Kerry Group plc (KRZ) Earnings Call Transcript & Summary

All right. We can make our way back to the room in our seats for the next presentation. It is my pleasure to welcome Kerry Group back to CAGNY this year. The company has a unique position within the B2B ingredient solution market given their business model and portfolio that they have transformed over the last 5 years. Joining us today are Edmond Scanlon, CEO; Marguerite Larkin, CFO; Albert McQuaid, Chief Science and Technology Officer; and William Lynch, Head of Investor Relations. Edmond, I'll turn it to you.

Thanks, [ Brian ]. It's great to be back at CAGNY, and it's certainly in an event we look forward to every year. And for everybody dialing in, we appreciate your interest in our company. Today, we're going to bring to life the science behind what we do with Kerry as we support our customers in delivering more impactful solutions for their consumers around the world. So before we begin, I draw your attention to the usual disclaimer regarding forward-looking statements. Today, we have 3 key messages. We have a very well diversified global business with strong growth differentiators. And this is underpinned by our leading science and technology foundation and supported by our systematic, strategic approach to capital deployment. So beginning with our business overview. With over EUR 8 billion of group revenue, Kerry is a global leader across the food and beverage end-use markets in which we operate. And these markets are very well diversified, as you can see here, with no major concentration in any one market. We have an extensive global footprint, comprising 137 facilities in 35 countries spread across our 3 regions, which enables us to deliver solutions for our customers in their markets where they operate. We have a passionate team of 21,000 people, including more than 1,100 scientists who work with our customers to develop and improve finished food and beverage products, which currently reach well over 1 billion consumers around the world every day. Moving to our business evolution. As an organization, we have a strong track record of growth, while at the same time, continually reinventing ourselves over the years, aligned to the areas where we anticipate our customers and their consumers moving. We've highlighted before at CAGNY the various stages of our journey, from our global expansion, building of our Ingredients & Flavours portfolio, to our business focus on integrating Taste & Nutrition, which has enabled us to deliver better, more impactful solutions for our customers. What may not be fully appreciated is our recent development, which has seen our core Taste & Nutrition business grow from EUR 4 billion in 2017 to EUR 7 billion in 2023 while, at the same time, undergoing a significant portfolio transformation, which I truly believe better positions Kerry for growth and margin expansion in the years ahead. Turning now to look at this in the context of the overall group portfolio transformation. Since 2017, we've rotated over EUR 2.5 billion of our business or circa 40% of our corporate portfolio. We have divested a significant portion of our business across this time frame that was less aligned to where we believe we could add the most value for our customers and our shareholders. We have completed a number of strategic acquisitions, expanding and building out our platforms across the areas of authentic taste, proactive health, biotechnology and food protection and preservation. These businesses and technologies are strongly aligned and complementary to our existing capabilities. So we provide synergistic benefits to our customers by leveraging and layering these technologies to create integrated solutions to address more complex customer challenges in a better way. These acquisitions have been highly targeted to meet the very specific customer and consumer needs and have performed well since they've been acquired. So we've discussed our growth, our transformation and our broad technology portfolio. And now I want to talk to you about our 3 key market differentiators: sustainable nutrition; foodservice; and emerging markets, which we feel position Kerry to deliver continued strong growth in the coming years. Starting first with sustainable nutrition. This is core and central to what we do at Kerry and is driving our innovation and new product development pipeline with our