Kerry Group plc (KRZ) Earnings Call Transcript & Summary

Good morning, everyone, and you're all very welcome here to our Technology and Innovation Center here in Beloit, Wisconsin. We have an action-packed day in store for you today, where you're going to see a little bit of our world. That's the food and beverage industry and why we are the go-to when it comes to solving our customers' and the industry's most complex challenges. I'm going to kick off here this morning with the main hall presentation. That will be followed by a number of deep dive interactive breakout sessions. Then Marguerite will bring us through the financial targets of the medium-term plan, and then we'll close out the day with a Q&A session. So starting first with my key messages for today, and there's 3 of them. Firstly, we operate in a highly dynamic market, particularly for Kerry. And whereas you might see the headline market data may not be overly exciting, the level of innovation and renovation opportunities across categories where we operate in, they really provide tremendous opportunities for growth for our organization. Secondly, we have the industry's most relevant technology portfolio and business model. We are the best in the business when it comes to solving our customers' problems. And thirdly, we're very much in execution mode, delivering on our strategy, delivering on our financial performance. So now let me take you through what Kerry looks like today and how we got here, both through the lens of strategic business development and our financial performance. So when we talk about strategic business development, it has been very much centered on making our business fit for future, strategically and systematically building out our portfolio, evolving our portfolio to be that top-of-mind partner with the capability to solve the food and beverage industry's most complex challenges. We've completed our portfolio transformation, as you're all aware, just under 2 years ago, becoming a pure-play B2B Taste & Nutrition company. We've built out our biotechnology capability, establishing our new center of excellence for biotechnology in Leipzig in Germany, expanding capacity and capability for enzyme manufacturing across 3 regions and embedding biotechnology right across our organization. We've expanded our global footprint, especially in emerging markets with new locations in Asia, in Africa and the Middle East and LatAm. We've developed new and next-generation technologies from Tastesense, sugar and salt reduction technology, our industry-leading protein masking capability, new enzymes, new pre- and pro and post-biotics and new-to-the-world natural food protection preservation systems. We further developed our foodservice business and continued to evolve building out our retailer go-to-market. We initiated Accelerate 2.0, which is all about optimizing our footprint, while at the same time, expanding digital excellence right across our organization. In conjunction with that strategic business development, we've also been delivering strong financial performance. We've delivered revenue volume growth of 3.8% over the last 4 years, over 300 basis points of market outperformance. On EBITDA margin, we've expanded margins by 320 basis points since 2021. And we have an EBITDA target of 20% to 21% by 2030. On EPS, we've delivered high single-digit constant currency EPS growth, 8 of the last 10 years, including 2024, 2025, and we're on track again here for 2026. So volume growth, EBITDA margin expansion, high single-digit plus EPS growth. That's our algo. So now let's take a look at our business and look at our business profile today. So firstly, looking through the lens of geography. Over half of our business is in the Americas. And we have a fantastic track record of industry-leading growth in this region over many years. And for those of you that have been here in the past, you know a big part of this is the capability, the energy, the passion of our people. And I think you're going to see that come to light again today. At EUR 2.2 billion, we're one of the largest in emerging markets, and our business model is particularly relevant to customers in emerging markets. On end-use markets, we work right across all categories, all end-use markets across food and beverage. On customer segmentation, we're split pretty evenly across global, regional and local customers. We get asked this question from time to time. The reality is we have been growing our business across each of the customer segments for the last several years, and we continue to see opportunity to grow our business across each of the customer segments for the next years ahead. From a channel perspective, again, we have a phenomenal track record on foodservice. We're as excited as ever about it. And the opportunities in retail are as strong today as they ever have been, primarily driven by the renovation opportunity. On technology, we have a dedicated session today on our taste leadership, and Albert will shortly bring us through how our biotechnology capability is driving our innovation platforms. So we're designed to master complexity, but how does all this come together and translate into value for our customers. Our differentiation is based on 3 key elements. Firstly, our extensive technology capabilities. We have a broad and deep technology portfolio. But what might be underappreciated is how our technology portfolio is integrated between taste and biotechnology and how biofermentation and biotransformation are key underpins of our portfolio. Secondly is our holistic food and beverage application expertise. Our focus and dedication has