Pernod Ricard Stock

Good morning, everyone, and thank you for joining our Q1 FY '27 sales call. I'm joined today by Mauve Croizat, our EVP, Finance and Tech. Unless specified otherwise, all sales growth rates are organic.

Mauve, over to you.

Thank you, Joelle. Good morning, everyone. Very happy to be with you this morning. I trust you all -- have all received the press release this morning. So I'm just going to read through it relatively quickly to leave time for the Q&A.

So we are reporting net sales of minus 1%, a sequential improvement on Q4 last year despite a mixed environment, which is consistent with our full year expectation and broadly stable organic net sales. Volumes in Q1 are back to growth at plus 6% with strategic international brand volumes growing plus 2%. Sales in the U.S. declined by minus 10% and in China by minus 25%, with both markets being impacted by inventory adjustments as expected.

The underlying deflation in China are returned to growth, confirming the cautious trade optimism ahead of the Mid-Autumn Festival as flagged during our full year communication. Excluding the U.S. and China, Rest of World sales grew by plus 4%, with strong performance across a number of Asia, Rest of World markets. India was a particular highlight with sales up plus 19%. We report softer results in Europe and in Latin America. The global environment remains volatile and uncertain with ongoing conflict and cost of living pressures in some markets.

At the same time, sales momentum is improving in a number of markets, demonstrating the benefits of our diverse portfolio and our geographic footprint as well as our ability to adapt quickly to changing market conditions. So let me start with our #1 market, the U.S., where sales were down minus 10%. Market trends have slightly improved over the summer. The total spirits market has declined by circa minus 2% and bottled spirits by circa 4%.

As highlighting, the consumer sentiment remains low with affordability, a particular issue for some consumers. Our sellout in Q1 is at circa minus 6%, and our gap to market continues at circa 2 points. The difference between sales down minus 10% and sellout down minus 6% reflects the impact of inventory adjustments.

Looking at our brands, Jameson and Kahlúa sellouts are performing ahead of their respective competitive sets. We are also seeing a marked improvement in Skrewball and a strong rebound in Malibu benefiting from the success of Malibu Pink. Sales are supported by our Q1 innovations, including small formats from Malibu Coconut and Pink as well as Skrewball Peanut Butter & Jelly.

Jameson Distiller Batch is also extending the Jameson Irish whiskey portfolio. These launches build on the innovation we already introduced last year. Ahead of the important holiday period, we have a strong campaign program across the portfolio. We are particularly excited about the significant initiative of Jameson with the NFL sponsorship, which kicked off in September and will be supported by a full 360 campaign throughout the NFL season with a key activation peak during the O&D period.

In India, we report sales growth of plus 19%. The market continues to enjoy dynamic consumer fundamentals and sales are driven by strong consumer demand as well as the continuation of the premiumization trend. Underlying sales grew in the high single-digit range with an additional benefit from the Maharashtra comparison base and from pipe-fill effects linked to preparatory steps for a potential IPO. For clarity, I remind that the decision to proceed with an IPO remains subject to a Board approval.

In China, sales declined by minus 25%. This is mainly driven by trade inventory adjustments as underlying depletion returned to growth in the quarter. This is a significant improvement from last year's sharp decline and confirm the cautious trade optimism we mentioned at the start of the summer.

For Martell, we have seen a return to growth in our off-trade depletion with a successful Mid-Autumn festival campaign that has been driving consumer and trade engagement. In the on-trade, we are lapping the regulatory crackdown, which gives a more favorable base. However, the channel continues to be under pressure, leading to decline there. Underlying trends for the rest of the portfolio remains resilient overall, notably supported by a strong performance of The Glenlivet, Royal Salute and premium brands such as Jameson and Olmeca.

If I turn to Global Travel Retail, sales were down minus 4%. Overall, global traveler numbers remain strong with -- but sales have been impacted by the ongoing Middle East conflict, and this has particularly affected some of the Asian travel retail market. In the meantime, Europe Travel Retail delivered strong growth.

In other markets, we report good growth in Asia, Rest of World, largely driven by Japan, which continues its dynamism. Korea and Taiwan, both returning to solid growth and Turkey's continued good momentum. Europe had a soft start to the year, reflecting phasing in some markets and continued pressure in the on-trade.

In Western Europe, sales declined in France and Spain with a persisting sharper decline in Germany. Eastern Europe was also soft with Poland impacted by ongoing customer negotiation. In the Americas, sales declined in Brazil due to phasing and in Mexico with continued weak consumer demand. In North America, Canada saw also a modest decline.

As it relates to our full year and medium-term outlook, the full wording is in this morning press release, but the key message is that we are confirming our guidance, including broadly stable sales in a contrasted and volatile environment, and we strongly defend organic operating margin supported by strict cost control and the acceleration of our operational efficiency program.

In conclusion, Q1 sales were mixed, but improved sequentially with encouraging momentum in a number of key markets, notably in Asia. In China, underlying sales have returned to growth. Our broad geographic footprint and diversified portfolio provide clear source of resilience in this volatile environment. At the same time, we continue to adapt our brands, our activation to the evolving consumer trends and occasions. Thank you for your attention.

That concludes my prepared remarks. I will now be happy to take on your questions.

Thank you very much, Mauve. So operator, we can open the line for questions. We welcome, please, 2 questions each as usual. Thank you.

[Operator Instructions] The first question is from Andrea Pistacchi, Bank of America.

My first question is on China, please. You confirmed the cautious optimism in the trade ahead of Mid-Autumn Festival and your positive depletions. Now this is clearly very encouraging, but it is in contrast to what other companies, particularly in luxury are saying and what they've reported so far in the quarter.

So what do you think is underpinning this more positive sentiment? Is it the comps, the lapping the crackdown or maybe something else? And I don't know whether you have much visibility yet on Mid-Autumn Festival sellout, but how do you feel, therefore, about China as we head towards CNY and for the full year?

And then the second question, please, is on the strong performance, the very strong performance in Asia, Rest of World when you exclude both China and India. I calculate that ex China and India, the region was up probably something like mid- to high teens, which is a material acceleration from last year. I know there's many different countries there, and I think you called out good performance in a few Japan, Korea, Taiwan.

But could you provide a bit more color on this strong performance and whether you're confident that this positive momentum -- I mean, not quite at this level, but the positive momentum in the region can continue?

Thank you for the question. So I will start with China. So indeed, we are very glad to see our depletion return to growth, marking a significant improvement. It's very fair to say that the macroeconomic environment remains challenging, as you point out. So we need to take it cautiously.

That being said, I think you're right to one point out that the base was really lapping and was relatively favorable. But I think it's also fair to say that we have been experiencing within the industry different type of adjustments. So it was not only driven by the consumer environment, but really by the crackdown by the anti-ban -- anti-alcohol ban.

So I think it's also a confirmation that the consumers are there and are adapting their way of consumption. So I think it's also testament that we are now seeing the consumer shifting to different type of occasion, more private occasion, and we have been also to adapt to this situation, adjusting the way we are interacting with our brands and with the consumer, shifting the channel mix and shifting as well our marketing channels to more digital and adapt to this moment of consumption. So we stay cautious, but also we are very glad to see our depletion return to growth as we were expecting.

As it relates then to your second question, which I think was more on the underlying trend. So that's true that on the quarter, we have a lot of technical effects and mainly in India, we had some phasing and pipe-fill effect. We still believe that the underlying trend is around the high single digit. We once restated from both the Maharashtra impact and the pipe-fill effect.

On the rest of the region, we have been seeing very positive momentum, lapping as well a favorable trend. But on the other side, we also see significant turnaround in our key markets and very significant markets. So overall, if we restate on all the technical effect, I would say, on both U.S., China and India.

So the negative impact of the inventory, the positive impact of the pipe-fill effect in India, we are in slight growth, which I think is also in line with the true sellout. And when we look at our sellout in the last 3 months, we are also in this vein. So confirming that we are seeing some resilient consumption while remaining fragile.

The next question is from Olivier Nicolai, Goldman Sachs.

First of all, on Europe, could you give us more details on the underlying trend? And what was the impact from phasing or even the customer negotiation that you mentioned? And how should we think about Q2?

And then if you could give us -- go back to the comments about China cognac, if you have any color that you could give us in terms of the channel, the growth in different channels and what kind of actions you've taken for Martell to actually have a much better off-trade performance?

Thank you for the question. So if I start with Europe, indeed, we have been seeing some soft start of the year in Europe. This has been mainly driven by Germany and Poland, where we see the underlying trends being in the higher range of the single-digit decline. Similarly, we saw softer decline in Spain and France.

In France, in particular, our net sales have been probably more impacted by phasing where the underlying trends are better, and we see that we are also gaining share in France. We see some -- overall, also improvements in the U.K. So the U.K. trend is improving. So we do see underlying trends being soft over the summer. That has definitely not been helped as well by the warm summer that we experienced, most notably on the on-trade.

But we would see probably Europe to be in the single digit -- low single-digit decline from an underlying standpoint. We had also suffered from a phasing most like -- most significantly in Poland, where we had some customer negotiation that will be resuming in Q2.

Then in China, as I said, indeed, the cognac consumption is evolving. So we definitely saw that the depletion of Martell significantly improved in the off-trade. The on-trade remains challenged and under pressure because we see some further restriction taking on in some of the states. And we see really the consumption shifting to more private occasion.

So we have been as well shifting for Martell activation and the way the brand is positioning. So we see overall the cognac category improving. And we see as well that the pricing has not been that significantly impacted, and we are back into a much stronger ground, but remaining very cautious at this point.

The next question is from Sanjeet Aujla, UBS.

Two for me, please. Firstly, on the U.S., can you just give us a sense if the destocking is now done? Or is there more to happen over the next 3 quarters?

And my second question is just coming back to China. Can you just give us a sense of how your channel mix has evolved over the last few years? I think in your earlier remarks, you'd highlighted quite a big shift in occasions. And in particular, how significant is the on-trade in your business today versus a few years ago?

So in the U.S., we have been guiding on the fact that the inventory adjustment will have some effect over the full year, even if it's fair to say that Q1 was particularly impacted. So we will -- and we are constantly monitoring the situation, but we are not guiding on a quarter-by-quarter, but some further adjustments is to be expected on the full year.

Then on China, so indeed, we have seen, as mentioned, a shift and the on-trade being more impacted because of the crackdown. To be honest, I don't have the exact evolution. We are now on roughly 60% off-trade and 40% on-trade. Even if it's fair to say that some on-trade are buying in the off-trade in China. So it's not a pure channel mix in this market.

The next question is from Laurence Whyatt, Barclays.

In terms of the U.S., you've had a distribution change for over a year now where you split your portfolio into 3 parts and put it through a number of distributors. Given you've had that for about a year, could you give us an update on the impact you think it's had, whether you think it's been a success and whether there are any sort of teething issues in doing that over the past 12 months?

And similarly, when you shifted a lot of the business away from R&DC towards the end of the year, how has that -- how the new distributors picked up those lines and whether there are any teething issues in getting that underway over the past sort of, I suppose, just 9 months now since that shift has taken place?

And then secondly, on India and the potential IPO, I was just wondering, could you give us any more information as to what are the key decisions that you need to be making? What are the factors that are going to influence the decision whether to list the Indian business? And once you -- once the Board takes that decision, how long after that decision would listing take place potentially?

Thank you, Laurence, for the questions. So if I start with the U.S. So indeed, we have been shifting in some key markets. The transition is now fully done and has been relatively smoothly. We have not been -- and we do not believe that there was material impact from sellout standpoint.

Now I think the key focus is indeed to make sure that we are all locked and loaded for the O&D period. That is the key period for the market. So all the program activations are well in place, and we will now focus on execution, which is key in this market. So I would say on this one, the focus is now O&D. This is the key period that will allow us also to demonstrate that we are now focusing on execution, execution and solely execution.

If I now go into your second question on India. So indeed, no decision has been taken at this point. So the Board has been asking us to continue on the preparatory steps for a potential IPO. That being said, so it's really for us to take on these steps and be prepared would the decision be made in the coming months. In Q1, we were indeed impacted by these steps because we had to change the name of the company, which created the need to adjust the label on our product.

So this is why we had some pipe-fill effect in Q1 because we were anticipating some of the shipments to ensure we would avoid any type of disruption with the consumers. So there is still a process that will be ongoing and discussion that will be ongoing with the Board. So be sure that when the decision will be made, you will be the first one to know.

The next question is from Celine Pannuti, JPMorgan.

My first question is on North America. So I think sequentially, the market seems to have improved, seen decline but slightly improving. At the same time, you sounded somehow cautious about affordability. So can you help us understand what the read of the market is now in the U.S.?

And as you look at the O&D period, are you expecting more promotion? Or are you expecting that relatively -- relative improvement sequentially to hold? My second question is on China. There has been a big gap, it seems on sell-in and sell-out. Are we expecting more of that or rather a bounce back in the second quarter? And for the year, are we expecting to have an impact on this sell-in, sell-out difference in China?

Thank you for your questions. So I will start with North America. So indeed, the latest sellouts were promising and showing some progressive improvement and slight improvement. Fair to say that most of the categories remain in decline, but that the pace and the rate of decline is easing. So we are expecting this trend to continue, but it's very slight.

We still expect RTD to gain share in the spirits evolution and spirits category. That being said, we are not counting on a material bounce back of the U.S. at this point. We do see that the consumer sentiments remain historically low. So we are more indeed focusing on execution for the O&D. We do believe that indeed, consumers are adapting and adjusting their consumption. So we see them going more because of affordability towards smaller formats as an example. The promotional activities are not significantly increasing.

So in Q1, we are seeing a relatively stable pricing, and we see now that we start seeing also a positive mix. So all in all, I would say we expect this slight improvements, but we are not counting on a material bounce back. Then the second question, sorry, I was losing on China in the inventory adjustment.

So here as well, we have been guiding on the fact that we would have inventory adjustment effect throughout the full year in both U.S. and China. That being said, Q1 was particularly impacted. The confirmation of the return to growth in the underlying trend is also promising in our ability to go there. So the material impact in Q1 will most likely ease on a full year basis.

The next question is from Richard Withagen, Kepler Cheuvreux.

Two questions for me. First one on the U.S. I mean you mentioned a slight improvement in your sell-out gap versus the U.S. bottled spirits market now around 2 percentage points. So what explains the remaining underperformance? And what initiatives do you have to improve the underperforming brands?

And then the second question is, I think you report volumes growing 6%, organic sales down around 1%. So we have this negative price/mix over the quarter. Can you talk about the product mix? And how should we think about the implications of this for gross margins?

Thank you. So in the U.S., indeed, the gap to market was held around 2 points, which is roughly what we had last year, but an improvement versus Q4. So we see that it's back to narrowing. Here, I think we are really counting one on execution, as I mentioned. So we are now fully locked and loaded with a very good initiatives planned for the key O&D period.

I mentioned the Jameson NFL activation. And this will be really supported by activation in bar in the on-trade, in the off-trade. So it offers a very great platform for the brand. That is our biggest brand in the U.S. But we are not limiting that to Jameson, where Absolut and Kahlúa have an Espresso Martini focus also for O&D. We have Absolut Ocean Spray cranberry program. So you name it, I would say. So a lot of brand activations. We are being much more targeted and in place and focusing on execution.

As mentioned, we have also innovation and innovation pipes that will support that. Obviously, the success of Malibu Pink is continuing and is delivering and supporting the rebound for the franchise and more to come. So that's for the U.S., then your second question was on the mix. So indeed, we had a positive volume that was offset by the mix effect. It is mainly and solely because pricing was broadly stable. So it's really solely linked with the mix.

As you mentioned, linked to a product mix. But to be honest, it's more a geographic mix that is impacting that with the product mix coming directly to that, where it has been also disproportionately amplified during Q1 because we had negative technical effect and inventory adjustment in the U.S. and China that are the most profitable market, while having a disproportionate fill effect and growth in India. So it has been amplified from a mix effect, but otherwise mainly driven by the mix with Martell being present in China and the consequence of the geographic performance.

The next question is from Edward Mundy, Jefferies.

So 2 questions, please. So the first is around sort of the weight of destocking in the first quarter. Clearly, there's a lot sort of going on in terms of timing issues and phasing and what have you. But do you think that the weight of destocking that impacted the first quarter, does that start to ease as you go through the balance of the year? That's my first question.

And then the second question is just a more broader question around guidance. You've had a pretty okay first quarter, some very early green shoots starting to be visible in markets like China. Does that give you more confidence in delivery of the broadly stable sales guidance for the year? And what are the main things that you're looking at both on the upside and also on the downside?

So thank you for your question, Ed. So on the weight of destocking, it's fair to say that Q1 has been mostly and particularly impacted. So we do expect that to ease in the remaining part of the year while sticking and keeping some inventory adjustment. It's also a question of the base that you are looking at a quarter is always creating some disproportionate weight effect to some extent because of the timing considered.

Then as it relates to your second question. So as we have been indicating, we are confirming our confidence in our broadly stable net sales outlook. And continuing and sticking to what we mentioned during the full year communication so that we still expect declines in the U.S. and China impacted by the inventory adjustment, not necessarily with the same weight as the one we saw in Q1 with the underlying trend expected to improve in China.

And here, we are very glad to see that it is confirmed as from Q1 where we can highlight the return to growth as from Q1. We do expect and we see a positive momentum in the Rest of World, particularly driven by India, where we see very strong consumer fundamentals. So I think for now, we are definitely confirming all the things that we have been highlighted during our financial communication end of August.

The next question is from Mitch Collett, Deutsche Bank.

I appreciate you've been asked a lot of questions on China. But the one I really want to ask is, and I appreciate it's difficult. Do you think that the consumer offtake has improved? Do you think consumer offtake has gone to positive given that you're seeing positive growth in depletions?

And then I know Richard already asked about the impact of volume versus revenue, you said it was mainly driven by geographic mix rather than product mix or negative pricing. But do you think -- I'll ask the second part of this question again. Do you think the negative price mix that you have this quarter will continue for the full year? And do you think that will be a drag on gross margin?

So the first question, so it's on China, the consumer overall. Consumer in China, no. Sorry, we have debate on -- we didn't hear well the question. So on the consumer in China, so yes, the underlying depletion and the positive trends and the confirmation of the cautious trade sentiment ahead of middle autumn festival is definitely a good sign. It's fair to say that we had an unfavorable base.

So it's still impacted by that, and we remain very cautious because of the challenging macroeconomic environment. That being said, it's also a very signal that the situation is stabilizing and that we are seeing much better prospects. So on the consumer shifting its habits, not necessarily shifting its sentiment overall.

On your second question, which is on the mix, so indeed, very driven by the geographic mix. This is an effect that we saw. As we mentioned and as we have been guiding, we see that we would expect some continued declines in the U.S. and China with the inventory adjustments, but Q1 was particularly impacted.

Okay. And sorry to follow up, but do you think that the negative price/mix, given it's driven by country mix is helpful or harmful for gross profit? I mean I appreciate it's a sales call, but how do you think that's likely to play out?

So here, we have been experiencing this mix effect that we are mitigating and the mix should improve on the overall full year. We are also making and taking action to offset that and protect our margin. We are confirming that we will be strongly defending our margin overall.

The next question is from Chris Pitcher, Rothschild & Co Redburn.

A couple of follow-ups, please, China and India. Firstly, on China, can you confirm, did depletions return to growth for the whole quarter or just over mid-autumn festival? And given the destocking, are your inventory levels below what you would regard as a normal level?

And then on India, it sounds like the trade loading should unwind once the name change and relabeling is done. You're saying that demand is still resilient, but another major Indian consumer company today was saying food inflation is becoming a reality and perhaps the resilience that we've seen in the consumer maybe is going to be under a bit more pressure. Are you still comfortable that the demand for your products is there when you strip out the easy comparatives?

Thank you for the question. So I will take the second question on India first. So as we say, indeed, the underlying trend for Q1 was closer to the low double digits. So we do believe that it was supported by the easy comp, as you mentioned. But that being said, the consumer demand and the underlying trends remain overall on the high single-digit trend, which is in line with our expectation.

We do believe that we still see very strong fundamentals and see the market continuing on this trend. We will be also on our side, impacted by the U.K. India FTA, which will help also the affordability of our scotch brands. So overall, still very confident on our India underlying trends and fundamentals. On your first question, I'm sorry, I forgot the one -- yes, it was on the China inventory. So we have been seeing indeed correction for this Q1. We are actively monitoring it.

We will be -- and we have been guiding on the fact that we will have an impact throughout the year. We will definitely end the year with in a much healthier situation compared to the starting point of this year.

And could I -- sorry, just to follow up. Can I confirm. when you say you're back into depletion growth, was that for the whole of the quarter or just over mid-Autumn festival? I'm just trying to understand what we should compare the minus 25% with.

It's for the whole of the quarter. The weight of the season and festivals are significant in China.

Next question is from Trevor Stirling, Bernstein.

Two follow-ups, please. Mauve, returning to the U.S. and the future inventory adjustments, is that because you're starting O&D with a bit more stock in your distributors than you think is necessary? Or is that because you're lapping tough comps and in the prior year, you were shipping a bit more than you were depleting?

And the second question concerning the Indian IPO. I appreciate that the Board has to make the decision first. But after the Board says yes, can you tell us broadly what the timing would be from that decision to a potential IPO?

Okay. I thought you had a third question, and you wanted to keep. So on the U.S. inventory, you're right. On inventory, it's a combination effect of the absolute amount of inventory and what is the base you are cycling in order to have the impact on your net sales.

For Q1, we are definitely and we have been seeing a decrease in our inventory with the gap between the sell-in and sell-out really highlighting this adjustment. And we do expect on the rest of the year that we will be continuing our efforts to reduce the absolute amount of inventory, which is our focus to make sure that we will get to the appropriate level of inventory that we still are actively monitoring and working with our partners and wholesalers, but we should end the year with a much healthier base in absolute terms and not only lapping the comparable.

On the IPO, so indeed, we are still under discussion, and we didn't get any approval. We are taking the steps in order, as you mentioned, for the time after the approval and the decision would be made to not be that long. So here, when the decision will make and you can assess and appreciate that it's a long process and an iterative process where we will be checking. Ultimately, the timing will take still a few months, but not that long and that many more, and it will really always depend on the market conditions.

That was the last one.

Thank you very much, everyone, for joining us today. I think we're going to close now the call, and I wish you a very good rest of the day.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Good morning, everyone, and thank you for joining us to Pernod Ricard's Fiscal year '26 Full Year Results. I'm joined today by Alexandre Ricard, Chairman and CEO; and Mauve Croizat, Group Deputy CFO. We are delighted to welcome Mauve to her first earnings call with us.

Alexandre, over to you.

Thank you, Joelle, and good morning, ladies and gentlemen. Maybe just before starting, I'd like to introduce Mauve Croizat, our Deputy CFO and soon to be CFO as of October 1. Maybe Mauve, can you say a few words about you?

Yes. Thank you, Alex. Very happy to be with you today. So I usually say that I'm born and raised Pernod Ricard. I was very lucky to move in many different countries, U.S., Sweden for many years across multiple affiliates. So a brand company, brand company, market company, headquarter and different functions because I started with cash and then more FP&A and core finance with some years as general managers and lately within transformation. So very happy to be with you today, very honored to take on the role and very prepared.

Well, thank you very much, Mauve. And without further ado, let's start with our fiscal year '26 sales and results. Overall, our fiscal year '26 was characterized by a contrasted environment with indeed continued softness in the U.S. amplified by some inventory adjustments and weak demand in China, all of it being mitigated by improving trends and growth across the rest of the world, though impacted by the Middle East conflict in our fourth quarter.

We strongly defended our organic operating margin with the acceleration of our EUR 1 billion operational efficiencies program, delivering half of the target in fiscal year '26 and with full delivery now expected by fiscal year '28 instead of fiscal year '29, i.e., 1 year ahead of anticipated, driving as well sustainable cash generation to preserve a strong balance sheet with materially improved cash conversion in fiscal year '26 at 91%, optimizing as well our strategic investments for future growth, maintaining balance sheet discipline to support our deleveraging trajectory and sustainable shareholder returns.

Maintaining a stable dividend per share with the final dividend of EUR 2.35 to be offered either in cash or in shares. So we fully leveraged the breadth of our portfolio and the balanced geographical footprint of Pernod Ricard to capture growth opportunities at speed and scale across diverse and increasingly diverse, should I say, consumer dynamics. And our operating model leverages its digital capabilities, accelerating to a fully digitally enabled organization.

So I won't go back on the environment that I just described. What I would underline is our net sales are down roughly 4% organically and 14% reported related to currency and perimeter impacts. That being said, we have experienced improved momentum in the second half of our fiscal year with organic growth improving from, remember, minus 5.9% in our first half to minus 1.3% in the second half. And in fact, excluding the U.S. and China, which we'll go through in detail later, growth was positive for our fiscal year in the rest of the world, up at plus 0.5%. From a PRO standpoint, down roughly 5% organically and roughly 18% reported for the same reasons as the net sales. We have done quite an amount of work to defend the organic operating margin in a contrasted environment. We have accelerated the operational efficiencies program I mentioned, enhancing as well marketing effectiveness and partially mitigating tariffs and COGS inflation.

As you'll see in more detail, our structure costs are down 8%. They were already down 4% in the previous year with the implementation of our Fit for Future operating model and disciplined cost managers. As for cash, at EUR 1.2 billion of free cash flow, a progression of 6%, we have strengthened our cash generation and strongly improved our cash conversion, as I mentioned, at 91% through disciplined investments and working capital management.

We continue the active portfolio management. Notably, fiscal year was a year where we disposed of Imperial Blue. I will not spend time on this slide as Mauve will go through all of these numbers in detail, other than stress the EPS at EUR 5.85. So yes, I mentioned the contrasted environment, and our top line was notably impacted by market-specific weakness. In the U.S., you see the U.S. down 14%. I'll talk about this in a couple of minutes. In China, down 19%. And finally, the Middle East skewed towards our fourth quarter, which was down 29%. These 3 specific areas impacted our top line and weigh roughly 1/4 of our top line.

When I mentioned mitigation, but mitigation came from broadly the rest of the world with improving trends in many markets. We have now roughly 40% of our total sales that are in growth. As I mentioned, excluding U.S. and China, the rest of the world would be growing. And by the way, the remaining top 16 markets sell-out value grew at double the market rate at plus 2%. That's a mix of Nielsen, NABCA, and IWSR data. So we estimate that for the top 16 markets, the market grew 1%. We grew double that rate. You have here a number of examples, both of emerging markets and mature markets. And by the way, you see that slight acceleration for Pernod Ricard, excluding China and the U.S. H1 was flat. H2 was up 2%.

Of course, we've done a lot of work to adapt and continue to do so at pace to evolving consumer trends and to growth opportunities, leveraging our data and technology capabilities and as well our new simplified organization following Tomorrow 1 and Tomorrow 2. And the name of the game in a way is really speed and agility. Consumers have always changed over time. I would say the major difference here is the speed at which they change. So we've done a lot of work around convenience and affordability, which is on the convenience side, a trend that we had already identified before COVID as emerging and which has significantly accelerated ever since. More recently, post strong inflation affordability with a lot of work done on small and fun-sized formats, on what we call affordable premiumization, working on our RTD portfolio extension on the route-to-market adaptation to our RTD portfolio as well and as well on a number of initiatives and increased capabilities on revenue growth management and promotions optimizations, as I said, leveraging our digital capabilities.

We are, on the other hand of the spectrum, leveraging the depth of our portfolio, including prestige with the development of unique brand and experiences through very high-end partnerships. We have a global approach to build our prestige and brand desirability and direct to high net worth individuals consumer approach. We have accelerated, and I'll talk about it in a couple of minutes, our consumer-centric innovation with the inflection point being innovation at scale or should I say, purposeful innovation at scale with a number of big successes around Malibu, around Absolut and as well into a new promising segments such as low/no alc segment. And finally, we are continuing to invest in elevating cultural relevance, consumer experiences and brand associations and partnerships.

Now moving into our sales by must-win markets. So starting with the U.S. market, which was down 14%, as I said. So we have sustained improvement in our sell-out gap to market. albeit, we still haven't reached the market level yet with accelerating responses to, what I was mentioning earlier, changing consumer needs. The spirits market slowed down with economic moderation and subdued consumer confidence. We have narrowed the gap to market through accelerated responses. Just to mention, our sell-out is roughly down 7% versus the minus 14% sell-in. This is where our sales have been impacted, as we mentioned, by some inventory adjustments. Good performance around Jameson and Kahlúa, which outperformed their competitive sets. Skrewball and Malibu sell-out are improving, helped by strong success of smaller formats and innovation, particularly Malibu Pink, which is turning out to be a big success of this summer.

Rapid adaptation to evolving market conditions, focusing on consumer recruitment, consumer activation, RGM, as I mentioned, innovation, ready-to-drink, small fun formats, on-premise activation, and cultural partnerships. We'll talk about this later. And finally, the route-to-market reorganization, which has finally, after a lot of work, been implemented over the full fiscal year '26 and with adaptation to subsequent, I would say, significant industry changes in the middle tier with some degree of residual impacts on trade inventory. So that's for the U.S.

Well, for India, it's a radically different story. India is, as you all know, now our second largest market in terms of sales, very strong momentum, reflecting underlying consumer demand and premiumization trends and a market where we are gaining share. So we see an accelerated performance, which is underpinned by very dynamic consumer demand, market share gains, further benefiting from the Imperial Blue disposal, which was a segment which is less dynamic than the more premium segments. Good growth on our local brands, notably Royal Stag, which you may have seen in the news is now the world's #1 whiskey with roughly 32 million cases sold and Blenders Pride as well, which is quite successful. And the recent launch of Xclamat!on.

Double-digit growth on our strategic international brands led by Jameson's exceptional performance, which is now the #1 imported premium spirit brand in India and good growth as well in the rest of the portfolio, particularly on Ballantine's and Chivas, if I had to name a couple. As I mentioned, we disposed the Imperial Blue business, which is now immediately accretive to margins and growth. We had mentioned the excise policy changes in Maharashtra just exactly a year ago, which we're finally now lapping since this summer. And more recently, in fact, as of July 15, last month, we now have the India U.K. trade agreement, which is in full effect.

Moving to China, which now represents 7% of our total sales, down 19%, basically characterized by challenging macroeconomic conditions, continued weak consumer sentiment, and regulatory measures impacting demand. We have experienced a sharp decline within our prestige categories, which are under pressure, and basically, that's Martell. Our premium brands continue to grow quite nicely, supported by the rise of casual dining occasions and increasing penetration of Premium Spirits among the growing middle class. So we experienced market share declines in Cognac, basically impacted by Martell's channel exposure. That being said, and it's first time in a while where we can be in a position to say this. We are getting feedback of cautious optimism from the trade sentiment ahead of mid-autumn festival. So let's see what happens in the next couple of months on that front.

Finally, in terms of must-win markets, Global Travel Retail, down 3%. Basically, the resolution of the Cognac suspension in China, which occurred exactly more or less a year and a month ago. Strong brand activations across Asia and the dynamic traveler numbers in Europe and Americas are what basically characterized Global Travel Retail for fiscal year '26. International passenger traffic continues to grow. It is now 10% ahead of pre-COVID levels. We have experienced a strong recovery of sales in China Duty-Free with strong Martell sell-out growth during Chinese New Year, but the Asian region was also negatively impacted by weakness, particularly in South Korea.

Europe benefited from U.S. tourism and Americas benefited from quite dynamic growth, particularly in cruises. Strong innovation execution was quite successful, particularly around travel retail exclusive ranges, notably on The Glenlivet and our other single malt Aberlour. We also gained market shares in that channel. And as you all know, our fourth quarter was impacted by the Middle East conflict, which is also expected to weigh in our first quarter of this new year.

More broadly speaking, when it comes down to the regions, by Europe, we see sales declining in France, while maintaining market leadership and gaining share with PJ and Bumbu in very strong growth. Spain and Germany, unfortunately, are both in decline amidst continued, I would say, soft market conditions. U.K. is in modest decline with growth on Jameson, Absolut and the Champagne, although we see some degree of improving market trends there. And finally, Eastern Europe is in continued growth, notably on Jameson, Ballantine's, and Absolut. Poland was in modest decline following a strong excise tax increase, though we're gaining share there.

In Americas, beyond the U.S., we see solid continued growth in Canada, driven by Jameson, Absolut, and our RTD portfolio in what we could qualify a soft market and therefore, translating into market share gains. Brazil was in modest growth, recovering, by the way, in the second half from the methanol crisis, which hit us just ahead of Christmas in Brazil with good performance on Beefeater and Absolut notably, though we're experiencing a slight share loss there. Mexico is and was in sharp decline over fiscal year '26 with share loss in what I would qualify quite difficult market conditions there.

Finally, for Asia, Rest of the World, Japan continues on its great, strong growth trajectory with a strong market share gains, very strong performance of PJ. South Korea returned to growth after what we can qualify as a significant reset, which has hit us in the past, as you may recall. Taiwan market sales continued to decline with a continued softness in that market. Very strong growth in Turkey, notably with Chivas and Ballantine's and also Absolut, and I would say, as well the rest of the portfolio. South Africa is in good growth. We're gaining share there, driven by the exceptional performance on Martell, not just, by the way, in South Africa, but across Sub-Saharan Africa. Australia is in modest growth with contrasted brand performance, growing on Jameson, growing on our RTD's portfolio and Champagne. Again, a market where we are gaining share.

This is a brief outlook after the regional description, which makes us quite, I would say, unique in terms of geographical mix and exposure. The other uniqueness, I believe, of Pernod Ricard is our broad portfolio of brands -- our diversified and broad portfolio of brands with very solid brand performance in a number of markets and with our strategic brands, which would have been in growth, putting U.S. and China aside. And you have here a number of illustrations. By the way, the first 4 are not taken as a coincidence. There are our 4 largest brands, Jameson being our largest brand, Martell, Absolut, Ballantine's and Chivas are -- sorry, the 5 largest brand of Pernod Ricard. I mentioned PJ's amazing performance, up 20% throughout the fiscal year. And just to note, [ trip ] for Martell, TD means triple-digit growth in South Africa, just below that, you have Nigeria where Martell is now leading in that market.

Now moving on to the financial update, Mauve up to you.

Thank you. So indeed, let's go on the financial performance. So I'll be quick because you have all the numbers on the slide. But our profit from recurring operation declined by 5.2% on an -- organically and minus 17.9% on a reported basis. So we told you that we were going to protect the margin, and we delivered, limiting the impact to a minus 35 bps.