customers, who strive to continue to look to make their products better. Our sustainable nutrition framework shows how we support our customers right across the spectrum, firstly, by delivering a better nutritional impact, whether that be making labels cleaner by removing artificial ingredients, reducing sugar, salt and fat or by adding clinically backed health benefits. Secondly, we support our customers in improving the sustainability credentials of their products by reducing their carbon emissions, water usage or food waste. So bringing together our food craft, our applications expertise and the science is critical. We have an extensive library of IP, a mine of data, know-how and recipe formulations which are key to meeting the challenges of our customers and our industry. Our data scientists have also developed a unique suite of digital customer enablement tools, which help bring together the data and the insight behind the overall impact of our customers' products. Kerry's Nutri Guide is used to advise our customers on how ingredient and recipe changes improve the nutritional profile of their products. Our proprietary Food Waste Estimator can show how much food waste can be avoided through shelf-life extension. And we've recently added to our toolkit with the launch of the Kerry carbon profiler, which is a unique enablement tool for our customers in profiling and working together to reduce the overall carbon footprint of their products. Next, to foodservice, which represents circa 30% of our business and where our business has a strong track record of consistently outperforming within a channel that has consistently outperformed retail over the past decade. Since 2017, we've grown our foodservice business primarily on an organic basis by EUR 800 million and at a 5% volume growth CAGR. So what is it that makes Kerry unique in foodservice? The answer is it's a combination of factors: our extensive experience across all food and beverage categories; our broad technology portfolio; our ability to act as an innovation partner at scale; our position and connections within the industry with the outsourced manufacturers; our role as their nutritional adviser; and our business model, which is tailored for our customers. I feel confident around the foodservice opportunity for Kerry for a couple of reasons. Firstly, we don't necessarily need the channel to be in growth for Kerry to grow, which is a really nice level of innate defensibility and resilience we have in-built into our business. We've been doing this through greater penetration with our customers, through providing back-of-house efficiency solutions, nutritional or sustainability improvements on their existing menu items. We're also well positioned as regards the key drivers of new growth and traffic within the channel, working with customers to add new menu offerings or platforms and developing seasonal products and limited-time offerings. Next on to emerging markets, which also represents circa 30% of our business. And at EUR 2.2 billion, we are one of the largest in our industry as regards the scale of our business within food and beverage markets. We have an excellent track record of consistent growth across our emerging markets, having grown at high single-digit CAGR over many years. Our growth is enabled by our 9,000 people across our emerging markets, our local manufacturing footprint of 44 facilities and our RD&A capabilities, market knowledge and commercial expertise. This allows us to work closely with our customers to support them, to innovate and to renovate their products, utilizing Kerry's expertise, broad technology portfolio and local market knowledge. Emerging markets will continue to be a key underpin of our success into the coming years. So before I hand you over to Albert, I'd like to highlight what makes Kerry truly unique in our industry. We work with our customers to improve the nutritional profile of their products without compromising on taste and minimizing the environmental impact. We deliver solutions to solve our customers' most complex challenges. We do this by layering and leveraging our technologies to deliver integrated solutions that create a synergistic benefit for our customers aligned to the latest market dynamics and consumer demands. The way we achieve this is through our science and technology capability we have at Kerry, which Albert will now take you through.

