Remy Cointreau Sa Ord

Good morning, everyone, and thank you for being with us this morning for Rémi Cointreau's full year results. I am here with Eric Valla, our CEO, and Luca Marotta, our CFO. Both of them will, of course, take you through the detailed results. As we present today our full year results, I would like to open with a few words of perspective. The past year has been marked by a complex and rapidly evolving environment, macroeconomic volatility, geopolitical tensions and temporary shifting consumer behaviour, all of which are more cyclical than structural and closely tied to a context of constrained spending. Yet, in the face of these headwinds, we remained true to our long-term vision, building exceptional brands, preserving our unique terroirs, and enhancing the desirability of our portfolio. But let us not forget, cognac has always evolved in long cycles. This is neither the first time nor the last. All the historic cognac families will tell you how it is important to stay the course during more difficult times. It is an essential condition for creating value over time. At Rémi Cointreau, we remain fully confident in the strength and relevance of our long-term strategy. Drink less but better is not a reaction, it is a conviction. Moderation is a structural trend, not a new one, and our value-driven model is built to embrace it. At Rémy Cointreau, we do not chase volume at any cost. This has been our stance for many decades and is one of Rémy Martin's greatest strengths. It is also what enables Louis XIII to stand the test of time, crossing centuries without losing its essence. We are tackling this challenging period with determination while also taking time for introspection. Both are essential. confronting the crisis, and at the same time, reflecting on how we can improve and emerge stronger. With that in mind, I would like to take this opportunity to sincerely thank all of Rémi Cointreau's teams for their perseverance and daily efforts, always carried out with the same passion. The upcoming CEO transition will mark a new chapter, one of renewed energy and continued strategic focus. We are delighted to welcome Franck-Marie Lee in a few weeks. His extensive experience in developing high-end international brands, his successful track record in business transformation and his proven ability to innovate and accelerate brands will be key assets that enable him to meet the challenges ahead. Our fundamentals are strong and our ambition remains unchanged to create sustainable value through excellence, discipline and long-term thinking. I will now let Eric take you to the full year business review. Eric, the floor is yours.

Thank you, Marie-Amélie, and good morning, everyone. Thank you for joining us today. I will begin with a quick overview of full year 24-25. Luca will then detail our financial results, and I will conclude by giving you an update of the group situation and the outlook as usual. Let's begin with a review of our business performance for the year. I am now on slide five. Group sales reached 984.6 million, representing an 18% organic decline. While this reflects the broader macroeconomic challenges, we took proactive steps to partially mitigate the impact by reducing costs, optimizing our operations, and enhancing efficiency. As a result, COP stood at 217 million, down 13.5% on an organic basis. Despite the sharp decline in sales, the organic COP margin reached the high end of our guidance range, standing at 21.6%. This represents a deterioration of 3.9 points organically. Beyond the sharp decrease in sales, this performance was mostly driven by two factors. One, the gross margin, while it declined by one point, primarily due to cost production, inflation, and a negative price mix effect, it remains at a high level, standing at 70.6%, which means 2.8 points versus 19-20. This demonstrates the structural strength of our business model despite the challenging environment. And two, ANP expenses were reduced by 1.1 point versus last year, now accounting for 20.3% of sales, reflecting a more targeted and efficient approach to brand investments. We have obviously taken measures in the current tough context, making sure we keep the right balance. Following several years of acceleration, ENP is posing, but from a high level. I am now moving on to slide six. The purpose of this slide and the following ones is to share some key achievements and to analyze our relative performance versus peers, looking at it for our key brands beyond the group results, which have been hugely impacted by our strong exposure to Cognac in the past two years. Let's start with Cognac, where we pride ourselves of having maintained our market shares worldwide despite a rather poor performance overall and a firm pricing policy in a challenging context. This inspires me three main high-level comments. First, Rémy Martin is a strong brand with a relevant positioning and its relative performance has been driven by the smart use of new channels like e-commerce, particularly in China. Second, a good share of the headwinds Cognac is facing are cyclical, as already explained and detailed by our peers. Third, we shall not deny that Cognac as a category is facing challenges in the US, while remaining very aspirational. We need to recruit beyond our existing core clientele, and we will achieve such through product innovation and new campaigns. Cointreau has benefited full speed from a wise and thoughtful investment behind the Margarita to leverage the growth of cocktails in the US and worldwide. It has gained market shares, but the opportunity remains massive. We have a great liquid and we are working on innovation to target new moments of consumption for the brand, particularly day occasions versus a strong focus today on the evening and the night. We could have shared the results of the Botanist as well, which are even more striking, even though from a much lower base, of course. The Botanist is the brand which benefited the most from the portfolio strategy beyond Cognac, and it is now accretive for the group from a gross margin standpoint. Moving to slide 7 and a crucial market, the U.S., Over the past two years, our company faced significant challenges which have strongly impacted our performance. But our recent performance seems to indicate that we have finally reached the bottom and we believe this difficult phase is now behind us. From that low point, we have begun to rebound and recent results show a clear recovery momentum throughout the year. Our key indicators are trending upward, confirming that the worst is past and that our strategic actions are starting to pay off. Throughout the downturn, we remained disciplined and focused on long-term strength. We maintained a rational pricing policy, refusing to engage in desperate price cuts just to chase short-term volume. Despite this prudent approach, we have been steadily narrowing the gap with our competitors, as demonstrated by the two charts on the right. In other words, our strategy proves to be relevant. We are regaining ground in the market without compromising our margins or the premium value of our products. This combination of pricing discipline and competitive focus is positioning us for sustainable improvement as the market recovers. And our latest survey, which measures our brand's desirability, strongly supports this conviction. Rémy Martin is still the number two within the cognac category. Moreover, we have made a substantial effort to reduce our inventory, particularly last year, with the destocking evaluated at 60 million euros. Today, we can confidently state that the absolute value of our stock level is now significantly lower than it was in 1920. This is why we consider that we enter the new fiscal year. with stronger fundamentals and we are reasonably confident that this positive momentum will continue in the coming months. Having said that, we are still waiting for the spark in depletions mentioned by Luca in previous mails. It would trigger the full speed recovery as our stocks, which are low in absolute value, would all of a sudden appear too low in a number of months. But we are not there yet, to be clear. I am now on slide 8. China has been and by far the country where we outperformed the most. EXO has gained market shares but starting from a very low base and below our expectations. Our activations have been hit by the current macroeconomic context and its impact on the high end. On the other hand, Club gained 4 points of market shares in its own segment. An amazing performance in five years. This has been driven by the liquid and the iconic shape of the bottle, which fits perfectly Chinese taste and symbols. And it has been amplified massively by a very smart and intense packaging animation and e-commerce roadmap. This has been made possible thanks to the decision we took four years ago to drive part of product innovation directly in China and thanks to the strengthening of the e-commerce team over time with a very entrepreneurial mindset. Talking about e-commerce, we managed to grow 12% last year and have now reached and secured the number one position among imported spirits, far behind Baidu. One last word on the desirability of Rémy Martin in China. As part of our last survey, one output is that cognac remains a very attractive category. It is in the top three most desirable premium spirits categories, and Rémy Martin remains the solid number two cognac brand since 2020. Another important achievement, and I am now on page nine, is this challenging environment has been the in-depth work we have done on cost to mitigate the impact of the top line on profitability. Over the past two years, we have implemented a series of targeted measures to address this issue. In 23, 24 fiscal year, we achieved savings of 145 million This year, or last year, 24-25, we continued our efforts, reaching 85 million in savings. In total, this amounts to 230 million saved over two years. Focusing on structural savings only, we have made significant progress in reducing our total cost base by 12% compared to two years ago. In addition to these cost reductions, we have also taken a gradual and considered approach to optimizing our workforce. Rather than making bold restructuring announcements, we have carefully managed our headcount reduction step by step, ensuring sustainability and minimizing disruption. Overall, we managed to reduce our total headcount by 9% compared to 22-23 at the peak, while taking the decision to reinforce our organization where we believe there is potential, notably in China beyond Guangdong, for instance, but I will get back to it later. Let me now highlight our progress on sustainability on slide 10. In 24-25, Rémi Cointreau made significant headway on the sustainable exception. Our transformation roadmap structured around three pillars, people, terroir, and time. This year, terroir stood out with visible and measurable impact. We achieved an A rating from CDP, Carbon Disclosure Project, Climate, and a B- from CDP water, reflecting external recognition. Carbon emissions were down 12% versus 2021, our reference baseline, keeping us firmly on track to meet our 2030 SBTI targets. While reduced production volumes played a role, the results also reflect key drivers included operational improvements and supplier engagement especially on packaging leading to a 23% cut in emissions per bottle. All our new packaging are now eco-designed. We aim to reach the lightest weight possible and use only CSR-friendly materials. Transport-related emissions were also reduced by 18% per bottle transported. We also made major strides on water use. Net water consumption fell by 53% versus 22-23, which is massive, equivalent to a 39% drop per bottle produced. These savings came from a robust program across the value chain, including better water treatment, leak management and rainwater harvesting. Finally, in Cognac, we launched the Centre Pact, a bold step in favour of agroecology. By March 25, over 42% of our wine-growing partners had already been trained in sustainable practices. I am now done with my first part, coming back to last year, and I will now give the mic to Luca, who will be more specific on financials.

