Reckitt Benckiser Group plc

Ladies and gentlemen, welcome to the Rekits Q1 Trading Update. My name is Neil, and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad. I will now hand you over to your host, Richard Joyce, Head of Investor Relations. Richard, please go ahead.

Thanks, Neil, and good morning, and welcome to everyone joining Rekits Q1 Trading Update. Our CEO, Chris Licht, and our CEO, Shannon Eisenhardt, will take you through some prepared remarks, followed by our usual Q&As. Before we start, I'd like to draw your attention to the usual disclaimer in respect to forward-looking statements contained on page six of our RNF published this morning. So now I'm pleased to hand over to Chris.

Thank you, Richard. Good morning to everyone and welcome to our 2024 Q1 trading update. We had a good first quarter with our net revenue performance in line with our expectations and as communicated in February. After a period of significant price-led growth, we are pleased to see volume growth across many of our power brands, including Dettol. Large innovation platforms continue to drive growth. Our premium thermal forming products have been instrumental in delivering high single-digit growth in finish for the quarter. Lysol laundry sanitizer and the recently launched Lysol air sanitizer help deliver double-digit like-for-like growth in Lysol. In Intimate Wellness, our recently launched Durex Invisible and other thin-field condoms are driving growth in the business. From a geographic perspective, Europe delivered mid-single-digit net revenue growth with broad-based volume growth across health and hygiene, offset by declines in seasonal OTC brands. I'm pleased with how our developing markets businesses are performing today. We delivered strong mid-single-digit volume growth in the quarter, led by our two largest markets in that region, India and China. North America saw growth in our hygiene brands offset by the rebasing of our U.S. nutrition business and the expected tough comparatives in our season OTC brands. We are increasing cash returns to shareholders with the recently announced acceleration in our ongoing share buyback program. We expect to announce the next program in July. We continue to make progress on our strategic agenda, and I look forward to updating you further on this at our half-year results in July. With these Q1 results, we are on track to deliver our four-year guidance. Shannon will now provide you with further detail on our Q1 trading performance and our full year outlook.

Thank you, Chris, and good morning. As Chris mentioned, we've made a good start to the year in line with our expectations and consistent with the guidance we communicated at our 2023 results presentation. For the quarter, we delivered 1.5% like-for-like net revenue growth with a more balanced contribution from price mix, and volume. The improving volume trends we saw through 2023 continued. Our combined hygiene and health portfolios grew volume by 1.4%. This was offset by the expected volume decline from the continued rebasing in U.S. nutrition. Price mix growth was 2%, driven by both carryover pricing from last year and selective new pricing actions in the quarter. Moving on to some brief highlights by business. Our hygiene business grew 7.1% on a like-for-like net revenue basis. Volume growth was 2.9%, continuing the sequential volume improvement we saw in 2023. This positive volume growth was led by power brands, including Finish, Lysol, Vanish, and Harpic. As part of our ongoing ERP upgrade around the world, we implemented SAP in Brazil at the end of the quarter. In order to ensure continuity of supply, the timing of our shipments was impacted. This resulted in a 2% net revenue and volume benefit to our hygiene business in the quarter, and this will unwind in Q2. Price mix was 4.2%, driven by a combination of carryover pricing from last year selective pricing actions in-year, and positive mix as Finnish consumers continue to trade up to our superior thermoforming innovations. Key drivers of net revenue growth were high single-digit growth in Finnish and low double-digit growth in Lysol. Lysol grew across all key segments as we benefited from distribution gains in wipes and drove penetration in both laundry sanitizers and air sanitizers. turning to health, which delivered 1% like-for-like net revenue growth in the quarter. Similar to our hygiene business, we saw strong volume growth across much of the portfolio, including Durex, Dettol, VMS, and Gaviscon. As expected, our seasonal OTC brands, including Mucinex and Strepsils, saw volume declines as they lapped prior year retailer inventory rebuild from a historically high cost, cold, and flu season. Overall, our health volumes were broadly flat in the quarter. Price mix was plus 1% in the quarter, with growth across many brands offset by some pricing actions in Dettol, which we discussed last year. In addition, a relatively soft end to this flu season has impacted late Q1 and early Q2 orders as retailers manage their inventory levels. In nutrition, we delivered like-for-like net revenue decline of 9.9% in the quarter, with a negative 9.4% decline from volume and a negative 0.5% from price mix. The drivers of like-for-like revenue decline in the quarter are in line with what we communicated in February as we continue to lap high market shares in the U.S. driven by the competitor supply issue in 2022. With a more normalized competitive pricing environment in the U.S., we have seen stability in our non-WIC value market shares. We maintained our market leadership position at an average of just under 40% share. Turning now to our group results across geographies. As Chris mentioned, we delivered mid-single-digit growth across Europe and developing markets, Volumes in Europe were broadly stable, excluding the impact from seasonal OTC brands. And we saw volume growth in developing markets, led by India and China. North America saw growth in our hygiene brands. This was more than offset by the rebasing of our U.S. nutrition business and the expected tough, tough comparative in our seasonal OTC brands. Moving to our outlook for 2024. We are on track to deliver for the year and reiterate our outlook of like-for-like net revenue growth between 2% to 4% comprised of mid single digit growth for our health and hygiene portfolios and mid single digit to high single digit decline for our nutrition business. We reiterate our expectation for adjusted operating profit to grow ahead of net revenue for the full year As I shared in February, the phasing of both our revenue and profit delivery will be second half weighted. Finally, as previously communicated, we have accelerated the third tranche of our ongoing share buyback program. We expect to complete this in July and to date have purchased around 600 million pounds of our shares. Additionally, we expect to announce the commencement of our next share buyback program in July. Chris, back to you.