If we zoom into the impact, it's mostly driven by the gross margin impact, where we experienced a negative price/mix in a soft pricing environment, as you know, and experiencing some adverse market mix. We had also the impact of the tariff, though a little bit less than what we feared at the beginning of the year in both U.S. and China. And as we anticipated on the COGS, we had inflation, lower volume absorption and as anticipated as well, increase on our wet goods impacted by past inflation. But we also very much benefited from the acceleration of our operational efficiency, managing to limit the impact and offset the normative inflation.

If we go on A&P, so here, we maintained significant investment behind our brand, and we slightly benefited from decreased non-working A&P, highlighting as well the improvement of our effectiveness. On structure cost, as Alex mentioned, the reorganization is in place as from January 1, so allowing us to showcase a decline on our structure cost as it was combined with a very strict disciplined cost control. So leading to a minus -- favorable impact of 77 bps on this line. Overall, you can see on the slide as well that our reporting operating margin was significantly impacted by FX that was only partly offset by the perimeter -- sorry, perimeter impact where we had the benefits of our brand accretive disposals. So all in all, what I note on this slide is that despite -- and would we not have such significant FX impact, our margin would have even expanded.

So on the earnings per share, we are landing at EUR 5.85, down 19%, which is mainly the result of the soft profit from recurring operation. And we can see here on the financial expense, a slight decrease as well, though we had a slight increase in our cost of debt from 3.2% to 3.4% as a result of higher interest rate. And we had also a lower income tax in line with the decrease in our PRO.

On the group share of net profit, here, we declined at a slightly higher rate at minus 26%, which is mainly driven by a slight increase in our nonrecurring operation and charges, which is mainly driven by our restructuring cost.

On free cash flow, I think you all know that this has been a strong focus from the organization this year. So I'm very pleased to see that we are delivering a free cash flow increasing by 6%. This is driven by a strong and material improvement of our cash conversion, overpassing our target of 80% and landing at 91%. This is due to a strong and strict monitoring and discipline on our operating working capital and the optimization of our strategic investments on both strategic inventories and capital expenditure, while lending at a level that we believe is the relevant level to protect our assets and our future growth prospects because it was really following a year of peak in FY '25.

So on the net debt, needless to say that as a newly appointed CFO, that would be one of my key point of attention. This year, our net debt remained broadly flat over the past 12 months, benefiting from a strong free cash flow delivery, as I mentioned, but also the proceeds of our disposals. And because of the softer EBITDA, we are experiencing an increased net debt EBITDA ratio up to 3.7x. But our intention is definitely to decrease this level below 3x by FY '29.

Back to you.

Thank you, Mauve. As we have now gotten a little bit accustomed to do over the last 18 months or so, I think it's worthwhile sharing with you a strategic update on Pernod Ricard. And in today's case, in this presentation, it's split into 3 sections. The first one on our purpose and transformation journey. The second one is what I would call a consumer-centric growth strategy, turning consumer insights into action. And the third one is our capital allocation strategy and financial policy.

When it comes down to our purpose and transformation journey, first of all, I strongly believe and we at Pernod Ricard all collectively strongly believe that our purpose is absolutely anchored in timeless human needs. We're not even talking here about consumer insight. We're talking into -- about deep human needs. And that purpose of Créateurs de convivialité is probably more relevant than ever in a world seeking absolutely authentic human connections. And it is true, and I think all of our industry peers have identified this recent evolution. Consumers drink more intentionally. They need a purpose. They need a reason. They need an occasion to do so. So we create more reasons to come together and more meaningful experiences around our brands.

I fundamentally believe growth will come from enriching existing occasions and creating new ones, expanding the shared experiences that, at the end of the day, bring people together around our brands. Our long-term drivers, and I won't dwell too much on that because it's a slide we've been showing and sharing with you for some time now. The long-term drivers do remain attractive despite the short-term headwinds and tailwinds. So you know the attractive long-term fundamentals around demographics, middle class and by the way, specifically for international spirits. You know also the near-term cyclical pressures we are facing in some specific markets related to consumer confidence and pressure on discretionary spend. And finally, the evolving at pace, as I mentioned, the evolving consumer needs around premiumization, around experiences, around consumer convenience and finally, around lifestyles and occasions and frequency.

Again, I do believe that our operating model has -- bears here a serious competitive advantage in so far as our broad and balanced geographic footprint, very well balanced, both across all the different regions and key, I would say, continents, but also in terms of that ideal balance between mature markets and emerging markets. Here, you have all the detailed. I think that is what makes us quite unique from that point of view and is a competitive advantage. And so is as well our diversified portfolio of premium international spirits, which I believe is well exposed to the growing segments. By the way, we are present in every category that matters. You see this on the pie chart. We are also present on every single, I would say, price point segment from standard, which represents roughly 15% of our portfolio, all the way through to prestige. And as well, you see on the extreme right there, the RTDs as well.

When I mentioned that we're ideally exposed as well, if you look at total beverage alcohol, there are a number of segments that are still in good growth or growth. If you look at international spirits for the last calendar year '25, which is the latest number we have, that segment has grown by 1%. If you look at Indian whiskeys, overall, they grew 7% versus an underlying trend for us of 9%, by the way, but anyways. Champagne is up 5% versus 20% for PJ, but anyways. And spirit-based RTDs, which is the segment on which we operate today and want to operate even further tomorrow, up 13%. These are industry numbers.

So all of the segments in which we operate from that point of view are growing. And then if you look at international spirits, which is the majority of our positioning, there on the right, you have the different rates of growth or decline in some cases by categories. Of course, and we have been on a journey over the last 4 to 5 years of significant transformation.

And I'd like to hand this story over to Mauve because before being Deputy CFO and soon to be CFO of Pernod Ricard, Mauve has served as our Global Senior Vice President for Transformation. So in a way, you kind of drove what we see on this slide.

Some of it, not all of it. The rest was really managed by the organization and the teams. But indeed, for us, this has been a continuous journey, I would say. And the initiative that you see on this slide is a result of action over multiple years and across multiple dimensions. So if we start with the organization.

So as you know, over the time, we have been really focusing on simplifying our organization for further agility. We have been also intensifying our efficiency program in order to deliver further efficiency. And we have been doing so without jeopardizing on our ability to invest behind our digital transformation that we believe is also going to fuel further in the future opportunities. Lastly, we have also been constantly looking at sharpening our portfolio.

So on the organization, as mentioned, we have been taking a 2-step approach, which we call tomorrow and became Tomorrow 1, Tomorrow 2. The first step was really focusing on delayering with the removal of our regions and really bringing market together under 10 management entities. And the second step was more on the way we're managing the portfolio. So really simplifying our global functions and also bringing our 8 market companies into 2 brand units in order also to reflect the differentiated business models that we have within our portfolio. So this allowed us to really constantly deliver tight and controlled structure costs with a decrease and reaching this year minus 8% and a second consecutive year of decrease.

This has been also helped by a strong delivery on our operational efficiency. So we communicated that we were going to deliver a very ambitious program of EUR 1 billion over FY '26 till FY '29. And here, we are able through the acceleration to already deliver half of it as from FY '26, which makes me very confident also to inform you that we are able and we will be delivering the full program of this EUR 1 billion no later and at least by FY '28, at least 1 year earlier than anticipated.

And as I said, this was done in order to improve our efficiency, but also to allow us to really invest behind our digital transformation. So we started by proving all the benefits that it could give us with the successful execution and implementation of our key digital program. And now the focus of the organization is really to make sure that we can scale these benefits to its full extent at pace and with agility. So we are really focusing now on building the relevant -- sorry, I'm losing my voice, building the relevant foundations, creating also common processes, building tighter and creating tighter governance and ensuring that we have higher quality data because we know that this is where relies all the power of this digital transformation in order for us to become a fully digitally enabled organization that will really allow us to operate, reshape the way we operate and ensure that we will be delivering at speed, at scale with this ability to adapt constantly to a faster evolving consumer needs.

One proof point of that is also what we have been able to deliver on our A&P spend because here, by optimizing our touch points and leveraging the digital media, we allowed ourselves to significantly improve our effectiveness. We also managed through that to decrease our non-working to really increase what's going to be impactful towards our consumer and showcasing significantly improvement of the impact of our spend towards the consumer.

In parallel, as I said, we've been constantly looking at our portfolio, sharpening it by disposing of nonstrategic dilutive brands as we saw last year with notably the sale of Imperial Blue that allows us to be more in a tighter margin and better margin and with a better growth profile in a key strategic market. We are definitely counting on continuing this effort as illustrated by the sales of Lamb's last month.

Thanks, Mauve. So the second chapter of our strategic update from insights to action, from consumer insights into execution on the ground, what I call our consumer-centric growth strategy. As I mentioned, there is a rapidly evolving consumer landscape where the speed has significantly accelerated, which really requires insight-led decisions and faster -- much faster execution.

We have identified along with our consumer insight teams around the world, a number of consumer insights, broad number of 9 very specific consumer insights, which all are translating into tangible on-the-ground execution and activation. The first one is spirits exploration. And by the way, I think you probably saw in more recent research and studies, Gen Z continues to engage in spirits. Repertoires, however, are growing to include many, many categories. And it's a very dynamic, I would say, need segment, which represents an opportunity.

Second, and that's not new, affordability, which is somewhat of a headwind with low confidence, as I mentioned earlier, pressured discretionary spend, fear of inflation. Number three, novelty/innovation. So a real desire and openness of our consumers for innovation, for flavors, for formats, when I talk about formats for fun and attractive formats. Convenience, as I said, an emerging trend before COVID, which has accelerated quite significantly ever since. So in what we call a cluttered and time-pressured environment for people, they want quick and easy options, should I say.

Mindful moderation. No need to mention this too much. You all know about it with rising health consciousness, with claimed spirits moderation widespread, of course. And finally, creating connection where, as I mentioned as introductory notes for our purpose, conviviality is really evolving from purely spontaneous connections to planned, meaningful and intentional events, and we have a big role to play there. More specific, I would say, to emerging market trends, which is half of our business. I won't go through this much more in detail because you're all too familiar with this, the demographics, the emerging middle class and status-driven premiumization, not only in India, but in many, many emerging markets.

Very briefly one by one, starting with spirits exploration. We are leveraging our capabilities, which you're now familiar with, including our simplified organization that Mauve described to really leverage and really create these occasions and also evolve our media targeting shifting towards the most active and the most efficient media channels. Affordability, I mentioned, addressed through revenue growth management capabilities through our portfolio press ladders, through formats as well. The reality is small and fun formats really satisfy consumer desire for premium products despite economic constraints.

So when we give the opportunity for consumers that are under, I would say, purchasing power pressure, they do go for the premium proposition if it's at the right price point. Here, you have an illustration, U.S. example, I think it's New York. If you see all of our different price points that we cover with a brand franchise in that very specific case, Jameson starting at $3.99, $4.99, $9.99, basically all of the different price points with one brand, different formats, different expressions. We have this for all our relevant brands across all the states, if I take the U.S. example. But I would say a lot of work is going on, on 3 things to address this opportunity.

The first one is the offering. So making obviously, these propositions a reality, which involves, obviously, ideation, innovation and let's not forget, supply chain. By the time we have the idea and it comes to shelf time there is a minimum number of time. Number two, which I would say is equally an operational challenge is the implementation, execution and deployment, i.e., having these propositions at the right price on the right shelf facing the right consumer because from a route-to-market standpoint, it's a big job to be done and which is as well underway. And third is pace the speed at which we go to market with these offerings. So these are the 3 things we're working on, the offering, the market presence in terms of points of distribution with the right offerings and finally, the speed at which we do that.

Novelty is another one. And here, you have 3 examples. Now innovation has moved to purposeful innovation at scale in a way fewer but bigger and better. And here, you have our key innovation pipeline. It's broader than that, but here you have the key ones, the ones we launched in fiscal year '26, which are going to continue to be deployed across our markets throughout this new fiscal year, plus some new innovations to come down the road during this fiscal year.

The fourth insight is indeed convenience. I mentioned it earlier, but spirits-based RTDs are the fastest-growing RTD segment, and this is somewhere we can play quite seriously in. We also know that Gen Z over-indexes amongst RTD drinkers, which, in a way, represents a great recruitment opportunity into our brand franchises if we engage in the right way through the right channels with our consumers, leveraging our brands. And you see here a few examples of our enhanced portfolio with different format solutions. There's the RTDs, but it doesn't stop there. We also have, and it's been launched now over the last couple of months, 100 ml, what we call fun-sized formats that are very dynamic. We have multipacks, mini formats and smaller formats as well and many other initiatives around that consumer insight of convenience.

Mindful moderation, which we address through a number of initiatives around premiumization on one side, amongst the expansion of lower, no, low ABV offerings. And let's be clear, there is a drink less but better trend, which works well if we engage with the right propositions with our consumers. The abstinence rate has remained stable over the last 5 or 6 years. We are seeing, as I mentioned, that trend of less but better. And you see here a few examples of what we're doing in terms of premiumization through a brand franchise and innovation through addressing lighter consumption occasions with the aperitif trends and some of the non-alc propositions we have innovated over the last 18 months.

Number six, craving connections. I do -- going back to our purpose of intentional consumption through experiences. This is where I really believe we have a role to play through the right associations through the right partnerships. We have a specialized team of experts that know how to basically work on partnerships. You have here a number of partnerships, and these are increasing. And behind every one of these partnerships, we have a very specific and clear execution strategy. What I would say is I would just take one example. People in key Asian markets, for instance, really want to see their friends, 25% more than they currently are. And it is our role in a way, as Créateurs de convivialité to create these meaningful occasions to bring them together with our portfolio, which I believe is very well positioned to do so.

And then finally, the last 3 trends, all in one, what I say is -- which are skewed towards emerging markets, which are demographics. I won't go through the numbers you know them, which is the emerging middle class. I won't go through the numbers you know them. And finally, which is status-driven premiumization, which we still see basically everywhere in emerging markets.

And finally, to the last section of our strategic update on capital allocation and financial policy.

I think this one is for me. So indeed, with this slide, we really wanted to reiterate our strong intent to bring our leverage ratio down below 3x by FY '29 and really illustrate the thing that we have already been doing this year and confirm that this is our intent to maintain it over time.

So first, on our strategic investments, so on both capital expenditure and strategic inventories, where we are decreasing our level and capping it to EUR 700 million and also maintaining and combining it with a strong effort on our operating working capital and really also increasing our target from 80% to circa 90% in the coming years as we have been already delivering this year. So that's our intent. And the [ pillar ].

Yes. And subject, of course, to shareholder approval, we propose to maintain our dividend at EUR 4.70 per share. As part of our commitment to our deleveraging trajectory, we will offer our shareholders the choice of receiving their final dividend of EUR 2.35 either in cash or in shares. And I think it's worthwhile noting the support of our reference shareholder for this proposition and the fact that they will opt for the shares.

On our financial policies, I think it reflects a balanced approach to capital allocation. So while maintaining our investment-grade rating and as mentioned, our deleveraging focus, we are really reiterating very clear priorities: first, to invest behind our future growth; two, to really continue actively working in sharpening our portfolio; three, maintaining a progressive dividend policy; and last, the share buyback when all above priorities will be fulfilled.

So in terms of outlook, let's start with fiscal year '27. So for this fiscal year, we expect organic net sales to be broadly stable in a contrasted and uncertain environment. Basically with 2 messages here. First of all, declines in the U.S. and China impacted by inventory adjustments as of the first quarter and with underlying trends that are expected to improve in China.

And second, continued positive momentum in the rest of the world with ongoing strong growth, notably in India, but not just in India. Continued investment behind our brands with our A&P to net sales ratio to be maintained at circa 16%. We will strongly defend our organic operating margin supported by strict cost control on one side and the acceleration of the implementation of our operational efficiency initiatives whilst investing in our digital transformation. We expect strategic investments to be at circa EUR 700 million versus EUR 800 million previously guided. We also expect strong operating working capital management with cash conversion now expected to continue at circa 90% versus 80% previously.

When it comes down to our medium-term framework, not guideline, but framework. While noting the current softness, I would say, in the U.S. market, we are projecting organic net sales growth, aiming to be, on average, close to the lower end of our plus 3% to plus 6% range over fiscal year '27 through to fiscal year '29, i.e., close to 3%.

We expect organic operating margin expansion, supported by the acceleration of our operational efficiencies of EUR 1 billion, which we mentioned earlier, which will be done 1 year ahead of plans while maintaining as well consistent investments behind our brands, as I mentioned, at roughly 16% in A&P/Net Sales ratio.

We expect a strengthened cash generation, aiming now for 80% -- for 90% sorry, versus 80% cash conversion to fund our financial policy priorities with strategic investments normalizing to no more than EUR 700 million. We are targeting a net debt-to-EBITDA ratio below 3x by fiscal year '29. We continue to adapt our strategy to capture growth opportunities in our operating model to meet those changing circumstances, including through our ongoing digital transformation that will unlock further efficiencies. And I would conclude by stating that we are confident in the continued engagement of our teams and that we remain focused to deliver sustainable value growth over time.

And on that note, I thank you very much.

[Presentation]

We're going to kick off the Q&A -- we're going to kick off the Q&A. So we can open the operator. [Operator Instructions]

[Operator Instructions] First question is from Gen Cross, BNP Paribas.

The first question is just on the U.S. I think in your outlook commentary, you comment on expectation of an improvement in underlying trends in China. I just wondered if you can comment on whether you expect your underlying trend to also improve in the U.S. in FY '27?

And the second question is on India. You saw a nice acceleration in growth in Q4. The question is specifically on the potential for an India IPO. I think it's something that is regularly discussed at the Board level. Does that continue to be the case now?

Sure. Listen, I'll take these questions. Listen, the key reason for, I would say, skewing towards the lower end of that midterm framework of plus 3% to 6% top line over fiscal year '27 through to fiscal year '29, i.e., close to 3% comes from the acknowledgment that the U.S. market will remain soft over that period. It's as simple as that. And it's difficult to say more than that. But that's what our current algorithm takes into assumption and that drove that revised, I would say, framework towards the lower end.

On India, yes, the Board continues to discuss the India IPO opportunity. Again, it's a question of the strategic opportunity it may represent in terms of shareholder value creation, and they're weighing the strategic rationale, the pros and cons in terms of these kind of situations. It's not an obvious yes or no. It is a clear process of analysis and discussion. And so I can confirm we -- the discussion is still ongoing. And that in the meantime, we are taking some legal preparatory steps in order to maintain the flexibility around the India IPO and keep our options open. But at this stage, we're still at discussion level at Board.

Next question is from Mitch Collett, Deutsche Bank.

Two questions, please. So for your full year '27 guidance of flat organic growth, you said it's predicated on improving trends in China. Can you give us some color on what drives that confidence about improving trends in China?

And then my second question is also on the '27 guidance. So you said you're going to strongly defend organic operating profit margin. In fiscal '26, a similar statement equated to a 40 basis point decline. But clearly, you had the support of lower A&P. So can you give us the sort of rough moving parts for fiscal '27? And would a similar level of organic operating profit margin decline be a correct interpretation of your guidance today?

Sure. Thank you. On your first question, maybe predicated is a little bit of a strong word. We have -- and again, I'm very cautious on that front. And by the way, our assumptions remain quite cautious for China for this fiscal year when it comes down to sharing with you our fiscal year '27 guidance. What I have mentioned is we are seeing some degree of underlying trends improvement, number one. Number two, we are getting some cautiously optimistic trade sentiment feedback ahead of mid-autumn festival. And number three, our assumption anyways is based on some degree of stock overhead that we need to destock, which is probably going to impact more the Q1 than the rest of the year. But -- so our guidance is not predicated on China, which represents, remember, 7% of our total business.

So on our defense on our operating margin. So indeed, we know that we will be facing similar but different headwinds, I would say, because we can also already anticipate similar impact on our wet goods. As I mentioned, it's really because of the past inflation in our aged spirits. We know as well that we will be impacted by the Middle East conflict that has been not that much impacting us this year, but impacting today our logistic costs and our commodity prices, as you can imagine.

On the other side, we also see some positives. So as you see with our guidance, we expect some easing top line trends that mechanically will also create better fixed cost absorption. And we are also expecting less of an impact on tariff because the U.S. and China situation will be offset by the India FTA. So all in all, we will be continuing our strong discipline, grabbing any opportunities, accelerating our operation efficiencies and maintaining our A&P while continuing our strong effort on structure cost. I hope it answers your question.

Next question is from Sarah Simon, Morgan Stanley.

Two from me. One was, can you give us a bit more color on where the savings, the EUR 500 million that were achieved in fiscal '26 actually fell in terms of maybe a split between COGS, A&P and structure costs?

And the second point was on your midterm guidance. Alex, you talked about an average towards the low end of the range of around 3%. But if we do -- if we say around 3% across a 3-year period and the first year is 0, that would imply 4.5% or so in years 2 and 3. Is that what you imply? And if so, how do you think you're going to get there?

I'll address your second question immediately before Mauve gives you some color. First of all, it's not a medium-term guidance. I'm sorry to have to reiterate. It's called medium-term framework. It's not around 3, but I don't know what the terminology difference may mean, but it's close to 3, i.e., around maybe. Yes, fiscal year '26 was a little bit softer than what we expected it to be. Bear in mind a number of factors that impacted fiscal year '26.

Number one, destocking in the U.S., which we don't expect to be that severe in the coming year and obviously, years for sure. Number two, some degree of destocking in China for the year to come, which we don't expect as well to carry on forever. Number three, going back to an earlier question on underlying trends, bear in mind, we're also lapping in China a number of decisions that were taken exactly a year ago, which we're now lapping, I would say, positively. Number four, the Middle East conflict at some point, I'm not a geopolitical expert, but I'm just saying it has impacted our Q4.

We expect it to continue to impact us over the coming few months to some degree. We're already seeing things starting to normalize to some extent. So basically, at the end of the day, when you look at during the presentation, our geographical mix, and you see where we're present. And if you see those markets where we're growing quite significantly, those markets where growth, in fact, is accelerating, those markets that used to be in strong decline that are stabilizing, even maybe growing. I took the example of Korea, but there are a number of other ones. But at the end of the day, it works.

So I take the first question. So thank you, Sarah, for this question because indeed, I went relatively quickly to leave time for Q&A. So I'm able to deep dive a little bit more on this EUR 500 million that has been the result of a strong effort from all the organization. So I just would like to remind that it's a mix of cash and P&L impact, even if the vast majority is on P&L. And as you can imagine, it's indeed split across COGS, A&P and structure cost.

On structure cost, I'm not going to deep dive. I think it's a fairly easy math in terms of the decline that we are able to generate. On the COGS to deep dive a little bit. Here, it's really a combination of what we call procure. So it's really all the improvements that we are managing with our suppliers, also managing that in a much more effective way, which impact the COGS and the A&P with the proof point as well on our decreased non-working by 33%, as an example.

And also on the make, where here, we are also looking at optimizing our manufacturing footprint and really also optimizing our assets, which allows us to generate significant savings on this line as well.

Next question is from Simon Hales, Citi.

So my first question is, can you just go back to India. And I wonder if you could talk a little bit more about the free trade agreement and what impact that is starting to have on your business already, your plans for fiscal 2027 and beyond. With that in mind, what are you starting to do particularly in the Scotch business that you have on the ground there to build your brand and your premium offering even further there?

And then my second question is just around your ambitions in the ready-to-drink category really, Alexandre. You've got to reach 2.5% of net sales. Do you expect a further sharp acceleration in the contribution of that category as we move through fiscal 2027, as innovations come online? Just wondering what your thoughts are there.

Sure. Maybe on the FTA agreement with the U.K., which is now into full effect and has been so for exactly 6 weeks. It came into effect on July 15. I've always qualified this potential happening because it's been years we've been talking about it together, by the way, and with many others as the cherry on the cake. But now the cherry on the cake is there.

It's difficult to share with you some very specific insights as to how we're leveraging this FTA to accelerate our performance in India just because it's, I would say, competitive and sensitive information. That being said, you should not be surprised if we were to introduce new propositions coming from the U.K. into India around the Scotch, of course. You should not be surprised to see some degree of acceleration around innovation.

You should not be surprised to see some basically, and that's part of the FTA agreement, price adaptation to make our brands more relevant and more affordable to consumers. That was the whole principle of the free trade agreement. And at the end of the day, when you look at our strategy in India, focused, first of all, by the way, on these local brands with great success of Royal Stag, with great success of Blenders Pride. By the way, we're premiumizing these 2 brands with innovation as well. With the recent launch back in October, November, coincidentally, with the disposal of Imperial Blue of Xclamat!on, which is a full range of propositions of liquid. And then, of course, the other leg to our growth strategy, which is our imports. So right now, this is going to be a nice booster for exports from the U.K., particularly from Scotland.

And of course, the second cherry and sometimes you have 2 cherries that come along could be. Again, we never like to bet on these topics because we're not in control, but could be an EU-India FTA, which is currently being discussed and which when it comes down to us, would look a little bit like the U.K.-India FTA, and this would be a great boost for the #1 imported spirit brand in India, which, as you all know, is Jameson and for a number of other brands we have. But that would be a second cherry on the cake, and we'll see.

All this, just to say that all the lights are green from a business point of view in India. It is a buoyant market. It is growing, not just for us, the market itself, the country itself. And the degree of optimism is somewhat refreshing, particularly when you come from France, for instance. On RTDs, our intention is indeed to increase our investments behind RTDs to increase our innovation behind RTDs. And more specifically, which I think this is the key to increase the pace at which we come to market with our RTD propositions, which, by the way, goes hand-in-hand with our route-to-market optimization for RTDs, which somewhat varies quite significantly from the traditional, I would say, bottled spirits route to market.

And I would also say the same for the marketing playbook where we're seeing a different marketing play for RTD proposition. So we're working on it. I'm not going to share with you what our expectations are for RTDs. But to the question -- the broader question of our RTDs a priority for us, yes, as well. They are a great complement to our portfolio, and we intend to invest behind them and accelerate the RTD performance for our business as we have over the last few years, as you've seen, the increasing weight in our portfolio.

Next question is from Olivier Nicolai, Goldman Sachs.

First question is on Europe. If we could go back to the performance, which was a bit softer in H2. You flagged weak performance in various countries. Just wondering how should we think about the region in full year '27?

And then for Mauve, could you give us a bit more details on gross margins into next year? Would you expect it to be more under pressure as input costs increase? And do you factor any potential tariff refund in your guidance?

Thank you. On your first question, the beauty on one side and the gloom on the other side of Europe is its lack of volatility to some extent. So you'll never see Europe as a region up double digit or down double digit. What you will see is within Europe, you'll see some ups and downs and some of the ups that offset the downs or -- and so on and so forth. But at least one can view Europe as a stable, I would say, homegrown territory, which doesn't have excessive volatility one way or another, at least in a very volatile world. We know we have a broadly stable base in Europe, sometimes growing quite nicely, sometimes in some degree of decline as we have experienced over the last few months.

That weakness basically comes from Spain and France and to some extent as well, sorry, Germany. So in France, we are gaining share. but in what I would qualify a sluggish market, but we are gaining share and experiencing some degree of slow growth through share gains only. But in Spain and in Germany, it's fair to acknowledge that the market is soft. And by the way, that we're losing share in both of these markets. Otherwise, and I did mention the U.K. is coming back to positive trends. Ireland is in positive trends. And the more we go Central and East, the more dynamic the growth.

And I'll -- thank you for the second question. Even if I have to say that I believe I answered the first question. So I warn you, Olivier, I may probably say the same thing, but a bit differently, but don't expect me to trap me in telling much more. We know that indeed, for next year, our margin will be pressured by, as I mentioned, wet goods increase and Middle East conflict that will weigh on our ability to deliver further margin expansion.

On the other side, we know as well that we will have an ease on the trajectory, helping the fixed cost absorption. We will continue our efforts on the structure cost. And indeed, on the tariffs, we will -- and we have already been receiving some returns. So it's a net impact for the U.S., and we hope and we believe it will be partially mitigated by the FTA impact in India this year. I hope this time, it's clear.

Next question is from Edward Mundy, Jefferies.

Two questions, please. So the first is for Mauve. I think on Slide 25, you talked through where we are on the cost savings agenda and the cost savings have been delivered 1 year early. As you step into the CFO seat, could you perhaps talk about potential further opportunities beyond fiscal '28 given that, that Slide 25 has a beyond element to it?

And then the second question, perhaps for Alex. In your final remark of your presentation, you talked about the engagement of your teams. Clearly outside of U.S. and China, you're seeing a decent outperformance versus the whole market. Could you provide an update on how you're managing through that dynamic, continues to keeping people engaged yet with the pressures of U.S. and China holding you back?

Yes. Let me start with your second question because I think it's obviously a critical question, a key question, particularly in an environment where a big chunk of the growth in a subdued environment will come from market share gains, which is not just a game of creativity of ideation, creativity, innovation, route to market and so on. It's also related to on the ground people commitment. the fact that the people wake up in the morning with that Créateurs de convivialité mindset, which means bringing people together around our brands, giving meaning to why our brands are there.

And by the way, there's a romantic aspect to that for sure. And there is, of course, a very business-related and technical aspect to that, i.e., the romanticism of our brand, consumers are extremely, extremely sensitive to what a brand represents. But at the same time, they're sensitive to the price of the brand. They're sensitive to the packaging of the brand. They're sensitive to where the brand is positioned on shelf. They're sensitive to how we bring that brand to life. They're sensitive to the channel we use to interact and engage with consumers on that front.

So commitment is absolutely critical in our industry and particularly -- it's something that we very fundamentally cherish at Pernod Ricard. So we follow that in many ways. We used to do what I call -- what we called the I Say report, which was initially every 2 years, then turned out to be every year. But leveraging tech and digital capabilities, we can now do pulse surveys. And one of the key things I follow through these pulse surveys because then management is empowered to leverage these pulse surveys here and there is to monitor that degree of commitment by function, by affiliate globally and so on and so forth. That's the first way we monitor this. And on that front, you'll be surprised how responsible people are because they understand the situation. And they know.

And the way we deal with our efficiencies, we do it in the most transparent and the most responsible way. But at the end of the day, people understand that business is business, that imperatives are imperatives, and they are ready for that. The second way, and it's not just me, it's the leading team. We travel. We travel extensively. We have a travel policy. By the way, there is some cost discipline around travel, but not for me. I spend my time in airplanes traveling, meeting the teams, having these town halls, having these dialogues. And then I have these brought by the way, later today, I think it's at 2:00 p.m., if I'm not mistaken. I have our ELF Executive Leadership Forum meeting, close to 300 leaders across the group, and we'll have an honest, transparent 45-minute discussion on what's happening.

Next week, I'm in Mexico, but so be it because it was planned and so on, but I'll have a live 16,000 wide exchange with the whole troops to explain. When people understand, they buy into it. And so communication is absolutely key. Right now, this morning is focused on external communication for our external stakeholders who are absolutely key for us. But this afternoon is going to be internally focused because they need to understand our results. They need to understand where we want to go, why we want to go there, and they need to understand it with enthusiasm and the winning mindset.

So as it relates to our operational efficiency, so apparently, I have still T&E opportunities to grab. But no, kidding aside, thank you for noticing that indeed, we have been on purpose putting beyond. And on purpose, I introduced the slide as well to say that it's a continuous journey. So I'm definitely not going to sit down on my seats and live on Hélène's legacy, but really actively working in finding new opportunities. I'm technically 4 days in the job. So for now, I will probably more rely on what I know best, which is our transformation. And here, I'm also fairly confident that it will open up new opportunities for the organization, for the teams and mostly also to grab new opportunities towards the consumers. So we are currently filling the pipe as we speak.

Next question is from Chris Pitcher, Rothschild & Co Redburn.

A couple of questions. Firstly, Alex, on the must-win market strategy that you introduced us to back in 2015. But when you introduced that, those 4 key markets had grown phenomenally over the previous decade. But if I've got my math right today, they're actually a slightly smaller share of the total group today than they were back then. Part of that obviously is the other performance of the U.S., the sale of assets in India. But is that must-win focus still the right one? Are you more -- are you having to redeploy resources across other markets? Can you give us a sense of how much resource they sort of absorbed during that period? And is there scope to spread that?

And then secondly, on the dividend, you said that the reference shareholder, Société Paul Ricard has committed to take shares in the final dividend. Is that an ongoing commitment? Should we model share option until you get to 3x net debt to EBITDA? And have you had any other assurances from other shareholders that you can give us an idea on in terms of share uptake?

Okay. So let me start with the second and then the first, so I don't forget your second question. On -- basically, if I translate your question, is this, first of all, a one-off scrip that we are offering? First of all, again, let's be clear, our focus is to continue actively our deleveraging strategy. A scrip remains an option, but frankly speaking, no decision has been made at this stage. Yes, our reference shareholder, again, has supported that proposition for this year and will opt for shares and so has GBL to be quite clear on that front.

When it comes down to your first question, well, the form of wins are still the 4 greatest markets in terms of size and in some cases, medium-term potential, in other cases, maybe long-term potential. But the U.S. is still our #1 market. We're less exposed than most of our peers to the U.S. market, for sure. But the potential remains there, we believe, not in the next 3 years, as I mentioned earlier, and thus our revised, I would say, framework. But the potential is still there. It's a highly profitable market. It's a highly I would say, dynamic market, not from a growth point of view, but from an opportunity point of view, if we're great at creating, at innovating, at executing, et cetera, and at pace, which is something we're stepping up as we speak. So we are investing above group ratios in terms of marketing in the U.S. market.

India has now become our second largest market is a clear growth driver for last year, for this year, for next year, for the foreseeable future, for the medium, long term. I mean, what's happening in India is quite phenomenal. Travel Retail, I mentioned earlier on, travelers are 10% above pre-COVID crisis. Back in the day, people thought Travel Retail would be subdued forever. As a matter of fact, from that point of view, traveler expectations are still going to be growing. We've been hit, as you know, by that Middle East crisis, but we do expect that channel to continue to be a growth driver in the future. Some issues with Middle East right now, of course. And it's a great brand-building channel for domestic markets.