Thank you, Eric. Now let's move on to a detailed analysis of the financial statement. Let's start with the full-year income statement, P&L. As previously mentioned, organic sales were down 18%. Based on this, gross profit decreased by 19.2 in organic terms, implying one point less, so deterioration in gross margin. though these still represent a strong improvement of 2.8 to 180 basis points on a five-year period. This full-year performance reflects an unfathomable evolution in COGS, as well as a negative price-mix effect, of which pricing contribution was slightly negative as expected. Sales and marketing expenses were down 16% organically, While we have reduced some investment in the current context, spending remains in line with pre-COVID levels. Inside, within this total, we have two splits in two different souls. AMP expenses were down 22.3 organically, still representing more than 20%. 20.3 percent of sales, so an increase organically of 2.4 points over a five-year period. As part of our optimization efforts, we increased the share of below-the-line specific point-of-sale spending relative to the above-the-line more general brand awareness spending during this period. So as a consequence, the below-the-line investment share, POS advertising, animation, activation, more volume-oriented promotional activities, is now bigger to the above-the-line spending. So what is above the line? Traditional media, digital, and PR. This is also there to speed up at the maximum depletion, the best approach of sell-out. Additionally, digital represented 60%, more or less two-thirds, of the above the line. So we can say that digitally, the group is spending 30% of the total AMP in digital. Then there is another line, which is the distribution cost, decreased by 6.2% organically year-on-year, mainly due to the restructuring efforts made in the U.S. and Europe last year, which are now as guided as expected, generating savings this year. The year just ended in 24-25. Over a more wide period, over a five-year period, these distribution costs are now down 11.3% in absolute terms. So what does it mean? That distribution costs have been decreased two times faster than top-line decrease. Then there's a third line, administrative expenses. We are down 2.5% on our organic brazes year on year. reflecting a series of overhead cost optimization in response in answer to the current economic condition, which I will detail shortly. Over a longer five-year period, this cost increased by 13.7, reflecting two different dynamics. Decrease, strong decrease in holding costs, but a bigger increase than that in marketing and staff costs behind essentially several future growth-oriented brands that today are strong investment, but with the top line, which is not yet at the point we expected. Overall, the current operating profit is now down, was down 30.5% organically, as Eric pointed out, and 28.7 on a reported basis. So small benefit on Forex. Important to notice this year because this next year will be another story as you have seen. After accounting for a positive currency impact of plus 5.6 million euro. Operating profit margins stood at 22%. down 3.5 points as reported, and down 3.9 points organically. The sharp decrease in sales alongside the clean and gross margin were partially offset, but not totally, but additional cost reduction. Now, let's take a look at the group current operating margin bridge, slide number 13. It was down, as said, 3.5 points as reported, reaching 22%. This breaks down into an organic decrease of 3.9 and a positive currency effect of 4. But why 3.9 points of decrease? First of all, deterioration of the gross margin, which remains at a high level of 70.6 and clearly above 1920 to 1980 base points. This was partially offset by a reduction in AMP spend which remain at a level still bigger, significantly bigger and higher than pre-COVID level, along with the further optimization in distribution and structural costs accumulated. In more detail, gross margin was down one point, impacted by inflation and COGS and unfavorable price mix effect. Pricing was slightly negative over the period, reflecting the slight adjustment made in Cognac, particularly on VSOP, as well as a more pragmatic approach, more volume-oriented, on Lycos and Spirits brand pricing. AMP ratio decreased by 1.1, primarily due to the optimization efforts, such as prioritizing BTL spending over above the line. And while we have made this cut, the reduction is relatively modest compared to the significant acceleration in spending over the past year. So IMP still remain far bigger, I insist on that, of 240 base point versus 1920. Third, which is the negative factor on this specific year, is the ratio of distribution structure cost that was up four points, even if decreased by 13.4 million in absolute terms, reflecting savings related to reorganization project of last year, coupled with further cost control effort to mitigate the impact of the sharp sales decline. Furthermore, this evolution of organic cob margin includes another round of cost saving, totaling more than guided. We gathered 450. Now we totaled 85 this year, which I will detail in the next slide. Slide number 14. In October 24, we announced, beyond stimulating our sales performance, that we decided to mitigate as much as possible the impact of these headwinds in top line with a very pragmatic, specific, tailor-made approach on cost, targeting more than 50 million cost savings. Thanks to a very good, quite excellent execution of this plan, We overachieved once again this objective and reached 85 million on a full year basis, of which 75% to three-fourths of structural savings that will last. In parallel, 25% of total savings are one-off, and so they will automatically reverse in 2025-2026 P&L. What we have done? Let's start with manufacturing and logistics, which contribute to 5% of total savings. All of them are structural. They will last forever. And reflects on lasting effort, optimization, and production in Europe. Second, on AMP, which represented around 65% of total savings, and this includes 20% of one-off savings spread across the globe, mainly in the cognate division, with, of course, a bit more emphasis on a depressed U.S. market. Here, the objective, I insist, was to protect more BTL, point of sales, volume-oriented, depletion-oriented spending, and be more selective this time, this year, on above-the-line and brand awareness-oriented expenses. So we had 80% as a second factor inside the MP of structural saving, which correspond to additional investment made over the past three, four years, and that will return now to a more normalized level relative to sales. If depletion and top line give signs of dynamism, clearly we might re-accelerate because of the variable nature of this spending. But as a global comment, the level of 20% we reached is quite satisfying, more than enough to dynamize the actual top line. Third point, overheads. Represented around 30%, so the missing part of total saving. Mostly 50-50, 45% one-off, including saving linked to the variable compensation benefit, travel and expenses, and fees cut, and more structural saving, 55%, integrated the optimization made in our organization, the organization in the US and Europe. All in all, the exceeding saving, 35 million, that we are now analyzing compared to the guidance, are mainly coming from what? First, AMP, mainly structural savings, for 65%, quite logic. Top line at that time was not what they ended with, but more in the highest brackets, minus 15 to minus 18. We are at minus 18, so we adjusted. And overheads for 30%, equally split between short-term and long-term. That's not enough on saving. Looking back over the past two years, we made a total of 230 million euro in cumulative savings. Focusing only on structural saving, the one that at the end truly matters because are there to last and stand, they account for around 130 million euro or 55 percent of the total. What does it mean? a 12% reduction of our total cost base since 22-23. And as an additional note, headcount had been reduced without any major global worldwide reorganization, which is not our style, by 9% over the same period. So now let's move to the remaining part of the income statement, page number 15. After the operating profit, we had other operating income expenses that are showing a negative value of 6 million to be compared to minus 12.8 million last year. What is behind that value? Mainly the cost of restructuring operation in China that has been happened this year and that will help to mitigate the potential rising duties. As a result, operating profit came to $211 million into 2024-25, down 27.7% as reported. Financial charges increased, as expected, a little bit less than guided, if you want to point out, from 38.5 to 42.6. I will go into that with more detail on this next slide. The report tax rate increased from 27.4 last year to 28.6, mainly due to the additional charge related to the exceptional corporate tax contribution in France linked to the 2025 French finance law. But stripping out non-recurring items, the effective tax rate was 27.2 to be compared to 27.1 last year. So basically the same flat tax rate. At this stage, we expect a tax rate slightly above 425.26. around 29 percent, including the year two or 1.5 points of exceptional contribution linked to the French law of finance. As a result, bottom line net profit group share came in at 121.2 million euro, so minus 34.4 on a reported basis, so a net margin of 12.3 percent, down 3.2 point versus last year, but more or less flat versus 1920. Earning per share came out at 236, down 35.3, and minus 9 percent versus 1920. Excluding non-recurring items, clean EPS stood at 249 euro. Now, let's move to the analysis of the 6 million non-recurring items. Three components, 6 million net charges, which most include the cost of restructuring operation in China to help mitigate the potential rise in duties, plus 1.7 of positive non-recurring tax items linked to this charge, and 2.5 million