always been on food and beverage. We know final product better than anyone else in the industry. Our customers put huge value on this. And the customer examples that you're going to see throughout the course of the day, that application expertise has been a key unlock in solving their challenges. And thirdly is our integrated solutions leadership. We have that ability to layer technology, not just to layer it for layering's sake, but to layer it to create incremental value, to create incremental benefit for our customers. You will see through the course of the day, we have dedicated channel specialists and experts across every aspect of new product development. So we're built to master complexity, and it's the combination of these 3 elements that really set us apart in the industry. You might have seen from the video earlier how the market landscape shifts are really driving more opportunity than ever. Dynamics like health and wellness, regulatory, GLP-1, the digital consumer, all these elements are pushing customers to improve the quality of their products. The impacts from inflation means that consumer affordability is a key priority for our customers and a key priority for our customers to address, but while at the same time, not compromising on quality or not compromising on taste. The geopolitical disruption, the supply chain disruption are adding even more pressure, forcing customers to look at their formulas, something they wouldn't even have dreamed to have done a number of years ago. So all these industry dynamics are leading to an increased level of innovation and renovation. And all these market shifts provide opportunity for Kerry. So firstly, looking at innovation. And John and Elizabeth are going to take us through some of the key dynamics here in North America. They're going to talk to us about innovation with CPGs, innovation with retailers, innovation with emerging brands, Mac & Cheese ice cream and cottage cheese everything. Renovation, it's increasing across all markets, first and foremost, driven by the consumer. We are the go-to in the industry when it comes to renovation. We've sized our addressable value-add specialty ingredient market at about EUR 87 billion. We see this market growing to over EUR 100 billion in the next 5 to 10 years, primarily driven by that renovation opportunity. So we operate in a highly dynamic market. And at Kerry, we're particularly well positioned to capitalize on that opportunity. So now here comes the really exciting part of the day. I'm just going to outline here the 5 breakout sessions that we have in store for you today. So the first one is accelerating innovation through biotechnology. You're going to see a number of exciting and potential game-changing innovations, how we're using next-generation modulation for Nutrition & Health. How we're using biochemistry to solve the raw material scarcity challenge. How we're using biofermentation to create new clean label solutions like natural colors, preservation without sorbate and taste without flavor. Next is renovation for dynamic market needs. We talked 2 years ago about the penetration opportunity and how that renovation opportunity was becoming a bigger part of our pipeline. Today, here in North America, renovation is greater than half of our overall project pipeline. We're seeing it across all customer segments and all EUMs. We've grown our snacks business by 17% over the last 2 years, primarily driven by that renovation opportunity, primarily driven by salt reduction. Despite all this, 80% of the products in the snack category still contain sodium levels above WHO guidelines. So a huge opportunity continuing to be in front of us out into the future. You will see through the examples throughout the course of the day that renovation equals complexity, and we're built to solve complexity. The next breakout session is pioneering for next-generation taste. We have the broadest taste technology toolbox in the industry. But what really sets us apart is how we integrate flavors with food science, with biotechnology and our application expertise to deliver next-generation solutions. You're going to see examples like Xperience, our natural fermentation-based taste enhancement system, our Tastesense sugar and salt modulation technology, our industry-leading masking technology, protein masking technology, and we have a real leadership position when it comes to protein masking, solving one of the biggest barriers to consumer adoption, and that's making high-protein food and beverage products taste fantastic. Next is foodservice and our structural tailwind. We have a fantastic track record here, growing on average mid-single digit over the last 10 years. We're as excited as ever about the foodservice opportunity. We're in a completely different league when it comes to foodservice, and our business model gives us a sustainable right to win. Then finally, it's about how our digital transformation is enabling our business strategy and our financial delivery. We've piloted and proven several initiatives right across the organization. Now it's about scaling, scaling across commercial, R&D, supply chain, manufacturing and business functions. It's about accelerating value delivery, and it's about solving real business challenges better, faster, more efficiently. I'm going to hand you over now to Dr. Albert McQuaid, our Chief Science and Technology Officer, who's going to talk to you about innovations that we're using to solve today's challenges and also talk to you about the next generation of new technology that we're developing to solve future customer challenges. Over to you, Albert.

