Ontex Group Nv Ord

I'm pleased to have Gustavo, our CEO, and Geert Petters, our CFO, with us today to present the first half-year results.

Before that, let me remind you of the safe harbor regarding forward-looking statements.

I will not read it out loud, but I will assume you will have duly noted it. You're well aware that since 2022, our P&L is based on continuing operations, which consist of our core market activities only, while the emerging markets are reported as discontinued operations. We have already divested more than half of these, and we are working on strategic options for the remaining. Meanwhile, these activities continue to contribute to our results, and to the presented debt and cash flow figures in particular. Please note that since the start of the year, we have changed the definition of free cash flow to reflect free cash flow after financing and the operating savings in our EBITDA bridge to a net figure after subtraction of implementation costs. We got cleared up. Gustavo, over to you.

Thanks, Geoff. I'm proud of the OnTech teams with a consistent delivery in quarter two as in quarter one, allowing me to present a strong first half results. This gives me confidence in delivering a strong year and brings us another step further on our transformation journey. Our first half results are summarized on slide four. We continue to strengthen our competitiveness through more efficient operations coupled with our strong sustainable innovation pipeline. As a result, we have achieved a 3% like-for-like revenue growth, driven by 5% volume and mixed growth. The adjusted EBITDA margin rose to 12%, delivering an adjusted EBITDA 31% higher than a year ago, triggering volume growth and continued strong delivering on the cost information program. The resulting adjusted EBITDA was converted in significant free cash flow of 43 million euros versus an outflow of 29 a year ago. This allowed us to further strengthen our financial position. Free cash flow and M&A proceeds brought net debt down by 12%, and combined with a strong adjusted EBITDA, brought our leverage ratio to drop from 3.3 times at the start of the year to 2.5 by June. On the next page, we summarize the further progress on our context transformation journey. As we have expressed multiple times, our vision is to be the number one trusted partner for our retail and healthcare customers. Our leadership position in Europe is well established in the three categories that we serve, baby, feminine, and adult care. In North America, we are rapidly growing toward this position in baby care first. We have made further progress on the portfolio refocusing with the finalization of the divestments of the Algerian business in April and Pakistan in June. Meanwhile, we continue to work out strategic options for the Brazilian and Turkish operations. To create value, we identified three main drivers, and in each of these we have made further progress in the first half. First, competitive and sustainable innovation. In May, I already talked about Ontex being recognized as an innovation leader in Belgium, and the rollout of our new line of swingpans and our latest standpoint innovation. Since then, we have launched our new stop and lock anti-leak technology for baby diapers and our new line of youth pants. In May also, I talked about the recognition we received for our efforts with the carbon disclosure project. We continue to keep sustainability at the core of our product innovation pipeline. We are proud to support WUSH with the recycled diaper technology as they recently announced further progress in their commercial closed-loop diaper project. Our second value creation driver, business expansion, with the biggest opportunity in North America, where we envision a strong double-digit growth this year and beyond, which we did achieve in quarter one and quarter two, and we are preparing new launches in quarter three and quarter four. Furthermore, we continue to generate double-digit volume growth in selective categories, such as adult and baby pants. And the third value creation driver, best-in-class operation. We followed progress in our cost information program and gradually transforming our supply chain to best-in-class. Scrap rate, overall equipment effectiveness, and service level improved further, and we reduced our operating cost base by 5% as we did in the last two years. In June, we announced the intention to restructure our Belgian production and distribution activities. While these are difficult decisions to make, they aim to strengthen our operational cost efficiency across Europe, enabling us to strengthen our competitiveness further. Moving now to slide six. You can see here the career on career evolution of the adjusted EBITDA since 2023. In the first half of the year, the adjusted EBITDA margin on the orange line has increased to 12%, 2.6 percentage points up compared to the first half of 2023, and 2 points compared to the second half. It has also further increased within the period, reaching 11.5% in the first quarter and 12.5% in the second quarter. Combined with the revenue growth, The absolute adjusted EBITDA in the blue bars is up 30% year-on-year in the first quarter and up 32% in the second quarter, marking the eighth consecutive year-on-year increase. With this, I leave you with here for more in-depth view. Thank you, Gustavo. Let me go into more detail in the elements that drove our results, starting on slide 8. In this graph, you can see how revenue has grown from the first half of 23 to the first half of 24. Revenue grew 3% like for like in the first half of 24, driven by 5% volume growth, both in Q1 and Q2. In North America, volumes grew strong double-digit, as Gustave explained, based on baby care contracts secured last year and contracts in the first year ramping up. Volumes in Europe are slightly down, thanks to strong sales in adult care Sorry, we're slightly up, of course, thanks to strong sales in adult care. In this category, we benefit from contract gains and higher demand supported by demographic trends. In baby and feminine care, overall demand was weaker, but retail brands are performing relatively better. As expected, prices came down by some 2% on average, and more in particular in baby and feminine care, whereas they were more resilient in adult care. This explains why adult care revenue is up 11% like for like, whereas the other categories are slightly decreasing. Forex had no meaningful net impact. Let's move to EBITDA on the next slide. The adjusted EBITDA rose 31% year-on-year, and let's go through the building blocks step-by-step. First, there was a positive impact from volume index. We expect that impact to grow thanks to our relentless focus on gaining competitiveness. Most important driver remains our structural cost transformation program, which continues to deliver important net operating savings, bringing 5% operational efficiencies. Coupled with sustainable innovation, this allows us to strengthen profitability and competitiveness, serving customers better and managing prices to invest in future growth. Costs were overall