Reckitt Benckiser Stock

Okay. I think we're going to kick off. Hopefully, everybody is caffeinated and fed post lunch. So delighted again to welcome Reckitt to Boston. Thank you, Shannon. Thank you, Kris, for being here. I think we've got a video to roll first. So, if we roll the VT and then we'll have a nice chat. Thank you.

[Presentation]

Super. So let's get cracking.

So I want to -- I'm trying to do this in 3 parts. So Kris, I've got a few questions for you and then Shannon, and we'll kind of try and mix and match a little bit if we can. So I want to start, Kris, with the most recent news, which is the unanimous win in the MDL litigation. I think it indicates your position all along. Are you able as far as you can, to outline to the next steps, what does it mean for state cases and ultimately settlements?

No. I mean, as you know, the litigation has been going on for some time now over 2 years. We said at the very outset that we knew we were on the right side of this issue. The science, the medical community, the federal authorities, all said that pretty early on. So it's nice to see it come through in a number of different jurisdictions. We have won every case that has been tried or won the appeal in 1 case. So it's not entirely surprising, but it is very positive. It's good for premature babies all across the U.S., and it is the right outcome.

That being said, no single case determines how a litigation like this goes, and we will continue to press our views on this and pursue our defense. We don't have any cases that are scheduled near term.

I think November '27 is...

Yes. Now that can all change that's sort of subject to change. But I think the real point is that we have shown that we will win these cases across lots of different jurisdictions and courtrooms, even the ones that are deemed plaintiff-friendly. And so I think we are at an important juncture where it's becoming clear that we are right and also that we win.

That's a positive step in the right direction. It is not necessarily the same as this is all done with. I have said before that we will be pragmatic about getting to an eventual resolution of this and that stands. I think it's important for Reckitt to move forward with this process. And I am interested in finding a practical solution. At the same time, these things take the time they take. And I think we need to also remain a bit patient so that we get to the best outcome for shareholders.

I know it's not done and it's not a line in the sand, but obviously, we look forward. So I think investors will obviously naturally shift to the Mead Johnson business. Are you able to kind of set out your view about the quality of the Mead asset and perhaps can you say -- I think you said before to me that there's been a fair amount of interest in the asset. Are you able to reiterate that?

Sure. I mean, fundamentally Mead Johnson is a very good business with leading positions, very strong brands, #1 recommended by doctors in the U.S. Actually, the emerging markets business is now trading really well, gaining market share across the board. We have a very experienced nutrition team running it. We're investing very significantly in the business, strengthening the supply footprint, investing behind the brands, investing in innovation.

So I think it's a good business. And I think a lot of people over the years have seen that, and that's why we've had the inbound interest we've had from a whole range of stakeholders, some of which you would expect and some of which might be surprising.

Would you look at all options to create value. I'm thinking about maybe would you consider splitting U.S. and non-U.S. Would you consider a spin? Are you looking -- are you running a [ parallel ]? I mean how are you thinking about?

So we have always said that we would consider all options, all strategic options, right? And that was very deliberate. That was because we really genuinely will consider a whole range of permutations of that. I will also say that I think it's maybe an indication of how good of a business this is that we have had so many people come consistently even through the litigation without us actually running a process. We have not run a process. We're not running a process. And yet we have this level of inbound interest. So I think that's positive. And hopefully, that means that we can get to a good exit.

And is there a price or a multiple that you wouldn't sell the business for because you might take the view it's either too dilutive or not reasonable value? And I guess related to that, is there any kind of like tax implications that investors should think about in terms of like the net gross proceeds potentially?

So it's a little early to talk about tax. I think I'll wait on that until we know what we're actually talking about from a shape of transaction or type of exit. But I would say, of course, we will take views on value, like I said it's a good asset, it generates a lot of cash, good margins. So it's something that we're thinking about. I'm probably not going to put a number on it right now. What I will also say is I don't think it's in the interest of Reckitt shareholders that we sort of take this to the extreme. I think we're going to be pragmatic and we're going to get a good value for the asset, and I think that's how it's going to be.

Cough, cold, flu season, Kris. Another big topic. A lot of us are looking at what's happening down there in Australia as we try and see whether we can extrapolate anything from that to what may happen. I know it's maybe a bit early, we probably had a few more weeks to really know the shape of the cold and flu season. I guess your assumption is slightly better year-on-year against a weak year last year.

Are you concerned at all that your assumption is slightly better year-on-year might be optimistic. Is there anything you can say about how cold and flu or ordering patterns vary by kind of marketing customers to try and get sort of a bit of a sense ahead of time. How should we -- how are you thinking about it?

Look, I've worked on this cold and flu business for years, quite a few years. It's never wise to speculate too much on the shape of the season before it even starts. As much as you really want to know, right? It would be very nice to know. It's a very complex thing to predict. Many of us oftentimes have looked at Australia and wondered if it was a good indicator of what's going to happen. Actually, it's not really great as an indicator. But you always look at things, right, to try to find out, and that's why you're looking at it too. What we do know is versus historical averages last year's season was weak, just in unit terms, incidences, everything about it was weak. Actually, the season prior was not weak. It was actually average in terms of units.

So I have seen a lot of fluctuation. I don't have any facts, any indication that we would see this level continue the 1 lower season that we just went through. And in fact, you asked about sell-in and orders. I mean, we have had the strongest sell-in in upper respiratory in North America that I've seen while I've been at the company. So in the last 7 years, we have not sold in as strongly as we did this year, and of course, some of that is on the back of 12HR cold and flu, which is exciting, but actually much of it is on the core. So retailers are very engaged in the category. They're very much supportive of us and of Mucinex and I think we're set up for...

Just need a season.

Was that?

You just need a season.

Well, we always need a season.

But I guess the thing that I'm hearing from investors. Some people are arguing about the GLP drugs and the Moderna flu vaccine and trying to argue that, that's starting to negatively impact the upper respiratory category. They're trying to make the link between GLP and vaccine versus the category. What's your perspective on that? Do you see actually any evidence of that? Or is it, in fact, the inverse?

So I think those are two separate issues. So if you just think about this idea that GLP-1s would have something to do with this, which I think is extremely far-fetched. I mean, actually, in our work -- because we have worked a lot on GLP-1s and tried to understand what it does for consumers. The overwhelming evidence that we have from all that research is that consumers that have a successful experience with GLP-1s become much more engaged in managing their own health and living a healthy lifestyle.

So actually, it pushes them into categories. They consume more, they're more interested in managing their health and preventative health. And that's good news. That's good for us, both in terms of OTC, but also VMS where that will be a benign factor. And then, of course, some of our brands like Gaviscon, which we don't own Gaviscon in the U.S., but we own Gaviscon outside of the U.S. is a brand that can be relevant for some of the side effects that people can experience.

So I don't think GLP-1s has much to do with this. I think, of course, it has a big impact on consumption in other consumer goods categories. That's obvious. And so maybe it's tempting to read across, but I think it's actually the other way around. On vaccines, look, vaccination rates are fluctuating in this country. And sometimes you see good vaccines, sometimes you see vaccines that actually miss the mark in terms of a season. It's also important to remember that flu is a very small portion of the incidences that we treat. So even if -- and from a public health standpoint, it could be good to have a better flu vaccine. But even if we get better flu vaccines and more people actually choose to get one, I don't think that will meaningfully impact the units that we sell because we treat so many different things.

Shifting gear, Kris. We don't normally talk about your VMS business as much, but we've seen a lot of activity in the space with PG, Thorne and Unilever Grüns, Nestlé exiting, 40% of their VMS business. You've got Neuriva and Airborne. How do you view your position in the space that seems to be consolidating? And sort of how are you sort of thinking about animating your VMS strategy? How will you differentiate drive new innovations when you've got a lot of capital from big players coming into the space?

VMS is a very big space. And there's a lot of things inside VMS, and we put it all under 1 umbrella. They're not all the same. There are some really good businesses in the VMS space. And those businesses have good signs behind them. They have efficacious products, and therefore, they develop brand equities that are trusted and enduring. But that's not the bulk of the space. The bulk of the space is more trend-driven, it's more flattish, and doesn't always have the proper scientific backing that you need to make the claims that people make and so forth.

From our standpoint, strategically, we're happy with what we own. We have successful businesses that have good science that have real credibility, efficacious products. But I am not looking to expand heavily into VMS. We have so many other things that are more interesting to do where we can realize both greater growth but also more profitable growth and things that are strategically more important. I do note that many people are buying and some people are selling and I'm happy that we're not taking part in that.

Shannon, maybe we can turn to you. Can I -- with you Shannon, maybe start on the pricing environment that you see. I think you talked about off-cycle pricing in developed markets in the U.S. and Europe. Are you able to kind of clarify whether that pricing that you were talking about has been landed? Have you actually put it into market? And if so, what kind of sort of volume elasticity are you seeing? Because we're hearing that it's really tough to take pricing now in developed markets. So maybe where are you taking pricing and how happy are you that it's landing without blowing out the volume elasticity too much?

Sure. So we've been super transparent since we saw the war in the Middle East breakout, and we saw oil prices rise significantly that our expectation was to pull various levers to mitigate the cost headwinds. One of those being pricing. What we talked about at half year was the fact that in developing markets, we're able to do that more quickly. So we actually had pricing that we took in developing markets started landing on shelf back in sort of April, May timing.

We also showed the fact that in developed markets just because of our contractual relationships with the trade that takes longer. And so that has not yet hit the shelves. From an elasticity standpoint, in emerging markets, what we've seen has been really positive. I think we've all been pleasantly surprised by how resilient the developing market consumer has been. We had a lot of conversations over where we're going to see a significant impact on consumer demand as we took this pricing, and we've not seen that. And so we feel really good about that.

If you think about U.S. and Europe, the price increases we're taking will start to land on shelf September, October timing. So it's a bit early to say what we're seeing from an elasticity standpoint, I think it is important to note the level of analysis that goes into us taking this kind of pricing is incredibly high and very detailed.

And so we go down to the SKU level to really understand what are those input costs that are going to hit our SKUs at what level, how do we view the consumer value equation and how do we land that pricing in a way that really minimizes impact on volumes. And so we feel confident as we head into Q3, end of Q3, early Q4, but that's when we'll really have a better read on the ultimate.

And maybe kind of related to Shannon, how are you feeling about the U.S.? I think you've said on the U.S. In terms of the cadence, we should expect Q3 to be a bit below Q2, and it depends on the sell-out in Q4. Is that still the way to be thinking about the U.S. in terms of -- because the sell-out consumption data, we can see still is a bit mixed, but it does look soft-ish, I would say. Is that kind of all tracking in the way that you've been thinking?

I mean, look, I think we're seeing -- it's a tough environment in the U.S., and it's a tough environment for the U.S. consumer. I mean, I'm sure I'm reading the same press all of you are every morning, gas prices, what's going on in the Middle East. And so I think we continue to see that as a tough environment. You're absolutely right. Our expectation is that Q3 will look a little softer, Q4 will look better. And that really has more to do with what we're lapping from a sell-in of the upper respiratory season from the prior year. And so we're going to be watching it closely. But I think we view both Europe and North America right now to be a tougher environment.

I mean you've kind of said that some of the destocking was kind of in the rearview mirror at the beginning of the second quarter in the U.S. But we are hearing that U.S. retailers are taking a more cautious view about the U.S. consumer in the second half, and therefore, they're putting inventory. So can you be confident that the destocking is behind you? Or could it be possible that with channel shifts and the more cautious for you from retailers that actually there might be a risk that the destocking continues for a bit longer into the back half? Or do you think inventory levels are in your inventory levels are in good shape.

Yes. I mean, look, it's tough to predict the future, right. I think what I'd say is over the past sort of 18 months, we haven't talked a ton about destocking. Where we've seen destocking has been 2 places. One was in VMS, and we saw a little bit of that in the front half of this year coming off just a very strong sell-ins in Q4.

And then we, of course, annually talk about it in upper respiratory. And so as we exited this historically weak season, we did see destocking in the front half of this year, because of the weak incidence and the fact that retailers needed to manage those levels back down. However, as we look forward into the upcoming season, we're not seeing any structural change in the level of inventory retailers want to carry in upper respiratory heading into the season.

And so with all of that, when I pull it together, I think we feel pretty good that for the time being, we're not talking about destocking and then we'll obviously see how this season plays out.

Long may it continue. And maybe Europe because the other big geography where I think it's been well documented some of the challenges of the market and what's happening there. But do you still expect sequential improvement in Europe in the back half? And maybe you're talking about executing better. What evidence, I suppose, do you have that the execution is improving in Europe that you're getting better ROIs on promo spend and you're driving innovation. You've got big innovation in the U.S. There's a lot of stuff going on in EM, but in Europe, is that sequential acceleration still coming, I guess?

Yes. So we have seen a good trajectory with Europe. Obviously, we haven't flipped Europe back into growth. I think we called out at the half year that June was a positive month for Europe, not intending that to predict that every month thereafter will be, but just to show that we're making progress there. Absolutely, my expectation is that in the back half, we'll get Europe back into growth mode. If you think about better execution, what we've really been talking a lot about over the past probably 9 months at this point is auto dish in Europe because we did see some real escalation last Q4 in the competitive environment and in the depth of promo and frequency of promo in that category.

And I do think our teams have really sharpened their approach to how we're reacting to that and we're seeing benefits of that. And so it obviously varies region by region within Europe, but we're seeing more progress from a share standpoint. We're seeing that our teams have really figured out what's the necessary depth of promo on what tier, at what frequency, on which pack sizes that allows us to hold on to share as share leader in Europe, but not being in an environment where when we see 80% off, we're matching that because we just don't think that makes sense. We don't want to drain the value out of the category. And so we do have early indicators that we're seeing progress there, and that gives me optimism around the improvement in the back half, Warren.

Cool. We're going to continue with the world tour, Shannon, if you don't mind. Emerging markets, obviously, 40% plus of Core Reckitt. I think the big message is that growth overall in the second half will be similar to the first half. But could you maybe be a little bit more precise, I suppose, around the moving pieces within that, within China, India and LATAM, just to give us a sense of how that builds up overall in the budget.

Sure. So emerging markets, we've spent the past 6 quarters, I think, trying to get expectations in the right place around the fact that we believe emerging markets should be growing high-single digits quarter in and quarter out. And I think that we've delivered a couple of quarters recently that really should be strong proof points in building some conviction in our ability to do that.

