Puig Brands, S.A. (PUIG) Earnings Call Transcript & Summary

Good evening, and thank you for joining us this evening as we discuss our results for the full year that ended on December 31, 2024. Today, we have with us our Chairman and CEO, Marc Puig; and our CFO, Joan Albiol. Mark and Joan will share some brief remarks on the performance, financial results and outlook. We will then open up the line for Q&A. You will find this presentation, the press release and other supporting regulatory documents on our website. You will also be able to access a replay of this recording shortly, also on our website.

Good evening, everyone. We are pleased to report a strong 2024, where we continued to deliver on our commitments and outperformed the premium beauty market. A few weeks ago, we discussed our sales performance, driven by exceptional growth in our core fragrance and fashion business, which resulted in record net revenues of EUR 4.8 billion. This represents double-digit growth, 10.9% like-for-like and 11.3% reported growth, ahead of our high single-digit like-for-like growth, medium-term revenue guidance provided at IPO and well ahead of the premium beauty market. We achieved this while delivering a strong gross margin position, which was 74.9% for 2024, 20 basis points improvement over 2023 and reflects well the desirability of our brands, the continued elevation of our portfolio and our strong execution capabilities at scale. Our adjusted EBITDA of EUR 969 million implied a margin of 20.2%, slightly ahead of our guidance of 20% for 2024. Our margin was 20 basis points higher than 2023. Our adjusted net profit was EUR 551 million or 11.5% of sales, implying 40 basis points of improvement versus 2023 and EUR 1.02 of adjusted earnings per share. Reported net profit was a record EUR 531 million, growing 14.1% over 2023. Further, we delivered exceptional free cash flow generation, resulting in a 65% conversion on adjusted EBITDA, much improved versus 2023. And we also significantly reduced our leverage to 1.1x net debt versus adjusted EBITDA. Joan will discuss our financial performance in further detail later in the presentation. To quickly recap our sales performance, which we discussed in detail a few weeks ago, the EUR 4.8 billion net revenues were a result of 10.9% like-for-like growth, 1.2% growth from the acquisition of Dr. Barbara Sturm and a negative 0.8% impact from foreign exchange. The key driver was the exceptional performance of our largest segment, Fragrance and Fashion in both EMEA and the Americas. With double-digit growth in this segment, we continued gaining market share in our core business. Our like-for-like growth benefited from a positive impact of 1.1% due to the hyperinflation adjustment of the Argentine peso. In 2023, we had a negative impact, whereas in 2024, we had a positive impact, which has therefore resulted in a favorable comparison. Looking back at the evolution of growth over the quarters, we saw in 2024 that our performance accelerated in the second half of the year. This was because our pipeline of innovation was skewed towards the second half. We saw strong interest from retailers in our brands, which was reflected in our net revenues during this period, and we were also lapping easier comps versus 2023. We have already discussed our segmental net revenue performance a few weeks ago, but I would like to make a few incremental comments on each of these business segments. The Fragrance and Fashion segment continued its strong momentum with EUR 3.5 billion in net revenues, up plus 13.6% for the full year 2024, driven by EMEA and the Americas. According to our estimates, this year, we had 3 brands among the top 10 globally with Jean Paul Gaultier joining Rabanne, Carolina Herrera for the first time. This means 2 things: shows our ability to achieve and maintain positions in top rankings while also making it clear that there is opportunity to advance further in the rankings. As a result, in 2024, we have strengthened our market share globally, having achieved a record 11.5% value market share in selected fragrances according to our estimates, improving versus 2023 market share. We gained market share in all of our geographies, except