Thank you, Edmond, and again, welcome to Beloit to everyone. As Edmond has mentioned, our consumers and our customers are facing a lot of challenges. And with those challenges, they need a partner. They need a partner that can help them win and help them solve those challenges. So over the last 10 years, we have invested over EUR 3 billion in our research, development and application ecosystem. We're currently investing EUR 315 million in RD&A, and that's to support over 1,300 scientists that are working with our customers wherever they may be. We intend to continue this. We intend to continue to evolve. And so when we go forward, we intend to move our investment in R&D, which is circa 5% today to 5% to 6% of revenue. And what's really important in this is this will allow us to connect science, technology and application for growth in various categories, channels and geographies. You'll see later today our digital session. We're going to use digital and AI to allow us to capture the commercial knowledge, the formulation knowledge and the analytical knowledge that will allow us to expand our capability. And that enablement of our capability will allow our scientists to focus more on solving customer challenges for the future. Edmond mentioned our broad technology portfolio. We have a leading Taste technology portfolio that's built on vertically integrated natural products. We've complemented that with -- sorry, and 40% of that Taste portfolio is delivered through biotechnology. We've complemented that with our biotechnology solutions portfolio of enzymes, of proactive health solutions, of biopharma technologies and food systems. And what's really important is each of these portfolios is powered by biofermentation and biotransformation. And this allows us to create integrated, scalable, sustainable solutions addressing customer challenges. So as Edmond mentioned, these technologies are already being used today. We have the industry-leading sodium reduction portfolio. We combine fermentation knowledge and flavor science knowledge to allow sodium reduction going to those WHO levels. We have best-in-class sugar reduction technology. We combine advanced lactase technology with our Tastesense portfolio to allow customers to reformulate products. We have the most advanced protein masking solutions that allows our customers to formulate nutritional dense products. You'll see a number of these masking solutions today as you go around the breakout sessions. And what's really critical and what is really unique about these systems, and this is feedback that we've had from our customers. What our systems allow is customization at speed. We are the only flavor house that offers customization of masking systems through a unique sensory and analytical processes to pinpoint specific off-notes that need to be addressed. We have best-in-class green technology. As a from-food-for-food company, we use natural substrates, not solvents or chemicals to deliver the masking. And thirdly, we are -- we have the industry-leading production stability. Our masking portfolio can withstand extreme processing conditions such as high heat, high-pressure extrusion or UHT. And this is due to the unique production process how we develop the products. We're developing the next generation of clean label preservation, and this has been rolled out in bakery and meat and into dairy and beyond, and we'll show later into beverage. And we've new-to-world fermentation taste solutions, our KerryXperience portfolio. This is a new-to-world savory solution. It naturally restores the authentic taste and complexity that you may lose in large-scale food production. So we have these and you're going to see these today. But we're looking for the future, and we're looking to what is needed for the future. We have identified 5 key areas of focus for the company. And each one of these has a potential opportunity of over EUR 50 million for Kerry. Firstly, we are looking at modulation for Advanced Nutrition, make healthier products taste better. We're looking into fermentation and how we reimagine natural, using biotechnology to replace ingredients while maintaining safety, quality and shelf life. We're exploring the biochemistry for tomorrow's scarcity, creating new solutions for a world facing increasing pressures on raw material and resources. We're looking at future-proof preservation. We're using science and data to predict and prevent and reduce food waste across the food system. And lastly, we're looking at food as a therapeutic, how we can develop nutrition solutions that can play a more important and more proactive role in human health. Later today, we're going to have an innovation session, and we're going to focus on 3 of these key areas. And we're going to talk you through technologies that we're bringing -- we're developing that will be the next generation of technology that we want to bring forward to the market. So in summary, we're increasing our investment in R&D. We're deploying it better, faster and with greater precision across the global food and beverage markets. We are solving the challenges of today, but we're also building the technologies that will address tomorrow's challenges. This is how Kerry will continue to differentiate, innovate and grow. So with that, I'll hand over to Elizabeth.