euro negative or net charges related to the exceptional corporate tax contribution in France. Slide number 17, some comment, as already mentioned, on net financial expenses, which amounted to 42.6 million euro in 2024-25 compared to 38.5. Up 4.1 million, but better than our expectation, better than our guidance. Net debt servicing costs were up in absolute terms as a result of the 12-month integration of, if you remember, 380 million euro private bond issuance, which has an average of 10-year maturity, at a weighted interest rate of 5.58%. As a reminder, we issued this bond in September 2023. So as a consequence, also this pro-rata temporis effect, our cost of debt increased from 3.76 to 4.07. Net currency expenses decreased from a loss of 2 million last year to a loss of 1.3 million this year, primarily due to the hedging of intra-group intercompany financing. Last but not least, other financial expenses stood at 7.6 million in 2024-25. For the year 2025-2026, we expect our financial charges to increase at around €5,500,000. Now, let's analyze one of the most important slides for us, which is the free cash flow generation and the net debt evolution on page 18. Free cash flow increased from 13.8 to 19.2 million in 2024-2025, or from 18.2 to 27.6 if you want to exclude non-recurring items. This evolution reflects, on one hand, a significant, important decrease in EBITDA, offset by three major factors. First, sharp reduction in tax outflows from $88.4 million to $19.9 million, clearly reflecting a lower net result, so less taxes, and a tax cash reduction related to overpayment in previous years. The second factor I would like to highlight is the capex outflow, which decreased by 29.7 million euro, considering the cash protection and optimization measure that also in that field we implemented. Finally, total working capital, global working capital, while not being the main driver this year, shows early signs of long-term optimization. The outflow decreased by 12.4 million euro, including a decrease of 6.7 rate to the ODV and ageing spirit, and 5.7 reduction in other working capital outflows. Overall, so the evolution of this important indicator, total working capital, reflect a smaller increase in inventory compared to full year 2022-2024 in terms of finished goods, cognac, eau de vie, aged liquid and bulk, and raw materials and packaging elements, considering the current context. and a more important significant decrease of account receivables compared to full year 2022-2024. What does it mean? An inflow of 25.7 million euros offset by a decrease in payables in line with a sharp slowdown in activity. In parallel, other cash outflows decreased by €81.9 million, largely due to the optimization of the cash dividend last year, €41 million versus €152.7 million. As a result, at the end of March 2025, Our net financial debt stood at 675.4, up 25.7 million euro from March 24. As a consequence, A ratio is up from 168 March 24 to 2.4 in March 25. Slide number 19, a new slide. Let's talk about the free cash flow conversion. which is very peculiar as an indicator for our industry, particularly for players like us heavily exposed to aging inventories. The analysis of this evolution highlights strong year-on-year volatility, primarily because it is driven by changes in EBITDA. During the peak positive periods, 2021 for instance, free cash flows conversion reached 45%, supported by the initial COVID-driven business boom and a measured, little bit delayed level of ODV purchases. Following year, 2022-21, free cash flow conversion stood at high level, but 24% driven by the record high EBITDA of the group during the COVID peak, but partially offset by the reinforcement of our future ODB supply coverage and our investment behind the future growth. So, we can say that our business, and for specific players like us with the weight of an aged business, our business model includes some inertia due to the two-day purchases being made to support future growth. A more, if you want, normalized level, excluding both the positive effect of COVID and the current adverse contest, would be in the range of 15% to 20% of free cash flow conversion. We are not there this year. We won't be there next year, 2025-2026, either if tariffs in China or the U.S. are confirmed. Clearly, there are two swords waving too much also on these indicators for 2025-2026. But it is a normalized environment with steady with the growth and continued optimization of cash behind our brands, ODB purchases and CAPEX, all the investment set up, this remains 15 to 20, a realistic normative target for the group. Now, let's move on the impact, a very technical slide, but it's important. More than ever necessary this year, in 25-26. Currency edges as slide number 20. The group reported this year, in 24-25, a positive translation impact of 5.7 million on sales, better than expected, and a positive transactional effect of 5.6 in COP in 24-25. This mainly reflects the evolution of U.S. dollar. So top line, bottom line, the same. So it is accretive. It is positive compared to the organic P&L. Let's look at our forecast for 2025-2026. We talked about that already at the end of April, but it's important to rehearse and repeat. Why? This is particularly tough to estimate considering the strong volatility of the U.S. dollar and more generally all the currencies this year. This year we have chosen to work on three scenarios on the U.S. dollar mainly and the RMB, Chinese Yuan currencies. which cover, combined, 85% of our hedging needs. So the best case scenario, 107 US dollar and 760 for the Chinese one. The second one, which is the current case scenario, which is presented, 115 for US dollar and 7075. And the worst case scenario, 125 or 810. Focusing clearly, as has been highlighted on the current case scenario, we assume a conversion rate of 1.15 euro-US dollar and 7.75 euro-RMB as well, this is conversion, as an edged rate of 1.12, so better than 1.15, on euro-US dollar and 70.82, like it was on Chinese one. So in absolute value, we anticipate the following negative impact between 30 and 35 million on sales, published sales compared to organic, mostly driven by a negative effect in H2 for two-thirds. between minus 10 and minus 15 on operating profit, equally split more or less between H1, H2. You can read all the information on the slide, talking also about forex sensitive by currency at year 11. As the evolution of the Euro-US dollar and to a lesser extent that is there of the Euro-RMB exchange rate remain very volatile, we will continue to update, to share with you in a very detailed Sometimes boring, but important for you to modelize also the published, even if we don't guide on published but organic. And so give you an update every quarter. At this stage, for 25-26, what we have done? We have already covered 80% of our estimated net U.S. dollar exposure, of which around 60% of option. On RMB, we already covered 60% of our net Chinese RMB exposure, of which around 50% 5-0 of option. Slide number 21, now let's move on the balance sheet overview, where total assets and liabilities stood at 3.42 billion, up 53 million compared to March 24. On the left side, the assets, global inventory increased by 133 million to reach 2.1 due to the purchase of young ODV and increase in our inventory levels given the current context. Inventories now represent 61% total assets, up three points, it was 58 last year. On the right side, on the liability side, shareholder equity is up by $84 million, historically high, mainly driven by the net income partially offset by the payment of the dividend related to the fiscal 2022-2024. The group's net-to-debt equity ratio, net gearing, is flat over the period at 35%. Always on the cash and return on investment side, let's move as every year at the ROCHI slide number 22. Our ratio came in at 10.3 in 24, 25, down, clearly down, 5.2 points on a reported basis, and 5.5 points in organic terms. This includes an organic decrease of 5.5 in Roche of the group brands and the negative swing, as you can see, even if it's a minor absolute value in partner brands Roche. Why that? The Roche evolution is the result of an asymmetry between organic increase of 7.6% in employed capital and a strong decline of 30.5% in COP, as the group continues to invest for the future despite a challenging context over the short term. This is particularly the case for our biggest division, Cognac One. Its ROCI declined 6.3% organically to 10.9%, on the back of an increase of 8% in employee capital and a CUP decline bigger than 30%, 32.4%. In 2024-2025, the group continued to invest in aging inventory, slightly less than before, but still investing, and CapEx sticking to its long-term strategy. Other divisions, so Laksa and Spirits, roughly decreased by 2.3 points, organically to reach 12.4%. bigger than Cognac. This evolution reflects a continued investment behind our brands, with employee capital being up 6.2 organically, alongside a decrease of 10.5 income. One word on employee capital, more closely is line number 23. So overall amount increased by 152.3 million, but the organic part, which is the important part, is 148.9, and a positive currency impact of 3.5. On the organic side, so we show you the 7.6 year-on-year increase in employee capital, reflecting a strong increase in aging inventories, 74% of the growth. In capex, less than 10%, so sign of strong moderation, without giving up the strategic view, as explained earlier on other inventories. Now, last word, slide 24 from my side. Moving to the early dividend, given the short-term headwinds and our confidence for the coming years, an ordinary dividend of 1.5 per share will be submitted for shareholder approval at the General Assembly on 22nd of July 2025. One year will be proposed in cash and 0.5 with the option of payment in cash or shares. Overall, total dividend equates to a payout of 60%. based on a recurring APS of 249 and a yield of 2.22% on the average share price over the fiscal year, which was 67.35. I'm done. Thank you.