Thank you, Edmond. Over the last 10 years, we have invested over EUR 3 billion in our RD&A systems of people, infrastructure and enabling systems. We now have one of the leading teams in the industry with over 1,100 scientists focusing on research, developing new products and integrated solutions and applications with our customers using our extensive portfolio. This team has generated over 1,200 patents and is connecting to a broad external network of suppliers, start-ups and universities. This capability is enabling the delivery of science-backed sustainable solutions to our customers. Edmond referenced this slide, how we understand the market dynamics and offer science-backed sustainable nutrition solutions, leveraging the broad and extensive technology portfolio. My role and that of my team is to ensure that this portfolio is fit for our purpose today and in the future. And this is where our science and technology investment comes into play. Over the last 10 years, we have defined a science and technology strategy that is focused on 2 key areas: taste and biotechnology. Each one is a strategic pillar with a dedicated team focused on delivering the next generation of technology based on market insights and technology evolution. In taste, we are focused on delivering new technology by understanding taste receptor metabolism and then identifying natural food components that will interact with these receptors to deliver sweetness, salt, mouthfeel and masking characteristics. Our commitment to delivering from-food-for-food ingredients means that we mine natural food products, for example, botanical -- natural botanical extracts, dairy products, smoked ingredients or fermented-derived compounds to identify the building blocks that will deliver the targeted functionality, whether this is sweet modulation or a peptide that will enhance salt perception. The biotechnology area comprises core science that will deliver impact into our enzyme, our proactive health, our food preservation or our biopharma technologies. We focus on the full array of sciences from bioinformatics, untargeted and targeted omics, strain engineering and hydrolysis to deliver the next generation of products into the targeted food and biopharma markets. I will now show 3 examples of recently launched products that have come from the science and technology team. Firstly, salt reduction. Salt has been identified as a micronutrient that is significantly overconsumed in the diet today, with the World Health Organization indicating that people are consuming twice as much salt as needed, resulting in major health issues such as cardiovascular disease with as many as 2 million people dying each year due to salt intake. We, Kerry, are leader in salt reduction technology and have been working on reducing salt in a number of applications with a particular focus on snacks, meals, meat and bakery. The science and technology here starts with a deep understanding of how our taste receptors detect and perceive salt and then identifying natural components that will stimulate these receptors but do not augment the amount of sodium ingested. These components are usually specific peptides we have identified which will enhance the salt perception. However, it is the generation and purification of these peptides where science comes into play. This requires a combination of fermentation, enzymolysis and purification technology to deliver the right building block. These components are then used by our flavor creation teams to design the right flavor system for the targeted application. So the science involves identifying the right natural component, using fermentation and hydrolysis to generate these components, process technology -- process extraction technology to purify the targeted or generated compounds, flavor creation expertise to formulate these into a taste -- a salt taste system and sensory science throughout the process to ensure we are delivering the right taste profile. Secondly, Kerry has over 50 years in enzyme technology and is now one of the leaders in enzyme technology for the food, beverage and pharma markets. In order to maintain and build on this position, we have invested in and developed a leading science capability in the identification and the development of new and novel enzymes. The key study shown here is an example of a technology push where we developed an enzyme which can be used in soluble coffee to reduce acrylamide levels, where regulatory and market concerns are challenging customers to reduce acrylamide levels in a category that represents the second highest source of acrylamide in consumers' diets. Enzymes that can reduce acrylamide formation already exist. But these were not cost effective nor are they easy to use in the current industrial process used for making soluble coffee. The process in this case started with the identification of wild-type enzymes that could break down the acrylamide in coffee, but these enzymes were not heat stable or efficient at breaking down the acrylamide. Through our unique capabilities in our C-LEcta [ enzymes ] platform, we engineered an enzyme that could work efficiently and at higher temperatures to allow significant acrylamide reduction at a cost-effective level. This patented product has recently been launched on the market and is generating strong interest from the industry. And lastly, food protection. As we know, reducing food waste is one of the biggest impacts we can have in relation to food sustainability, and reducing waste and meat is one of the key areas of concern. Kerry is a leader in food safety solutions with a broad portfolio and leading application expertise. The science and technology focus here is twofold: firstly, understanding and generating data on food pathogens and food spoilage organisms, in particular, how these are impacted by different compounds that can inhibit their growth; and secondly, identification of new compounds and processes that can deliver greater inhibition or more cost-effective inhibition of the targeted organism. The key study here shows both of these activities at work. We carried out extensive studies on the various food pathogens of concern in meat and have identified the right combination of natural active components that will stop or inhibit their growth. In this particular case, we brought together a novel plant extract, a natural buffered vinegar, and combined these ingredients through an innovative drying and agglomeration process to deliver a patented and unique food safety solution which prevents growth of pathogens but also spoilage organisms and which results in extra days of shelf life for the meat product. So in summary, our science and technology is continually augmenting and extending our technology portfolio and is built on an extensive science and technology ecosystem and expertise that is delivering a leading product technology portfolio with targeted deployment to meet today and tomorrow's market needs. I will now hand it over to Marguerite.