Thanks, Shannon. Before we get to Q&A, I know a number of you will have questions around the NEC litigation. So let me walk you through where we are today. Litigation will continue in the coming weeks and months. This includes post-trial motions on the Watson case and a new trial currently scheduled to begin on September 30th, 24 in St. Louis, Missouri. These near-term events do not change our overall outlook and we remain confident in our position. To reiterate what we have previously said, Enfamil premature products are safe and provide life-saving nutrition for premature babies under the guidance of medical professionals who administer and specify our products. We strongly reject any assertion that any of our products cause necrotizing enterocolitis and that there was any failure to warn users of risk. The science does not support a causal connection between any Mae Johnson product and neck. We have no plans to stop providing the product, as that would be detrimental to the care of preterm babies and their families. Safety is and will remain our number one priority across our entire product portfolio. And we are not seeing any wider impact on the equity of our nutrition brands from this litigation. In closing, and to summarize our Q1 trading update, we had a good start to the year and in line with our expectations. We are pleased to see volume growth across many of our power brands, including Dettol and Lysol, Durex, Finish, VMS, and our non-seasonal OTC brands. Our successful innovation platforms are a key driver of that growth. We are on track to deliver our four-year guidance, and we are well-placed to deliver shareholder value creation from our portfolio of market-leading brands, our earnings model, and our strong free cash flows. Thank you, and with that, we are happy to start questions.

Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to withdraw your question. When preparing to ask your question, please ensure your phone is unmuted locally. Thank you.

Thanks, Neil. Right. First question we've got is from Guillaume Delmas at UBS. Go ahead, Guillaume.

Thank you, Richard, and good morning, Chris and Shannon. I've got two questions. The first one is on your health division. Would you be able to say what your like-for-like sales course would have been in Q1, excluding the seasonal OTC offering? Because it seems intimate wellness, dental, VMS, non-seasonal OTC, all that performed quite well. So curious to know what was the performance X seasonal OTC offering? And then also consistent with what one of your large competitors said last week, so you were affected by some retailers' inventory destock late in the quarter. Wondering here if you could quantify this impact, or I guess more importantly, provide some color on how it will affect your second quarter, as in could it be meaningful enough to prevent your health division from returning to mid-single-digit like-for-like from Q2? And then my second question is on nutrition, because at the time of your fully results, you were guiding for a low teen decline in the first half of the year. Q1 was arguably the quarter with the toughest comparator, and yet you did slightly better than that low teen decline. So here I'm wondering, what did drive this better than expected performance, especially because Latin America is seems to have been adversely impacted by some unfavorable shipment phasing and also some destocking there. So basically, why a better Q1 despite LATAM? And would it be fair to assume a sequential, albeit probably very modest, in Q2, mostly driven by a bounce in Latin America? Thank you very much.

