Premier Foods plc

Good day and thank you for standing by. Welcome to the premier first quarter one trading update analyst conference call. At this time, all participants are in listening only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, we want you to press star and one on your telephone keypad. Please be advised that today's conference is being recorded. And I would now like to open the conference over to your first speaker today, Mr. Alex Whitehouse. Thank you. Please go ahead.

Thank you and good morning everybody and thanks for joining this our quarter one trading update call that covers the 13 weeks to the 3rd of July 2021. So I'll give a brief introduction to our first quarter trading before opening up the call to questions and I'm joined of course this morning as always by Jonathan Leggett our CFO. So I'll start by giving a few headlines on our trading in the quarter. I'll then dive into a few key areas to provide a little bit more detail. And then I hope that some countries can give you a brief reminder of the refinancing that we completed in the quarter as well. And then as usual, Lester will pass the question. So as a reminder, by the way, today we're also holding our AGM. And that is at 11am. And we'll be holding that virtually again this year. So if any shareholders on the call who'd like to attend and don't yet have details to do contact with Scotland in relation to the details of how to attend this year's meeting. So on then to the quarter one results and overall I'm really pleased to say that we've had an encouraging start to the year and we've carried on the slaving remittance from last year into the third quarter and that this combines with the significantly reduced interest costs that means that we're now seeing lower adjusted PDT to be at the top end of our expectations for this financial year. Now, when we switch back in May, we test out a couple of things in terms of how we'll be measuring our progress this year. And I think, first of all, given the exceptional circumstances this time last year when the UK was in that first quite strict national lockdown during the quarter, our volumes were equally exceptional, particularly in our grocery business. So we said it would be sensible and appropriate to review our sales performance this year compared to two years ago, as well as compared to one year ago. So for this quarter, that means we're comparing events quarter to the end of June 2019. And also if you remember we provided then a range of where we expected our Q1 sales were likely to land and that range was between 5% and 6% growth compared to a couple of years ago. And so we're very pleased therefore that we've come in at the top end of that range with growth of 6.3% compared to the same quarter two years ago for the total growth. And when we look at our retail grocery sales, and by that I mean if we exclude the out-of-home channels, then things were up 13% during the same period, which compares quite favourably, I think, to how our retail partners have performed over a similar timeframe. But for me, most importantly, it's our branded sales. Our branded sales have performed really strongly, up 9.5%. business, branded sales were up 12% versus two years ago. So essentially the equivalent of two years of 6% back-to-back growth, which is clearly well ahead of the historical growth rates of our category. Now obviously that strong branded sales performance is a direct result. of us continuing to deploy our brand as growth model and that remains at the heart of what we're doing. And so as a reminder, of course, we start with a portfolio of brands which are our leaders in their categories and with very high household penetration. And we then bring to market insightful new products which are based on current consumer needs and trends. And we support our major brands with emotionally engaging and meaningful marketing and TV advertising campaigns. And finally, and very importantly, and we work closely in partnership with our key retail partners delivering excellent install execution for the brand. So during the quarter therefore we continue to execute the growth model with pace and with energy and three of our major brands, Starwood, Mr Kipling and Bachelors receive advertising during the quarter. And again, we brought a number of new products to market. In fact, you might remember that due to the challenges of COVID last year, there were delays for many of the retailers, range reviews, and the range reviews, obviously, those are the windows where we get our new products. And that resulted in some delays in the introduction of some of our new products from last year. So I'm pleased to say, ladies and gentlemen, those reviews are now taking place and we've seen some really very positive outcomes for our brand and for the distribution of our brand with much of the delayed new products from last year now coming through into store. And in fact, we've seen a rapid step up in the potential of sales that we derived from new products which for the quarter was well ahead of how we ended last year and we've been how we ended the year before so that's all very positive and as a result of all that we've continued therefore to perform ahead of the market in the quarter increasing our volume