Back in 2015, we turned Travel Retail into a global organization, which is now working in synchronicity with domestic markets when it comes down to activation because there are strong brand-related synergies from an A&P point of view as well. And China. Well, let's not forget China has been very cyclical in the distant and more recent past. Right now, there is continued softness. We'll see what happens, but the reality is the underlying fundamentals in China, and we currently see them on our premium brands portfolio remain strong. So I wouldn't underestimate China potential. It doesn't mean we've taken this assumption in our medium-term framework for sure. We prefer to be cautiously, let's say, prudent. We have revised, which is normal, our marketing investments in China. It doesn't mean we no longer invest. We invest still quite strongly.

Maybe one last point to conclude on investments. Circa 16%, it can be 15%, 17%. What really matters is are we getting -- are we sweating our assets the right way? Are we getting the right return on spend, which Mauve shared with you a few metrics on that front. consumer-facing A&P, basically what consumers see on our brands has increased. What has fundamentally decreased is what we call in our internal jargon, non-working A&P by leveraging expertise and capabilities, including content production with tech and many other things. So at the end of the day, we're committed to investing behind our brands to make them relevant and to engage with the right consumers through the right channels.

We have time for one more question, which is from Sanjeet Aujla, UBS.

I just had a couple of follow-ups. Most of mine have been answered, but just coming back to China, and you highlighted there a bit more optimistic feedback from the trade. Is that just lapping stricter enforcement of prior government regulation? Are you seeing actual any genuine signs of stabilization in the nightlife and banqueting channels?

And secondly, just coming back to U.S. destocking. Can you just clarify, are you expecting the quantum of destocking to be less in fiscal '27 versus fiscal '26 or about the same?

Sure. So for China, I'll let you talk about the destocking. So for China, both or all of the above. The reality, and you're right to mention it, we have now started lapping a decision which was taken back in May of 2025, which we basically call an alcohol ban, which was -- and the entire industry, including local players and Baijiu and et cetera, felt it for the full -- our full fiscal year '26. And of course, I strongly believe, and it's purely in that case, technical, as the weeks come by, and I would say, by the end of September, October, frankly, we'll be lapping a new base from that point of view. So for sure, this helps.

But at the same time, it is true that trade sentiment ahead of Mid-Autumn Festival for the first time in a number of years is cautiously optimistic, and we have seen as well some degree of improving underlying trends. I'm not going to call it we're back to growth in China, definitely not. But there's something happening and something new in a number of years for China.

So on the U.S. destocking, so indeed, as we mentioned, we are expecting some inventory adjustments, both in the U.S. and in China starting Q1. And indeed, we know that this year, we have been significantly impacted by inventory adjustment as well. That being said, I think we will be benefiting from 2 impacts.

So one, indeed, we are still at too high of a stock at trade level, but we are now starting from a healthier basis because we know that back in FY '25, we had some increase due to the pre-tariff uncertainty. So because of that, we will have less of an impact and also leveraging a healthier base, I would say.

Thank you very much. Thank you all for joining us today. We wish you a good rest of the day.

Thank you.

Thank you.

Hello, everyone. Thank you for joining today's Q&A session with Conor McQuaid, CEO of Pernod Ricard North America. I hope you've had the opportunity to see the video update we released earlier today that described the progress Conor has made in the nearly 2.5 years of his leadership in North America, with this now being Conor's third opportunity to update us all on his progress.

Please note that during this call, Conor will not provide any forecast, outlook or guidance. Our most recent group guidance was updated and shared by Helene in our Q3 sales update in April. As usual, in order to give as many people as possible the opportunity to pose questions to Conor, please, no more than 2 questions at a time.

So operator, please now if you could explain the mechanism to ask questions, and then we'll hand over directly to Conor. Thank you.

[Operator Instructions] First question is from Laurence Whyatt, Barclays.

A couple for me, please. In your prepared remarks, you mentioned that Skrewball was having a few issues from the route-to-market changes in the U.S. But just wondering if any of your other brands struggled in any way as a result of the route-to-market changes because I think in the past few quarters, you mentioned that you've been underperforming the U.S. market. So just wanted to understand if the route-to-market changes have anything to do with that.

And then secondly, on your ready-to-drink strategy, a lot of the growth in ready-to-drinks has often been in new-to-world brands. But your innovation in the space is largely line extensions with your existing brands. I'm just wondering if you could talk us through the strategy behind your innovations in the ready-to-drink space.

Laurence, thank you for joining us, and hello to everybody on the call from a bright and sunny New York. I'll take the 2 questions in sequence. Ready-to-drink -- sorry, beg your pardon Skrewball first from a route-to-market perspective. As we went through the transition on acquisition a number of years ago, we had some challenges in the relative stock loading that went into trade and also the timing of those changes meant that some of the promotional windows that we would normally have been able to access on a portfolio basis weren't available to Skrewball. So I think we got off to a very challenged start at the outset.

We also had some supply challenges around the 100 ml can, which is core to the proposition on Skrewball insofar as it's a great trial mechanic. And obviously, we were one of the innovators in bringing that format to market. So I think we've largely addressed those issues now. We have the 100 ml back in distribution, and I think that's a positive contributor to the improving momentum that we're seeing on Skrewball.

And largely, we're seeking to double down on the strategy, being very clear that it's a shot brand and plays in that shot space and really making sure that we get on menu for those impulse moments around shot which take place clearly in the U.S. on an ongoing basis. So very happy with where we are in terms of the strategy clarity and what we're trying to bring to bear from a market execution perspective. The small sizes play a key role in that proposition. And we've got some exciting innovation coming down the line, including the launch of the American Classic peanut butter and jelly in a can and small-size format that's hitting the market as well as some even more exciting innovation that we will trial in California, Southern California and New Jersey come September.

So as I say, a lot of work done to positively inflect the performance on Skrewball despite the challenging start that we experienced.

From an RTD perspective, I think you're right in saying that new-to-world has been a key driver of RTDs. But I think it's also very important that we look at the various swim lanes that play out in the RTD opportunity. Clearly, you've got malt-based or flavored malt beverages as they're referred to. You've got wine-based RTDs and indeed, you've got spirit-based RTDs. And it's in spirit-based RTDs that we're seeing the dynamic growth. And the propositions that seek to access that market and those opportunities come through 3 swim lanes as we're describing it. There's the light and refreshing. There's bar quality in a can and there's playful pour. And really, what we're saying to ourselves is, is new-to-world the entry point -- or is it the clarity of proposition that we bring to bear? And you look at a brand like Malibu, for example, the #1 brand in the U.S. associated with summer, our #1 household penetration brand and indeed, a brand that has all the refreshment cues and daytime, summertime drinking occasion opportunity to execute against.

So it's about us challenging ourselves to bring the right proposition to market that can access that moment. It doesn't, to my mind, necessarily need to be new to world. Indeed, our strategy opportunity in service of our power brands. That's the 60%, 70% of the portfolio that is made up of those 6 power brands. And we're really trying to hone and refine our entry point so that we have the most competitive chance to win. We're seeing great momentum on our most recent collaboration and innovation, which is Malibu and Dole. Dole being the #1 brand associated with pineapple juice. And again, the multiplier effect of those 2 brands working together in support of a relevant proposition seems to be resonating as we head into the critical summer period.

So again, a lot of work done in refining the strategy, and I referenced in the video as well the positive momentum we're experiencing on the launch of Malibu Pink. Malibu Pink is clearly hitting the mark and clearly going after a key consumer opportunity that the brand has all right to win within. And recruitment is the overarching theme of the strategy. So making sure that all we do is in service of the recruitment of the next generation of Malibu consumers. And I think we're much sharper and clearer in the role that RTDs play in that.

So in summary, I'm saying new-to-world is not the only entry point, consumer relevant propositions, and we believe we have brands in the portfolio that can meet that need.

My first question was much more about your other brands rather than Skrewball. I really want to understand if you've had any issues on any other brand outside of Skrewball following the route-to-market changes.

I think that's a very live and active question. As we reset our route-to-market as we came to the end of our contract period, as of last year, and we updated everybody in terms of the changes that we made and the philosophy that we brought to bear in those changes, which was very much driven by a fittest athlete by state. So looking at it on a state-by-state basis, very forensically going across each state and determining who is our best partner to win in that state. And they were the changes that we made some 12 months ago and obviously transitioned towards. In the interim, outside of our control, there has been quite a degree of change within the distributors tier. And we've seen, obviously, the consolidation of various states, the departure of RNDC to a meaningful degree, which was a #2 wholesale partner that we have been working with.

So we've had to, again, forensically go back across our footprint and make changes as appropriate. In that context, I'm very comfortable that we've done and made the right choices. And as I say, I think the team have worked very hard and diligently to go about that exercise with real clarity. And we're in the transition mode on those 11 states that are in that second wave of change. And fundamental in those changes is Texas, one of our largest markets, and we've transitioned from RNDC into Southern as of the first of May.

I would characterize that as a transition that's gone particularly well. I think, again, duo to the hard work of the team and the support of Southern as a partner. We're off to a good start. Our fill rates are north of 80%. And the transition has been exemplary, I think, in the way that we've managed it. Some of the other markets will transition as of the 1st July, notably in those is Maryland, which is currently with RNDC and we will move to the new Reyes organization subject to the conclusion of those contract negotiations.

And as I say, we're working across each of those states that are in transition to make sure that we're doing so in a very structured and supportive manner. And as I say, I think the work that's been done by the team is giving us confidence that we're doing so without major disruption to the route-to-market or indeed, the availability of our products in the brand or in the states in question. Hopefully, that answers your question, Laurence.

Next question is from Richard Withagen, Kepler.

Two questions from me as well, please. First of all, there's been a structural destocking in your U.S. business for a few years now and the industry inventory to sales ratio also remains elevated. I mean, should sell-in and sell-out be more aligned in fiscal 2027? And why would that be the case?

And then the second question I have, there is, I mean, obviously, a lot of focus on the top line performance and rightly so, I guess. But how do you make sure this is profitable growth? What are some of the points of focus for this, Conor?

Thank you, Richard. Good questions. Destocking clearly contextualized, and I think we need to take a step back collectively and look at the challenge that we faced into some 12 months ago. So again, to recall a lot of the noise in the system and a lot of the speculation and uncertainty indeed around the level of tariffs that will be applied to our sector. At one point in time been spoken to in terms of 200%. Now we took that into account clearly in ensuring that we had an elevated level of stock state side to mitigate the challenge and the risk that, that poses to the business.

So we did start the year with elevated stock levels, and I think that was well flagged. We have seen some industry adjustments through the course of H1, and we are lapping those elevated comparison basis as we head into H2. So that's reflected in the figures where you see the sellout broadly at minus 7%, and they sell in at about minus 14%. So adjustments are being made in the context, as I've just described, of some of the distributor changes and indeed some of the pipeline fill effect on the impressive innovation funnel that we've put to market. So we're not really at liberty at this point in time to talk about how next year or the full year of next year will play out. But clearly, we are diligently working across each of the states, each of the distributors, ensuring that our stock levels are appropriate to mitigate any challenges and risks, but it's been bumpy over the last 12 months, and I would hope for a more stabilized view as we go forward.

On your second question in terms of top line and the profitable growth and how the shape of the P&L plays out against the challenges that we face into. Clearly, resource allocation is critical in that regard. Key line item is A&P and the dedication of those resources to the brands of greatest opportunity that can positively inflect our performance. We're helped and aided greatly by the early adoption from a matrix perspective, which is our AI A&P process, which allows us to diligently review investments made, touch points chosen and return on investment that we get from those investments. And that hones and sharpens year-on-year through the support of the AI tool that we're using to make more informed choices as we go forward and again, really refine how that A&P is being deployed, drive for efficiencies therein and challenge ourselves very much in the context of working versus nonworking. So how many dollars are in the eyes or in front of the eyes of the consumer versus those that are in more back-office focused activities.

So we're really trying to pull that down so that we get as much of that investment working hard in this field and in front of consumers. So a lot of good work being done in that regard. Our matrix adoption and our use there of the recommendations through that tool is north of 70%. So in other words, what it's telling us to do is being reflected in the decisions that we make to the level of 70%. And then we have opportunity, and this is intended within the tool that you can override and maybe strike for some new ideas, new initiatives that aren't in the historical numbers. And therefore, it's not ever a case that you strike for 100% adoption of what the tool will tell you to do.

But as I say, really good use thereof and the marketing team have really embraced it as very informative as to how they make those relevant resource choices from an A&P perspective.

And then from an SG&A, looking at the organization and again, trying to ensure that what changes have happened externally, be that the wholesaler changes that we are making, the dedication that we have negotiated within the wholesale tier is reflected in our own teams and ensuring that there's no duplication in roles, responsibilities and indeed accountability, make sure that we really are very studiously and very disciplinedly looking at our organization and our SG&A costs that are pressed up against the opportunity and making adjustments accordingly. And again, I have to commend the team, the agility that they've shown and the way that they've addressed or worked with us to address those changes that we would wish to make to ensure that we're as agile and responsive to the external context as we see it.

So as I say, very disciplined approach to A&P, very disciplined approach to SG&A. And then largely within the broad parameters of what's in our control is the SG&A -- or sorry, the RGM discipline that's been brought to bear in the business. And again, I'm very impressed with the work that the team has done in using new tools, new insights and embedding that understanding into those choiceful decisions that we're making around promotional intensity, promotional frequency and indeed, state level, SKU level discussions and conversations that we are having against the competitive context. So I can reassure you genuinely, there's a lot of really good work being done, and it's something that's to the forefront of our mind in the context of the current market that we need to use the resources available to us in the most appropriate way possible.

Next question is from Sanjeet Aujla, UBS.

A couple of questions from me, please. Can you touch upon the pricing environment in the industry, it feels like it's been deteriorating in the last few quarters. And against that backdrop, how competitive do you think the portfolio is versus your competitive set at the moment? And are there any further interventions you foresee over the next 12 to 18 months. Clearly, it's a dynamic marketplace at the moment.

And then just coming back to your point on resource allocation and marketing spend. I think in the first half, marketing spend in the Americas region for Pernod was down 23%, something like 250 basis points as a percent of sales. So do you feel you've got the resources there to be able to keep closing that gap versus the market? Or does there need to be incremental investment on the marketing side?

Thanks, Sanjeet. In relation to pricing, clearly, and I say this with all transparency, we sit every Friday morning at the executive team level and sit with the RGM team and go across the detail and the understanding. There's a work plan that is looked at. We looked at the external environment. We looked at any changes within the competitive context moves being made with that cadence of once a week. So that's a mandatory no choice, one must -- all of the team must be there, including our commercial leadership, our finance leadership and our marketing leadership. So that to say that we are studiously studying this and acting in real time, I think, is reflected in that cadence and the approach that we're taking.

The tools, as I say, have really given us greater understanding, greater opportunity to make database decisions as we see those changes. Now in the context of the market, clearly, you've got a lag in some of those decisions that you take and their ability to show up on shelf, and that's not uniform state by state. Different states can move in different ways at different times. So we're looking to OND. We're looking to the promotional calendar and the promotional investments that we'll make and the bets and the choices that we will place against that available resource. So in the marketplace, what we're seeing at the moment is a migration towards premium in certain categories more so than others.

So for example, tequila, for example, you're seeing super premium maybe somewhat more under pressure and then dynamism in that premium space around that $25 price point and brands that can hit that price point and work in tequila in that category at that price point seem to be hitting the sweet spot of where the consumer is at the moment. But it's not a uniform view across categories. So there's different dynamics at play across vodka and whiskey and some of the other major categories that we're operating within. So pricing is something that we will continue to stay hugely focused upon and really challenge ourselves to be as sharp in the choices that we make and the decisions that we take and respond in real time to what we see externally.

From an A&P resources perspective, we're holding to a view that 18% as a ratio, A&P to net sales in the U.S. is an appropriate level. And within that, while it has reduced in quantum, I point to the earlier conversation and discussion I gave in terms of the use of those resources is getting better all the time and the concentration of those on fewer brands. So north of 70% of those available resources are going against the Power 6 and really being very diligent about how they are being spent in support of the strategies that we are putting in place.

So the resource, as I have it and as we work towards the 18% is being worked harder. And indeed, opportunities as they present themselves are always something that we can have a discussion with our colleagues in Paris around. So we have the out-of-cycle opportunity last year, for example, on the MLS opportunity for Jameson to become the official whiskey of Major League Soccer here in the U.S., and that was a conversation that we were able to take to Paris and get support therein. So it's fluid and dynamic at market level. It's fluid and dynamic at group level. And as I say, we're working to make sure that we've got the available resources to address the opportunities as we see them.

Next question is from Trevor Stirling, Bernstein.

Two questions from my side, please. The first one is there's a lot on your plate Conor, just looking at the presentation and the number of things, the number of levers you're pulling at the moment is quite remarkable. But if you had to pick out 3 or 4 of the critical ones in terms of closing that gap to the market, what would you highlight?

As for the second question, I appreciate you can't comment at all on the Brown Ricard discussions. But during that period when it was public that the discussions were going on, how did you manage the morale of your organization and indeed your distributor partners because it must have been quite unsettling for them?

Thanks for the questions, Trevor. And let me take the first one, if I can, in terms of the 3 levers. I think as I referred to in the presentation, when we -- when I set off on the journey here in the U.S., I called out 3 areas of focus in terms of the sharper portfolio focus, excellence in execution and recognizing that I needed to bring the team, the people in the organization and indeed our relationships with the wholesalers on that journey with me. And they still hold true to this day. They are still the focus areas that we challenge ourselves against, knowing that they're not once and done. It's an ongoing muscle that we must flex and we must continue to pump action, if that's an analogy I can use on each of those 3 levers.

So build that muscle, ensure that, that sharpness on portfolio, that excellence in execution and that the structure and the people are coming on the journey with us.

In closing the gap to market, we've brought it from where we were 6 points off the market rate some number of years ago down to a 2-point gap to market. And I think that's reflective of all the good work that's been done. The challenge we now face into is how do we get from 2 to meeting the market. And that's the focus and the energy that the team are bringing to the FY '27 plans. In that clarity of what we're asking of our distributor partners to do. And I think this is a big step forward in where we've come from. We had 150 of the senior leadership across the wholesale tier with us last week in New York. And we were able to call out very explicitly the 3 bold actions on each of the brands and challenging ourselves to make it as simple and executable as possible.

Our asks potentially in the past have been somewhat complicated, and we weren't really as sharp as I would have hoped us to be so that the teams and the partners that we're working with across the wholesale tier know what we want to do, know where we find the opportunities and know what we need to go after. Specifically, what has been commendable and what was remarked upon by the wholesalers was the innovation funnel that we've brought to bear across the brands with a particular focus on the Power 6 and the need for they to be strategic in nature to fall within the brand architecture of each of those brands. So not a short-term LTO spike to the brand architecture that they fall within what we would wish to sustainably invest behind over the long-term.

And we've had some really good positive launches on some of those innovations. I mean, Glenlivet Jamaica cask, which was for the holiday season last year will be repeated this year with again with a different proposition, but again, hitting that elevated price point to 12. And really, and I mentioned this in the video, Malibu Pink has come out of the gate really strongly and really started to show where we had an issue. And it was clear that Malibu was a drag on the portfolio performance, really understanding what was driving that, what we needed to pivot towards. And we've hit an occasion, we hit a flavor and we hit an execution of that particular innovation, which gives us strong positivity towards the summer period.

So we're faster in our response to what's going on in the marketplace, and we're pulling the appropriate levers from a brand perspective that I would genuinely hope set us up for success as we set out to try and close the gap to market.

From a Brown-Forman and morale perspective, the conversations that were being had and the respectful decision that was taken not to go forward together with our colleagues in Paris was something that we were fully aware of. And what I sought to do during that period was just be as open and transparent with the team here. Clearly, there was open questions within our own organization and indeed within the wholesaler tier. There was many things that were going on that we couldn't speak to, but we did try to give the team reassurance that in the eventuality that there was news and information to impart that they would hear it directly from us.

So that was all in service of trying to ensure that they stayed focused on what we need to do and the job at hand and not to get too far ahead of ourselves and not to think about what might happen further down the line, but to stay focused on the day job and the work that needed to be done. And yes, it was obviously a cause of much conversations with our distributor partners. But again, trying to make sure that people didn't run ahead of the curve while the discussions took place and didn't get ahead and start thinking about what the possibilities or the opportunities or the challenges that might face into us if it was to go ahead. So it was really trying to make sure that everybody was diligently focused on the day job while this played out as it did.

Next question is from Olivier Nicolai, Goldman Sachs.

Two questions, please. You highlighted that Pernod will now work with 10 wholesalers in the U.S. Can you elaborate a little bit on the operational and financial disruption that you had following the switch from RNDC? And when do you expect the full benefit of this new route-to-market to flow through to division?

And secondly, I was just wondering if you have commented or if you're able to comment at all on the tariff reversal and if you could expect any -- what you could expect in terms of refund?

Olivier. So on the wholesalers, we can take a step back if we would to the process that we went through some in the power process that we went through some 12 months ago. The fittest athlete philosophy, who is best by state, but also looking at the portfolio, in terms of how can we bring simplification and prioritization to what we wish to get done. And that very much fundamentally shifted our focus towards saying the mainline and the predominance within the mainline of the Power of 6 needed to be given primacy in the focus. So mainline and choices of who are our mainline distributor by market were the first entry point.

Secondly, we looked at where there opportunities in RTD, were there capabilities in RTD that would be better serviced by somebody who had that muscle. And Reyes came to the fore in that regard as a beer distributor at that time that was solely focused on building that capability with all that goes with that in terms of frequency of delivery, C-store coverage, merchandising capability at scale. So we've moved quite a number of the states. I think overall, it was 7 markets moved to the Reyes network, which is about 54% of the spirits-based RTD market covered. So that was a very deliberate choice to be and in working with somebody who had that RTD discipline built from what they understood and what they were so expert in doing from a beer perspective. So big markets moved to an RTD network, and that's going through that transition phase as we learn how to work together and as we build out that muscle.

And then the third leg of that thought process was to say that we had gems within our portfolio, by definition, great brands that had opportunities, but were just too far down the priority list and weren't really getting their right to step out and be incubated to scale in the manner in which we hoped. So therefore, we picked a set of different distributors, largely different by state to put the gem portfolio into play. So for example, here in New York, we moved it to Empire. Brands within that portfolio, as I say, real gems such as Plymouth, such as the spot range in Irish Whiskey, such as Powers, such as Goslings Rum. And that allows us to have those conversations and get to know a new set of distributors.

So very -- 3 very intentional choices across the 3 portfolio priorities that we've got and ultimately, new relationships opened up with distributors that we hadn't traditionally worked with. In that transition and the transition that happened last year and indeed, the transition that's happening as we speak, the financial disruption is relatively minor. As I say, I think I've been super impressed with just the ability for us to plug into those systems, knowing that we had a pre-existing relationship with Southern, for example, when we moved Texas to Southern, meant that a lot of the disciplines that were already in play across the other states just simply incorporated Texas within how we operate. So the cadence of engagements, the engagement of the teams towards the priority and the clarity of the portfolio strategy has been relatively seamless, I'd have to say.

And Texas has been a challenging market for us. It was probably about 20% of our Nielsen drag was coming from Texas alone. So we're very optimistic to the new relationship that started with the team. We have a kickoff meeting with the new team in place that has been recruited at speed. And we will set forth, as I say, with that new FY '27 plan working together with them. So really encouraged by the speed of the transition and the relative seamless nature thereof. What it does provide, if you think forward, is now the 5 footprint states of the U.S. that are about 40% of the total opportunity are now with Southern. So how we work together while it has improved over the last 12 months, can be even turbocharged now that we've got those 5 big states with one wholesaler and that we can work in the same disciplined manner as Paul, my commercial leader, has brought to bear on that relationship. So a monthly cadence of meetings identifying core opportunities and indeed challenges that the team must face into.

So I think if anything, we're getting even closer and more collaborative and more aligned in terms of how we're trying to get to market. And this is now facilitated even to a greater degree than maybe what was happening before by the change of Texas and the 5 footprint states now all being under Southern.

From a tariff perspective, clearly, the process is in play as we speak in terms of recouping some of that impact and that tariff impact that has hit the business over the last 12 months. And we're starting to see the first payments or repayments of those tariff monies starting to flow through. So the process is -- seems to be working well. And obviously, we're across trying to recoup the monies that we previously had paid on the tariff basis.

Next question is from Chris Pitcher, Rothschild & Co Redburn.

Yes, A couple of questions, please. One, following up on the distribution changes and then one on brands. In terms of the scale of the shift, could you just give us numbers sort of what percentage of your revenue is actually in transition currently? And in this process, have you been able to get better terms, which should help your reported sales performance? And then within that, now that you're more coordinated with Southern, how would you describe the technological backdrop between you and the wholesalers? Is it still quite a manual process? Is it highly automated? Are there more efficiencies to be taken there? And then on your other brands, just you didn't say anything about Martell, Chivas or Seagram's, which are reasonable size in your portfolio. I was wondering if you can give us a quick update on those.

Thanks, Chris. So in terms of distribution, it was 11 states that transitioned in the most recent changes that we made, the biggest of which obviously was Texas. And we went with Texas, Louisiana and Oklahoma with Southern Maryland to -- from RNDC into what will presumably be the new Reyes structure. And then the Dakotas and Indiana, we moved into Johnson Brothers. So it was 11 states in total, the biggest of which clearly was Texas. Beyond that, I wouldn't want to comment further in terms of what those represent for our business just from a commercial sensitivity perspective.

From a tech backbone, I think genuinely, there is -- it's not a manual process. It's a highly automated process. We were plugged into the Southern system, for example, from all the other states. So the addition of Texas into the disciplined processes and the investment that Southern has made in a technological backbone that is in that service of how they work with their partners is particularly impressive and their digital capabilities are somewhat in tune and in line with the work that we've been doing together on initiatives such as D-Star, which is our sales tool where we direct the sales team to the next best action based on data by outlet, looking at the competitive context.

So as I say, we were very well plugged in and using a lot of the synergies that were already in play across other states and the opportunity now, obviously, is to apply that to Texas in the same manner. So good tech backbone and good solid integration between the teams and using the tools that are available to them.

When we talk to Martell, Chivas, Seagram's in the portfolio strategy, as we've outlined, there's 2 distinctions in that list of those 3 brands. Martell and Chivas are in what we call Targeted Elevate. What that seeks to do is not try to take on the national opportunity, but seeks to go after where we see the greatest opportunity for cognac and for blended Scotch whiskey and pick out those states where we believe we've got the opportunity to be targeted and focused in bringing the brand strategy to bear. So that's very specific for Martell. It's very specific for Chivas. Seagram's is somewhat differentiated and that's in our execute intent. So very much a commercial focus. We don't invest any meaningful amount of A&P into Seagram's Gin. So we're just executing that commercially. So it doesn't play a strategic role going forward. So Targeted Elevate, focus state prioritization and investment appropriately and then an execute strategy against Seagram's.

Next question is from Andrea Pistacchi, Bank of America.

Yes. I had one question, please, or a couple on Jameson, which has been a key driver of your improved performance relative to the market. I mean you made and referred to price adjustment you made a couple of years ago. You put more resources behind the on-trade, the MLS sponsorship. What are the next steps to further improve Jameson from here besides really getting the distributors behind it? And then sort of connected or on Jameson, more broadly, you were talking earlier about the pricing environment. I mean we see what's going on in tequila. But how do you see the pricing environment more broadly in whiskey, the space Jameson is competing in?

Thank you, Andrea. Yes. No, as you say, the pricing adjustments that we took some 2 years ago flowed through now to a clarity in terms of the shelf price and the competitive context in which we continue, as I mentioned previously, to monitor on an ongoing basis. So the prices have been reset. Now we're down at the level of looking at promotional frequency, depth, frequency by state in those key selling periods and really sharpening and honing our approach therein.

I think, again, to take a step back, what you need to be mindful of, too, is the relative life stage of the Jameson brand across states. So we take markets such as New York and California, which were at the forefront of the Jameson growth back in the day. that has and asks us to do things differently given the relative scale of Jameson in California, one of the top -- top whiskey and certainly one of the top 2 spirit brands in the California market. So that has different challenges attended with it versus a market such as Texas, where we are under-indexed versus our competitive set and our fair share, and that's more in that growth phase. And again, we hone the strategy and play a different playbook in Texas than we do versus California and New York.

So in terms of what we're doing going forward, and you talked to really showing up in culture in that bond and connect moment that goes with sports culture around the MLS, really being sure and clear that we have the right portfolio strategy, meeting those right price points. So the trade-up opportunity at a 20% premium that Triple Triple is bringing to bear and indeed, that occasional gifting opportunity and special moment that Black Barrel plays into at that $34 to $39 price point. So having the portfolio architecture that allows us to flex towards those different price points is hugely important.

And as we go forward, if we look into next year, there's 2 things I would call out. One is a very clear recruitment strategy where we under-index in certain -- 2 specific target markets against Hispanics and African-Americans. They are 2 where Jameson hasn't really recruited is at the levels that we would aspire to. So a deliberate focus on getting a relevant playbook in place so that we can recruit against those 2 opportunities.

And then in terms of both innovation and small sizes, we do still see upside opportunities. So we will bring in Jameson Distillers batch which is a $50 price point proposition, which will launch in September in advance of the key holiday period. And that will bookend the Jameson portfolio in the $25 to $50 range with the 4 relevant propositions therein. And small sizes is something that we under-index in and it's a highly dynamic part of the market. So 375s and below across Triple Triple and indeed across Jameson Original will be focuses for the OND period.

And indeed, smaller sizes being in canned format and the 100 ml size is something that we will also put into play as we seek again with that recruitment intent to get people to sample to taste the great flavor and the approachability that Jameson represents. So a key drive on under-indexed opportunities from a targeted consumer perspective and making sure that the portfolio, both in breadth, price points and in relative sizes has been fully exploited to the extent going forward. We still believe genuinely that there's huge headroom for Jameson in this marketplace, and there's not more that we can do to fully exploit what we have, which is a key brand in an occasion, bond and connect, fan culture and all that goes with that, that really plays to the strength of the brand and the accessibility of the flavor. And from a pricing perspective, just come back on that point, as I say, I think we're super clear in terms of the strategy that we're putting in play in support of that.

And if I can just follow up on -- more broadly on the sort of smaller pack sizes. From a profitability point of view, how do sort of smaller packs -- smaller bottles, small can compare to the standard side? I mean, obviously, there's -- you're getting a higher price per unit of liquid, but we're more complex in terms of supply chain. And is your supply chain set up to be able to at speed, adapt to and offer different pack sizes?

It's a profitable market. And on a percentage basis or whatever, it's not margin dilutive in those smaller sizes. So we adapt with agility to make sure that we're bringing the right price point to the pack size as appropriate. I would draw a distinction between what would be traditionally normal pack sizes that would be within the range. So 375 ml, 200 ml, 100 ml is new, but 50 ml is obviously traditionally and has been part of the price pack architecture that we've put. We have stepped up and are clearly making sure that the supply chain is making those sizes available. And then the call out as we had with the wholesalers the other -- last week when they were in New York is to put double down on the distribution opportunities that they now represent.

So again, I'm confident that we've got the supply chain flexibility and agility to meet that opportunity. With the 100 ml can being new, that's something that we're going to have to go forward with now with a clear focus to make sure that as the opportunities and as we see the responsiveness of the market to the launch of those new 100 mls, how that plays out and making sure that the supply chain stays in lockstep with those progress or the progress that we make in that regard. So again, I think the team are clear on the opportunity. They are clear that this is a focus for us as we head into '27 and that we need to work very closely with our supply chain colleagues to make sure that we don't miss any opportunities out there as we get the 100 ml through the system and as we double down on closing the under-indexation opportunities that we see where the traditional small sizes can play.

Last question is from Celine Pannuti, JPMorgan.

My first question is on the U.S. market. You said it was down 5% year-to-date. Have you on the ground seen or discussed with your wholesalers any impact of higher gas prices on consumer propensity to go out, spend on alcohol, either on the on-trade or potentially on the off-trade? And when you were talking about pricing affordability, do you see any rise in promotion in order to view the consumer in the current context?

And the second question on RTDs. Can you remind us how big is RTDs as total sales for your business? You said it was still growing. What do you expect the RTD category growth to be? And can you talk about the profitability? So first of all, can you talk about your ambition in terms of how big it should be in your business, the profitability profile? And as you see a competitive set of brands that are mainly non-spirit brands, how do you think you can step up and seeing that branded -- spirit branded RTDs are more relevant to consumer?

Thank you, Celine. Great question on the consumer. I think, again, as I mentioned in the video, there's a lot of challenging contextual data points that would say the consumer in the U.S. still feels apprehensive to their financial future. We see their positivity at an all-time low in terms of how measured by Michigan. The University of Michigan Tracker, I think, is at a historical low in terms of consumer sentiment. And again, in disposable income and all other metrics that you look at, the gas price, the disposable income is under pressure and that wallet squeeze is something that we clearly need to be mindful of.

So as we go forward, clearly, as I highlighted in the video, I think we're clear on where those consumer insights lead us to put clear actions in place. And the price pack architecture is one clear response to that. In terms of how we show up from a promotion perspective, again, with the diligence that we've now got and the data-led insights that we're working to, those choiceful decisions are being taken. And we're looking clearly at how we sit relative to the competitive set to make sure that we've got that focus to all the plans that we are putting in place. This is a temporary pressure. I think one of the salient comments I keep coming back to is never underestimate the strength of the U.S. consumer.

And when times are good, they like nothing more than to spend, to celebrate, to socialize. But clearly, contextually in the moment that we're in, that temporary pressure remains there, but we remain confident in the future and all the fundamentals that would give us that confidence going forward.

From an RTD perspective, it's currently 2% of our net sales. the profitability profile has a difference to bottled spirits. So on a gross margin basis, wherever, it's probably about 30% versus the average across the category across the broader portfolio at the level of about 70%. So it has different dynamics at play within. And I think I described them earlier on in terms of what it asks of you as a supplier to put your focus towards is a different playbook with different challenges. Speed of innovation is clearly one, consumer relevance in the proposition. Clarity, are you playing in that lighting refreshing space? Are you playing in that bar quality in a can space? Or are you playing in the playful pour space? So as I say, as we look to build out the portfolio that we wish to put forward to the market, it's been very choiceful and disciplined in how we do that.

And again, making sure that you're clear on who your competitor is because, again, there is differences depending on the alcohol base in question, is it malt? Is it wine or is it spirit gives you access to different channels and different -- different coverage challenges in terms of C-store availability is an opportunity in certain states if it's in a wine format or in a malt format. So we're very clear that we wanted to play in the spirits space for the core portfolio that we're working to at the moment. And that, as I said, is in service of those Power brands. So a focus on Absolut, a focus on Malibu, opportunistically going after where Jameson and indeed where Skrewball can play in that relevant format as we go forward. So a lot of work done to get us to here and a lot more that we would wish to do going forward.