Thank you, Guillaume. Okay, I'm going to... answer your first question, and I'll hand it to Shannon on the next two. So, the seasonal difference is significant, as we expected. It was a record season last year, and there was also significant rebuilding of trade inventory in Q1. So, it's a significant... I wanted to flag the volume growth that we're seeing, which is broad-based across our brands, both in non-seasonal OTC, but also in in Durex and in Dettol in the health portfolio. And obviously, as I mentioned, Lysol and Finish and other brands in hygiene are showing very good volume growth. So we're not going to necessarily quantify that, but I can tell you that we would continue to see retailer inventory management impacting Q2.

And so the answer would be we do expect that we'll continue to see that have an impact in Q2 through the year. Then on your nutrition questions, I think there were really two. You know, I'd start by saying we absolutely had strong trading performance in our nutrition business in Q1. And I'd also call out one quarter doesn't make a year. Having said that, what drove our over delivery in the U.S. was really related to our Nutramigen business and the fact that coming out of the recall in Q4, we were restarting shipments of Nutramigen to consumers. and had the ability to refill that pipe. We had strong supply performance that allowed that, and we're seeing strong consumer demand for Nutramigen in the U.S. On LATAM, I would just first note, docking as they were managing, or customer, I apologize, as they were managing their inventory levels, and we had a change in a distributor within LATAM. We absolutely expect LATAM to pivot back to growth as we exit the year.

Okay. Next on the line, we've got Celine Panutti from JPMorgan. Go ahead, Celine.

All right. Good morning. Thank you for taking my questions. The first one is on the volume recovery that we have seen in the health division. So it was quite encouraging to see that sequentially. Can you talk about where this volume growth came from? and how confident you are that the innovation that you've put through the execution will sustain this kind of gradual volume recovery. And my second question is regarding to NEC, the litigation there, and referring as well to the call that we had, I think, several weeks ago with some of your experts. Mike, I want to understand, you were mentioning at that time that The litigation was with Mitt Johnson. So would it be a solution for you to split the business and, yes, trying to segregate record value from this litigation? And or what are your thoughts about accelerating potentially a settlement?

Okay, so, Celine, thank you for the questions. Let me tackle the first one here first. So, look, the volume performance in health outside of non-seasonal OTC is quite broad-based, which is positive and also not a surprise to us. As you remember, I'm sure volumes in health have been resilient through the inflationary period, and we have seen a lot of growth in different franchises and in different markets. And that is the picture that's continuing. So really the outlier in the health portfolio at this moment is the normalization, if you will, of OTC volumes following that record season last year and the pipe fill associated with that. So it's very broad-based. Now, I mentioned in my remarks that innovation is a driver of this. It's a major driver. If you think about The innovation platforms that we've launched behind our Durex franchise and our Durex franchise across many markets, and I would probably highlight here in particular China, which is really working very well for us, where we have a number of large innovation platforms and new materials that we've introduced over the last 24 months that continue to drive strong growth. We are seeing innovation working for us in other parts of the portfolio as well in health In non-seasonal OTC, Gaviscon is a very successful franchise, and we have seen good innovation contributing to that growth. In the non-seasonal parts of the Neurofin portfolio, we have very good innovation in places like Europe that are really working for us. So it's broad-based, and that gives us confidence. As I've said before, The way we think about innovation platforms is we want them to be permanent additions to our business. So this is not about launching a bunch of new SKUs and then they cycle in and out of the shelf. It's about placing new elements of business into our portfolio that's accretive, that solve new problems for consumers. And that's what we're doing broadly across the company. I'm very pleased with the progress so far. But this job is not done, and we have a number of innovations and a number of new platforms that we continue to invest in and that we will be launching over the next 12 months. So more to come on that front, but I'm pleased with how that is going so far. Your second question on NEC. Look, I think, as we've said before, we're in the early stages of what is a large and complex litigation process. I think we need to, while I certainly understand that everyone would like to resolve this matter, and of course I don't disagree with that at all, but it is not prudent, I think, to speculate right now on structural moves that we may or may not consider. I can tell you that we are spending a lot of time thinking about how to best navigate the litigation and how to prevail in the litigation. And we remain confident that we will prevail because the science is clear. The benefits of what we do every day is clear. And I think you're seeing more voices come to the table as well in the marketplace that are serious voices based on science, based on concern for premature babies and their families. You know, most recently the leading nonprofit organization representing parents with kids that unfortunately have neck. And the Neck Society has, I think, said some sensible things. And I think we'll hear sensible things from other parts of the U.S. and the marketplace, and I welcome that. So I can't share with you today many new specifics on the neck litigation. As I said in my remarks, there are not so many new developments, but we are completely committed to keeping you fully informed on that as new things develop and as we make further choices in terms of how we best represent the interests of record shareholders.