When you think of Q1 and Q2 in this year, where we were right in that range of high-single digits, we didn't have visibility to the war in the Middle East when we headed into this year. We've been facing headwinds in China on direct from the implementation of VAT. We had Russia sanctions that played out very differently than any expectation. And even amidst all those headwinds, we've been in that high single-digit range. And so we absolutely expect to deliver that in the back half as well. If you think about the composition of that growth, we also feel good around how broad-based it's becoming. And so we don't want an emerging markets business where it's China and India are growing, and that's sort of the end of the story. And so we talked about the fact as we exited Q2 that Brazil was at mid-single-digit growth.

And so China is our largest business. We feel like we have a really long runway for growth in China. We have our 3 largest brands in China, although we have many others that are also growing our Dettol, Durex and Move Free, which is a VMS brand. And Dettol has been growing incredibly strong behind a really strong pipeline of innovation. And when we review that pipeline, we see that continuing to come through. Durex, we've talked a lot about the headwinds in the front half, and we now feel like we're at a place where we're starting to see a positive growth trajectory in Durex, and we expect that to continue in the back half.

And then VMS is really an interesting business, particularly our Move Free brand in China. That's one where in recent weeks and months, there were some sort of bad actors manufacturing other VMS brands that were claiming their products were imported into the market. And in fact, they weren't. And so that's caused a little bit of a headwind in the VMS category in China. Unfortunately, we've been impacted by that even though our products are imported, but we're working through really closely with our partner in China and with stakeholders in China on how to get the message out that our products are very efficacious and are truly imported.

And so we'll continue to manage through that. And I think that we'll see tailwind coming from that business again as we look forward into the back half and into '27. And then India is a market, we've routinely been hitting high-single digit, low-double digits. We just have an incredible execution engine in India and our ability to continue to get more and more reach. And again, it's broad-based growth across our India business. And then we're focused on LATAM and the other markets and how we get those to continuing growth because we have been expanding the number of markets contributing to that EM success.

Switching gears, Shannon, I've got to ask you about margins. Fixed cost guidance below 19% in '27. I'm not going to ask you how much below, don't worry. But I am interested in when you benchmark your costs against peers, can you maybe give us some KPIs and how much further opportunity you see on the cost base because clearly, it's going to be a smaller business; eventually, you need to rightsize the business for that. But particularly through fully-fledged global business services with AI, where is that gap versus peers on the cost base that you can really go after if you had to identify?

Yes. It's a great question. So when we -- it was probably 3 years ago now when we've done our initial benchmarking, our operating overheads were running around 22% of net revenue, benchmarking got us to say okay, we think we should get down to 19%. We were super transparent. 19% gets us in the ballpark. It doesn't get us best-in-class. Think if you fast forward 3 years, our peers haven't been sitting still. They've been making great progress. And so I think that would lead you to believe, do we eventually need to get to better than below 19%, which is our revised target, absolutely.

I think operating overhead is a space where there's really no finish line. Like as soon as you get to a number, you're going to keep seeing and looking for opportunities to get further, and you called it out, the real enablers for us at this point and moving forward will be GBS as we get that stood up. My experience in GBS says you sort of go into it thinking this is my universe of what work can move. And when you actually get that engine running, the universe just becomes more and more broad of what work you can move in.

And then AI. And we actually see a lot of overlap in our ability to drive savings through AI within GBS. So as you move processes into hubs and get a standard process, then your ability to layer on AI and make even more progress. And so I'm not going to give you a number, but when we hit below 19%, yes, we'll be shooting to do better.

Back to you, Kris. One year ago, we talked about disruptive innovation being one of the most value-creative things that an FMCG company can do. And here we are with the Mucinex 12HR. Can you maybe update us also around some other things, other than the Mucinex? So, I think about things like Dettol Activ Botany that seems to be quite interesting. Is there any others that you'd sort of point out that you think can sort of move the needle or you're excited about?

Yes. I mean I would say we now have an innovation engine that's firing. So we have made a big deal out of Mucinex 12HR. But actually, if you look at every 1 of our power brands, we have very significant innovation coming. It's just that the 12HR cold and flu is such a breakthrough. But I think about Durex intensity, which is a first-to-the-world condom that is consumer preferred, that's been very successful all across Europe. And that's an example of disruptive innovation that is landing in the marketplace and making a difference. I mean the success of our Dettol and Lysol franchise, which has grown double digit. I mean it's unbelievably strong. That is fueled by innovation.

Activ-Botany is the platform that's driving a lot of the innovation in Dettol, a lot of the growth. But Lysol, we have a track record of great innovation, and we have more coming. As I look at our pipeline today, we have very meaningful innovation coming on all our power brands, and some of it is quite disruptive. And that is fundamentally the place that we should be as a company, and we weren't always in this position.

Yes. I do want to go -- talk a little bit more about Intimate Wellness. It's driven so much by China and it's been well documented and what happened at the beginning of the year with VAT. But when do you think that business will be back to kind of a decent run rate?

It's actually generating a decent run rate in lots of places today. So it's just that China is a big business. And so when that has a bit of a slow period, then it overwhelms that number. I fully expect Intimate Wellness to have a great year next year.

Okay. Do you -- is there any signs that China Durex will have a better second half? Have you got a lot stuff coming down the pipe?

Yes. I mean we get to see the everyday data, right, like the current data, and it is recovering, and it will have a good second half. One of the important things that we look at is what channels are growing and are we growing in the channels that matter. And we are growing well in the channels that matter. So I fully expect it to continue to recover and do well in the second.

And whilst we're on the topic of emerging markets, again a year ago, you talked a lot about trying to export what works in China into other EMs, particularly around social commerce. Can you maybe update us a year later what is working, which markets you're going after, how they're doing?

So there's 2 components to this. So social commerce is not as well developed in the rest of the world as China is very far ahead. But we are seeing social commerce play a bigger role in Southeast Asia. And so we are actually already succeeding in transferring those capabilities and driving growth in that geography, which is great. And we'll continue to do that as we see platforms emerge and become successful, we'll continue that.

The other aspect, though, is new forms of content-driven demand creation which we are also very good at in China, and that we're going to bring to the whole world because that is relevant everywhere. And so we are working on that at the moment. I'm very excited about what that's going to lead to.

If you were to identify outside of China and India, the emerging markets. You've talked about lots of different countries. What are the 3 in EM outside the big 2 that you're most excited about? How would you force rank them?

Yes. So I have 6 or 7, not the 3, that I'm excited about. But that's just because these are exciting markets. It's hard to pick. I would say Brazil and Mexico has a lot of inherent potential. Colombia is already performing really well for us, has a lot of opportunity. Malaysia is important. Vietnam is a really big and important opportunity for us, but we actually have a smaller business that we are now looking to accelerate very fast. Pakistan is an exciting market where we're growing fast.

So there's a lot of markets there. But I think there's the 6 or 7 that I just mentioned, if you put them together, they are as big as in India or China, and they have the same growth potential. So the idea here is to make sure that we get into a very consistent high single-digit or better growth rate.

How do you figure out within those EMs, which category or which brands to animate those countries with that we're?

We're pretty clear on that. We've made a big change actually. We used to be very Dettol focused. It used to be that we would go in with Dettol or Harpic. We don't do that anymore. We go in and say, we're going to build a leading consumer health business, a leading Intimate Wellness business. And when we do that, which is actually working quite well in a number of these markets, it creates structural economics that allow us to grow the business much faster. So, that's a big change that we've made in the last 4, 5 years, and I'm excited about it.

Can I ask you quickly about Russia? Any update on timing of the Russia? I guess you're waiting for a signature in the U.K.

Yes. We're just waiting for some closing approvals. We have all the approvals in Russia. I think it's not going to be long.

Okay. And Shannon, on that, I mean, I guess the question I've been getting a little bit on the 4 to 5 Core Reckitt guide, just to be clear, it's not dependent on Russia exit to kind of help the kind of Q4 organic? Do you think you can do that on a [ clean ] basis, clarify that point.

Yes.

Okay, cool. And then, Kris, back to you. I think that you said to me a few times that you want to make this business boringly consistent quarter-after-quarter try and do the growth. But your guidance is quite a narrow band, 4 to 5. Most companies have a wider band. Can you maybe kind of just outline why that is the case? And how do you manage to keep within such a sort of narrow band when it does seem to be quite dependent on the vagaries of cold and flu.

Yes, I actually don't know that cold and flu has been the biggest impact. I mean, look at all the things that are happening in the world that we've just touched on that we're dealing with, right? It's a pretty dynamic environment to say the least. It's hard to be boringly predictable in the current environment. I'll be honest, right, that you can all see it.

It's not easy with this many shocks to the economy, there's many things happening geopolitically, seasonal variability. I don't think we necessarily need to be consistent quarter in, quarter out. We need to do what we say we will do. But naturally, the shape of the year is it's not linear and it's not flat, right? What I've said is I would like for us to be boringly predictable in terms of doing what we say we will do year in, year out.

And that's the goal. Now 4 to 5, why did we say 4 to 5%. That's our medium-term guide. We expect to be able to do that this year. It looks like we'll be able to hit. So that's the reasoning for that. I do think that the volatility in the world and the things that we're going through, Shannon talked about the environment worsening a bit in North America, I mean if we keep seeing this kind of volatility and headwinds, maybe we will widen the guide range. I think that might be something we'll do. We haven't made any decisions on that. But I think the environment could cause us to kind of think about that. But we have made no calls on that.

But one thing that I guess is different with the Reckitt today on the Reckitt I saw 10 years ago is the supply chain, the CapEx, the investments in the backbone of the company is entirely different? So hopefully, in a more volatile world. Can you talk a little bit about that in terms of it doesn't completely shield you, but it gives you a little bit more flex to have a bit more kind of see through.

No question. I mean we have a far stronger supply chain already from all the investments we've made in manufacturing, and we have years of continued investment and strengthening ahead of us. I think it's already helping us. I mean, if you look at it, we are growing well, and we are able to mitigate these shocks in a better way than we historically did. I feel very passionate about that. I think as we strengthen and complete the play on building a world-class manufacturing network, we will be able to deliver more consistent performance.

Super. Well, we're on the buzzer. So thank you, Reckitt. They are doing a breakout. So if anybody wants to hear more from Reckitt, breakout will be next door. For those staying here, we've got Bayer Consumer Health up in 5 minutes. Thank you very much, Kris and Shannon.

Thank you, Warren.

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I would now like to turn the call over to the JPMorgan host.

Good morning, good afternoon. I am Celine Pannuti, and I head Civil Research at JPMorgan in Europe. As part of our fireside chat series, I am pleased to welcome this afternoon, Kris Licht as CEO of Reckitt. Kris, thank you very much for joining.

Thank you for having me.

It's been a very busy week for everyone. So I'm glad that we can call down and have a discussion about the results that you presented this week, which were better than anticipated, and we'll come back to that, but as well to reflect a bit on the past and look forward to the future on our strategic points.

So maybe let's start with the guidance. You reiterated your guidance on the top line at 4% to 5%. I think this includes Russia, which you may sell, which at 70 basis point drag. So I would say ex Russia, it kind of points towards the top end of the range, if I'm correct. Can you try to give us a bit the building blocks of that? I think the emerging markets continue to be good, and you mentioned that should continue in the second half. What visibility do you have on that? And then more precisely on developed markets, we have had 18 months of minus 1 in this market. And I think the makeup of the guide is that we should see an acceleration to the low single digit in this market. So again, what will drive this?

Yes. Well, thank you for the question. It is really important to see the acceleration that we've seen in our business over the course of the first half. We had a very strong second quarter, which is what we anticipated would happen, and that's why our guide is set the way it is, and that's why we are reiterating it now. We expect that sequential improvement in the business to continue. We expect to have a good second half. In some ways, you always want to know, okay, what are the building blocks. But actually, I think the best thing I can point to is look at Q2, and Q2 gives you a really good idea of where we're going. So strength in emerging markets, which is a really broad footprint of markets that spans most of the globe. It's 44% of our business today, but it's going to be 50% of our company soon. We're seeing this very strong growth there.

And actually, what you saw in Q2 is a broadening of the growth. So we have historically been very successful in China, very successful in India. But now you're actually seeing many of that next tier of markets that I've talked about before, I think maybe I even talked about last time we spoke, that's actually coming through and starting to generate some good growth for us. So that's what we're looking for in the back half. So continued strength in emerging markets. And I think we have good visibility to that, to your question.

In Europe, we saw an acceleration. So we have been candid about the fact that the environment in Europe is tough. And I think it will remain tough. But we saw an acceleration in our business. We expect Europe to return to growth in the back half, and it will be modest growth, I mean, in this environment. I don't think it's possible to grow strongly in Europe right now, certainly not for us. But I think we can see some modest growth and continued sequential improvement. And frankly, that's all we need to hit our guide.

And then in North America, we saw a return to good growth. So our nonseasonal business has been quite strong in North America for quite a long time. Our Lysol franchise is doing incredibly well. And now you see Mucinex coming back and with the 12-hour Golden fever innovation that we're launching, this will be, I think, a good second half for the seasonal business. So I'm excited about that. So I think you put all that together, and it implies a continuation of the strong performance we saw in Q2 and some improvements in different parts of the business along the way. And yes, that's what underpins the guide.

Of course, we have been open about the fact that we will be taking a bit of pricing. Some pricing has already been taken in emerging markets, but there will be more pricing coming in the back half to offset some of the cost inflation that we've seen from the war in the Middle East. But again, I would say, relative to what we thought maybe earlier in the year, it's been a bit more benign. It's been a little bit less of a headwind than we thought it would be, and we are mitigating it pretty well. So I don't think that will be necessarily a big issue. Obviously, we are trying to stay very close to the situation. It's a very dynamic situation. And certainly, this could change. But at the moment, it looks manageable.

In fact, so you also reiterated your margin guide, which is 24.9% to 25.6% though you had a quite a nice beat on H1 margin. And as you mentioned, the cost situation is a bit less than anticipated. So I mean, it could feel like you could be at the upper end of the range. At the same time, we saw in your H1 that you did invest quite a lot in marketing. It went up 110 basis points. So again, like visibility and then what is the flex that you have in the business in terms of your willingness to reinvest or maybe where in the range we could be landing on margin?