Latin America, where we continue to defend a very strong #1 market share position while not compromising with promotional activity, which we have seen accelerated in this region from our competitors. Among the 2024 highlights, we want to showcase the performance of some of our best-performing fragrance lines. What we refer to as fragrance lines are the franchises within our Prestige brands. Based on the most recent sellout information, we are delighted to inform you that our estimates confirm that Carolina Herrera, Good Girl has become the #1 feminine fragrance line worldwide for the first time in addition to become the #1 feminine fragrance line in the U.S. This is now easy fit, and we are incredibly proud of this accomplishment. Puig fastest-growing brand was Jean Paul Gaultier, and Le Male became the #3 masculine fragrance line worldwide. Within our EUR 1 billion brand, Rabanne, the franchise One Million was the #4 masculine fragrance line worldwide. With this, we have 3 franchises in the top 5 masculine and feminine franchises worldwide. For the full year 2024, the makeup segment represented 16% of the Puig net revenue in the period and recorded net revenue of EUR 763 million. This is a decrease of 1.3% on a reported and constant perimeter basis against 2023, reflecting some of the specific challenges we navigated this year in the segment. Our largest contributor to makeup, Charlotte Tilbury posted a flat performance in the segment versus 2023. In spite of softer net revenue growth, Charlotte Tilbury maintained its #1 ranking in the U.K. and achieved a #3 ranking among makeup brands for the full year in the U.S., having gained 2 positions versus 2023. The brand continues to drive innovation in the category. The segment was also impacted in 2024 by several factors, including a weaker performance across some of our small makeup offerings, tougher comparison with a strong 2023 performance and was further impacted by specific sell-in, sellout dynamics. We are in the early days of building the makeup proposition for core fragrance and fashion-led brands. We're learning that it takes a long period of investment to build this even with large and established brands. Puig operates by brand. And when we look at the P&L and the opportunities that the build-out of the makeup proposition brings to brands like Rabanne and Carolina Herrera, it makes a strategic sense. But it is challenging from a reporting standpoint because these investments are then reflected in the makeup segment. Gaps in the sell-in and sell-out, along with the impact of dupes and the withdrawal of the Airbrush Flawless Setting Spray slowed growth in this category this year. For the full year 2024, the skincare segment delivered EUR 560 million in net revenue or 11% of Puig's net revenue. Puig represents an increase of 19.8% on a reported basis and plus 7.4% at constant perimeter against 2023. In particular, Dermo-Cosmetics continued to perform strongly with Uriage delivering double-digit organic growth, supported by successful launches and hero franchise accelerations. Puig continued its expansion and diversification in the segment with the incorporation of Dr. Barbara Sturm in 2024, which adds an ultra-premium brand to Puig portfolio. To quickly recap the performance of the geographical segments, which we discussed in detail a few weeks ago, we delivered strong growth in our core regions of EMEA and Americas. And while APAC performance was more moderate, we delivered growth in this region as well, and we began to see the benefits of the implementation of newer subsidiaries in the region. We continue to make progress toward our ambition of being at the forefront of ESG practices in our industry. During this year, our targets were verified by SBTi. We have aligned our strategy and commitments with the most recognized international standards, certifications, ratings and initiatives. To call out a couple of examples, we were recognized on CDP's A list for climate change, and we were awarded a 20.9 score by Sustainalytics, which is #10 in the household product industry out of 104. With this, I will hand it over to Joan, who will walk you through the details of the financial performance.