share versus last year If you look at the brands that saw the strongest two-year growth in the quarter, and there were quite a large number of them actually, but in particular, I'd call out Sharwood, Ambrosia, Bisto, OXO and PASO. All these brands grew in double-digit percentages compared to two years ago. And when you think again about the average invested growth rates over a longer period of time, that's really very strong performances. And additionally, all these five brands and a higher household penetration during the same period in 2019, which demonstrates clearly that some of those new consumers who tried our brand last year during lockdown are continuing to buy them again this year. In terms of sub-individual performance, I'll pull out Sharwood. You know, Sharwood is again a standout performer for us in the quarter. Sales were up 25% compared to the same period in 2019. Sharwood received sort of CD support in Q1 and that was a continuation of the new CD campaign we started at the end of last year. And we also launched, of course, a review product, but that included vegan versions of our Korma and Tikka Masala cooking sources. And that's as we extend our plant-based heating options across the business. Another brand that had an excellent product along was Mrs. Noodles. And when we took on the distribution of this product over three years ago, sales were pretty modest. But since then, he's taken the premium, authentic knitting round, and with the strength of our retail customer partnerships, we've built it into the clear leader in premium cotton noodles in the UK, with now almost £20 million annual retail sales buried. Sales over the last two years were up a very significant 168%, and grew 30% compared to last year. If we move on to sweet treats, now sweet treats we're experiencing very different trends over the last year, so consumer patterns in buying text were not as heavily impacted during the lockdown restrictions. And so, accordingly, you do not see the exceptional volumes in text at this time last year, like we did in our grocery factories. So, in the first quarter of this year, branded sweet treats were actually topped by 3.2% versus a year ago, and that being driven by Mr. Kiffling, which And that's coming from things like the low sugar options, such as the sugar angel and lemon slices, and further success on the new premium range and the significant signature range. In terms of peak consumer trends we're seeing, obviously we're seeing people transitioning fast towards eating at home more than they were earlier in the year. And we're also seeing people trying to maintain some of the good habits that they picked up last year, and I'm particularly talking about eating more healthily. And most consumers are also telling us they still want to try and hold on to the enjoyment they get from cooking at home and eating around the table together with the family. And as we move on to the online channel, and by that, again, I mean sales that we make via our retail partners' online platforms, I know we're all aware that this channel saw people moved to shopping for their groceries online during the pandemic. And you might remember that following the greater effort we've been putting into developing our business in this channel for a few years now, we remember last year, you know, when the channel went through that incredible growth phase, we were able to grow even faster than the channel and increase our online market share. So now, as expected as we start to anniversary that period from last year, what we're seeing is that most of the people who moved to buying their groceries online last year are sticking with it and so our business through the online channels is nearly double than the level it was two years ago and that's in line with the market. is very much core to our strategy and healthy nutrition is incredibly important to it and we've been doing a lot of work over a number of years now to be more healthy arrangers to market for our consumers and I'm particularly pleased to see that our healthy options ranges in the course of nearby twice the rate of our branded portfolio versus two years ago so that includes product common madras sources and things like Lloyd Grossman who added sugar following maize sources. If we move now on to our international business and remember that this is a key strategic growth pillar for the group looking forward and that enjoyed a very strong year last year with growth of 23% and I'm pleased to say it's carried that momentum forward into the current year and with sales on a two-year basis up 17%. I've talked before about our strategy for our overseas businesses, which is focused on doing sustainable, profitable businesses of scale in selected markets. And we're doing this by applying the same for the local market conditions and environment. So, for example, in Ireland, where we've always got an established business, we're launching a series of new products that have already been successful in the UK, so things like the Bisco Southern Sour Gravy, or the OXO Meat Free Stock Foods, and the Mr. Kipling Signature Age of Premium Cakes. And we'll also be supporting our brand in Ireland with advertising again later this year, so that's for the second year right