PZ Cussons Plc

Good morning and thanks for joining our call today. This morning we have announced our results for the six months ending 30th November 2024. Sarah and I are here to talk you through those results as well as to provide an update on operational and strategic progress. Turning to the agenda for our call today, I'll start with a brief overview before handing over to Sarah to take us through the financial results in more detail. Next, I'll cover the operational and strategic update before finishing with a quick summary, and then it's over to you for your questions. Let me start then with some overall comments on how we are delivering against the priorities we set out for this year and our journey to transform PZ Customs into a business with a more focused portfolio and stronger brands, delivering sustainable, profitable growth. We have delivered solid trading overall in the UK, Indonesia, and ANZ. three of our four priority markets, with like-for-like revenue growth of 2%. UK delivered the strongest revenue growth of these three markets. The robust performance has been driven by new product innovation and effective price and promotional management, combined with competitive brand activation and increased retail distribution. The sustained revenue momentum across the UK portfolio has enabled a step up in profitability, supported by overhead efficiencies and continued improvement in the profitability of child's farm. Looking further afield, Indonesia recorded a third consecutive quarter of growth, despite the lack of some of the macroeconomic challenges we have faced over the past couple of years. Growth was driven by targeted innovation, strengthened retail execution and effective revenue growth management. Indonesia remains an important market for the baby category. driven by the high birth rate of such a populous country. And given its leading brand position, Custance Baby is well-placed to sustain growth in the future. And in ANZ, our portfolio of category-leading brands is demonstrating its resilience in the face of market-wide declines in category value and volume by growing market share on both the rolling 12-month and quarterly basis. Meanwhile, in Nigeria, we continue to navigate the inherent volatility of the market effectively, thanks to our strong operational capabilities on the ground and the more recent stabilization of exchange rates, although still with a weaker Naira than 12 months ago. Overall, the group's performance trends of the first half of the year have continued into the second half, so we are on track to meet profit expectations for the full year. Sarah will provide more detail in a moment. And finally, we are progressing with our plans to transform our portfolio to unlock value and reduce complexity. Processes involving our Africa business and the Saint-Tropez brand. Although we have nothing to announce today on either transaction. But let me pause there and hand over to Sarah.