Thank you, Marc. I would like now to spend more time on Puig's financial performance during the fiscal year 2024. As Marc summarized a few minutes ago, we are very proud of the financial performance of Puig during this past year. We showed a strong growth ahead of the market and slightly above the target we set forth in our medium-term guidance. We improved our EBITDA generation while continuing to have healthy investment level behind our brands. Our cash conversion increased significantly, leaving our leverage position well below our guidance threshold. Finally, after the IPO and the update agreements with our partners, our capital structure with respect to future commitments has improved significantly. Now let's go into the details. I would like to start providing you with a summary of our income statement, where I would like to highlight our net revenue increased to a record of EUR 4.8 billion, which represents a year-on-year growth of 11.3%, of which 10.9% was like-for-like growth. That, as mentioned, position us well ahead of beauty market. Our gross margin grew to 74.9%, one of the highest in the industry. We delivered adjusted EBITDA of EUR 969 million, which at 20.2%, it's also an improvement of 20 basis points ahead of last year and also above guidance for 2024. Finally, our adjusted net profit was EUR 551 million. Our growth in adjusted net profit for the period has been 15.5%, which is 4 percentage points faster than our top line reported growth. Our key indicators for operational profitability, the adjusted EBITDA margin has evolved positively to 20.2%. Let's review the drivers of this increase. First, we continued improving our gross margin to 74.9%. Our gross margin would have been even higher if it wasn't for the performance of the makeup business segment, which due to the events explained, generate higher inventory losses. Our distribution costs generate savings of 50 basis points, benefiting from the normalization versus early 2023 level. Due to our superior growth, we leveraged our SG&A expenses, now weighting 40 basis points less of our net revenues than last year. On the positive impacts, D&A as a percentage of net revenue also increased 50 basis points, following the increase of CapEx investment over the recent years to drive growth. This positive impact allow us to increase our A&P investment by 1.3 percentage points. In 2024, we invested 32.4% in A&P behind our brands in line with the levels deployed in recent years. We believe that this investment allow us to continue to fuel growth and maintain the desirability of our brands to go ahead of the premium beauty market. Moving to operating profit. We demonstrate growth of 9.5% versus 2023. Our operating profit margin reduced slightly by 0.3 percentage points, which, as we just explained, is a result of an increase in A&P to support our brands. Analyzing the profitability of our business segments, the results of 2024 have differed by category. Our core Fragrance and Fashion business, which remains the largest and most profitable segment, increased its profitability by 0.3 percentage points to reach 19.2% of operating profit margin. The business segment benefited from the strong positioning of our brands, which led the Prestige fragrance rankings globally. We were able to deliver this improvement despite the increase in the A&P levels already mentioned. Our makeup segment, which had a challenging year, saw a reduction in its profitability to reach a 5.8% margin. Several factors contributed towards this. The first factor was the growth of the segment, which was lower than expected. Performance this year was affected by the negative sell-in, sell-out dynamics and the increased impact of Puig, slowing the growth and therefore, limiting our ability to better leverage the structure and A&P. The second factor was that we maintained elevated A&P levels to support our smaller offering in this segment. We have been learning that the extension of brands across categories to build multi-access brands will take longer than initially expected. Finally, as announced in December, the voluntary withdrawal of the Airbrush Flawless Setting Spray had a negative impact on Charlotte Tilbury, a brand that otherwise demonstrates healthy profitability levels. Lastly, our skincare segment at 7.2% operating profit margin was impacted by the integration of Dr. Barbara Sturm, which had a dilutive impact. As anticipated, 2024 has been a year where we voluntarily reduced the distribution of the brand to ensure that it gets the right setup for future growth. Over time, as we gain scale in makeup and skincare, we believe that the profitability of these 2 business will have the potential to converge with the group level. Focusing on the bottom line, we delivered a double-digit growth in our reported net profit to Puig to reach EUR 531 million in 2024, mostly driven by the increase in operating profit, as we just discussed, but also impacted by other items. Let me go through the main ones. In 2024, the financial result improved significantly due to the reassessment of the earn-outs related to the acquisition of Charlotte Tilbury and Byredo that had been accounted conservatively. The second impact is the reduction in noncontrolling interest following the increased stakes in Byredo and Charlotte Tilbury during this year. We had a lower than previously anticipated