Philip Morris International Inc. (PM) Earnings Call Transcript & Summary

Welcome to the 21st Deutsche Bank Global Consumer Conference, 21st time ex-COVID held here in Paris. And it's great to have everybody back here again. My name is Gerry Gallagher. I'm the Co-Head of European Company Research at Deutsche Bank, and I sometimes masquerade as a tobacco analyst as well on the side. With me today is Emmanuel Babeau, the Chief Financial Officer of Philip Morris, who I believe will open up with a few comments. And then we'll go into a fireside chat format, and I'll be very welcome for anybody to raise their hands in the audience at any time to ask a question they may have. With that, over to you, Emmanuel.

Good morning, Gerry, and thank you for having us. Good morning, everyone. Great to have this next 40 minutes together. So allow me to start with a few introductory comments. As always, please read carefully our forward-looking and cautionary statements. So just a few words of introduction to confirm that we are on course to deliver a strong performance for 2024. You have seen that our Q1 was excellent. We confirm that we expect a solid Q2. And that is pointing to H1 that will show strong growth in terms of organic performance or before ForEx, if you want both for revenue and adjusted EPS evolution. This performance, of course, has been built on the very strong momentum that we are enjoying on our smoke-free portfolio. IQOS continue to enjoy a nice dynamism. First of all, in the market where IQOS has been historically, I would say, successful, like Japan, you have seen that in Q1, we were still very nicely above 10% growth in Japan, and we keep growing our market share in the country. And it's really important to see that IQOS has its potential over time to deliver sustained growth. We are also seeing a number of, I would say, emerging growth relay in the western world in countries such as Germany and Spain, and that bodes very well, of course, for the continuation of the growth of IQOS in the developed economy. And then we have all these new economies where we see an emerging pool of promising market. We've been talking a lot about Egypt. We see now clearly Indonesia with very good traction. We see the [ Gulf ] country with great potential. We see now Mexico that is starting to have nice traction on IQOS. So we see a growing list of country in this new economy with a nice potential that is firming up, and that's very nicely. So IQOS, that keeps doing well. And of course, next to that, we have ZYN, that is having a very strong performance in the U.S. Remember, the growth in Q1 for ZYN in the U.S. was close to 80%. It is clear that this very strong growth is creating some tension on availability, whether at the level of some retailers or on some SKUs. We are making good progress in order to expand our capacity on ZYN in the U.S. And thanks to that, we believe that this tension on supply should gradually improve as we progress through Q2 and Q3, and we believe that we're going to be back to a normal situation in the course of Q4. We are confirming that we are targeting a volume for ZYN in the U.S. in 2024 of around 560 million cans. And we are working on a new location for production of ZYN in the U.S. in 2025. And of course, in due course, when we are able to share more about it, we will. On top of the [ momentum ], on our more smoke-free portfolio, we are also seeing good resilience on our combustible business. You may have seen that in Q1, we are almost flat, actually, when it comes to combustible evolution. And we continue to see even some emerging market, like Turkey, with very nice growth on combustible. So on top of a rather favorable evolution of volume, we see also very strong pricing power. You have seen that we were north of 7% in Q1, and we are now targeting 6% to 7% price on CC for 2024, which is more than what we thought at the beginning of the year. So good evolution on volume, good resilience, I would say, on CC and capacity price, we may rediscuss this during the Q&A. So all of that, of course, is building the framework of a strong performance in 2024. We are reiterating this morning our guidance for growth before ForEx impact of our adjusted EPS between 9% and 11%. And we are revising upward our guidance in terms of dollar term, in term of reported growth of the adjusted EPS. We have the ForEx impact that is easing. So the headwind easing. We were previously expecting minus $0.36. And based on the [ prevailing rates ] today, we're expecting a minus $0.29, so a bit better. And that would generate a growth of the adjusted EPS between plus 4.2% to plus 6.2%. For us, delivering performance in dollar term is a very big objective. And we are doing our utmost both in terms of price action and in terms of cost management to mitigate the potential negative headwind that we are seeing coming from the ForEx. I think what is very important is to understand that we are building our performance on what is a very strong financial growth model coming from the smoke-free portfolio. Our smoke-free portfolio enjoy today a superior financial impact on the company. If you look at the revenue on average on a per unit basis on our smoke-free portfolio, it's 2.5x higher in dollar terms than our average combustible business. And if you look at the gross profit, it's 2.6x higher. So what does it mean? It means that we have a fast-growing smoke-free portfolio. But that on top of the growth in volume, it is coming with a very positive mix impact on our financial performance. And it has a very positive mix impact, and it is giving us the capacity to have a positive margin trajectory in the future. They also enjoyed the smoke-free product at a higher gross margin rate. And already in 2024, we are based on the current currency, targeting to improve operating margin, both organically, but in reported terms as well. And that's also a very big objective that we have. Just the last word to -- but certainly not the least important. We are extremely proud because 48 hours ago, we've been named by Forbes as the #1 company in the list of the net 0 leader for greenhouse gas emissions for the work we are doing in order to decrease or compensate our emission. It's a fantastic performance to be simply the best among all the U.S. companies that have been ranked by Forbes. And I think it's a tribute to the work that we are doing on this space and the impact of our operation on the planet, which is complementing what is our first and biggest mission, which is to bring event, develop the product that will allow 1 billion smoker to switch to better alternative. Thank you, Gerry. These are the words I wanted to say...

