Nomad Foods Limited (NOMD) Earnings Call Transcript & Summary

So thanks, everybody, for joining us. I'm very pleased to welcome back Nomad Foods to our conference. With us today, Stefan Descheemaeker, Chief Executive Officer; and Samy Zekhout, Chief Financial Officer. We're going to use the time today to engage in basically Q&A for the entirety of the -- for the entire session. We have a good amount of ground to cover. So we'll be -- we'll just jump right in.

Interesting time.

It's interesting times indeed.

So I guess maybe we'll just start high level, just to ground everybody in the Nomad story. And maybe, Stefan, you want to kind of walk us through what you feel sort of most differentiates the Nomad business model from maybe other companies here at the conference and why investors should find it enticing? And then maybe, Samy, you can just kind of ground us all in current fiscal year guidance.

Well, I think the biggest differentiating factor is the fact that we are fully focused behind one category, frozen food. In Europe, we are the leader. It's a great category, by the way. And I think being focused is really some part -- it's part of a mantra, which is basically we're doing well, when we are focused. We could have become some sort of good conglomerate. And definitely, we decided this was not the right thing to do for a variety of reasons, but definitely doing well what we know, having our people being passionate about the category is a great thing. So that's that. In terms of numbers, track records, we started well in the business in -- so it's old brands, great brands, but it's a new story since 2016. So we started in 2016. And since then, we've generated average per year 7% of revenue growth, 8% of EBITDA growth and double-digit EPS growth. So that's in a nutshell what we've been doing. And this with, quite frankly, a combination of operational improvement, but also, I think, well-balanced capital allocation between M&A, people thought that we would be a lot of M&A. We've done 2 deals, but well selected, buyback as well and also deleveraging. So that's been a bit the story. So now a bit of the category as such and what we're doing. So we're covering a lot of whole spectrum of frozen food. Frozen food covers a lot of different things. But mostly, we are -- fish is big for us. It's 35% of our business. Vegetables is 15%. Then in the meantime, we have also added new businesses. For example, poultry has increased as well. On an organic basis, it's 10% now. We now have 5% of our business is ice cream, something we discovered 2 years ago with the acquisition of Fortenova in the Adriatic. And we also have things like, for example, potatoes, french fries and all the rest of it. So it's very, very wide, and it's a good thing, by the way, because to be able to cover the whole thing makes a lot of sense. In terms of numbers, well, it's EUR 3 billion of sales, there are there about, EUR 530 million of EBITDA. I think that these are the key numbers. Other numbers, covering 19 countries in Europe. In most of the countries, we are the #1, the leader. We believe in leadership, we believe in impact, we believe in focus. We believe in A brands as opposed to B brands, and all our brands, by the way, are the brand leaders, brands like Birds Eye, brands like Iglo or Findus, all the brands that you probably don't know like Ledo in Croatia, which is probably an even bigger brand in this country. We believe, as we said, I believe -- we believe in leadership, that's very important for us, and it's doing well. We are -- we have 19 countries, but in all fairness, 4 countries between U.K., Germany, Italy and France represent around 66% of our business. So that's a big thing, number of people, number of manufacturing plants, we have something like around 22 plants covering from, let's say, from Sweden, Norway to Italy, and we're employing 8,000 people. So in a nutshell, that's what we are.

Samy, do you want to just update us on year-to-date trends and current guidance and we can kind of dive into some of the details.

I think the business continues to be on track. I mean with the guidance that we have been giving both in revenue terms and EPS, what we communicated at the time of the earnings release remain the same mid-single-digit revenue growth, and the current EPS to EUR 1.52 to EUR 1.55, cash flow as well on track. We had a good Q1 start and the trend continues. I think the idea is to continue that momentum of quarter in quarter out with good performance, translating this profit into cash. And I think equally important across the year is reignite the virtuous circle of, let's say, our business model, which is all about investing into our brands, making sure we are competitive in store, and we clearly have -- we are leveraging the whole powerhouse of our own sales organization in order to get the product to our consumers. And we have very exciting plans. I mean, virtually, as we are talking right now onwards, we've quite stepped up investment, particularly in A&P as we look forward.