Okay. Thank you, Luca. And I'm back. Let me now walk you through our outlook for the year ahead. Before diving into figures, I'd like to provide some context around the current environment and our expectations as far as we can, given the high level of uncertainty and the number of unresolved variables at this stage. As you've seen, our top priority is to return to top-line growth. At the same time, we are making sure we are well prepared with mitigation plans in place to address potential risks, particularly those linked to tariffs on both sides of the Atlantic. So returning to top-line growth at group level will not happen without the U.S., where we firmly believe that the recovery in this market will unfold in two stages. First, we anticipate a technical rebound in selling before counting on a sell-out improvement. This will be driven by a low base of comparison, a restocking effect given our current trade inventories are well below 19-20 levels, and potentially some forward buying from wholesalers early in the year ahead of the possible implementation of higher tariffs. While our overall pricing principles remain intact, we are also taking a more agile approach to price management. In the current context, this means staying true to our value positioning while adapting tactically, smartly, where appropriate, ensuring our brands remain competitive and relevant without compromising our value strategy. This is all about finding the right balance. We are also counting on a strong innovation pipeline. The examples shown on this slide are not exhaustive. Some key launches cannot yet be disclosed, but they will provide significant support for brands. This innovation strategy serves three key objectives. One, recruit new consumers. Two, build local relevance through tailored products. And three, enhance brands' desirability with premium editions that further strengthen the high-end positioning of our portfolio. As you have seen from this slide 26, a lot of innovation is also coming from non-cognac brands. So you will not be surprised to see on slide 27 the non-cognac business as another important lever to support our top-line recovery. Growing the non-Cognac brand has not been set as an objective because of the headwinds on Cognac. It was already a key priority when we shared the vision in 2020, removing the target of achieving 65% of our business above $50. At that time, we implemented a new portfolio strategy, which benefited particularly some of our global priority brands. It has also been instrumental to the growth of some of our regional power brands, particularly Metaxa, whose footprint in Eastern Europe is quite strong. Our investments are focused on a selected number of countries to make sure we emerge with our activations. To list a few examples, for Cointreau, we will focus on the US, the UK and China, leveraging the margarita and the strong positioning in the cocktail universe. China has become the number three country now and displays a great potential, driven among others by convenience stores, a new channel for us. This is very exciting and this is why we are investing more. For Metaxa, the year will be marked by a lot of activations and a new campaign with Greece at its heart, considering the strong appeal of the country worldwide. And here again, with a clear focus on a selected number of countries. For the botanist, as you can tell from the picture, we are moving from a very white and clinic visual identity to a more colourful approach to maximise the visibility in store, particularly in travel retail. It will be supported by a new campaign and new activations, notably in the US. And lastly, for Boucladis, we will leverage liquid innovation designed for China and travel retail to keep rolling out our thoughtful campaign. And of course, we will make sure we keep the great momentum of the brand in Japan, where it has grown double digit in the past two years. As a result, we believe 20% of sales spent on ENP is an appropriate investment for our mature brands. The percentage being higher for rising stars, rising star brands with little impact on the group. On top of products and brands, we also aim at better balancing our geographical footprint, accelerating growth outside of the U.S. and China. This is what the slide 28 is about. For the sake of time, I will not elaborate much, but I will be happy to take questions. We focus on three priorities which could be split between short-term, medium-term, and long-term impact. This year, we have decided to allocate new resources to support growth beyond Guangdong, where the majority of our business is made today. We will focus on strategic cities in Fujian and the Southwest, where we can leverage the strong awareness of Rémy Martin and where we are late versus our competitors. We believe in a rather quick payback. The payback in Africa and Brazil will take longer. but we are already investing as we have potential to grow. The Botanist and Cointreau in Brazil and Rémy Martin in Africa, where we plan to launch a new product. India will take even longer, but we are already on it, not only through the product innovation as you saw from Saint-Rémy and Diwali, for instance. We are finalizing an RFP and we expect it to be a game changer in the country. Also, the surveys we made highlighted the great potential of the botanist combined with the lower tariffs expected in India for UK products. This is an opportunity we are determined to capture. We have assessed the potential impact of tariff increases in China and the US for 2025-2026 on slide 29. It is important to know that these estimates are based on the assumptions known to date, which remain unconfirmed. We continue to monitor the situation closely and will adapt our strategies as more concrete information becomes available. As of today, our best estimate of the maximum gross impact stands at approximately 60 million euros for China and 40 million euros for the US. we expect to be able to compensate at least 35% of the total effects in both China and the US. This translates to a net impact estimated at a maximum, I insist it's a maximum, of 40 million euros for China and 25 million euros for the US and COP. To achieve this level of compensation, we have initiated a comprehensive action plan focusing on critical levels such as inventory management, cost organization and strategic pricing, and promotion management. These efforts are essential to minimizing the adverse effects of tariffs and maintaining our operational efficiency. The last level, related to pricing, cannot yet be accurately modeled at this stage. the context remains too uncertain and volatile. We consider pricing as an additional source of mitigation, which is not factored in what you've seen there, but it is impossible to commit to a precise timeline or magnitude at this stage. More importantly, and beyond these actions, the most effective solution remains the return to top-line growth globally, particularly in our key markets, the US and China. Boosting our revenue in these regions acts as a natural hedge to the cost pressures we face, further reinforcing our financial resilience. If top line accelerates in line with our expectations, we would be able to offset two-thirds of the gross impact. On slide 30, one last important element before moving to the final guidance. Beyond restoring top-line growth and given the fundamentals of our business model, maximizing cash generation is imperative. There are three key levels I would like to highlight today, which will not surprise you. The number one is working capital optimization. In recent years, we significantly increased our OTV purchases to prepare for the future, reaching a peak in 2022-2023. Since then, And in light of the current context, these purchases have gradually normalized, albeit in a measured way, and in line with our multi-year contracts with wine growers. This year, most of those contracts are coming to an end, and we have decided to seize the opportunity to reduce our purchase volumes, considering the current market conditions and the stock levels we now hold. This reduction will represent between 25% to 45% of initial volumes, depending on the nature of the contracts, and will have a visible impact as early as the end of H1-25-26 in terms of off-balance sheet commitments, with the first cash impact expected by the end of the fiscal year, March 26. As a result, strategic working capital outflows are expected to come in between 90 million and 100 million euros this year, to be compared to a peak in 2022-2023 of 150 million. The number two lever is CapEx discipline, a similar trajectory, of course, as that of Eau de Vie purchasing, with a peak reached in 2022-2023, followed by a normalization phase driven by a more selective approach. We expect investments to be between 40 and 45 million this year. And lastly, shareholder return. Naturally, the goal is to maximize it to the extent possible. As of today, a share buyback appears unlikely despite our current low stock price, as the Board has chosen to preserve cash for operational needs. The Board is applying the same approach to the dividend with a dual objective. on the one hand, ensuring a consistent and attractive policy over time, and on the other hand, maintaining a reasonable and performance-aligned stance. Accordingly, the Board will propose at the upcoming General Assembly a dividend of €1.5. To conclude, let's now turn to slide 31 for a few comments on our guidance for 2025-2026. We have tried to be as precise as possible, although the environment remains unsettled. This is why we've chosen to present two scenarios, with and without the impact of potential tariffs, so you can better grasp the underlying trends. So what do we know at this stage? First, while the US has not yet shown clear signs of a sustained rebound, no spark, comparables are now turning in our favor. Second, inventory levels are healthy in absolute value and even below what we used to carry before COVID. And finally, we are now operating in a more efficient and agile manner thanks to the transformations implemented over the past two years. Conversely, what remains uncertain? China clearly represents the biggest question mark. From here, anything can happen. The recovery could be swift if consumer confidence returns, fueled by substantial household savings. But the rebound could also take more time. And last but not least, there's the matter of tariffs still unresolved on both sides of the Atlantic and the Pacific, by the way. Against this backdrop, we expect group sales to return to mid-single-digit organic growth, mainly supported by a strong technical rebound in the U.S., starting in Q1. That said, the year will see some phasing effects, particularly in the US and China. As such, we expect to return to growth at group level in H2. Well, turning now to the outlook of the COP, we are presenting two scenarios. First, excluding tariffs in both China and the US, we expect COP to grow by high single to low double digit organically. Second, including 65 million euros of potential maximum net impact linked to tariffs, Rémi Cointreau expects an organic decline in COP of mid to high teens. Looking further ahead, we have taken the decision to withdraw our 29-30 objectives. While these targets may still have been achievable, the persistent macroeconomic uncertainties, the volatile tariff landscape, as well as the lack of sell-out recovery in the U.S., no longer provide the necessary conditions to guarantee it. This decision also reflects the fact that the new CEO will naturally define his own strategic roadmap while staying obviously aligned with the group long-term value-driven strategy. I would like now to thank you for your attention, for this long introduction. We are now prepared to take your questions. Thank you very much.