flat. with a positive raw material impact thanks to year-on-year lower indices, offsetting continued cost inflation of other operating costs, such as energy, distribution and wages. Note that raw material indices are up again since the end of last year and that positive year-on-year impacts will gradually decline. SGMA came out at 10% of revenue, impacted by inflation and by actualizations of incentive provisions. As Gustave already explained, the adjusted EBITDA margin thereby increased to 12%. And in the next slide, I will discuss the P&L below the EBITDA level. The finance costs came out slightly higher despite lower indebtments and margins due to net exchange differences in financing activities. Taxes were lower as we recognized tax assets for an amount of about 10 million euro. This is consequent to consistently achieving our financial plans and disconfirming our future profit prospects. This led to an adjusted profit from continuing operations of €41 million, well up compared to 12 last year. We made adjustments for restructuring costs, primarily those related to the intended restructuring of our Belgian operations. We currently have taken a provision of €37 million, reflecting the potential redundancy costs according to the Belgian legal requirements. There were also 4 million euro related equipment impairments. Note that we were not able to make a reliable provision for a social plan on top of this, as currently the in-farm consultation round is ongoing and negotiations only start later. The profit from continuing operations thereby was 10 million euro. This continuous operation ended with a loss of minus 50 million euro. Adjusted EBITDA nevertheless was positive at 20 million euro. Reason is a non-cash impact as a consequence of the divestment of Algeria and Pakistan. This divestment led to a minus 21 million euro P&L impact of historic currency translation adjustments. These so-called CTAs reflect the forex valuation effect on foreign assets and are posted year-on-year in equity on the balance sheet. At the time of disposal, these CTAs are recycled through the P&L. Combining the results of continuing and discontinued business led to a limited loss of the period for the group of minus 6 million euro. Let's now move to the cash flow side of our financial results. In the first half year, we managed to generate a free cash flow of 43 million euro, which is a substantial improvement compared to the outflow of 29 last year. We start from an adjusted EBITDA of the group amounting to €130 million, consisting on one end of the core markets for €110 million and on the other end of discontinued emerging markets for €20 million. Working capital needs were €12 million, while the underlying working capital efficiency improved. Inventories were up to support of volume growth, especially in North America, where new contracts require us to anticipate filling the shelves at the start of the contracts. but also to support the footprint adjustments and investments in Europe. PayBus compensated this to a large extent, thanks to better negotiated payment terms, which is also part of the Cost Transformation Program. CAPEX amounted to €38 million. This is lower than last year, but this is due to phasing of payments. As you remember, we announced that we planned a significant increase in the CAPEX level in 2024. to support business growth and also the cost transformation program. We are still committed to do this and these payments will catch up in the second half of the year. Restructuring cash out was €5 million, mainly related to divestment costs. The anticipated restructuring costs for the intended footprint optimization in Belgium, once confirmed and negotiated, is only expected at the end of 2024 and in the course of 2025. Financial cash out was €70 million, well below the €33 million of last year, due to lower debt cuts and lower interest margins. Moreover, last year the financing costs were paid at the time of the RCF renegotiation. What does all this mean for the deposition? Net debt reduced by €77 million or 12% over the first half to €588 million, thanks to the free cash flow, but also thanks to M&A proceeds of €34 million. The latter comprises 25% of proceeds from the divestment of the businesses in Algeria and Pakistan. Note that this amount is enterprise value excluding the cash, but that still taxes have to be paid in Q3. Moreover, the M&A proceeds includes €8 million received from the acquirer of our Mexican business last year, as a deferred payment, and still an amount of €90 million is expected to come. Gross debt will reduce even more, by €86 million, as we are also optimizing our cash position. Our use of factoring facilities remained largely stable at €170 million, It's a limited increase of €6 million versus the end of last year. Our debt structure is thereby solid with 70% lease liabilities, 77% higher bond, which is maturing mid-26, and only 4% of revolving credit facility, which matures end-25. End-June, we have only drawn 13% of that revolving credit facility. That solid position can also be seen in our solvency and liquidity indicators on the next slide. The leverage ratio presented as a bold orange line has been continually coming down since September 22 and dropped below three times in the first half year to 2.5 at the end of June. The drivers of the solvency strengthening have also been presented on the chart, with a decrease in net debt as a green line and increasing last 12 months adjusted EBITDA as a blue line. This adjusted EBITDA reached €236 million and excludes the businesses of Mexico, Algeria and Pakistan as from the date of their effective divestment. Our liquidity position also improved further. We have now €370 million liquidity headroom consisting of €160 in cash and €210 on ground on the revolving credit facility. It is needless to say that with these figures we fully comply with a large headline to the bank governance. I now hand you back to Gustavo for the outlook. Thank you, Geert. When I am pleased about the further progress we are making on our transformation journey, we acknowledge that much is still to be done. The delivery so far has given us strong confidence in the rest of this year. and consequently, we have revised our outlook upward across all metrics, as we can see in the slide 15. We expect our core markets now to grow revenue between 4 to 5% like for like in 2024, higher than the low single-digit announced in February, driven by new contracts in North America and in selected categories. The adjusted EBITDA margin of our core market is anticipated to end at 12%, more than 2 percentage points higher than in 2023, with our cost information program as the main driver behind the profitability increase. Looking at the total group, we expect free cash flow to end up higher than €20 million, a strong improvement year-on-year, And this with a sufficient headroom for investment in capex and restructuring. And finally, in February, we expected our leverage ratio to drop from 3.3 times at the start of the year to below 2.5 by year end. And with this, Henry and I are ready to answer your questions.