Great. And I want to get to that. But just before we do, just -- I think it's probably evident to most people, but the level of cost inflation that you guys have been grappling with the past year plus has been extraordinary, even by -- even in an extraordinary time, it's been extraordinary, exacerbated obviously by supply constraints in fish. Where do things stand now at least from a cost standpoint? Then we can go to -- get into some of the supply dynamics. But just in terms of the cost headwinds that you're facing relative to the pricing you've taken, where are we and what's your cost outlook going forward?

Yes. I think we're coming out of a period effect here. I can't call it hyper but, let's say, extraordinary level of inflation. If you compare beginning of last year, 2022, end of last year, 2022, you're talking about the 30% increase that we've seen, and it came almost by block across the year, which has really led us to execute the pricing in a staggered way to recover that. As we get into 2023, we are clearly seeing definitely smoothing down of that into clearly single digits. I mean very clear from the cost inflation, and even on some materials, we see effectively as well some softening down because of product availability and market stock, some deflation even in some ingredients. The average is still inflation. But overall, effectively, we see a disparate view, if you want, ranging from fish to energy to, let's say, poultry and so on, that is a broad-based point to about, let's say, single-digit inflation as we get into 2023.

Okay. And to offset that dynamic you have taken now 4 rounds of pretty significant pricing, a fifth round that you're sort of selectively putting in place, I guess 2 dynamics or 2 questions there. One is does that catch you up to that cost inflation? Does that finally kind of make you essentially whole? Number one. And then number two, how do you -- the question I often get from investors has Nomad priced too much to the detriment of household penetration and volume and volume share? What gives you confidence that you haven't?

I mean I'll get start and then you can come in...

I will comply...

And so the point there is, effectively, we -- let's maybe rewind back the tape, I mean, and go back into a year ago when we are starting to see the premises of that inflation. I think if we are sitting here, and I told you we are going to execute repricing round. We are not going to get any dislocation. We're going to be able to recover the totality of an extraordinary inflation. Over the next 3 years, you would have told me, I mean, clearly, that's never going to be possible. We've done it, honestly, with a very strong commitment of the organization with a very clear choice, which is we wanted to preserve our gross margin, not grow, but preserve our gross margin during that time in order for us to secure the necessary funding to support our innovation and our investments in A&P because our brands are very strong. They have very strong awareness and they need to be supported by a proper level of A&P as we move forward. That was the mantra that we got into. We had a bit of a tail end to continue to do pricing this year. And we have some minor form of pricing, I mean, to get executed in the rest of the year. I mean the reality today is effectively have we priced too much? The answer is, no. The only thing we've done is recover, is recover inflation. And the important point there was not to create necessarily the space there. It was affected to secure a gross margin level that just enabled the virtuous cycle of our business model to work. We're investing in A&P and reigniting growth and so on and so forth. As we move forward, we are now putting in place a substantial effort around revenue growth management. That's going to add a bit of spin to our top line that we can then because that's proprietary. That is not about if your pricing up per se. That's about leveraging all of the potentiality of our sales, be it on freight terms, on mix, on portfolio and promotion. That's going to enable us to create space that, again, we're going to be able to reinvest and flow through to the bottom line as well.

Well, I would add one thing, which is very much in line with what Samy said is -- was strategically speaking, at the end of the day, price or not to fully price or let's say, the half price, half way, for example, it could have gone that way. It would probably have been easier, by the way, easier conversation with the trade, I can tell you. And at the end of the day, probably, let's say, minimization of the volume loss, I think we would have lost them what the essence of a brand leader is, which is to be there with the right gross margin, then with the ability to drive the category, drive the brand, drive the innovation, drive A&P. We would have become soft -- the risk was really to become some sort of private label plus, and we just didn't want to become a private label plus. And I think we would have been a very bad private label plus, by the way. It's not part of our DNA.

Speaking of private label, I mean, how do you -- how do you -- what's your sense on of current price gaps and your relative comfort with current price gaps? And does your pricing or your investment plans, which we will get to, which are now more advertising and innovation based and not -- therefore not private label plus? But if that doesn't work, are there allowances and flexibility to pivot to more of a promotional protection type of strategy?