Thanks, Albert. Welcome again to North America. Here, we live in an incredibly dynamic market. And here every day, we have one job, and that's to answer the question of what will 385 million consumers want to eat and drink next. And I can tell you here, at least, the answer will keep surprising us. For example, we live in a market where a drink can be launched at a soda shop down the road at a mom-and-pop restaurant. And within weeks, it's a national phenomenon. We live in a market where a chain restaurant with 40 locations can desire and demand to have 400. And we also operate in a market where something can be popular on TikTok on Tuesday and end up in a project brief here in our building by Friday. And while that might seem incredibly wild and different, here, we just call it an average Wednesday. And that's what you're going to see here today. And what makes this market so exciting is that it's fast-moving, it's fragmented, and it's constantly reinventing itself. And this pace is staggering for us. New flavors, new sizes, new collaborations, new products appear on the shelf every single day. Over the last 2 years, 17,000 new products have been launched across 4,400 brands. And that means 26 new products a day can be tried by consumers every single moment. And these new products can be enormous. When something here launches, it scales fast. Circana's top 200 new retail product launches amounted to $6.2 billion in sales in the first year alone. And for emerging beverage brands, in particular, they can explode overnight, and you'll see many examples here today. A category can emerge, a challenger can appear, and they can become very meaningful businesses. And so what we say here is today's niche can easily become tomorrow's category. And this is also changing how consumers discover these new products. Today, 1/3 of American consumers are discovering these new products using AI. Only a few years ago, discovery would have happened on the shelf or on the menu, and now discovery of these new products can happen anywhere. So whether it's a social post, it could be a content creator, a viral trend, it can show up on the shelf and menu in hours. So the distance between inspiration to purchase has never been shorter and the speed that these trends travel has never been faster. But we also know the consumer here is challenged. It is a challenging environment. And 79% of our consumers here are trading down. But all this complexity and disruption is creating a very different consumer. So while 79 are trading down, 40% of those are also splurging. So the same consumer that's buying a retailer brand pasta is also buying a $4 functional soda. So they're trading down in one category, and they're spending in another. So it's value and premium, it's not value or premium. And what that means for us is consumers are becoming much harder to predict. But what makes it also fun is that they're becoming far more interesting to watch. And when 385 million consumers here start redefining what they want, some very unusual things start to happen. So I'm going to give you a few examples that you'll see also throughout the day, but that are part of some unusual disruption in our businesses. First, let's take refreshers. It's probably one of the most exciting things happening in beverage right now. A decade ago, this was not even a category. And today, it's one of the most fast-moving beverage dynamics we have. It's hard to define what is a refresher. Is it an energy drink? Is it a tea? Is it a functional beverage? And the answer is yes, it's all of these things. So consumers took bits and pieces of all their beverages they enjoyed and they made something completely new. And it's fascinating actually just how quickly this has happened. A category that barely existed a couple of years ago is now everywhere. Every foodservice operator wants a refresher strategy, a QSR, a fast casual chain and even casual dining, and you're going to see that here today. And what's interesting about this dynamic is this means consumers aren't actually buying a beverage. They like refreshers because they're buying an experience. It's a pick me up, it's a reward, it's a moment, and they are willing to pay a premium for it. So they didn't just adopt a new product that launched. This has created an entirely new opportunity and a new beverage occasion. And we couldn't talk about dynamics in North America without talking about protein. I hope you all enjoyed your baskets in your hotel room that were a little protein loaded. You might have noticed. 