Before handing over to the operator, could I ask you to state your name and firm and limit your questions to two at a time. If time allows, we'll do a second round of additional questions, and if not, feel free to contact IR afterwards. Operator, over to you.

Thank you, my sir. Ladies and gentlemen, if you wish to ask an audio question, just please press star 1 and also make sure that your mute function is not activated in order to let your signal reach your equipment. So star 1 for questions. Our very first question today will be from Charles Eden of UBS. Please go ahead. Your line is open.

Hi. Morning, everyone. Our limit was up to two, as promised. So on the 24 sales guidance ways for core markets, would it be fair to assume that's effectively driven by better-than-anticipated momentum in North America? where it looks like you're growing volume sort of 40% plus in Q2. And does that mean you're winning additional contracts in the quarter, which might see that growth accelerate actually in the second half of the year? And then second question, a bit more sort of medium term, longer term. And I appreciate these targets were presented by the previous CEO, but Gustavo, you were on the board during this time, so I suspect you're more than slightly involved in shaping these objectives. But when these were presented, there was a target of 2% to 3% like revenue growth, 12.5% to 13.5% margin in core markets and a leverage ratio less than three times. At the time, they fell a long way away in 21. But I guess you're there on two of these metrics or will be by the end of the year and not far away on the margin. So I guess the question is, what are the expectations? What are the ambitions now, particularly on the margin side, over the medium term for core markets? And then also leverage, I guess, you'll be under two and a half times by the end of the year. What are you thinking about cash growth? Yes, invest in the business, but are you thinking about bringing a dividend back next year? Maybe you could also talk on use of cash. Thank you.