Thank you, Emmanuel. There's few things that have come out from your opening comments I'd like to pick up on. You talked about Japan and the growth in share. I think I'm right in saying for 3 years prior to the current period, your shares of the total nicotine tobacco market in Japan have been relatively stable, post a very strong rate of growth, and you've now picked up that growth again. Could you talk about ILUMA and what the product is? And why you guys are so positive and passionate about what it can deliver for the business?

Yes, sure, Gerry. In fact, if you look back where we were before the launch of ILUMA, I mean, we have been already making very nice inroads in terms of developing IQOS present in Japan. It was a bit more than 20% market share. But it's true that ILUMA came and delivered a kind of new boost to the market share and to the growth. That is clearly for me coming from the superior quality of the experience, really within [indiscernible] the pain point of blade IQOS experience. ILUMA is intuitive. It starts on its own, it stops on its own. The flavor experience, the [indiscernible] experience is even better than with the previous IQOS. And I think we made several steps forward in terms of lifestyle experience. We've been also very innovative when it comes to consumables. So we've been developing a range of sophisticated products with our [ TEREA ] brand that has proven to be very attractive for the Japanese consumer. And I think it just shows the potential over a long period of time for IQOS, not to be a kind of one success and then that's it, but really to generate growth and gain. And I mean today, heat-not-burn category into 2 has more than 50% market share, if you take the combined heat-not-burn and combustible. And so that's it, in Tokyo, heat-not-burn now is the [indiscernible] beyond combustible. So we tell what's going to happen in Japan over the coming quarters or year. It can take just some time. And it just shows that there is no glass ceiling, and the potential of the heat-not-burn category is huge.

So on that point, could you -- there's this running debate, does heat-not-burn only work in low tar markets. Could you address that? And show us how you think -- how you guys think of that...

Well, Gerry, that's something that we are hearing very often, but the reality is that we don't see that. I mean if you take the Russian market that is probably a longer priority, I can tell you that was not a kind of low tar market, and we've been incredibly successful. Of course, we stopped the effort. We haven't been launching ILUMA. So that is, I would say, freezing the situation in Russia. And if you look at what we are doing in Cairo, in Egypt, which is a high tar market. If you look at the beginning today in what is the high tar market, which is Jakarta in Indonesia, I mean we see the traction here in a market that is, I think, probably the epitome of [indiscernible]. So I think that precisely with IQOS, ILUMA, we have such a great quality of experience that we are able to deliver to a smoker that was used to [indiscernible] an experience that is very satisfactory.