10 years ago, protein meant a tub of powder at the gym. And today, it's protein coffee, it's protein lemonade, it's protein chips, cereal and even protein water. And I'm confident most Americans would put protein into everything that's not nailed down. And underneath this humor about protein on the shelves, the important thing to know, though, is this demonstrates a huge shift. Protein has escaped sports nutrition. It's become breakfast, it's become snacking, it's become indulgence, and it's become a lifestyle. And what's really important here for us is a single ingredient has now become a daily consumer expectation. And then we have pickle. Maybe one of the best flavor trends of the year is pickle. Pickle chips, pickle popcorn, pickle ranch, pickle sunflower seed and even pickle beverages. And I'm confident no one sat in a meeting 10 years ago and said, "I've seen the future and the future is dill." But here we are, and consumers aren't just buying flavors that they love like pickle, they're buying discovery. They're buying things that are interesting enough to talk about with their friends. And that means apparently, sometimes that means they're buying pickle as well. Innovation also doesn't have to be here something new. It can be sometimes America collectively gets together and decide something that's old is cool again. So take cottage cheese as an example. It was a forgotten product, an ingredient in the back of your refrigerator. Then social media happened. Suddenly, the entire American population woke up and said, "Wait, it has protein in it." And now we have cottage cheese ice creams, cottage cheese dips, pasta sauces and breakfast bowls. Now we have desserts, pints of frozen desserts with 40 grams of protein per serving. And what this represents is that health and indulgence used to occupy different ends of the supermarket, but now consumers are asking why do I have to choose. And lastly, my favorite, we have Macaroni and Cheese ice cream. Yes, Macaroni and Cheese ice cream, and it shouldn't work, but that's the point. Consumers now don't define categories in their traditional sense. They don't define categories the way we define categories. All they care about is whether the product is delicious, interesting, relevant and worth trying. So beneath all this fun of pickles and macaroni and cheese ice cream, there's 3 main takeaways for us and for our business. First, all of this change in the market creates incredible opportunity. Every shift that's happening with consumers, channels, economics, regulation creates an opportunity for innovation and renovation. Secondly, all of this complexity drives the value of partnership with our customers. Our customers rarely need a single ingredient solution anymore. They need a full integrated outcome, something that works for the consumer, something that works on the label, something that works in the manufacturing process and also, of course, works economically in today's environment. And lastly, and most importantly, speed wins in our market. In a world where today's niche is tomorrow's category, identifying these trends and these opportunities is not enough. You have to commercialize it, and you have to do it very quickly. And that means this is a very good market for Kerry. So all this opportunity and all of these new dynamics only matter if you're prepared and you've built a business to capture it. And so I want to turn it over to John now, who will talk to you about how we've done exactly that. John?