Ladies and gentlemen, if you would like to ask a question on today's call, please signal by pressing star 1 on your telephone keypad. In the interest of time, we kindly ask to limit yourselves to two questions only, please. Go again. That is star 1 for your questions today. And up first, we have a question from Trevor Sterling from Bernstein. Please go ahead. Your line is now open.

Good morning, Eric, Luca and Marie-Anne Allie. Eric, before I dive into questions, just to say I wish you a fair farewell, bon voyage for the next chapter. I know the last couple of years have been very, very difficult, but thank you very much for your patience and always your clear explanations to all of us over those years. Then questions. I guess, Eric, returning to the US, which is probably the critical long-term question, you highlight that the underlying depletion trends are very close to flat do you think that corresponds to sellout or is there still a bit of a gap between the sellout and the depletion trends in the us and also if you could put whatever you think is true for any council into the context of the cognac category and the industry and the second question around sensitivities i appreciate very much the uh scenarios you've presented based on 20 percent tariffs uh on new eu imports Is it right to think that the sensitivity is around 20 million of gross impact per 10% of tariffs on the EU?

Luca, you want to take the second one and I take the first one? Well, first, thank you very much, Trevor, for your words. And needless to say that... Your questions have made me improve as well over the past two years, so really appreciated our discussions. Taking your first question, So indeed, depletions are close to flat. They are still negative, but they are, let's say, mid-single-digit negative. So if we compare to the past two years we've been through, it's a real sequential improvement. This we can say for sure. Plus, it is interesting to note that if you look at VSOP, where we have taken actions, we are now close to flat, indeed, meaning slightly better than the trends I just shared. meaning also that our actions on pricing do have an impact. And by the way, they are not yet all fully implemented. If you take, for instance, the small formats, where we want to come back to an index which provides more potential for the small formats, particularly the 35 centilitres, which in the current context of less purchasing power is the same consumption as that of the 75 centilitres. you know the retailers can decide to keep some of the margin for themselves for a while and so on. So it's not yet fully implemented. So we still expect some impact there. Having said that, it is too early. to say that it is purely and solely driven by real and solely sell-out. My view is that it is partly driven by also the actions we took on price, which are reasonable and so on, also have a limited impact in time. So there's a positive impact once you implement them, but then people get used to it and the... dynamism is less so we're still waiting for the spark and it's still too early to say that uh that uh depletions uh and that sellout is is back to uh to a growth or even flat i don't know yet what i'm comfortable with in the us and i will conclude with that is uh first our stock levels are very healthy today over three years worldwide we have destocked 100 million 50 million driven by more depletions than pre-COVID, over the five years, sorry. And 50 million driven by the fact that we have less stocks than we used to have before. Our stocks are pretty healthy. Our comps are pretty low, so selling, we are quite confident. Depletion should be okay, as also driven by all these actions we are taking on VSOP and other products. Sellout. will take a bit more time. It's hard to say when it will happen, but as many of our peers have shared, we believe that a good share of what is happening is cyclical, even though long-lasting.

For the second question, the answer is yes and no, because it's theoretically yes if it was in a vitro world without considering the phasing, the volumes that what we have already done in these months covering which kind of needs. But the theoretical answer is yes, more or less 20 of gross impact. And then the more you go into the year, the less impact you have also because you have what you need, but theoretically, yes. Let me profit of your question also to elaborate to some of your potential question mark reaction. We highlighted the worst case scenario, differentiating gross and net of the first set of measure of containment from 100 to 65, combining both China and the US. But if you look at the guidance, before, so without tariff or with tariff, you highlight this is not coherent with 217 million, which is the bottom line of this year, minus 65. So it is high, double, low teens. So bigger than that, what does it mean that we are fighting projecting to moderate this net impact, clearly also through volumes and sales, because the first, as already said, weapon to try to offset the huge sword is to grow back again. And we think we have all the elements to realize these objectives, starting with the mechanical strong restocking in the U.S. And I repeat myself, the spark will finally be there, the acceleration will be huge. As you know, as you, Trevor, pointed out many times.

Can I just ask one follow-up then, Luca? The guidance without tariffs implies marginal expansion next year, and you have roughly 20 million of one-off costs, which will recur in the back of the P&L. So that's basically saying there is a lot of operating leverage under there that would help offset the return of those.

Yes, and you know ourselves, very low profile, but on comparable basis we are working to try to get to a flat, to low single digit increase of the rates. without this wadoff. So we are working to, even if they are a strong burden compared to the size of the top line of today, to continue to be able to do, I think, a good job in terms of cost. Now the ball is more in the field of my dear colleagues of COMEX in terms of top line, because at the end, costs are not touching the sky. We can do no miracles. I'm not a saint.