I think your final question around, again, that sort of view on frequency and intensity and how we're showing up in the on-premise. I'd point you to the most recent CGA data that we're looking at in February, which shows that from an on-premise perspective, we have inflected our performance and are now growing ahead of the category in the on-premise. So all the good work that's been done and the focus to the on-premise is clearly there. Frequency and intensity is a debate that obviously has gone on. We look at it over a longer-term and then obviously use different data sources. So we would see frequency somewhat in decline over the long-term, but intensity going up.

And intuitively, that feels right. People going out less in terms of the number of occasions that they're consuming alcohol. But when they choicefully do so, maybe really spoiling themselves in those occasions to have that extra cocktail or have those extra drinks in those occasions. If you come lower and narrower in a sort of last year basis, you get a different perspective. And again, I think that we need to be choiceful as to how you're looking at this through the longer-term lens or whether you're just going in on a short-term basis and obviously, the data source that is used to underpin that.

So we really see that as, I suppose, supportive of the belief that spirits clearly continue to be relevant to the consumer choices that are being made in the U.S. But there are other questions that you need to challenge yourself and need to challenge our teams against is how we're showing up, how relevant are the propositions, how clear are the strategies that we're putting in place to access that highly dynamic situation as we're working towards.

So on that final question, thank you very much, Conor, for taking the time today from closing the gap to market to answer those questions. And thank you all for joining us today for that Q&A session with Conor McQuaid, CEO of Pernod Ricard North America.

Thanks, everybody. Have a good day.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Hello, everyone, and thank you for joining me. Over the past year, Pernod Ricard USA has been on a deliberate journey to strengthen our business in what has been a challenging and fast-moving market. Our priority remains unchanged, closing the gap to market. We have been clear-eyed about the headwinds facing our category from affordability pressures to shifting consumer behavior, and we recognize that this market continues to evolve at pace.

Our strategy remains consistent, but we are getting sharper about how we turn insight into action using data, AI and technology to improve the speed of decision-making. Now let me take you through how we see the U.S. market, what we've changed and importantly, how we are building momentum for the future.

Compared to last year, the U.S. market has softened with bottled spirits, excluding RTDs year-to-date at around minus 5% in value. And we are seeing that affordability pressure has become the most persistent challenge. Our view remains that the current pressures on the U.S. market are primarily cyclical, but not exclusively so. Economic moderation, inflation and consumer apprehension are the dominant drivers of softness today.

At the same time, we recognize that consumer behavior is evolving and that health and wellness, moderation, GLP-1 and generational shifts are also having an impact on spirits consumption.

Consumers are not disengaging with spirits, but they are drinking differently. Overall spirit consumption and household penetration remain broadly stable and spirits continue to hold share against beer, supported in part by the growth of RTDs.

We are adapting to this context and addressing 6 key consumer insights. We are bringing bold brand activation and recruitment to maintain that spirits relevance, sharper RGM affordability and smaller formats to address economic pressures, RTDs and convenience formats to meet the search for ease and convenience and experience-led activation and cultural partnerships to satisfy a growing desire for connection.

Now innovation continues to play a critical role in creating genuine new news and retail theater, while wellness and moderation trends reinforce the importance of no and low alcohol options and appropriate formats. Against this backdrop, we believe Pernod Ricard is well equipped with a premium diversified portfolio and the execution capabilities to meet consumers where and how they want to drink today.

Now let's look at the Pernod Ricard picture across the U.S. As I said at the top, our priorities have not shifted, but we are adapting with greater speed and clarity to an evolving market. We continue to focus on 3 critical areas: sharper portfolio prioritization, stronger execution and a more focused organization.

Now adapting these around a changing market at pace and with decisiveness is pivotal to our goal of closing the gap to market. Let's start with the portfolio. We've been clear about the role each brand plays and where we lean in.

This means concentrating resources behind our power and explode brands. Across our priority brands, we're responding to the clear set of consumer trends previously mentioned with focused execution. The levers we're operating with include bold activation to support relevance, RGM effectiveness to support economic pressure, RTDs to support convenience, cultural partnerships and on-premise focus to support the desire for connection, scaled innovation to support new consumer needs and the search for newness and small formats, which we believe have a role across all these insights.

Now turning these insights into action at speed is central to how we're operating today. And Malibu Pink is a clear example of that. Last year, Malibu was under pressure. We analyzed the reason for softness and identified clear areas for new innovation to target. Malibu Pink transformed the shelf, the activation and the conversation around the brand, bringing together cultural partnerships, fun flavor and small formats to deliver affordable innovation and renewed relevance.

It's a good illustration of how we respond decisively to the trends shaping the category. Beyond the products, we've also stepped up our approach to experiential activations to hit the connection insight. Leading with Jameson, in particular, we're building on our partnership with the MLS and our new “It’s What You Bring” campaign ahead of a big summer of sports in the U.S. Alongside this renewed portfolio focus, we've strengthened execution capability.

Over the past year, we've reset our route to market, strengthened our commercial leadership team and upgraded key capabilities across RGM, on-premise and brand advocacy. And the distributor landscape has evolved through a combination of expansion, consolidation and RNDC market changes, and we've adapted with speed and purpose.

We've made targeted capability-driven distributor adjustments with one objective, unlocking long-term sustainable growth across the U.S. portfolio. Structurally, we're now set up to move efficiently with a clear focus across Mainline brands, RTDs and the GEM incubation.

We now work with 10 wholesalers to place the right brands with the right partners in the right states. Our execution in national and regional chains like Total Wine & More or Kroger remains a strength, while on-premise execution is improving under new leadership, allowing us to capture value more effectively across channels.

Finally, we further simplified the organization, clarified accountability and empowered teams to move faster and execute better. We're doing this by embedding data, AI and technology directly into how work gets done from everyday productivity tools like Copilot chat to targeted role-specific AI supporting sales, marketing, operations and HR.

Adapting these around a changing market at pace and with decisiveness is pivotal to our goal of closing the market gap. With that framework in mind, let me now focus on the portfolio, in particular, our 6 power brands, which represent about 70% of the net sales and sit at the core of our U.S. market growth ambition.

Now for each of these, we are deliberate about where we focus based on consumer opportunity, the brand proposition and how we can win. I'll start with Jameson, which remains a cornerstone of our portfolio with an opportunity for growth through new audiences and new portfolio lineup and by taking share from the North American whiskey category. The brand demonstrated its resilience despite a soft market and with sellout slightly ahead of the competitive set in Q3 and maintaining strong on-premise credentials.

A key driver of this momentum is how Jameson shows up where people want to connect. We are doubling down on experience-led and cultural moments from the return of the industry favorite Bartender’s Ball, to our MLS partnership and the new “It’s What You Bring” soccer fandom campaign. helping us reach important voices in the on-premise as well as new diverse audiences to reinforce Jameson's role at the heart of social occasions.

Now at the same time, we have strengthened the full Jameson portfolio from a clearer, deeper focus on Black Barrel to our latest innovation, Triple Triple, which provides affordable trade-up from the brand they love.

Turning to Absolut. Absolut remains one of the most recognized spirit brands in the U.S. And over the past year, our focus has been on rebuilding momentum through innovation, brand activation and a more focused RTD portfolio.

Absolut Tabasco is a major global innovation for the brand, tapping into flavor through the spice trend and culinary culture. While it's still too early to assess, the brand saw an improvement in performance following the Q3 Tabasco launch compared to Q2.

Alongside experience-focused core brand activations and a new look RTD portfolio, highlighted by the launch of Absolut Refreshers, our priority is to execute with consistency, strengthen Absolut's position across off and on-premise and drive steady improvement versus the category. Kahlúa remains the global leader in coffee liqueur, benefiting from the Espresso Martini, an occasion rooted in connection and cultural relevance and continues to outperform its competitive set through focused partnerships and experiential activation.

Through partnerships like Kahlúa Dunkin', fresh creative, and selective experiential activations such as Wicked, we are reinforcing the brand's relevance and expanding occasions. This disciplined approach supports our ambition for Kahlúa to continue leading and outperforming the Cordial category.

Malibu is the #1 flavored rum in the U.S. with strong relevance in lighter social occasions and the highest household penetration of any brand in our portfolio. The brand is gaining momentum as we head into the key summer period with recent performance improving meaningfully and outperforming its competitive set in the latest quarter. I've already gone through Malibu Pink in detail, but this momentum reflects a more focused approach, combining innovation like Malibu Pink, partnerships with Dole and summer-led experiential activation to recruit new consumers through convenient formats while maintaining our leadership in Rum RTDs.

The Glenlivet remains the category leader for single malt, performing in line with the category with more than twice the volume of its nearest competitor. We are strengthening the master brand campaign while using targeted annual innovation like Jamaica Cask to reignite interest and build both profitability and brand halo, particularly during the important holiday gifting season and the on-premise.

Finally, Screwball, the original peanut butter whiskey and category creator. We're seeing improved momentum and have eased its decline following issues with our distributor handover and small size availability. Our brand building is focused on increasing on-premise visibility and scaling trial through small formats, innovation and cultural relevance, including the reintroduction of the much sought-after Screwball can and the launch of new innovation, the American Classic, peanut butter and jelly.

Beyond our power brands, Código continues to build for the long-term growth within agave with disciplined expansion, while Jefferson's is entering its next chapter with renewed brand focus, a new visual identity, packaging and master brand campaign, combined with long-term supply confidence.

RTDs remain the standout growth category in the U.S. And while we remain underweight, our approach is disciplined, using RTDs as a recruitment engine into our bottled spirits and a core part of our convenience strategy alongside bolstering our small format offerings. Across the portfolio, the common thread is focus, clarity and consumer relevance.

Increasingly, that relevance is built not just through products and campaigns, but through experiences, moments where our brands connect with people in real life through culture, sport and celebration. Let's take a look at how we stepped up our activations. --

Turning briefly to performance. While the market showed a modest improvement in Q3, bringing the year-to-date to minus 5%, the consumer backdrop remains challenging with discretionary spending still under pressure from inflation and interest rates.

Against this environment, our performance also improved, moving from minus 7% in Q2 to minus 6% in Q3. Importantly, our gap to market remained stable at around 2 points, marking a clear improvement versus last year. Our key brands, Jameson, Absolut, Kahlúa, and The Glenlivet are now performing at or ahead of our competitive set, reflecting stronger and more consistent execution.

We also saw tangible improvement in Malibu and Screwball during the quarter, supported by innovation and expanded formats, which are helping to rebuild momentum. These are encouraging trends, but we know there is a lot more to do. Our focus is on accelerating further in Q4 and the start of the next fiscal.

Looking ahead, this year is about execution, consistency and acceleration. Our focus remains on closing the gap to market, and we'll do this through relentless execution behind Power Brands, continued innovation momentum, maximizing value across channels and embedding the organizational and route-to-market changes we've made. We have moved the right resources into the right places, and we are confident in the path forward and the people delivering it. So in summary, we have a lot done and a lot more to do. We're operating with greater focus, moving with more speed and executing with more discipline. And while the environment remains demanding, I am confident that Pernod Ricard USA is stronger, more agile and positioned for sustainable growth.

Thank you.

Good morning, and thank you for joining our FY '26 Q3 Net Sales Call. I'm Joelle Ferran, VP of Investor Relations, and I'm pleased to welcome Helene de Tissot, our Global EVP, Finance and Tech. Helene will begin with a brief overview of our Q3 performance, after which we'll open the call for questions. Please note, unless otherwise stated, all sales growth figures discussed today refer to organic net sales.

With that, I hand it over to you, Helene.

Thank you, Joelle, and good morning, everyone. Before I begin discussion on our Q3 sales results, I will say a word regarding our press release of 27th of March, in which we confirm discussions are taking place regarding a potential business combination with Brown-Forman. As stated, we did not intend to communicate further until either an agreement is reached or discussions are terminated. Discussions are ongoing. So at this stage, I have no further comments to make.

Returning to the topic for our call, our sales performance in Q3, today, we report, as expected, a sequential improvement in organic net sales in Q3 compared to H1 with plus 0.1%. Reported sales are down minus 14.6% with negative FX at minus 7% and perimeter impact of minus 7.7%. The FX is mainly due to U.S. dollar, Indian rupee and Turkish lira. And the perimeter effect is due to the disposals of our Wines, Imperial Blue business and [ Finnish ] brands.

Volumes in Q3 are back to growth with plus 4%, within which and important to note, we have strategic international brand volumes growing in Q3 at plus 3%. When excluding the U.S. and China markets, which contracted minus 12% and minus 7%, respectively, sales in the rest of the world are growing strongly at plus 5%.

Sales have improved in markets across all regions in Q3 with strong momentum in emerging markets and continued growth in several mature markets. Markets that have turned to growth in Q3 include Travel Retail at plus 11%; U.K., mid-single-digit growth; Spain, double-digit growth; Korea, double-digit growth; and Brazil, low single-digit growth. Markets in which organic growth momentum is maintained or is accelerating include India, plus 11%; Japan, high single-digit growth; and Turkey, double-digit growth.

We are exploiting evolving consumer trends to capture growth. This includes actions that address consumer trends and needs, including, for example, addressing affordability with revenue growth management, smaller formats and standard and premium brands, experiences with music festival activations, convenience, including through RTD and through targeted store activations; and broadening the consumption occasion with the launch of no- and low-alcohol products.

Moving now to our year-to-date performance. Year-to-date organic sales are down minus 4.4% with the U.S. minus 14% and China minus 24%. Reported sales are down minus 14.8% with FX negative minus 5.9% and perimeter minus 4.5%.

Excluding the U.S. and China, sales in the rest of the world are in growth, plus 1%; volumes year-to-date down minus 1.6% in total, of which Strategic International Brands volumes are down minus 1.4%. When excluding the U.S. and China markets, Strategic International Brands volumes are up plus 1.4%.

We are actively managing what is within our control, adapting our resources with agility, deploying our efficiency program, steering the organization to fuel our future growth and optimize our cash generation.

The global environment remains volatile and uncertain, notably with the conflict in the Middle East. In these circumstances, along with our diversified premium brand portfolio, we benefit from our balanced and both-based geographic footprint.

Our direct exposure to the Middle East is circa 2% of group sales. We expect full year sales to be impacted, though the scale will naturally be dependent on the duration of the conflict. I will return to this in our updated outlook. We are monitoring the situation closely.

Turning now to take a closer look at sales in our markets and regions, beginning with our #1 must-win market, the U.S. We have organic sales down minus 12% in Q3 and minus 14% year-to-date. Market conditions in the U.S. remained soft with the spirits market, excluding RTD, down circa minus 5% compared to circa minus 3% 1 year ago.

After a soft Q2 holiday season, Q3 global spirits market performance improved to minus 4%, slightly ahead of the year-to-date trend. The on-trade channel is performing better than the off-trade, demonstrating that channels relevance for consumers who are prioritizing experiences and social connections. Gains made over the past year in our sell-out gap to market were sustained in Q3 with a gap holding at circa 2 points.

Consumer sentiment in the U.S. remains low, and affordability remains a key issue for some consumers. We see shoppers ready to expand on discretionary items. We are adapting to these changing conditions, for example, with small pack sizes and targeted promotional investment on key brands, so our products remain relevant and affordable for consumers.

We have as well launched significant innovation in fiscal year '26, recruiting new consumers and maintaining desirability and bringing incremental value to our customers. Notable recent examples include Absolut Tabasco, targeting key evolving consumer occasions such as branch and expanding the Absolut drink strategy toward serves such as the Bloody Mary or Spicy Lemonade, which particularly lean into daytime consumption occasions.

Within the Jameson family, we launched Jameson triple triple, expanding our Jameson offer for whiskey enthusiasts and leveraging a more affordable upsell opportunity, and as well Malibu Pink for fun flavored recruitment of new consumers.

We believe that our broad portfolio is well positioned within the U.S. market, and we continue to activate our brands to meet consumer needs across price points. We are maximizing the consumer impact and value creation of price promotions. Our teams leverage our revenue growth management expertise and AI tools to plan and execute those promotions at the optimum depth and frequency.

While the U.S. market remains soft, we are convinced that the current challenges are primarily cyclical linked to affordability issues. However, we are not complacent, and we monitor with vigilance the changing consumer trends, adapting and flexing our brand strategies in response. We remain confident in the recovery of the spirits market.

Moving to India, our #2 market by net sales, with double-digit organic sales growth in Q3, plus 11%; year-to-date, plus 6%. When excluding Imperial Blue, year-to-date sales are growing by 9%. I remind you that the Imperial Blue disposal closed end of November, so sales are excluded from organic performance since December.

The Indian market continued to enjoy dynamic consumer fundamentals and sales benefit from strong underlying demand and continuing premiumization. Growth in Q3 is broad-based across the portfolio with imported spirits in strong double-digit growth, including Jameson, Absolut and Scotch brands, the Glenlivet, Chivas and Royal Salute and with strong growth from local brands, especially Blenders Pride and with the launch of the new Xclamat!on range of spirits.

Moving to China, organic sales in Q3 contracted minus 7%. Year-to-date is at minus 24% Q3 sales benefited from the later timing of Chinese New Year. However, underlying sellout was soft in line with the cautious sentiment of the trade ahead of the festive period.

The market is not yet stabilized. The macro context remains challenging with weak consumer confidence and tightened regulatory environment. Year-to-date sales of Martell and Scotch whiskeys are declining, while premium brands enjoy positive sales momentum.

Let's move now to Global Travel Retail. Global Travel Retail Q3 organic sales grew plus 11% and plus 2% year-to-date. Global travelers numbers remain strong and continue to present positive dynamics with all regions showing travel numbers ahead of pre-COVID. Within this positive environment and as expected, sales in Global Travel Retail are rebounding with the resumption of contact sales in China Duty Free.

Sales in Asia also benefited from an active festive marketing program celebrating Chinese New Year, including Travel Retail limited editions, leading to strong double-digit sell-out growth for Martell over the period. I am encouraged to see Chinese travelers demonstrating enduring strong attraction and consideration towards Martell and our ability to engage with them through impactful activations.

Remaining in Asia with Duty Free, I also want to highlight that Korea Duty Free is now back to growth this quarter. Elsewhere, Europe and the Americas continue to present positive momentum in sell-out, notably cruises in the Americas. As you can imagine, the Middle East faces travel disruptions as a result of conflict there, and full year sales in Global Travel Retail are now expected to be in slight decline.

In the rest of the world and beginning with markets in Europe, we see conditions improving in a number of important markets there. Organic sales in Europe were back to growth in Q3 with plus 1%, including in Spain, which benefits from the earlier Easter, also back to growth in the U.K. and with growth continuing in Ireland as well as in Eastern Europe. France and Germany continued to decline in Q3.

In Asia/Rest of the World region, Q3 organic sales are in growth at plus 6%. Focusing on Asia, when we exclude India and China, sales grew strongly in Q3 with double-digit growth, benefiting from the timing of Chinese New Year and some of the Southeast Asian markets. Here, Japan continued its good momentum. And Korea, which was in decline in the first semester, is now back to growth, supported by the timing of the Lunar New Year.

In Americas, Brazil is back to growth this quarter following the easing of the impact of the methanol crisis. Canada continues to enjoy its good momentum. And finally, in Africa and Middle East, which is in mid-single-digit organic growth, Q3 sees organic growth continued notably in Turkey and strong underlying momentum continues in South Africa.

Now moving to our outlook. In a context that remains volatile and uncertain, we continue to see fiscal year '26 as a transition year and in line with our expectations, organic net sales strongly improved in Q3. Given the ongoing conflict in the Middle East, we now expect organic net sales to decline by minus 3% to minus 4% for the full year. A&P investment ratio expected to remain at circa 16%.

We continue to invest to increase our brand's desirability with sharp allocation, efficiency, innovation and experiences. We continue to defend our organic operating margin to the fullest extent possible, supported by strict cost control and the implementation of our fiscal year '26 to fiscal year '29, EUR 1 billion Operational Efficiencies program, including the adaptation of our Fit for Future organization. I remind you that we are on track to deliver 1/3 of those efficiencies within this fiscal year.

Our focus on cash generation continues, with strategic investment for fiscal year '26 now expected to be below EUR 700 million and maintaining strong operating working capital management. We are aiming for cash conversion of circa 80% and above this fiscal year. We expect FX impact to be significantly negative.

In conclusion, we have 2 of our 4 must-win markets in strong growth in Q3, with growth in India accelerating and with a rebound in global Travel Retail. We have markets that are maintaining their already positive momentum, such as Canada, Thailand, Turkey and Japan. And we have markets that are now coming back to growth, having declined in H1, including the U.K., Korea and Brazil.

I believe this demonstrates the resilience of our diversified model from both the portfolio and geographic footprint point of view, the key strength of the Pernod Ricard business model.

On that note, this now concludes my prepared remarks.

Thank you, Helene. We will now take your questions. But please, I must ask you to respect that this call is to discuss Q3 sales results and we won't be able to address any questions regarding Brown-Forman. So no more than two questions each, please. Over to the operator.

[Operator Instructions] The first question is from Celine Pannuti at JPMorgan.

So my first question will be on the outlook. Can you try to help us understand, clearly, you said that Travel Retail will be slightly negative for the full year. It doesn't seem that you have had an impact in Q3 or maybe I'm mistaken. So can you explain what you expect to be getting much weaker in the fourth quarter?

And beyond Travel Retail, can you give us a bit of a steer by regions on whether there are other impacts that we should be aware of? And maybe on the same vein, if you could tell whether in Q3, clearly, there's been some benefit from Easter and the Lunar New Year, the Chinese New Year. How much of that helped Q3 and could be a headwind for Q4? So that was my first question.

And then my second question is on the U.S. Clearly, you have had benefited as well from a better market. What is your sense for -- as we look into Q4, where we'll have less of an inventory impact, if you could comment on the situation there. And then it seems that as well, there's been a bit more promotional environment. Could you give us a bit of a steer on what's happening on your pricing overall for that region or that country rather?

Thank you. So I will try to give you two answers to what I believe it's more like five questions. But hopefully, I would manage your expectations.

So first, let me clarify what we are facing, especially, I think your first question is mainly on the impact on the conflict in the Middle East. So that's true that there was already some impact in Q3, especially obviously, the month of March, which has been significantly disrupted, especially in the affected area. So it's not a big impact on the Q3 performance.

But to give you some color, if there was no conflict in the Middle East, Q3 would probably have been more close to, let's say, something like plus 0.5%, 0.6% growth. So the impact, obviously, is, again, mainly in the affected area in March, both domestic market and Travel Retail.

When it comes to the distance to go and the Q4 in Travel Retail, it's fair to assume that as we speak today, the conflict is in place. It has some disruption, of course, in the affected areas.

There could be as well some limited, I would say, secondary impact outside of the affected areas, especially when you think about logistics as well disruption in terms of -- limited disruption in terms of supply, probably as well some impact in terms of caution and willingness to travel. That's what we are taking into consideration to modestly, I would say, change the outlook for the year.

Your second question was, I think, in terms of technicalities in Q3. I would say when you take all those positive and negative elements, technical ones, it's probably more or less neutral, right? You mentioned some of the favorable impact. You're absolutely right. And with the earlier Easter, this is, for instance, definitely the reason why Spain is back to growth in Q3, where the market is still under pressure. And this will, in a way, reverse or normalize in Q4.

Chinese New Year, of course, as well, you're right, this is a later timing compared to last year. But please keep in mind as well that last year, there was a kind of significant impact of the tariff uncertainty, especially in the U.S. that has brought our shipments a bit higher than what would have happened without the, I would say, Liberation Day events.

So all in all, that's more or less neutral. And the improvement that we were expecting and that we have delivered in Q3 are absolutely not technical. They are real.

When you mentioned then Q4, I think in the U.S., so the -- I mean, obviously, our focus is to keep closing the gap versus the market. I mentioned in my introduction that the gap now is at circa 2 points, and we are holding that gap. There's lots of excitement in the team when it comes to Q4 activation program. Maybe let me name a few. We have more to come with the exciting partnership with a major league soccer with [ Jameson ].

There's as well a lot happening in terms of festivals with Coachella and some other musical festivals in Q4 where our brands would be very well activated, especially Absolut. But not only Absolut, we have as well a very strong innovation pipeline in the days and weeks to come. We launched Absolut Tabasco as well [ Malibu ] and Absolut Ocean Spray, new flavors in the weeks to come. So lots of excitement and busy activation for our brands and our portfolio in the U.S. in Q4.

You were, I think, asking as well a question on promotions. Obviously, this is an environment which is quite busy in terms of promotions, and we are actively leveraging our capability as well to make sure that all our promotion efforts are extremely efficient and, I would say, targeted. And this is obviously part of what keeps our team busy for the weeks to come in the U.S. and elsewhere.

The next question is from Sanjeet Aujla, UBS.

A couple from me, please. Firstly, I think you highlighted 4% volume growth in the quarter. I think that would imply price/mix is running at minus 4%. Can you just help us understand within that, the composition between headline pricing and any product and geographic mix impacts? Clearly, I guess, India is weighing a little bit on that, but really trying to get a sense of underlying pricing, please.

And then clearly, you highlighted today, Helene, the demand impact from what's going on in the Middle East. But can you just help us understand a little bit what the implications are for your cost of sales? Just remind us perhaps on your hedging policy there and maybe any early sensitivities on what that could mean for COGS, please.

Yes. Thank you. So your first question Yes, you're absolutely right. When you look at Q3, with this very positive growth momentum for volumes, which means that price/mix is under pressure.

I wouldn't consider that this is deteriorating when it comes to price. It's quite subdued, the price environment as we speak, but no deterioration to flag. The mix is obviously negative, especially when you think about the U.S. and China net sales, which, as you know, this is as well quite different from our underlying performance in both markets with the inventory adjustments that we were flagging from the beginning of this fiscal year that are impacting our selling versus the underlying demand.

So this has, I would say, an additional negative impact in terms of price mix. But price is subdued and negative mix is mainly due to market mix.

The second question in terms of the impact from the conflict in the Middle East on our margin and a bit more specifically, the exposure to the energy cost, so first, let me say that for the fiscal year '26 operating margin outlook, which we are not changing, we want to protect it as much as we can; this conflict should not have a significant impact.

And the reason for that is that, as you alluded to, we have some hedging instruments in place that are protecting us from the exposure of the spot price volatility. On top of that, as you know, the impact that could hit us in terms of [ white ] goods would be for a significant part, differ in terms of P&L impact because of the aged portfolio that we have. So all in all, no significant impact for the margin protection by fiscal year '26.

The next question is from Andrea Pistacchi, Bank of America.

My first question is on China. I was hoping you could give a bit more color there. Are there been any signs of the crackdown easing? It's been going on now for about 9 months. Where do you reckon underlying performances, stock levels? And most of all, given -- I mean, given all the above, how are you thinking about the outlook in China Q4 and maybe next year?

And then the second question is, excluding U.S. and China, and you've commented quite a bit on this already, but excluding the U.S. and China, the group had a strong quarter. You said plus 5%. I think in H1, ex U.S. and China, growth was around zero and the same in fiscal '25, growth around 0.

So you've given some color already. But besides phasing effects, besides comp effects, in what markets do you genuinely think or see that there is an improvement in the underlying performance? I mean India is consistently strong, but other markets where you're seeing things get better.

Yes. Thank you. So first question, in China, so it's true that the, to be fair, environment is not evolving significantly. I mean the consumer confidence remains quite weak. And we don't see yet any tangible evidence of an improvement. So the underlying sellout is running at quite similar rates in Q3 than they were in H1. So with no improvement in consumer demand.

So for Chinese New Year, it's been, I would say, a bit contrasted because it's been soft in China as expected and very much in line with the trade sentiment that we were sharing in our H1 communication. But it's been quite strong in duty-free. So it shows as well that Martell is a very strong brand. And when Chinese consumers are, I would say, in a more confident mode when they -- especially when they travel, they have a quite positive consideration towards Martell.

To be fair, we've been as well quite busy in activating Martell in Asia duty-free with as well strong limited editions that have been quite successful. But globally, cognac category as a whole remain under pressure during Chinese New Year, especially in the South region, which is, as you know, quite important for the cognac category.

When it comes to Q4, so Q4 is a quarter where the -- it's a low quarter, and it's not a big quarter in terms of seasonality for Martell. So we're going to -- we expect Q4 to be in a modest growth when it comes to China with the strong positive momentum on our premium brands to continue.

So your second question was -- I'm sorry, I'm a bit...

The second question was markets ex U.S. and China where you're genuinely seeing sort of improving momentum, excluding phasing comps, et cetera.

Yes. So first, as I said in the first question, I don't think you should be distracted by those comp things because all in all, for Q3, it's almost neutral because, again, U.S. was having a very high comp. So there are definitely some improvement in the underlying trends that we were expecting.

So let's start by our 2 win markets, Travel Retail and India. So Travel Retail, we are back to business, I would say, in the China Duty Free with Martell, which is obviously materializing in a quite dynamic top line growth. And the other geographies are as well in very good momentum.

India, acceleration in India, which was as well expected, both because the change in the policy impact is easing. And secondly, we have an acceleration of our portfolio, both imported one and local one, which is, as you know, exactly the reason why as well we were quite happy to sell Imperial Blue business so that we can really focus on accelerating those, I would say, two beautiful legs of our portfolio in India.

And Xclamat!on is a strong innovation, still early days, but we are quite happy with the dynamic there. And it's not the only regions where things are improving. So maybe let's stay in Asia for a while, Korea is improving. So this is good news. Q3 is back to growth. Japan is still growing quite strongly.

If I move now to maybe Africa. So Africa, I would say, except the Middle East conflict, we have a strong momentum, which is quite in line with the H1 performance.

In Americas, Brazil, back to growth, this was as well expected because the -- I mean, the recovery as well as the methanol prices and Canada is in a good momentum, as you know. And when it comes to Europe, I would say -- so I put aside Spain because of the Easter impact, but U.K. is back to growth, and we have as well a continued good momentum in many other markets in Europe, such as Ireland, Nordic and Eastern Europe.

The next question is from Laurence Whyatt, Barclays.

Two for me, please. Firstly, in the U.S., you changed your route to market at the end of the summer. I'm just wondering, how that change has performed versus your expectations? And whether there's been any disruption in the U.S. market as a result of that change? Usually, you would comment on route-to-market changes as leading to disruption, but we've not seen any comments to that effect in the U.S.

And then secondly, you paid the same interim dividend as you paid for the last couple of years. I'm just wondering, what would you need to see and change in circumstances to force you to change that policy? Of course, your net debt-EBITDA level is slightly higher than your target range. Just wondering if there's anything that could happen that would cause you to change your dividend payout levels.

So maybe I'll start by your second question. I mean, let's be very direct. We have confirmed the intention to maintain the dividend in February, and we are announcing the payment of the dividend, the installment, the first installment of dividend in July as usual. So I think it's quite consistent in terms of message, which is no change.

Your first question in terms of route to market. So you're absolutely right. We -- and by the way, the route to market in many countries, but starting with the U.S. is obviously a key element to make sure that we have a very strong partnership with our wholesalers to really focus on excellence in execution.

So a new route-to-market relationship, I would say, have been put in place over last summer, and there were as well some additional changes very recently with the sales of the [ ROTC ] business to -- in 10 states.

So our team have been working hand-in-hand with the wholesalers to really make sure that this evolution of our distributor ecosystem, I would say, is happening in a very smooth and focus on excellence in execution way on both fronts for our teams and for the wholesalers. And that's exactly what's happening right now, even with the recent evolution, so that obviously we can limit very significantly any type of disruption that could happen.

So just to confirm, you see no disruption at all from the U.S. route to market?

That's our top priority to make sure that there is no disruption. So this is a focus on the team. So we are confident that they're going to manage to have a smooth transition, if I can use this word.

The next question is from Simon Hales, Citi.

So my first question is just going back to the Middle East impact in the quarter and looking forward, I mean, Helene, you indicated that without the Middle East impact, perhaps group organic sales would be up about 50 bps better.

Can you just drill down a little bit more into what you saw in terms of the impact of the conflict in March? Am I right to assume that basically the Middle East Travel Retail business was basically closed in March, so we should think about that being down pretty well 100%? But what about the performance you saw in some of the markets around the region? I'm thinking particularly like Turkey. Just be interested in some more color there.

And just associated with that, have you seen any supply disruption issues yet around some of the fuel rationing restrictions we're starting to hear around in some of the Southeast Asian markets? So that's my first question.

And then secondly, briefly on the U.S., you talked about a better performance in the on-premise that you're seeing. Can you give a bit more color there about the on-premise versus off-premise growth rates you're seeing? And is your growth gap versus the market the same in both channels?

Yes. Thank you. So let's start with your first question. So I mean, your assumptions are basically right. March has been almost zero for these affected areas for obvious reasons. And obviously, the same thing for the duty-free business with everything that happened in terms of airspace closure and so on. So this is perfectly what you were assuming. This started, as you know, very early March. So the month of March has been impacted by that.

No significant impact -- negative impact in Turkey, you are referring to Turkey. No, this is not something that we are facing as we speak.

And your question about supply disruption, so it's true that there is some pressure on that, some, let's say, potential threat, and our teams are extremely engaged to make sure that they can get the right supply for the weeks to come. So I would say, we are very closely monitoring that as we speak.

For the U.S., question on-trade versus off-trade, so yes, the on-trade is a bit better. What I think is very positive about it is that, first, as you know, we have a kind of overexposure to the on-trade in the U.S. when you think about our portfolio.

We've been as well very much accelerating the activation in the on-trade recently for, I would say, a very good reason because our brands can really, I would say, showcase and recruit consumers in the on-trade, and there was a need to reinforce that a bit. And it shows as well in terms of consumer behaviors and willingness to socialize and to celebrate.

The fact that the on-trade is quite dynamic that this, I would say, consumer need is is there and remains quite powerful. No significant difference, I would say, in terms of gap or gap to the market in the on-trade versus the off-trade. But again, you can expect us to be really in an acceleration mode in terms of activation in the on-trade.

The next question is from Trevor Stirling, Bernstein.

Two questions from my side, please. The first one, Helene, you very kindly told us about the direct impact of the conflict on your sales in the Middle East. But particularly in the United States, are you starting to see any second order impact of the very weak consumer confidence? Is that feeding through into consumption trends in March in the U.S. or maybe it's too early to say?