Good morning, and welcome to Beloit. Over the last 25 years, I've had the pleasure to work across all of Kerry's developing markets and developed, and I had the privilege to lead 3 of the regional businesses. And Elizabeth and Edmond, they spoke about how dynamic North America was. But not only is it the most dynamic, it's also the most exciting and scalable market on this planet. And I keep get blown away with the level of opportunity that exists here every day. And today, I'm going to bring you through 3 things. The first is an overview of our business profile in North America. The second is bring you through some of the challenges that our customers are having every day. And finally, how Kerry is partnering with our customers to help solve those challenges. So over the last number of years, Kerry has had industry-leading growth here in North America to build a business that today is over EUR 3 billion. It's a diversified business that constantly is evolving in this market. And if we look across our end-use markets, our customers and our channels, both foodservice and retail, we have a breadth of business that gives us in North America, a unique view on where acceleration of growth is happening and where disruption is also occurring in this market. And regardless of the segments, the customers, the same realities exist across the whole spectrum. Customers' expectations continue to increase. Innovation cycles are getting shorter and the complexity that our customers are facing every day is increasing. And the best way to understand this is through understanding the challenges that our customers are trying to solve. So I'm going to bring you through now 3 of those challenges that our customers are facing. And the first one is retailer brands. Retailers of the brand -- retailers' brands of the past. You just follow national brands. You follow the CPGs. Today, they're competing directly with them. And 80% of consumers are buying retailers' brands regularly. And retailers are building these brands. They're investing in quality. They're investing in improving the nutrition of their products, and they're investing in innovation. And for the CPGs, this is a completely different competitive environment to what they faced only a few years ago, but it also raises the stakes for the retailers. They need to improve the quality, the taste of their products. They need to improve the nutrition of their formulations. They need to innovate faster, and they need to differentiate their products from the national brands. We're going to move now from retail to foodservice. And in the past, restaurant growth was measured in decades. Today, it's measured in years. And finally, consumers have been rewarding smaller, fast-growing niche brands and the challengers have been coming for their share of the pie. And over the last 3 years, these challenger brands have taken 1.5 percentage points of market share from the CPGs. And the market share is switching. And they're winning because they're identifying consumer needs, and they're creating occasions for the consumer. They're building communities of new consumers even before they scale their business, and they're winning. They're winning because they're reshaping the category and they're moving faster than the incumbents can move. So all these examples, they may look very different, but it all comes back to the same facts. Change in North America creates opportunity. The complexity, the more complex this market becomes, the more our customers regardless of the size, regardless of the category, they need to partner with us, and solutions at speed wins, and that is where Kerry is at its best. Thank you.

Good afternoon, everybody, and welcome to our final session of the afternoon. But before I start, just thank you very much, Shane, Stuart and the broader team. That was a really engaging session, and I think it very much brought to life how digital is helping us to really solve some practical business challenges and to deliver value. I believe it's going to be a significant driver as we move forward in the coming years, but more on that in a few moments. So now moving to our financial session, and I would like to give you an overview of, firstly, our track record of strong business performance; secondly, our growth-led financial model; and finally, our disciplined, balanced strategic capital allocation framework. So beginning first with our strong track record and looking at our performance across the 3 key pillars of growth, returns and sustainability. Starting firstly with growth. As we've mentioned earlier this morning, we have delivered 3.8% average volume growth over the past 4 years. It's a strong market outperformance of over 300 basis points. On the EBITDA margin, we have delivered margin expansion of 320 basis points since 2021, with a 17.9% EBITDA margin in 2025. And on the EPS growth, we've delivered 7.5% constant currency adjusted earnings per share growth in 2025, and we're guiding to deliver another year of high single-digit constant currency EPS growth in 2026. On returns, we've stepped up our cash generation, and we've delivered average cash conversion of 88%, combined with steady progress on return on capital employed in recent years. And on sustainability, we have made significant progress against our targets, reducing carbon by 52%, reducing food waste by 54% and increasing our nutritional reach to almost 1.5 billion consumers globally. So we've demonstrated a strong track record of delivery. And now looking forward to our 2030 targets, which we announced at our half-year results. Firstly, on volumes, we've set a target average volume growth rate of 3% to 5% in the context of limited overall market growth, but I'll touch on that later. On the EBITDA margins, we've set a target of 20% to 21% by 2030. And on the EPS growth, our focus is on earnings compounding and our growth algorithm is about consistently delivering high single-digit plus EPS growth. So now on returns and cash. We've increased our cash conversion target to 85% plus, and we've increased our return on capital employed target to 12% to 13% by 2030. So we have very clear targets, and we have a consistent and well-proven financial model. But I would like to take each of these targets in turn to give you a little bit more context. So starting with revenue volume growth. As I mentioned, over the last 4 years, we've delivered 3.8% average volume growth. It's well above food and beverage end markets, where growth, as you know, has been limited through this period. Our consistent growth highlights the strength and the relevance of