now. And this approach in Ireland has led to our biggest brands in Ireland, Visto, Sharwoods and Mr Kipling, all increasing their market share over the last 12 weeks. And Visto sales, in fact, were up by a very strong 11% year-on-year and also took 180 basic points of share. So it's really clear to us that adopting that same brand-building strategy in Ireland is now starting to work really well for us. We've also expanded our category presence in Ireland from entering both the quick meals, snacks and soup category and also home baking and these are categories where we have not historically been present in Ireland so they represent wide space for us. And then in Australia Mr Kiffin and the Academy Cakes which are the market leaders of the Now one of the key markets we're looking to expand the business in is North America and we've previously mentioned that we've been running a trial for Mr Kipling in Canada and that's given us some really promising results. We're making some tweaks to the model based on what we've learnt and then we'll move to a full national rollout in the second half of this financial year. And then looking to the USA, it's clearly a much bigger market than Canada, we're continuing to work with our partner Western Booth and preparing a similar launch of Mr Kipling into the US market and we'll have the benefit of course of taking some of the learnings from that Canadian trial forward into our US model. Now another of our strategic growth pillars is taking the brand building capabilities that we've demonstrated in our core categories in the UK and expanding into new categories and so we already have four live initiatives in the market that take us out of our traditional And in fact, these have already delivered over £6 million of sales in the last 12 months in what I have to say are the early stages of this strategy. And in most cases, this involves utilising the strong brand equities that we've got available to us in our portfolios and expanding their presence into those adjacent capacities. So, for example, we've launched Mr Kittering and Cadbury into baking mixes, which has been a very logical extension to have. We've also introduced a range of rubs and mayonnaise under the Oxo brand and we've brought cake, fudge and spice to market that again is a white space capacity for us in the UK. And there are further initiatives in the pipeline for the second half of the year and that also includes a significant expansion in our plant-based offering. Now I'd just like to touch quickly on non-branded sales. So overall revenues were 10.9% lower than two years ago, but there were a few moving parts going on in here. So in the grocery business, sales were down 10.1% compared to two years ago, and that was due to declines in our business volumes of the supply as of home eating. So, you know, unsurprisingly, that's down versus two years ago, but, you know, promisingly now starting to recover versus a year ago. I should also point out that this was partially offset by stronger demand for the non-branded grocery products that we sell into our retail customers, which in fact were up just over 10% over the same time period. And then increasingly, non-branded sales were down 14.9%. So, with that being the review of the first quarter's training, I will pass over now to Duncan to cover the refinancing that we completed in the quarter. Thanks Alex and good morning everyone. So, just a reminder, when we announced our four-year results back in May, we announced the new revolving credit facility. We also announced the issuance of a new bond. The process was really strong and we actually chose to off-size the size of the bond to £330 million and following what ended up being two upgrades from credit rating agencies in nine months which is really strong recognition of our progress and our strong financial result. We priced them at 3.5% which we think was a great result and one frankly that we really pleased with. The difference is the £300 million of fixed rate notes, which were priced at 6.25%, so a significant improvement on interest. And this bond refinancing together with the retiring of the final £20 million of the £210 million floating rate notes will reduce our interest costs by nearly half compared to two years ago. And this forms a key part of our expectations for adjusted PD2 this year. So that's the final review. I'll hand that back to Alex to wrap up. So to wrap up really, we've made a very encouraging start to the year, particularly in our brand of business and I can also say now that quarter two is also off to a good start. So looking forward to the rest of the year and year, supporting in total six of our key brands with advertising in the UK, along with Mr. Kittingham Bisto in Ireland. And we'll also continue to focus on building our overseas businesses and expanding our UK presence into new categories. So I think given the encouraging start to the year, the strong plans that we know we've got in place, and has done contention of significantly lower interest costs compared to last year. That means that we're now seeing the PBT at the top end of our expectations for this financial year. So thank you for your time. I'll now pass back to the operator, and we've been very happy to stay with you.