Thanks, Jonathan. And good morning, everyone. I'm going to share a summary of our first half results, walk you through the key movements at a group level and then by segment, and finish with the outlook for the full financial year. As Jonathan mentioned, we have delivered a solid overall performance across the UK, Indonesia, and ANZ in the first half of the financial year. The decline in reported revenue and profitability has again been driven by further devaluation of the Naira which declined by 55% compared to the average exchange rate across the comparative period. Root revenue declined by 28 million pounds to 249 million, of which 46 million is attributable to the translation of foreign currency revenue into sterling, of which the Naira explains 43 million. And the breakdown of the FX movements are in the appendix to the presentation. Like-for-like revenue growth of 7.1% was driven by continued growth in the UK and in Indonesia, and also by pricing in Africa. Adjusted operating profit was 27 million pounds, down 3.6 million versus the prior period. This was primarily driven by improved profitability in the Europe and America's region, offset by a decrease in Asia-Pac and in Africa. with FX again contributing to that adverse movement. Adjusted operating profit margin reduced by 20 basis points to 10.8%. Profit before tax declined to 19.8 million, reflecting the reduction in operating profit and also an increased interest charge, with less interest income earned on lower Naira cash balances which more than offset the interest cost saving from the reduction in our overall group gross debt. Adjusted earnings per share declined by 10%, less than the decline in profit before tax, due to a lower adjusted effective tax rate of 18%, resulting from the statutory loss in our Nigerian business, as well as a reduction in the sterling value of minority interest there. The Board has declared a dividend at the same level as last year's first half payment, 1.5 pence per share, to be paid in April. And in doing so, we have considered a range of factors, including a target cover ratio of approximately two times, as well as our clear intent to reduce leverage. The Group's future approach to dividend policy will remain under review in light of the ongoing portfolio transformation activity. Finally, net debt has reduced from £115 million at the beginning of this financial year to £106 million at the end of November 2024, helped by stronger free cash flow. This represents an increase of £18 million on the £97 million net debt reported at the end of the FY24 first half, from June to November 2023, which of course marks the beginning of the significant devaluation of the Naira and its subsequent impact on our earnings and cash. Moving now to the detail and firstly, our revenue performance. You can see here the Naira translational currency impact on reported revenue, and also the pricing-led Africa revenue growth being the primary driver of our overall like-for-like growth. Excluding Africa, group like-for-like revenue growth was 1.6%, with growth in Europe and Americas and in Indonesia. And now to operating profit. Our adjusted operating profit margin reduced by 20 basis points to 10.8%. reflecting a lower contribution from the PZ Wilmar cooking oil joint venture. This business is equity accounted, seeing us consolidate 50% of its earnings, but none of the revenue. Excluding this contribution from both periods, the resulting lower group operating profit margin actually improved 70 basis points to 8.9%. Group gross profit margin was lower in the first half, reflecting the adverse mix impact of strong revenue growth in Nigeria. This was more than offset by an 80 basis point reduction in overheads, as we have started to reduce our cost base. Marketing investment was flat in absolute terms, but contributed a 30 basis point improvement to operating margin, largely due to phasing this year with UK and US media spend second half-weighted, and the lapping of some big campaigns in the prior year. Let me now provide some more detail on the performance of each of our three regional reporting segments. Looking first at Europe and Americas, we saw growth in both revenue and operating profit. Revenue was up 4%, which was a combination of both price mix and volume. up 3% and 1% respectively. This performance was helped by a particularly strong Christmas gifting period in the UK, with Sanctuary Spa growing double digits. Carex continued its good performance, growing strongly via both volume and price mix, and Imperial Leather and Charles Farm also both grew revenue. and with Child's Farm profitability benefiting from the move to in-house manufacturing from August of last year. And Jonathan will talk more about progress on Child's Farm a little later. Adjusted operating profit