our business to support customers as they adapt to the changing business environment in which they're operating and address consumer market needs. You'll have seen that brought to life today in the various sessions. The volume growth target range, as I mentioned, is set based on limited end market growth. We do believe we will see end market growth over the coming years, but we have not factored this in when setting the overall targets. And across our addressable markets, we expect growth of 1% to 2%, primarily driven by the renovation opportunity that we would have discussed today. Importantly, delivery of our growth targets will be underpinned by the 3 key volume growth drivers of foodservice, emerging markets and renovation. And as you will have seen today, the common themes across each of those: firstly, customers need more support than ever. The challenges are more complex and speed is key. I believe our Kerry leadership and our differentiated capability gives us a sustainable right to win. Now moving to EBITDA margin progression. We have delivered strong margin expansion progress in recent years. We're well on track to achieve our 2028 target range of 19% to 20%. We have increased our EBITDA target to 20% to 21% by 2030 based on the progress we are making and also the opportunity that we see for further margin expansion. The key drivers of delivery of our margin expansion target to 2030 is firstly, operating leverage; portfolio mix, secondly; and thirdly, efficiencies. Our EBITDA target is based on gross margin of 38% in 2025, moving to 39% plus by 2030. We will continue to balance delivering our margin expansion while also reinvesting in the business. And we have increased our R&D investment into the 5% to 6% range of revenue over the coming years, and we will be focused on deploying our investment on our extensive taste and biotech capabilities to meet the key industry challenges that you saw today. I want to spend a little bit of time just on the margin expansion drivers. So taking each of efficiencies, operating leverage and portfolio mix in turn and starting with efficiencies. Our Accelerate program runs until 2028 and as you know, comprises footprint optimization and digital excellence. On footprint optimization, we've a very well invested global manufacturing footprint. We have over 100 facilities, very much designed to meet customer, local in-market needs. Our footprint optimization program involves a low double-digit number of manufacturing facilities where we believe we have the capacity to transfer production and to improve efficiency while maintaining the customer proximity and our local for local operating model. We have made significant progress to date. We've completed 9 to date, 7 in 2025, 2 so far this year, and we'll complete the remainder over the next 18 months. Then secondly, on digital excellence. And I think the previous session probably does a much better job of articulating the opportunity that we have in front of us in the years ahead on digital excellence. But maybe just for a few moments, you can see how digital value can -- how digital excellence can unlock and deliver value across many parts of our business. In customer and R&D, we are using digital to leverage Kerry's proprietary customer and analytical knowledge to drive faster innovation, enhance the overall customer experience and support growth. In supply chain, decision intelligence to help automate and prioritize operational decisions and to drive efficiencies. And in manufacturing, you saw the efficiency benefits being delivered through the connected plant ecosystem, whether that be the digital manufacturing twins or predictive maintenance. And we will scale this across priority plants. The strong progress we are making to date, it reinforces our confidence that we will deliver further efficiencies and margin expansion opportunities over the life of the plan. Secondly, on operating leverage. As we continue to grow the business, we will leverage our existing footprint and overall business structures to generate further incremental margin expansion, particularly in our key growth market areas of foodservice and emerging markets. And then importantly, you've seen this morning on portfolio mix. Solving complex customers' challenges requires a greater depth and layering of technology. It requires more extensive innovation and renovation support. This mix opportunity will be a key underpin of further margin expansion, particularly over the latter years of the plan and beyond. So it's the combination of efficiencies and operating leverage and portfolio mix that will enable our continued EBITDA margin expansion and to reach our target of 20% to 21% by 2030. Moving now to cash and returns. And firstly, on cash, we have delivered strong free cash flow of EUR 2.8 billion over the past 4 years. We've consistently achieved our cash conversion target. And recognizing this performance, we've increased our target from 80% to 85%. On return on capital employed, we have made good progress in recent years. Building on this, we have increased our target range to 12% to 13%, very much aligned to the business growth ambitions and the margin expansion, but also providing flexibility for some bolt-on M&A activity under our capital allocation framework. And finally, moving to capital allocation. There's no change to our capital allocation framework. It remains well balanced between reinvestment in our business and capital returns. In terms of our priorities, our first priority continues to be capital investment, where we will strategically invest 4% to 5% of revenue to support our growth-led approach. Secondly, on dividends, we will maintain our track record of double-digit dividend growth. And thirdly, we will continue to evaluate M&A investment opportunities very much aligned to our strategy that enhance our technology portfolio or our strategic positioning or market access. And finally, we will continue to balance investment in M&A and share buybacks, returning capital to shareholders. So overall here, our objective is to have an efficient balance sheet while retaining the agility and the flexibility to allocate capital where we believe we can generate the greatest value. So a couple of key takeaways and to summarize just before we move to Q&A. Firstly, we have a consistent strong track record of business performance. Secondly, we have a growth-led financial model balanced across all of our key metrics. And finally, we take a disciplined strategic approach when it comes to capital allocation. So with that, I'll hand to William to open up our Q&A session.