Thank you. We will now begin the question and answer session. And as a reminder, if you wish to ask a question, please post a star and one on your telephone keypad. Once again, that is star N1 to ask a question. And your first question comes from the line of Charles Hall from Cloughan. Your line is now open.

Morning, everyone.

Morning, Charles.

Morning. Obviously, a really good start to the year with that 6.3% growth. Does that give you some confidence for the run rate for the remainder of the year? And is that sort of a good... target level of growth that you might expect as we go through the quarters? That's the first question. And secondly, obviously there's much more chat about inflation in the market as well as labour shortages. Do you want to just give your experience to date and how that might be impacting on margins or otherwise?

Yeah, sure. Thanks, Charles. You know, we're really pleased to have seen, you know, it's obviously a transition, of course, wasn't it? People returning throughout the phone, returning throughout the phone meetings and just wanting to see how that settled down in the quarter. It's played out, you know, pretty much exactly as we modelled. It's not a little better, as you see. in the sense that we came out at the top end of where we expected to be. So that's what's giving us a confidence for the rest of the year. I think specifically looking at Q2, given we've seen the start of that, I would say that we would expect Q2, Q3 in that same 5% to 6% range that we gave Diamond School for Q1. That's as far as I probably want to look out at this moment. In terms of inflation, We're in a very similar position to where we were when we last talked about this, but I think we're seeing low tingles in this. It's input cost inflation and that's in line with our expectations coming into the financial year and so as a consequence our plans that we put in place for the year are dealing with that. So it's a combination of three things really, hedging and price increases that we already put through to the market at the beginning of the term of the year and then internal cost saving measures. So I would say there's no real news there for us and we're quite comfortable that we've got it covered

That's helpful. Thanks. And just sticking on the sales line, obviously you gained share in every category in the quarter and last year, so that's been really impressive. And maybe that was a bit helped by the pandemic and focus on the leading brands. Do you want to just comment on what's happening now with range reviews happening, new product launches? Is that meaning that you're actually going to be able to grow on your existing position or may you give up a bit of shell space to new competitors?

Thanks. Well, you know, I think the first thing to say, I'll reiterate one of the comments I made earlier, is that, you know, rain reviews are happening now. We're very happy with the outcomes. very positive for us and I think that's in two respects. One is the new product pipeline that we built up during last year, not all of which made it to market for the pandemic reasons that we talked about and of course this year's new products are all now going out the door and landing and we seem to be doing very well out of that in terms of initial distribution. And then also as retailers look to optimise their range, we as shelf space is given to the best selling shoes in the category in order to make sure that they don't run out of stock on a heavily shopped Saturday afternoon. And that often means that more shelf space goes to our brands because often we're the leader in the category and we often have the best selling shoes. So, you know, never, never, you know, we come out of these things and we are doing that, you know, in a positive position.

Makes sense. Thank you.

Thank you. And the next question comes from the line of Martin Deboe from Jefferies. Your line is still open.

Yeah, morning, everybody. I'm Martin Deboe at Jefferies. I have similar questions to Charles, so I won't repeat them. Let me ask another one, which is much more general. You know, trading's going well, so you've given us the luxury of just sort of looking a bit longer term. You know, with the cash flow envelope now so much more if I could use that word. Obviously, we've all pushed you hard on what you're going to do on M&A, and I'm not going to repeat that this morning. But another potential avenue is, are there any bigger scale capital projects you would now be tempted to undertake that would be transformational for the business, either in top line or bottom line, in other words, organic expansion rather than the more obvious one of M&A? Because, you know, the problem going back five years is you're just so passionately trained, you could only accept short payback projects? Is that thinking changing and evolving? It is, Martin. I think one of the key things is investing back into our manufacturing infrastructure. So we run a pretty tight shift when it comes to structure and every year we fit a multiple list of projects which go across three buckets really. So one is investing in new capabilities for infrastructure maintenance and then also cost reduction and efficiency improvement. And I think what's interesting on the cost reduction and efficiency improvement is that for each of our manufacturing sites, you know, we look down the list and then draw a line and the line is really where our cash and capital envelopes have allowed us to draw it as opposed to where the paybacks were attracted. So what it means, ultimately, is that we can go further down the list. I don't know if you want to talk more about capital allocation. Well, yeah, I mean, obviously, Carfectures, I think Alex's point on CapEx is a really good one and I guess to your point, are there any big transformational ones? I think it's very much around making factories greener, et cetera, that are also on the table as part of that. Okay, thank you.

Thank you. And the next question comes from the line machine, Colin Muller from Investec. Your line is moving. Hi, morning.

A couple of questions really around labour and sort of Charles had touched on it and you covered it off with a general inflation comment, but Obviously, with the pandemic, as they're now calling it, is that an issue for you? I know you're less labor intensive than some of our companies that we follow. So that's one. But also, I suppose, with COVID costs, I mean, are you now starting to take some of those additional practices and costs out of the factory or are you going to wait until later in the year?