increased to 20.7 million with a margin of 20.5%, up from 12.8% last year. This improvement was driven by strong revenue growth, favourable mix and margin improvement initiatives across our brands and is the strongest profit performance of our UK business on a last 12 months basis for three years. Saint-Tropez revenue was flat as a solid performance in the UK was offset by a softer US performance where revenue was weighted to the category's seasonal peak in our fourth quarter. Looking now at Asia-Pac, half one like for like revenue was down 1.1%, with continued growth in Indonesia offset by softer category performance in ANZ, plus external headwinds in some of our much smaller distributor markets. Depreciation of the Indonesian rupiah and the Australian dollar was offset by growth in non-branded manufacturing product sales. which are excluded from our like-for-like revenue calculation, resulting in reported revenue also of 1.1% decline. In ANZ, a softer macro backdrop within our categories and some disruption to distribution of one of our key customers, which was felt across our consumer peer group and which is now resolved, saw revenue decline 3%. Despite this, we continue to gain market share and improve profit margins across our three main brands of Morning Fresh, Radiant and Rafferty's Garden. Indonesia like-for-like revenue grew 4% in the first half of the year, delivering its third consecutive quarter of growth in Q2. This was driven by the implementation of a new trade promotion analytics platform during FY24, allowing us to price more effectively and efficiently. Consumer relevant innovation and continued growth in the e-commerce channel, as Jonathan will comment on later. Custard's baby maintained its market share alongside other multinational competitors. Adjusted operating profit margins declined by 280 basis points, with higher ANZ and Indonesia brand margins offset by cost headwinds in our smaller distributor markets and some manufacturing one-offs. Performance in Africa should be seen in light of the currency devaluation. with the Naira exchange rate 55% lower on average during the period compared to the first half of FY24. The 28% like-for-like revenue growth was price-mix driven as we continued to implement multiple rounds of price increases. And whilst disappointing, the double-digit volume decline, most notably in electricals, continues to represent the optimal PZ plan for us to protect our overall profitability and cash. Electrical's revenue was 18.5 million, up 20% on a constant currency basis, driven by price increases and favorable product mix, helped by our innovative energy saving appliances. Adjusted operating profit margin declined by 70 basis points, primarily due to a more normal level of profit from the PZ Wilmar JV, which had been particularly strong last year. And excluding PZ Wilmar, the lower African margin increased by 10 basis points, as further pricing offset higher input costs. Turning now to group cash flow and net debt. Our cash generation remains stable. with net cash of £11 million generated in the first half. This has led to a reduction in gross debt of £14 million, leaving our gross debt now just above £150 million and with headroom on our committed borrowing facilities up at over £170 million. These levels are a good indication for how we will end the current financial year in May. The payment date of the £9 million dividend in respect of the FY24 final results fell just after the end of the FY25 half one reporting period. And this will partially offset the business's seasonally stronger second half cash generation profile. Our current Naira cash balance sits at £16 million. And I consider this to be an appropriate amount to support local working capital and CapEx requirements. And turning finally to Outlook. As we said in the statement this morning, year to date to the end of January, trading remains in line with our expectations, in part due to lower levels of volatility versus the previously severe impacts we have been experiencing in Nigeria. And as a result, we expect continued revenue growth in the second half of the year. In terms of profit outlook, this is effectively unchanged. You will remember that in September, we provided FY25 guidance for adjusted operating profits of between £47 and £53 million. Our underlying assumptions are unchanged and the business is on track. The mechanical, if you like, upward revision to the guidance of £5 million is the impact of a technical accounting change to where certain non-cash items, namely the FX revaluation of historical Nigerian intercompany loans, are reported. Moving from our adjusted or underlying view of profit to the statutory definition, with both measures shown clearly on the face of the income statement. With that, I'll hand back to Jonathan.