Okay. The competition in rating is intense. The competition is [indiscernible] less so. The reasons around technology, et cetera, your installed base, the work you guys have done. Do you think that competition can ever come into heat-not-burn? Or is a category so different that it will be within the big global players?

Well, a few elements to answer you, Gerry. The heat-not-burn category is very different from the vaping category. Everybody understands that. Vaping has no tobacco. It's about the liquid containing nicotine [indiscernible] and then we extract the nicotine. The heat-not-burn category, first and foremost, is about the tobacco [Audio Gap] eat. The technology is much more complex in order to control how you are eating, not burning the tobacco. How you at the best eat [indiscernible] to extract the best nicotine and generate this satisfactory experience for people who were used to smoke until then, that is protected with a number of patents. You have huge investments to be done in R&D, in science, but then in industrial capacity if you want to be able to do big capacity, again, with quality, let's not forget that quality is essential there to replicate what IQOS is doing. So that means that for somebody who would have limited resources, no science, has not been developing any kind of pattern so far, let's just say that it's very, very difficult to penetrate.

Maybe move across to nicotine pouches and ZYN. Could you talk a little bit about -- I mean, it's been a fantastic story since you acquired Swedish Match. Can you talk a little bit about how the business has performed against expectations, some of the short-term constraints you've seen on the production side? Where does ZYN go outside of U.S. and into other markets, the nicotine pouch category in general? How big could it be relative to vaping, tobacco combustible? All that kind of stuff.

Sure. You could probably spend the rest of the time on that. I mean, nicotine pouch is a fascinating category because that is a way to enjoy nicotine, that is really new. And that's -- and I think we have a growing number of user. And for many of them, when we see the profile of the ZYN user in the U.S., I mean, many of them are actually or are coming from other nicotine source. Sometimes, they absolutely 100% move to ZYN. Sometimes, they develop some [indiscernible]. But clearly, nicotine pouch is allowing people to enjoy their nicotine moment in a great way in terms of experience because you have a kick of nicotine and everybody is telling us, with my ZYN, I feel more focused, I feel better at what I'm doing, I feel more energized. So it seems to be delivering great personal benefit for the user. And this is something that you can enjoy wherever you are, whatever you're doing. So that's something that is very important to understand. The nicotine moment is with gaining space. Remember, during decades, it was probably more and more moments where you could actually enjoy your cigarette, but it's also worth [indiscernible] on IQOS in most country, not anywhere. Then with a nicotine pouch with ZYN, you can be in the office, you can be in the plane, you can be in a restaurant, you are enjoying your ZYN. But also, you can be active in doing something else. When you smoke, when you are vaping, even when you are IQOSing, you do that, you don't do something else. When you are enjoying your ZYN, you can be typing on your keyboard. Some of you could be enjoying your ZYN as we speak. You can be in the military forces on operations. You can be playing tennis. You can see driving a truck. We have a huge population of truck drivers in the U.S. who tell us that in order to be sharp at what they're doing they are using ZYN. And therefore, it's a [indiscernible] of consumption. And let's remember that there is today probably no better or less risky way to enjoy nicotine than nicotine pouch. We have already in the U.S. [indiscernible] MRTP with our snus product, General. And arguably, nicotine that does not contain tobacco that can present a number of issues. So it's probably even better than the snus product. So this is in terms of [indiscernible] nicotine, I'm not saying [indiscernible] but in terms of nicotine, this is the best product you can enjoy. This is the closest proxy to nicotine replacement therapy. Now if you take a Nicorette, for instance, to some extent, that's very similar to enjoying your -- so it's a great product. Of course, the red line is indirect consumption, and that's a place where I think we are having an impeccable approach in terms of market [Audio Gap] in the U.S. We need to be held by the regulator. We need to be held by the trade. But we believe that the category has a fantastic potential for the benefit of the consumer and for the benefit of public health. You're asking me about, okay, what is the size? What are we talking about? Today, we talk about the category that is 3% to 4% of the nicotine market in the U.S., could be 10%, could be 15%, could be 20% in the future. Why not? So I think it's what we think about.