And the second question, you explained a lot about the moving parts in Q4, Helene. Clearly, your guidance implies a little bit of a further acceleration in Q4. And it sounds as if that's partly because China is going to be a little bit less worse and then the momentum you've seen in many other countries is going to be sustained. Is that a fair summary?

So thank you, Trevor. So your first question, I would say I don't think this right now significant or tangible impact in terms of consumer confidence because of the conflict. Obviously, it's -- I don't think it's helping anyone in terms of optimism. But let's not be extrapolating of what we are not facing today.

And the impact of the conflict for us is really what I was describing before, which is obviously affected areas and some limited impact outside those affected areas in terms of probably limited supply disruptions and probably as well a caution in the travel -- in the willingness to travel. So -- but nothing more than that as we speak.

When it comes to Q4, I mean, to be fair and when you look at the modest change we are bringing in terms of outlook, this is more flagging to a kind of modest decline in Q4 due to the Middle East conflict. As you mentioned, and I think I was as well alluding to that Q4 in China is expected to be better than Q3, again, because it's a low season for cognac, and we expect improving sales momentum on our premium brands to drive that growth in Q4.

In the other geography, I think it's probably a continuation of the improving trends that we are delivering in Q3 and positive momentum for the markets that are already in a good place in in H1. When it comes to the U.S., again, the full year net sales is very likely to be much worse than the underlying trends because of the inventory adjustments and the high comp last year linked to the tariff uncertainty.

Thank you, Trevor, and thank you all. We will now end the call. Have a great rest of the day.

Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Good morning, everyone. We are pleased to have you for our H1 FY '26 results. Alexandre Ricard and Helene de Tissot will take you through the highlights before we open the Q&A session.

Over to you, Alexandre.

Well, thank you very much, Joelle, and good morning to all of you. I suggest we go into our first half of fiscal year '26 sales and results. Now before we deep dive into all the details of this first half, I would like us to, for a couple of minutes, just sit back and think about the underlying, I would say, mindset that underpins these results and what we're about to share with you for the short and medium term.

So steering with agility, discipline, and strategic conviction in, what we call, a transition period. So first of all, and I hope you'll get a gist of this in a few minutes, but we are clearly adapting our organization and executing strategies to go and capture growth where it lays because at the end of the day, in a contrasted environment, there are, of course, some challenges, but clearly as well some opportunities in an environment as well where consumer trends are continuously evolving, which is not new.

Second, you'll see we have made rapid progress on the delivery of our EUR 1 billion operational efficiency program, which we introduced exactly a year ago. You'll see where we stand on that program. Third, you'll see as well, we have a clear focus on cash generation to preserve our strong balance sheet with, and we'll focus and deep dive on this with Helene in a few minutes, normalizing strategic investments and improved operating working capital.

Finally, and this will be our conclusion later this morning, we remain absolutely confident in the attractive fundamentals of the industry, in our strategy, in our operating model, and we confirm our outlook for this fiscal year, the medium-term framework with some lowered strategic investments that we'll detail and the financial policy as well, which remains unchanged.

So in terms of results, net sales are down roughly 6% organically with a soft first half in, as I mentioned, a contrasted environment. By the way, excluding the U.S. and China, our sales are broadly stable with many markets in growth across all regions. The second quarter trajectory is improving. Q1 was down roughly 8%. Q2 is down roughly 5%.

This is notably due to the acceleration in India and led as well by Global Travel Retail. I would also mention that in Q2, excluding China and the U.S., the Rest of the World is in growth of 1%. The declines in the U.S. and China are amplified by inventory adjustments, and as well, our first half gets a negative impact from currency and perimeter effects.

When it comes down to our PRO, which is in decline -- organic decline of minus 7.5%. We have done a lot of work to defend our organic operating margin through operational efficiencies. We have indeed been hit by the trade tariffs on one side, by some COGS inflation, particularly on aged liquids, which have been partially mitigated through some strong operational efficiency levers.

You'll see sharp reduction in structure costs. They're down 10% in this first half driven clearly by the implementation of our fit-for-purpose -- Fit for Future operating model and ongoing strong cost discipline.

Finally, with EUR 482 million of free cash flow, we see a strong improvement, up roughly 10%, and this despite the decline in profit from recurring operations, leading to an enhanced cash conversion with, and you'll see this later, normalizing strategic investments and discipline around our operating working capital management. And we've continued and pursued our active portfolio management, notably with the disposal of Imperial Blue in India.

You have here a synthesis of the key figures for our first half, which we'll deep dive on with Helene in a few minutes. So I mentioned, by the way, broadly stable sales over the first half if we exclude U.S. and China, with growth in many markets across all regions, whether it's mature markets such as Ireland, up 3% or the Nordics up 7% or then again, Canada up 3%, or by the way, Japan, up 6%, but as well are Poland, up 1% with some acceleration over the second quarter. And then in other emerging markets with the continued excellent performance of Turkey, up 27% and so on and so forth.

This, I think, is important to stress because, again, we believe that our global balanced and diversified footprint is a key competitive advantage for Pernod Ricard. So I mentioned in the introduction, what I wanted you to take away from today's session as well is that we are constantly, are continuously adapting our strategies to really go capture growth where it is and to really address our consumer needs that are constantly as well evolving.

So we'll touch upon these 4 growth levers, which are underpinned, by the way, by data and artificial intelligence. The first one is meeting or addressing evolving consumer trends, particularly with convenience and affordability. At the same time and leveraging the depth of our portfolio, really capturing that opportunity which is on the very high end, the prestige opportunity, in a way addressing as well the K-shaped economy paradigm.

Third, accelerating on the consumer-centric innovation at scale. We've always innovated over the last decade or so, but I think that the inflection point on that front is scaled innovation with global impact. And finally, elevating cultural relevance with increasing consumer experiences and brand associations, again leveraging our scale, which is the nuance and the inflection point there.

So if I start with meeting evolving consumer trends with convenience and affordability, you have here our small formats. They now represent 17% of our value in the U.S. if I take this market alone. They're much more affordable and they are driving -- they are growing very nicely.

Likewise, in our premiumization strategy, we are addressing the affordability question with price positionings that are on what we call various sweet spots from one market to another. Here, you have the example of Jameson Triple Triple, which is up roughly 20% over the first half.

Of course, you all know, RTDs, convenience are a trend that we had identified just pre-COVID as an emerging trend, which post-COVID has significantly accelerated. So we're investing behind RTDs, behind our brands, behind -- as well from an innovation standpoint. We are collaborating or partnering as well with some very well-known household brand names such as Ocean Spray, and soon to come Dole.

And finally, in terms of affordability as well, we have stepped up when it comes down to revenue growth management, leveraging our AI tool, Vista Rev-Up, which is now really embedded in our ways of working. So meeting evolving consumer trends, which is at the core of our focus right now.

I mentioned it, leveraging the depth of our portfolio, including Prestige. We gave one example with Perrier-Jouet, which is up 25% over this first half. We have Rare & Collectibles. We really invest behind experiences money can't buy at our Brand Homes, but sometimes as well, we bring our Brand Homes to our consumers across the world with amazing experiences as well. We see our Private Client Society keep on growing quite significantly across the world, particularly in Asia, but not only.

Third, as I mentioned, accelerating consumer-centric innovation at scale. We have selected here a number of launches that we did in the first half. Xclamat!on, which was launched broadly exactly the same month we closed the Imperial Blue disposal.

This is a range of different propositions, which is at a more premium price point versus what used to be Imperial Blue, and basically to meet the premiumization of the entire spirits industry in India, which is, in fact, accelerating. Kahlua Dunkin, we already mentioned it last time, but again, meeting that specific taste for indulgence, which is spreading around.

We have also listed here a number of key innovations for the whole fiscal year. You have what we have already launched in the first half, and you also have our innovation pipeline for the second half. This is not exhaustive, but these are the key, main, I would say, impactful innovations with Malibu Pink, which was launched, in fact, a couple of weeks ago in the U.S.

Absolut Tabasco, I'll get back to that, and as well, so the ready-to-drink Malibu Dole, which is in the process of being launching and soon to come as well. The non-alc innovation here with Lillet Zero, which is going to be launched in the coming couple months.

So speaking of impactful innovation at scale, it was difficult to go unnoticed. Hopefully, you've all heard about it. You have here Absolut Tabasco. It was launched on January 28. It is -- let's be clear, it is our first ever global launch.

So it was launched simultaneously across 50 markets with huge media impact, although it's still early times, because it was just launched a couple of weeks ago, to give you exact numbers, we're quite positive. In fact, we're very positive on the impact. And on that front, I think there's a short video on Absolut Tabasco.

[Presentation]

Great. If you haven't tasted it, please don't hesitate. By the way, this innovation is also designed to address another new consumer need, which is the desire for more spiciness. So we have the spicy margarita, we have the spicy lemonade, we have the spicy Bloody Mary, which is growing amongst the new as well consumer occasion, which is that Sunday brunch, which people are increasingly enjoying.

And finally, as well, elevating cultural relevance through consumer experiences and brand associations at scale. And it's not a mystery if you look at these 5 brands, and in the following order, Jameson, our #1 brand in terms of profit; Martell, our second largest brand; Chivas, our third largest brand; Absolut, our fourth largest brand; and Ballantine's, our fifth largest brand, we're really leveraging the scale of these billionaire brands in retail sales value to drive big, impactful and skilled partnership and experiences, particularly if I take just the middle one with Tomorrowland, that moment of consumption is one of the fastest growing, what we call, max movements of consumptions in our industry, which is festivals.

And all of these initiatives are leveraging our key digital programs or KDPs that are all powered with artificial intelligence. I won't go through them. You are all familiar with them. We started this exactly 5.5 years ago, almost 6 years ago, they are now deployed across the group and embedded in our ways of working.

And there are further opportunities in terms of additional efficiencies powered by AI, and we took here one example on the marketing front with Genie, which is generative AI, and we gave an illustration of the impact the development of Genie can have on our business.

You see here the cost of development of the latest Glenlivet's brand campaign, which was down 80%. So better quality, faster time to market, in fact, a lot faster time to market and significantly reduced costs. That's on the marketing front. But of course, we are also leveraging AI across the entire supply chain.

Now if we look at our sales by region, starting with the U.S. The U.S. is down 15%. The spirits market there continues to remain soft albeit some green shoots in Jan and February. Too early to make any specific call. Let's remain cautious. But that being said, we're happy to see some of these green shoots in this new year.

Our sell-out value gap-to-market has continued to narrow to roughly 2 points. In fact, the most recent numbers are closer to 1 point. So we're on track to close the gap. And we have some of our key brands that are gaining share in their respective competitive sets with the likes of Jameson, Kahlua or yet again, The Glenlivet.

It's worthwhile noting as well that our H1 numbers were impacted by inventory adjustments, as expected, down 15%, which is not a reflection of our sell-out performance, which is somewhere between 4% to 5% decline.

India, so net sales up 4%. If we exclude Imperial Blue, which is now disposed and closed, the performance is plus 8%, in line with what we're used to see in India, and despite, by the way, our first quarter, which was severely impacted by the very strong tax increase in Maharashtra. We expect to see this momentum continue over the second half. It's worthwhile as well noting that our international spirits brands are enjoying strong double-digit growth in India as the market continues to premiumize.

China, down 28%, driven by a number of factors. The first is a tightened regulatory environment, number one, which is impacting the high end on-trade. Number two, the persistent macroeconomic headwinds, and number three, the continuation, I would say, of a weak consumer sentiment. So of course, this is impacting Martell and Chivas.

Our premium brands portfolio is continuing to grow with a strong performance, particularly of Absolut and Jameson, and our tequila brands in China. It's worthwhile noting as well, we're at January -- February 19, 2 days ago was Chinese New Year. What we can stress is cautious trade sentiment ahead of Chinese New Year.

Finally, Global Travel Retail, down 3% over the first half with a very strong rebound, as expected, in the second quarter with the resumption of Martell sales in China Duty Free. Asia, beyond China, continues to see some weakness, but very good underlying growth, both in Europe and Americas.

More broadly, if we go beyond our 4 Must-Wins Market, Europe down 3% with market contraction in France impacted by some phasing, some softness in Germany and Spain, but pretty strong resilience in the U.K., good growth in Poland and very good performance as well from a market share point of view, but as well in terms of growth of Jameson and Absolut, Bumbu and PJ.

Americas, organic net sales down 12%. I won't go back to Canada up 3% with very good momentum across the whole portfolio. Brazil suffered from the methanol crisis over the first half with a return to growth as of January, and more generally speaking, over the second half. And Mexico in decline due to weak market conditions.

So Asia-Rest of the World, finally, down 4% with very strong growth in Turkey, up 27%, as I mentioned. South Africa in strong growth as well with very strong performance of Martell. Japan, up 6%. Australia, very resilient, and the rate of decline strongly moderating and expected to keep doing so for South Korea.

So I won't go through all of these brands. The aim of these numbers is just to show you that excluding the U.S., which has been impacted by stock adjustments, you see that we have brands such as Jameson, which are in growth, mid-single-digit growth. Absolut outside the U.S. is in growth as well, plus 2%.

The plus 20% for Martell, excluding China, means that our diversification strategy, diversifying the sources of growth of Martell outside of China, which is a 10-year strategy, is starting to pay dividends, plus 20%, again, excluding China.

Chivas, globally stable. I mentioned the 25% on PJ. Our Agave portfolio is growing quite significantly, overall double-digit growth for it. And it's nice to put Bumbu on the spot here with 16% growth. This brand has now become the #1 super-premium rum across the globe with more than 0.5 million cases sold.

And we keep on investing behind our brands, behind brand equity to drive desirability across the portfolio of our brands. And this translates into gaining or maintaining share in the majority of our markets with that one notable point, which is that linear closure of gap to market in the U.S., which is, of course, a very strong focus.

And now Helene, let's deep dive into the financials.

Thank you, Alex, and good morning, everyone. So let's start with the profit from recurring operations. I confess it's a quite busy slide. So in this first half, the profit from recurring operations declined by 7.5% organically and 18.7% on a reported basis, largely impacted by foreign exchange.

We have actively defended our organic operating margin, limiting the decline to 55 basis points. We responded with agility to a contrasted environment through disciplined resource allocation and the fast implementation of our efficiency program.

So let's start with gross margin. The gross margin evolution of minus 216 bps reflects 3 main elements: First, price and mix had a moderately negative impact of around 50 basis points; Second, gross margin was impacted by approximately 70 basis points from tariffs in the U.S. and China, as expected; Third, as anticipated, we faced inflation on aged liquids and lower fixed cost absorption in a softer volume environment.

We were successful in partially mitigating this cost inflationary pressure with the implementation of operational efficiencies across procurement, manufacturing and supply chain.

Now moving to A&P. Advertising and promotion stood at circa 13% of net sales in H1 with phasing over the full year weighted towards H2, supporting our innovation rollout, notably Absolut Tabasco launch we shared with you earlier. We continue to prioritize brand investment to support long-term brand equity.

So no change to our full year guidance to maintain A&P at circa 16% of net sales for the full year and strengthening return on investment discipline through digital tools, and increasing as well the proportion of working versus nonworking A&P.

And now on structure costs, Alex mentioned the decline of 10% organically, which is reflecting the rapid implementation of our Fit for Future operating model and very strict cost discipline, both set to continue in the second half.

Reported operating margin declined by 142 bps driven by the decline in organic profit from recurring operation, plus a significant negative FX impact of EUR 187 million, while the perimeter impact on the margin was positive by circa 50 bps thanks to our margin accretive brand disposal. I note that excluding the adverse foreign exchange impact, the reported margin would have been sustained.

Moving now to the earnings per share. So the EPS is down at minus 20% due to lower reported profit from recurring operation, mainly linked to the negative translation effects. From a financing perspective, the recurring financial expenses decreased and our cost of debt improved from 3.4% to 3.2%. Income tax on recurring operation reduced in line with the reduction in profit from recurring operation.

Moving now to the cash and -- to the free cash flow of EUR 482 million in this first half, which is an improvement in terms of generation through optimized strategic investments and operating working capital management. Indeed, we delivered an increase in free cash flow of EUR 42 million, which is plus 9.5%, with strong improvement in operating working capital, notably trade receivables and continued focus on finished good inventory optimization.

CapEx investments coming off their peak in fiscal year '24, continuing to normalize, as expected, now at EUR 217 million, down circa EUR 150 million versus the same period last year, lapping high investments last year on capacity expansion programs.

Optimized strategic inventories, the increase now is at EUR 111 million, which is EUR 92 million less than last year. Though normalizing for their peak, those investments remain key to secure our long-term growth. This strong focus on cash generation has led to an improvement in cash conversion, up 11 points with 61%.

So let's deep dive on the cash generation and the net debt evolution. Regarding net debt, we are committed to preserve the strength of our balance sheet and maintain strategic flexibility. And hence, we are focused on cash generation. As at December, our net debt stands at EUR 11.2 billion, which is a decrease of circa EUR 0.9 billion over 12 months. thanks to the improving free cash flow generation and proceeds for margin-accretive brand disposals.

As I explained in the previous slide, free cash flow in H1 grew by 9.5% with optimized strategic investment and strong operating working capital management supported by our efficiency program. We also benefited from the positive contribution from brand disposals, notably Imperial Blue, for which we received the proceeds this H1.

Moving now to the net debt-to-EBITDA ratio, it stands at 3.8x. This ratio has increased primarily as a function of the softer reported profit from recurring operation. We remain focused on cash generation to support deleveraging and to preserve a strong balance sheet. Our clear intention is to deleverage and to bring our net debt-to-EBITDA ratio below 3x by fiscal year '29.

We expect the ratio to improve with 4 levers: number one, strategic investments normalizing, reducing from peak levels; number two, ongoing operating working capital management improvement initiative, including with the support of our operational efficiency program; number three, dynamic portfolio management; and number four, with a return to growth of the profit from recurring operation.

Regarding the strategic investment, which is the first lever I just mentioned, strategic investments are now expected to reach circa EUR 750 million in fiscal year '26 and no more than EUR 800 million per annum for the period '27 to '29. This reduction will have a cumulative benefit to our cash conversion acceleration of circa EUR 800 million compared to our earlier strategic investment guidance that we shared last August.

Back to you, Alex, for the strategic update.

Well, thank you, Helene. I think this is perfect timing as well just to again reiterate some of the fundamental reasons why we remain perfectly confident in the industry fundamentals in our strategy and in our business model.

This slide, we already shared with you during our full year results back in early September. It's all about leveraging our key competitive advantages around our geographical breadth, around our diversified portfolio, leveraging, again, our teams that have that very strong winning mindset and level of engagement.

You'll see we have continued to really simplify our organization to really find and strike the right balance between on one side scale and on the other side, business proximity and agility. You'll see our road map on operations to deliver the efficiencies is very well on track with some acceleration in fact.

And all this, of course, to create value with this year being a transition year with an improving top line trends with that medium-term framework of an average growth over the period '27 to '29 somewhere into plus 3% and plus 6%. And we have an illustration to show you the building blocks that got us to there. And of course, and Helene touched upon it already, and we'll detail a little bit further, improving cash conversion and to maintain our balance sheet strength and flexibility.

So again, the underlying drivers remain absolutely attractive. I won't go into the long-term fundamentals, particularly in terms of demographics, legal drinking age population, middle and affluent classes and the increasing spirits share amongst total beverage alcohol.

That doesn't mean we're denying the fact that right now, there is some particularly soft consumer confidence, particularly in China, or that there is some degree of squeeze to consumer wallets, particularly in the U.S. But the matter of fact is conviviality continues to evolve.

Premiumization is an underlying, very long-term trend. Experiences, as I mentioned, are clearly expanding, convenience is accelerating. And there are evolving lifestyles which we like to embrace. These include changing occasions, these include different frequency levels, et cetera, et cetera.

Again, this is to illustrate how balanced our geographical footprint is. This is why, excluding U.S. and China, second quarter was up 1%. And it basically comes from all the regions. And we have a balanced exposure between mature markets and emerging markets.

And well, you see this, I think it's quite unique to Pernod Ricard with roughly half of our business exposed to emerging markets that have a strong growth potential for the foreseeable future and where we have strong leadership positions, I won't go on Turkey, which was up 27%, but Turkey is now our fourth largest market and where we have a leadership position.

India, as you know, where we have as well a leadership position, with strong demographics. China, currently soft environment. But again, the underlying long-term fundamentals remain attractive there, and we have a leadership position and so on with Vietnam and so on with South Africa, or yet again, Nigeria, just to name a few.

So I mentioned on the distribution front, on the geographical front, but I would say it's equally true, in fact, on the portfolio front, where we cover all the segments within the industry that are relevant and also all the different price premiums. So it is our duty to be as flexible and agile as possible to really leverage all the sweet spots depending on the markets across the world, leveraging that the wealth of our portfolio of brands.

And again, I alluded to that earlier on when I was talking about partnership with cultural relevance. We are leveraging the scale and attractiveness of our brands. We have 5 billionaire brands in terms of international brands plus as well some local ones. And these brands have a or close to have a what we call a must-have status amongst our customers, and we can leverage the scale of these brands for further more efficient impact.

So I think it's worthwhile just spending a few minutes on these illustrations. So as you know, our medium-term framework is top line growth, organic top line growth somewhere between the plus 3% and plus 6% on average. What we showed on the left illustration is that achievement of the low end of this range on average does not require the U.S. and China to be within the range. They can be below plus 3%.

But with Global Travel Retail between plus 3% and plus 6%, which is, by the way, it's normal type of algorithm, we've known it in the past, we now know it as well, and we have projections for passenger growth in the foreseeable future; with Rest of the World emerging markets growing, I won't go back to that slide, Turkey, Sub-Saharan Africa, Southeast Asia, Latin America and so on; and with India, above that 6% range, which it already is, yes, we can deliver on average over the next 3 years a growth comprised between plus 3% and plus 6%.

The reality is, indeed, over time, as China and/or the U.S. come back to a more normalized growth pattern, we could even be top of the range. These are pure illustrations. This is not any sort of guidance. But it's just to share with you the building blocks of that medium-term framework and the tangibility of why we believe we can deliver at the very least, on average, at the bottom end of the range.

Likewise, a couple of years ago, there were a number of questions around the new geopolitical landscape in the world might have a lasting impact on Pernod Ricard's model through trade tariffs. This is a perfect illustration. Do not try and reconcile this with P&L.

This is just to show you that pre-geopolitical trade tariff-related tensions in 2023, broadly speaking, 18%, the equivalent of 18% of our retail sales value around the world had trade tariffs. This spiked to a potential of 28% with the announcements in the U.S. market, but as well at the height of the trade tariff announcements in China.

Since then, a number of things happened. New free trade agreements were signed. Some are on the brink of being ratified. Based on what we know today factually, which has been signed and announced, and we know in real life, things will be different, but based on what we know today, we're going to start seeing that record peak number of 28% steadily decline to, by the way, in the next 18 months to 14%, and by 2035, again, based on what we know, to 11%.

That's just to give you a snapshot of the current geopolitical trade tariff-related landscape. It's going to move upwards, downwards, ups and downs, we don't know. And that was just to address some of the questions some of you may have had over last 12 to 18 months on that front. That being said, we do not control this. This is beyond our remit.

What we do control is what we've been working on post COVID, in fact, for the last 3 years, which is driving increasing agility throughout our whole operations and supply chains with increasingly agile global flows with some near-shoring initiatives and more broadly speaking, a more flexible manufacturing footprint.

So as I said, we've done a lot of work to be Fit for Future from an organization point of view, to be a lot more efficient, to be a lot more faster and to strike the right balance between leveraging our scale on one side, but as well on the same -- on the other side, leveraging our business proximately.

I won't go through Tomorrow Phase 1, which was all about having a simplified market company organization based on 10 management entities with a lot of delayering that happened there, and a few years down the road, a couple of years down the road, it is working extremely well.

And the more recent Tomorrow Phase 2, which is now in full effect since the beginning of January in this new calendar year where we moved from that tripartite organization, HQ and functions on one side, brand companies on the other side and market companies on the third side, to just that dual relationship between global on one side and market companies on the other side, with some further simplification going on.

So talking about simplification. So a simplified organization, leveraging, as I said, that global scale and consumer proximity, which is anchoring a Fit for Future structure.

You have here our ExCom or Executive Committee, which basically is driving much more faster decisions and arbitrations in a world which is quite volatile, so where decisions have to happen on a continuous and very fast basis, and as well with the creation of 2 global brand business units, on one side, the Gold business brand unit and on the other side, the Crystal brand unit, in each case with very specific specificities where we can generate some clear synergies and much more simplicity as well. This is now effective, as I mentioned, and has started to work pretty well and effectively.

So talking about efficiency with the zoom of the different initiatives. So here you have on that slide, the key initiatives that are supporting our EUR 1 billion efficiency program, which is well on track, 1/3 being delivered in fiscal year '26. That's our very strong expectation for the year.

By the way, let me say, this is year 4 of our efficiency program. We started back in fiscal year '23 and completed the EUR 900 million by '25. And now this is year 1, I would say, of Chapter 2, but I think it's important to have that in mind. We started accelerating the control of the controllables already 4 years ago. So we are advancing at pace on this EUR 1 billion efficiency program, as I just mentioned, as a continuation of a very structured and multiyear program to deliver sustainable P&L and cash impact.

Many details on the slide, so I'm not going to elaborate on each of those, but you can easily understand that this is about procurement optimization with significant savings, manufacturing efficiency gains, end-to-end supply chain integration with a more efficient footprint and optimized inventory levels to support the cash acceleration, organizational simplification, as just mentioned by Alex, with a leaner headquarter and 2 scaled brand units, Gold and Crystal, being fully implemented as of 1st of Jan, which are complementing the market management entity organization that we implemented a few years ago.

So margin expansion has been and is a core focus as we speak. As you know, the objective for the year is to protect profitability as much as we can this year, enhance cash generation while continuing to prioritize customer-facing investment and long-term growth.

A zoom now on the organization. So we've been pursuing an active reorganization program already for some years. The efficiency program in place since '23, '24 has been very visible in terms of tangible results, and that's what you can see on that slide. SG&A headcount is down cumulatively 18% with the main impact being from the 2 reorganization programs.

This has been combined with a very strict cost discipline, which translate into below inflation structure cost organic increase in fiscal year '23, '24 and since then, a decrease of minus 4% in fiscal year '25. And as we mentioned already of minus 10% organic decline in our structure cost in H1 set to continue in H2.

This organization not only supports our ambition to protect the organic operating margin, but they are there to build a Fit for Future organization, which means simpler, more agile and better able to leverage the group global scale.

Moving on to cash. So as I explained earlier in the presentation, preserving the strength of our balance sheet is a key priority to maintain strategic flexibility. Strategic investments in both CapEx and in aging inventory are normalizing, as you can see on the slide, and continue to reduce from peak investment levels in fiscal year '24.

Those investments are now expected, I'm going to repeat myself, to reach circa EUR 750 million in fiscal year '26 and no more than EUR 800 million per annum for the period '27 to '29 with a cumulative benefit to our cash conversion acceleration of circa EUR 800 million.

We maintain a strong focus to improve operating working capital across all levels, including finished good inventories. Here, you can see on that slide, the reduction we have made over the past 2 years, and we are continuing to drive efficiencies in the finished goods with a strong focus on the S&O process, and improving as well forecast accuracy among our affiliates.

I'm also pleased to announce today that we now expect to achieve our midterm target of cash conversion ratio of 80% and above 1 year earlier, meaning this fiscal year '26. And we expect, obviously, to continue to achieve this cash conversion ratio of 80% and above for the medium term. Taken together, and as I mentioned earlier, this strong initiative contribute to bringing our leverage ratio below 3x by fiscal year '29.

Back to you, Alex, for the active portfolio management.

Sure. Thank you, Helene. And we've been very active on that front as well. And just like you mentioned, Helene, on the operational efficiencies, we started a number of disposals back in fiscal year '23, which was our record year in terms of results.

And I won't go back to Clan Campbell, Becherovka, Tormore, the wine business, which we closed more recently in fiscal year '25 or the Nordics brands and more recently, particularly Imperial Blue. And in this new second half for Pernod Ricard, the announcement of the disposal of Mumm Napa sparkling wines which we expect to close before the end of this fiscal year.

These disposals are perfectly strategic, designed to really focus Pernod Ricard on our premium brands that have growth potential, that has strong margin versus brands that had lower growth potential, in some cases, no longer growth potential with, and that were quite dilutive from a margin point of view. Over the last few years, the cumulative gross proceeds of these disposals is roughly EUR 1.5 billion of proceeds.

Our financial policy remains unchanged. It basically aims to balance the deployment of capital for, on one side, profitable growth, and on the other side, returning capital to shareholders, in line with our financial policy and consistent with what we've been doing in the fiscal years '24 and '25. It is indeed our intention to maintain a stable dividend in fiscal year '26, subject, of course, to Board and AGM approvals in due course.

This brings me to the outlook for the year. Basically, the outlook remains unchanged, except maybe for 2 important elements that Helene stressed a few minutes ago. So I won't go through all of these because you're familiar with them. I'll just focus on the 2 changes.

The first one is the focus on cash generation with strategic investments that are now revised to roughly EUR 750 million for this fiscal year versus EUR 900 million previously indicated and strong working capital management. That's the first one.

And the second, which is a consequence in part of the first one, is aiming, as Helene said, for circa 80% and above cash conversion as of this fiscal year, 1 year ahead of what we had initially anticipated. And finally, FX impact is expected to be significantly negative this fiscal year.

Likewise, we are confirming our medium-term framework, again, with one change, which is on the cash generation given that we are now expecting to see our strategic investments normalize to no more than EUR 800 million per annum in fiscal year '27, '28 and '29 versus initially EUR 1 billion, as previously indicated.

So all in all, and in conclusion, we are confident in our strategy, we are confident in our operating model and in the engagement of our teams, which I'd like to thank again, and to deliver sustainable value growth over time.

So before moving on to Q&A, may I suggest a small mash-up video, just so we get a minute to breathe a little bit.

[Presentation]

We're opening the call for questions. Up to 2 questions each, please. So operator, you can start with the first caller. Thank you.

The first question is from Sanjeet Aujla of UBS.

A couple of questions from me, please. Firstly, on the top line outlook is unchanged. What's embedded in the guidance for H2 organic sales? Should we expect the rate of decline to moderate or even return to growth just given some of those comparatives?

And then my follow-up is on free cash flow. I think with the lowered guidance on strategic investments, would you expect your free cash flow now to cover the dividend, which I think you said would be stable for the year?

So thank you for those questions. Let me start by the first one. So we are reiterating the guidance for this fiscal year '26 in terms of improving trends for the year, top line versus last year. So a transition year towards H2, and that was expected. And I think already, hopefully, clearly mentioned in our previous interactions.

So if you do the math, that means, obviously, a stronger H2 to deliver that top line trajectory. And when you think about what happened in H1, you can see already some improvement. I think Alex mentioned it from Q2 versus Q1. So we expect a stronger H2.

And maybe just to highlight some key building blocks supporting that ambition for H2. Number one will be China because as you know, China had a very significant decline in H1, by the way, much higher decline than the underlying performance of our portfolio because we believe that our sell-out are roughly at mid-teens decline, and you see the number in terms of top line.

So there is obviously CNY phasing. Last year, it was end of Jan. This year, it was 2 days ago, which will have an impact for H2 and as well, to be fair, a quite low comp last year. So a very different trajectory expected in H2 versus H1 with strong technicalities behind that. As you noticed, probably we have a cautious sentiment ahead of Chinese New Year. So the stabilization trends expected in China in the second half is mainly technical.

Then I'm not going to talk only about technicalities. We are expecting a strong H2 for India, which is obviously a very exciting market for us, our #2 market, and there will be some acceleration in H2 because the momentum is great, and we have as well a stronger top line ambition and now that Imperial Blue has been sold. We have as well Travel Retail, which is expected to benefit as well from a better environment because as you remember, last year, at the same time, we didn't have the ability to sell Martell in China Duty Free. So this year, we'll have, obviously, this as a positive.

And I'm not going to go into the list of all the markets because obviously, there is as well strong expectation that the market that we are in strong growth in H1 will continue to be in H2. So when it comes to free cash flow, I'm not going to guide on what would be the free cash flow ambition for the full year. I believe I said already a lot in terms of what I suggest matters, which is as well what we are doing and what we will be doing in the months and years to come to accelerate this cash generation.

To answer your question, hopefully, I discussed this as well on the slide that we've been covering the dividend when you look at our free cash flow in calendar year '25 but please don't expect any guidance in terms of free cash flow number for June nor in terms of net debt-to-EBITDA ratio. I think what matters is really our intention, which is to preserve a strong balance sheet and to accelerate the cash generation with the drivers I mentioned before.

The next question is from Andrea Pistacchi of Bank of America.

So 2 questions also from me, please. First one on the U.S. Now the market had a challenging O&D, but recent industry data have been looking a bit better. So what's your read on the market recently? Are you seeing any maybe even slight signs of improvements or trends getting less bad?

But on the other hand, given the soft holiday season, what is the distributor inventory situation now in the U.S.? Do we need to see some correction here? And I think you flagged in your remarks earlier some inventory adjustment to impact the full year. How sizable could this be?

The second question is on the balance sheet. Now you're clearly very focused on reducing net debt to EBITDA. In the 4 strategic levers to do so, you didn't mention understandably, I think, a potential India IPO. There were press reports yesterday saying that you seem to be considering listing your business there, but no decision has been made.

So the question is, I mean, what are the key factors you would evaluate as part of this assessment? And if you can comment on this over what time frame would you expect to make a decision?

Okay. Well, thanks, Andrea, for your questions. I'll pick the first one. I was in Vegas 2 weeks ago, I spent the whole week in Vegas, not to play, let's be clear. It was the annual convention of the WSWA. For those who are not familiar with that name, it's the Wine & Spirits Wholesalers of America where you have all the distributors that gather there the entire week.

And that's the perfect opportunity to go get a sense of what's happening in that middle tier and also get a sense of what are the underlying dynamics. And I had the opportunity to have one-on-one meetings with basically all the distributors, whether it's Southern Glazer's Wine & Spirits, whether it's RNDC, whether it's Reyes, whether it's Allied Beverages or Johnson Brothers or Breakthru, for that matter, or Martignetti or Crescent Crown or I could -- Empire, if I don't name them.