Well, we have -- the good news is we have a lot of levers. And I think going the other way, we would have lost a lot of flexibility from that standpoint. So the first piece is we're obviously monitoring, you can expect, you can see very closely where we stand in terms of relative pricing over the last 2 years, was around 10%. It's more in the region of versus private label, and it's more in the region of 7%. Where is it coming from, the delta, the 3%? Partly a more promo from us. It's exactly what we can do. At some stage, we still -- we always have the ability to go with more promotion and a bit of these guys also increasing their price because let's face it. We are all facing the same COGS. It can take more time. It can be 1 month, it can be 6 months, it can be 1 year. At the end of the day, it's coming because some people are better hedged. Some people are hedged by luck. Some people have not hedged at all, some people are hedging themselves with their own suppliers with a great contract for 1 year, you can't change your contract, but it's coming at some stage. Where are they going to come? Where they're going to go with their price? I have no idea. And by the way, I prefer not to know because legally, that would be probably an issue anyway. So we're not going to count on this. We're just counting on ourselves and on the consumers. Consumers, what we see is a sort of not a shock, whilst pricing are starting to normalize. Confidence is starting to come back a little. And so pricing is getting the new normal. What we've seen in that kind of situation is, well, things are starting to balance between private label and consumers. Once they have absorbed, obviously, the new price level. Wage, salaries are coming back up to some extent as well. Energy is going down. So it's -- all these things have to be taken into consideration, it helps. Second piece is, to your point is, yes, we are reinvesting. We want to invest big time. So basically, there will be more space. By the way, it's a decision we're taking, more space between gross margin and EBITDA margin because we want to reinvest as a brand leader, and we're going to do this, combined with revenue growth management, combined as well with supply chain. As we said, we have now -- we started with 9 factories. Now we have something like 21 factories. We're going to readjust the whole thing. We're going to see a way how can we specialize some factory, the others. So we still have a lot of productivity improvements that are available for us in terms of supply chain, which is going to be well obviously our gross margin. So the beauty -- the good news is we still -- by having done what we have done, we have preserved most of our levers.

Okay. Let's tackle some of those -- some of that what you just mentioned there. In terms of the investments, you signaled a base plan of a real ramp-up in advertising alongside the rollout of more and more innovation now that supply is more reliable, you kind of solve those operational problems, now is time to kind of play offense. Talk us through the cadence of those -- of those investments kind of coming into the P&L and into the marketplace over the balance of the year? And how quickly do you think they manifest in the marketplace?

So let me start with the first, the cadence, and then the impact. And I'll start with A&P. We're starting already in June when some countries do have the time. So we've released the fund something like 2 weeks -- 1 month ago. It takes more time, some people -- some countries -- in some countries, it's easier to go fast than some others. But it's basically, let's say, it's H2 to make it simple. Then in terms of cadence after -- beyond 2023, we're going to still increase the level in '24 and to some extent in '25. So that we're going to be at a level that we think it's satisfactory to us as a brand leader. In terms of timing, well, it's not a promo. A&P is -- it takes a bit of time. And you have to judge return on investment is 1 year, 2 years, but that's exactly -- but that's the right decision. So we're going to measure success after month after month, but we need to pace ourselves and to decide what success means. But we believe that we have great return on investments in our brands, great brands, and we're expecting a great results. But again, don't judge us after 1 month. That's not working that way. Promo is something else definitely. Revenue growth management is really something where we have raised the game. And I think from that standpoint, really starting to generate some great results.

Yes. And to build on Stefan, the decision to reinvest or, let's say, to step up our A&P investment is really guided by the fact that we do know, and that's a fact that has been proven year after year that when you invest behind the must-win battles, the business respond. Those are big brands, they are leaders, they respond well to investment. They have higher margin, and they really drive momentum from a retail standpoint, regain momentum. So from that standpoint, effectively there is a very strong choice fullness as to where we allocate those incremental spending so that effectively, we recreate a positive, let's say, positive spin on the business to really get on the right growth path. On the promo side, in all fairness, I mean, clearly, we're going to apply a fairly [ surgical approach ] that is going in concert with our revenue growth management, which we are rewriting to clearly step it up to a rivalry of the best-in-class players in the industry, simply because we see a lot of more science needed in order for us to really see in a very sharpened way where to act, where to promote, how to execute effective business plan in what terms and so on. So we're clearly going through all of the levers, not just promo optimization, but as well mix, PPA, rate terms optimization. And that's really now getting in motion. We'll use Italy as a guinea pig. I mean for that because obviously, there was a lot of change we had in Italy and the business is already responding gradually, okay, to that. And we're going to deploy that across the rest of the organization to really make RGM a clear building block of our business, so that effectively will be able to count on that plan for that in order for us, as I said, to continue our investment positive cycle, I mean, on that.