Yes. I mean what I would say is I'm very pleased with the margin performance in the first half, and it's very nice to be able to both invest behind our brands, invest behind a lot of great innovation that's landing in the marketplace at the moment and at the same time, be able to meet expectations. That's good. That's what we would like to do quarter in, quarter out, year in, year out. I'm not going to give you much more detail on where in the range we're going to land. But obviously, as you can see, we can -- we're making good progress on Fuel for Growth, and that's arguably running a bit ahead of schedule. And we are doing a good job.

Our teams are really doing a nice job mitigating the cost headwinds that we've seen. So yes, I think we have the room to invest. I think we have the room to invest behind the innovation that's landing in the back half and make that really successful. And that's the kind of way that we want to run the business. We want to have that flexibility and still be able to deliver on the expectations.

As you mentioned, we met a year ago, room. And there's been a lot of change in the business from a portfolio perspective, which I'll tackle after. But what I would like to talk about is as well the change that are maybe less visible, the supply chain, the higher CapEx. I mean, AI, I have another question on that. So I think there's been a journey to expense a lot of the business to reinvest. So the CapEx now is up to 4%. Can you talk about what do you think are the priorities? Where are we in that journey? Do you feel that now the supply chain, the manufacturing facilities, are you happy enough with what you are?

So actually, we spoke 1 year ago, but actually, we set out our plan 2 years ago. So maybe what I would say is 2 years ago, we said we would step up CapEx. We said we want to strengthen the supply chain and in particular, manufacturing. We also said we wanted to invest -- continue to invest a lot behind R&D and innovation and of course, to step up investments behind our brands. We have done all those things. And the room to do that comes from Fuel for Growth, which has been successful. So I would say I am pleased with how that's going.

Now if we dive into manufacturing as an example, yes, we're certainly investing more, but we are already seeing some of the benefits come through. So our service levels are up. Our plants are running at higher levels of operating efficiency. We have better in-stock performance in some parts of the business where that had some weakness. And so I'm very pleased and really grateful to our supply team. They have set a new bar and they are elevating performance. But in order to reset the asset footprint of Reckitt, it takes time. I have been open about the fact that I think historically, we spent much less CapEx than needed on our manufacturing footprint.

And when you have a portfolio like ours of market-leading brands and very high-margin products, you really have to have a very resilient and strong manufacturing footprint so you can always meet demand. You can always sort of realize the full potential of the portfolio. And so we are going to continue to invest in the manufacturing footprint. We are right now in sort of the -- getting close to the final stages of opening and building and opening our new mega site in Wilson, North Carolina, which is a health factory for North America. Very excited about that. We will make other investments. We have made other investments in capacity in different plants, and I fully expect us to continue on this journey. I would say that we're probably not going to be at a place where I would say I'm perfectly content and happy with our manufacturing footprint for another several years. But I can see very strong progress, and I can see good returns from the investments we've made already, and that gives us the confidence to continue down that path.

As it pertains to R&D, we've also made some big investments in R&D. I was actually just in Shanghai a couple of weeks back, opening our new science and innovation center in Shanghai, which is a state-of-the-art R&D center, and I feel very excited about that because we have such a good business in China. It's very successful, and it deserves this kind of innovation capability, and I'm pretty excited about what we're going to get out of that. So I would say we are definitely investing in Reckitt, and we're definitely seeing the benefits of that, but we will keep going. We're not done.

One interesting day that you hosted, I think it was a few months ago was about AI and how your investment is helping accelerate R&D. I think you also have made some investments for marketing using AI. So obviously, very topical. I think it's transpired that data quality and data richness is really a competitive advantage when it comes to AI. So I wanted to understand where are you in that journey? And how clean is your data and how confident are you that you are being able to be well taken by LLM searches, like whether your products are being -- yes, coming out on top of the searches. And then I presume as well -- if I think about the innovation, I think it's very functional, consumer-centric, the way Reckitt execute with your brands. How does that work in an environment where LLM or Agentic searches are going to decide for consumer?

Sure, sure. Well, first on AI, we've been open about this, I think, over the years pretty consistently. We are definitely trying to go fast. We're definitely trying to harness the power, and we believe in the power of the technologies that are now available, and we have moved from pilots to at-scale execution. So I feel that we are on the right journey. I think we're making good progress. We're seeing returns and we feel confident to continue to invest in a fairly accelerated manner against this.

I would also say that we're also learning a lot, and we're actually also failing and which I think is good. Perhaps the best thing we've done is create an environment where it's okay to fail and where we sort of accept that perfection is the enemy of good, and we're actually going to get into this and learn and enhance and continue to improve the solutions. I think some of the trouble with AI is if you, well, never get out of the pilot stage, that's a problem. But also if you sort of give up on the things that you're working on because you're going to hit roadblocks, you're going to find things that don't work. And so we have not done that. So I think we have a very kind of constructive approach to this. And I think it's very important that, that continues.

I can say that I have spent a lot of time individually in my job on AI and getting this off the ground in the company. And even when you do that, you also have to spend time in your private life, getting to know these tools. And so I have done that, too. And that actually helps me also in this discussion about Agentic, right? Because I put on sort of the hat of the consumer and I start asking questions to the different LLMs. And it's very interesting what you find, right? Some of them give me exactly the answer I was hoping for. I remember the first time I punched into Claude, what's the best disinfection products that I should buy. And it said Dettol and Lysol are by far the best disinfection products in the world. Very happy with that because that didn't have to necessarily happen that way. But on the flip side, I asked some other questions about some other categories where we compete, and I didn't get the answer I like. So it highlights that there's work to do.

I think we should demystify this a bit in terms of the Agentic. I think for companies like us that have #1 brand positions in our categories, we have brands that are very active in social commerce. There's a lot of content, right people like our brands. They like to engage and sometimes post about them. So that's actually very helpful because that's the information that the LLM is looking for. So if an LLM is trying to figure out what to recommend, it would typically look for what's the most popular products, where is the high engagement, where are people saying positive things about their user experience. Also, is there science behind the product? Is that published science and credentials around it? And that makes me feel like a company like ours, we can actually do well with this. We actually -- because what the agents are trying to do is distill all this information into something useful. And that should benefit market leaders like us so long as all that information is findable and accessible and out there. That's, of course, the job that we have to make sure is the case and gets done.

I think the people that need to worry more about Agentic are probably the ones that sort of have brand #5 or #7 in a category or maybe people that don't have a social commerce operation that is strong or an online presence that's strong. And of course, if you don't have rigor in science and a lot of claims and a lot of clinical work and a lot of things that underpin your product and your value proposition, then I think maybe that will be a bit harder to navigate. So I think there definitely will be some winners and losers in this space, but I actually believe that leading brands and products with really strong science behind them will do well. So I'm excited about that.

And the other thing that is pretty exciting about AI is we always talk about it in terms of productivity, and we will have maybe fewer people doing certain transactional work, and that's true. But the most exciting use case we have is actually using AI for innovation. And you talked about data and can we manage our data is the data of enough quality. The fact is we have enormous data sets in our company already. And actually, what the AI can do is digest those data sets in a way that sort of a human-only process just can't. There's just simply too much data. And so actually, what our innovation concept generator does is it scans all of that data and looks for trends and opportunities according to the instructions that we've given the tool in terms of how to do its work. And then it splits up innovation concepts that our R&D people can then work with. And those concepts are a meaningfully higher quality than the concepts in terms of how they test with consumers because we test them. And they are of higher quality than the human-only concepts that we used to generate.

So is our data perfect? No. You asked about that. By the way, someone very smart on this topic, told me once recently that no one's data is perfect and no one actually ever cleans their data perfectly. In fact, the only people that have a shot at that are the people that use AI to clean their data because that's -- otherwise, it's just a formidable task. So I think we're being pragmatic about that. But actually, the way we're using AI innovation, data is an enabler. The richness of our data is clearly an enabler of that.

So that brings me to innovation because we've seen when we discussed after in Europe that [indiscernible] seems to have done quite well, thanks to innovation. Lysol is another one. Mucinex is a multi innovation. So can you talk about how rich is your pipeline? Is it richer right now? I mean, are there many of those Mucinex innovation in the pipe? And then maybe if I try to kind of like con it all. So more -- a better supply chain, elevated services, better marketing, better innovation. I think 45% of your sales have been gaining share. Do you think -- are you -- I mean, what do you think of that number? And what do you think you should be performing at given all of the above?

So I would say, as you rightly point out, we have very big innovation landing in the market and doing well against almost every one of our power brands. And our pipeline, I mean, we measure our pipeline, right? We measure a lot about innovation. Our pipeline is bigger than ever, meaningfully bigger than 2 years ago. And you can see it, right? We talked about growth in Durex. Durex Intensity is a brand-new platform, first of the world product. We talked about Dettol active bottoming is a home run of an innovation that's exceeding our expectations to a significant degree. Lysol, we talked about Air Sanitizer, other innovations we've launched under Lysol, Mucinex 12 hours. So this is happening. And it's not happening by accident. It's because we worked for a long time to strengthen our pipeline, right? And you have to do that and then it starts to pay off, and that's where we are now in the journey.

And yes, our pipeline has many exciting innovations in it and some that are as significant as Mucinex 12 hour. You don't get 10 or 20 of those every year. You get 1 or 2, which is fine. That's all we need in terms of that kind of breakthrough. Remember that 12 hour was the first NDA in the UR category in more than 10 years. So this is very significant. But we do have big projects like that in the pipeline.

Now on market shares, we are at 45% CMUs holder getting through the first 5 months of the year. That's shy of our 60% target. I think our target is the right one. So no, I'm never happy when we're not on target. What I will say is part of that is through some temporary things that happened with Durex in China, which, again, we're going to come out of that, and we've been very open that we expect -- we have high expectations for Durex going forward. But there were some temporary things that caused us to tip into some share loss. Now that's on the back of multiple years of strong share gains. So I'm not so worried about it, and I think we will flip that back in green.

The other is Mucinex, which is a very big CMU for us. When the season is weak, like it was last year, Mucinex doesn't gain share, it loses share. That's a mechanical thing that we see time and again. conversely when the season is strong, Mucinex gains share. And mechanically, just the category mixes into very efficacious, very dedicated, very premium things like Mucinex. So I expect us to flip that as well. So do I think that 45% is enough? No. But I can see a clear path back to 60%, and I think we'll get there soon.

So focusing on North America, you said that you expect to see an acceleration. Mucinex is one of the innovation. Can you -- on Mucinex on this innovation, can you talk about how much of a game changer that could be? I mean, is there a way to size the innovation, the cannibalization risk? So obviously, it's incremental to the franchise, but are we going to see a big step-up because of a potential shift from consumer in that and whether this kind of IP could be used in other geographies and if the authorities would agree with that. And then on the U.S., I think you were talking about partnership and elevating the execution. Can you talk about that? And probably, I think one has been a fantastic success story has been Lysol. Like what is the sustainability of that? And what has been the key driver in that performance?

So starting with 12 hour, why is this a big idea? It's a big idea because it's much better for consumers, right? If you have a cold, if you have fever, instead of having to take medication multiple times a day, maybe you forget, maybe you run out, you just don't have to worry about it. You take one pill and you get all day relief. That's what consumers want. They have had no way of getting that for these symptoms. Now they do. And so that's why it's a big deal, and that's why it is a new drug application that we've had approved and that doesn't happen all the time.

Our mindset was we're going to execute this like a switch, like an Rx to OTC switch. We're going to go just as big because this is just as new and significant. And that's what we've done, and we have seen tremendous retailer engagement and support. We are getting very significant support in terms of shelf space, distribution points, and display activity. And when we do that, we always bring the core along because we don't want it to be cannibalizing the core. So the core will also benefit from this significant launch activity and the gains that we've seen in terms of shelf space and distribution points and display support. So I'm very excited about that.

But it's also important to say that's just the launch. So right now, the priority is to launch well. But we think of this as a permanent new addition, as you rightly said, to the business. And how high is up? It's a good question. I am ambitious for us on this. I think it could be a very significant platform. But I also know that it takes time. You have to educate the consumer. You have to get people to try it, then they will have a very positive experience. They'll repeat, they'll tell their friends, their family. And so this will build on itself. And that's been our experience with Mucinex over the years. Mucinex grew from nothing to a very sizable business through that kind of steady growth. And that's what I think we'll see with 12-hour 2. There will be an initial impact from the launch, which will be this year, and we'll step that up next year, I think. And then you'll see that repeatable growth model kick in and it will become a permanent part of the franchise. And ultimately, yes, down the road, I think it will be a very large business.

Lysol?

So Lysol has been doing fantastically well off the back of innovation, but also improved execution. I think your question is, is that repeatable? It is. So my -- I've worked in the U.S. retail market for many years. Momentum is very helpful. Having relationships with winning retailers and partnerships with them is very helpful. Once you get the traction and the credibility behind a brand like Lysol, where we very much have it, that helps you sustain it, too, because the retail partner will always ask us, what's next? What's the next platform? What's the next thing we can do? And it's our job to always show up with an exciting set of ideas that expands the business that expands the category for the retailer. And we're good at that. So I think we will keep doing that. I think Lysol is one of the top 5 most trusted brands of all brands in North America, which is pretty remarkable for a disinfection product. And so that tells you about the power of the franchise, and we have a nice pipeline on Lysol.

You mentioned Mucinex and cold and flu is a big franchise. Now we have seen 2 years of weaker flu season. I mean, on the back of as well very elevated incidence. But I think the Australian number right now are showing not much of a flu season in that part of the world. And you think you have been a bit -- I mean, rather conservative in your guidance on expecting incremental acceleration. I presume now it's a question that the business is being asking itself, like you think like too bad season in a row and maybe it's another weak season. So are they -- are consumer better educated, not proliferating germs because of COVID, we learned that. What is your view -- like vaccine have been as well better seems in terms of the germs that they target. So do you -- what is your view in terms of is it structural or is it just like 2 season in a row against [indiscernible]?

Yes. So we have seasonal experts, right? So we have been in this business for a long time. We studied these things very deeply. We ask ourselves all those questions and one more. And it's also important to remember that we call it the flu season. Actually, flu is a timing aspect of the incidences that we treat, right? It's sore throat, it's RSV, it's lots of different things, and it was COVID for a while when COVID was elevated. Okay. So the net of everything that we know right now is that we can't see anything structural that's different. The consumer is not behaving really differently in terms of propensity to treat or they don't think about it differently. They see their doctors and their pharmacists like they normally would do. So there's no real change there.

