM partner portfolio. Askja's OEM relationships include Mercedes-Benz, a new partner for us in Europe; and Kia, a new OEM partner for us globally. Finally, on this slide, we continue to optimize our retail network. This is a fundamental element of Accelerate+ and a key part of our role as a leading automotive distributor, ensuring we have the most optimal route to market and leveraging our third-party retail network. Optimizing our retail network and reconfiguring our physical footprint brings us a number of important benefits. It enables us to drive higher market share as well as lower the amount of capital we employ, which supports higher returns. It also helps us to deliver more efficiencies and scale our retail network. In the first half, we reconfigured 8 retail sites, and we'll continue to look for further similar opportunities in the future. On to our outlook for 2025. We are today reiterating our guidance for this year, originally disclosed at our 2024 results on the 4th of March 2025, with another year of growth expected compared to the prior year at prevailing foreign exchange rates. Our guidance includes the expected impact of tariffs on supply, demand and the competitive environment in our markets. We expect to deliver high EPS growth relative to profit growth in 2025, driven by our operating performance and capital allocation. We have increasing confidence that our growth performance in the second half will be stronger than the first half. This slide shows the key underpins to our second half performance. Firstly, there are a number of product launches planned across various brands and markets in the second half. Many of these are already underway and are on track with robust demand evident and order banks building based on our latest data. These product launches will help us deliver a stronger performance in the second half in Australia, Asia and the Americas. And finally, we continue to focus on managing costs, inventory and working capital and further optimize our retail network. So to summarize our performance in the first half of 2025. We delivered shareholder value supported by our disciplined approach to capital allocation. We achieved good strategic progress and delivered further operational execution, ensuring we maintained a strong balance sheet. These factors enable us to reiterate our guidance for 2025, supported by our growing confidence for the second half of the year. And finally from me, Inchcape is well placed to deliver on our medium-term targets, supported by our clear and compelling investment case, which is based on our highly diversified and scaled business. Powered by Accelerate+, Inchcape will strengthen our position as the leading global automotive distributor. Our business is characterized by sticky long-term relationships with OEMs in smaller scale and more complex markets, supported by our differentiated technology capabilities. Our business model drives our attractive financial profile, which is capital-light with resilient margins, is highly cash generative and delivers high returns. This financial profile enables Inchcape to deliver a disciplined capital allocation policy, ensuring we drive value for our shareholders. This investment case will help us to deliver on our medium-term EPS target of in excess of 10% compound annual growth over the next 5.5 years. That's it for the presentation. So let's take your questions firstly from the phone lines and then from the webcast via Rob. [Operator Instructions]

[Operator Instructions] We'll now take our first question from Arthur Truslove of Citi.

Just a couple from me, if I may. So firstly, on my math, if you are to grow full year PBT in line with what you've said guidance-wise, you're basically going to need to deliver around GBP 245 million of second half PBT. So that's obviously up around GBP 30 million or just under 15%. It would be really helpful if you could just run through what the key building blocks of that would be. Second question I had was around Europe. Clearly, margin is very strong and unexpectedly strong, I would say. In the previous year, your margins were obviously underpinned by the unwinding order bank. And my question here is whether there's anything that is unusually or unsustainably positive in that margin you've delivered in the first half this year or whether actually your perception around the sustainable margin is slightly higher than you thought.

Arthur, thank you very much for the call and for being fast out of the blocks. I'll ask Adrian to cover both those questions.

Arthur, thank you very much for the question. So let me start with the building blocks. So you're absolutely right, in order to deliver on our guidance of growth for this year, the second half will indeed need to be around GBP 245 million, given we've just published a number of GBP 200 million for the first half. If I think about the key building blocks of that, I'll start with the Americas, where seasonally, you see a natural half 2 that is somewhere between 10% to 15% better than the first half. We've got an Asia Pacific business, which we've been consistent all year with that we would expect to see product cycles supporting growth in the second half. Those are the 2 components that will really support a better second half than the first half and enable us to get to our full year guidance. You will have a small offset against that with Europe and Africa, which is typically smaller in the second half versus the first half, but they're the 3 key building blocks for you to consider. And all of that is going to be underpinned as well by the work we've been doing in the first half around cost, around cash and around working capital management, together with the further optimization of our retailer facilities. And to that point, you asked about margins, if there was anything unusually positive. We were quite transparent and clear in our narrative earlier: there was a mid-single-digit gain on disposals reported within the Americas region relating to the 8 sites that Duncan mentioned in his voice over to the presentation. That was supportive. That would be very normal. And as you know, over time and over history, we've regularly seen that sort of degree of support within the margin profile of our group.