But yes, O&D was somewhat softer than expected. But -- and as I mentioned during the presentation, there are signs of green shoots, but in January and February, but I'll say, but, but I wouldn't -- I will not be the first one to say it's -- things are improving. I will just say there are signs of green shoots.

The market is currently trending somewhere between minus 3% and minus 4%. We are trending somewhere between minus 4% and minus 5%. The gap is closing. We have strong expectations, as I mentioned, particularly around innovation, taking Absolut Tabasco and Malibu Pink, then the acceleration of our smaller formats as they enter into our supply chain across the U.S.

The tone, I think that's the only thing we can speak about, was slightly more positive than what it was a year and 2 years ago because things have stabilized. We're not out of the woods yet, but there are some early signs of green shoots. But that's as far as I will go on that note.

From an inventory point of view, listen, I said our sell-out is minus 4%, minus 5%. Our sell-out is down 15% over the first half, and we clearly said expect this inventory adjustments to impact the full year in the U.S., but it's planned and it's going as planned.

So Helene, apparently, an article came out yesterday. Is that correct?

I believe so. So I mean, I think you were kind enough to even almost repeat word by word what was the rumors about and what was our answer. So I'm not going to do that again. What I can tell you is that, I mean, looking at strategic options that could create value is obviously, I would suggest our jobs.

But I'm not going to comment anymore. What I can tell you is that the intention that I shared earlier today, which is to deleverage and to bring our net debt-to-EBITDA ratio below 3 by '29 does not include an assumption of a listing in India.

The next question comes from Simon Hales of Citi.

So 2 for me. I mean, firstly, can I just go back to China a little bit, please, Alex? Obviously, you talked about, obviously, still the low consumer confidence, the caution coming into Chinese New Year. I wonder, are you seeing any signs at all on the ground of an improvement there from a consumer standpoint, from a regulatory standpoint?

I appreciate, to Helene's point earlier, that you've got easier comps in the second half of the year. But is there anything that we should feel a little bit more optimistic about?

And then secondly, just on FX guidance for the full year. Obviously, FX big headwind in the first half. Helene, how do we think about the FX headwind for the full year, please?

So Simon, I'll address your first question. We did mention that basically, there was some cautious trade sentiment ahead of Chinese New Year. So that's point one. Helene stressed in one of her answers a couple of minutes ago that our assumption, at least in terms of the building blocks for H2 when it comes down to China was mainly technical with some phasing topics and some comparable topics.

All I can say is, yes, the environment has -- remains quite soft in China. And it's the tale of 2 worlds. The premium brands portfolio is expected to continue to be quite dynamic, but the higher end, in our case, Martell and Chivas, are still experiencing strong softness. And this is a direct result of the tightened regulatory environment, which will start to recycle starting the month of June, to be fair. And it is also the result of a continued weak consumer sentiment in China.

So it's still very early to give you any immediate feedback on Chinese New Year. It was just 2 days ago. They're all on vacation, hopefully drinking for that matter, but cautious is the way to go. And we don't want to assume anything more optimistic on that front. But again, China is now 7% of our global business.

So FX, I'm not going to give you any number. I mean, we are obviously using spot rate as well to do the math on what can be our expectation for H2, but to be fair, and that's why we are obviously flagging it as well in our outlook for the year, we believe it's going to be significantly unfavorable for the full year with as well a negative impact in H2.

The next question is from Edward Mundy of Jefferies.

So 2 questions for me, please. The first on the normalization of the strategic investment. Alex, could you perhaps provide some comfort that you've got sufficient inventory to fulfill your medium-term demand? And as the growth comes back, how quickly can you "turn the taps back on" if required?

And then the second is on the Absolut Tabasco global innovation rollout. I think you mentioned it's the first time you've done such a big rollout at a global level. What are the early learnings from the simplified brand company organization? And do you expect more global launches and campaigns after the success of this one?

Listen, on your first question, Ed, let's be clear. Our strategy has been, is and will always be to fund and invest for the future long-term growth of our business. The fact of the matter is volumes have rebased. And as volumes rebase, we regularly revisit our strategic investment plans to be fully in line with the reality. Let's put it that way.

I just want to put a nuance there. Strategic stocks, it's not just you open the tap full on and then you close it full off. It's really a fine-tuning and a continuous fine-tuning initiatives.

I used to say a couple of years ago, we used to have one meeting a year on that topic. Then we moved to having it every semester. Then we moved to having that meeting every single quarter based on what we call our commercial sequences, putting -- updating our base and then projecting.

So we're ready to take our -- more than our fair share, should I say, of our future growth, particularly on strategic stocks. That's perfect. But we will keep on fine-tuning and adapting to the reality and to the world as we know it. So it's always finding that right balance.

And so put it in a nutshell, yes, we're ready to grow the business when it comes. Yes, so Tabasco -- Absolut Tabasco, it is our first global launch. It is the big difference between being completely decentralized and leveraging our scale while at the same time maintaining that consumer proximity.

We're starting to gather all of the key learnings of that launch, which, by the way, it's a fact, it has been a successful launch. Let's see how it turns out in terms of volumes, net sales and value creation. I feel quite optimistic about it.

And what we will be doing internally, which is part of what we call a learning organization, is get all the key learnings of that success and then replicate them, of course, for other global launches with impact.

And I would say it's the same for our global partnerships. When you sign a partnership with a partner, you want to sweat the asset as much as possible in the most impactful way. As a matter of fact, last week, I was in a meeting on one of these partnerships, which was signed a little bit more than a year ago on the key learnings and what else could we drive more to sweat that asset in an impactful way.

So we'll keep on learning from what we're doing. In some cases, it might fail. In others, it might be a success, and we can learn from both.

The next question is from Trevor Stirling of Bernstein.

Two questions from my side, please. I guess they're a little bit interrelated. So the first one, Helene, just when I look at your slide on your savings and where the savings are coming from and the phasing of those savings, and it looks like the SG&A, a lot of those cuts have been front loaded because you made the organizational changes. And then I would expect then the future savings will come more through the COGS line. Does that make sense?

And then the second one, I guess, Alex, coming back to a theme I asked you about 6 months ago. If you are through the worst of the organizational realignments, if you like, and savings, can you get your arms around the organization and really get the morale back into the organization, which inevitably suffers when we're having to go through significant constant realignments?

So thank you, Trevor. I'll start with the first question. So you're right, there were 2 important move in terms of adapting the organization and that for the most recent one in place since 1st of January. So you can still expect some benefit in terms of savings to go through the P&L with, I would say, even a stronger impact in H2 because of the timing of the implementation of this leaner headquarter and combined brand units with Crystal and Gold.

But to look at the midterm, I would say, first, and I was alluded to that, the organization is really designed to be Fit for Future, future being growth, so that we can really scale that organization moving forward, so which means that, obviously, we're going to be investing behind the organization to support the growth, but with a very focused way where it matters.

And the scale impact, I would suggest, means that we don't need to increase the structure cost as fast as the top line when we'll be back to growth. And that will obviously contribute to the margin expansion, which is, as you know, a part of the midterm framework ambition.

Hello, Trevor, and thank you for asking this question, which I believe is key. As you know, and by the way, as you all know, commitment, our team's commitment and engagement around the world are paramount to our culture.

And as we navigate through an environment which is quite contrasted, in some cases, dealing with fast growth, which is not easy, in other cases, dealing with declines, which is not only not easy, but as well from a moral point of view. After summer, I traveled the whole world across the organization. I don't know why my internal comps team had an idea to call that worldwide trip the next chapter tour.

So -- and that next chapter tour, by the way, the title says it all. We went through a series of transformations, particularly that last one, Tomorrow 2, which opens a new chapter for Pernod Ricard, a chapter, which we could qualify by a leaner chapter, a more efficient chapter.

By the way, lack of efficiency or lack of speed of decision-making or layers can be frustrating for teams, and unleashing their desires to be more efficient, to be faster when they make decisions and to really focus on what eventually fundamentally matters, which is our consumers and our brands, can be quite reinvigorating.

So having traveled the entire globe over the last 4, 5 months, the one thing I can tell you is morale remains very strong. The enthusiasm of our teams remains equally strong. And there is this winning/fighting mindset, which is paramount, I have to say.

Not easy by the way, but at the end of the day, life is not designed to be easy. We need to fight to be successful in life, no matter what the environment. Yes, right now, the environment is not the most pleasant environment of them all. But you know what, we're in the business of [Foreign Language] and people have a smile on their face.

So listen, what can I say other than, yes, this is my #1 objective to make sure that the teams are enthusiastic. It's fair to say that after that visit, they injected more energy in me because the last 18 months haven't been that easy, making some of these tough decisions.

But frankly, I'd just like to conclude by saying I'm extremely proud of these teams, and I can never thank them enough for what they're doing, which is very strong.

Thank you, Alexandre. Thank you, Helene. So that concludes today's Q&A and presentation. Thank you, everyone, for joining. Have a great rest of the day.

Ladies and gentlemen, dear shareholders, hello, to everyone. Great pleasure to welcome you once again here in the Salle Pleyel for our Annual General Assembly. So you're loyal, many of you as ever. This shows the interest that you have for our group and your group, and I really thank you for that. I would like to thank those of you who are with us for the first time here today. You are welcome, of course. The current general assembly was conveyed in line with the legal and regulatory dispositions, which exist. No request for a description of a resolution project or point for the minutes for the agenda not was formulated after the publication of the meeting on the BALO on the 19th of September.

There is a present sheet, which was made available with the mentions prescribed by the legislation. So I declare this Annual General Assembly open. As Chair of the General Assembly, I suggest that we make up the bureau of the assembly. So I will therefore request that Madam Patricia Ricard Giron, representing the company Pernod Ricard and Mr. Jonathan Rubinstein, representing the group Bruxelles Lambert to act as scrutineers. I designate Mrs. Anne-Marie Poliquin as Secretary of the General Assembly.

Also present in the Central Bureau, Mrs. Patricia Barbizet, Senior member and Mrs. Hélène de Tissot, Vice President, Executive Finance and Tech. The statutory auditors are represented by Mr. Marc De Villartay from the Deloitte from Deloitte & Associates. We are now going to be sharing with you the provisional quorum.

So I note that it's 80.92%, representing 204,419,414 shares for 449 shareholders present or represented. The final quorum will be provided to you before the opening of the voting on the resolutions. Later on, the general assembly, therefore, has the quorum as prescribed by legislation. The legal documents in digital form are available for the members of the general assembly, and they are deposited on the desktop. They have been made available for the shareholders in the time frame set out by law. So the general assembly is made up and can deliberate on all the resolutions which appear on its agenda. The general assembly comes together to deliberate on the resolutions which are mentioned on Page 45 of the brochure, which was provided to you when you arrived.

So now let's move on to the central topic of this general assembly, the presentation of our management report for the fiscal year '24, '25 as well as insights looking at what lies ahead for your group. Before coming back to our performances and what we have accomplished, I would like to take a few moments to celebrate what has inspired us, what inspires us and what has been driving us for now exactly 50 years, 5 decades.

Our history narrative is unique. It begins by the unexpected alliance of 2 entrepreneurs, visionary entrepreneurs, originally competitors, Paul Ricard and Jean Hemard decided to unite their strengths to create an international group. In 1975, they imagine together a shared future for their 2 companies carried by the ambition of conquering the world. If they could see the group, the global group that Pernod Ricard is today, I know that they would be proud of everything that has been accomplished and of how their vision has flourished.

I would like you to discover now in pictures a quick overview of these 50 years of history and of this spirit -- this so unique spirit which makes up the identity of your group, the beginning of the story, 1975. You can’t succeed alone. It's a team that succeeds, 2 families coming together. Making up the group, Pernod and Ricard, 80s, 90s conquests Pernod Ricard stretches globally with United States, Ireland, Asia, Cuba, the millennium ever bigger ambitions with Patrick Ricard and Pierre Pringuet.

The company becomes one of the world leaders [indiscernible] it’s spirit. Let's not forget that we are here today. It's because there was Pringuet. That’s because there was a Ricard originally and because it became Pernod Ricard 2015 to today with Alexandre Ricard’s management, new brands. A group which continuing to gather pace, digital acceleration, premiumization, innovation, has complete and a diversified portfolio of over 200 exceptional brands, present in over 160 countries worldwide. Passionate teams, which embody the values of the group. Thank you to everybody who has made up and contributed to the [indiscernible] of Pernod Ricard. You know they are, we know what we owe them, grounded, passion of challenge, together, be onboarders, authentic and proud of being so.

We must never forget where we come from to know where we want to go. [indiscernible] which is born from each encounter, from each social interaction and nothing is more powerful and unveiling the magic that makes each human connection special, so special.

So since, of course, since now 50 years, we have been favoring meetings, shared moments, and I want to give the homage to the generations that have preceded us, some of the iconic managers of our group, leaders of our group are today here with us and is very venue. And I would like to thank them to thank them from the bottom of my heart. You have been builders. And it's thanks to your boldness, audacity, thanks to your will to be entrepreneurs and to your strategic vision. We have foundations which are solid to rise to the challenges of today and build the Pernod Ricard of tomorrow. So thank you. Thank you once again, all of you.

So our story has always been closely linked to that of the world in which we live, the entrepreneurship, the exceptional success of our entrepreneurship of Pernod Ricard has many stumbling blocks and its competitive advantages that we have gleaned over time, which enables us to overcome these challenges. We have a portfolio of over 200 exceptional brands, which is the most complete and the most diversified in our industry. We have a distribution network, which is the most wide-ranging globally. And finally, especially, I would say we have this culture, which makes us strength, which makes us who we are, the commitment and the will of our teams to succeed really pushed these teams since the very first day, this passion for challenge and this passion for our brands. So these fundamentals are absolutely precious. They are all the more precious when the situation is complex, as is the case currently.

So inflation, of course, are still impacting purchasing behavior. The confidence of the consumers is down, notably in China. In addition, there's an impact -- a negative impact of currency changes and the ever more promotion within the companies, which are necessary. This economic climate cannot be dissociated from the instability due to the current geopolitical context, what's happening throughout the world, impacts directly our activities, starting with the increase in tariffs and other restrictive legislations in some of our key markets, such as notably the United States and China. So we need to face up to those headwinds. We need to be agile. We need to be ever more agile. And that is precisely what we are doing in this context, which is so complicated.

We are showing resilience. We are protecting our margins certainly -- previous fiscal year. We are organically down 3% with regard to turnover with EUR 11 million. The ROCE, EUR 2,951 an organic down 0.8%. We have retained our profitability, organic operational margin, which is up by 64 basis points. The net result part of the group is EUR 1.6 million, plus 10%. Free cash flow is EUR 1.1 billion, plus 18% and the debt net EBITDA 3.3x.

I've gone through it quickly because Helene will be going into more detail with regard to these figures, commentating on our performance from a financial point of view shortly. These results are happening in a context which varies very much from one area to the next. Our geographical exposition has enabled us to mitigate the decrease in sales in 3 of our priority markets, notably China, America and Travel Retail Asia, our turnover is down 3%, as I said, organically in America, 2% in Europe and down 4% in the markets, Asia, Rest of the World, which is a total decrease of 3% at the group level outside the United States and China. We'll come back to that.

Our turnover is internally up by plus 1%. India, Japan, Nigeria, Turkey, South Africa, for instance, have shown solid performances. And overall, we have progressed or maintained our positions in 12 of our 17 main markets. As a quick reminder, Pernod Ricard is the leader of premium plus spirits outside the United States. In detail with regard to our key markets now, we have over the fiscal year 2025, first in the United States, a spirits market, which is growing but slowly impacted by confidence of the consumers, which is quite flat and the uncertainty linked to what is happening with regard to tariffs.

Our sell-out performances, that's selling to consumer is getting closer to those of the market, thanks to a solid execution and investments carried out and put into our brands. India, another strategic market, of course, benefits by higher underlying demand by the consumers and demographic situation, which is very strong. And Jameson notably is working exceptionally for us and became the first brand over the past fiscal year, first brand of imported spirits with over 6 million liters sold.

In China, the macroeconomic environment and the confidence of the consumers, which is very much down, is impacting our sales substantially, notably those of Martell. So several of our premium international brands, Jameson, Absolut, Olmeca are going well, notably pushed by a younger Chinese population after a difficult year in global travel retail, notably linked to geopolitical reasons. We are expecting an improvement with the suspension finally of the imports of Cognac towards duty-free in China. Conviviality can't be told, can't be written, you have to live it. So throughout the year, our brands have taken part in festivals, events throughout the world, moments, which have been dynamic, shared moments, authentic moments. I invite you to discover what the Pernod Ricard experience actually means that is where our brands come into their own in our different markets. And through them, they are the reason that of your group makes sense.

[Presentation]

So no moment, no second goes by without somewhere in the world, women, men are living the experience of Conviviality of Pernod Ricard. And that is also the power and the asset of our geographical footprint, world footprint. As you should have seen, geographic balance is a major asset. Our diversified portfolio is another competitive advantage, a main one, notably in the current context. Our brands have made solid performances.

Jameson, organic growth of 3%, notably is up in most of the markets. Absolut is growing in every area of the world, except in Western Europe, and that is linked to the slowdown in Germany amongst our local brands, the strategic ones. Kahlúa has an organic growth of 7% strategic local brands with excellent performances on the American market. Bumbu, which is part of our specialty portfolio of brands is #1 of super premium rums with an organic growth of 24% to 4%. We're going beyond EUR 0.5 million of crates sold.

Our portfolio is diversified and also rests on 2 economic models, which are very complementary. On the one hand, our aged spirits anchored in exceptional [indiscernible], territories have know-how, which is unique, timeless brands with a very capital intense, of course, which is a barrier to entry, which is very efficient.

On the other hand, there's our non-aged spirits, trendy used in cocktails, a bit more versatile, which can generate volumes rapidly and from a financial point of view, a lot of cash flow. You can see this even more clearly here with regard to our main competitors, whom we will not name here. Our portfolio is broken down 50%-50% between aged spirits and non-aged spirits. This balance is one of our markers of differentiation. And our objective is to maximize the potential of those 2 very complementary models whilst capturing the different moments of consumption identified. So our model has evolved down those lines, and we've simplified the organization in order to be ever more focused on the expectations of consumers. I'll come back to that shortly.

Maximizing the potential of our portfolio. Also goes through a management -- a dynamic management of said portfolio. As you are well aware, over the past 2 fiscal years, we have finalized the sales of Clan Campbell, Becherovka of our wine portfolio also of several Nordic brands. And we have announced several sales this very year, notably that of the whiskey Imperial Blue, and that will be finalized at the end of November, and that should have a positive -- immediate positive impact on margins and growth of turnover. So these strategic sales enable us to refocus on our brands with a strong potential, which is absolutely current with our strategy of premiumization and our objective of profitable growth over the long term.

Drawing the very best out of our portfolio is also cultivating on an ongoing basis, the desirability of our brands associating on the one hand with iconic and culturally strong experiences such as Absolut at Coachella Festival or also other iconic brands with prestigious partnerships such as Chivas and Ferrari or Jameson and the major league soccer in the U.S., but also Kahlúa and Dunkin' beyond our geographical global footprint and our diversified portfolio.

The third competitive feature of Pernod Ricard -- well, it's our teams, our teams of the world over, which are ones highly performing. I'm committed. They are the face of our group of your group. It is these teams, these men and women who embody and ensure that the Pernod Ricard spirit lives. And I want to thank them warmly from the bottom of my heart today in this complex environment that we're living through. They're continuing day in, day out to show their commitment to be resilient, to show their agility and creativity, which is remarkable.

In the current environment, I am specifically proud of sharing some of the awards that we have received this year. Best companies for women in India, top employer in China, Great Place to Work in Turkey, in Greece also and notably, in particular, this year, once again, your group is recognized as amongst the best employers 2025 by Forbes and is part of the companies identified as the best in the world by Time Magazine, taking into place criteria such as employee satisfaction and transparency with regard to sustainable development.

On this topic, as you will be aware, our commitment does not make back to yesterday. My grandfather, Paul Ricard already was committed for preserving biodiversity through the Institut Océanographique, which remains very active today, thanks to the involvement of Patricia. We are going -- we are looking to have growth, which is one sustainable and responsible. We want to create value over time for all of our stakeholders, I would say, from the bar to the table. So we want to share and preserve to share. That's what guides us. So Noemiee Bauer is now the CSO, Director of the group. She will be sharing with us our commitments and the means that we implement to respond to these commitments and to be in line with them. Noemiee, please for sustainable and responsible growth.

Thank you, Alexandre. Hello, everyone. I am here to present the progress made with regard to CSR this year. It remains a major stake for our planet, of course, but also for every one of us in spite of the current context. Our strategy that we launched back in 2019 enables us to carry out several points, an optimized use of our resources, a controlled management of our risk and the integration of new regulations with regard to sustainability. We are fortunate enough, Pernod Ricard, to have started our CSR actions very early. So today, we have a fantastic progress made already, and we can simplify our chapter on our road towards 2030 by targeting more actions for ever bigger impact. 2025 was a key year. We attained half of the commitments that we took back in 2019.

We have also published our first report of sustainability linked with the new regulation, CSRD. And we have also been recognized externally as Alexandre has just presented. So I will now be talking about the major advances made on each of the 4 pillars. The first one, we want to preserve our territories. We are very proud of having attained our objective of regenerating agriculture in all our wine growing regions. We see 3 advantages to that, the resilience of our crops, securing our supplies in natural ingredients, but also the reduction of carbon emissions. We have registered a decrease of 10% of carbon emissions linked to agriculture, which represents in total 45% of the emissions of the group. Good news. We have already 39% of our natural ingredients, which have been certified according to sustainability standards. We want to value human beings.

Our ambition is clear. We want to offer an environment of work, which is safe and valorizing and fair. We have reduced by 55% in 3 years, the rate of frequency of accidents with time off. We have 40% of managers, women managers today, and that is practically the double of what we had 10 years back, while still remaining fair from a wage point of view. And every member of staff has at least one training course per year because we consider training as absolutely essential with regard to development.

The main pillar, if you will, the third pillar, we need to act in a circular manner. We want to reduce our environmental impact throughout our chain of value, sometimes by us collaborating with our suppliers. In our production sites, we have already reduced by 42% our carbon emissions. And we are, therefore, well on the way to attain our objective of minus 54% between now and 2030. We have also reduced by 15% the usage of water on industrial sites with our suppliers. We have reduced by 13% our carbon emissions, notably linked to procurement, logistics or to packaging. And packaging precisely, we have attained 99% of recyclability.

Fourth pillar, in order to create moments of responsible conviviality, we promote consumption of alcohol with it balanced convivial and without any excess. We launched in 2022 a campaign for the general public, which is named Drink More Water, which has attained today almost 1 billion people. We also promote responsibility with other stakeholders like the visitors to our Brand Homes or bartenders that we train for eco-responsible activities in bars, hotels and restaurants.

You'll have understood our progress has been remarkable. That's the reason for which we can simplify our road map 2030 by focusing our actions on 10 pathways, which you can see on the screen here. These are looking to work for the resilience of the group, but also the creation of values for our brands.

As Alexandre said, thanks to our CSR policy, we are part of the companies that are most attractive and most committed. So to launch officially the second chapter, I invite you to show you a few pictures, and I thank you very much for your attention.

[Presentation]

Thank you very much, Noemie. Let's now turn towards the future. And a lot of you I have welcomed in front of this room have asked me questions, what does the future look like? Our ambition is a clear one, making of Pernod Ricard the house of reference for brands and premium experiences. If the time is demanding for our sector, as for many others, in fact, we are benefiting from wins that will push us for the long term.

There's a demographic growth and an increase of middle class that are supporting our development. Our innovation respond to the constant evolution in behaviors of our consumers. The cocktails and ready-to-drink and for example, is especially dynamic and helps us invest in new moments of consumption. The beach parties in the U.S. are 1 example. It is with great proud that we have launched the 4.5 degree bottle at Ricard last summer here in France. The small format of 20 centimeters is the fruit of more than 10 years of research. The success was such that this limited series will be relaunched in a definitive way.

Finally, the tendency to consume less but better is very favorable to our spirits, premium plus spirits segment, the most dynamic in alcohol industry that grew by 7% in average per year in the last 10 years. Well, in all times, human beings have needed to come together, share things and celebrate. This need has traveled through times and cultures. It is universal. It is timeless and very deeply human. At Pernod Ricard, we have decided to make it our [indiscernible] our purpose. We are conviviality creators. We make every encounter or meeting a source of inspiration. This is truly a conviction supported by all of the employees in the group. In a polarized world where everything accelerates, goes fast, we believe it is crucial to preserve what makes the essence of our humanity, enjoy the importance of being together and sharing small and big moments. Sharing a drink is one of the oldest way to favor meetings, encounters and cultivating relationships.

At Pernod Ricard, we are very proud to be the depositories of this legacy. And so let's look at these wins that are favorable and the volatility uncertainties, we think are present today, but we are able with our strength to look at the future in a positive way. Volatility, we said uncertainty are, will constitute the world today, but a presence that is well divided between the different regions in the world are key to absorb the geopolitical and economic shocks that have become part of our daily lives. Our brands are distributed in more than 160 countries, and we are lucky -- this is nothing due to just pure chance or to have a strong geographical footprint in a well-balanced way between mature markets and emerging markets and the different regions of the world on the other hand.

Our portfolio is a cross-cutting one with different categories of international premium plus spirits that can adapt to any time in conviviality in a changing world at a fast pace, a very fast pace. It is an essential factor of resilience and adaptability to quick evolutions and the consumption trends that evolve. The balance is thus a key element in our strategy at the same time in terms of geographical footprint or spread and in terms of the portfolio.

To the balance, we have an investment strategy that needs to be added in marketing and innovation. We are continuing to invest indeed in marketing and innovation in order to answer to consumers' expectations and to increase the value of our brands and finally, to prepare the future. I will let you discover in images a few emblematic new items launched in the last month.

[Presentation]

So here we are. And last month, some of the brands that you saw appearing on this video, Ramazzotti Aperitivo Arancia 0.0% has become the first brand in Germany that is alcohol-free, and that was launched only a year ago. The spirit of progress that animates us and of continuous progress, shall I say. This is applied to our organization that we want to be even more -- ever so agile with a global service at the service of the performance of the markets because we want to take full advantage of the size and the scale effect of your group on the one hand and on our proximity to consumers on the other hand.

At the head of this organization, the Executive Committee that I -- who is here present, and I thank them very warmly for their leadership that is essential in this difficult times. A great thank you, especially to Philippe Guettat, who, after more than 30 years of international experiences within the group and 2 at the head of our brands has decided to leave the company. So -- and we are very happy to welcome Jean-Etienne Gourgues at the Head of the Executive Committee as Vice -- Executive President in charge of Brands after a long experience in the group to date, 25 years in the group, as you can see on this slide. Jean-Etienne wanted to sit in the back, and we obliged him to sit in the front row.

So our sector is very sensitive to economic cycles. Let's be clear. And the growth of a sector and the global GDP are closely correlated. And after the super cycles that mark the after COVID period with an exceptional dimension, our industry is again confronted to these people in the world with a normalization that is exacerbated by these headwinds that I mentioned and illustrated previously. So yes, our sector is sensitive to the time, but the business model at Pernod Ricard with a unique balance that I shared just now sets us on a trajectory for growth that is sustainable and profitable in time.

We have known 3 years of exceptional growth after -- right after the COVID period. When you remember, the need for conviviality just exploded. We talked about revenge conviviality at the time. Then the market normalized. We have then entered into a period that we called perfect storm marked by a macroeconomic and geopolitic that were especially difficult, as I mentioned before. The current fiscal year '25 and 2026 will be or is a transition year before the expected improvement of the organic growth of our revenue or turnover. I'll come back to the outlook in a moment.

Our current operational margin, our PRO is making progress slowly, but in a sustainable way as we announced in our pluriannual strategic plan in 2018, focusing on a profitable growth with an organic growth by plus 39 basis points in average since 2014, our -- or 2019, rather. Our demand and profitability is translated with measures of efficiency. We have fully achieved our initiatives of efficiency about EUR 900 million in ‘22 and ’23, closed in '24, '25 and a new objective of EUR 1 million spread in -- or divided between the next years, starting with the current fiscal year. Our financial policy is well balanced, and we are offering a dividend per share that is unchanged compared to last year, EUR 4.70 submitted today to your approval. I will invite now Helene de Tissot to present in detail our financial performance.

Thank you, Alexandre. Hello, everyone. I will now present the consolidated accounts for fiscal year 2024 and 2025. Let's start with a few synthetic elements or a summary. Our financial performance is solid and resilient in a more difficult context. Our revenue is behind by 3% in organic with decreases in China, in the United States and Global Travel Retail in Asia that are impacting negatively the market mix. Nevertheless, a number of other markets are resilient or in strong growth, which helped your group in most of these markets to consolidate or win market share.

This well-balanced divide between developed and emerging markets is one of our strength that helped us during the fiscal year to compensate partially part of the cyclical difficulties met in certain markets and especially in China and in the United States. For the third consecutive semester, volumes are in growth, are growing and precisely by plus 2% for the fiscal year '24-'25. Despite of a revenue that's slightly declining, we have delivered a strong progression of the organic operational margin with plus 64 basis points. This performance is a result of the full achievement of the last fiscal year, the program that we started in '23 to '25 with an amount of EUR 900 million and a strong discipline on our costs.

We have also maintained the operational margins in published data despite of strong negative ForEx effects, mainly due to our emerging exchange rates or money. So our free cash flow is at $1.1 billion in growth, 18%, thanks to a rigorous management, and we are pursuing our investments to ensure the long-term growth with $1.2 billion invested in CapEx and strategic stocks invested for our aged alcohols and then are normalizing after their peak in fiscal year '23, '24. The management of our portfolio was very dynamic in fiscal year '25 with the finalization of the disposal of our ones and the announcement of the divestment of Imperial Blue announced -- a closing announced at the end of November, as Alexandre mentioned.

I suggest now to comment our accounts. We delivered a substantial improvement of organic operational margins with sustained investments in the desirability of our brand to support our long-term growth. The turnover is EUR 10,959 million, down by 5.5% in what was published and minus 3% organic. The gross margin is impacted by a mix -- a market that is this favorable but benefited from supported programs. The advertising and promotional fees represent 16% of the revenue. We apply a rigorous discipline in structural costs that are declining by 4%.

Consequently, the PRO is at EUR 2,951 million, down by 0.8%, a ratio of operational margins, 26.9%, an increase of plus 64 basis points in organic and a stable published data despite the negative exchange rate. Sorry, I went too far. Let's now go to the net result share of the group. It's at EUR 1.626 million, a growth of plus 10% because mainly the decrease of current charges compared to fiscal year '24, '25. These charges are linked to restructuring operations and are benefiting from a favorable comparison basis due to the fact that there was a depreciation of the wine activity the previous year and partially compensated by the recovery of the depreciation of Kahlúa. The interest rate is high and the average cost of debt is approximately 3.2%. What I suggest now is to move on to the evolution of our net debt. Our cash generation is solid with a free cash flow of EUR 1.133 million, an increase of 18% compared to the previous year.

Due to the fact of an improvement of these needs in working capital, thanks to the optimization of stocks and finished products, normalization of investments in strategic stocks and CapEx after the peak reached in '23, '24, investments that remain supported in order to secure the long-term growth. For '25 and 2026, we are planning an investment -- strategic investment amount that is inferior to EUR 900 million. Our active management of the portfolio gave a positive of M&A activity. Net debt is down compared to '24 to reach EUR 10,727, thanks to a better cash generation and the impact of ForEx on our debt, U.S. dollars of U.S. dollars that is lower compared to Euro.

The ratio, net debt over EBITDA at average point has progressed 3.3x, mainly due to the fact of the PRO published. And on this slide, a reminder of our financial policy that remains unchanged with our 4 pillars in order of priority, which are investments in organic future growth, our strategic stocks and CapEx, the active management of the portfolio with operations of mergers and acquisitions that create value, a distribution rate of dividends of 50% of the net results in current operations with an objective to increase the dividends each year. And last priority, in other case, repurchasing of shares when all 3 priorities are fulfilled.

Let's now take a look, if you like, at the revenue of the ongoing fiscal year that we communicated 2 weeks ago. For the first semester -- quarter, our -- as anticipated, we have a minus 7.6% organic impacted by the decrease of sales in China and the United States. As indicated last August, the withdrawal has been amplified by the adjustment of stocks in these 2 markets, China and the United States that weigh for about 3 points of growth. Our geographical exposure that is well balanced, records solid performances in several markets in most of the regions, whether in Asia, Africa, Middle East, North America or Europe.

These positive performances contribute to less than partly the withdrawal observed in our main markets. The markets in growth during the first quarter are namely Canada, Turkey, Japan and South Africa. The revenue in the United States is down during the first quarter by 16%, amplified by stock adjustments. The performance of sales such as Jameson, Kahlúa compared to our competitors, we see a gap in the performance on the American market that is being reduced. Our revenue is impacted by the reduction of precaution stocks implemented for the fiscal year '25 in reason of uncertainties that weighed on the tariffs and between European Union and the United States, uncertainties that ended last July, thus in adjustments in all these geographies.

In India, the turnover is in growth by plus 3% with an underlying growth that remains as dynamic excepted for the state of the Maharashtra, where demand is impacted by changes of rights that came into effect in July. Outside of the impact on this state of Maharashtra, the growth in India is up plus 7%. In China, the revenue we see -- so the growth in India is very dynamic and is up plus 7%. In China, the revenue is decreasing by 27% in a macroeconomic context that hits cost and the demand in consumers. The revenue has been also impacted by the stock adjustments as anticipated and the calendar effect that came late for the mid-autumn festival, which date is 2 weeks later than last year on October 6, which was on the 17th of September the previous year.

The revenue of Global Travel Retail is declining by 15% during the first semester with a recovery in our Martell sales for Chinese duty-free expected during the second semester. We expect a return to growth for Travel Retail over the year. And I thank you for your attention, and I will give the floor back to Alexandre.

Thank you very much, Helene. Let's now move on to the short and medium term for 2025 and 2026 for those this fiscal year that started on last July, we described this year as a transition year, and we plan to see an improvement in our organic revenue that will materialize during the second semester. We are following our investments in order to continue to increase desirability of our brands, thanks to an optimized resource allocation, a strength in efficiency innovations and experiences with a ratio of fees for promotion and advertising maintained at 16%.