Okay. Is there sort of a predetermined level of optimize A&P spend relative to the size of your business? Or is that constantly tested for?

It's tested. I mean we use marketing mix modeling, but we have other techniques to look at it. In all fairness, it's going to depend on where the competition stands. It's going to depend as well effectively of the awareness, there's a lot of parameters. And we use model that have proven to be quite reliable that goes from the minimum required to maintain the brand alive, then you have effective what we call sufficiency, which is affectively what is needed to grow the brand, then you have Optimum, which is the optimal to accelerate the brand and you get to saturation. And saturation, it's not bad. Sometimes when you really have an extremely strong brand and then you have the space, sometimes going to saturation, still gets the right return. It's not diminishing returns. It's just a bit of, let's say, the return is less than when you are at optimal. So there is a very strong classification there. It is -- effect has to be taken with a pinch of salt in a way that sometimes the market changes well. And you have to reflect the dynamic there. So there is science and there is judgment as well on that one. But frankly, in our business, the beauty of it is that you measure the results right away. So our intent on that is because we have limited means is to make sure that we reallocate that in a very choiceful way. High-margin business, fast-growing margin business, big business, leading business, honestly, deserve more than the opposite. And that's frankly, it follows quite a logic on that.

There was a question today about how you're going to spread your investments across the board, across your sales. And clearly, the answer is no. And that's -- we started that already 6, 7 years ago. We focused on 70% of the business. The good news or the bad news is, in the meantime, the 70% have become the 90% because obviously, it has been -- it's been very successful. Now we need to reset the whole base so that we're going to start again with something like the 60%, 70% of business we're going to with all of resources.

What are some -- I mean what are some of those, you used the term must-win battles, like what are some of those most critical either must-win battles or strategic initiatives that you see where you see new opportunity?

Well, I think the must-win battles remain obviously the cornerstone of everything, and we've seen it's been very, very successful. I think we're going to make it more comprehensive using more of the other commercial levers. That's one big piece. That's something more to come, but at least it's one of the elements. Second, whether we have new must-win battles, for example, 3 years ago, we didn't know what ice cream was, indulgence ice cream, for example, where we've learned a new level of margin. We had no idea that the business could generate that kind of margin. By definition, it has become a new must-win battle. One more thing is also what we've seen during this crisis that having, like in the U.K., a very broad spectrum of segments from fish to pizza to poultry, vegetable, plant protein, Yorkshire pudding, which is very much U.K. centered, that works very well. Because then people during crisis, definitely, they can move from one category to another, and we covered, we hedged, so that's the kind of vision we would have for at least for large countries. It would be long term, is to have through M&A or through new growth opportunities to be able to have a wider range of something that covers, let's say, the right way the frozen food in the frozen food category. And U.K. is perfect from that standpoint. Orders, we still have a lot of opportunity.

Going back to revenue growth management. I mean, to some extent, everybody has developed more capability and revenue growth management. What do you think makes your journey on that capability differentiated? And how do you think you stack up now versus either your own kind of optimized goal or versus competition? Is it now really a competitive advantage for the company? Or is it still -- there's still work to be done?

Well, let me start and then we'll finish because we have an obsessive CFO, we absolutely believe very much it is so right in terms of revenue growth management. And when you believe in something, I think it's going to happen.