All right. Thank you, Charles. I appreciate your question. I'm going to try to address little by little. North American growth. Yes, we continue making further progress in North America. And the answer would be yes. We expect quarter three, quarter four to continue with our growth. strong double-digit growth. And also, not just in Q3, Q4, but continuing in Q5. So this is a huge amount of efforts that we're doing there. We're approaching our customers in the right way. We have the support of them and investing in the business, investing in innovation, And it's going well. So, yeah, we expect to continue to grow strong double digits growth. In terms of the margin, and I'm going to leave the cash answer to Hilt. In terms of the margin, so we are, you know, while we are in core markets, while we are building the scale in North America, it's very nice to see how we are definitely improving our margins also in North America while we're building that scale. We need to be patient because we are investing in capacity. That means that we have a startup cost. That means that we have to grow Our business, we are building the scale that helps on the profitability side and then making North America contribute in an accretive way in the future months to come and years to come. In that way, the core business, North America and Europe, will continue to improve our margins. That is the expectations. So growth in North America is a big driver, definitely. From my side, on your question, Charles, related to the leverage and the cash, as you know, the 23 to 25 plan, to which we are highly focused, is fully focused on the fact that we want to improve significantly our competitiveness. with the purpose to have long-term value creation. So for this year and next year, we are still fully in that program, so we want to use the cash as much as possible for the investments, for the restructuring. You know that there are still some cash-outs coming, of course, as I explained in my exposé. At the same time, we strengthen the balance sheet that you see also in the leverage ratio. And if we take all together, the end goal for us is indeed to have a significant sustainable cash flow in the future. At that moment, and then we're at the end of the 25 program, we will reconsider dividends, which is of course part of that long-term value creation story that we're currently building.

Okay, thanks for the detailed answers.

Thank you very much, Mr. Eden. We will now move to Fernand de Boer of the group Peter Camp. Please go ahead, sir.

Yes, good afternoon. Thank you for taking my questions. I have two questions. One is on the gross... Sorry. On the raw material cost, you had a benefit in the first Q1 accelerating in the second quarter. So what could you say about commodity costs more in the second half? And then in your assumption for, let's say, top-line growth of life-like sales growth moving to 4% to 5%, meaning acceleration in the second half, what is your assumption of price? Because I think in the second quarter, price was minus 3%. In the first quarter, it was minus 1%. So what should we take there? Minus four, maybe in Q3, and then getting better a little bit? Or what's your assumption there?

Yeah, okay. Hi, Fernand. I will take the first question and then Gustave will tell you something about the sales growth guidance on your raw material costs. Indeed, it's always a bit of a mixed picture, but we see that they're gradually increasing. Of course, that's fully included in our forecast that we are updating month on month and which we closely always discuss with our sales teams. So that means that, as I said, we believe that the positive impact here and here will gradually decline. But for us, it's a normal evolution and we're not talking anymore on big changes as we have seen during the COVID period. This is a normal trend and we're resilient enough to absorb that. and to have sales prices that are aligned with the evolution in the markets. In terms of the revenue for the second half, your question, perhaps first on the price decreases, first quarter and second quarter, they are, I think we have been managing prices Actually, perhaps even better than expected. And we will continue to do that. The prices are responding. So when material costs are going down or up is one of several inputs on the pricing strategy. And we respond and we manage the prices based on, depending on the categories, depending on the evolution that we're seeing, the competitiveness. And what we are saying that we are looking after growing in selective categories is because where we feel a strong position in those where we have more competitive advantage. And then managing prices is also related to that, to our competitive position. So we don't foresee any bad surprises. On the contrary, we are managing very well our pricing strategy in the market so far, and we expect that to continue.