tax rate that impacted us positively. And to finalize offsetting these positive impacts, as we mentioned during our first half results, this year, we had an extraordinary impact generated by the IPO war, IPO cost and M&A expenses. The most relevant of them being the extraordinary cash award granted to all Puig employees that amounted to EUR 94 million. Adjusting for this extraordinary IPO and M&A expenses and also for the positive financial impacts of the reassessment of the earn-outs resulted in an adjusted net profit of EUR 551 million with a margin of 11.5%, 40 basis points better than last year. 2024 has been a very positive year in terms of cash flow generation. We have been able to advance on our targets of improvement in cash conversion, delivering significant results. Adjusted operating cash flow of EUR 825 million was an increase of EUR 263 million versus 2023, benefiting from the increase in profitability and significant improvement in working capital, driven largely by improved inventory levels and improved liabilities management. After adjusting for CapEx in line with our expectations at 4% of net revenue for the year, free cash flow from operations stands at EUR 634 million, with a conversion over adjusted EBITDA of 65%, achieving our objective earlier than announced. Incorporating the cash impacts of extraordinary items, largely the IPO award and cost, operational cash flow was EUR 549 million. Before we discuss the evolution of our capital structure, we would like to recap the key events of 2024 that had a direct impact on it. In January 2024, we acquired a 65% stake in Dr. Barbara Sturm. On May 3, we listed on the Spanish Stock Exchange, raising primary proceeds of EUR 1.4 billion for Puig. At the same time, we accelerate the buyout of the remaining ownership of Byredo. Also consequently with the IPO, we acquired the minority stake held by the financial partner in Charlotte Tilbury. And after the execution of the planned partial put/call with Charlotte in July, our stake in Charlotte has increased from 55% at the end of 2023 to 78.5%. Also with Charlotte Tilbury, we extend our strategic agreement with her this past December until 2031 with a better distribution of the timing of the Puig end calls over the next 5 years. Our net financial leverage improved significantly over 2024 and currently stands at 1.1x net debt to adjusted EBITDA, which is comfortably below our 2x medium-term threshold, allowing us to maintain both operating and financial flexibility. Let's quickly recap the key impacts. First is the remarkable improvement of cash flow that contributed to a reduction of EUR 549 million of leverage. EUR 1.1 billion have been invested in M&A, which includes the cash outflow related to the acquisition of Dr. Barbara Sturm and cash paid for the stakes of Byredo and Charlotte Tilbury acquired over the course of the year. This was offset by the EUR 1.4 billion of primary proceeds. During 2024, we paid EUR 186 million of dividends to shareholders corresponding to full year 2023 performance. And finally, the EUR 222 million of outflows related to the financial interest and leases. As a result, we finished 2024 with a significantly strengthened capital structure. We would like also to reflect on the evolution of our future commitments and liabilities from business combinations and provide an analysis of how these have evolved through 2024, reducing significantly from EUR 2.4 billion at the end of 2023 to EUR 1.1 billion at the end of 2024. Let's quickly recap the events. Following the acquisition of Dr. Barbara Sturm, we recorded EUR 161 million liability on our balance sheet related to the 35% put/call option for the remaining stake that we don't already own. As mentioned, we increased our ownership in Byredo to 100% and Charlotte Tilbury to 78.5%, reducing our liabilities to EUR 1.25 billion. Furthermore, every December, we reassessed the value of the remaining liabilities in our balance sheet. These liabilities relate to Charlotte Tilbury, Byredo, Loto del Sur and Kama Ayurveda. The reassessment is based on several factors: change in foreign exchange and discount rates, change in expectations of business performance of the brands where we have commitments and any update of the condition of our agreements. And in this case, it's worth mentioning that we agreed with Charlotte Tilbury in December 2024 with respect to the remaining stake and was extended to 2031. Based on the combined effect of these 3 factors, the liability from business combinations further reduced by EUR 205 million in 2024. To wrap up our financial remarks, we would like to provide also a view on how the timing of effective cash outflow related to these liabilities from business combinations is scheduled. As you can see in the calendar, out of the EUR 1.1 billion of liabilities, the largest cash outflow is expected to happen more than 5 years from now in 2031 to be precise. This is a significant change with respect to last year where the expected concentration of outflows was in 2026. Taking into consideration the current levels of financial leverage, the reduction in the amount of liabilities and the adjustment of the calendar, we would like to highlight the reinforced capital position of Puig, allowing for complete flexibility in the coming years. I now pass it back to Marc, who will comment on Puig outlook.