In terms of vaccines, actually, that doesn't look like it's a big variable in explaining this. And vaccination rates are also down in some parts of the world. So it's not clear that, that's a big factor. There's been a hypothesis about it because maybe we work from home a bit more post COVID and maybe people are doing that differently. But actually, most of the transmission of these illness happens in schools. in classrooms among kids and they tend to bring home to their families. And so there's no change to that. So we don't see anything structural at the moment.

The other thing I would say is we didn't actually -- technically speaking, we didn't have 2 weak seasons. We did have a step down from the prior season. But the most recent season is the one that was weak. Actually, the one prior was just normal. If you look at a 3-year average and you think about it volumetrically, it was normal, okay? Now it felt like a step down because a lot of the COVID was in the lab. But that was actually just a normal season. The one we just went through Q4 '25, Q1 '26, that was a legitimately weak season, but it was within the band of seasonal variation that we have seen pre-COVID. It was just low.

So where we sit today is we say, okay, we know the seasons are too complicated to predict. We try with predictive modeling and -- well, we will keep trying. I'm not going to rule out that one day we'll figure it out. But we don't have it figured out yet in terms of predicting seasons. What we've made is what I think is a prudent planning assumption that it will be a little bit better than last year, but not much. If it turns out to be better than that, then obviously, that could be a tailwind.

So if I think about the markets that you play in, Europe seems to be particularly challenging in terms of consumption. So you saw an acceleration quarter-on-quarter. You expect to see some modest growth in the second half of the year. Obviously, flu season could be part of the.

It's a swing item in that.

But outside of that, can you talk about the market growth and then your competitiveness? What are the particular areas? I mean, I think one of those where it has been competitive, you try to come back with your own -- to fight that. So if you could elaborate a bit on how the ramp-up from here.

Sure. I would say that the macro backdrop in Europe is challenged. And you can see it across categories. I don't think it's surprising. There's not a lot of growth in Europe, right? Whether we're talking about consumer spending or GDP more broadly, sentiment is not particularly good, and we're seeing value-seeking behavior in many places. So that's the backdrop. Against that backdrop, I think what we saw is an acceleration in our business through the first half. And yes, we're expecting to return to some modest growth. I think that Europe will probably stay tough. I don't see a lot of catalysts on the horizon that will fundamentally change this. But that's okay. We have a playbook that we know how to run.

You just mentioned how well Gaviscon has done. I mean Gaviscon is doing well in Europe. Mucinex is doing well in Europe. We're going to do well with VA and other businesses. So Vanish, I think we will have a good second half. So I think there's many things that are working. We're also even inside Auto dish, which, yes, it's very promotional and there's headwinds there. We're actually premiumizing people up through the tiers in Finish, just like we normally do, and that's still happening. And we have great new innovation coming on Finish at the beginning of '27.

So I think we'll be fine. We have to stay disciplined. We have to execute our playbook the way we know how to do. We will not chase people down promotional steps that don't make sense. Like we're just not going to do that, and it's not good for the category. So we don't do that. But I think we have what we need to do to do fine. I just don't think that Europe is a place where you can really drive any accelerated growth at the moment. It's just the macro backdrop is just too challenged.

If I look at your H1, pricing was negative in developed markets in the 2 regions. So I hear you, you don't want to push on the promo button to too fast. But nevertheless, it has been surprising because usually the price mix component is quite positive. So when we see that at the same time, we saw that the volume accelerated quarter-on-quarter, maybe different reasons, including the -- how do you think about making sure that you are relevant to consumers that are down trading? You may need to raise prices because of input cost inflation, but at the same time, being relevant from a price point standpoint makes as well a difference from your. So how do you look at that? And are we expecting really -- I mean, could you lure a bit more that weaker pricing into the developed markets?

So we definitely have to pass on some pricing. And everyone understands why. So I don't think that's particularly controversial. We have promo as a lever to deal back to make sure we get to the price points, we get to the promos that both meet the consumer where they may be, but also give us a good ROI. I think we're actually getting better at that. So if you look at, for instance, in Finish, where it has been heavily promotional, we're not matching some of the low promo points that we're seeing in the category, but Finish is back to share gain in multiple markets, and we're holding our share leadership overall. So I am thinking that we can find our way through it.

But as you say, it's a very careful exercise because if you overdo the pricing or if you don't get your promo schedule and execution right against that increased pricing, you will definitely be penalized. So it's a bit of a tight growth, but at the same time, it's not the first time we're dealing with this kind of problem. And I think we can do it. And I think our teams in Europe are actually doing that now in a way that I'm pretty happy with. So that has to continue. But that's the environment we're in, right? We have cost increases. We have a consumer that's under some pressure. that's the challenge at the moment.

Last year, I think your best category was intimate wellness, which is not growing in the first half of this year. A big part of that is China. There have been changes, first of all, price rise and as well changes in terms of marketing. You mentioned on the call 2 days ago that your teams have adapted. So can you talk about how the playbook in marketing has changed? How do you feel about back to growth or back to great market share in this market?

So I would say intimate wellness overall has been quite a growth category for us and actually still marginally in growth even in the first half. Now I fully expect it to be in growth for the full year. And I expect us to do really well in intimate wellness in the coming couple of years. We are the world leaders. We have the strongest brand. We have excellent innovation. I'm not concerned with the outlook for this business. We did have some things that temporarily impacted our trading in China. We had the VAT increase at the very end of '25. That's a moment in time headwind that sort of subsides over time, but it did have an impact. Some of our competitors promoted more deeply than we chose to do, had a short-term impact.

The content restrictions, which, by the way, happen -- we're familiar with this, like rules around content changes all the time in many parts of the world. And this particular one impacted what you can and cannot say in the category. So we found a way around it. So we thought we would. And it just means that we have to use slightly different language, promote a slightly different portion of the portfolio. And so we do that, and it's working well. Durex is in good growth, steady growth month on, month on month, on TikTok right now, which is the most important platform in China. So yes, I'm not too concerned with it. We're leaders. We have an incredibly competent team on the ground in China. They have had all kinds of success, and I'm sure they will continue to have it.

Well, China, you mentioned we have 12 quarters in a row of double digits. You just mentioned the Shanghai Innovation Center. I mean double-digit growth in China is quite impressive for such a long period of time if you think about all of the other staples companies that are playing there. So you mentioned Durex, but I think Dettol is your biggest franchise there. So what's going on? Like what is it in Dettol that can grow that fast, quite in the double digit and the rest of the portfolio? And you always said that overall emerging markets, high single digits is what you see. And clearly, we've seen China well above that. What is your sense of the durability of those double-digit growth?

Yes. So we have been remarkably successful in China. There's just no other way to put it. And it is broad-based performance. So we actually sell many brands in China. We've also been in launch mode on a number of brands in BMS and female intimate wellness with intimate. And like we have a very broad-based portfolio. You are right that Dettol is the biggest business that we have in China. And it is just phenomenal what our team has done with Dettol. Dettol is a very powerful brand, broadly speaking, I mean, not just in China. And it's a very expandable brand. There's not that many brands that can stretch across multiple categories, but Dettol really can. And we have really stretched it successfully across a range of new propositions.

And Active-Botany is the big platform right now, which is us reinventing the antiseptic liquid category with a very different and new format that's really resonating. What is it about Dettol? It's a special brand. It's a special equity, and I think we're good at innovating behind it, and that's really what's driving it. But if you go on TikTok in China, you'll see. I mean, it's just a very dynamic brand that has a big presence and consumers are highly engaged with the business. So what's the repeatability of our success in China? I think that it is fairly repeatable. Think about it, we have state-of-the-art R&D facilities. We have a state-of-the-art manufacturing facility.

We have, I think, the strongest live streaming capabilities in our category, certainly, and we have a very good team. And so you put that together, and I wouldn't bet against us. I think we're going to do well in China. Now is it always going to be double-digit quarter in, quarter out, like it's been for 12 quarters straight now? I don't know, maybe not always, but it also doesn't have to be. It just has to be a good, steady growth business. And that I think it will be for a long time.

So emerging markets, we were discussing accelerated in the second quarter. I think Middle East was less of an issue and then Latin America...

Good improvement there.

So I just wanted to focus, a, on your 2 next biggest markets, so India and Brazil, different markets. I mean, India has been strong for you. So I guess, like how confident you see about this high single-digit growth in this market? And I presume you also could be accelerated by price increases. Conversely, I think Brazil has been a bit tougher back to growth in the second quarter. There is a change to the tax regime in Brazil at the end of this year. How do you feel about Brazil? I mean, are we in a steady long stream of improvement? Or is it more volatile? And then I know you have those frontier markets. So anything you want to add?

Sure, sure. So India first, as you say, has been very consistent for us, might be our strongest operating business in all of record just in terms of the capabilities and the sustainability of the performance, just a wonderful business. I don't see that running out of steam. You mentioned can it accelerate? Possibly. I also don't necessarily think we need to accelerate it. I mean, of course, it's always nice to have more growth. But having steady high single-digit growth coming out of a business of that size year-on-year-on-year and competitive success in the market and improving P&L. And I just -- it's about as good as it gets, and I just kind of really want to see them continue and see that business continue on that trajectory.

India is one of those places where the middle class households are really coming into our category and participating in our categories at a greater rate, and that's just a very positive thing. And I think the runway for growth in India is very long.

In Latin America, you're right, it's been a bit more mixed for us. And Brazil has -- historically, we've had a lot of good growth in Brazil, but it has been softer. Some of that is the macro, which has been more challenged. And some of it is opportunities for us to execute at a higher level, frankly. So I think we're definitely happy that we're seeing improvement. I would not say that I think we're now on a repeatable sustained kind of growth trajectory in Brazil like India. I just frankly think we have more work to do.

I would highlight Mexico as a market that I think has a lot of growth potential ahead of it. And Colombia, which is already performing very well, is one of those next tier markets that I'm watching very closely. And those next-tier markets include places like Vietnam, Indonesia, Pakistan, Nigeria, all of these markets are big markets with large populations that we need to create our categories, and we need to bring more households into these categories, and that will be a source of growth for a long time. So if ever China does slow down, that's where we pick it up. That's the offset is to get those markets to grow at a rate of India or China.

So over the past 12 months, you disposed of Essential Home. You announced recently the disposal of the Russia hygiene business. Mead Johnson is as well one of the business that you qualified as noncore. But I mean, is it right to say that the litigation as it drags on -- like is that an impediment dragging on the litigation to look at potential exit routes. And I think you said there were several scenarios you are looking at.

The other thing is 2 of your competitors have recently publicly said that they were -- they didn't see a lot of growth in the infant formula market in the U.S. So it feels like they are ruled themselves out of interest. Does it make it harder to consider a sale to private equity or effectively the exit multiple that you will get if you have less competition? And then maybe on that, also do it really make sense to sell the business in part because it's really the U.S. where you have the issue of the litigation, not the rest of the emerging market business.

So just on Mead Johnson, so 2 years ago, back to 2 years ago, we said Mead Johnson is noncore. It's not part of core Reckitt and we will exit. We said that we didn't want to put ourselves on a clock because the litigation was there, and we have always believed that, first, we have to get through the litigation and resolve that some way somehow. And then sequentially, we would exit Mead Johnson. As I sit here today, I still think that, that will happen. I think that, that is quite doable. I think that we have made a lot of progress in the litigation. So I'm very encouraged. Our record so far is one of winning cases. We don't have any verdicts against us as we sit here today. That's very positive. I think the market has also come to understand the litigation much better. So we're not seeing any real reactions to news flow and changes in the litigation in terms of what the market reaction is. So that's positive.

In terms of how we eventually exit Mead Johnson, I don't want to speculate too much. I will just say we're going to keep all our options open. We're going to do the right thing for shareholders. We're going to maximize the value of it. And at the same time, we're going to get on with the program when we can. We're not going to linger around and make it complicated. That's probably what I'd say about that. I just want to remind everyone that Mead Johnson is a really good business. It's cash generative. It's very stable. It's trading well, and it will attract good interest.

Okay. So yesterday -- 2 days ago, you announced a GBP 500 million 12-month share buyback. And I think it has been part of your policy return cash to shareholders when you did some of the disposals you did a special return. I think if I look at the leverage net debt to EBITDA is 2.5x. So while you are going ahead with that GBP 500 million share buyback, it does not allow a lot of room to maneuver that leverage for M&A. So I just would like to hear your thoughts on what you think -- I mean, 11 brands, obviously, you've been choosing them carefully in the process over the past 12 months, 24 months. But like what -- I mean, do you think that you have enough with that? Or is there room for maybe M&A at some point? And then I presume we have seen in the past 12 months bigger M&A in the category with one of your competitor [ consuming both ] by Kimberly-Clark. And we know in the past that Reckitt as well have been talking about the consolidation in some global consolidation in the category, especially in OTC. How do you -- what is your view on further consolidation? And how would Reckitt participate into that?

So on the balance sheet first, we have a very strong balance sheet, right? We have a stable capital allocation framework. We return excess cash to shareholders. To your point, that's what we've been doing. Actually, over the first 24 months of the span of executing our strategic plan, we've returned GBP 6.4 billion to shareholders, which I think is important. That was an important element of the plan. And we will continue down that path. Our balance sheet is strong enough that we have some flexibility if there's something that comes along that we think is particularly attractive.

I think financing M&A is actually not the hard part. Finding things that are worth buying is the hard part. I think there's many things for sale, okay? In our industry, there's many things that come for sale. But there's very few things that are of the quality of the assets that we have in core Reckitt. Normally, when someone owns something that's that good, they don't want to sell it. They want to organically grow it. But -- so we're always looking for something that fits, but it's very important that we're disciplined about that, right? Because we can -- we could go out and buy things and we can maybe even get a bit of a pop in terms of short-term growth from that. But if it's not durable, if it's not something that is as attractive and enduring as our core power brands are, then our people will eventually not focus so much on it, and it will not be a good transaction.

As you say, in our past, I mean, Reckitt was built through good M&A, right? We also had an example of not so good M&A with Mead Johnson, right? I mean -- so we have -- even in our own lived experience, we can see the role of M&A and it could be positive and it can really form a great company, but also do the right deal, not the wrong one. And so that's very much in my mind. And if and when consolidation happens in our industry, could that involve us? Of course, it could. And by the way, the more we sort of focus in on core Reckitt and I mean, you can see how attractive core Reckitt really is, right? #1 positions across the board, structural economics at the high end of the sector, a runway for growth. I mean this is an excellent business. So do I think that eventually that could be a part of consolidation somehow? Yes. I think that's very possible. Is that -- is that something that's driving what we're doing right now? No, right? I mean I think actually, the plan we're executing could, in some sense, get us more ready for that. But I think right now, we need to execute our plan.