Do you need an oral tobacco heritage in a market for ZYN to work?

You mean, do we need to arrive in a place where people knows about oral tobacco and...

Yes.

Well, that is certainly helping, let's face it, because then -- and we see a number of markets even in Europe, where in Austria, you have a little bit of [Audio Gap] history. But then you go to Indonesia, you go to Pakistan, you go to South Africa. So these are the places where we see today ZYN having traction already and some interesting move. There is some history. Now let's be clear. Vaping was not known by the nicotine consumer in the past, and it gained traction over time. So we're sure that with the right regulation, with the capacity to explain what the product is about, there will be the capacity to develop these product, which once again, for the consumer, if you want to enjoy nicotine, it's probably the best product you can have. And that present all the advantages I was describing.

Having asked the question, I've got is anecdotal evidence in the U.K. that it has a chance even with that tobacco heritage in the U.K. that much is for sure. Can I maybe switch back and go to the combustible market? And you mentioned your volume performance in the first quarter. We were discussing earlier about longevity in the sector. And every year, I've been in the sector, people have asked me the question, when does the volume price metric in combustibles unwind? i.e. declining volume rates and prices revenue flat to positive or positive. We had a load of inflation, must have had an impact. There are new categories coming in that people are transitioning to those categories. Where are we on that volume price trade-off?

Look, if you look at the markets and Gerry, you're extremely knowledgeable, you know, of course, that the trajectory of combustible is impacted by how fast alternatives are developing. And we all see a number of markets where when you have very dynamic smoke-free product developing, well combustible [indiscernible]. I mean that's obviously in Japan when you look at combustible evolution because of heat-not-burn and IQOS, in particular. That's very clear that we have a number of markets. And without any doubt, just taking the U.S. as a big market, it is for sure that the decrease in combustible is a mix of [indiscernible] in terms of consumption. But there are also -- and we see that process in a number of smokers who are switching to other alternatives. For us, the mission, and that's not very specific today in PMI. But the mission we are giving to our combustible portfolio is to be the aircraft carrier for product. And therefore, we are making sure that we are maintaining our leadership on combustible in order to maximize our impact with the trade and with the smoker that we want to convert to smoke-free products. And that's why leadership is important. And that's why we are saying maintain leadership is an important element. And so we are maximizing our price capacity, and I think '23 and '24 are showing our very strong capacity price with this vision. Now having said that, it is clear that in a number of markets where we see very great traction on our smoke-free portfolio, we start to reach critical mass, where we can wonder, okay, now the name of the game for us is to maximize the bottom line from [indiscernible]. So we're going to be less obsessed by the percentage of share of the category, but much more -- okay, what is the bottom line that I'm delivering because it becomes a pure financial play when it's no longer a commercial play.

Okay. Guys, I'm going to continue asking questions about what -- I'm not going to open up to the floor formally. But if you do have a question, please raise your hand, and I'll catch up and I'll come to you if you a question. So as we transition through the questions, if you want to raise your hand, please do, and I'll ask your question. I want to move on slightly to ESG-type profit. So the equity markets meant to discount the future, then to look at what a company is doing, where it's going to be, what the value of those cash flows that we'll generate will be in the future, discount them back to a the share price. It's all more complicated than that, but that's a starting point. It frustrates me that the dominant conversation around your business is the transition from a combustible product to a noncombustible product, all the benefits that entails, everything you guys are doing to educate the consumer, the market, et cetera. But it still feels like nonconsumer stakeholders, led by investors aren't discounting the future of your business and where it should be, what value that attracts, what multiple it should be, et cetera, et cetera. What more can you do?