Thanks, Albert. And some really good examples to bring to life how our science and technology capability is enabling our growth. Today, I'm going to give you an overview of our latest results, our performance over the last number of years for each of our key metrics before closing out with our strategic capital allocation framework to create value for our shareholders. So first, looking at our performance scorecard in 2023 and beginning with growth. Taste & Nutrition volume growth of 1.1% represents an outperformance of our markets, led by strong growth in the foodservice channel. Group volumes were [ back ] 0.9%, reflecting softer market conditions in our Dairy Ireland division. Group EBITDA margins increased by 60 basis points, driven by our Accelerate Operational Excellence program and portfolio developments. On returns, we delivered strong free cash flow of over EUR 700 million in the year, reflecting 92% cash conversion and over EUR 1 billion net cash from operations. Return on capital employed of 10% was flat year-on-year, excluding currency. On sustainability, we continued to build on our progress of recent years. Firstly, we increased our nutritional reach to 1.25 billion consumers in 2023, a measure of the number of consumers globally we impact with our positive and balanced nutritional solutions. On carbon, we had strong performance with a 48% reduction in Scope 1 and 2 emissions versus our 2017 base year. And on food waste, we also delivered a good performance with a 39% reduction across our operations. Overall, in 2023, we made good progress across the year, especially given the market backdrop. We delivered volume growth in Taste & Nutrition, good margin expansion and a strong free cash flow performance as well as continued progress against our sustainability commitments and targets. So now looking at volume growth. When you look at our Taste & Nutrition performance over a number of different time horizons, you can see our strong track record of consistent mid-single-digit volume growth. On the right, you can see the breakdown of our performance by channel and geography, which highlights the resilience of our business across these different dimensions. Our strong track record of growth and leading position in foodservice and emerging markets gives us confidence that we will continue to deliver mid-single-digit volume growth over the medium term. Next, to EBITDA margin. I want to take a few moments to discuss our margin progression over recent years and how we will achieve our Taste & Nutrition EBITDA target of 20% by 2026. On the left, you can see our Taste & Nutrition margin development over the last 2 years. Over this time period, we have successfully managed the significant input cost inflation via pricing. It has, however, resulted in a mathematical impact of circa 190 basis points. We have partially offset this impact, firstly, through operating leverage, mix and portfolio of 80 basis points; and secondly, delivery through our Accelerate Operational Excellence program and efficiency initiatives of 60 basis points. In the past 2 years, we have delivered a total of 140 basis points underlying margin expansion from these 2 key drivers. So looking forward to how we will achieve our Taste & Nutrition targets of 20% from the 17% we have in 2023. We expect operating leverage, mix and portfolio to contribute circa 100 basis points, with another circa 100 basis points to be delivered from our Accelerate Operational Excellence program and other initiatives to get us to over 19%. Thereafter, we expect a reversal of some of the mathematical effect of the significant recent inflation to get the EBITDA margins to 20%. The key takeaway here is that the delivery of these targets will be based on continuing the recent progress we have been making under, firstly, operating leverage, mix and portfolio; and secondly, our efficiency program and other initiatives, which I referenced. Together, amount to underlying margin expansion of 140 basis points over the last 2 years and from which we are looking to deliver 200 basis points over the next 3 years. Turning now to our cash and returns. Firstly, on cash, we have made very good progress over the last couple of years in increasing our overall level of free cash flow generation and our cash conversion. This has been driven by improvements in our working capital, enabled by our Accelerate Operational Excellence program and the establishment of our global business services centers. As we look out into 2024, we are expecting another good year of free cash flow with cash conversion in excess of 80%. Moving to our return on average capital employed. As I referenced, our returns, excluding currency, were flat year-on-year. And over a broader time frame, our returns level in recent years has reduced as a result of market disruption as well as the significant work we have completed in rotating circa 40% of our portfolio. Our return development across the past number of years has been very much in line with the sector through this period of higher industry multiples. Reflective of the current environment, we have increased our threshold for acquisitions, and you should expect to see our returns level increase over the coming years, moving back towards 12%. Moving to our capital allocation framework, which is well balanced between reinvestment in our business and capital returns. Our reinvestment is a combination of capital investment as well as acquisitions. And while capital returns to shareholders has primarily been through dividends, we have also recently commenced share buybacks. And I will talk to each of these over the coming moments. On reinvestments, we continue to strategically invest to expand our capabilities, our capacity and in deploying our technologies across the globe. This is central to our growth-led approach. Some of our recent strategic investments shown here include -- in Rome, Georgia, we commissioned our world-class manufacturing facility for integrated solutions for a variety of protein applications in 2022. This facility has been key to facilitating our growth in the foodservice channel over the last 2 years, where we have delivered double-digit growth in this time frame. In Durban, South Africa, we opened our state-of-the-art savory taste manufacturing facility in early 2022, which is central to our business development plans in sub-Saharan Africa. And in 2023, we opened our new taste facility in Karawang, Indonesia to further support customers in key end-use markets across Southeast Asia. These investments are just some examples of how we are strategically deploying capital to support our continued organic growth in emerging markets and in our foodservice channels. We are planning an average capital investment of 4% to 5% of revenue over the medium term, which will support the continued growth and development of our business. Next to M&A, where we have a good track record and have significantly evolved and rotated our portfolio in recent years through a combination of strategic acquisitions and business divestments. As Edmond referenced earlier, we have significantly built out our technology platforms in the areas of authentic taste, proactive health, biotechnology and preservation through a number of targeted acquisitions over the past number of years to support our strategic growth areas. We have also selectively divested of certain businesses as we continue to enhance and refine our portfolio to areas where we can add the most value. We will continue to evaluate M&A investment opportunities aligned to our growth strategy to support our customers with new product innovation and solutions. Finally, on capital returns and returning cash to shareholders. On dividends, for 2023, we had a dividend of approximately EUR 200 million and have grown our dividends at a consistent double-digit rate since Kerry went public in 1986, with EUR 1.3 billion paid out by way of dividends over the past 10 years. On buybacks, we are currently in the middle of a EUR 300 million share buyback program, and we indicated last week at our full year results that we will be launching a new program post the completion of the existing program. So overall, on capital allocation, we will remain agile and flexible as regards balancing capital deployments between strategic reinvestment in our business and capital returns aligned to market conditions as we seek to generate value and deliver on our medium-term targets. And with that, I will hand you back to Edmond.