Morning Nicola, thank you for that. Yes, so labour, I think particularly with reference to the pandemic, we of course have seen an increase in the number of people self-isolating over the last few weeks, just as everybody has. To be honest, it's paled off a bit in the last week, so we have seen rates actually fall slightly in the last week, but we're obviously quite hardened by the But, you know, absence is, you know, certainly well within what we saw last year and therefore well within our proven capability to manage it. So it's certainly not present as a specific issue. But as I say, we're quite, you know, we're welcoming the news from this morning. In terms of COVID costs. But I think we can talk about measures first. So the distancing measures, the hygiene measures and everything that we put in place last year, they all remain. And we've made no changes and we've got no immediate plan to make any changes. And that's because we still think it's the right thing to do to keep our colleagues safe and also from a business continuity point of view. In terms of cost, you know, the biggest cost for us last year was essentially with labour, with assets. And we expect them to, you know, reduce ultimately as we go through the year. So, you know, that obviously is therefore, you know, a net reduction versus year ago for us in that respect.

Okay. Thank you very much.

Thank you. And the next question comes from the line of Juliana Russo from HSBC. Your line is now open.

Thank you very much. Good morning, everyone. I just wanted to go back to your comments on current trading for Q2. You said that it's trending in the same direction as Q1, so meaning it's plus 6% year-on-year. I was wondering if you can make any comments of whether, you know, during the course of Q1 you've seen any changes versus two years ago, so have you observed a consistent 6% increase, or is that especially since the out-of-home trade channel has completely reopened. And my second question goes back to your new product launches. You said that there was an acceleration this year versus last year. So can you give us a sense of how much sales from new products have been sold this year versus two years ago, please?

So if you look at the shape of Q1, clearly you see people starting to return to eating out of the home, but it did happen quite quickly. I think once restrictions were removed, people were pretty desperate to get out of the vat. So I think you can think about the implications of that, but frankly I'd say the fluctuations least individual month numbers. But certainly what we are saying is that we're comfortable with the drum rate and that's why we're saying that we expect to be in the same 5-6% range for QT. So some new products. On a quarterly basis, it's not the number we would normally talk about, but certainly the ratio of sales from is really took up very strongly in quarter one. And as I said, it's ahead of where we ended last year. And it's actually ahead of where we ended the year before as well, which, you know, pre-pandemic. So we're really, you know, very pleased with the direction of travel there. And as I say, I think it's largely linked to the fact that those brain diseases are now happening. So we would, you know, we're expecting to make good progress on ourselves and new products this year.

Okay, thank you.

Thank you. And the next question comes from the line of Darren Shealy from Shaw Party Park. The line is now open.

Thank you, and morning, gents. Morning, everyone. A couple for me, if you don't mind. Firstly, on the pension, I think we're now, what, 15 months away now from sort of your pension announcements in April last year. I mean, is there any colour you can give us on sort of progress Can you confirm you're broadly on track with the guidance that you gave at that time? Are there any staging posts we should be looking for over the next 12, 18 months in that process? And then another one just on SKUs. Obviously, when the COVID hit last year, we saw a lot of skew rationalisation. Basically, retailers ensuring products were on the shelf. That would have brought some efficiencies, I would have thought. I mean, where are we now in terms of sort of skew counts, maybe relative to sort of pre-Covid levels? Are we getting back to that sort of ranges? Thank you.

I'm sorry, I'm going to hand over to Duncan to talk about pensions that he's especially stuck at, and then I'll pick up on the SAB questions. Morning Darren, thanks for that insight. I mean on pensions you know there's a lot of good progress being made by the trustees and they are they're doing lots of good things behind the scenes ranging from sort of opportunistic winding up some exercise that you might have read about in our annual report And also changes to the Premier Food Scheme, the investment strategy, which was always going to happen once the team that effectively ran the RHM scheme got their hands around all three schemes. So there's been changes to the Premier Food Development Strategy, and in turn we are targeting higher returns from those outlets as a result. So, as I say, a lot of good things coming. In terms of staging projects, a more technical value-adding in the Premier Circuit protection rules. 2021 that is a requirement of the merger and we'll know more about that in the autumn but the main staging post will be next year so I think summary is a lot of good progress being made nothing to suggest that what we said previously will change but obviously with pensions as you know there's a lot of factors outside of our control that we can't have a perfect visibility of hence putting in the low medium and high case when we announced it last year so hopefully that helps So you're absolutely right when we were in the midst of quarter one and into quarter two last year where it was essentially all hands on deck from both our land and the retail that's just keeping core eyes on shelf, we did in conjunction with our retailers what we call suspend some of our some of the more periphery skews, if you like, to make sure that the late ones were in stock. But actually, that reversed very quickly. So, they were never taken out of the range. They were only suspended. And so, quite quickly, I would say, back in the quarter two last year, those products all sort of came back into distribution. So, they were never really removed from the range. They were just sort of put on hold, if that makes sense.