Thanks, Chris. Thank you. Okay, next on the line, we've got Ian Simpson from Barclays. Go ahead, Ian.

Thank you very much. Two from me, if I can. Firstly, when did non-wet nutrition stabilize in the U.S.? ? and has volume sequentially stabilized alongside value? And secondly, can you give us some color of which brands drove that missing the developing market volume growth? Thank you.

When did the nutrition business stabilize in the US?

So I mean, I think, Ian, you're asking when did non-WIG stabilize. So I think in terms of share performance, what we're seeing at the moment is a fairly stable picture now, and that is what happened in Q1. I want to make sure that I'm answering your question. Is that your question?

That's correct. I'm just interested how many months of sequential share stability we've had in the U.S.

and all the way around. Okay. Well, we've had a few puts and takes from the Nutramigen in and out, so to speak, of the market. So that would have caused the syndicated data to show a slight share decline early in the quarter and then a share recovery later, but effectively it's stable.

Great, thanks. Which brands drove developing market volume growth?

The brands that I mentioned are the brands that grew also in developed markets. I mean, across developed and developing markets. So, you know, in terms of developing markets, we saw a lot of strength in directs. We saw strength in debtor volumes and in non-seasonal OTC. So we've also seen good volume performances from Harpic and from Vanish. So it's broad based.

Thanks, Ian. Right, let's move on to the next question. We've got Victoria Petrova from Bank of America. Go ahead, Victoria.

Thank you very much and congratulations on the result. I have three very short questions. First one is on hygiene. You had 7.1% growth in the first quarter, one-offs in this context. My second question is on margins. And I know it's too early in the first quarter, but... You said that margins will be also kind of more beneficial in terms of progress through the year. How should we think about it, especially in the context of your nutrition business? Should we expect significantly lower margins in the first half of the year versus the second half? And my third question is very technical. When do you expect any first news? on your appeal in the context of Ms. Watson's verdict. Thank you so much.

Great. I'll jump in here, Victoria. So first your question on hygiene. As you quoted, we did deliver the 7.1% like-for-like hygiene Q1. I wouldn't articulate it as we expect any slowdown. I just remind you that 7.1 included a two-point benefit. That was purely timing, but related to that SAP implementation in Brazil. So the underlying 7.1 was really 5.1. And we would expect, as we shared in our guidance for the year, that our hygiene business will deliver mid-single-digit growth across the year. From a margin standpoint, really no comment today, given it's just a trading update, although I do want to make the point that we shared in February and that I shared again today, that we expect the phasing of our margin growth and margin delivery to be back half-weighted. So very consistent with what we said around top line. We shared that same guidance around bottom line in February and wanted to make sure that that was clear. And then as far as the new news on NEC, I'll pass that over to Chris.

Thank you, Shannon. Look, as you can probably appreciate, it is not appropriate for us to comment on specific cases that are undergoing litigation. So I can't speak to specific outcomes in cases, but I can say that we are completely committed to giving you timely information and any information that we receive and that we think is material and important, such as the kinds of questions you're asking. we will share with you in a very timely fashion. So I'm sorry I can't speak to the specifics on that, but I hope you understand.

Thank you.

Thanks, Micah. Right, now on to Tom Sykes from Deutsche Bank. Go ahead, Tom.

Thanks, everyone. You've mentioned debt-old volumes a lot, but you also mentioned that pricing had come down. Was debt-old actually in totality in... like-for-like growth, please. Then also, just in the developing markets business, and in OTC, you pick out, sorry, Health X OTC, you pick out Sexual Health Durex. How did Russia perform in this? And any updates on that, please? And maybe just on the guidance on the margin improvement in total, I guess that's EBIT margin. Is there any view that your EBITDA margin would also improve, please? Thanks.