Well, I'm sure we can do a better job in explaining why -- what we are doing is just now from one tricky business to another tricky business, but very much so moving from the [ tricky ] business to a fast extending business that has the potential to be growing over a long period of time. First of all, let's step back and have a look at the nicotine market, which at the end of the day, I mean less and less tobacco company, but a much more nicotine company. I know that nicotine is not well understood. And therefore, sometimes it's mixed with issues that are coming from smoking. It'll be clear what is driving the issues and the disease coming from smoking is smoke, not the nicotine. Nicotine is legal stimulant. You can have a debate. I'm for sure if you have cardiovascular condition, you should not take taking nicotine. Coffee sometimes is also creating some risk. But that's not the reason for the disease caused by smoking. But we are much more a nicotine company. And the reality is that the nicotine consumption in volume in the world is probably flat, is growing a bit that's what we see when we look at the market. And probably, by the way, partly because the smoke-free product, as I explained, general different amount of consumption. The fact that when you're not smoking, you're not overwhelmed by the smoke, so you can enjoy more nicotine as well. So that is also certainly playing a role. But there are a number of markets where we see that when we develop some less risky products on nicotine products, you have a consumption that is growing. So that is the situation. And therefore, people should not see that as a market that by necessity. We like the combustible, which we believe will [indiscernible] one day going to decrease [indiscernible] by market that is very, I would say, dynamic and with a good outlook. And within this market, of course, a smoke-free product, when you enjoy leadership as we do with more than 50%, certainly in value share of the smoke-free category, where you are set for a fantastic ride because you have probably 1.1 billion nicotine users today in the world, ballpark, 1 billion smoker, 1 million smoke-free products. That's a very bold number. So you see the trajectory that we can have 1 billion. Yes, of course, the emerging countries will take more time. That's going to be a long run and so on. But ultimately, I mean, from 10, 20 years, we see that this move has happened and will continue to happen. I'm not saying that the combustible category will have disappeared everywhere in 10 or 20 years, but we're pretty sure that the smoke-free category are going to expand. There is no way back. And when you are the arch leader of this category with IQOS and ZYN, that is taking for us a great future.

What would be good to see if some of the blanking exclusions that perhaps are put in place without people considering all the variables, if we start to see those unwind, that would be a great...

Yes, Gerry, I believe -- my view on that is that people with continued [indiscernible] performance would say, well, at the end of the day, maybe it's not a shrinking industry. As I saw, they would spend more time and they will realize that it's not a kind of dying industry. And the definition of the dying industry because it's becoming sustainable. And I'm pretty sure that [Audio Gap]. At the end of the day, yes, you're right, you have a number of exclusion. You have also people who are not necessarily having a real exclusion, but say, I don't want to look at it because they don't see the performance. So I think for us its performance and to see the number of people that we convince that this is [indiscernible] industry.

So can I take that ESG thing one step further. So you've got a combustible business that kind of declined over time. We've got a growing nicotine business, noncombustible, with all the relative benefits that provides. And I'm thinking about the old sector here now and various others. If you span out combustible business or sold it, the business still exists and therefore, there's a question mark long term for some people. There's a Board sit there and think the way to deal with this is to run it off and shut it down country by country? Or do you think spinning out the combustible business or selling it and selling for the unlikely event to get the point I'm making, is the route to go? Or you have in there, let's run this off?

Look, I think we're not at that stage where we are wondering how are we going to put the final end to the combustible business. I think our attitude to a combustible is very much the one I was describing, which is how can we leverage this combustible business to have the best performance on growing our smoke-free business, whether by this commercial impact that we generate or by the bottom line generate, which, at the end of the day, is helping us to finance the transition. It is very clear that we won't give up on the value of the business at any time. So we're not going to close the shop overnight saying that this is it. And I think for the time being, what we have in mind is to do the best possible job in the fastest possible way in order to have, I would say, an ease of problems to solve in the course because the combustible business will have shrinked in a very, very meaningful money. And at that moment, the answer will be much easier going through this question.

Okay. Related to question, I don't think that -- do you see ESG bond market raising debts? Is there any issue there at all if the bond market open to you guys, just not a problem?