Understood, Luca. Thank you very much, Luca. And thank you, Eric.

Thank you. And we're moving on to our next question now, which comes from Edward Mundy from Jeffrey. Please go ahead. Your line is open.

Morning, Eric. Morning, Luca. So two questions for me, please. The first is on the cognac category where, you know, we're still not yet seeing a spark. I'd just be interested in your views on sort of what is it that's required? Is it an affordability piece? Do we need a bit more mixability? Do you need a bit more freshness, you know, coming to the category? You know, more liquid on lips or cultural revenues? Or do we actually need to launch sort of lower priced products, perhaps a VS plus to drive affordability? I just love your big picture views and what it is that's going to drive that spark. for the cognac category in the US. And then second, apologies if you sort of just partly answered this on Trevor's question, but just around, the sensitivities of what can be mitigated on tariffs. I mean, if it's not 100 million gross impact, would the amount that you can offset start to increase from 35% up to 50% or even more? I'd love to get your views on how much the net drop-through would be if it's not quite as bad as expected on the tariff side.

Thank you, Ed. You'll take the second question and I'll take the first one. You want to start this time? Okay. So on the first question and the cognac category, I understand the question focuses on the U.S. I don't believe that what is happening is purely and solely price-related. If you look at the trends in the U.S., it's across the board, except for tequila to a lesser extent and except for cocktails, that the depletions are negative. And unlike in China, by the way, the high end is resisting better. So I don't think it's purely and solely price-related. And by the way, we've seen some of our peers decreasing their prices aggressively. And this did not translate into necessarily much more volumes. So I believe, of course, in psychological prices. So I believe in being below 50 for VSOP. I believe in being below 60 for 1738, because this has a psychological impact for sure. And this we know. I also believe in the fact that making sure that every stakeholder in the value chain makes money, you know, so that everyone is highly motivated because we shall not forget that it's a very intermediated business. So pricing does have an importance and a role to play, particularly in this context. And, of course, if we had a VS, we would do more volumes for sure, or a VS+. But our strategy is not to compete face to face with our competitors. In fact, if you look at our successes in the past five years, we have doubled the volume on 1738. We have doubled the volume on club. two SKUs, which do not compare face-to-face, compete face-to-face with our peers, two SKUs which are not necessarily cheap. So, you know, it cannot be reduced to that. It doesn't mean we shouldn't be smart in pricing. It doesn't mean we have a strong pricing power today, no. I believe the second challenge, to be honest, if you look at our depletions compared to five years ago, if you exclude VSOP, they are good. But if you include VSOP, they are bad. So we have a challenge with VSOP. And as we explained many times, we are in the process of fixing it. It takes time. I think we are partly responsible for that because Well, we've been placing so much effort behind 1738, and we believe that 1738 could serve as a halo brand to Rémy Martin, but it is not true. 1738 is a brand as such. VSOP is a different brand within the Rémy Martin umbrella, and we need to support it. So this takes time, as I said, when we launched it a year ago, and it's still in progress. I also believe that probably the biggest challenge, in fact, and it's a challenge for the category, and it's a challenge for VSOP and VS probably, in my view, more particularly, is to recruit. So, recruit beyond our historical clientele, which, by the way, is more impacted on VSOP and VS by the current macroeconomic environment than For the rest of our SKUs, 1738 is recruiting. VSOP is not recruiting and is relying on a clientele which is more Afro-American and more impacted by the current context. So the question and the challenge is how do we recruit beyond this clientele? And this comes through liquid tulips, for sure, but this is not going to give you the scale. It's also through communication, and you will see us investing behind VSOP, not solely on pricing now, but also on communication at some point, to rebuild desirability and to build it beyond our existing core clientele. Not that we are going to give up on this existing clientele. We currently have a number of of activations around DJ and music in many cities. But recruitment is the key challenge and it will come through a number of 360 actions that are being put in place. I think if we manage this properly, pricing together with the recovery of the purchasing power in the long term is not the main issue. Again, having a VS would drive more volumes, but we are not obsessed by the volumes as such, as you know, at Rémy, and we believe there is a lot of value we can drive in the long run, and turnover we can drive in the long run. We still have a very small share on EXO, and we still have a very small geographical footprint in China, so there's still a lot we can do, and as well with the non-Cognac, of course.

You want me to precise what is between mid-teens, high-teens? As already said by Eric, if our top-line assumptions are there, I think that we go beyond the 35 percent of setting, reaching 50 to 60, even 65. And then it depends also the top-line dynamics. It can be counterintuitive, but the more the top line will follow the budget scenario, so recovery and stocking and dynamics in Europe with special attention on China, the more we will support this top line enhancement. And so we will be more on the saving side if top line is a little bit more tough than expected. But at the end, I can only repeat that there is a fork, which is what has been highlighted, which implies that our guidance is not counting to reduce bottom line of this year of 65 million, and then you put on that plus 8, plus 10 percent. It's a bit more bold than that, because otherwise we'll have a sharper decline. You can count on us, and you can do the math. It is better than your first read. Negative point. No, no, negative point.

Important. My question was clearly, sorry. The question was more if the anti-dumping is not 38, but let's say 20, and if, you know, the U.S. target is not 20, it's 10. and therefore you're bringing back the dots 60 and 40, China and the U.S., but maybe it's like 30 and 20, it is still a drop through or mitigating factor of 35 or are mitigating factors start to increase? We will adjust.

We will adjust. We can say that all in all, without considering all the options, because I had to do a sensitivity test for all the options, but if one of those is there, Consider also the fact that we need to support the stronger volume recovery for this year in top line with a slight decline. So meaning that bottom line, even if it's growing, will be growing a little bit less than the top line. But I insist also what I answered before, maybe it was not your question, So your first read of you all is a little bit more than too much negative compared to what we have highlighted. Because if you do the math, we are planning to compensate to net a bit more than 35 million, also using the top line dynamics of this year expected. On the negative side, I put a lot of attention, a lot of disclosure on the forex. Forrest has been a supporter this year. It's more volatile, more complex. So we will guide on organic, but for your model, it's important that you take that into account. And everything is clearly explained. Top line and bottom line.

Thank you. And now we move to a question from Andrea Piscacci from Bank of America. Please go ahead. Your line is open.

Yes, thank you very much. I also have two, please. The first one is on the midterm targets, which you have withdrawn. So the 33% margin clearly looked difficult to achieve also given the tariff uncertainty. So I think no surprise there. On top line, you were expecting to grow at high single digit, and most of the headwinds you're facing are cyclical. I think consensus, if we go out two, three, four years, is around 6% for the long term. Now, I appreciate visibility is poor, but could you share thoughts on how you're thinking about top line longer term? Does that consensus seem reasonable? How you're thinking of the various moving parts? And then probably for Luca on a couple of things on cash flow, please. You're reducing, you were saying, your Eau de Vie contract volumes, and you've given us guidance for this year on strategic Eau de Vie investment at 90 to 100. What is a more normalized long-term level of investment here once those benefits of the new contracts fully kick in? And also, if you could give us a longer-term CapEx level, please. Thank you very much.

Actually, Andrea, you are asking to shoot a plan before the plan. You are top-line cap. You are funny when you are Italian.