Okay. So, Chris and I are going to take turns here. I'll start with your Dettol question. So, you're correct. Dettol was in volume growth, which is fantastic. From a like-for-like, there's some phasing, timing phasing that we're comping from the front half of last year, which has debt all in a small decline from a like-for-like net revenue standpoint for Q1. I think your next question was on Russia, which I'll pass back to Chris for that.

Yeah, I mean, from a trading standpoint, Russia was not a major driver of our performance in the quarter. I think you also asked about Durex in particular, and I would say Durex is in broad-based growth, and it's really great to see how successful our Intimate Wellness franchise is broadly across markets, especially the largest markets that matter most to that business. And China, actually, if I was to highlight a main driver of this performance, China has really posted some outstanding performance in recent quarters behind Intimate Wellness.

And then your last question was around our guidance on EBITDA and whether that was the same as the guidance we've given for EBIT margin. And yes, it is. And I'll just repeat, both our net revenue and our margin or profit guidance is that it will be back half-weighted, which we shared in February and again shared this morning.

Okay. Thanks, Dom. Right. Now we've got Fulvio Caso from Berenberg. Go ahead, Fulvio.

You called out China and India a few times. I was just wondering if you can share or remind us how big these markets are as a percent of records as group revenues. And if you can also share what the like for like sales growth in these two businesses or these two countries were. in the quarter. And then my second question is just generally on the industry pricing environment. I mean, have you seen any signs of higher promotional intensity across any of your categories or countries, or is it still fairly robust, the general pricing environment? Thank you.

Okay, let's take those in turn. So I'll actually start with your last question. Look, I would say that we haven't seen a lot of promotional intensity pickup. We are seeing, I would say, a return to normal trading, normal promotional activity during the inflationary period. We did not see as much promo activity as I'm sure you know, and I think all we're seeing at the moment is a return to normal promotional activity and promotional depths and levels. I mean, look, this is a nuanced picture, so I'm giving you the aggregate view. Of course, there's always going to be some variance in a single market and a single category, et cetera. But broadly speaking, we are not seeing anything that is of concern and anything that we think creates risk. Of course, we are in a moment of transition out of the inflationary period into, as we can see in our results today, a more balanced algorithm. So that's something that we expect to continue. We want that to continue. And this is an issue that we're watching quite closely now. But as we said, you know, we're not seeing anything that is causing us to be concerned at this moment in our large markets.

And then I'll take your first question around China and India. So we, you know, aren't going to share specific numbers around those countries. What I would say is they are our two largest countries within our developing markets. And they both delivered, as Chris said, strong growth in Q1.

And I can just add to that, you know, I did share some statistics that were longer term statistics during our presentation at Cagney. And I think it's important to just call out that we have been very successful in China and India over the years. And they're among our top five markets. And it's a part of our portfolio that I think is very good because it gives us exposure to high growth at meaningful scale. And I expect that to continue.

Great.

Thank you very much. Now we have David Hayes from Jefferies on the line. Go ahead, David.

Hey, thank you. Morning all. So two from me, three from me, if I can quickly. So firstly, just on the cold and flu season and the dynamics in March and April, sounds like it was up, you may call it this weaker season. So is it no to be down in April? We should think about that still have an effect. in the second quarter in terms of that dynamic of year-on-year. The second question is, just to be on the strategic agenda update at the first half results, I think you mentioned earlier, can you just give us a sense of what that will cover? Is that something that's being formulated now? Will it involve mid-term guidance, expectation changes, new approaches and processes, or is it just going to be sort of a very incremental update on the current strategy? And then the final quick one, just on WIC contract renewals, is there any WIC contracts that are due for it or going through a process of renewal review and that we might hear about over the next nine months or so? Thank you.

Okay, so I'll try and take your first question around cold and flu season. So we do expect to see an impact in our Q2 results from the continued inventory de-stocking in the U.S., as we are seeing some key customers there manage their inventory levels. And I'll say that we expect to see, as we look forward for a health business through the year, sequential improvement in those results as we move through the upcoming three quarters.