Well, it is, and we've been very active in the past months and very, very successful in raising bonds. I would say it could be an issue if we were not doing this transformation, Gerry, but precisely, the fact that we are so active on bringing better products to smokers on bringing less risky solution for nicotine consumption. I think on having a great behavior in terms of responsibility on how we market our product, avoiding underage usage problem, I think all that is creating credibility. And actually, there are a number of lenders who are happy to have companies. You know that we have with a pool of banks that are lending us money. We have even a framework that is conditioning some of the rates we pay to our success on our transformation to become smoke-free. And I see that, by the way, developing as probably a new feature that is probably going to develop in the coming years. I think a number of lenders now see their role, like probably many investors, where investors believe we have a role to play in a company transformation to be more sustainable, of course, for the benefit of the shareholder as well. But to develop business that can go profitability sustainably over a long period of time. Traditionally, that was a role that the investors were playing and investing in equity shareholders. I think or more and more lenders, we believe that they have a role [Audio Gap] in order to drive the right behavior, the right solution as well.

Okay. I'll move on to capital allocation type questions. Do you mind just where the Board is on share buyback?

The Board is always happy to consider share buyback, provided that we stay within the frame and the trajectory that we have set. So you remember that before the Swedish Match acquisition, we were on a net debt to EBITDA of around 2x. And we said that once we have the visibility that we are on our way to go there, then we will resume discussion with the Board on share buyback. To be clear, for me, share buyback is not really a strategy. But certainly, we see our share price not really reflecting the value of the company, it's a good thing to do. So that's why we would be always happy to discuss that with the Board, provided that we are within, I would say, the guardrail or the frame that we've been setting.

[indiscernible] a situation, where something is on the horizon that leads a huge amount of CapEx or an acquisition that prevent you going down the buyback route?

Look, there was one Swedish Match, okay. And frankly, we have no regret to have made this acquisition. I think that given the leadership it is giving us in the overall category, the fact that we are back in the U.S., I would say, probably in the brightest possible manner, that was the right thing to do. But there is nothing else in the smoke-free space that is as the Swedish Match. So that was the kind of one of its own. And today, we are very much focused on organic growth. It's a very strong portfolio that we have. And that means that M&A is not top of the agenda. Am I closing the door in the future if there was interesting smoke-free, I would say, opportunity? Why not? But frankly, today, the name of the game for us is to optimize the organic growth [Audio Gap]. No, I don't see that in the way of going back to buyback program.

Probably a short answer. You announced a strategic view of the cigar business. Can you give us any indication of time as to when you guys may be in a position to say something?

Well, we'll see. I don't think that you will have to wait forever. We're still in the middle of this process. I think everybody can appreciate that we need to understand, okay, what is the business doing for us in the U.S.? What is the potential of growth in the U.S. and outside the U.S.? What is the value that we could get if you were to find a buyer for the business and then try to assess what is the best future for this business? We want to be smoke-free. So it's clear that in the long run, we don't expect to be necessarily selling cigar. But in the U.S., we need to have a very clear strategic view of how important or not is this business.

So you touched on the dollar in your opening comments. You were talking about the dollar as we entered the room. Do you guys -- are you thinking about allocating capital and investment in resource to more stable parts of the world? Or just the dollar will be the dollar and ebb and flow -- it probably ebbs or flow a long time one way and it will come back the other way. How do you think about that? .

Well, I don't know whether it was the first -- to some extent, I guess, when we invest in Swedish Match, we are, first and foremost, making a dollar -- okay, that we've been paying in Swedish krona, but that was a dollar investment in this. The vast, vast majority of the revenue and the profit generated by Swedish Match is in dollar. So I think this was going in the right direction. And clearly, if we have the possibility, inorganically, but first and foremost, organically to develop fast our U.S. dollar business, which [Audio Gap] to a large extent, is U.S., large part duty free and a couple of countries where we are selling in dollar or where the currency really affects the dollar. But given -- I'm not going to come back on what I was saying on ZYN and then IQOS that is coming soon in the U.S., given the growth potential that we have in the U.S., I mean I believe that our exposure to the U.S. is going to grow, which is certainly good news because that's going to decrease the volatility on the U.S. dollar. For the rest, I think it's for us to, as I explained, to -- I mean the growth potential is huge outside the U.S., okay? So we're not going to be just focusing on the U.S. because that's comfortable from a currency perspective. In terms of growth, in terms of looking for the long term, we have fantastic market opportunities. Yes, in market with some volatility on the currency on the short term, it's for us to work on price increase to make sure that we set as much as we can. Cost management, very demanding on how we are managing our cost to offset possible negative impact coming from the ForEx and over time, as I said, to deliver performance in dollar terms, whatever the currency. And I will finish by saying on the dollar, I have been now for too long CFO of the company, I know there are cycles. It should have last 10 years, not being particularly favorable to us. Who knows what's going to happen in the future.