Thank you, Joan. Now let's talk about the future. We feel confident that given the strength and desirability of our brands, we will be able to outperform the premium beauty market. With this, we maintain the medium-term guidance that we provided at IPO, high single-digit like-for-like revenue growth. Given that we have seen some moderation in the market momentum, particularly in makeup and skincare, we wanted to provide a more specific outlook for 2025. For this coming year, we expect net revenue like-for-like growth to be in the 6% to 8% range. There are a couple of factors which could determine the upside or risks to growth for the year. One, the first factor is the momentum in fragrances. As we mentioned a few weeks ago, 2024 was another strong year for the fragrance market. Even though we saw some moderation of growth during the holiday season, these levels remain healthy and are consistent with our hypothesis at IPO. We remain very confident in the prospect of fragrances for 2025. The second factor is the momentum for Prestige makeup and the impact of dupes. We have seen mixed momentum in this category, some of which has been driven by the proliferation of dupes in the category. We are responding to this through innovation, education and creativity along with legal measures. Coming to adjusted EBITDA. We continue to see upside potential for margin in the medium term, as always allowing for virtuous reinvestment into our brands. We will continue to prioritize growth over margin improvement, and therefore, we will maintain healthy levels of A&P investment. We aim to drive margin improvement in 2025 in line with 2024. With the strength of our brands and our healthy gross margins, we're able to cope with tariffs to some extent. This outlook took into consideration a potential level of tariffs that was lower than what we heard overnight. If this level of tariffs are finally implemented, we would need to reassess the potential impact to adjusted EBITDA margin for the year. We continue to monitor this situation. We made significant progress this year with respect to our capital structure, as Joan described a few minutes ago. We continue to manage our balance sheet conservatively. And while we are comfortably below the threshold that we established for ourselves, we will continue to make sure we have ample room for strategic flexibility with net debt versus adjusted EBITDA ratio not exceeding 2x. We maintain our intention for a 40% dividend payout ratio in line with our historical practices. The first dividend since our IPO of EUR 212 million will be paid in June 2025 with respect to the full year 2024, subject to the approval at our Annual General Meeting. And lastly, we continue to maintain a highly selective approach to M&A. True to our character as a home of creativity, we have some great initiatives for 2025. While it would be impossible to discuss all of them, we can say that we are excited by the long pipeline of innovation ahead of us. In fragrances, we have a major and exciting Prestige launch lined up for the second half of 2025. In niche, we continue to expand our collections-based offerings through newness that we plan to deliver throughout 2025. In makeup and specifically in Charlotte Tilbury, we have a longer pipeline of innovation in 2025 than we did last year with multiple new launches in the most relevant categories over the course of the year, also skewed towards the second half. In skincare, we have a steady pipeline of launches over the course of the year across our brands. In closing, I want to reiterate how proud we are of our 2024 results. This is a testament of the strength of our brand portfolio and our teams that make Puig the home of creativity and deliver on our commitments. Overall, we are energized by all the great initiatives we have planned for 2025, and we look forward to another year of continued execution.