I'll reply to the first question. Well, first, as you know, even in 2020, when we shared our long-term vision, we never spoke of the top-line growth. We spoke of a gross margin. We spoke of a cup percentage. so obviously the visibility has not improved. It is making it more difficult today. So what I can tell you is, as you've seen, indeed we are ahead of the plan or in line on the gross margin front, slightly ahead still, and we are indeed lagging behind because of the very low visibility on tariffs as well and the turnover on the COP. And the reason why it is withdrawn is not driven by the top line or not the top line achievement. It is more driven by the lack of visibility, by the risks linked to tariffs, than by a risk as such linked to the top line. Even though obviously we have lost one or two years. If you ask me, my view on the potential is... I still believe at least, but I cannot tell you the horizon. I still believe that we do have potential from where we are to grow in China, even though we've gained market share a lot lately, regions being... We are still very small imported spirits in total consumption. You know, if you look backwards, China, in 2003, the imported spirits accounted for 0.2% of the spirits consumed. In 2022, it's only 1.2%. So it's still very little. But meanwhile, we've grown, in portage spirits, 11% kagar in these 20 years. And the overall size of the cake has grown 30%. So what it tells is that China, we are still a drop in the ocean, and there's still a lot we can achieve there. And cognac remains an attractive category. The US, of course, is very much dependent on the macroeconomic environment. But I can tell you, confirm what Lucas said, is the day there is a spark, the day it starts recovering, the recovery will be massive in the U.S. because our stocks are very healthy, too low in number of months in case of recovery. In that case, we would catch up a lot. When will that happen? It is very hard to tell.

Cash flow benefits of the new negotiation, as highlighted by Eric, there will be the first moment you will see something, it will be end of September, in which the off balance sheet, consider all of that will be adjusted, about the commitment, so I expect to land something between minus 80 to minus 100 million, considering the future commitment, so not over one year, over the future year. As you know, it's a rolling picture representing the engagement of the company to buy in the future, not clearly linked to a specific year. used to be 660 should be something between 560 to 600. I cannot be more precise than that. And then what is the benefits on a specific first year? should be between 20 and 30 million already encapsulated in the guidance. What is the normative one? I cannot answer on that. It is accelerating top line. If it is something supporting top line on cognac back at plus 12, 13 for two years and then decelerating, clearly there will be some spike as you have highlighted as you've seen in the free cash flow conversion. So I think that all in all, 90 to 100 this year overall, considering the actual footprint of brands, could be something to modelize, maybe 10 million or less. But no more than that, because reaccelerating, clearly we are betting on that, there will be a consequence in terms of cash employment. Capex, we can live with 50 million so far for some years, even making some sacrifice, but without touching the DNA. can be a bit more also if the market is not dynamizing itself as we expected because you need to store. So you have some capex to store more. But the normative basis compared to our scenario, it is 50 maximum 60. So we don't plan so far to be back at the 70 to 80 of two years ago. We were at a high level of performance. One point, Andrea, which is important. We can't shoot a CAGR on top and bottom line today. Everything is changing. The tariff sword threat is so big, Damocles' sword is so big, and it's also implying an impact on the gross margin as a first tool to the growth. So all the P&L dynamics, also the cash, might change, positively or negatively. even without considering the absolute value in a given year. So that's the reason why it was the moment, on top also considering that if we are lacking of growth in some historical market, we need to speed up in some new one, and the new one has some characteristic that may be a little bit less accretive to the average. of the profit and loss, so need to be digested also by the new boss that will come. We have his opinion, clearly, to take more into account, the guy, the vision, and so the new one that will be shoot, I don't know when, will take into account not only this conjunctural specific element, but also the new footprint. But the first tool, which is gross margin, today, clearly, if tariffs are standing for five years, it's not only for Rémy Cointreau. For all the industry, it's a change of the business model in terms of negative element because because it gives you less money after you have sold a bottle you have less money to spend so you have to be more efficient but in amp in overheads and then 33 percent was no more achievable very helpful thank you thank you and from redburn atlantic we now have chris pitcher with our next question please go ahead

Thank you. Good morning all. A couple of questions from me. Firstly, on the destocking benefit, you talked about £60 million of destocking in fiscal 25. I mean, that's would account for 6% growth in this financial year if stock levels have hit the stable level. If we assume a gross margin in line with the group, that could be as much as a 20% benefit to EBIT. And so is the messaging right that the underlying operating performance, even before tariffs, we're still seeing a structural reduction in margin as the non-structural savings come back? Just want to check I've got the drop through right on destocking. And then, sorry, to follow up on the strategic inventory question, in terms of those forward contracts, you have a commitment to buy in the future. Are you seeing any reduction in the planted area in, say, Grand and Petit Champagne, i.e. there may be just less available supply, which will put a lid on how much strategic inventory you need to buy or indeed can buy? Thank you.

First, you take the second? Yeah. Okay. So, thanks, picture, for your very easy question. So let me rephrase it. Tell me if I understood correctly. You are trying to see if the stocking automatic hypothesis, overall 60 million, is giving enough gross margin to offset the... That cat bounce back, negatively speaking, on time of cost. So, yes, it's accretive. So because the restocking will give much more than the short-term headwind on a vertical basis, on P&L. Then if you look line by line, clearly the restocking is not showing it. So, on a vertical basis, this activity, it is accretive. Does it mean that we don't need to speed up investment? No, we need to speed up. So, the equation works only because we are trying to remain at 20 percent EMP ratio. increasing, I insist, BTL dynamics, short-term money-oriented AMP compared to more noble, more long-term brand awareness spending. So it's a shift inside that. But vertically, it will be an accretive impact. I'm not able to estimate precisely, but at least 10%. if you consider at least $20 million. So we pay the returning cost with $20 million more. So if we want to take on the positive side, we are able. So we take it on the negative side. If you are not able to restock, you can say we have a threat on that. But then remember what I said. In that point, if top line is more stress, we can also activate some additional saving posture, even if we already cut $230 million. Today the guidance is based on a top line dynamics as well to increase this 35 million of not offsetting of tariffs already there.

And for the second question, so you know there are two ways to reduce production. One is indeed less hectares of vines. And the other one is reducing the productivity per hectare. So the productivity has gone from 14 plus hectolitres per hectare to now 7 plus. So it's a sharp decrease already. And this can be flexible and increased again in the future. Then there is indeed, I looked at Google Translation to make sure... I am translating properly from French to English, but there are two things that indeed are happening. One is we had some planting rights that we had negotiated with Europe that we are not exercising, that our wine growers are not exercising. This is more a non-growth of the hectares planted. And then you have the uprooting, this is where I looked at the translating of vines, which is happening indeed. Having said that, it is not happening at a big scale today, particularly in Petit and Grand Champagne. Just so you know, for instance, if you take Grand Champagne, when we negotiated hectares to plant as a region with Europe, in fact, Grand Champagne was already covered and there were no hectares negotiated more. And Grand Champagne is still a sought-after crew. So I am not so much afraid. And if your question behind this is whether we are comfortable with our sourcing in the long run, despite this indeed very strong crisis in cognac, the answer is yes. Because of the stocks we have on hand, but also because of the contracts we have secured with our wine growers. It is true that we have reduced by 25 to 45 percent, but we believe that both combined do not prevent us from being comfortable to achieve sustained growth for our Rémy Martin brand in the future.

And as a brief reminder, that is star one for your questions today. And we now move on to a question from Lawrence Wyatt from Barclays. Please go ahead. Your line is open.

Hi, good morning, Eric and Luca. Thanks very much for the question. I wonder, at the Q4 stage, you kind of gave us the level of stock across the world. And given we're a couple of months later on, I wonder if you could just update us on where we are in stock levels, particularly in the US. I think it was around four months. when you gave the update last month for the stock levels at the end of March. And then secondly, in terms of marketing spend, you mentioned that marketing spends around 20% of sales. But I was just wondering, where are you prioritizing that spend across regions and brands? And what are the main metrics that you're using to determine the effectiveness of that marketing? Thank you very much.