Please, to get the ball rolling if someone wants to put forward their hand. So listen, Charles, there's many hands up, so we'll start with Charles.

Maybe just one question for me on if you have to balance growth with returns, obviously, target for taking returns to 12% to 13%. If there's a trade-off between the 2, is it always volume growth over returns if you need to invest to get the growth? How do you think about balancing that target on returns, which is reasonably stretching versus [ maintaining ] sort of accelerating the top line growth?

I think, I'll kick off, if you don't mind, and you can jump in. Look, I think just reflecting on everything that you saw really important point from my perspective is that we don't need M&A in the next phase. I'm not saying we're not going to be doing M&A, but we don't need M&A in the next phase to achieve the level of growth that we are planning, expecting and the level of ambition we have around that growth. We feel from a, let's say, the scale of the opportunity around renovation, innovation, the innovation programs and platforms that Albert talked about, the trajectory in the first half of the plan around, let's say, margin expansion through Accelerate the second half of the plan through portfolio mix that all the building blocks are there to continue on that journey and hit those targets through an organic-led strategy. So what we want -- I mean, not saying that we're not going to do M&A, but if we do M&A, it will be fairly modest in scale. Therefore, the returns metric will be effectively driven by that organic growth, both top line and bottom line. And that impact, I suppose, that probably headwind maybe that was there through M&A. And obviously, we had disposals, et cetera, et cetera, in the past, won't be there in the next phase.

Ranulf come back to [ Ihsane ], Ranulf please.

I'm curious on pricing and how proactively you tested your ability to push because I think what we've seen today is multiple remarkable examples of how you create vast amounts of value for brands. I think your EBITDA margin of around 18% doesn't seem to me to really reflect your value proposition. And so I guess what I'm trying to understand is what is the opportunity to step change [indiscernible].

I mean I think a couple of comments from my perspective. Firstly, we do have a value-add pricing model where we focus on the value in use and effectively that value that we're creating for the customer at the inception of the product. And that's very much how we drive our overall pricing. Thereafter, obviously, over 90% of our portfolio, our raw materials portfolio is natural or natural-based. So there is an element as we work through the cycle that we're managing any raw material movements. I think from an overall perspective, when you look at our margin expansion ambitions and the clear drivers that we have in place, we do feel that our portfolio today is a 20% plus technology portfolio. The efficiency program that we have in place, which is kind of the earlier part of the plan will really cement the delivery of the margin expansion. That being said, mix and leverage will be a part of that margin expansion in the earlier years. It's just it's more indexed towards efficiencies because of the program that we have in place. And then as we move forward, in our view, mix will become a greater element of the opportunity to drive margin expansion to 2030 and beyond, very much based on what you've seen today in terms of that layering of technology to solve some of those complex issues that you've referenced. But it's a clear focus for us in the context of capturing that value that we're generating.