So maybe I'll give you a bit of perspective. When I joined Nomad, I think what I saw effectively that we were saying we were doing revenue growth management at this time was called net revenue management in the right way because it started off with a playbook that started from promotion optimization. And let's not forget, we have on average per year about 30,000 -- 30,000 promo. There's definitely some promotion that are inefficient. And the whole idea was affecting in a ZBB approach, say, what's efficient, what's not sufficient? Where should I put more, where should I put less? That was done well, well with the systems in place we had. But there was a number of other steps, such as mix. We have extraordinary franchise that travel across different category and there's no reason why we'd have a consumer in the U.K. that's buying peas and on buying fish and vice versa. And so that mix element, how do you translate that into a much more deliberate strategy as opposed to a wishful strategy. Then PPA, price pack architecture, which was done much more as a surrogate to pricing. I cannot execute pricing. So what about maintaining the list price and then effectively just removing [ mostly finger ]? That doesn't work. You have to have a thinking whereby manufacturing, innovation and commercial are complete integrity so that you have a manufacturing [ apparel ] that can get integrated together, and then you define 12, 18, 24 months in advance, what do you want to do from a PPA standpoint. And then the [ growl is right terms ]. [ Right terms ] mean putting in the equation, your customer, let's say, financial and business goals together with yours, which is that if they have less out of stock, they should be rewarded and we should be rewarded by more sales, and have an integrated joint business plan is clearly something that requires a lot of data, a lot of [indiscernible] KPI and so on and so forth. I'm picking one very simple example. You could go through assortment and so on. The power of RGM is not just to go after one element. Anybody can do one. The power is the integration, it's effective, the interrelation across those so that you really optimize the pie. That's exactly what the team has been developing recently in Italy, where customer by customer, category by -- or let's say, segment by segment, almost [ service SKU by service SKU ], we came with plans to say, well, with the proper level of modeling and data, do we know what are the price points that can move the needle? Where should we do more promo? Where should we do less promo? That's why I'm using as an example, so we're going to have very targeted promo intervention wherever it makes sense to reignite the business. We're now taking that and replicating if you own that in other markets, with the support [ of an entire organization that we've been in ]. We have now a very experienced leader, I mean, leading RGM together with a very experienced team centrally. But more importantly, in the market we are developing capabilities in sales, in marketing, in finance, to clearly enable that. So -- and for us, it is something that is a true funding machine for the business, clearly. So that's really where I have to say versus what it was versus where we are, where we clearly have stepped up that. And at the same time, we are investing into a new system and new digitalization that's going to enable that to capture information in a faster way so that we can respond if the market is moving, if competition is moving, how do we act upon that. So huge opportunity that little by little, we are now deploying to the market.

So back to your question...

And hence the obsession.

Back to your question, I would say, at the risk of being arrogant, that at this stage, we are good in revenue growth management in 1 year for a company of our scale, size, I think we're going to be best-in-class.

And is the -- that frontline kind of localized application of revenue growth management, Stefan, is that what you're talking about with commercial capability you alluded to? Or is that something different?

One of them. One of them.

I think the -- also one of the mantra for us is to have a more holistic approach of the different levers, category by category. For example, this category, category A is a must-win battle going to receive a lot of A&P, but also a bit -- probably a bit less in terms of, for example, innovation because we don't need it. For the others, it's going to be more in-store activation, this one is where elasticity is very big. So we better make sure that we have a great RGM expertise there. So this is the kind of granularity we want to achieve, country by country, category by category, with the holistic approach of the commercial levers, RGM is one of them.

Almost half an hour, and I haven't talked about fish supply. I haven't asked you about that. That's an achievement, I think. That's symbolic. And when I -- I mean, if you want to give an update on sort of where you are and -- that's great. I'm actually asking about it more kind of looking forward. Now that you've got the supply -- new supply chain is effectively built -- what opportunities does it open up in terms of -- clearly, it gives you resiliency and redundancy that you didn't have. But does it enable in forms of innovation that you didn't see before? Does it lead to lower unit cost going forward when you're at scale? How do you...

Well, I like very much your question because what it says is from every challenge we are facing, we're learning something, and I think -- this company is still built around these questions. We faced a lot of challenges, say, when we started. But quite frankly, we've become a bit of business. I'm taking the example of RGM. When we did our due diligence in Fortenova, in the Adriatic, we did not include any RGM synergies because, quite frankly, we didn't have the expertise. No, we're revisiting the whole thing and say, "Oh my God, we should add that on top." So it's post synergies, which is great. Fish is not different basically. We knew that we were overly dependent on wild fish -- white wild fish basically. And this crisis forced us to move faster. Move faster but not in a stupid way. So we could have gone even faster and go with farm fish. Farm fish, you have -- basically, you have 2 big -- let's say, in terms of white fish, you have 2 species, one is Tilapia, which is expensive and a very different taste, then you have pangasius, panga. So that's what we've decided to go. We could have gone very fast, but it's very simple. Only 9% of the panga in the world, it might be increasing in the meantime, but slightly is labeled, so in wild fish, you have MSC, which is a great label by the way. It has protected the species, and it's label of quality. And so 9% only in panga is ASC-certified, which is the equivalent of MSC. So for us, it was out of question to go without ASC. So as a result, it takes more time. Some people believe you do this then you have new supply chain. Well, it's naive at best, I would say. It takes time. If you want to deal with the right level, so that's what we've done. Now you can, well, you would visit a store in France, for example, you will see the new products, new innovation, by the way, great products. So yes, it delivers a new set of innovation. We've decided, by the way, that most of innovation in fish would go with panga right now because what's happening is at some stage is people in the countries first, we're asking, I want my panga, and then obviously, they see our price is a bit different in terms of COGS. So do I really need panga. And we tell them, "No, no, we need strategically to diversify". So price will go down because we'll buy more, we'll become more efficient, more long term with those suppliers which we also need to think strategically. And I think it's great learning in fish, and we'll apply the same recipe in other pieces of our supply chain.