On the strategy update, I mean, we'll do that at the half year. So, you know, we're not going to sort of preview that today. We are very committed to our strategic direction. We're very comfortable with it, as is the board. And, you know, so I'm not going to say much further about that. But we do intend to provide an update. And we'll get back to you at the half year with all of that. In terms of WIC, no, there are no large contracts coming up. And so I don't expect that you will have any significant news on that in the near future. Okay.

Thanks, David. Now we've got Jeremy Fiocco from HSBC. Go ahead, Jeremy.

Hi, morning, everybody. Just a couple of clarifications and then one question. So the two clarifications are, first of all, on these neck post-trial motions. I think when you held the original call straight after the initial Illinois verdict, I think you talked about kind of a one to two month timeline on those post-trial motions. Is that still your expectation or has it actually extended a bit? Second clarification, just on health, are you indicating a like-for-like performance, broadly similar performance to Q1 given you have this destock impact in Q2. And then final one is on pricing over the balance of the year. So you're at 2% in Q1. Now, if you look over the balance of the year, potentially you can have slightly better mix because there's less of an OTC negative impact. But at the same time, you're still lapping some pretty high price comps. or price rises that you put through last year. So can you talk about how you would expect the pricing component of your organic growth to trend over the subsequent quarter, whether you'd expect it to still sort of trend down towards around the flat? Thanks.

Okay, let's take those in turn. I'll start with the next question. We have no real update on that. We still expect these post-trial motions to continue along the timeline that we set out. And again, we're not fully in control of that timeline either, as I'm sure you know. But we don't have any new information on that to share at this moment. Again, if we do get important information on timings of that, we will be transparent with you and share that with you in a timely fashion. Shannon, over to you on the other two.

Sure. All right, so first question was around health. You know, we're not going to give quarterly guidance on the health business. What I would say is we're comfortable with where consensus is sitting for health for half one and for the full year. And so we reiterated that guidance earlier in the morning. And then on your question around the impact of pricing and our expectation, I would say we expect to see a similar impact from price mix as we look forward across the year. And so I don't expect that. If your question was, does that go down to zero within the year, I do not expect to see that.

Okay, thanks a lot. Thanks, Jeremy. All right, next on the line we've got Emma Latherin from RBC. Go ahead, Emma.

Hi, thank you for taking my question. Given your margins are ahead of peers and the several negative, unexpected events that have happened over time at Racket, I'm wondering if you've put any thought to the possibility that your business is over-earning and would actually benefit from some additional investment to improve that resilience. Thank you.

Okay, let me take that question. Look, this is a question that we have some experience analyzing and discussing because, as you may recall, this is a while ago, but... But back in the period pre-COVID, there was a time when the company did, in fact, over-earn, and we have been in the business of reinvesting in the company and reigniting growth since that period of time. And what's so encouraging to see is that our investments in innovation, in our pipeline, and in our commercial execution is bringing results and driving volume growth at a time when that is really something we're looking for in our businesses. So I'm very pleased that those investments are translating to performance. And I think we have more of that performance in our future and more of those returns on those investments coming. In terms of over-earning, look, we have no interest in over-earning, but it is the case that we have a truly excellent portfolio of premium brands. And our earnings model is very attractive. It has historically been very attractive. it remains very attractive. But we understand that the most important thing here when you have a P&L like this, an earnings model like this, is to drive sustainable growth and volume-driven growth. And that's exactly what we're focused on. If we see areas for further investment where we can accelerate that growth, we will not hesitate to invest in those areas. And that's not a throwaway comment. That's really something that we are assessing. There are places in our business where I do think we can invest more, but I don't think it'll require any kind of significant adjustment to our earnings model or our margins. Many of the places where we can and will invest in the business for greater growth generate near-term returns as well. So that's a positive. That's a plus. But there are areas where we will want to continue to invest. Our OTC franchise has historically been very successful. It's an area where we are investing, and we will continue to invest. Intimate Wellness is a successful franchise. We will continue to invest in that. Our growth in Finnish is good, and our premiumization in Finnish is very good, and we will continue to invest in that. And overall, I expect that we will continue to invest in our supply chain to make it even more resilient and agile than it is today. So I would say absolutely an attractive portfolio that should generate high margins, and it is, and we will not at all entertain any ideas that we would push our margins to a level where we can't drive sustained growth.

Right. Thank you. Thank you, Emma. Right. Next on the line, we've got Chris Pitcher from Redburn Atlantic. Go ahead, Chris.