We will preserve our organic operational margin as much as possible, thanks to a strict control in costs. And as I said, the execution of our program of operational efficiency for an amount of EUR 1 billion and starting during this fiscal year. And finally, the implementation of an adapted organization for the challenges in the future. Our ambition is to continue to deliver a strong cash generation with investments that are strategic and below EUR 900 million, and optimization in working capital and an improvement of the cash conversion compared to fiscal year ‘24, ‘25. And finally, we are planning an impact of exchange rate that will be significantly negative.

For the midterm and for the 2 following years, we expect an improvement in the organic growth of our revenue between 3% and 6% and a progression of our organic operational margin as well. This increase of organic operational margin will be supported by efficiency measures, this EUR 1 million of efficiency that I mentioned before, generated by the optimization of operations and the implementation of an adapted organization adapted to the future challenges. We plan the maintaining of the consequent investments behind our brands with a ratio for advertising and promotions by -- with a revenue of 16%, agility and reactivity to maximize opportunities at the level of our brands and markets. In terms of cash, we are aiming at a conversion ratio of about 80% and beyond to finance our priorities and our financial policy as well, of which strategic events that normalized for an amount of EUR 1 billion.

We trust our strategy. We are confident in our operational model and the commitment of our teams in order to generate sustainable growth for the long term, value for the long term. Pernod Ricard is a story of growth and vision to the benefit of all our stakeholders. And in this meeting, our 50th anniversary marks a key moment in our history and the opening of a new chapter.

We will continue to implement our very know-how or our commitment and our passion to the service of a fundamental need for meeting and exchanging. We will continue to create these moments of sharing that are authentic and sincere and to promote the pleasure of -- which is very simple, but that we have a tendency to forget, which is very simply the pleasure of being together. So the pleasure of being together is also being with you, our shareholders, the day of our general meeting, of course, but also all along the year, thanks to our club premium, which helps us exchange, discuss and helps us discover our brands, our legacy and the innovations today for tomorrow. I invite you to take a look at these meetings of the Club Premium that marked this very special year, that of our 50th anniversary.

[Presentation]

So we now get into the presentation of our governance. And I would like to seize this opportunity to thank from the bottom of my heart, the members of the Board of Directors. They're all with us here today here in front of you for their trust and the quality of the exchanges that we've had throughout the course of this very year in an operating context, which, as you all have seen, is particularly demanding. I will now give the floor to Patricia Barbizet.

Alexandre, thank you. Dear shareholders, this year, once again, it's a pleasure to introduce to you the Board as quality of Senior Member and Chair of the Committee of Nominations and Governance. So you have here the different members of the Board of Directors, some 14 administrators, Board members, 6 independent and 2 representing employeesbig . In addition, 7 nationalities are represented and there's a balanced representation between men and women.

This year, the makeup of the Board is going to evolve with the departure of Namita Shah, who wanted to step down and not renew her mandate. The Board is proposing the nomination of 2 independent members, Mr. Albert Baladi, who was formerly the CEO of Beam Suntory and Mr. Jean Lemierre, who's currently the Chair of the Board of Directors of BNP Paribas and recognized for his experience once financially and internationally. Well, Patricia, if you may allow me, I would like to see this opportunity to thank warmly in the name of all members of the Board, Namita, Namita Shah for her major contribution to her work and her commitment within the CSR Committee notably, we have also benefited from her know-how, intimate knowledge of our key markets with United States of America and India and her competencies, which stem from the different sectors she's been involved with. So Namita will no longer be sitting on the Board because -- and I quite understand her because of the professional responsibilities, which are particularly demanding currently.

We understand and completely respect that choice, and we wish once more to express all our recognition for the quality of everything she's accomplished and offered us. Thank you, Namita. The Board of Pernod Ricard has some 97% presence at our meetings, which really shows the commitment of the directors. There are also complementary skills and competencies, which facilitate exchanges and discussions and which ensure that the decisions we take are even more efficient. Every year, I also report to the general assembly what I have accomplished as a senior member. I've met with our main investors, with the Pernod Ricard teams, and I've led our annual roadshow on the questions pertaining to governance with our major and institutional investors in France and abroad.

We exchange with them notably with the makeup of the Board and the topics which are at the heart of our debates. Also in the continuity of our 3-year assessment, I've carried out an annual assessment of the Board with interviews with each of our members to talk notably about the organization and the modus operandi of the Board. I've also chaired the executive session, which happened outside the presence of the top management -- for the preparation of our meetings, the committee, the Board is assisted by 5 specialized committees that you see on screen here.

So there's an Audit Committee, a committee for Nominations and Governance, Compensation Committee, Strategic Committee and a CSR Committee. The makeup of the Audit Committee, which you have here on screen, is chaired by Philippe Petitcolin, who chairs this Audit Committee and the nominations of Governance, which I chair, a great honor. The other 3 committees of compensation is chaired by Kory Sorenson, the Strategic Committee chaired by our CEO, Alexandre Ricard; and the CSR Committee by Patricia Barbizet. So I now invite Kory Sorenson to join us to talk about the compensation and present of our CEO with looking at the different ex-post and ante-post topics. Thank you.

Hello, everyone. As the Chair of the Compensation Committee, I am going to be presenting the policy of remuneration of the corporate officers managers. So I'll detail the ex-post vote, which is mentioned in the ninth resolution and the ex, ante, which appears in Resolution #10. You'll find all these components on -- from Page 27 to 32 in the conveyance brochure. The elements of remuneration paid to Mr. Alexandre Ricard for the exercise '24-'25 fiscal year. That's in the ninth resolution include the gross set remuneration of EUR 1,325,000 unchanged. An annual variable remuneration of EUR 1,466,775 corresponding to the target. The detail of how each criteria was attained is features in the document. You have received an attribution of 27,000 performance-related shares corresponding to 60% of the maximum amount authorized for the policy of remuneration in line with the commitments taken to the shareholders last year.

This attribution is submitted to performance levels internally and externally with regard to additional pension, an attribution of 3,400 shares and EUR 256,812 gross was paid. So Mr. Alexandre Ricard also has a company car and providence and health cost regime. I also would add that Mr. Alexandre Ricard benefits from no remuneration as the Chair of the Board of Directors. Finally, it is important to note that out of the 59% of the shares attributed in the long-term plan 2021 were paid in '24, '25, which testify to the -- how rigorous the performance criteria are, the alignment between his remuneration and your interest as shareholders. This is pertaining to the profit sharing.

Now looking at the managers, the directors' corporate officers, which is in the 10th resolution. 10th resolution, the Board of Directors ensures every year that the major funding principles are adhered, improvement of performance, alignment of the interest with the shareholders and competitivity. For this year, the Board on the recommendation of the Remuneration Committee proposes to the proposal of the following adjustments in view of the criteria linked to the sustainability and responsibility strategy in the annual and long-term variable remunerations is a suppression of the [indiscernible] being removed.

The other elements of the remuneration policy on screen remain unchanged with regard to the preceding fiscal exercise. With regard to the level of attribution of the long-term profit sharing for '24, '26, the Board of Directors proposes to retain attribution of performance-related shares at the same level as the previous fiscal year, 60% threshold, which means that the policy is applied rigorously and in a measured way. So the remuneration target of your CEO will be balanced with 73% of his remuneration, which is submitted to performance-related conditions. Given those components, we propose that you approve the ninth and tenth resolutions. And I thank you for your attention.

Patricia and Kory, thank you for your presentations. I would now invite Mr. Marc Villartay from Deloitte & Associates presenting the name of the statutory auditors, the components for the general assembly.

Thank you, Mr. Chair. Ladies and gentlemen, shareholders, hello in the name of the college of the statutory auditors, KPMG and Deloitte. It is my great pleasure to report to you with regard to our assignment and the reports that we have written for the exercise, which closed on the 30th of June 2025. We have written several reports, and I propose in line with what generally happens during this assembly to not read them in their totality, but to provide you with a summary thereof. Here we go.

Let's start with our reports on the consolidated accounts and the annual accounts. These reports have been made available to you in the context of the current general assembly, and you will find them on the Pages 393 and 396 and 423 to 425 of the Universal Registration Document, URD. As a reminder, our work as objective is to obtain a reasonable assurance with regard to the sincerity, regularity and the fact that the accounts are correctly reported and to check and verify that they don't have any significant anomaly. Our reports on consolidated accounts and annual accounts mention the key points of our audit.

Regard consolidated accounts, the key points of the audit are the assessment of the brands and fiscal-related risks. With regard to annual accounts, the key point of the audit has been the assessment of the value of utility of the participation titles. Our reports on accounts understand include for each of these key points of the audit, the description of the identified risks and the response that we have brought to said description. As a summary, we have certified the consolidated accounts and the annual accounts of your company without any reservation or indeed observation.

Our reports also have the conclusion of some specific verifications as scheduled by legislation that we have carried out on the basis of information which are required in the management report. In line with this, we tested the exactitude and sincerity of the information supplied with regard to compensation and advantages paid to the corporate officers and also of the concordance with the annual accounts and their sincerity with the information relating to payment time frames.

Finally, in the context of the ESEF regulation, we verified and checked that the presentation of the accounts in line with the format of unique electronic European information, ESEF. So what I would suggest now is that we move on to a special report with regulated agreements, Page 426 of the Universal Registration Document, URD. As a summary, no new regulated agreement has been -- needs to be submitted to the approval of your general assembly and no regulated agreement already approved by the general assembly in previous fiscal years has happened over and carried on over the course of the exercise. We have also published 4 reports, which you'll find from Pages 452 to 455 of the universal registration document and which pertain to resolutions which are submitted to your approval, which will be submitted to your approval in the context of the extraordinary part of said assembly.

First off, pertaining to the 15th resolution with regard to the reduction of capital by cancellation of shares held in the limit of 10% of the capital per period of 24 months. A report on the issuing of shares and/or of different other values with maintaining and/or suppression of the preferential right of subscription in the context of the 16th to 20th resolutions. A report on the issuing of ordinary shares and of mobility values giving access to the capital with members who have corporate savings plans in the context of the 22nd resolution.

And finally, a report on the issuing of ordinary actions of mobile shares, giving access to the capital with suppression of the preferential right of subscription in the context of the 23rd resolution. Ladies and gentlemen, shareholders, with regard to all of the said resolutions I just stated, no observation to formulate. Finally, this year, your company published this year for the first time, information pertaining to sustainability in line with the European Directive CSRD. In this context, we have carried out verifications with regard to 3 points: the compliance of the process implemented to set out which information needs to be published, the compliance of information included in the sustainability plan and the respect of requirements for publication with regard to taxonomy. We have published a report, which concludes to the absence of errors, omissions or incorherence, which would be significant for any of these 3 points just mentioned.

Moreover, in the context of first application of the regulation, we have formulated an observation on the information, which appear in the Section 3.1.1 of the sustainability study. Ladies and gentlemen, shareholders, I thank you for your attention, and I give the floor back to our Chair.

Thank you. Thank you, Marc. We thank you for this presentation. I would now invite Madam Anne-Marie Poliquin, who's the Secretary of this General Assembly to present succinctly the resolutions that we are submitting to your vote.

Thank you, Alexandre. Hello, everyone. I'm going to be presenting in a very succinct manner, more so even than last year, all the resolutions which are submitted to your vote. You will find the integral text of said resolutions in the brochure of convocation, which was provided to you on Pages 51 to 66. 25 resolutions appear on the agenda, 14 which have an ordinary character and 11 extraordinary. We'll start by the ordinary ones. The third -- the first 3, the objective thereof is to approve the P&L and social accounts of Pernod Ricard for '24-'25 fiscal year. That is the first resolution. The consolidated accounts of the group, that's second resolution. And finally, the affectation of the result and determining the dividends as has been mentioned by Alexandre and Helen a bit earlier in the presentation. That is Resolution 3.

As I just said, to be noted that an account on dividend has been paid on the 25th of July last, and that [indiscernible] EUR 2.35 per action will be detached in November '25 on the 25th of November, and that will be put into payment on the 26th of November. If we can now move on to resolutions with regard to the makeup of the Board of Directors, Resolutions 4 to 8. This year, we propose 3 renewals of members, 1 independent member and the designation -- nomination of 2 more.

Let's start by the renewals. The mandate of Mrs. Anne Lange, independent member would be renewed for 2 years. And those of Madam Veronica Vargas and the [indiscernible] company Pernod Ricard would be 4 years renewed. With regard to the nominations, we propose to invite to sit on the Board, Mr. Albert Baladi and Mr. Jean Lemierre by mandate would have a 4-year duration. Those 2 candidates being present with us here today. I'll let Alexandre give them the floor.

Yes. Thank you, Anne-Marie. I am delighted to invite Albert Baladi and Jean Lemierre. You have -- whose candidacies are being presented to you today. Let's start with Albert. Albert, please.

Thank you, Alexandre. Hello, everyone. I'm Albert Baladi. I'm 61 years of age, I'm Lebanese. I left my country of origin Lebanon to work internationally. And this career has brought me to live in 7 countries on 4 continents. So really a global career professionally I've worked with Procter & Gamble notably, and I've had the opportunity over that time to work with different brands here in France. I then moved to PepsiCo Group where I worked in marketing at the Director General level.

And then I was with young brands, fast food. I worked notably in Australia, New Zealand, looking after operations there. And then I joined the industry of spirits. At the time, the group was Beam Global, which was then purchased by the Suntory Group to become Beam Suntory. 13 years in that group, Beam Suntory, I was in charge of each of the global international regions one after the other, and then I became CEO of the group. So I'm very honored and very -- feel very humbled and a lot of enthusiasm, ready to present it to you and to stand up here in front of you for my candid candidacy. I'm very excited about it because I believe that my past experience can indeed help the group Pernod Ricard to maintain the success -- the sustainable success that they know. So it's an experience of the industry of spirits, which I have. I've had the opportunity, and I've been fortunate enough to manage and to lead Beam Suntory during a period of sea changes for the industry and for the company. I've contributed to make Beam Suntory a brand recognized internationally, globally, third in the world notably.

And I think that I can bring to the floor these competencies and skills to help the group Pernod Ricard, but it's also an experience of family-run companies. So Suntory gave me, enabled me to understand and to enjoy working for a family-led company guided by strong values, by clear mission, assignment and remit and a long-term vision of sustainability, the pillars, if you will, that we can absolutely find within Pernod Ricard. And finally, even if I have been working globally, my market experience is based on in-depth knowledge of the American market, a critical market for Pernod Ricard, as you are too well aware.

So to conclude, I would just say a competitor of Pernod Ricard had a lot of respect for the company, Pernod Ricard, a lot of admiration for it. And I've also had the opportunity to collaborate and to work with Alexandre Ricard for whom I have a huge amount of professional respect. We work notably within associations of the industry, and we've developed a very warm relationship over the course of the years. So I'm standing again in front of you, as I was saying, with a lot of passion, a lot of excitement. And I thank you in advance for your support.

Thank you, Albert. Please. Delighted to be here. Two words. I'll be concise. The first one being, where do I come from? What is my career path has been? And the second, why am I here? Those are the 2 questions which will be of interest to you. Where do I come from? Well, I've been a civil servant for a long time. I was a manager in the Ministry of Finances here, notably with regard to the tax office. And this is a fantastic company. I won't say that I was Director General of the taxation office, but it's a fantastic company. It's open, very rigorous way in which you learn to work. Then I was elected President of the European Bank for Reconstruction and Development. It's a multilateral bank, which was founded when the [indiscernible] fell to assist the Eastern Europe to evolve and to move towards a democracy and to move towards entrepreneurship, private entrepreneurship.

Let me tell you a quick story, if I may, which I've already shared with Alexandre or Patricia, they'll have to listen to it again. I'm afraid, but my first professional contact with Pernod Ricard, it was brandy. And at the time, I always remembered this I acquired a lot of esteem for the group. I saw the courage, determination, how bold they were to take a brand, which had maybe -- was maybe not in the [indiscernible] of health. The quality of the relationship that they had with suppliers was -- and the growers was -- it gave them a way to survive, not to live, but to survive.

And then the relationships, the commercial, the business relationships with Armenia, of course, you know the Ararat Brandy, but it -- that was my first contact through the Ararat Brandy. I was extremely impressed by this spirit that they showed that they brought to the table, very impressed. And those are qualities that I saw during the presentations that we've heard today. Okay. That's it with my personal side.

And I'll come back to something which is a bit less emotional. That was back in 2001, by the way, so some time back. Then I joined in 2008, the group BNP Paribas. I've been the President of the Board of Directors of BNP Paribas for 11 years. Now since 2014, you all know BNP Paribas. It's a bank. It's a bank, you have it. Maybe yours, maybe you bank with BNP Paribas. Who's to know? So a few words. What are my motivations? It's a question that has been put to me, members of staff who said, why were you coming to be a candidate here? Why do you want to join us? Well, it's a fantastic company, Pernod Ricard, a fantastic French company. I know a number of them. It's a beautiful company.

And it is a company that France can be proud of. We don't say that enough. And it's a global company more than international, it is truly everywhere. It's a company which has products, values, staff, teams. And if I may say that, a remarkable executive team and a fantastic boss that is formidable. And that counts when you're asked to join or you say, would you like to join this Board of Directors? That's what counts at the end of the day. That's what you look at. So what can I do? Not much. I have an experience from an economic point of view in geopolitical situations, which may appear quite complex.

And Pernod Ricard, from my point of view, at any rate, deals with the situation in a dual manner. There are challenges, difficulties, of course, we talk about them, but there are also opportunities. And what is important is to seize the opportunities within the difficulties to identify them I listened carefully to what was being said earlier on. There are more opportunities than even mentioned, but they need to be grasped, build upon them, work, work over time and rigorously.

And that is the reason. Those are the reasons indeed, which drive me to want to join Pernod Ricard, fantastic company, fantastic leadership, fantastic products and also possibilities of development, possibilities of development for a French company. Well, that needs to be supported and worked upon. So if you agree at any rate, it would be a great honor, pleasure and determination that I would join your Board. Thank you, ladies and gentlemen. Thank you. Thank you, Jean. Thank you, both of you. Thank you, Albert and Jean. Back to Anne-Marie.

So I'll continue now with the resolutions 9 to 12 which have been explained in detail by Madam Sorenson, and I won't go into detail on them. I would just say that we need to obtain your approval with regard to the remuneration of the CEO, the Corporate Officer for '24, '25 and on the policy of remuneration to be applied for the current exercise '25-'26, the same for the remuneration and policy of remuneration of the directors. No regulated agreement has been concluded or has been carried out over the past fiscal year as indicated in the 13th resolution.

The 14th and final ordinary resolution enables the company to buy its own shares to be able to benefit its staff from long-term profit sharing. I'll pursue with the extraordinary resolutions on the agenda today. This year, we are proposing notably the renewal of all of our financial resolutions. These resolutions would enable the Board to take the measures, which are the most appropriate in order to finance the investments during external growth operations and to associate to the success of the company, all its stakeholders, notably its shareholders and its staff.

First off, we would like to renew through the 15th resolution, the possibility for the company of canceling its own shares. Its resolution would be used should the company be launching a buyback share program. Then there are the resolutions with regard to the increase in capital to -- there are several possible increases with maintenance of the preferential subscription rights of ordinary shares or securities, and that is the 16th resolution that would enable the existing shareholders to subscribe to the pro rata of their participation. There's also increases with suppression of the preferential right of subscription. These are the 16th and 17th resolution. And those increases will be done by offer to the public or they would be reserved to qualified subscribers.

Through the 18th resolution, we are proposing to approve an increase in the number of securities to be issued in the event of a share capital increase, subject to a limit of 15% of the initial issue carried out under the 16th, 17th and 19th resolution. Should there be a major demand, this could come into play. The other resolutions are looking at increase of capital, which would not -- which will be done by remuneration. That's the 20th resolution to issue ordinary shares under securities or the delegation of authority to increase the share capital by capitalizing premiums, reserves or profits.

Resolution 22 and 23, looking at the increase in share capital to our staff by either profit sharing or a similar. And then through the 24th resolution, we are suggesting an amendment of the Articles of Association so that they be in line with the attractivity law of the 13th of July, June 2024. And then the 25th and final resolution this time would authorize the Board of Directors to carry out any required legal formalities following on from decisions taken during the course of this general assembly. This presentation of the resolutions being concluded. I will now give the floor to Mr. Alexandre Ricard.

Thank you very much, Anne-Marie. What I suggest now is to open up the Q&A session. But before beginning our discussion, I'd like to inform you that we have received a questionnaire sent by the Forum of Responsible Investment, the FIR on October 1. As last year, the Board that took place this morning decided to answer by a written letter, and it will be published on our company website. It was published before the beginning of this general meeting. These elements, I made more precise. I declare this Q&A session with our shareholders open. Let's start with number 2.

Could ask for a question that will be on the Elliott Fund and it's Captain Paul. The Elliott fund that attacked Pernod Ricard first time in 2018 is coming back to attack, taking advantage of this difficult times that the company is experiencing, a decrease of the sales in the U.S. and China by 10%, the problems on the stock exchange. Elliott has approached a certain number of shareholders in the company, Wellington, shareholder withholding 5%, [indiscernible] 1.5% Artisan Partners, but also the window of the Pernod Ricard, [indiscernible] who is trying to sell her shares.

For this last person, it was -- there was an immediate reaction by stipulating that from now on, inheritance would have a preemptive right for any share of all the members of the family. This means it's applied to Madam [indiscernible], cannot be applied to all great shareholders approached by Elliott. How can we make sure? Then this is my question that the activist fund does not attack Pernod Ricard against -- again by asserting be able to improve the governance of the company. In short, how can we make sure that the company can work, produce, sell in full serenity in a peaceful way without always wanted to take a look in the back mirror to see what does, says or thinks, Elliott. Thank you very much.

Thank you very much for this question. Okay. Before answering, in 2015, when I took the lead of the group, there was no more growth. We had a top line, as we say, turnover at 0. And what we tried to do from 2015 until 2018, when we presented our strategic pluriannual plan, from 2015 to 2018, the whole challenge was to recover and to find growth again. And so we no need to rewrite history. The growth model at Pernod Ricard was broken. Yes, 2 years at 0 in growth, and the obsession of all the organization, and I'm saying the entire functions, all employees was growth. Not one meeting that didn't start without a question, what are you doing for growth? Was it for turnover or communication or reputational aspects or human resources or engagement, everything was focused on growth.

And in 2018, after moving from 0 to 2 percentage of growth, 2 to 4 and then 4 to 6 percentage in growth came the time of what we call profitable growth. And this was meant positioning ourselves and to make this growth in turnover a growth that was more expansion with operational margins. This is when Elliott came in by highlighting skepticism when it came to this profitability, but that we delivered -- and for proof, the slide where we see the evolution of the margin before and after this pluriannual plan in 2018.

We clearly see this inflection point of the growth -- margin growth. So to answer your question, maybe in 2 parts. The first part, the only way to avoid activists is performance, not the performance in the sector, but a relative performance because, of course, at some point, the sector, it remains what it is. There are cycles in these sectors, and this is the low part of the cycle. I hope it will not last, but it's our performance, our relative performance in the sector that will make the difference, and that can protect us. Starting when -- and this is what our investors qualify when they talk about controlling what can be controlled to note our cash flow and honestly, EUR 1 billion that we generated in fiscal year was done, thanks to great internal work in all the lines of the cash flow on the ground.

We worked on the cost. We controlled the cost strictly in a disciplined way, and I'll come back to that, winning market share as well. And the reality is that, as I said before, we won or maintained market share in 12 of our 17 first markets, top markets. Of course, the elephant in the room, as we say, are the United States, but that has been the case for more than a year. The performance in the U.S. comes close in a linear way every month, month after month to that of the market. Being very active in terms of innovation. And I believe that this year, the pipe of innovations that we have planned is perfectly remarkable. And finally, preparing Pernod Ricard of the future with our fundamentals and in one word, the protective pill, if we could name it as such, is the first is performance, the relative performance. And we are doing everything we can, everything we can to control it.

The second topic is my family. For me, my family is a real source of pride because when I see the way in which my family has been supporting us, when I say us, it's not me, but it's the entire management in the group, Pernod Ricard. My family is very involved and follows very closely. It's most or all of their legacy, and they are the first of the activists, an activist that knows the situation. It means they see things and they ask the right question, including on this balance. That is not an easy one and same for everyone, the question of finding the right cursor between short-term discipline and short-term performance, but aiming at long-term performance and Pernod Ricard of the future.

And this is what we're trying to do. All the employees at Pernod Ricard, I talked about the ExCom, they have 2 jobs, the Executive Committee. They work on the daily aspects and they're preparing at the same time for the future. These are these 2 factors, performance and having this reference shareholder. These are very faithful shareholders, and there's one who was a part of the Board, but you all you all who believe in the performance of the group, believe in this history to create value in time, of course, submitted the cycles, but things will come back in order. And we are trying to work. And let's try not to be too distracted by other hazards and things that could change because our reality is that we are focusing on value creation for the future, and this is our main commitment. Thank you.

Maybe to change sides number -- question number one. Hello, Mr. Agadi, individual shareholder for less than 50 years. So 2 short questions. Thank you very much for your presentation. Thank you for your -- reassuring us about the dividends. My first question concerns dividends. Why given our financial situation and the current contextual situation, why don't you plan a possibility to reinvest at least partially in shares as your [indiscernible], who are in the same situation.

And second sub-question, I'd like to come back to your question on Mr. Jean. Yes, because we must -- we are on the ground, we must look at stars. And you offered an overview of your beautiful -- our beautiful or magnificent portfolio with 200 brands. Maybe there are places where we're not yet at the top position. I think I read in the last weeks that where there are opportunities maybe in champagne or regions where we'd like to strengthen your position with the savings that you said, well, we should have the means to do so. Yes. Thank you very much for your answer.

Yes. Thank you very much for your 2 questions. So the first one part. One point. The difference between the Pernod Ricard business model compared to what we could call more focused actors on Cognac. As I said in my presentation, spirits, aged spirits represent a barrier by the need. The capital is the need they represent. And thus, in a low cycle period, cash flow is under tension, which is not exactly the case at Pernod Ricard. For shares or the dividends and shares today, it's not something topical, but this is something that the Board of Directors review at the end of the year, the fiscal year. But today, the statement is very solid, 3x. 3x, it's above where we would have rather seen the lever, but we've seen higher levers. And of course, our commitment is, as time goes by, to come back to these lighter, lower levers.

But in the meantime, it is not topical to pay dividends in shares for the moment. Concerning the brands, we have a management strategy that is very dynamic when it comes to the portfolio. And in the last years, in the 5 last years, for example, we were very active apart from the last 18 months on targeted investments. The main of them corresponded to fill the gap in segments where we were not or not very present. I name 3, the segment of aromatic whiskeys, we had no presence, not to say, not any at all.

And we acquired an aromatic brand dedicated mainly to the American market and other -- it's called Skrewball Whiskey. You won't find it in France, maybe one day, but you need a like peanut butter. And then we acquired a certain number of American whiskey brands. We were more present with the most strategic one called Jefferson, a bourbon that comes directly from Kentucky. And finally, a segment where we were present, but not enough, which is the most dynamic one in spirits, aged spirits, and this is tequila with Codigo.

And this has added other segments that are working very well to know the ready-to-drink. Ready-to-drink, we were present in innovation, but acquisitions in North America and Canada, namely, most specifically and nonalcoholic beverages with a nonalcoholic tequila called Almave. For 18 months, we are rather going in the opposite direction. We are getting rid of a certain number of brands who are less strategic, even if they played a part in the past, I already named them during the presentation. You should expect to see this pursuit of this dynamic management of the portfolio on both sides, meaning we will see the opportunities and seize them when it comes to targeted opportunities if they are meaningful in terms of our strategy. And then we will follow our disposals for brands that are not that strategic or not in line with what we want to do in the future. So we are continuing to be very active on these topics. Thank you very much. Maybe at the back of the room. Question #8.

Hello, I'm an individual shareholder for at least -- I have been for at least 50 years or more, but I would have a comment to make on your strategy. If you cannot -- whether you could change it to adapt it to the context or surroundings. You talked about conviviality. And if you go on the street or to cafes, people don't drink Clan Campbell or tequila or I don't know what, they drink beer. So without wanting to be a competitor and buying Heineken or Carlsberg, maybe you could envisage positioning yourself in beer. That is all.

Thank you very much for your question. That is France. We need to know that on the first global market, the most challenged segment is that of beer. And that has been the case in the last 20 years. It's just based on facts. This is data in the industry that show it and prove it. In the last 20 years, beer has lost 20 points of market share, where spirits have won 20 in market share. So to simplify it, and it's easy to remember. This is the first point. The second one is that we listen and we have set up a whole system dedicated to the knowledge, the continuous knowledge because things change.

And you're right, things change systematically when it comes to our consumers. For consumers, it happens when we analyze the situation, what we see in the new generations is that there's an interesting phenomenon. We see a frequency that is decreasing, which means that young consumers drink less regularly. And consumption -- regular consumption has a tendency to focus on beer. On the other hand, when they drink, they have a tendency to be more demanding, let's say it as such. And when they have the means, -- that's about purchasing power.

When they have the right means because it's a great occasion, they want to focus on spirits, the segments of spirits and premium spirits. Where we adopt, we adopt on different fronts, innovation. Because the reality is that these new generation love known brands because it's reassuring to them, but they like novelty as well. And on all of our strategic brands, almost all of the 13 strategic brands in our group, we have had innovations for 2, 3 years. We are innovating behind all of the brands. And I showed you the first one, Ricard in France, which innovated with Ricard [indiscernible] ready-to-drink this year.

So this is the first point. The second point is also the RTD trend, which is not specific to France, but another part of other markets, starting with the U.S.A. ready-to-drink, Canada, United Kingdom, Ireland, Germany, Australia, New Zealand, to name just a few, where there is a very strong emergence of what we call convenience, proximity and then, of course, ready-to-drink cocktails. Here again, we made some acquisitions in Canada and innovated in the rest of the markets going even to create partnerships with brands in nonalcoholic beverage, the first being an unknown brand in France, but very well known in the United States called Ocean Spray, and we have launched last year Absolut Ocean Spray.

And finally, for the nonalcoholic drinks, each of the markets in the group, I mentioned Ramazzotti Spritz Arancia 0.0%, that became #1 in the market for nonalcoholic beverages, and each market is developing a brand without alcohol, so with Pernod Ricard. So it's clear in our strategy, and you're absolutely right. following very closely and when we can, even anticipating the demand of our consumers is absolutely critical. And I'll go even further than that. It's not just consumers, it's the organization as such that is evolving also to face the world today. We have the intent to pursue acting in this way. Thank you. Let's move on to question #3.

Mr. Chair. Hello, Mr. [indiscernible] for the association for Patron Heritage and Individual Shareholding, creator of conviviality. Let me tell you that we are in a vacation period and here are the very top of the individual shareholders who congratulate Pernod Ricard's teams. Is it -- was it possible to applaud these shareholders who come during the vacation to be present during your general meeting? Can we get a round of applause?

So I'll come to my 3 questions, if I may. The first concerns champagne. From February to last July, rumors in Champagne mentioned the fact that Pernod Ricard envisaging the partial sale of moon. But it would seem that since September, there is a change of the brand's appearance aligning tradition and boldness. What about it?

My second question the social body of the Pernod Ricard company is an exceptional richness or wealth. You have been working on these for many years. You're enriching them regularly with training. So my question is, what about the employees or what do they think about the additional tax on benefits, the exceptional contributions depriving the company from part of their resources. And my third question, China. You seem to mention that in July, you accepted a commitment on a minimal price. Is that sustainable? Is that negotiable in a period that is short? What is your opinion? Thank you very much for your answers.

Thank you very much for your questions. About the date of this general assembly, it happens that in terms of logistics, this beautiful room was only available today. And sometimes reservations are made years and years before, ahead of time. So thank you very much for being here, and thank you to the teams as well who worked hard to prepare this general meeting, whereas they have families whose on holiday as well. So we were watchful to make sure that if everything goes well, next year, we would come back -- we will come back to a period that is less problematic in terms of logistics.

So to come back to your 3 questions, the first one for champagne. I'm sorry to disappoint you, but we cannot, and we will not comment on rumors of potential disposals, acquisitions and others because you mentioned a rumor in champagne, but there are rumors on all kinds of topics. And for obvious reasons, sincerely, I cannot explain these or say more about it. Depending on the brands and rumors, it's -- we need to work on the desirability of our brands. So when it comes to the exceptional wealth of our social body at Pernod Ricard and the taxes, maybe Helene, you have something to say?

I'd like to say I won't comment rumors, but I'm not going to answer this because this is a serious topic and indeed, debates are topical. But this overtax on whiskeys, which was a fact in the French context that is lasting and of course, could have an impact for Pernod Ricard. We can quantify it at about 30 basis points for our headcount, but it's around 25%. So this would go up to 25%, depending on our tax footprint. So we are following this very closely.

Indeed, last year, if you remember, we had invited someone from Oxford Economics to give you a presentation on the impact of the footprint of Pernod Ricard at the same time in France and on the global level. And we had assessed independently our contribution to the French GDP at about EUR 2.7 billion. And we also had on the global level, shared with you the division of value creation at Pernod Ricard, there was for EUR 1.3 billion for our suppliers in Agri-Food business for EUR 4.3 billion for our other suppliers, EUR 1.6 billion for our employees, EUR 1.2 billion for our shareholders; and finally, EUR 6 billion for the state. So this is what we presented last year.

Coming back to your third question about China, what happened? Maybe Helene, you could summarize what happened very precisely what happened?

Yes, I'm going to summarize. So indeed, China had been the object or had launched more precisely an antidumping investigation on dumping in January 2024, which created -- launched a number of questions for the Chinese authorities for the Cognac segment, and we collaborated as many other actors in this industry to answer in the best way possible to all the questions asked. There were numerous and very detailed provided by the Chinese authorities. There was -- there were 18 months to conclude at the latest. And the 18 months ended in July 2025, with what I could qualify as a satisfactory ending because having more clarity on this topic was essential for us.

And then the end was, we accepted to increase our transfer prices. This is very technical. Our transfer prices between the production company, Martell, French company, and price invoiced to our Chinese subsidiary, which is the base for the calculation of the custom fees with this or tariffs with this agreement that was signed with the Chinese authorities in a very formal way in the beginning of July, the threat of these tariffs is now resolved.