Excellent. Maybe going back and going back to the algorithm. So you are focusing on growing 4% to 5% and delivering EPS. This year, the EPS where we land has been constrained at the beginning, at least because of the stranding costs from the EH set down. So like if I think about margin perspective to start with and then I'll come back to top line. So on the margin front, you mentioned that gross margin this year is going to be flattish. What is your expectation of where gross margin could come in that business? And then you are on the journey of executing 300 basis points of savings from SG&A. So yes, overall, trying to understand how you feel your margin is trending and especially gross margin because sometimes there's always been a question whether you have too high gross margin.

I know that's been a question about Reckitt. And I think if we're honest, back in time, I think maybe there was an excessive focus on gross margin in our company. I don't think that that's where we are today. But what we've said very consistently is we like that our gross margins are very high because it creates the opportunity to invest in the business, behind the brands, behind innovation. And it's just a function of us being a premium branded player. but we don't want the gross margins to drift up.

What we want is to be able to invest in our manufacturing footprint, and we want to be able to absorb the depreciation that comes from that and still hold our gross margin. So that's the right way to think about it, and that's what we're expecting for this year, and I'm pleased with that. I don't actually see that changing much. And as you rightly say, the opportunity for us in our P&L is to rightsize our SG&A, our fixed costs, as we call them. And that is going really well. That's fueled for growth. It's going really well. We're going to keep at it. We're going to go below 19% by the end of '27. And if we do that, then we'll see what's next. I mean there's a lot of opportunities there also with the use of AI to really think about what that could look like in the future.

I think, therefore, you can see that we have flexibility from a margin standpoint. So we can invest behind our brands in BEI like we are doing, right? We're stepping up the investment behind our brands. We want to do that. We're stepping up the investment in innovation. We want to keep doing that. And yet we have -- should have the flexibility to also let some of that fall through to earnings growth. So I'm very comfortable with that model. I think we're doing what we said we would do, and we will keep at that.

Just on the stranded cost, I think the one thing to mention maybe is, of course, mechanically, when you divest the big business, you have a mechanical headwind from these stranded costs. It makes sense. I think everyone understands that. The fact that we're trying to offset them more or less in 1 year, largely in year, it's actually quite aggressive. It's actually not necessarily normally the case that you could do that in a year. So now why are we doing that? We're doing it because we think we can. But I think it's important to remember that, that's actually a pretty aggressive ambition. And so if we deliver that, I'll be very happy.

Maybe last one. So to finalize on the 4% to 5%, you addressed the algo from a geographical perspective with the growth in emerging markets, high single digits and low single digits in developed market. From a category perspective, we discussed we expect intimate wellness to come back to accelerate. But if I look at Household Care and Self Care have been probably a bit behind the algo. Do you think that it's the role they play because maybe they play a role from a cash perspective? Or do you think that there's more that this category can give?

No, there's definitely more they can give. There's no question in my mind. We're in different cycles in different categories. So Self Care -- actually, nonseasonal Self Care is growing very well. Very pleased with it. That's bang on algo. The part that's not delivered in the first half is the seasonal part, as we've talked about, and there's clear reasons why. And we do expect the seasonal business to do better going forward.

So I think OTC is as I would expect it, given the seasonal fluctuation, and I'm not concerned with the outlook for growth from OTC. It's a very strong franchise, market-leading brands, good innovation. We're expanding brands. Gaviscon, we talked about how successful that's been. I mean -- so I think Self Care will be fine. I think we are in a tougher spot in Household Care at the moment. Now Vanish is back to growth, that's nice. But we have to work through the moment that we're in with Finish.

But if you think about Finish, actually, the emerging markets piece of that is a very attractive growth story, and it's going very well. It's really Europe and the U.S. and making sure we stay competitive but making sure we don't overdo it in terms of the promo and we navigate that challenge that we have with some pricing we have to pass through in a consumer that's under some pressure. So we will work through that. Do I, therefore, think that Household Care will probably be lower growth for the near term? I do. I do. But I still think it will sequentially improve.

Well, thank you very much, Kris. I much enjoyed. Thank you, everyone, for being with us on the Friday. And well, I wish you a good summer.

Yes. Thank you.

Good morning, and thank you for joining us online for the Reckitt's half year 2026 Results Presentation. I'm Nick Ashworth, Head of Investor Relations here at Reckitt. Before we start, can I draw your attention to the usual disclaimers in respect to forward-looking information. So presenting today, we have our CEO, Kris Licht, and our CFO, Shannon Eisenhardt. Following their presentation, will be the usual Q&A session. [Operator Instructions] If you have any follow-ups after the event, please feel free to reach out to the IR team, and we'll be happy to help.

So with all that, I will now hand over to our CEO, Kris Licht, to start the presentation. Kris?

Thank you, Nick, and good morning, everybody. Welcome to the call. I will start with an overview of our first half performance and some of the key highlights particularly the significant acceleration in Q2 with the more balanced growth that we delivered. Before Shannon takes you through the financial results in more detail. I will then come back and provide an update on the progress we're making across our areas and our strategic priorities for the second half, which underpin our reiterated full year guidance. After that, we will both be happy to take your questions. .

As I just said, we've delivered a significant acceleration across our business in the second quarter. In the first half, we delivered like-for-like net revenue growth of 2.7% in core record with growth in the second quarter of 4.2%. Importantly, all areas in all categories improved in the second quarter with a balanced contribution from volume and price mix. This performance not only demonstrates the strength and equity of our power brands, it reflects the continued impact of innovation across our portfolio. Alongside top line delivery, we continue to make good progress with our Fuel for Growth program.

You can see this in our first half results, where we continue to reduce our fixed cost base to offset the stranded costs from the Essential Home divestment. We're driving greater efficiency across the organization, and we're increasing our ability to invest behind our power brands. Overall, we're continuing to drive benefits from being a simpler and sharper business. Executing against the priorities we've outlined consistently over the last 2 years. Our portfolio is more focused our capabilities are stronger, and our execution is improving.

Turning to our financial performance. In the first half, we delivered like-for-like net revenue growth for the group of 2.6% with a much stronger Q2 of 4.7%. Our AOP margin for core record and Mead Johnson was 23.6% in the half. This was higher than our expectations, as headwinds on gross margin were not as significant as anticipated, and we made good progress in offsetting stranded costs through fuel for growth. Including the impact from the essential home divestment at the end of last year, we delivered adjusted EPS of [ 152.1p ] in the first half.

We continue to return significant cash to shareholders, returning approximately GBP 3 billion during the period, through both the special and full year dividends and our ongoing share buyback. Today, we've announced another GBP 500 million share buyback and a 5% increase in our interim dividend. Since announcing our strategy 2 years ago, we have now returned GBP 6.4 billion of capital to shareholders. This is around 20% of our market capitalization at the time of announcing our plan.

The organizational changes that we've put in this across record are driving improved execution making us a more resilient business able to successfully tackle challenges. This is evident in the strong acceleration in core record in the second quarter with all of our areas and categories improving performance compared to Q1. Emerging markets again delivered strong high single-digit growth led by China and India with Q2 supported by more broad-based growth from our ASEAN and Latin American regions.

Europe improved sequentially as we executed better in an environment of continued category and consumer headwinds with Q2 seeing the absence of a seasonal impact. In North America, we returned to growth in Q2 with the continued strong momentum of Lysol as well as the launch of Mucinex 12HR cold and fever in June. Together, core record delivered 4.2% like-for-like net revenue growth in the quarter.

I want to come back to innovation as it continues to strengthen our competitive position, enhance our category leadership and support premiumization. There are lots of great examples of recent new launches on this slide, but just to call out a few. That's all active Bardney, our naturally formulated range of disinfection solutions continues to significantly exceed our initial expectations in China as it resonates very well with consumer desires for enhanced sensory experiences. Following that success, we have launched Active Bardney across additional markets in ASEAN and Europe as part of our global expansion.

Our latest innovation in Vanish, the new turbo formulation designed for quick wash and tough stains has driven strong results in the market, particularly in Europe, taking advantage back to like-for-like growth in Q2. Across intimate wellness, we continue to expand the Deric intensity platform, which has now been launched across 19 markets. The range is performing well and is a great example of how superior innovation can grow categories while strengthening our premium position. In North America, we've continued to broaden the range of Lysol air sanitizer with seasonal extensions. And in Q2, we began to ship Mucinex 12HR cold and fever, 1 of our most significant innovations in recent years. which I'll come back to a bit later.

Execution is not just about in-market performance and innovation. We have faced challenges across our input costs and supply chain resulting from the war in the Middle East. Our experience in navigating these external headwinds positions us well to mitigate the impact. I want to give you some examples of actions we're taking across our supply and procurement functions. We're securing critical supply and building strategic inventory in key materials such as solvents and plastics. We have moved sourcing and manufacturing to markets seeing lesser impacts where alternative raw materials are available, we have amended sourcing and formulations, including increased use of post-consumer recycled plastic. We will continue taking these actions and others to mitigate the ongoing volatility in the commodity environment.

So in summary, I'm pleased with the progress that we've made in the first half. Our focused portfolio continues to deliver with growth accelerating in the second quarter and improving across all areas and categories. Our power brands are operating in attractive categories with strong structural drivers of growth. And our innovation pipeline continues to strengthen our position and the quality of the growth. As always, there's more to do. and I will come back to our priorities and the opportunities ahead shortly.

Now let me hand over to Shannon to take you through our financial performance.

Thanks, Kris, and good morning, everyone. As you will have seen in this morning's release, in order to ensure our reporting is as clear as possible, we've made some changes in the presentation of our financial results. We're reporting core Reckitt and Mead Johnson together to ensure you have a clear view of our ongoing operating businesses. Our core -- our group numbers also include the Vestas transitional services profit. This is income that's both time-limited and low margin, which is why we believe it makes sense to separate it. For comparison purposes, we're comparing core Reckitt and Mead Johnson versus our previously reported 2025 group numbers. which do include essential home as these were the reported numbers at that time.

As always, if you have any questions, please reach out to the Investor Relations team, and they'll be happy to walk you through the numbers. Turning now to the key financials for the group. Core Record and Mead Johnson like-for-like net revenue grew 2.6% in the half, with growth in core record of 2.7% and made Johnson of 2.0%. This reflects a much stronger Q2 with core record up 4.2% and made Johnson growing 7.2%.

Core Record and Mead Johnson gross margin was 50 bps lower at 60.5% as the positive impact from the divestment of Essential Home was offset by increased input costs and change to category mix. Core record gross margin was 60.9%, down 110 bps year-on-year. Core Reckitt and Mead Johnson adjusted operating profit margin was 100 basis points lower at 23.6%, ahead of expectations due to a lower impact on gross margin from the Middle East war and the pacing and phasing of our Fuel for Growth program. Adjusted EPS was 9.7% lower at 152.1 in the period, largely driven by the divestment of Essential Home.

Looking now at volumes, where Core racket delivered sequential improvement with volumes up 2% in Q2, reflecting momentum across all segments and a more balanced volume and price growth algorithm. We also delivered an additional point of growth from mix. Emerging Markets delivered volumes up 3.2% in Q2 or 4.4%, excluding Russia Hygiene. -- driven by continued strong performance of Dettol in China and India as well as our VMS portfolio in China. Europe volumes improved through the half against a challenging consumer backdrop. In Auto DISH, despite continued elevated promotional intensity, Finish maintained its market leadership position and delivered volume growth in the quarter.

In North America, volumes grew sequentially to 4% in Q2, driven by continued strong performance in Lysol and supported by the launch of Mucinex 12-hour cold and fever. Mix contributed 1.4% in the quarter. Turning now to our area overview. Emerging Markets delivered like-for-like net revenue growth of 9.4% in Q2 and 8.5% in the first half. Excluding Russia Hygiene, emerging markets grew 10.3% in the half. Performance was broad-based in Q2, with growth across all regions and categories, excluding Russia hygiene. China delivered its 12th consecutive quarter of double-digit growth. driven by recent innovations, notably Deal active Bottone and across our VMS portfolio. India grew high single digits with broad-based growth across all categories, driven by continued sales force automation, wider distribution reach and strong in-store execution. Africa, ASEAN and Latin America all accelerated with a number of smaller markets up double digits.

Finally, in the Middle East, operational and supply chain conditions improved through the quarter, following the initial Seafire contributing to growth across the region. We continue to monitor the situation closely, given the ongoing volatility. Half 1 adjusted operating profit margin increased 150 bps to 21.4%, driven by gross margin expansion, with benefits from category mix and selective pricing alongside our Fuel for Growth program, enabling increased marketing investments. In developed markets, performance improved in Q2. Europe was down 3% for the half, with performance improving sequentially.

Like-for-like net revenue was down 1.5% in Q2. All categories delivered sequential improvement in Q2 as we moved out of the season and continued to focus on delivering strong in-store execution in our Household Care business. In Auto Dish, finish improved like-for-like net revenue and volumes, maintaining market leadership as we actively managed our promotional activity. Vantage returned to growth in the quarter, supported by the latest innovation, Vanish Turbo.

In intimate wellness, Durex delivered volume growth in Q2 with a modest decline in like-for-like net revenue, reflecting targeted pricing investments. Half 1 adjusted operating margin was 27.7%, down 300 bps year-on-year. This reflected supply chain cost inflation ahead of our offsetting measures in the second half. partially mitigated by Fuel for Growth productivity savings. Turning to North America. Like-for-like net revenue grew 0.8% in the half, up 2.8% in Q2, driven by strong volume growth.

Lysol continued to outperform, benefiting from strong consumer demand in adjacent categories, including air sanitizer and laundry sanitizer. Self-care returned to growth in the quarter, supported by initial shipments of Mucinex 12-hour cold and fever, and Household Care remained softer in the quarter. Finished performance reflected weaker category demand in the grocery channel. Half 1 adjusted operating profit margin was 27.0%, down 260 bps year-on-year. Like Europe, higher input costs impacted profitability ahead of mitigating measures in the back half. partially offset by ongoing productivity gains.

Moving now to our categories. Growth was broad-based in the half year, with 3 of our 4 categories, delivering like-for-like net revenue growth and all 4 categories improving performance in Q2. Self-care grew 2.4% in the half, driven by continued strength in the nonseasonal business, with strong growth from Gaviscon across ASEAN, Latin America and Europe, alongside the BMS portfolio in China, which continues to benefit from innovation launches. Growth was partially offset by a weaker cough and cold season across Europe and North America, which impacted seasonal OTC brands in Q1.