Do you already then see some, let's say, ease at competition, that you are less promotional, as you indicated, after the first full-year result in the Q1?

Yes. Can I ask you to speak louder or closer to the microphone?

Compared to the previous quarter, you mentioned the high promotional levels at A-Brand players. Do you already see some changes there or do you see them actually getting more aggressive?

There are two distinctions, right? Because I thought that we were talking about our prices. On the A brands, it's about the retail brand competitiveness in the store against the A brands. The A brands are doing promotions as they continue to do. I'm sure that you have listened also... The A brand's announcement, they keep, so they have lost some market share in the marketplace during the last year, year-on-year comparison, and therefore they are looking forward to recuperating that, and they are doing some promotions. How heavy they're going to be in the second half of the year, I don't know. I cannot say that that is in the hands of the A brands. But also the competitiveness on shelf, it's related to retail brands versus them. But not always retail brands compete on the A brands. It's also the competitive advantage between retailers. So that dynamic, it's all that it takes for us also then to manage our prices. It's a market dynamic. We don't see anything especially happening different than the normal course of the business. Okay. Thank you very much.

Thank you, sir. Sorry for interrupting you, sir. Our next question will be coming from Karel Zeute of Kepler Schubacher. Please go ahead.

Yes, good morning. Thanks for taking my questions. I have two questions. The first one is a follow-up one, basically, on the North American market. We see at competitors things are tough. At the same time, you and others are adding quality, like First Quality and several other players. How do you see supply-demand in the North American market shaping up? over the coming years, and are you and others basically banking on a significant shift of market shares in the years ahead in the North American market? And the other question is more a housekeeping one on expectations for H2. First one is on interest costs. Those are still high in H1. What should we expect? for the second half of the year, and also looking at the P&L, did I understand that we should anticipate potentially more exceptional costs in the P&L for the second half in relation to the restructuring in Belgium?

Thank you. I think the first one, so thank you, Karel.

How do we see North America's supply-demand? Yes, existing competitors in the retail brand. We are focusing today in the baby care first. And we have several opportunities to grow our business. There is a trend, a very good trend in terms of that we are building with the customers. on building retail brands, a stronger, more strategic management of the retail brands. And that is giving more room to grow to a retail brand. And we are participating in those discussions and we are part of those new businesses that the retailers are building. So we are seeing not just our growth. Today is coming from a market share growth. From our side, we have a low market share. We're growing in our market share within the retail brand. But it definitely will impact in the retail brand segment as a whole and to start growing that retail brand segment. We are talking now specifically, we are focusing on baby care. So how do I see it? I see it very positively. And your second question is, If you have questions, because they were here, we'll address them. So, Karel, thanks for your questions also. First one, let me perhaps start with the second one, because the first one we can derive from that one. Indeed, as I told during the presentation, we probably, the intention is confirmed based on the consultation information rounds in Belgium. Then typically, as you know, there's a negotiation and a social plan, which is on top. And that on top provision has not yet been taken because we even didn't start negotiations. We cannot make any reliable estimates. So that's included. And so included, I mean, there's no provision made. But at the same time, of course, we give cash flow guidance. That cash flow guidance is based on the better results we have. And we foresee hedge room for what still might come in cash flow in 2024, which will be only part of the amount, of course, because you know that the plant of Bruggenhout, the one down, will be on a much longer period, also partially equal, so it will be partially 25 also. We will give more visibility on it when it's clear, of course, so that will be in the coming months. A lot of it means with the interest costs, we are at €588 million net debt, so you can derive from the free cash flow that we, the second half of the year, we will have a limited minus to come to that €20 million, €20 million or above, so the net debt will probably slightly increase. But at the same time, our margins will become much better because, as you know, on the RCF, We have a margin grid, which is dependent on the leverage ratio, and we're now in the category of the 2.5, which comes with much better margins.

Okay, super. That's helpful. Thanks, Geert. Thank you, sir.

Ladies and gentlemen, as a reminder, if you have any questions or follow-up questions, do press star 1 at this time. We'll now move to Marcus Schmidt calling from AutoBHF. Please go ahead.