Are there other kind of big buckets of productivity that you see that enable some of the reinvestments we're talking about earlier?

Yes. I think one is what we call fuel for growth, which is basically how can we for the same quality or the same consumer perception come with something much simpler and can obviously -- which is less expensive. I'm taking an example of, let's say, bags, plastic bags. So we had -- 5 years ago, we came up with new plastic bags with a zipper, very, very nice for the consumers. And well, we told the countries, well, it costs a lot, quite frankly. So you have a choice. Either you're going to price more or you're going to go with no zippers. So a lot of reactions first. I want my zipper, whatever. So we thought a solution, which is basically to explain to the consumers, yes, it doesn't go with zipper, but in terms of, let's say, carbon footprint, it is much, much, much better. I think it's a 70% difference. So we've been able then to implement it, low-volume impact and everybody's piece. So that's the kind of thing we can do with [ Fugro ]. We have a lot of examples like this. I think simplification. I think we've moved from a lot of -- from -- from 9 countries now to 19, so a lot of SKUs, definitely, in the coming years, we're going to simplify this. We're going to standardize here and there. There will be some resistance, obviously, want to have my fish fingers exactly the same way as we do in this country, that color, well, at some stage, people will have to adapt a bit, and we find some of the right solution. And so that's the second way of improving of -- finding productivity. And then we have a, let's say, ongoing productivity models that are doing very well in terms of let's make sure that the best factory are obviously, the others are learning from them. Then we also need to think of can we specialize more. Can we find -- can we make sure that we fully specialized with the right definition of role for each and every of the factories. So a lot of things to do for the next 3, 4, 5 years, no doubt, which is great, by the way. So in other words, we are very imperfect, which is great.

A lot of your growth over time growth opportunities you talked about kind of taking -- moving existing brands or categories into white space kind of around your regional geography. You talked recently about Pizza into this market, for example. I guess, how much opportunity is there that you see kind of in the near term for more of that as part of your growth model going forward? And then just because I'm sure on time going to lump it in, from a -- that's an organic kind of expansion, but you've also obviously you mentioned ice cream, you've done -- you've used M&A as a vehicle for doing that. So what's the balance of your focus now between the organic and inorganic expansion?

Well, first thing, as I said, we've been through 5 acquisitions. They all have been very successful. We're proud of that. And I think the reason is -- one of the reasons is focus and being very selective. One of the learnings, by the way, also in the U.K. is we've come up with 2 acquisitions in the U.K. One was Aunt Bessie's, the other one was Goodfella's. And on top of being on a stand-alone basis, good deals, we also -- it has covered exactly what you said about new space. So the dream would be to find this kind of equivalents in other countries, especially in large countries. Well, they might be available, some might not be available. In M&A, anyway, you don't know what's going to happen. So what we're also doing is we're checking whether we have a chance to be successful with, for example, poultry in other country, for example. And in some countries, we -- oh my god, there is no space. It's impossible. Or let's say, you would tell me, let's go with let's say, with Goodfella's in Germany. Well, that would be stupid. [ Utkal ] is there. They have -- they're very strong. That wouldn't make any sense, or we should we go with ice cream to the U.K., waste of money. So we will need to be very selective between this combination of adding new categories in some -- in existing countries through M&A or building it from the scratch in the very -- I mean by being very selective where we believe we have a good chance to win.