Thanks, Marc. With that, we come to the end of our prepared remarks, and we will begin Q&A.

The next question comes from Mariano Szachtman from Santander.

So my question is on the guidance. If you could provide more color on the growth guidance, how should we think in terms of price, volumes and mix? And also, if you could share some information of the pipeline of innovations, if it is more skewed towards the first half of the year or the second half of the year?

Thank you, Mariano. In terms of guidance, we expect in terms of pricing, as we have mentioned in the recent past that most of the inflation-related price increases that we have seen in the prior year, post-COVID effect, had finished. So our intention for the future is basically inflation or 1 point above inflation. That's in terms of pricing. Regarding the pipeline, we have -- we call Puig the home of creativity. We have a pipeline of innovation that we are very excited with. And regarding -- a little bit skewed towards the second half for 2025. That's our plan. I hope that answers your questions.

And if I may a quick follow-up on the A&P increase. How should we think going forward?

If I understand well, you are asking regarding the A&P increase for what's going to happen next year? Basically, what we have said is that our intention is to prioritize growth versus margin improvement. And it's true that last year, there was an increase when you compare 2024 versus 2023 on A&P. Sometimes it goes because there is more emphasis on launches or there are certain activities that whether it's Prestige versus whether it is Niche, there might be not necessarily at the same level of A&P for all the different business models. So that's why there's been sometimes volatility -- not volatility, but changes in the percentage. And our expectation is to be between the 31% and 32.5% levels that you have seen in the last few years.

The next question comes from Molly Wylenzek from Jefferies.

I just have a question on the M&A outlook. It feels like -- and given the changes for liabilities for business combinations that the integration mode that you talked about during the IPO for the next few years might be shifting a little bit. Do you agree with that?

Thank you, Molly. I'm not sure I got the whole question. You're talking about M&A, but can you clarify again the specific question?

Yes. Yes. So thinking about the company, at the time of the IPO, you were talking about the next few years being more integration mode rather than going out and seeking new opportunities given the cash flow that you published this evening and the changes in the maturity [ now aging ].

Okay. It's true that the modifications, the changes you've seen in the balance sheet over the past year gives us more flexibility going forward. But we have always mentioned that we are going to be very careful because we have what we believe is a curated portfolio and only when the circumstances happen to bring us the possibility of a brand that we think it fits with our portfolio, that it has the right profile, then we'll be proactive in that sense. In the last, I think, remarks, we did mention that we wanted to make sure that the different companies that we have been partnering with in the last few years are well integrated, and we run them efficiently. At the same time, we do look at things. On an average, every year, we have like 100 possibilities of opportunities that come to our table. And if the time -- if the opportunity -- the right opportunity comes, then we will be proactive. But at this point, we are more focused on continuing this progressive integration of the different brands that we have been partnered with lately. I hope that answers your question.

The next question comes from Jeff Stent from BNP Paribas Exane.

You said that your guidance includes an assumption with respect to tariffs. Could you please tell us what your guidance would be if there were no tariffs and also if they were the proposed 25% tariffs?

Yes, we mentioned that in our guidance, we had contemplated a scenario where eventually we might have tariffs that were mentioned originally in this year that were below the 25%. If -- because in that sense, tariffs do not affect as much as may affect other industries given our gross margin and given the flexibility that we have had in the past to pass the small tariff increases into the prices. Now what we heard last night or yesterday about the 25%, that's a bigger impact that we have not contemplated in our guidance. And now we'll have to see whether these tariffs are implemented, what -- whether it affects our product categories, when -- if they happen, when are they implemented, and then we will be able to assess if there is an impact in our business.

The next question comes from Danping Liu from Citi.

I have a question on the phasing of growth in 2025. I appreciate you talked about the large pipeline, and it seems to be H2 skewed again in 2025, which is similar to 2024. But considering last year, we had an easy comp in H1. So how should we think about the growth trajectory this year? Is it more balanced between H1 and H2? And if I can just squeeze in, which is also related to the phasing, how the start of 2025 been in terms of sell-in and sell-out?

Yes. Thank you, Danping. In terms of sell-in and sell-out, we have minimized the gaps that we had seen last year, particularly in makeup. And so we are not expecting these gaps happening this year. In terms of growth, we can say that the first -- the weeks we have up to now, the growth we've seen is consistent with our guidance for the year. But in any case, the -- some of the launches or innovation is skewed towards the second half. It's true that last year, we saw something similar. And maybe this year will be in that same trend.

The next question comes from Jose Rito from CaixaBank.

So in terms of top line growth outlook, 6% to 8%, could you mention if this evolution should be more or less be similar across the different divisions, so fragrance and skincare. Also because last year -- well, we know that makeup had lower-than expected response to Charlotte Tilbury. So going into 2025, how do you see this evolving the makeup division?