Thanks for taking the questions. I have two. First of all, could you please provide an update on the emerging markets asset sale process and timing? Also, if you think that the 2026 bond will be refinanced anytime soon, given the good operating performance, or is the bond refinancing rather something for next year. Thank you.

Okay, take the first one, emerging markets. So, the timing, so we are still expecting the timing for the two remaining Brazil and Turkey during this year and we continue progress. We always be looking, we are always looking for the value for the shareholders and And yeah, we expect to finalize during this year. And then on the refinancing, yeah, I always repeat also the fact that the maturities are still far away, of course, because the higher bonds, it's in two years, it's bid 26, and the RTS is end 25. We're very focused, as I said, on further realizing our plan, improving that racial performance, strengthening the balance sheets. We're very pleased that it was also reflected in the first half in better ratings as well. Some of the tempo and movies upgraded us. We hope that There's more room in the future. We will see what will happen because the improvements we're doing will probably also not get unnoticed by them. So that's why we don't feel it as an urgent necessity to do the refinancing in a very short term. For the last year, we're very confident on the refinancing ourselves. We have very good relations and support from our long-term relationship banks. Also, the sounding of the markets, we hear it's good, so we're very confident that at the right moment, we do the refinancing. Okay.

Well understood. Thank you very much. Thank you very much, sir. Our next question will be coming from Rebecca Clements of Fidelity International. Please go ahead.

Hi, can you hear me? Yes, yeah. Hi, just to follow up on the previous question about the refinancing, do you have any specific ratings targets you'd like to achieve or any specific leverage target you'd like to achieve before attempting a refinancing?

No, we don't have a specific target. Based on what we're doing now, we will just further strengthen in leverage. Based on our guidance of the ABDA, our LTM ABDA will further improve, so it will further drive down the leverage ratio. We don't have a specific target. We will be very happy to be between two, two and a half, further in the coming periods. And on the credit ratings, that's what I said, we hope we can take an extra step and we will see. It's up to us to convince the rating agencies to notice the big improvements we're making and the cash flow generation, of course, because it's all about also showing that we manage to deliver a sustainable cash flow.

Okay, and then just a couple of housekeeping questions with respect to the 37 million of provisions that you've taken for Belgium. How much of that do you expect? Will that actually be 37 million of cash outflow is my first question, and then how much of that do you expect to pay out in 2024 versus tipping over into 2025? Thank you.

Okay. Yeah, the 37, it's also based on assumptions, of course, because we announced an estimated number of people, but it remains an intention and even based on the final outcome, also a number of people can always change a bit, so people leave themselves and all that, so it's based on assumptions. so the final outcome will be more clear in the coming months. We don't have a very specific estimate for the cash-outs that will come this year. It will be parts, but we have to make sure that we understand that so far we announced the intention and information and consultation period of time is the one that we are living today, and we still have that information consultation period of time towards the end of August. Therefore, there is no way that we can do any appropriate estimate more than the ones that we have announced.

No, no, I understand that. I'm just wondering if from a timing perspective, I mean, let's just assume that it's $37 million cash out. Would it be more heavily weighted to be paid out in 2024 or probably more likely to be paid out in 2025?

Based on the intention announced so far, the execution of the two plants, a $1 million is going to be between 24 and beginning 25, and the second one is going to be more during 25. Execution of that intention.

Okay, that's helpful. And then your leases were a little bit higher. I think this one, your carrying value was, I think, $115 million at year end, and I think I saw on the slides it's $130 million is your carrying value of leases on the balance sheet currently. Are you adding leases, or is that just something that's reflective of rates?

I don't know.

Yes. Yeah, there's nothing particular. It's a recalculation. We wouldn't add very big new assets, so it's for us a limited amount. Okay, and then last question. Very specific dimension.

Thank you. And then the last question is just, you know, you talk about being very focused on, you know, your 2025 plan. In a perfect world, what would be the amount of CapEx you'd be able to spend given where you want to take the business? Would you want to spend quite a bit more than you currently are, ideally, for growth reasons? Or are there some timing constraints on that, you know, away from the fact that you're obviously still very focused on the balance sheet as well?