Yeah. Okay, thank you. Cheers, Jess. Thank you.

And the next question comes from the line of Clive Black from Shores Capital Markets. Your line is now open.

Yeah, thank you. Good morning, guys, and welcome. Just a couple of quick ones for me. Firstly, can you give an indication of how you see the cost of advertising at the moment? Is that something that is becoming more a little bit more challenging, now we're out of the constraints of lockdown one in particular. And secondly, also just any indication of where sustainability fits in with your Q2, H2 plan for this year, please. Thank you.

Yes, sure. So, I mean, the first thing, and you'll be very well aware that, you know, as we went through particularly the first half of last year, And we took full advantage of that and we actually increased our investment levels, you'll remember. And we essentially got a double benefit because the cost was lower and the number of people watching at home was not higher because prices were not as high as they were. So, you know, that benefit really was mainly in the first half of last year, a bit into the second. And we saw advertising costs normalised really at the back end of last year and that. of notes I don't think in that area. Moving on to sustainability, it's going to be a big question. So, you know, there are a number of key areas here. I mean, you've got, as you'll be aware, this thing that I'm going to report, we've got five pillar sustainability strategies and we continue to work on all those pillars. In the interest of time, I'll not go through them all now and all the different things we're doing, but, you know, key to those are things like packaging, focusing on encouraging consumers that in our MPD plans, bringing more plant-based options, more low-fat salt, low-sugar, low-fat products to market, and that continues to be a key focus within our MPD pipeline. And then there are a number of other things we're doing in terms of reducing our environmental footprint, etc. But, yeah, it would take a long time to go through them all.

Okay. I was just wondering if there's any specific initiatives that you should be looking out for in the next sort of three to nine months. In that respect, just by way of a supplementary, did you have any particularly strong views on Dunbarby's national food strategy as being good either ugly for Premier Foods?

Well, I think, you know, we've been clear, you know, for a long time. We fundamentally support the government's intent to encourage people to eat more healthily. And we think that, you know, as a major UK food manufacturer, you've got an important role more responsibility to help deliver that. But I'd also point out to everybody involved that this is also a commercial opportunity for us because the success of the business over the last few years has been fundamentally based on the fact that we listen to our consumers and we provide these products that are in line with where they're going. They're cooking and eating trends and the single biggest trend in cooking and eating is people trying to be more healthy. So by fulfilling our moral obligation to help people, we're also actually delivering commercial benefits for the business, because that's what the company wants to hear from us. So, if you remain, you know, absolutely sense of danger for us as we go forward.

Excellent. Thanks, very helpful. All the best.

Thanks. Thank you. And the next question comes from the line of Barbara. Your line is now open.

All right, thank you. Yeah, good morning, Alex Duncan. Thank you for the great trading update. I've just got two questions. The first one is, is there any progress on the Bolton acquisitions? Rumors are that Unilever are looking to offload some savory brands. Is Premier looking to acquire, say, the OXO right to the OXO brand in other countries, such as Canada and South Africa, if this is available? And the second question is, What is the cost of the refinancing? Was it in line with the estimates or was there any improvements in the cost? Thank you.

Thank you. Sorry, if I didn't catch that, can I just check which institutions you represent?

Oh, sorry, yeah, private investor.

Ah, okay, right. So in terms of balkan acquisitions I think we've been quite clear on this one. I mean the good news is that we are in a financial position that should the right balkan acquisition come along then it's now something that we can entertain which is clearly different from where we've been in history. There's nothing specific that I really wanted to talk about today but I will remind anybody that fundamentally we see ourselves as brand builders. Our core skill set isn't about how we build brands and generate value from brands. That's how we've made the business successful and turned it around. And our core focus is on delivering brand approach from our existing core business, from expanding into new categories, which I've talked about today, and from expanding overseas, all deploying the same brand-based principles. Now, if it makes sense to acquire a brand which gave us presence in an additional category, and picking one that we felt we couldn't do organically, then that would make a lot of sense. But there's nothing specific that I'm drawing one's attention to at the moment. And Duncan, do you want to talk about cost of refining? Yeah, we set out progressive refining costs in our guidance for the year at the prelims, and there's nothing to call out in terms of major differences to that.