And now our tariffs are allocated on this transfer base. We even quantified the impact on a 12-month basis, EUR 45 million for this -- after exiting this investigation, this antidumping investigation with a total of EUR 45 million for us. And I'd like to add that the total amount of the evolution of this custom fees for Pernod Ricard is at EUR 80 million of additional cost of EUR 45 million in China, EUR 35 million in the U.S.

Thank you, Helene. Do we have any other questions? Maybe we can move to #6 over there.

Hello, dear Chair, [indiscernible] individual shareholder. I appreciate tremendously as usual, the link you make between the past and the present. It's a good thing, and it's very significant of companies that are family run. I have 2 observations, nevertheless. The first is that I noticed that you didn't reduce the debt very much. I already mentioned this last year, which was very high. In these troubled times, by the way, I forgot to say that minus 3% of turnover in this period where it's a mess all over the place, including here in France is a performance.

So in these troubled times, I'm coming back to the point, debt is dangerous and you reduced it very little. So my last idea is that you said, if I understood well, you had 290 brands. I fear that as everywhere here and we all look at the stock exchange. We know the rule. You need a diversity, you need diversified, but not scattered. But 290 brands that is more important than in the past or maybe we could -- should distinguish the premium brands from the others, but be aware, be careful. Wanting to have too many brands. Will you -- with that, will you be able to follow the necessary investments in order to develop each brand?

Thank you. I'll start by responding to your first -- to your second point, and then I'll let Helene talk about the debt level. We're talking about just over 200 brands over the past 2 years. The number of brands furthermore has reduced significantly with the sale of a certain amount of brands. I was talking about that earlier on during my presentation. Now, behind all these brands, the true brands, if you will, the ones which count, they are not that many. We activate on average, 15 brands per market. And it's true that we have moved, and this is linked to our transformation using the lever of artificial intelligence. We have moved from a capacity to be able to activate 6 brands on average, what, 5, 6 years back to 15 on average today.

And that's where stopping for the moment within the 200 brands, there are brands which, to be quite honest with you, they fill trucks, of course, and our salespeople, they're not even aware that they belong to us. I'll list a few off the top of my head here, [indiscernible]. That's just for the frank or French side, but you have the same thing in other markets, of course, which are brands which are completely amortized. And of course, they bring in cash, of course, but we're not investing in them.

And as I was saying earlier on, we are truly in an optic of a dynamic management of the portfolio, taking into account the capacity to activate to buy a brand today such as precisely a tequila brand like Codigo, and American whiskey brands such as Jefferson to have the capacity, a, to invest within it; and b, to activate it. Otherwise, we don't go ahead.

Recently, we've sold Clan Campbell, Becherovka. We've sold many, many Nordic brands, notably, we've sold the major part of our wine portfolio. And we're talking about some few dozen brands, some big, big ones, of course, and then there's some others, many others behind. So that portfolio is going to continue to evolve in order to -- as you say, we really want to focus on the brands which differentiate matters. They're not always the same from one market to the next. So that is something that we are working on, on a constant basis, and this review of portfolio is practically -- well, it's done on a constant basis.

In debt level, yes, I remember your comment last year, so very well. And of course, it is a topic that we monitor closely in order to retain a solid P&L sheet and also to improve our generation of cash. So the debt has been reduced by EUR 224 million over the fiscal year, which translates those efforts made. But that said, it brought our net debt on ratio on EBITDA to move to 4.3. It was 4.1 last year. So it is a topic which deserves to be managed with a lot of vigilance whilst protecting the investments for future growth, as we were saying.

We always need to find the equilibrium before the performance of the ongoing fiscal year whilst securing future growth in our industry and especially with the portfolio that we have, 50% thereof is made up of aged spirits. So that also signifies that we need to continue to invest in CapEx, capital expenditure for production, for maintenance, but also in strategic inventory. But you can see that with regard to these investments, which were EUR 1.4 billion for 2024, there was a peak with an acceleration of certain projects, very specific ones and significant ones from a financial investment point of view, which are the construction of distilleries.

Since that peak, we have reviewed in depth and reprioritized all of our investments in order to normalize the level of investments, bearing in mind and taking into account the context, but also to protect future growth. So we've reduced these investments by from EUR 1.4 billion to EUR 1.2 billion from '24 to ’25. And as I was saying earlier on, I gave out a lot of figures. Those investments are not superior to EUR 900 million for 2026.

So as such, that will be a source of less investment of EUR 300 million. So it's really this balance that we're looking to attain to improve our cash generation possibilities, the strategic investments which are normalizing themselves, which we're looking to prioritize with an optimization of our working capital requirements. And I talked about the EUR 900 million and the EUR 1 billion over the next 4 years. That is also pertaining to cash for promotion and publicity, especially in a challenging period. So optimization also of that need in Working Capital Requirement, WCL to improve our ratio of cash conversion, which was at 74% this year, 67% last year and on which we are looking to get back to rapidly to 80% and go beyond the 80% indeed.

So a lot of focus of the teams, not just the financial teams because of cash. It's the whole organization contributes to it, to generating it, to maximizing that and this ratio of net debt on EBITDA. That will improve through cash generation, through savings and the increase in our current operating result, which was also impacted by the negative foreign exchange impact, which was EUR 110 million last year and which is -- remains significantly, which we believe will be very negative in the fiscal year to come because the euro is appreciating with regard to the emerging currencies, but also the U.S. dollar because last year, we had an average rate of 1.09 between Euro and Dollar.

And today, the spot rate is 1.16. I haven't checked today, but it's no doubt around that EUR 1.16. So the evolution of foreign exchange situation is not favoring us, but it remains a factor that we have to take into consideration in the rolling out of our efficiency measures.

Thank you, Helene. We can maybe take on, maybe possibly 2 additional questions. So let's go over here, 5 up there.

Mr. Chair, hello. Two questions. A question with regard to the United States. First off, can you assess already the impact of the tariffs in the United States as of today? And how much do you believe that the top line will suffer in 2026 pertaining to tariffs? The second question regards to dividends. The current dividend is 65% of its net profit and 65% of its free cash flow. Is it not -- would it not be necessary to reduce that to preserve the P&L result. Several speakers indicate that 2026 may be very challenging for consumers. Thank you.

First question, the figure is EUR 35 million. The impact over 12 months and tariffs were implemented and are in place for the European Union at the end of July. That's good, gives us a good idea to forecast and translate into the full year. To describe our footprint in the American market, approximately 50% of our turnover is done by products imported by the European Union and 10%, respectively, coming from the U.K., Mexico and Canada. So the implementation of these tariffs on European Union covers 50% of our imports to the United States.

Second question, looking at dividends, and that is absolutely linked to what we have expressed with regard to the solidity of the P&L sheet, the predictability of our financial policy and the improvement of our free cash flow because over the past fiscal year, the free cash flow was more or less exactly equivalent to the amount of the dividend paid, which is submitted to your vote today. Thank you.

Thank you. Question #4 from #4.

Mr. Chair, a question. When I look at your annual report, Page 460, 461, I see that the Ricard family possesses 14.3 approximately percent of the capital, which means that with regard to the price of EUR 86, EUR 3.1 billion and [ 920.2 ] shares nonrepresentative of the capital. Page 460, I see there are approximately 12 million, 12.4 million of shares, which belong to the Ricard family in different structures and represents over EUR 1 billion, which are belonging.

And do you believe that -- I believe that there are people in families who have debt means that, that means that you have a policy of dividends, which is quite substantial. Today, the dividend is EUR 4.2 over a full year. That's over 4.80%. I also heard that you were the first activist of Pernod Ricard that in your slide on the CSR. The fourth point is the fairness of chances, equality of chances. Does the application of a Zucman type tax would that improve the CSR program of Pernod Ricard. So 2 points, the pledged shares and the CSR point.

One point with regard to the capital, et cetera. So there are systems which have been put in place for the Pernod Ricard S.A. to be present in the capital of the group and to provide precisely this long-term vision and this integrity or, if you will, this independence. With regard now to the policy, the financial policy of the Pernod Ricard Group, this policy which is discussed every year at the level of the Board of Directors, and that stems from us listening to all of our shareholders.

Of course, it's not just Pernod Ricard that we listen to, but there are several names of shareholders, which have been mentioned earlier on, Wellington, Capital, Aris -- Harris, indeed, BlackRock, many others who have points of view, which are very clearly expressed with regard to dividends. And the Board of Directors discusses this policy in line with what they hear from the shareholders on the one hand and also in function of the activities of the group. And then they review that on a regular basis.

Now with regard to the Zucman tax, as I have no doubt, I'm certain that you know my opinion personally, I'll let Patricia Barbizet maybe provide her point of view or point of view, which is maybe more objective with more height.

The Zucman tax is a very bad idea because it destabilizes in principle, the confidence investors can have in France and in the French situation. So I think it's a very bad idea and should not be followed at all.

Well, that is precisely the same point of view as me, indeed, Patricia. Now what I suggest is that we bring this 45-minute Q&A session to a close. Once again, I thank you for your questions, for your participation. So I declare the Q&A session with the shareholders closed and suggest we move on now to voting on the resolutions, proposed resolutions. This year, again, voting is done through tablets.

A quick film will explain the usage of these tablets and the electronic votes and how they can be cast. To vote on the resolutions of the general assembly, a tablet has been provided to you. It's strictly personal and can only be used during this assembly. When a resolution is to be voted on, the voting window will appear automatically on your tablet even if it is not switched on or turned on, you can't see the screen. The screen is black.

To vote, nothing is simpler. Just to press on the button corresponding to your choice in favor, green, amber, abstention or against, red. And click press on okay to validate your choice before the voting is closed for each resolution. Once your vote is validated, you can no longer modify it. Please return your tablet as you leave the venue.

So I suggest that we move now on to the votes of the resolution. The final quorum is 81.2%, representing 204,419,414 shares for 449 shareholders. First resolution, approval of the parent company financial statements for the financial year ended 30 June 2025. The voting is open.

[Voting]

Voting closed. Resolution is carried. Second resolution. Approval of the consolidated financial statements for the financial year ended 30th of June 25 of voting open.

[Voting]

Voting closed. Resolution is carried. Third resolution. Allocation of net profit for the financial year ended 30th of June 25 and setting of the dividend. Voting open.

[Voting]

Voting closed. Voting carried. Fourth resolution, renewal of the directorship of Anne Lange. Voting open.

[Voting]

Voting closed. Resolution carried. Fifth resolution renewal of the directorship of [indiscernible] as administrators. Voting open.

[Voting]

Voting closed. Resolution carried. Sixth resolution. Renewal of the directorship of Madam Veronica Vargas as a Director. Voting open.

[Voting]

Voting closed. Resolution carried. Seventh resolution. Appointment of Albert Baladi as a Director. Voting open.

[Voting]

Voting closed. Resolution carried. Eighth resolution. Appointment of Jean Lemierre as a Director. Voting open.

[Voting]

Voting closed. Resolution carried. Ninth resolution. Approval of the fixed and variable components of the total compensation and benefits paid during or awarded fiscal year '25 to Alexandre Ricard, Chairman and CEO. Voting open.

[Voting]

Voting closed. Resolution carried. Tenth resolution. Approval of the compensation policy applicable to Alexandre Ricard, Chairman and CEO. Voting open.

[Voting]

Voting closed. Resolution is carried. 11th resolution. Approval of the information referred to in Article L22-10-91 of the French Commercial Code relating to the compensation of each of the corporate officers. Voting is open.

[Voting]

Voting closed. Resolution carried. 12th resolution. Approval of the compensation policy applicable to directors. Voting is open.

[Voting]

Resolution is carried. 13th resolution approval of the related party agreements referred to in Articles L22-5-38, and following of the French Commercial Code. Voting open.

[Voting]

Voting closed. Resolution carried. 14th resolution. Authorization for the Board of Directors to trade in company shares. Voting open.

[Voting]

Voting closed. Resolution is carried. 15th resolution. Authorization for the Board of Directors to reduce the share capital by canceling treasury shares subject to a limit of 10% of the share capital. Voting open.

[Voting]

Voting closed. Resolution is adopted. 16th resolution. Delegation of authority for the Board of Directors to increase the share capital by a maximum nominal amount of EUR 129 million, approximately 33% of the share capital. Voting open.

[Voting]

Voting closed. Resolution adopted. 17th resolution. Delegation of authority for the Board of Directors to increase the share capital by a maximum amount of EUR 39 million, approximately 10% of the share capital. Voting open.

[Voting]

Voting closed. The resolution is adopted. 18th Resolution. Delegation authority for the Board of Directors to increase the number of securities to be issued in the event of a share capital increase with or without preferential subscription rights. So each limit of 15% of the initial issue carried out under the 16th, 17th and 19th resolutions. Voting open.

[Voting]

Voting closed. Resolution is adopted. 19th Resolution. Delegation of authority for the Board of Directors to increase the share capital by a maximum event of EUR 39 million, through the issue of ordinary shares under securities granting access to share capital of the company or any other company without preferential subscription rights pursuant to Article L411-21 of the French monitoring financial code. Voting open.

[Voting]

Voting closed. Resolution is adopted. 20th resolution. Delegation of authority for the Board of Directors to issue ordinary shares and/or securities granting access to the share capital of the company or any other company as contribution in kind, granted the company subject to a limit of 10% of the share capital. Voting open.

[Voting]

Resolution is adopted. 21st resolution. Delegation of authority for the Board of Directors to increase the share capital by a maximum nominal amount of EUR 129 million, i.e., approximately 33% of the share capital by capitalizing premiums, reserve profits or other items. Voting open.

[Voting]

Voting closed. Resolution is adopted. 22nd resolution, delegation of authority for the Board of Directors to increase the share capital subject to limited 2% thereof through the issue of shares and/or securities going to access to the company's share capital reserved for members of company savings plans. Without preferential subscription rights. Voting open.

[Voting]

Voting closed. Resolution is adopted. 23rd resolution, increase of the share capital subject to a limit of 2% thereof through the issue of shares and/or securities going to access to share capital reserved for certain categories of beneficiaries without preferential subscription rights. Voting open.

[Voting]

Voting closed. Resolution is adopted. 24th resolution. Amendment to Articles 21 and 33 of the bylaws. Voting open.

[Voting]

Voting closed. Resolution is adopted. And finally, 25th resolution with regard to the legal formalities. Voting open.

[Voting]

Voting closed. Resolution is adopted. Nothing more being needed. I close the session at 4:28 p.m. precisely. Ladies and gentlemen, dear shareholders, we thank you for your attention and presence.

Good morning to all of you. We're very pleased to welcome you today to our Pernod Ricard Q1 FY '26 sales call. I'm in the room with Hélène de Tissot, Group CFO. Hélène will take you through the numbers with some opening remarks. And after that, we're going to take your questions. Hélène, over to you.

Good morning, Florence. Good morning, everyone, and thank you for joining today's Fiscal Year '26 Q1 sales. So we are reporting today a 7.6% decline in organic net sales for our first quarter. As flagged in our recent full year communication, the slow start to this year was expected with 4 key reasons. First, in the U.S., and while we are encouraged to see that sellout performance in the U.S. is continuing to improve related to the market, our U.S. net sales have declined in Q1, amplified by inventory adjustments.

Second, the sharp contraction of sales in China in the context of continuing macroeconomic and consumer sentiment weakness, and also reflecting the impact of some trade inventory adjustments. The impact of the technical effects in those 2 markets on our Q1 means that the underlying performance is significantly better than on net sales by circa 3 points. Third, strong underlying growth in India, though with sales negatively impacted by excise policy changes in Maharashtra State since July. And fourth, global Travel Retail sales are challenged in Q1 as the benefits of the resumption of Cognac sales in the China duty-free channel is expected from Q2.

With our broad geographical base, we see positive performances in a number of markets across most regions; in Asia, in Africa, Middle East, North America and Europe, helping to partially mitigate the decline in those top markets. Markets of notes that have enjoyed positive sales momentum in Q1 include Canada, Turkey, Japan and South Africa, and we continue to enjoy positive market share momentum in key markets.

Price/mix is largely impacted with the negative market mix. Volumes declined driven by key markets, notably U.S. and China impacted by destocking; and India, impacted by the Maharashtra excise policy changes. Reported sales are minus 14% with a negative FX effect of EUR 143 million, linked to U.S. dollar, Indian rupee and Turkish lira and a negative perimeter impact of EUR 54 million, mainly linked to the disposal of the [indiscernible] brands.

Turning now to take a closer look at sales in our markets and regions, starting with our #1 market, the U.S. So net sales, minus 16%. The U.S. market remains subdued for Nielsen and NABCA, we see the market sellout value for total spirits, including RTD for the past 3 months is running at circa minus 1% in Nielsen, minus 2% in NABCA. We are continuing to close the gap with the market despite some softening of the spirits market as Pernod Ricard sales out momentum remains rather resilient at circa minus 6%.

Our gap to market and bottled spirits has consistently improved during the past year and that gap is now reduced to circa 2 to 3 points. We have strong performances, beating the respective competitive sets on some of our top 3 brands that are Jameson, Absolut and Kahlua. Beyond those, we also see good momentum amongst our other brand priorities, including the Glenlivet, Martell, Del Maguey and Jefferson's. The sales in the U.S. were also impacted with some inventory adjustments as explained at our full year call.

As a matter of fact, fiscal year '25 year-end wholesaler trade inventories were higher than would otherwise have been the case due to the uncertainty regarding trade tariffs during H2 of fiscal year '25. So turning to look at our U.S. marketing. We are maintaining the U.S. marketing investment level above the group average, and we have, I must say, a strong activation program ahead of us as we enter the Q2 festive season. We have as well impactful product innovation, some that are now in their second year, including Kahlua Chocolate Sips, Absolut Cocktails Cosmopolitan and Espresso Martini, Jameson Triple Triple and Jefferson's Rye Whiskey.

Newly launched product innovation this fiscal year include Kahlua Dunkin, which is a co-branded Kahlua with Dunkin Donuts for caramel-infused experience. Skrewball 100ml small format and the Glenlivet Jamaica Edition. And we have more, I must say, exciting product innovations scheduled for later this year that we can share details of those with you in February at our H1 sales and results update.

Sports sponsorship are important avenues for engaging with our consumers, notably that between Jameson and the Major League Soccer where we are fueling fandom with advertising and out-of-home visuals, city localized key visuals of an on-premise tools with tools for our owners and retailers to activate the brand and as well e-commerce assets.

And we are deploying a range of media activation on our priority brands partnering with cultural icons, including Kahlua with Salma Hayek, Jameson featuring Aaron Taylor-Johnson, the Glenlivet featuring Thomas Doherty and Redbreast featuring Andrew Scott. So altogether, an intensive program to support our improving momentum in the U.S.

Moving now to India. India net sales are up plus 3%. So while enjoying strong underlying consumer demand dynamics, sales in India are negatively impacted by the excise policy exchanges in Maharashtra state implemented in July. The 50% increase in excise tax from 300% to 450% leads to a significant increase in consumer prices at circa 35% increase, which is having a consequential impact on demand. Elsewhere, India sees strong sales growth both on Royal Stag and especially on international brands, led by Jameson. For the full year, we are expecting the excise policy change to continue to weigh on our overall sales performance, though with continued favorable and dynamic underlying trends.

Let's move now to China. China is posting a Q1 at minus 27%. So sales contracted at a similar rate as last year Q1 in a still challenging macroeconomic environment with soft consumer demand over the summer and into the Mid-Autumn festival, an impact from some trade inventory adjustments as expected. Demand was impacted by the tightened regulatory environment in place since Q4 last year, which particularly affects sales in the high-end on-trade. While Cognac sales remain depressed, other premium brands continued to grow in Q1, notably Jameson and Absolut. We remain cautious on the demand environment ahead of the importance CNY period.

Let's move now to Global Travel Retail, minus 16%, following the resolution of the Cognac anti-dumping investigation in July, the suspension of Cognac sales in China duty-free has ended. Our sales in that channel are expected to resume from Q2, and so Q1 sales remained subdued. Travel Retail in Asia beyond China remains weak, notably in South Korea. In Travel Retail, in Europe and America, underlying performance has been strong over the summer, while sales were impacted by phasing. Global travel retail expected to be back to growth in fiscal year '26. In other markets, elsewhere in Asia, Rest of the World, we see dynamic sales performance in Japan, in Turkey and South Africa, an easing in the rate of decline in South Korea and a sharp contraction in Taiwan market with softening consumer demand.

Let's move to Europe now. So market in Europe over the Q1 is at minus 4%. Spain is stabilizing. There is an easing in the rate of decline in Germany, a soft start in France against a high comparison basis with restock in a major retailer in Q1 last year and soft start in the U.K. Poland is negatively impacted by sales phasings, though sellout remains in growth. Latin America saw a decline in both Brazil, which is due to phasing, and in Mexico, due to continuing weak consumer demand conditions. North America saw a strong start to the year in Canada from RTDs and also Jameson and Absolut performing well.

So for the full year, which, as we say, is a transition year, though the environment is challenging, especially in China, we maintain our expectations for improving trends in organic net sales compared to last year, [indiscernible] H2 with a more favorable comparison basis, later timing of Chinese New Year and a rebound in Travel Retail. We will defend our organic operating margin to the fullest extent possible, supported by strict cost control and the implementation of our fiscal year '26 to '29 EUR 1 billion operational efficiencies program, including the adaptation of our Fit for Future organization.

We continue to invest to increase our brand's desirability with sharp marketing investments allocation between markets and brands, focused on improving efficiency and effectiveness, focused on innovation and experiences while maintaining our A&P investment ratio at circa 16%. Regarding cash, cash generation remains a focus. Strategic investments, that is CapEx and change in strategic inventories will be less than EUR 900 million in fiscal year '26, and we will apply strong operating working capital management. We expect cash conversion ratio to further improve versus fiscal year '25.

Foreign currency exchange impact is expected to be significantly negative. We remain confident in the attractiveness of the spirits markets and in the long-term demographic and consumer trend tailwinds, leveraging our unique broad-based and balanced geographic breadth and diversified portfolio of premium international spirits. We continue to project organic net sales growth in the medium term, aiming for the range of circa plus 3% to circa plus 6% per annum on average with annual organic operating margin expansion.

We are confident in our strategy, in our operating model and in the engagement of our teams to deliver sustainable value growth over time. That concludes my opening comments, and we can now open the line for questions.

[Operator Instructions] The first question is from Edward Mundy, Jefferies.

Hélène, Florence, so 2 questions for me, please. I think you have been flagging a softer first quarter and it's very much in line with expectations. And you've kept your guidance unchanged. I think the guidance would imply that as you go into H2, you're probably going to be doing positive revenue growth. Could you perhaps flesh out how you sort of think about that? And what are the main things that are going to be slightly different in the second half relative to what we're seeing in this first quarter, is the first question.

And then just a little bit more color on the cost side to defend as much as possible the margin, could you perhaps provide a bit of update on some of the initiatives underway and to what extent you can sort of double down on those, given the environment is still quite tricky.

Yes. Thank you very much, Edward, for those questions. So let's start with the first one. As you said, we were expecting a soft start for the reasons I started my introduction remarks with, and that's why we were obviously sharing that with you at the end of August. So H1 is impacted by technicalities that are materializing in Q1. So why will H2 be stronger than H1, I think that's more or less your question.

So first, we have the resumption of our sales in Martell China duty-free, which is only starting as we speak in Q2, and this will obviously contribute to a much stronger H2 for Global Travel Retail, which we'll be lapping last year, a low comp starting probably in December. So that's the first element.

Second one, there is as well some easier comps in China, which will be lapping a very weak CNY last year, and we'll have as well a later CNY this year. Then we have as well obviously still quite strong ambition for India, which will very likely be in a very dynamic trajectory in H2 with still some impact of the Maharashtra excise policy, but which could be a bit less impactful in H2.

When it comes to the U.S. It's too early to really be, I would say, quite specific on what we expect in the U.S. because, obviously, we are only starting the festive season as we speak. But as you know, our focus is really to keep improving our sellout momentum, which has been quite continuously materializing this improvement for already a few months now.

But obviously, there is, as well the impact on the inventory adjustment that will have a weigh on the trajectory in the U.S. on the full year. So this is the key, I would say, drivers of H2, and I must obviously as well, highlight the Rest of the World where we have a resilience or strong growth for already a few quarters that we expect obviously to still be delivering in H2.

Your second question is on the margin. Yes, so we are confirming our ambition to protect the margin to the fullest extent possible. And I would say that this is, first, because we have obviously already quite strong track record in terms of delivery of EUR 900 million 3-year program from '23 to '25 with half of it being delivered in '25. So those initiatives have not stopped, obviously, at the end of June last year, and we are continuously accelerating of those efficiency.

And as you know, we have now this EUR 1 billion program, which is, as I just said, a continuity on many aspects versus what was already contributing to the margin expansion in the very recent past. So without maybe going through every line on the P&L, I can tell you, it started obviously with the first line, which is the top line and price and premiumization that is the core of our strategy. And we're going to take price where we can and when we can, for sure, with as well some initiatives in terms of revenue growth management and making sure that any promotional efforts is optimized.

Then we have all the initiatives on our COGS, which are really covering the full, I would say, scope of our production on procurement to production to supply. And this is obviously something which has been very significantly contributing to the EUR 900 million. So there's much more to come.

And then when we look at the A&P, there's as well, strong ambition in terms of efficiency with reinvestments behind the right, I would say, brand market combination. And when it comes to the SG&A, there is a combination of what we call Fit for Future organization, which is adapting the organization to the current environment, but as well to the future growth ambition that we have, plus some, I would say, strict cost control measures that have been already in place for more than 18 months and that are obviously still fully implemented.

The next question is from Laurence Whyatt, Barclays.

A couple for me. Firstly, on the destocking in both China and the U.S.A. I was wondering if you could quantify what you think the numbers would have been in those 2 markets, if you didn't have any destocking, just sort of giving your underlying change in those 2 markets? And also similarly, do you think the change in distribution in the U.S. had any impact on the American level of destocking? Or do you think that was sort of too early to see any of that at the moment?

And then secondly, on the changes in Travel Retail in China, you mentioned this as a reason why you expect an improvement throughout the year. Do you expect Travel Retail for Martell in China to go back to where it was as we've sort of removed this restriction from the government. Do you expect it just to go back to where it was in sort of say, Q1 or calendar Q1 of 2025? Or do you think it will still be a little bit of a subdued level in the travel retail channel in China?

Thank you. So let's start by your first question for U.S. and China. So I start with the U.S. So first, let me maybe remind you the key reason for the level of inventory that we started the year with. This is really the traffic -- the tariff uncertainty that we were going through in H2 last year. So that's the main reason. I think the change of distributors is probably quite anecdotical. So the main reason is really this tariff uncertainty. And when you look at our sellout, obviously, looking at the Nielsen and NABCA, we are at circa minus 6%, where the sell-in are at minus 16%. So I think you have clear ability to do the math in terms of underlying performance versus the Q1 trajectory.

When it comes to China. So China, it's a bit more difficult in terms of full visibility as we speak because first, this is obviously the impact of Mid-Autumn festival. And as you probably know, this year, it's almost 3 weeks later than last year. This year, it was 6th of October, last year, 17th of September. So it has an impact between the sell-in but as well depletion in September and October. And we don't have yet the full visibility on the depletion in September.

So what I can tell you is that getting into Mid-Autumn Festival, our understanding is that the depletion were probably around, I would say, circa mid-teens decline, where you have the numbers for China at minus 27% in terms of net sales. But again, not completely easy to do the math because of the timing of Mid-Autumn Festival. But for sure, this is -- this means that our performance -- underlying performance is better than the Q1 numbers. And when it comes to the full impact on the group performance, as I mentioned in my introduction, it's probably circa 3 points, which is linked to those inventory adjustments.

Your second question, for Travel Retail, China duty-free. Obviously, as I said, it's just resuming. So a bit early to tell you what is the consumer demand. But to be fair, there is some link between China domestic demand and China travel retail demand. So the consumer demand in China domestic is very soft. So I would say it would be cautious to assume at that stage that the demand in China, Travel Retail could be a bit lower than it was 1 year ago. But we'll know that obviously in a few months.

Just to clarify on the Travel Retail then. You're getting the same amount of shelf space that you had previously. You're not seeing any differences with that sort of -- any of these sort of changes?

Yes. yes, no difference.

The next question is from Sanjeet Aujla, UBS.

Hélène, Florence, a couple from me, please. Firstly, on Europe, I think you called out some easing of the rate of decline in Germany. But with the region, minus 4%, are there any other markets within Europe, which are a significant drag and how you think about Europe for the balance of the fiscal year, please?

And my second question, just wrapping up the conversation on the U.S. So in Q1, how we now have the full unwind of the inventory adjustment? And therefore, would you expect sell-in and sell-out to be aligned for the next 3 quarters of the fiscal year? .

So I'll start with Europe. So Europe in Q1 is impacted with some phasing, especially in Central Europe, not to say, Poland, where sell-out is in growth but there is some quite significant impact due to negative sales phasing. So we expect a stronger performance from Poland in the months to come. For the other markets, so there is not a particular weakening, I would say, in our European spirits market. To be fair, there is some softening within the on-trade. And this is largely due to the cost of [indiscernible]. So continuing pressure on disposable income in major European markets.

Having said that, Spain, which is a big market and a big market as well in the on-trade is stabilized in Q1. You mentioned Germany, yes, there is some easing rate of decline in Germany. But to be fair, the consumer demand is quite soft. As we know, in Germany for already a few months now, and this is really linked to the macroeconomic environment.

Moving maybe to France. So soft start, but some technicalities in this Q1 with an unfavorable comparison basis because we are recycling a strong pipeline we filled last year in one of our major off-trade customers. We are still gaining share in France despite soft market conditions. So your question on the outlook, I would say that despite this soft start, Europe remains overall resilient. and we expect the full year to be better than Q1 in Europe.

Your second question is on the U.S., yes, for the trade inventory situation. So there is some adjustment in Q1, as I mentioned, quite obvious when you compare sell-out with the net sales numbers. To be fair, it's really a bit early to tell you what to expect for the 3 quarters to come, especially now that we are only starting this quite important festive season in the U.S. So the inventory position at the end of December, I'm sorry, it's probably fora bit naive for me to remind you that, but it's very obviously dependent on the O&D performance, for which we are focusing, obviously, on being extremely visible and hopefully, as were exciting for the consumers in terms of the presence of our brands in many moments of consumption, both in the on-trade and in the off-trade.

The next question is from Trevor Stirling of Bernstein.

A couple of questions on India, Hélène. I am wondering if you could tell us, roughly speaking, how much of your sales is in Maharashtra? And then what is your sales trend ex-Maharashtra? So 3% nationally. You mentioned about the strength of Royal Stag and the international brands, is Blenders Pride growing according to your expectations as well?

Yes. Okay. Great. Thank you. So India. So India is in a strong place in terms of performance. So you're absolutely right. We should not be focusing only on what's happening in Blenders Pride even if Maharashtra is one of the largest state in terms of weight in our net sales. So it's circa, I would say, 14% of our business. And this change of the excise policy has, unfortunately, the impact we were expecting to have, which is a significant double-digit decline in Q1. So if we were excluding this impact, our performance in India would be at circa plus 7%.

So then the -- one of the brand, which is the most impacted is Imperial Blue. You're absolutely right, Royal Stag is in a good place, and our imported brands are performing very well in India in Q1. I wouldn't be highlighting anything significant when it comes to Blenders Pride. We are extremely ambitious with Royal Stag and Blenders Pride for the future growth in India. So some impact, yes, because of this Maharashtra situation. But this is a great brand for which we have, again, a very strong ambition for the quarters and the years to come in India.

The next question is from Chris Pitcher, Rothschild & Co Redburn.

Could you maybe give just a little bit more color on the sell-in ahead of the festive season. You mentioned, obviously, it's an important time. And we're moving into that. I mean encouraging to see Jameson doing well, but also pointing out Absolut. Maybe give a bit of color on what's driving Absolut. And then on Latin America, it seems like some really different performance between Mexico and Brazil. Could you sort of try and quantify how bad, sharply, is in terms of the decline in Mexico? And then on Brazil, the phasing effect, would you -- does that mean you would expect a better performance going into Q2? .

Yes. Thank you. So your question in the U.S., you're absolutely right. There is some improvements in the sell-out. That's why we are closing the gap versus the market. And 3 of our brands that are strongly contributing to that very positive trajectory are Jameson, Absolut and Kahlua. So focusing on Absolut, which is your question, I would say this was already something for which we were highlighting some positive weak signals back in Q4, which are confirmed in this Q1. And it's probably a combination of different initiatives.

And when it comes to the absolute range, we have done, I would say, a quite significant job in terms of Absolut Cocktails innovation, obviously as well the RTD with Absolut Ocean Spray. Absolut, when it comes to the Absolut flavors, Absolut vanilla, for instance, is doing well. So lots of innovation ready -- in terms of ready-to-serve, in terms of ready-to-drink, a strong partnership as well and visibility of the brand. And all in all, this is obviously contributing to a stronger performance of the full Absolut franchise.

By the way, maybe just closing on the RTD success story, the Absolut Ocean Spray. We are obviously extremely consumer-centric. As you know, and tracking what is the perception from consumers when they get into the absolute RTD offer. And there is some significant positive trends in terms of then both consumers moving to Absolut Blue, [indiscernible]. All those initiatives, plus a quite strong media campaign and again, visibility of the brand are the key, I would say, success factors explaining the recent improvement of the performance of Absolut that we are obviously quite happy with and that we want to keep improving in the future.

But again, I'm just taking the opportunity of that question to say that Jameson is in a great place. Kahlua as well is strong, and we see some positive green shoots and some other brands in the U.S. like the Glenlivet, Martell, Del Maguey, and Jefferson. So more to come. This is a huge focus, of course, for us and for our team in the U.S., strong focus in the excellence in execution and those recent performance trends are quite encouraging, I must say. So -- sorry, I forgot your second question.

Just to understand what's going on in Latin America.

LatAm, absolutely. So LatAm, I would say there is no change in terms of underlying trends versus fiscal year '25, meaning in Mexico, the environment is softer. There is a weak consumer demand, and this is materializing in our Q1 numbers. When it comes to Brazil, there is phasing impacting our numbers in Q1. So we expect a stronger performance from Brazil for the full year.

Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Thank you very much. I think this is the end of our call. So thank you very much all for attending. Thank you, Hélène for the presentation and answering the questions. Speak to you all very soon. Bye-bye.

Thank you. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.