Thanks, Sarah. Let me turn now to provide an update on progress against our strategic priorities. You should all be familiar with this slide, which very simply summarises our strategy, building brands for life over the past three years. Five pillars are summed up in just 10 words. Build brands, serve consumers, reduce complexity, develop people and grow sustainably. And then we distill this overarching strategy into specific priorities for each financial year, just as we did back in September. So for FY25, we are focused on these clear priorities. Driving up businesses in the UK, ANZ and Indonesia, continuing to strengthen our brand building capabilities and moving ahead with the transformation of our portfolio, helping to unlock value and reduce complexity across a group of our size. So how have we delivered against these in the first half of our financial year? First off, the UK, where we are seeing sustained performance improvement, not least since the integration of the UK personal care and beauty businesses, which we announced this time last year. We're now benefiting from better execution and sharing of commercial best practice across the full range of brands in our portfolio. Taking our hair care brands as an example, we've been able to use the strength of our go-to-market capabilities in the UK to drive significant distribution wins, more than doubling the number of distribution points of Fudge and Charles Worthington brands, including opening up new retailers such as Tesco and Waitrose. At the same time, we've been able to expand our presence in the seasonal Christmas gifting market from Sanctuary Spa into Original Source and Customs Creations too. increasing retail sales value by more than one third versus last year. Christmas gifting now represents a building block in our annual brand activation plan, and we have already reapplied the lessons learned from Christmas 2024 for bigger and better activation in Christmas 2025. These actions to drive top line sales have combined with the three million plus overhead savings due to the integration of the two business units to drive material margin improvement. We're now delivering margin performance not seen since the exceptional demand levels of the COVID pandemic in FY21. Turning now to Indonesia, a market I visited at the end of our first half and was able once again to see the long-term opportunity of building a leading baby care brand in a country with more than 4 million births a year. Team there have delivered a third consecutive quarter of revenue growth thanks to broader distribution, optimized pricing and promotional activity and consumer relevant innovation. We've also continued to diversify beyond our core mini market and general trade channels with e-commerce an integral part of this diversification. Supported by rapid growth in the live streaming sales channel, online revenue doubled in the first half. You might be interested to know that not only do we now have our own studios and our Jakarta operations from which the online influencers live stream, but also that the peak online shopping time for Indonesian parents is between midnight and 1 a.m. Innovation plays its part, too. Expanding our presence in telon oil continues to help Cousin's Baby reach new users. Pelan oil is used as part of the traditional baby care regime in Indonesia. It provides a warming sensation, a mild fragrance, and protection from mosquitoes. And it's used in over 80% of households with babies, often up to six times a day. As a result, it's a sizable category in its own right, but one which has been dominated by a strong local player, hence a clear opportunity for Cousin's Baby. Results so far have been very encouraging. We've achieved household penetration of 7% thanks to the depth of distribution already secured and to the willingness of users to recommend the product, fuelling the word of mouth that is critical to winning in the baby category, which new parents seek out trusted sources of advice and recommendation. Finally, to Australia, where we have category-leading brands across both home care and baby food. As Sarah mentioned, we have increased market share despite category softness, thanks to effective brand activation, targeted innovation and promotional optimization. Morning Fresh washing up liquid value share has increased by 50 basis points, consolidating our share leadership with the brand holding around half of the entire market. Radiant, the number three brand in the laundry category, gained 130 base points of market share with its combined value and performance positioning, picking up shoppers as they seek out better value. And its most recent capsules innovation has outperformed, reached number two in that subcategory. And finally, Rafferty's Garden, the number one baby food brand in Australia, launched seven new snack packs in the period. helping grow market share by 110 basis points. Although we've seen some pressure on the top line as a result of the overall category declines, the structural economics of the business are sound, and the team are working hard to translate stronger market share positions into a return to revenue growth, as well as unlocking additional sales opportunities in other channels and categories. Our second priority is to strengthen our brand building capabilities as we embed a new operating model to put more focus on driving innovation as well as stronger brand activation. A good example of the progress that has been made is on Charles Farm. As we speak today, we are in the middle of the rollout of new packaging and new formulations that represent the results of disciplined work to strengthen what the brand stands for. dermatologist-approved solutions for sensitive skin and fun, while removing barriers to trial, such as a confusing lineup for the shopper, by improving pack graphics and adopting clearer product names. All of it informed by and tested with extensive consumer and shopper research. The launch provides benefits beyond improved shopability and enhanced product performance, including the ability to make more of the formulations in-house, So we now manufacture more than half of the child's farm brand at our H-Cross factory, alongside Carex, Original Source and Imperial Leather, with all of the gross margin benefits that come with it. Our third and final priority for the year is to make progress transforming our portfolio. Now, I know you will all have questions on each of these projects. And as we said before, we will make announcements when we have news on them. But equally, we're not going to give a running commentary either. When we have something to say, we will do so. Let me step back to provide a summary. We're making progress against the priorities we have set for the year in delivering solid results overall in the UK, Indonesia, and ANZ, making progress with our leading brands in attractive markets. We also continue to trade well in Africa. Overall group performance to date has been in line with expectations. We're on track to meet profit expectations for the full year. And finally, I want to underscore that we remain focused on transforming our portfolio to unlock and reduce complexity. And with that, we'd be delighted to take your questions. So I'll pass over to the operator.