Thank you very much, Philo, in Q1. And if not, could you? And then certainly just on Dettol, you talk about a bit of a price reset. Dettol pricing has been an issue for a few years now. I remember when you initially did your first margin reset, part of that was to fund the Dettol price reset. Can you just give us a bit more colour on how you're improving your price monitoring, your execution around Dettol? And what is it that's causing the problems? Are competitors moving quicker? What are you missing? I just want to get a bit more confidence that debt holes back in the right range now, particularly in important markets across South Asia?

Thanks. So I'll take your first question. We haven't shared like-for-like sales for our OTC portfolio, and that's not a data point that we're comfortable sharing or that we intend to share at that level. And then Chris, I'll pass that to you.

Yeah, sure. Look, firstly, I think it's important that we say that that's all has been an extremely successful franchise and the clear winner in its markets in disinfectants through the COVID pandemic. So the household penetration gains that we realized with that's all were among the top of the consumer goods industry during that time. So this is a very successful franchise. The franchise has grown well and is growing volume, as we talked about at the moment, and also gaining share in its key markets. The most important markets for Dettol are markets like India and China, and I talked about the strength there before. Now, in terms of why do we often talk pricing in the Dettol franchise, and why do we sometimes find that we need to make adjustments to be competitive, as you referenced, in certain markets? it's because it's an intensely competitive place. As you know, in Dettol, we have a big bar soap franchise. That's a very price-sensitive place to be. It's also a very strategically important place to be because it's where we bring people into our franchise and then we trade them up from there. That's our whole model. And so it's important to be price competitive in a segment like bar soap. Sometimes... you know, we find that we're not competitive enough and then we make adjustments. And that's sort of the nature of competition in that space. I would not say that we have any systemic issues with pricing and debt. So actually, the franchise has been and is currently trading well and it's successful. And it's a great part of our portfolio. But it's intensely competitive and we have to remain competitive. And in a competitive market like that, anytime you make any kind of misstep, you get penalized. And that's not unique to us, and it's not unique to Dettol. It's true for everyone competing in that space.

Okay, thanks. And we've got one final question from Bruno Montaigne from Bernstein. Go ahead, Bruno.

Hi, good morning. Chris, my first question is for you. You tend to refer to the science and the NEC cases, which is clearly on your site. What I don't understand is if I look at other corporate litigation cases, science wasn't always that important. I mean, many of these companies felt equally sure about scientific kind of being on the right side. So what gives you the confidence that in these jury cases, science is all the determinant versus other factors? Why do you think science will be more useful to you than it has been to other companies? The second thing is there was a question previously about corporate strategy, and you sort of avoided it and started talking about the NEC litigation. But I really think coming back to corporate strategy seems important because I feel like the record history is almost like a living proof that there's limited or no synergies between selling condoms and dishwasher tablets in the same business. And your business will probably work more to other operators who might have bigger cost synergies. I think also effective governance has been a challenge for your board as well. So given all that kind of history and evidence, why is a radical rethink of corporate strategy not your top priority?

Thank you. Okay. So on neck, look, I mean, obviously the role of science is incredibly important because while the Watson case didn't bear this out today, the scientific evidence is really important to arrive at the ultimate verdicts and the conclusion of this. It's not just science. It's also the medical consensus, which is really important. And As you see with the statements coming now from other parts of the stakeholders here, the NEC Society as an example, there's a public health interest that is very real in these matters. I can't comment on other companies' litigation, but I can say that because of the confluence of strong scientific basis for our viewpoint, an unequivocal scientific basis, really, a very strong concern, public health issues that are at stake here. I do think that these matters will be very consequential in how this litigation is ultimately resolved and how it ends. Now, the question on corporate strategy, look, there's no question that Assessing our strategy is an important exercise, and it's something that we have been doing. I think you made reference maybe there to some of the past assessments and discussions we've had, including the debate about RB 2.0, which we studied extensively and resolved. Anyway, I can tell you that we are hearing a lot of alignment to our current plan from our large shareholders. And our board is aligned. And so I think that's what I can say about that. I will provide further updates on our strategy and our direction at the half. Thank you.

Thanks a lot.

That's all we have time for.

Thanks for dialing in and have a good day. Bye.