Germ Protection grew strongly at 10.5% in the half, driven by continued impressive performance from both Dettol and Lysol. Growth was supported by innovation-led momentum in emerging markets, where Harpic delivered sequential improvement through the half. Household Care declined 6.6% in the half, reflecting a 250 basis point impact from Russia Hygiene as well as elevated promotional intensity in the European auto dish category. This was partially offset by Vanish returning to growth in Q2. And intimate wellness grew 0.5% in half 1, reflecting strong Direct performance in India and Latin America offsetting the impact of VAT changes in China.

Vet delivered broad-based growth across all 3 areas. Through May, 45% of core racket top CMUs were in gain or hold versus 55% at the full year. It's important to remember that this is a binary metric and large CMUs have a material impact. Mucinex U.S. and Durex China are 2 examples of large CMUs that currently sit outside of gain hold territory. We remain focused on driving strong share performance and achieving our target of 60% and flipping these 2 CMUs back into growth would largely close our gap to that target.

Now turning to our non-core businesses, starting with Mead Johnson Nutrition. Like-for-like net revenue grew 2% in the half with strong price mix of 5.9% and offsetting volume decline of 3.9% as it lapped elevated inventory build in the prior year. The international performance was led by Latin America. Innovation remained focused on portfolio expansion with new rice-based product launches in both the Philippines and Mexico during the period. Finally, Vestas generated GBP 235 million of net revenue, delivering adjusted operating profit of GBP 12 million from the service agreements we have in place.

Moving now to adjusted operating profit. Core Record and Mead Johnson adjusted operating profit was 14.5% lower at constant currency following the divestment of Essential Home in 2025. The 23.6% margin was 100 basis points lower year-on-year, although ahead of our expectations. This reflects a lower gross margin impact from the Middle East war and continued reductions in fixed costs through our Fuel for Growth program. which roughly offset the impact of stranded costs from the sale of Essential Home in the first half of the year. Looking at fuel for growth in a little bit more detail. We've talked about savings coming from 4 areas with strong progress coming from organizational simplification and the rightsizing of investments.

Now looking at the other 2. In shared services, we continue to make progress expanding our global operating model. We're deploying shared services across our HR, finance, IT and supply organizations, and now have our 3 global hubs up and running. Our focus is on extending shared capabilities further within these functions around the world as well as across additional functions. We're also accelerating the application of digital and generative AI across the business and believe there's a long runway in this space. to drive both growth and productivity. Kris will come back to this shortly. We remain focused on delivering these efficiencies while managing stranded costs associated with the separation of our non-core businesses.

Looking at the numbers. Fixed costs remained broadly in line with half 1 2025 at 20.1% of net revenue, with Fuel for Growth savings broadly offsetting the essential home stranded costs. The program remains on track to deliver our upgraded target of fixed cost below 19% of net revenue by the end of 2027. We -- in terms of the cost to deliver the program, we continue to expect it to be around GBP 1 billion and for this to be around GBP 350 million in 2026.

Now turning to EPS. We delivered [ 152.1p ] in the half. The 9.7% decline versus the first half of 2025 was primarily driven by loss of income from the sale of Essential Home and lower operating profit in Core Reckitt and Mead Johnson due to higher input costs in the period. This was partially offset by income from the essential home vehicle a lower share count from the share consolidation alongside the GBP 1.6 billion special dividend and our ongoing share buyback program. It's been another strong period of cash returns. We've paid an GBP 800 million full year dividend, repurchased GBP 600 million of shares through the share buyback program and returned GBP 1.6 billion following the sale of Essential Home.

In total, we've returned over GBP 3 billion to shareholders in the period, taking total cash returns to shareholders to over GBP 6 billion since we announced our strategic plan in 2024. We -- this is in line with our capital allocation policy, where we prioritize investment in organic growth and a progressive dividend while maintaining a single A credit rating. Excess cash will be returned to shareholders.

Turning to cash flow. In the first half, we generated free cash flow of GBP 419 million, with the majority of the year-over-year impact, reflecting the loss of the operating profit from Essential Home. This has led to cash conversion of 42% as we continue to invest behind our Fuel for Growth program. The half year dividend is increasing 5%, in line with prior year. Our balance sheet remains strong with net debt to EBITDA at 2.5x, in line with our expectations following the GBP 1.6 billion special dividend paid in February of 2026. As we said in March, we expect leverage to start to trend back down through 2027. In line with our commitment to return excess cash to shareholders, we've announced a new GBP 500 million 12-month share buyback program this morning.

Finally, turning to our expectations for the remainder of 2026. We're encouraged by our half 1 performance and the momentum across our business. Our guidance of 4% to 5% like-for-like net revenue growth for core record in full year 2026 is unchanged. For the second half, we expect emerging markets to deliver ongoing broad-based growth similar to half 1.

In Europe, we expect to return to like-for-like net revenue growth in half 2. with sequential improvement through the half, supported by strong execution and innovation launches as well as planned pricing actions. And in North America, we expect to deliver a stronger half 2 weighted towards Q4 given the challenging comparative in Q3. Across all geographies in our seasonal OTC business, we're planning for incidence levels to be slightly higher than the prior season. Our adjusted operating profit margin guidance remains unchanged and is expected to be in the range of 24.9% and to 25.6% for core Reckitt and Mead Johnson for the full year with a significantly stronger second half.

Commodity prices continue to be volatile but we're confident the actions we're taking will mitigate any impacts over the course of the full year. We reiterate our ambition to deliver sustainable long-term EPS growth. acknowledging the headwind from the dilution resulting from the divestment of Essential Home.

I'll now hand back to Kris to talk about our strategic priorities.

Thank you, Shannon. I want to spend the remaining time discussing our priorities across each of our areas and the work we're doing to position Record for long-term sustainable and consistent growth. Starting with emerging markets. This is our largest growth opportunity and continues to deliver excellent results. Our priorities across the area are consistent and our new operating model is allowing us to unlock accelerated performance. We are increasing penetration in mature categories. We're developing new categories, and we're scaling the next generation of growth markets.

At our event last December, we showcased a lot of what we're doing in these areas. When we think about penetration, this is being delivered by our enhanced execution in markets like India and China through very different consumer engagement strategies, offline led in India and online led in China. The learnings and the best practices from these markets are being taken into other markets today. Self-care is a significant opportunity for us as we expand education and activation around nascent categories in this space. We're seeing results from this today.

Self-care grew double digit in emerging markets in the first half, led by Gaviscon and continued strength of our VMS portfolio. And we've been focused on scaling in a number of smaller high opportunity markets to deliver more broad-based growth across the area. With the exception of Minot, all of our regions delivered like-for-like net revenue growth in Q2. In China, we delivered a 12th consecutive quarter of double-digit growth in Q2. This continues to be driven by strong innovation and executional excellence, particularly online.

The consistency of our growth in China really demonstrates the breadth and strength of our portfolio in that market. India continues to perform very strongly with consistent growth across each of our categories, driven by our loved and trusted power brands and activated through increasingly smart distribution. ASEAN grew high single digit with Indonesia and Vietnam leading growth in the region. Colombia continues to be a very strong growth market with Latin America overall returning to mid-single-digit growth in Brazil showing an improved performance. In Africa, although small today, we see exciting long-term opportunities and the region was in growth in Q2.

Now turning back to China. In July, we opened our new Shanghai Science and Innovation Center, which speaks to our priorities and intentions across China and emerging markets. We're really proud of this facility, our ninth global innovation hub. This investment represents an important milestone in our continued commitment to China and the country's growing role in our global innovation. The center combines consumer insight, innovation and local expertise to help us create the next generation of products for consumers in China and around the world. integrating R&D with real-time consumer feedback through live streaming capabilities will help us improve the quality and relevance of innovation, accelerate speed to market and support stronger consumer preference. This is another example of how we're localizing capabilities in our most important growth markets. and equipping our teams with game-changing digital science.

Turning to Europe. The operating environment remains challenging and category growth continues to be subdued. However, -- we're encouraged by the continued improvement we've seen through the half, supported by innovation, premiumization and stronger in-market execution. This drove an improved performance across each of our 4 categories in the area in Q2. In a highly competitive auto dish market, we have taken selective actions to protect our market leadership positions and we've continued to trade consumers up to the premium tiers of finish. Eric's intensity is a great example of innovation driving premiumization with continued strong results from this first to the world product as we launch into new markets and bring extensions into the range.

Looking into the second half, we have a strong pipeline of new innovation launches, and we're focused on consistent execution to drive growth. That is our plan. A great example of the way we do this is Gaviscon. The rollout of Gaviscon double action continues across Europe. It is a case study in highlighting what we can deliver when we execute a successful playbook for a power brand with consistency.

With local educational materials market by market, all tied to a consistent message we're growing through format extensions, flavor extensions and bringing relief to more consumers every day. Gaviscon has been a consistent strong performer, and this continued in Europe in the first half with like-for-like net revenue growth of 9% and hitting new market share leadership positions across 8 countries.

In North America, our priorities are centered on innovation, customer partnerships and operational excellence. Our nonseasonal portfolio continues to perform strongly with Lysol delivering high single-digit growth in the first half. This performance is driven by the equity and trust consumers have for the Lysol brand, 1 of the strongest brands in North America overall. A sharper execution across both our supply chain and with key retail partners, where we're growing in the fastest-growing channels, particularly omnichannel platforms and the continued expansion of the range with successful recent innovations now delivering multiyear growth.

As we look to the second half, we will continue to focus on executional excellence across the whole of the North America portfolio. A great example of this will be Mucinex 12-hour cold and fever which we began shipping at the end of Q2. Our teams have done a great job driving engagement around the launch and the response from retailers has been fantastic. We've secured multiple shelf facings including up to 9 in some stores, which is really a strong result for a new launch.

We have the assets in place to grow awareness and education around this launch, and we've started shipping into stores already. Mucinex 12-hour cold and fever will be incremental to our upper respiratory portfolio, and we're pleased with the additional distribution points that we've obtained. As such, we're well set for a strong activation ahead of the season.

I've spoken a lot about innovation today. I hope many of you were able to join our recent showcase on digital science. At the event, we demonstrated how digital capabilities are being embedded across our R&D function. This is enabling faster innovation cycles, better consumer understanding and more effective product development. We talked about the huge increase in virtual experiments we've undertaken this year. and the number of users already reaping the benefits of our righted AI tool. These capabilities are already driving an increase in pipeline and innovations with enhanced consumer preferences. These are tools embedded in how we operate today, and they're delivering results in the examples we shared across our power brands.

Our next event will be on the 19th of November in our North America headquarter in Nutley, New Jersey, where Jerome and team will provide more insights into the drivers of growth in our North America business over the coming years. Now let me close with our outlook. We delivered good growth in the first half with performance accelerating through the second quarter. Our innovation pipeline is strong and is landing well in the markets. Our Fuel for Growth program continues to be well on track to deliver fixed costs below 19% as we exit 2027. And our supply chain and digital capabilities are becoming increasingly powerful enablers of growth.

While the external environment remains uncertain, our strategy continues to deliver. We, therefore, remain confident in our outlook and we reiterate our expectation for 2026 to deliver 4% to 5% like-for-like net revenue growth in core record as we continue to build a stronger record and create long-term sustainable value for shareholders. Thank you for listening.

Shannon and I will now be happy to take your questions.

[Operator Instructions] I will start with Guillaume. Over to you.

A couple of questions for me, please. So the first 1 is on your like-for-like sales growth guidance for the core. So can I just check, it does include hygiene in Russia, so that 70 to 80 basis points dilution you're likely to get in 2026. And assuming it is the case, I mean it does imply 5% to 7% like-for-like in the back half when comps get a bit tougher. So my question is what underpins your confidence in that meaningful sequential acceleration. Is it because you expect more pricing to land in the back half? Or you do expect some regions, categories to be significantly better?And also, would it be fair to assume that it's going to be relatively back-end loaded. So it's going to be a much stronger Q4 than Q3. .

And then my second question on North America, could you maybe talk about what you're seeing on an ex cough and cold basis in the second quarter? Because if I remember well, in Q1, ex Cough and cold North America was up a mid-single-digit territory seems like it slowed quite significantly in Q2. So wondering what's driving this? Is it category, retailers destocking or some market share development?

All right. Thank you. I think I'm going to start with these 2. So the first one, look, on the like-for-like guide, we guided for the year 4% to 5%. As you know, we have encountered some headwinds. We are dealing with those headwinds I would say I'm quite pleased with how we're dealing with those headwinds. And so yes, our guide is 4% to 5%, and it does not assume that the Russia transaction is closed. So I think that's probably the first element of your question. .

Why do we believe that's achievable? I think is your second question. Yes, it's a pricing element, but actually, what you're seeing is very balanced growth in our results, and you saw this sharp acceleration in our business and a really good performance. We expect that to continue, right? So really, the anomaly in the year was Q1, very much a function of the weak season. We do have a very strong innovation plot. And I think in my remarks, I just expanded quite a bit on that, and that's giving us a lot of confidence.

What's great to see is that meaningful innovation lands really well in the market and consumers are willing to pay a premium for it. even in this environment, even with the headwinds that the consumers face. And so we actually expect to do very well with innovation in the back half as well. So we have the building blocks. We think our business will continue to perform well through the fall. -- and we're holding the guide for that reason. Just in terms of the North America business, we did see some destocking, and it did continue into April as a function of the season. and a little bit of destocking elsewhere. Actually, North America was pretty resilient. It was a good performance in Q2, and the nonseasonal business continued to do well it wasn't quite as high as Q1, but it was very strong. So we feel comfortable with North

America going forward, albeit, of course, we have a bigger comp in Q3 and then we expect a bigger Q4 to come through. So yes, in aggregate, I think your last element of the question was, is this going to be somewhat back-weighted in terms of Q4? It is. But at the same time, this acceleration that we've seen in the business, we expect to now be the level that we're going to be performing at I hope that answered your 4 or 5 questions in a question.

So [ Olivier ], and then we'll go to Ed, just a signal out. So over to you, Olivier.

Kris and Shannon, I'll stick to 2 questions. So first is seasonal OTC, you're planning for incidence level to be slightly higher than the previous season. What gives you the basis for this? And then secondly, just going back to the GBP 500 million share buyback is lower than the 1 you've done historically. Considering the lower free cash flow generation should investors expect a lower rate of buyback going forward as the cash generation remains a bit more under pressure?