Thank you. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to remove your question, you may press star followed by two. If you have joined us online via the webcast today, you can type your question into the Q&A chat box. Our first question for today comes from Matthew Webb of Investec. Your line is now open. Please go ahead.

Hi, good morning, everyone. I wonder if I could start off on the UK, where clearly you've had a material improvement in your execution. And you've given a few examples of, I suppose, the outputs of that and things like better distribution. But I just wonder whether whether you could sort of go a bit deeper and talk maybe a bit about how that has been brought about. Is it tougher management? Is it more resources? Is it the benefits of putting two parts of the UK business together? Anything like that would be very useful. My second question is just about Indonesia. I suppose there are a couple of parts to it. One, clearly the market background is, when in the period, was still relatively tough. I wonder whether you've seen... any improvement there. And then I also wonder whether you could just tell us a bit more about the price analytics platform and the impact that that has had. And then my final question, I know you're not going to talk about Central Pay and the Africa Strategy Review, and quite rightly, but I just wondered whether you could tell us anything about any plans that you are making to sort of think about what the cost structure of the business might look like in that new world? You know, is now the right time to be thinking about that? Can you think about that until you have clarity on what the Africa Strategic Review will conclude? Any thoughts on that would be really helpful. Thank you.

Thank you for the questions. Why don't I pick up the UK and Indonesia question and then Sarah can come in on the thinking for future cost structure. All right. So first of all, in the UK, I mean, you're absolutely right to call out the distribution wins that have been secured. And those are a good manifestation of a step up, not just in focus on being competitive, but a real focus on making sure that we're winning wherever the shopper shops are. As you hinted at, some of that is down to the fact that we have a reasonably new integrated leadership team that was the product of being able to bring the two business units together. So not only were we able to drive some overhead efficiencies, which we've alluded to, but we were also able to really drive the opportunities for best practice sharing between the two. And if you like, beauty bought Christmas gift sets and Christmas gifting into personal care, and personal care brought really strong grocery trade relationships into beauty, hence those hair care distribution wins that I mentioned earlier. But overall, I think what we've got is an organization that has a sense of momentum and belief in the brands they're driving. And what you'll see, therefore, is a much stronger in-store execution. If you just go out into stores across January or February of this year. You've seen that we have really been trying to fight back against some recent aggressive activity from some of our biggest competitors. And, you know, we were in stores just a couple of weeks ago as a leadership team, and we were able to see not only strong on-shelf performance, but also some big, hairy, ugly displays at the front of the stores where you walk in with some great price points. So you always need a bit of strategy and street fighting to win in the UK grocery trade. And the good news is we're getting a combination of both. So there's zero complacency, but high hopes for sustained delivery in the future. But if I flick over to the other side of the world, Indonesia, So we have seen a moderation of some of the pressures on shopper spending in Indonesia. Some of it to do with the fact that a new government was appointed over the last few months. Quite apart from causing a bit of indigestion with some of the things they have done. So they've created some new tax regimes. They've doubled the size of the cabinet so as not to leave people out. What they have done is created slightly more pressure. benign economic environment, and we have been able to make sure that we benefit from that. But actually, I think our improvement has been more through self-help than macroeconomic factors. So, for example, some of it has been through driving a real focus on incremental distribution So not only in the UK, we've been growing distribution points, and so in Indonesia, both on the existing customs baby lineup that we sell in outlets that traditionally sell baby toiletries, but also with the telon launch, where we have incrementally added tens of thousands of outlets that don't sell toiletries, but do sell this exotic telon oil I was describing. So we're literally reaching new users and new outlets. And all of that has been, if you like, underpinned by an increasing sophistication of using data and analytics, not least informed by the price and promotion tool that we have implemented there, that is helping us get the sweet spot between making sure we can drive volume, albeit at gross margins that might be under pressure in Indonesia, but are still highly accretive to our overall group gross margin performance. So we're managing the mix very effectively as we're trying to make sure that our products are turning up in more and more shopping baskets of Indonesian consumers. So I hope that helps on the UK and Indo. Sarah, do you want to talk a bit about future costs?