Okay. And cash flow, right, has been constrained because of supply and you build up inventory. Samy, what's your visibility and your confidence in future cash flow from here? And then beyond deleveraging objectives and selective M&A, are you thinking about a more assertive return of cash to shareholders, there's been talk of late about not only buybacks, but the institution of a dividend, which we haven't seen before. How are you thinking about, a, getting that cash on hand and then think about options for deploying it?

Yes. We're coming out of a year where we had to make some choices, which effectively led us to be below what we have historically done. I mean to give you a bit of a thought. We've always return more than 100% of our EBITDA into cash flow that has been, frankly, our mantra, up to 2021, cumulatively, in 2022, because of the supply situation, we really ended up with about 65% productivity, free cash flow productivity. This is our intent to return back to our, let's say, business range between 90% and 95% of our EBITDA converted into cash flow. The point is, we started the year in a bit of a slow way because we still had some elements related to some constraints relating to receivables and to receivable payable and inventory. And as we move forward, primarily driven by phasing and as we move forward in the year, we are on track to deliver the 95%, actually in place together. It's really important for us because like the essence of our strategy in terms of funding and development and investment that we have to get to your second point. So I just want to reiterate the point of it's not just our commitment, it is embedded in our DNA, I mean, from that standpoint. So we get there and probably with a bit of, if you want, stronger position by the end of Q4. Fundamentally, directionally, we are leveraging all of the levers that we have in our mind in terms of capital allocation. Whilst in the past, it was primarily buyback and M&A. Now we're clearly contemplating 2 more, which are dividend and which is effectively delivered at some point, especially with interest rates that have been coming up higher, I mean, at this stage. So regarding with the dividend, it's a Board decision there, but we've been engaging conversation at this stage, and it is something we're contemplating for the foreseeable future. And clearly, we're going to put that in, let's say, competition together with other opportunities, but our desire is to return cash to shareholders, to really continue to work on delivering superior shareholder return from that perspective and potentially given the fact that interest rates have gone up, given effectively the fact that we do have clearly an agreed, let's say, budget to clearly go after buyback up to EUR 500 million out of which we have consumed about EUR 100 million so far. And at the same time, clearly dividend result is in our radar screen. It's going to be clearly something we're going to be contemplating across these 3 items with M&A still being in the starting block, but probably with the, let's say, lower priority. I mean [indiscernible] compared to the totality of the spectrum of action that we have. We are continuing to look at M&A to be very clear. But the opportunity to return to drive superiority with the other item is out there. Given the fact that dividend is probably more, let's say, possible future, but not for now. Now it's going to be effective deleverage and buyback that are clearly going to be on the [ forefront ] of what we want to do.

You think -- so it sounds like the more clarity on those things, once the cash is -- more clarity on those things and maybe an update to some of the long-term financial targets you've had that may need adjustment because of how you choose to deploy capital. That -- an expectation of that sort of come sort of early next year once you figure out where this year lands. Is that the right way to think about it?

We have a strategic plan, I mean, to come in every year. And in the middle of the year, we have that. We will revisit our business strategy to see what are the opportunities, what are the challenges, what are the mitigation strategy and so on, but we talk as well about capital allocation. And our intent is to clearly go through all of these opportunities and really think about the prioritization around that from a immediateness what's now, what's to come, and that's being debated as we speak with the intent, as I said, to deliver superior return, I mean, on that.

Okay. Great. We're just about on time -- or out of time. I'll leave it, last words to you, just final thoughts for the listeners in the audience in terms of...

Well, I started with our track records so far, 7%, 8%, double-digit EPS. Our ambition is beyond the refinancing we went through is we keep going for the coming years. In a more challenging environment, and that's why, by the way, we're also raising the bar in all the things we're doing. We know where we're going to do this. So the -- the model has proven to be very resilient. And we want also to challenge ourselves, move to the next one because the market is not staying still, and we're going to do it within great category. Frozen is definitely with category. I was in the store yesterday, I was talking with my colleagues, and they said, "When would you would like to go? Maybe spice, that's great, but I mean it's a good category point." We were in the hypermarket, so a lot of categories. And quite frankly, we thought, well, it's really a nice category. It has a lot more to offer. As a leader, we can do more, by the way, by making sure that people understand the reality of this category that is really has a lot to offer.

Great. We will end on that note. Stefan, Samy, thank you very much. Thank you all for joining us.