So maybe I'll respond on OTC and Shannon take the buyback. So on the OTC planning assumption, I actually think this is quite prudent. So you will remember that the last season that we just went through Q4, Q1 taken together was abnormally low and really to a significant extent. And so when we look at historical averages, including pre-COVID, it was a very low season. We don't expect to recover all the way back at least we're not planning for a recovery back -- all the way back to a normal pre-COVID average season, but we are expecting to do slightly better to see slightly higher incidences. That strikes me as prudent. We have no facts to suggest that anything other than that would happen. We still believe that the variations that we've seen are largely a function of seasonal variations, which have always been the case. And of course, we had COVID in sort of the base for a few years, and that has now come out. So I think it's a good planning assumption, and that's why we're taking it. I don't think it's aggressive. I think it's prudent.

Yes. And then on the share buyback program, our share buyback program is really an output of our capital allocation principles, and we go back to those and share those pretty frequently. The magnitude of the program we managed to ensure that we're able to, first and foremost, invest organically behind our business and drive top line growth. And so to your question on should we expect to see the magnitude change over time? Absolutely. So our expectation is that the program is an important piece of how we return value to shareholders. but that it will change over time in line with our capital allocation principles. .

Ed, you are up next.

Just on Emerging Markets. Can you talk to any kind of disfication you saw from I guess, events in the Gulf and local suppliers or local competitors, which would have benefited your results in Q2, whether that's a factor as what I consider for the rest of the year? And then also, there's a comment around gross margins in emerging markets, which I remember this time last year, they were pretty strong. It sounds like they improved again. And so can you just talk to that and the opportunity around the gross margins?

Maybe I'll take the first. So the impact in the Middle East has actually been somewhat significant for us. We have a plant in Bahrain that we actually had closed for the safety of our employees. And we have since reopened that, but it continues to be impacted certain days when there is a conflict, and there is a danger. We closed the plant back down. We also have more challenges getting inputs into the region. So that impacts production volumes. So we have actually seen a bit of a headwind to our Middle East business, as you would expect from this disruption it's manageable. And as you can see, we're still able to report very good results in emerging markets, but it's something that we have to continue to actively manage. So I wouldn't say that we have benefited from this in any disproportionate way. I don't think we have taken a step forward competitively in the region for this reason. So -- but we continue to manage it. And hopefully, we can get back to business as usual pretty quickly.

And then on gross margins in emerging markets, we've been seeing over the past few years, and we talked about this on the emerging markets focus on event that differential between gross margins in emerging markets versus our developed markets. narrowing. Our expectation is that we'll continue to see that narrow over time. It's largely a function of the category mix and where we're driving growth in emerging markets. Additionally, we called out the fact that you're also seeing the fact that executionally, we can price more quickly in emerging markets than we can in developed markets. And so we had the benefit of being able to take quick action around pricing in emerging markets as we saw the headwinds coming in from the crisis in the Middle East.

Jeremy, and then we'll go to David. So over to you, Jeremy.

Thanks for ask the questions. So first one, perhaps you could talk about sort of auto Dish. That's been a difficult category, both in Europe and in North America. So I'd be interested to hear why the category has become so kind of challenging and what you think as a category, you can do to get your business back into growth within that.

And then secondly, perhaps you could talk a little bit more on pricing, maybe where you've implemented price rises already where you think you have to put them in? And if there's anything a bit about the kind of the magnitude of those price increases that you would need to see?

Great. So let me take them in turn. So Auto Dish, look, mentally, it's important to remember, this is a very attractive category. It's quite expandable. You can innovate. You can premiumize, and we've seen that over the years. There is a tremendous runway for growth in emerging markets. for Auto DISH, and we are seeing that come through, and we're very excited about the potential of that business over time. In Europe, in particular, it has been tough recently.

Why is that? It's primarily because it's become very promo heavy beyond levels that we normally see beyond levels that we actually believe are rational. In Auto Dish, the game that we want to play, the strategy that we have is to expand the category, right, to premiumize and to expand the category. Whenever we as an industry forget that strategy, we get into a promotional cycle and especially during times like this, when consumers are value-seeking in Europe and retailers are looking to provide value, that can get into a bit of a loop. We are trying to manage this very carefully.

We're trying to make rational decisions. We're trying to invest in things that make sense, but not promote at levels that don't make sense from a P&L standpoint, from a category standpoint. And I think that's the cycle you're seeing right now. I am very hopeful that, that will change. But for the time being, I expect it to continue to be fairly tough in Europe. We are holding a leadership and we will continue to defend market leadership. But again, we won't respond to every very deep promotional price point that we see in the marketplace. It just doesn't make sense. And as market leaders, we really shouldn't. So I would expect it to get better, but I don't expect it to get better soon.

On pricing, we have been able to already execute pricing. Shannon just talked about pricing in emerging markets. That has gone well. There may be a little bit more pricing we have to take in certain markets in emerging markets. We will do so. I'm not worried about our ability to do that. In developed markets, we will also be taking some pricing. It's moderate in magnitude. It varies across markets, but we're talking about sort of single-digit price increases in some places. And largely, we have the pricing power to do that. And so we're going through that, and we're trying to be smart about it, and I expect that to be a building block in the second half.

So working across, I think we're up to David next, and then we'll go to Warren. So David.

So out to our -- just a bit of an update on China [ InterWellness ] in a bit more detail about the current trends and how you're adapting to the regulation changes. And I guess you talked about a lot of supply, some smaller competitors and pricing pressure. Is that still the situation? Or is that starting to ease and work its way through now as you go into the second half?

And the second question, just on the margin in the first half. Obviously, back end of April, you were guiding to 200 basis points down much, much better than that, which is great. But I just wonder if you can talk us through what happened in May, June that saw that improvement in performance? And is there anything to do with timing in that? Is there something we should be aware of that certain things are being pushed back and it all into the second half to just smooth that a little bit more for the full year.

Okay. I'll start on China. Look, I just wanted to say the first thing is that we've now had 12 quarters of double-digit growth in China. I mean this is a remarkable business. It's a genuine success story. And what's great about it is that it's broad-based, right? So this is not something that hints on 1 brand or 1 category. We have a multitude of leading brands, a multitude of brands that are growing very fast. That all is our largest business in China and doing really well. VMS is very large, too and doing really well.

You're right that after years of very strong performance from Durex, this first half was soft for Durex, but we know why there was the VAT increase. There was the content restrictions that came in, and there was some fairly deep promo from some of our competitors, again, where we chose not to match all the way. I feel good about that. We're very optimistic about the outlook for Durex. We expect that to recover. We're growing very fast on the platform that matters most in China, and we're doing really well with social commerce. So -- the content restrictions turned out to be something that we could navigate. That's what we said earlier in the year, and our team has been able to do that so we can effectively communicate.

We just have to change the messaging change the emphasis a bit, change the content. But we can do that very quickly with our content studios. So we have been able to do that. So that's no longer a headwind, and we are growing on the most successful platform with Durex. We also have good innovation coming behind Durex. So I think this was a bit of a temporary set of events that caused the business to be a bit soft. But if you zoom out, it was very strong for years before. We fully expect it to be strong again.

Great. Then on margins. In Q2, we saw a couple of different dynamics that allowed us to deliver a bit stronger operating margin than what we discussed at the end of we're really pleased with the performance. I think the things worth noting are, of course, as always, and we say this a lot, we always strive to provide guidance that's prudent guidance. What we saw play out over Q2 were a few dynamics. One is the fact that the headwinds we saw come through in the Middle East or from the Middle East in Q2 were a little bit less than what we had expected when we were initially guiding at the end of Q1.

At the same time, we also saw just some pacing and phasing of Fuel for Growth savings that moved into the front half that we weren't fully expecting to land in the front half. And so that drove that 100 bps over delivery versus what we've set out as expectations. When you think about operating margins for the full year, we remain very squarely in the place of believing that we'll deliver operating margin between that 24.9% and that 25.6% bookend that we've been discussing for the past couple of quarters.

As you think about what that delivery looks like, again, fuel for growth, it's pacing and phasing across haves, but we expect to largely offset those stranded costs that are coming in from the essential home divestiture. When you think about Middle East, it's obviously a volatile situation, but we remain committed to mitigating the headwinds that we see from the Middle East over the course of the second half. And so that really gets us into that same place between those bookings. We also really want to maintain our flexibility to fuel our BEI investment to the extent we have that opportunity to do so and see ideas that we think are worth investing behind.

Okay. Let's move on to Warren and then one after Warren. So Warren, over to you.

So 2 for me as well. The first one, just on destocking in the U.S. Can you maybe give us a bit more detail? It looks like it's VMS, how much impact was there in the quarter? And then looking into H2, Kris, do you think there's any risk that U.S. retailers look to more destocking to conserve cash and a more cautious U.S. consumer, where Arista becomes a more pervasive issue in the U.S.? Because I'm looking into the second half in the U.S., it looks like a lot of moving pieces on kind of comps and other stuff. So how should we think about the cadence of the U.S. in the back half, Q3 versus Q4?

And then secondly, just on Europe, with emerging market growth expected to be similar in H2 versus H1, obviously, Europe then becomes a bigger delta to deliver your uplift. So what's driving the confidence on this European recovery given it doesn't sound like Auto Dish will get much better. So is it category? Is it innovation? How are you fitting on that?

Sure. So on the first question, look, it's hard for me to speculate exactly what retailers will do through the second half of the year. But what I will say is the destocking we saw got us to a level of inventories where I don't see it to be likely that there would be some sort of further sustained trend. In fact, it was not sustained through the quarter. And so I think that was decisions that were made, and we appear to be done with those decisions if that makes sense. Now could that be something that retailers consider doing again, of course, it could.

But for our business, if we look at our business and our categories for the second half for retailers inventory is hugely important, right? So they want to be fully stocked for the season. They want to have a great back-to-school activation with brands like Lysol, so I don't think that inventories on our business will be under heavy scrutiny in the back half because this is sort of our time where we really show a big display activation sell-in for the season and then, of course, 12-hour Mucinex cold and fever, which retailers are very excited about. So I suspect that this will not be a big headwind, but it's hard to say with complete certainty, right? I hope you understand that.

For Europe, what I will say is we are seeing a gradual improvement in execution we are seeing good success with innovation, which will continue to roll, right? I talked about Durex as an example, that's a meaningful business in Europe. I talked about Gaviscon that's very meaningful growth in a European context. And then we will have some pricing, which is also a building block for Europe. And then we have a very soft comp later in the year. So those things put together give us confidence that we're going to see recovery in Europe.

But I also want to stress that what we're talking about is modest growth, right? This is not a high-growth environment. It's a very challenging environment. And so we're just expecting to see return to growth, but modest growth.

Okay. And then [indiscernible] over to you.

Just 1 question from my side. So Med Johnson delivered 8% increase in price mix in Q2. So could you please elaborate a bit on it, like what allowed this, et cetera?

I couldn't hear.

Sorry, you said 8% -- could you just repeat the question?

Mead Johnson had an 8% increase in price mix, if I'm not wrong, right, in Q2. So if you could please elaborate a bit on it.

So in Mead Johnson, we saw both some phasing of shipments and some pricing activity, all of which contributed to an abnormally big Q2. We're not expecting that to continue. So consider that a bit of a one-off in terms of the magnitude of the growth. Mead Johnson is trading well, and we expect it to continue to trade well. but this was a blip of a quarter, not how it's going to perform on a going basis.

Diana. And then from Diana, we'll go to Tom. So you have Diana.

Going back to the pricing question, if I may. Just for North America, where I think it came weaker -- slightly weaker than expected in terms of the price mix. Just if you could walk us through the main drivers and the phasing in the second half is we see those price increases coming through. How should we think about the volume elasticity if it's staying around the levels that you expected? Are there some areas where you feel that the elasticity is potentially lower for instance, in premium, more premium rise categories?

And then the second question, if I could go into the IT investments linked to AI. Could you give us some more detail? For instance, what is the percentage of the budget for IT that you are currently spending in tokens? And are there any areas where the return has surprised you more positively than others? That would be helpful.

Maybe I'll start on the first one then. So North America elasticities, I would say we haven't seen a sort of dramatic change in the environment. We did see a bit less performance and a bit softer response in the grocery channel, which again, I think we can attribute to the gas prices and the impact of that. So we did see a little bit of slowness there. But again, I don't think it's structural. I think it's a function of the spike in gas prices that we saw and sort of particularly in the grocery channel, when you have consumers both buying their gas and their groceries at the same store we could see some pressure there.

But broadly speaking, I don't see a big change in elasticities, and I don't anticipate it either. I mean we are a fairly premium business. We operate with the leading brands in the category, but also at the top price point typically in our categories. And so inherently, we are a little bit less exposed to both trade-down activity and sort of the most elastic parts of the category. So I think we can pass through pricing. We have that ability. We've shown it time and again, I think we can do it again. You want to deal with AI?

Yes. So the question is just the amount of budget going towards AI. I mean, I think -- in tokens. So obviously, we're very focused on driving AI across the company. We view it as something that's not only going to enable us to drive productivity, which we've talked a lot about, but we also view it as a tool that's going to help us drive top line growth. And so we're very focused on making sure that we're expanding and focusing on both sides of the equation.

The token cost is quite small. We just reviewed it actually as an exec co about a month ago. to understand where are we at, how do we project that growing. It's very small today, what we see. We're obviously paying attention to it. We're assuming it will grow quite rapidly. But even assuming that rapid growth, we don't see it as something that we're particularly concerned about at this point in time. a much bigger portion of the investment for us is not the tokens, but it's just the continued investment behind building the internal models and capabilities that we're using deliver that productivity as well as delivering the top line growth benefit that we see as an opportunity from AI.

So it looks like we've got 2 left on Zoom. [Operator Instructions] So we are going to Tom and then Sarah. So over to you, Tom.

Yes. Sorry to go back into this North America destocking. I mean if you sort of split the business between, I guess, Amazon, Walmart, Costco of the grocery and I appreciate what you're saying about the gas price impact. But presumably there's any so long that Amazon, Walmart and Costco can take share without there being some pressure on the other parts of U.S. retail. Is the destocking at all concentrated a little bit in that kind of other last? I mean no drug is in there, but other grocery other than or other channels other than drug in that large bucket because they're obviously losing share for a number of your categories.