We're not at the stage that we're giving any guidance for 2025, right? But what we said some time ago is that we have a three-to-five-year plan that is in the first part of 2023, 2024, 2025, the first three years, we're going to require investments and strong investments from other parts. in terms of in two major areas, one in operation efficiencies that is mostly in European focus, and then the second piece, big piece, is the growth in U.S. But, Rebecca, I hope that you can apologize to us, but we're not giving guidance yet to 2025.

Thank you, Mr. Chair. We'll now go to Fernando de Boer calling with a follow-up question from the group Peter Kamp. Please go ahead.

Yes, thank you for taking my question. I have one follow-up question on actually the first question on the margin beyond maybe this year and beyond the 12%. Do I understand your answer correctly, Gustavo, that you say actually we will see margins going up in Europe and in the U.S.? ? But due to the stronger growth in the U.S., where we will have a little bit lower margins for the time being, actually the margin of 12% is it. And you should maybe better look at absolute EBDA growth than specifically on higher margins than 12%.

You have a good view, Hanferman, so that's correct. I will add also to that assessment that you have done, I will add also that as we are growing in top line and we plan to grow in EBITDA, in adjusted EBITDA, but of course that the top line growth is second The second half of the year is stronger, and that will, of course, in the equation, in the margin, also is another piece of the equation that you have done.

But you are very well set. I have one financial question. If I read your comments correctly, then you have quite a big net cash position. in emerging markets, but still you have a negative interest line. Where does that come from?

A negative interest line in the emerging market. It's a difficult question, but one of the reasons is emerging markets or is the... One of the things, for example, in the emerging markets is that the hyperinflation in Turkey, it's booked as a financial difference between, yeah, the recalculation is booked as a financial cost. So, for example, that's one of the important reasons why we have a financial cost.

Okay, thank you very much.

Thank you, Mr. De Boer. Ladies and gentlemen, we have time for only one more question. That question is going to be a follow-up question from Karel Zuta of Kepler Shuttle. Please go ahead.

Yes, good morning. Thanks for this. On the restructuring in Belgium, can you speak a bit more about the benefits and not only about the costs? What kind of payback do you see on these interventions you make? And the other thing is maybe on the currency situation you've heard and touched upon. Suppose you would sell the Turkish and Brazilian business. Would we also have this adjustment of the currency? Would we see that in the equity or in the profits? Thank you.

Okay. Very good, Karen. I'll take the first one and leave the second one for here. The first thing I will tell you on the benefit is this is, for reaching more competitiveness and more efficient operations across Europe footprint. And to your question about the payback, you were very specific on that. I don't have the answer, I can't disclose a specific answer to you, but I can tell you that, and I said it in other analyst course, that we as management on the company, All the time we look after approving investments and moving ahead on investment. Our criteria is for those investments that they have three or less years in payback. In this case, it's not that we are doing that analysis. We don't know the cost of this investment, but the intention is to improve our operational efficiencies in Europe as a whole, the footprint. That's responding to your first question. Second. Yeah, and the second question of the CTA, the cumulative translation adjustments. Yeah, a good question. Also a very relevant one. If you just take our balance sheets, and you look as part of the equity, then you see the amount as a negative amount, which is on our balance sheet, related to that CTAs, which have not been realized. And it's an amount of about 210 million euro, which is related mostly to those emerging markets. So that means that if that materializes, that those amounts will also be in the P&L, But of course, as you know, it's a technical accounting thing because there's no cash impact at all. And we have seen that in other press releases over the last days that there are other market players going out of emerging markets who also have a lot of CTAs. So it's something quite common.

Okay, thanks for that. That's useful. Many thanks.

Thank you. What are your questions, sir? Ladies and gentlemen, that will conclude today's question and answer session. I turn the call back over to Mr. Gustav Carbopas for additional closing remarks. Thank you.

All right. Thank you very much for your questions, which I hope we have addressed properly, and for your support. That means a lot to me. Let me leave you with a final remark. The teams behind these results are working very hard day by day, And the career and career sustainable success are giving them huge energy and hunger for more. So have a good day and a wonderful summer. Thank you.