Yeah, let me do that. Morning, Matthew. So let me set some context and then talk a little bit about what we have done and what we will continue to do. So I think firstly, I'd say we are unapologetic in terms of the capabilities that we have put back into the business over the last four years. And those capabilities range from digital to brand building all the way through to governance and control, effectively attracting people that know what good looks like. And that also includes being able to now reward those good people with competitive levels of fixed and variable compensation as the performance of the business has done rather better than it did perhaps in the five or 10 years before we joined the business. That said, we are always looking to make sure our cost base is competitive. partly to share those returns with our shareholders, but partly to keep generating fuel for growth that we can use to reinvest behind our brands and drive profitable revenue growth. And you're also right to say, Matthew, that in light of some of the corporate activity that we have recently announced that we are progressing, our cost base is too high. So we started, if you remember, with what we call our supply chain transformation. So optimising our manufacturing, both in-house and and via third parties for some real product cost and therefore margin, but also working capital benefits. You've seen us reminding today, we're seeing some real structural cost benefits in the UK business by virtue of merging our legacy personal care and beauty businesses. And it's probably fair to say, as we've in-housed our child's farm manufacturing in 2024, that we might come on to integrate that brand more fully in the coming months. And also, it is true to say that outside of our local operations in Nigeria, we have a level of global or group expertise that we deploy to manage the risk and volatility of that business. And that ranges from people expertise through to higher audit fees and some other related items. So I think you could expect a significant cost saving there in the future. And then beyond that, we are generally optimising our cost base. So being a little bit more ruthlessly focused on where we spend our money, which capabilities are now sufficient, because we are looking to make our cost base competitive. You're absolutely right.

That's really helpful. Thank you both very much indeed.

Thank you. Thank you. As a reminder, if you'd like to ask a question, that's star one on your telephone keypad. Or if you've joined us via the webcast, you can type your question into the Q&A text box. Our next question comes from Damian McNeill of Deutsche Neumis. Your line's now open. Please go ahead.

Thank you. Morning, Jonathan. Morning, Sarah. Thank you for taking the questions. Just on the first one, on the performance, margin performance of Europe and America. Could you help break down that sort of 770 basis points into improvement into some of the big buckets, whether that's overhead efficiencies that you've talked about in combining the UK business, whether that's sort of in housing of child's farm, if possible, and whether there's any sort of cost savings in that. And just give us a sense, I think it's like the UK's trending at around about a 25% margin. Are you sort of confident that the business can sustain that level of profitability as we look forwards? I guess the first question. Second question is around innovation and A&P spend. And I was just wondering, is there any way of quantifying what proportion of the sort of of your revenues are coming from new products. I think there's clearly been an improvement in or a focus on driving more innovation. I was just wondering where we were in terms of how does the portfolio look in terms of renovation and how much more you're spending on A&P do you think this year? And then last question, I know you're not going to tell us anything about the progress of Santa Fe and Africa sales, but I was just wondering, whether you're spending time on perhaps adding things to the portfolio or not, because that was clearly a central part of the investment case to build on the current blind portfolio.

David, why don't I take the first question on the Europe and America's margin and then hand over to Jonathan. So you're right to say we are encouraged, please, you pick your word, in terms of the eight percentage point margin improvements in Europe and Americas. And I think we would probably isolate that specifically to our UK geography. And of that eight margin point improvements, Roughly one is phasing. So we were lapping, for example, the sanctuary spa relaunch in the first half of FY24. Some of our bigger campaigns in the UK business this year behind Imperial Leather Innovation and Original Source will be in the second half of the year. So there's a point of phasing. The integration and overhead cost savings are three points of that eight percentage points. which leaves four or five in terms of structural ongoing gross margin improvement, which is roughly, roughly 50% product mix. So remember Carex is a brand which grew 6% in the first half of the year is accretive to our overall mix. And we're pleased about that. Plus also what we call RGM or margin improvement initiatives. You've seen our state-of-the-art manufacturing facility out in the north. We continue to put more volume through that factory and continue really, as Jonathan says, we're doing in Indonesia, absolutely to do in the UK in terms of looking for the sweet spot between price and volume. And you can see us now in this half back to a more balanced price and volume-led growth. So if you'll permit me plus or minus one percentage point of not having a crystal ball, knowing there are some cost headwinds on the horizon, I think 20% is a good proxy for what that business can do in the coming months, if not a little bit more, if that helps.

And just to be clear, when you talk about 20%, you're talking about Europe and America as a whole, not the UK, right?