Thank you.

Thank you. And the next question goes on the line of Yolanda Russo from HSBC.

Yes, sorry, me again. I just have a follow-up question. First of all, I wanted to understand a little bit better what's your current take on your international strategy. There has been some mentioning earlier on in the call in terms of moving into different categories, and I was wondering whether this is going to be like the wider strategy that you're going to look at in the future. And secondly, a question on the competitive environment that we've seen post-pandemic. As the market reopened, have you seen any of your previous players moving more aggressively into the categories or out of the categories and how are you looking at the private label within some of those key areas, if you can make a comment on those ones please.

Yes, sure, no problem. So our international strategy has not changed since we went through it at the prelim and we continue to vigorously execute that. I think your question might have been specifically about new categories over the years. I would point it to the fact that we would focus always first on going into categories where we've already got expertise from the UK. Because if you think about it, it's categories we know. We know how they work. We know the dynamics. We've already got the NPD pipeline. So our primary focus is taking our existing brand and existing products earlier using the same skills that you've got in brand building but of course you then have to adapt to the local market environment so things like promotional techniques will change a little bit and price points will be different etc so you know you have to adapt to the local environment but the fundamental way in which one builds brands and generates brand value are fairly universal so business that's the skills that we're at this point. In terms of competition post-pandemic, I would say no real change, to be honest with you. I mean, you know, in most of our categories, well, in all our core categories, we're strong market leaders, and that always is a great advantage, of course. Then I think specifically private label, I would say the dynamics are pretty much as they've been for the last few years. I think the key thing that brand owners always have to remember is, you know, your job is to stay ahead of private label, which means you've got to innovate, and you've got to make sure that you're bringing a product that offers genuine benefits and value to the consumer. And if you do that, you'll be successful. But as I say, that's fundamentally core to our model and fundamentally core to what's made the business successful over the last two or three years. So, you know, I'd say, you know, no chance.

Okay, sorry, but coming back to the international strategy, Diane, did I understand correctly that you were... opportunistically getting into cake baking and other categories that perhaps are not cool for you in the UK.

Yes, that's right.

Okay, and was that just a business opportunity or is that more broadly the way you want to go about this in the future?

So I think this has to be set out in prudence. So, you know, one of our core strategies is to expand into logical adjacent categories, in particular where our existing brands have got relevant brand equity for consumers. So, you know, the example I gave earlier, it makes perfect sense, doesn't it? You've got the leading brand of cake, in the UK to launch a home baking technique because it's instantly credible for the consumer so that's a very good example of where an establishment category extension works really well and likewise we've launched Oxo Bronson marronade which gives us exposure to again another category and in particular the barbecue season and again you know Oxo is It's incredibly incredible when it comes to flavouring and seasoning, products and seasoning, you know, so clearly that extension makes perfect sense. And so those are the things that we will look to do. Occasionally where we think it might be beneficial, as we've done with K-Person Spice, we've brought in a new brand, and that's a brand that we're distributing, and that gives us presence in Person Spice as well, which historically has not been present. So again, another example of white space where it's all on top for us in terms of

Okay, excellent. I think I was trying to understand whether you might be doing the reverse and therefore if cake baking works internationally, you might bring that in the UK, likewise with some of the other examples that you've made.

Okay, sure. Well, we actually launched that in the UK first. So it actually came to the UK just over a year ago. It's done very well and we've now extended it into Ireland and it's not entirely unreasonable to think we might do so in other markets.

Okay, excellent. Thank you for sharing that.

Thank you once again. If you wish to ask a question, please press star and 1 on your telephone keypad.

there are no further questions at this time please continue I think that wraps everything up everybody thank you very much for investing time with us again this morning and as you see we're feeling pretty pretty pretty confident I'm on the front foot we've had a good start and it's given us a lot of confidence for the for the rest of the year but thanks very much for your time thank you Dr Sampson to the conference for today thank you for participating in the loud skinner