Yes. Thank you, Jose. When we mentioned the guidance and our outlook for the year, we did mention that there were a couple of factors that could affect either positively or negative throughout the year. On the positive side, we felt that if the momentum in fragrances continues, then there is an opportunity for an upside in that category because we still see the category having a healthy behavior. On the other -- on the contrary, particularly in makeup and our main brand in makeup, the impact of dupes is something that we are counter assessing. And as we mentioned with innovation, creativity, education and legal measures, legal protections of the IP. But we have to see whether this plan really helps us counterbalance the dupes in the way we think. So that's why we have some upside opportunities and also some risks that we have mentioned. I hope this answers the question, Jose.

The next question comes from Fernando Abril-Martorell from Alantra.

Fernando, do you have a question for us?

The next question comes from [indiscernible] from JPMorgan.

Yes, sorry I was on mute. Only one question with regards to the...

Question was cut at the beginning, and we cannot hear you.

Celine Pannuti here. I have a question about the fragrance industry. So you said the momentum continues to be good. Could you give us an idea of what -- all right. I hope you can hear me. I wanted to understand on the fragrance industry, what kind of growth are you seeing or expecting for 2025? You were talking about a moderation at the end of last year. How do you feel about your inventory in the trade as you start the year? And in terms of the launch that you are talking about in perfume, can you talk about -- I mean, which brands are this going to be for? I think you were super successful with Jean Paul Gaultier in '24. I just wanted to understand how -- what innovation you have for that brand specifically? And then just maybe can you clarify on the tariff? You mentioned 25%. Is that from Europe to the U.S. that you expect 25%?

I'll try to answer the different questions. I'm going to start from the end going to the beginning. I mentioned 25% because last night, we heard the U.S. mentioning the possibility of applying tariffs of 25% for products coming from Europe to the U.S. Now this was only a possibility, and there was no mention of which products, what timing and et cetera, et cetera. But there was the mention of 25%, and that's why the question is arising, but that's very recent news from yesterday. In terms of the growth, I think you mentioned growth of Jean Paul Gaultier. Jean Paul Gaultier brand has been growing at very significant levels over the past few years. 2 years ago was a brand that grew the most as last year. So we believe that this is a brand that has momentum and may continue growing. So that's a brand with momentum, let's say. You mentioned whether I could specify what the launches from what brands. We have not presented those launches yet in the market. So I would prefer to maintain this information confidential, if you don't mind. And regarding the fragrance industry growth, at the time of our IPO, we did say that our projections for growth of the industry were going to be -- for the next few years was going to be between 6% and 7%. And at that time, we're also seeing that all of the 3 categories were going to have this growth because that was the projection that some statistical companies had presented to us. Now the reality is that 1 year after, we have seen the fragrance market grow faster in 2024, but this growth has moderated or normalized towards this growth rate that we had anticipated during the IPO -- during the Christmas season. That's why we said the Christmas season was healthy, but had moderated its growth by the end of the year. Going forward, we believe that the fragrance market will continue growing at this level that we had anticipated during the IPO. And I believe you have also the question regarding inventory at retailers. We think that we have not seen this destocking that we have heard others mentioned. So we feel we're comfortable in that regard. I hope that answers all your 5 questions.

The next question comes from Fernando Abril-Martorell from Alantra.

Sorry about that. So with regards to the free cash flow generation in H2, particularly with regards to the working capital evolution, so a big improvement in H2. My question is, do you see room for further improvements there in the inventory management or not going into 2025?

Fernando, Yes, as we said during the IPO and in previous calls, we identified that our level of inventory was not optimal at the time of IPO. So we have done a significant improvement of this level during 2024. We have reduced EUR 78 million in the inventory, but we still think we have some room to improve these levels.

That was our last question. Thank you all for your questions today. We look forward to speaking again when we present our sales update for Q1 2025 on April 28. Thank you very much.