Right. Now, remember, we've got a, I am talking about it as a whole. Remember, we've got our Sanctuary Pay brand, which is a profitable brand doing most of its business in the second half of the year. But I think even for the UK in itself, you know, assuming plus 20% is a good assumption.

Let me pick up on the second and third questions. The first one relating to innovation and marketing investment, and then are we thinking of adding at the same time as we're thinking of potentially disposing? So first of all, on the innovation and the M&C, M&C is what we call it internally. Sorry, it's slipping to jargon there. That's marketing and consumer. So innovation is an area where we are pleased with progress we've made, but honestly, Damien, we can do better. And that's underpinned some of the choices and changes that we have made to our operating model over the last 12 months and will continue to evolve in the coming 12 months, where we're not only trying to dial up our ability to win in the marketplace, very much as I described in response to Matthew's question in the UK, but also as we look forward to a multi-year innovation cycle. Are we getting increasingly confident that we are developing, testing, and then ultimately investing behind real market-winning innovation that will build brands, make them stand for more, enable us to charge if we want to the appropriate premium, so that we then get the gross margin profile that will enable us to have sufficient firepower within the P&L to invest back behind the brand, leading straight to your A&P question. So what we have resisted doing so far is obsessively measuring the percentage of revenue that goes through innovation. I worked in businesses before where that can become a little bit of a cottage industry, and everyone's suddenly claiming, I've changed my label, so therefore it's a new piece of innovation. And then endless debates about, using the words you used, renovation and what's what's what. What we know we need to do is put innovation and brand building at the beating heart of our business. And we will refine the measures, but we haven't yet resorted to, if you like, the very distinct measures of what's innovation, what's renovation. We may choose to, so wash this space. But in general, your question is pushing in the right area of what are we doing to dial up our innovation capabilities and therefore confidence in the plans we want to invest behind. So we're all over that. As we do that, we will continue to look at, are we investing at competitive levels for a given brand in a given category in a given country? As I've talked before, we don't need to be investing too much more than 3% or 4% of net sales into bar soap categories in Africa in terms of marketing. But when you come to Saint-Tropez in the US, we need to be 15%, 20%, or 25%. So we're not going to be playing vanilla across the group. But what we are going to do is really make sure we build a gross margin profile that enables us to invest. What I would say to you, as we look to the second half versus the first half numbers we've reported, you will see a step up in our marketing investment, not least because some of our innovation plans were back-weighted, most notably in the UK. So actually, it means that we will be ending with, in a sense, a flourish that not only helps us to meet this year, but also set ourselves up for next year. But we'll come back again in the future and talk a bit more about some of those capabilities. But it does also link to what is then our appetite and ambition for the future. So there is no doubt that here and now, we need to make sure we are reducing our gross debt, we are reducing our interest charges, and that we're sufficient to invest in the organic business. So we're in no rush to go add anything, but absolutely over time, in the right priority markets, where we think we have scale and a right to win, and you would look at the moment and absolutely say, UK is achieving that level. Indonesia, with three quarters of consecutive growth, is getting back to where it needs to be. ANZ, assuming we can get Battery dynamics coming in our favor also playing well. We think we have strong go-to-market platforms, which absolutely other brands at the right time could benefit from, which would then not only give us an overhead leverage, but also which we're going to make it in-house a manufacturing leverage, which would give us quite a sweetening to the P&L. But we're not getting carried away. That's not for today. That's not for tomorrow. We're very clear what we need to do right here and now. So I hope that answers your question.

Yeah, thank you very much. Thank you.

Thanks, David.

Thank you. At this time, we currently have no further questions. So I'll hand back to Jonathan for any further remarks.

So, look, thanks again for those of you that have dialed in this morning, particularly Matthew and Damien. You get gold stars for asking questions. Thanks a lot. What we've tried to convey is a sense of tangible progress being made, but with no complacency and a clear recognition that we have much to do, both to deliver the year, but also to drive through our portfolio transformation. And we look forward to our next update when we can provide the very latest progress on both fronts. Thank you very much.

Thank you all for joining today's call. You may now disconnect your lines.