Thanks, Marguerite. So just to close out with our 3 key messages. We have a well-diversified global business with strong growth differentiators, sustainable nutrition, foodservice and emerging markets. And these will continue and remain to be key underpins of our growth and market outperformance in the coming years. We have a leading science and technology foundation, and we will continue to deploy our capital in an agile and flexible manner to generate mid- and long-term value. So thank you, and we look forward to taking your questions.

Marguerite, you talked about the reversal of inflationary pressures to -- leading to margin expansion this year. And I was just curious if you could talk about the drivers of that reversal. And then also, are there any concerns on the logistics front for Kerry?

Yes. So firstly, on margin, as I referenced, we had very good margin expansion in '23, and we expect to have very good margin expansion again in '24, moving towards 18% in Taste & Nutrition. And there's 3 main drivers to that. Firstly and most importantly, I would call out our -- the contribution from operating leverage and mix; and secondly, from our Accelerate Operational Excellence program; and then thirdly, we have the mathematical impact, which is the reversal due to pricing deflation. And just to your point, we -- you will have seen in over the last number of months, we have seen input costs, deflationary input costs coming through. And we see that continuing into 2024, which will then have an impact on pricing, lower pricing as a result of the deflationary from an input cost perspective, which will lead to that overall margin expansion. I wouldn't necessarily call out significant constraints in logistics. I think that was the final part of your question. We don't necessarily foresee that in '24.

Maybe Marguerite, just a follow-up on the mathematical part on the margin bridge. Is that Dairy? Just wouldn't assume that you've got a lot of pass-through type pricing in your model. So I'm just curious like what -- is there any one piece of the portfolio that drives that?

So if you look at the input costs across the basket, there's increases, and there's decreases. The predominant driver of deflationary is Dairy.

Okay. All right. And then you spent some time talking about foodservice in the presentation. So I guess a couple of questions related to that. One is, as you're gaining share, which again, I think -- I mean you suggested that foodservice doesn't have to grow for you to grow. Can you talk a little bit about just what's the advantage? Are you bringing a lower cost? Are you bringing better technology? Maybe I'll start there.

So it's -- the big point really is that we've seen a structural change from a labor cost perspective in the foodservice channel. So there's been substantial inflation in labor wage rates in that particular industry. That is a structural change in that industry. And we're working with our customers to offset that by bringing in solutions into the back of the store that minimizes or reduces the amount of labor that's required in the back of the store. So an example would be if a customer has a coffee program or wants to launch a coffee program as an example. We have our own unique proprietary coffee extraction technology that we can develop a specific signature taste in coffee for our customers in the foodservice channel. And it also gives that customer flexibility to use coffee not just for the morning day part but as a base to any coffee beverage right throughout the course of the day. And we provide that customer a ready-to-use coffee -- concentrated coffee extract that allows them that flexibility without actually having to maybe potentially source beans, bring them in, ground them, make fresh-brewed coffee all the time, the waste associated with that, the cost of actually having coffee machines and the cost of having a barista or something like that to actually serve the consumer the coffee. And it's an example where we have been able to work with customers to change their existing coffee program or actually introduce the coffee program that they were -- felt constrained doing it previously because of that extra labor cost or extra capital cost from a machine perspective.

And then your foodservice, if you could just give us a perspective on just your customer mix, large restaurants, QSRs versus mom-and-pop and maybe just a little bit of what it looks like geographically as well.

Sure. I probably should have stacked it there, [ Brian ]. So when we talk about foodservice, we talk about primarily QSR, fast casual and coffee chains. They're kind of, let's say, the main 3, I would say, subsegments. It represents about 30% of our Taste & Nutrition business globally. In terms of that geographical split, it is more or less the same globally actually. It's roughly about 30% globally. And 70% of our foodservice business is orientated towards larger players as opposed to smaller players. So it's kind of 70% QSR, coffee chains -- 70%-plus QSR, coffee chains, fast casual, 70%-plus larger players, kind of think top 100 type chains. And pretty much evenly geographically spread in terms of the profile, more or less 30% globally.