Great. We got a few minutes left. My next question is slightly negative, and I don't want in the negative. But the stock was -- we're talking about a dollar again, right? The stock was $120, 7 years ago. We're sitting around $100 now. To what extent does the stock price have an impact internally morale [Audio Gap] all that sort of stuff.

Gerry, can I tell you that the [indiscernible]? It's a bad...

No, doing well...

No, no, but it's a bad way to start the day because I don't think it's true. I mean I was, before this conference, looking at our total shareholder return for the last -- since the IPO the last 10 years, last 5 years. So 10 years, which is probably impacted by the dollar, we're middle of the pack. But otherwise, since the IPO in the last 5 years, in 2019, we are, I think, top 2 or top 4 company in the FMCG space for our peer group. So we are among the best performer. Don't forget that versus other company, we pay a very high dividend. That is, of course, impacting the share price, okay, but we should be looking at the total shareholder return that is a much better way to look at the work we are doing. And I think if I was looking at the total shareholder return since the IPO and its M&A, we talk about 250%, okay, could be there for sure, but not that bad, nevertheless. But then I take your challenge and as I said, in chorus, we understand that our investors want U.S. dollar performance. They are paid the dividend in dollar, and our [indiscernible] is to deliver performance in dollar terms.

In my defense, the total shareholder return part of the answer was the way to go. And I do think we're all guilty of ignoring the dividend at times, and people [indiscernible] state the blinding the obvious, but sometimes, the blinding obviously needs to be stated. Yes, you have to think about the dividend...

In our industries for sure.

Absolutely. One final question. We're through Q1. We've probably got visibility around Q2. I'm not talking about the second quarter or even the calendar '24. You guys are sort of sitting there with long-term earnings trajectory of something around touching on double digit. Given the trajectory of the business over the medium-to-long term with ZYN, et cetera, the stability of pricing in combustibles, what you could do with share buybacks, et cetera? Is it reasonable for people to think that this is high single-digit, low double-digit compounding earnings business ex the dollar, which could be positive over the medium to long term?

Look, we've been sharing our algorithm for the '24, '26 period. It comes with very strong dynamism on the top line. The [indiscernible] 6 to 8. By the way, this is what we've been delivering for the last few years. So we are not gaining any color, I mean that kind of performance, and coming, of course, with good evolution on the volume. We talk about organic margin improvement, and we talk about 9 to 11 adjusted EPS growth, excluding ForEx. So if you take that and on top of that, you had the fact, as I said, we want to work on how we maximize the offset of potential is that there is a negative impact on the dollar. We believe that we are in a position to deliver very strong performance in dollar terms. In terms of excluding ForEx, I think we are very clear. But it doesn't mean that we cannot have something in dollar, that is going to be very powerful. And I think you've been summarizing very well all the elements. Given the momentum on the smoke-free, given the resilience on CC, where between relatively good resilience and volume, the pricing power, everything we can do, thanks to the positive mix on the margin improvement. At a certain point in time, certainly the buyback that we resume, I think we are in a very good position to deliver strong performance in the last term.

Excellent. Well, timing is superb. We've got single digits really on the [indiscernible] in front of us. So with that, Emmanuel, -- thank you very much.

Thank you. A great conference. Thank you very much.

Thank you very much for your time.