On question one, but feel free to elaborate, Luca. But basically, so the stocks worldwide are healthier and healthier. Having said that, compared to last month, they are still four months in the U.S. Don't forget that it is four months considering depressed depletions. So in absolute value, it's quite low. And the strong selling you will see in H1 is not driving a risk to king. We still aim at improving the level of our stocks throughout the year, but the comps are very low, which is helping, of course. Worldwide, Europe stocks are also healthy in most countries, let's say, and China stocks are healthy as well, particularly on Club. So the situation has dramatically improved versus a year ago, not so much change versus last month when Luca shared. I don't know if you want to elaborate on this, Luca, but... No, more or less the same.

So close to four months in the U.S., even if on a far lower basis, we highlighted that overall worldwide with the stock for 100 million, 50 of the more depletion, 50 million or less sell-in. with a clear acceleration of the stock in the U.S. for 80, if it's not symmetric over five years. So a very strong stocking, even if you consider the normal footprint of depletion, seems to be ready for months. China is more or less the same, quite healthy. EMEA, even lower. Even if EMEA is a land of many different countries, so the average... The average is not the right picture. So we have some countries we are clearly understock, and others we have a little bit more stock of less dynamics. But overall, I would say in Europe, between 2.8 and 3 months. ready to accept a rebound. Rebound which is there compared to the historical footprint and the historical last 12 months data, but it's still not dynamic as we would like to see and to witness.

As to your second question, I'll try to answer while not being too long. But so basically, our ENP spend is indeed 20%. We believe it is a fair level. It has changed by nature over the past two years, and it will change again in the future because we're adapting, of course, to the context. Today, there is more BTL than there used to be. It's basically 50% between ATL and BTL. Today it is more digital than it used to be. It's basically probably, if you take ATL, 60% is digital. Why am I starting with the nature of the spend? Because in fact it is easier to trace the efficiency and to track the efficiency of our actions when they are digital or when they are BTL. The most difficult to track is in fact an ATL campaign. That is 360 because the impact is never immediate. You have to look at it over the long run and so on. For BTL, what are we talking about? We are talking about... If you take a physical BTL, it's a shelf stoppers, presence, special displays. So you know you can better track the dynamism and the sales if you compare to stores where you don't have these and so on. So you can sample and you can compare. um if you take a digital also you have a certain number of kpis you can track of course we look much more at engagement versus just the number of connections or or touch points if you look at digital now Also, it varies a lot from whether you're a small brand or a big brand, whether you're Louis XIII or whether you're Cointreau. If you take Louis XIII, we do track every single action, but big campaigns, which we don't have currently, because in fact we are very much D2C, we are very much CRM driven. And obviously, it's easy for us to track the efficiency of our actions. If you take Cointreau, obviously, it's a bit more driven by kind of, let's say, mathematical KPIs and less tracking of the behavior after the communication has been made. So it really varies a lot from one brand to another, from one country to another as well. And the last, I think, question you had in the NP was, This 20%, do we overinvest somewhere or where do we invest? So in fact, the smaller the brand and the smaller the market, the higher the proportion. Of course, because you cannot leverage the scale. So if you take small brands like Telmon, like Belle de Brier, like, well, the share of spend is more than 20%, definitely. Because we are still in a growing mode, of course, but also because, you know, if you spend just the 20%, you won't spend much and you will never emerge. So there's a minimum you need to spend. And in fact, the same applies to the countries. The smaller the country... In sales, I'm not speaking necessarily in absolute for the country as such, but in size for us, the smaller and the more potential we believe there is, the more we will spend. So this 20% is really an average. It is not at all reflecting the spend per BU or per country.

That's really helpful, Eric. And just to follow up on that, have you made any changes between your key markets of China and the

Well we are decreasing in both markets but I would more present it as a rationalization of the spend as well. You know everything was very easy two years ago so We could spend, we spent, to be transparent, we spent millions behind an advertising for the Super Bowl, you know, and we had this, let's say, these tons of money that were falling and that we had to spend, so we went quick and we were probably a bit less adamant on making sure that every single euro we spend is efficient. We are much more doing like this. So we have decreased our spend in China and the U.S., but I don't believe that our impact has decreased as much because we have optimized in the meantime. We've been much more cautious on every single euro we spend. So that's point one. And point two, in some other countries, on the contrary, we are spending more. or we are about to spend more, driven by also, let's say, actions we are taking. I mentioned Africa, I mentioned Brazil, I mentioned Mexico, I could have mentioned some countries in Asia. In these countries, on the contrary, we are going to spend more than what we were spending before. But in relative value, it is not a big share for the group.

because it's starting from a low base but we are going to spend more an additional point sorry lawrence an additional point with i don't think we discussed very much about that with all of you is that before covet only four percent of our turnover was e-commerce digital now it's 17. Business model of e-commerce is very different. So more efficient in terms of AMP overhead. So also the channel splits. Direct sale increasing has changed. It's changing a bit to the year. So when you compare 20 now with the top line or over 18, you have some new channel that are a little bit less AMP intensive compared to the average. And you have some MP inside overheads. Let's think to the Louis XIII freestanding store. They are in overheads. An increase of brand ambassador and PCD, personal client director, more or less 100 people over 1,008 that are in overheads and break costs as well, are investment. They are categorized as overheads, but they are MPs. The way we are measuring their profitability as well is also share of art, not only sales. The fact that we are able to increase direct sales much more than the top line. So this is to say that even if we are spending less in the short term, we increase dramatically the EMP footprint. So potentially, if it is your question, we can be even more selective, maybe on the future growth brand that today are lacking a bit of speed on top line, But we have enough. So don't be scared if we will touch even a bit more AMP. Because part of the switch of the model has made some part of the turnover is made with a lower gross margin, e-commerce in China because of the format, lower overheads, lower AMP. And the opposite is true also for direct sales. So apple to apple is very difficult. Overall, we have a lot of ingredients to combine even with the turnover that is under pressure. So we are not cutting into the meat today in AMP.

Really clear. Thanks very much. And Eric, reiterate the words, best of luck for the future, really. Thank you very much for your time over the past few years.

Thank you so much. I would like, you know, I'm not asked to this time, but as a conclusion, a remark, I would like first to say, you know, this was my last call for Rémi Cointreau. I'm really moved today as I am about to leave a group that I have been very proud to work for for more than 10 years, a group whose unique relationship to terroir and time has contributed to build amazing brands over decades and even centuries. A group whose values embodied by its reference shareholders speak to me. A group whose teams are so committed and passionate that their contribution during these past two years, very challenging years, has been remarkable. I have been appointed at the very beginning of COVID. The least we can say is that a lot has happened since then, positive and negative. As we like to say, what does not kill you makes you stronger, and I truly believe that the group will emerge stronger from the crisis. Thanks to its great brands and while adapting to a changing environment, it has remained loyal to its value strategy, echoing a long-lasting trend that is here to stay, drinking less but better. The future of our industry is about value more than volume, which is better for the people and better for the planet. I would also like to thank you all. This was my first experience as a CEO of a listed group. I have enjoyed every single moment, and that includes the roadshows and various discussions we had together. I have learned a lot from them. And lastly, I must say I am happy and glad that we managed to secure the smoothest transition possible. Franck Marie will join in June 25 which will allow me to spend time with him. I am already spending some time with him actually to prepare his arrival. I am sure he will be as enthusiastic as I have been about the group and its prospects in the long run. Voilà. I wish you all the best and I hope our path cross again in the future which I will be happy to disclose in the coming weeks as far as I am concerned. Thank you very much.

And yes, I just wanted to take this opportunity on behalf of the group, on behalf of the shareholders and the board to thank Eric for his tenure at the helm of the company and also for his years at the head of Rémi Martin, previously to that. As you said, a lot has happened since your appointment with COVID and many ups and downs. But we have, thanks to you and your management, we have achieved many things, all of them positive. And we are on a track that remains the same. Our strategy remains the same. And we have not deviated because also of your commitment to the company. So we wanted to thank you. And as for all of us, we will see you soon. And Luca will speak to you on 25th of July for the Q1 sales. Thank you very much.