Adrian, sorry, it's a bit -- what I was asking was more around Europe. So obviously, you did a very strong 4.9% margin in Europe in H1. And you talked about a sustainable effort there of sort of, let's say, low to mid-4s. And I guess my question was, clearly, the 5.2% you did in the previous year was very strong because of the order bank unwind. I guess what I was getting at was, is there any -- is that continuing? Or is the sustainable margin just higher than you thought in Europe and Africa?

Yes. Sorry, Arthur, I didn't catch the Europe question. I thought it was a more generic question around overall margin. So look, Europe has performed very well in the first half. We're lapping some really tough comps. So we're really pleased with the progress and momentum in that region. I'd still say, over time, we would return to that mid-4s region for the margins in the Europe and Africa region. We can continue to see growth from those contract wins that we've been signing. They're going to be slightly dilutive to the current trading momentum. And so I think we'd stick with our guidance of over time, we'd return to that mid-4s range.

We'll now move on to our next question from James Wheatcroft with Jefferies.

Just a quick one on the sort of the -- just some digital parts platform in APAC. I just wondered if you could give us an update there. I haven't heard from that for a little while. And then also maybe just sort of bigger picture, what's the sort of overall strategy on parts?

Very good. James, I think they're coming to me. Thank you for the questions. So look, in general, for us, parts is a really high-margin business for us. And clearly, we want to continue to expand it. In general, we'll do that by gaining more and more share, which is accretive for our parts business. Now you specifically asked about digital parts platform. Let me first give you a sense as to where it fits into our business. So our objective is to keep people in our parts ecosystem forever, this OEM original parts ecosystem forever. We do that using DXP to engage customers to keep them coming back into our dealers and our third-party dealers. We also optimize our profitability through our parts pricing algorithms. The more scaled our business gets, the more we need algorithms to be able to cope with the volume of parts we would see in a market, the individual volume of parts. Then we use our algorithms to optimize the inventory we land in countries, reducing airfreight, which is good for reducing our CO2, but also better for margins. And then if you do escape from everything we've done in that first phase that I've spoken about and use third-party aftersales, independent aftersales, we want those independents to use as much OEM original parts as they possibly can, and that's where the digital parts platform fits in. So it is now in Australia, it's in Hong Kong, it's in Singapore. We are seeing slightly higher parts sales in those margins accordingly. We're looking for other markets in APAC to expand that platform, too. And we will, over time, introduce that into our Americas business. So -- and then the final thing I'd say is the bulk of the development on that platform is now complete. So for us, it's about execution in markets. But you have to see it as part of the big picture of what we're trying to do to keep growing our parts business. I hope that answers the question, James.

We'll now take our next question from David Brockton of Deutsche Numis.

Two questions from me as well. Firstly, going back to the profits bridge. Is it possible to quantify the expected benefit of management actions to costs in H2? I noticed there was a restructuring -- exceptional restructuring cost in the first half and sort of keen to understand how that evolves going forward. And then secondly, in terms of Asia, there's a lot of moving parts that have sort of impacted the business through the first half. I was wondering if you could just focus on the greater competition dynamic you're seeing there. What's driving it? And what is your assumption as to how that will evolve going forward?

Do you want to do one and I'll try two?

Sure. Okay. Just in terms of the profit bridge and the value of the restructuring items. So typically, when we do these sorts of restructuring, we're thinking about how we're setting ourselves up in our markets. Have we got the right resourcing levels particularly where we've seen structural changes in some of those markets? And we've taken some restructuring charges this year to make sure we're rightsizing those resource levels, particularly in parts of Asia and centrally. Typically, they come on a 1- to 2-year payback level, and you can expect the restructuring charge in the second half to be broadly consistent with what you've seen in the first half as those activities continue. Duncan?

Thank you, Adrian. David, so just in terms of your second question, which is competitive dynamics in our Asia business. Look, I'd say a couple of things. One is in the premium segment, as Adrian mentioned earlier, we are seeing our premium segment decline faster than some of the markets, and that's an industry trend. And if I give you an example, in Indonesia, the premium segment is down about 40% year-over-year, Philippines dropping 15%. Now to your topic then about competition, look, we're seeing Chinese competition in markets like Hong Kong and Singapore. Our market share is down a little bit in the first half, but we were clear earlier on this year, we expected our second half market share to be better than the first half. And our second quarter market share in Singapore was better than market share in the first quarter. We're getting the supply of the products we need to plug some gaps in our portfolio, and we'll introduce those in -- during the second half. Look, we welcome competition. And -- but we have seen our market share decline a little bit in the first half, improving into the second, and we'll see better share in the second half. I hope that helps with that answer.