And we will see if anybody else has any questions.

Maybe [ Rupert ]?

Again, just to think about the innovation pipeline as we look towards 2024, how do you see this evolving, customers' appetite for innovation and the timing of this sort of accelerating the market, just thinking about your volume cadence through the year? And then perhaps one just on the capital allocation, potentially to Marguerite. I mean you've highlighted very clearly there's going to be a follow-on sort of share buyback program. But I mean, is there a sort of an algorithm we should think about the sort of ideally sort of 1 year's cash flow? If you spend it, brilliant; if you don't, actually, it's going to come back. Is there a sort of a more formulaic approach we can take?

I'll take the first question, first, [ Rupert ]. So 2023, we would have characterized 2023 from an innovation perspective as a year of renovation as opposed to innovation. So what I mean by that is the year would have been categorized as a year where improving the nutritional profile of products, improving the sustainability credentials, maybe some flavor extensions and things like that. I'm talking of primarily retail CPG. That would be primarily the type of innovation that would have been going on in the CPG retail part of the business. Foodservice would have been a little bit more dynamic in that LTO seasonal offerings would have been a more significant portion maybe than was there previously from an innovation perspective, of course, along with the back-of-house simplification of operations, like I just mentioned there to [ Brian ]. In terms of going forward into this year, we have seen an uptick in engagement and innovation on the CPG side, more on the innovation side, where our customers are engaging more about actually bringing new products to the market. Renovation hasn't gone away, but we have seen an uptick in innovation on top of the renovation that we've seen in 2023. There will be a lead time for that innovation to kick in, maybe 6 to 9 months, even maybe 12 months depending. So yes, renovation continuing an uptick in innovation but a little bit of a lead time more towards the back end of the year.

And [ Rupert ], on your capital allocation question, perhaps not necessarily as formulaic. But I think importantly, you should think about 3 things. Firstly, our objective is to retain as efficient -- an efficient and strong balance sheet; and secondly, retain our strong investment-grade rating; and most importantly as well, retaining flexibility to continue to invest in the growth -- the strategic growth of the business, both organically and from an M&A perspective. So really, it's about having that agility and flexibility, taking into consideration market conditions and balancing those 3 components with our strong cash generation in terms return of the share buybacks.

There's a lady [indiscernible].

I had a question on volume growth driver. So historically, Kerry has really been able to grow by expanding geographic footprint and has outperformed in volumes. But going forward, now that you already have a decent geographic footprint, what would enable Kerry to grow at that sort of same outperform level? And also, is it fair to say the lower hanging fruits of growth is sort of in the past, and in the future, the growth will be -- or volume outperforming would be a more difficult challenge?

Thank you. I would say, in terms of our overall emerging market scale of our business, it's still only 30%. And versus many of our peers, many of our peers, half their business is in emerging markets. So we came to emerging markets a little bit later than a lot of our competitors. But I would say we are significantly outperforming them in terms of growth by virtue of the fact of our ability to actually do more for our customers in emerging markets. And we have a nice diversity in our business in emerging markets now where in the past, maybe within the APMEA region, we were -- had a heavier indexation towards China and North Asia. Today, we are split pretty evenly across North Asia, Southeast Asia and Middle East, Africa, approximately 1/3, 1/3, 1/3 across each of those regions actually. And what we are seeing is that when -- I guess, when one of those regions maybe is showing lower growth, we're able to offset it by a higher performance in other regions. So the Middle East and Africa, where we had basically no footprint, maybe 6 -- 5, 6 years ago, today, it is consistently outperforming at strong double-digit levels, and we expect that to continue. So I think our level of penetration in emerging markets is still quite small in the scheme of things. We feel we have a huge runway in front of us in emerging markets for, at least, the next 10, 15 years. And with another 1 billion people coming into the middle class in emerging markets, we feel we're very, very well positioned in terms of taking opportunity for that growth. So we believe it will continue to be an underpin of our growth. We will, let's say, grow beyond our T&N target in emerging markets in that high single digits, so on. That's our expectation.

Okay. With that, we're going to move to the breakout for further Q&A. Please join me in thanking Kerry Group for the presentation today.