And then just on the margin improvement into H2. I mean was there anything sort of noncash, I suppose, in H1 that helped unwind of FX hedges that would have helped. And as we go into H2, is there anything noncash or FX hedges that really contribute and provide a bit more of an extra boost to that H2 above the things that you sort of outlined of revenue and mix improvement?

Okay. I'll just give you my reflections on the channels. It is definitely the case that the channels that are underperforming are taking much closer looks at their inventory and are taking actions. In terms of winning retailers in the U.S., you mentioned a few, it's very obvious who's taking share at the moment. We are very well positioned with them, but we're also well positioned with other retailers. So we're somewhat agnostic of who's winning and losing our brands will find their way to consumers' pantries regardless.

But right now, it is the omnichannel, the leading omnichannel retailers that are winning, and that is where we have a lot of traction at the moment also with our innovation. So I think what you're sort of suggesting is right, which is the channels that are disproportionately losing share are also the ones that are taking more actions on inventory.

Yes. And then on the question on margins in the back half and the front half. So there's no one-offs that I would call out in our front half margin delivery nor are we expecting any unusual or abnormal one-offs that are going to drive that improvement in the back half. The back half improvement from an operating margin standpoint is really related to mix. And so if you think of as we continue to get to a more balanced growth dynamic with developing markets contributing more, we'll see a positive benefit from geography mix. And again, if you think about the category mix and how we expect that to deliver across the year, we have that sort of weak season that was negatively impacting margins when you think of self-care mix in the front half assuming a more normalized season in the back half, we'll have a category mix benefit coming through as well.

The last one is Sarah. Over to you.

Yes. I guess that's quite a good segue from Shannon's point. If we look at seasonal revenues, they were just over 10% in the quarter. And I'm assuming that's because of the new music product. If you think about the kind of quantum of the destock at the beginning of the quarter, in cold and flu, -- would you say it would be filer to think of it in the second kind of magnitude percentage-wise as what you saw in Q1? I'm basically trying to extrapolate from those numbers, how big Newson is. I mean would it be fair to say that Mucinex our sell-in seasonal by 20% or so in the quarter, would that be war?

It was a little difficult to hear you. There was something with the audio, but I think I understand what you're asking. So what's very important to remember is with a business like Mucinex, we shipped the season, the vast majority of the season we ship in Q3 and Q4. And so if you have a big season, we then ship again in Q1. If we have a low season like we did, we don't ship very much again in Q1. So you take the "pain" of a bad season, overwhelmingly in Q1 and to some extent in Q2, which was the destocking in April that we're talking about.

But now we're back into a new cycle where we're shipping again, right? So we're shipping 12HR cold and fever, and we're shipping the base range, which has also done really well in terms of sell into retail. So we're sort of starting over, so you can't really extrapolate from Q1, Q2 to dimensionalize Q3 and Q4.

The other point to remember that hopefully came through in the RNS was this point around the Q3 lap of the PE shelf resets that we're comping from prior year. So when you then try to look forward into what's the delivery going to look like in the back half of the year, you should expect to see a more muted performance from North America in and then a stronger performance in Q4, that's really related to that lapping of the PE shelf reset that hit and benefited Q3 in the prior year. .

And actually, we do have one question that's just come in on the webcast. I think we are all done too. Okay, let's move to this and so it's from [ Calama Bernstein ]. So it looks like it's to you, Shannon. Can you talk a bit about gross margin drivers, please, down 50 basis points despite the tailwinds from us from the EH divestiture. What would this be without the EH tailwind? And what are the drivers over the next 6 to 12 months?

So the gross margin progression, I'm trying to think, I don't think I have -- I don't have top of mind the number. I feel like it was in the presentation, excluding the.....

[indiscernible] to be precise because we showed.

Okay. Great. So to think about gross margin drivers as you head into the back half of the year, obviously, we continue to have the impact as we have essential home coming out of the delivery in the current year. You should think of the fact that we've talked around the fact that we'll continue to have more and more of the headwinds from the Middle East coming through although our expectation and our ambition is that we'll be able to offset those as we go through the entirety of the back half of the year. .

And then we've talked previously around the fact that as we've stepped up our CapEx over the past few years and continue to do that in this year, you'll see a little bit of a headwind coming through from depreciation. And then I think the last piece on gross margin would just be mixed. And so similar to what I said around operating margin, you can take those same drivers, positive mix from geography and category mix coming through in the back half around gross margins as well. So when you really back up and think about gross margin delivery in the current year versus prior year. We've been very consistent in talking about wanting to maintain our gross margins, but not expecting a significant expansion of gross margin.

Brilliant. And it looks like we're all about done and given the time, I think that's a good place to end it. So look, thank you, everyone, for joining us today. As a reminder, our next record focus on event will be on the nineteenth of November, which is going to be focused on our North America business. and will be led by German team at our offices in New Jersey. And hopefully, the details will come up on the screen shortly. Registration is now open and so we hope to see lots of you there in person. The event will also be webcast as usual. So as I said at the start of the presentation, the IR team is around for the rest of the day if you have any further questions. Otherwise, we look forward to engaging with you over the summer. Thank you very much for joining us.

Okay. I think we're going to crack on. So it's Reckitt's turn. I'm delighted to welcome Ryan Dullea from Reckitt. Ryan is Head of Reckitt, Chief Category Growth Officer. I think I'm right in saying that. So the plan for this fireside is to split it into 2 parts, Ryan. The first part is to talk a bit about the consumer health category and the Reckitt perspective and then the second part is to get into some of the Reckitt-specific issues. So thank you for supporting us today. A lot to talk about. So I think the way to maybe start it is to talk about the new organization. You became the Chief Category Growth Officer, a year ago.

A little bit more than that. Right around that.

Can you explain a little bit about how the new organization has been delayered and simplified. And then related to that, how you're kind of thinking about sort of speed to market because I guess that's one of the kind of the key benefits from doing that and what it means sort of day-to-day for the organization.

Yes. Look, I think it's part of our collective journey as a company. As you all know, we sharpened our portfolio quite a bit, about 18 months ago, really focusing on core Reckitt as the key energizing growth for that. It's a fantastic portfolio of #1 equities that makes up a little bit over 80% of our business. What we realized at the time as we were doing that, we also had to sharpen the organization in order to make sure that we could deliver against that and maximize the growth potential of that portfolio.

So a couple of points of simplification. We came under one unified Reckitt structure as opposed to used to being a health and a hygiene BU. So a simplified set of operating principles and operating procedures enable us to operate, really, as one unit. What we've also done as part of that is create a clear role for what we call our category organization, which is what sits below me, which creates the scale for us and looks to bring things together to make sure we understand deeply the consumer. We're driving big innovation that can disrupt markets, and we continue to build against our brands.

But we pair that up then with our what we call IMEx, our in-market excellence teams to really continue to leverage the speed that has always made Reckitt great. By doing that, what we've been able to do is consolidate, if you take a brand like Finish, the actual execution that we're developing against that brand in Europe, and then actually executing with speed in the market. It's a really nice balance of both of those as you go through. And then, of course, as part of that, we've been on a digital and AI journey, which has able us to simplify some of our processes while at the same time, automatizing things. We're a big believer of humans staying in the lead, but from everything we do across marketing, consumer insights, some science stuff as well, too.

And maybe talk a little bit about the long term. I mean you've got these 11 power brands that have very, very strong positions. But how do you actually ensure a consistent competitive advantage in brand equity driven by actually best-in-class foundational technologies and then at the same time, invest in categories with long-term growth tailwinds so that you can actually, on a consistent basis, because Reckitt's pass has been a bit boom and bust. But how to do it on a more consistent basis against CPG normal?

Look, it's great. I think part of that actually is the refined sharpened portfolio. If you look at the consistency of that shape, of that portfolio over time, the growth has been relatively stable and the margins have been healthy. I think that's really the secret unlock. Not only do we have these brands with fantastic equities, but they've got to the shape to the P&L that allows us to invest in them across kind of 3 core areas. For me, equity, the lifeblood of brands, is really innovation and making sure you have good R&D investment. So you're continuing to innovate in the category, continuing to bring new benefits to meet consumers' needs in other ways. This keeps the brand fresh and relevant for consumers.

Second big investment for us coming out of that is also supply chain. You can't have a good business and a good equity if you can't get products to consumers when they need them. So we continue to invest in that to make sure we have a very great regionalized supply chain to be able to meet needs. And last but not least, comes down to the equities and the margins and continuing, then, to invest back into those. So it's kind of the combination of those 3 things that enables us to deliver today, but also then insulates these great brands for the future.

I mean one of the things -- one of the big themes in this conference so far today has been about the difference between the incidents and the treatment gap and actually the education piece. It's significant for a lot of companies. You need to spend money to actually tell people why they need a product. But how do you at Reckitt intend to close that kind of gap? And how big an opportunity could it be for Reckitt in, I guess, self-care and in wellness is probably the 2 categories you're talking about.

Yes, 100%. Look, I think it's a significant opportunity, not just for Reckitt, but also for society. When you think about the pressures on health care systems, there is a definitive need for self-care. Of course, it needs to be appropriate self-care treatment. And so that's where we look to partner with HCPs, KOLs, governments and regulators around to really structure the entire health care pyramid, to make sure people are clear on where can you give consumers the choice, and the opportunity to be able to choose a product that is safe and appropriate for the treatments that they have.

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periods of time. I'll give you one example, what we call our AMR program, which is Antimicrobial Resistance. If you have a sore throat, and most people have had one and you've gone to the doctor, there's a high chance you've probably gotten prescribed an antibiotic for that. The trick is 90% of sore throats are actually caused by a virus. So most of the time that antibiotic is going to do nothing except to have this massive side effect of creating antibiotic resistance, which is becoming a bigger and bigger issue globally.

So this is where we look to partner with governments. We paint that story for them, help them understand the impact on the health care system, help them understand the economic impact, and then work with KOLs to make sure that they're prescribing appropriate treatments as they go down the funnel and down the stream. It really has to start all the way up there to have the most significant impact down funnel.

AI, agentic e-commerce has to be a question. How do you see AI reshaping consumer health or self-help for Reckitt, if you kind of crystal ball look out a few years?

Yes. Look, there's a couple of areas I can maybe talk about what we're doing on the inside. And then I also think there's a bit of an industry shake-up on the outside as you think about the impact on how you grow brands. For us internally, what it's enabled us to do is really supercharge and empower the humans we have on the business. One of the early activity sets we dove into, we've got tens of thousands of data points of research around proprietary research we've done.

There's hundreds of thousands of ratings and reviews across our product. There's social feedback. You can consolidate all that into one data set now into a set of millions of data points that no individual human could actually have the bandwidth to be able to consolidate. What we've been able to do then is partner that human with an AI tool to be able to look through that data, pull out new insights, and create new ideas.

For those of you that would have saw our kind of categories review about a year or so ago as we were introducing the structure we're looking at, what this has enabled us to do is actually reduce the amount of time to develop new concepts by 70%. So it's a significant reduction in the amount of time. And not only does it go faster, but what we found is because of that breadth of data you're able to put into it and that consumer-first lens you're able to take, it actually qualifies at twice the rate.

So as we went into AI, we kind of focused on marketing first to learn and understand the space and understand how to use it. Our R&D organization, which I believe Angela will be sharing some things in a couple of months around how we're looking at that, has really taken the next step into it of how do we think about leveraging those same tools for document creation, for formulation work to really change the game in how we think about that end-to-end creation of a new product.

And then as you move out and downstream, obviously, there's going to be lots of efficiencies in the marketing world and how you can reach consumers probably in a more one-on-one way than we could previously from the efficiencies it's going to drive in your ability to create content.

Why don't you shift gears to the cold and flu season. I don't know how many questions I've had on it about whether it's structural or cyclical. Nobody's really seemingly got a convincing answer. But it's a big headwind. I think in the first quarter, it was like 180 basis points of organic growth, and it's 2 years in a row. So is there any evidence that you've seen that it could be structural? I guess it's something you guys have been looking at. Is there any data points that you can share or reassure?

Yes. Look, I have been working, for better or worse, in cold and flu for over a decade. So I've had the privilege or cost of seen lots of different seasons, some up seasons, some down seasons. We recently did a review looking at unit movement because there's no perfect way to really triangulate what happens next season. If there was, I would probably have retired and been a very rich person from learnings I had in the first few years of the season, but it's very hard to predict what comes next. But there are some patterns.

So we've looked back to like a 3-year running pre-COVID period and kind of look at average units sold. We did this assessment in the U.S. because we had the best breadth and depth of data. And you came to an average number of units. The exact number, I won't quote you, but it's in like the, call it, 800 million-ish type of units, not our sales, but the total category sales that are sold in the U.S. for cold and flu, cough, congestion, and sore throat incidents.

Now you came to COVID. And I think you guys all remember what we term in as the no season season, the 2021 season where everyone was locked down and effectively, there was really no incidents, no units sold across the market. From that point in time, though, the seasons that followed were exceptionally higher than those old COVID norms. And it's interesting when you look back over the patterns, last year, so the '24, '25 season because you kind of have to break it from a starting in June to ending -- sorry, starting in July, ending in the next June, the 2024, '25 season was actually just about the same as the pre-COVID average as far as number of units sold.

This year, however, has been disproportionately low and has been one of the lowest seasons on record. So while I don't have a crystal ball and can't predict, I don't think it's a structural thing that we have seasons continuing to decline. We actually went back to the normal last year, and we're having a low season this year. So the hope is you see that return at least to the norms that we saw pre-COVID, which seems to make a lot of sense because we see that across other categories like our germ protection business that had significant impact during COVID, have all kind of normalized back to the similar period. So that's kind of how we're outlooking and thinking about it seasonal...

Again, another topic, there's a lot of topics to talk to you about, but one other one. On the GLP-1 topic, penetration is obviously increasing everywhere. Pricing is coming down. We're seeing more and more reports of side effects, which given your self-help business, you would think maybe it's beneficiary. Is that true or not? And then any specific subcategories within self-care or VMS that are seeing any kind of more direct uplift? How is GLP-1 overall impact it?

Look, it's obviously a huge impact on the category and ancillary categories even in the food. So we've been keeping a close eye on it, and we actually have a group that just ongoing does it and we'll review quarterly. What we're seeing is a net impact on our business hasn't necessarily been huge. I think you're starting to see some of these secondary symptoms, whether it be nausea, upset stomach starting to come through. Of course, that will have a benefit on our Gaviscon portfolio. So where there are opportunities, I think we'll certainly get a little bit of tailwind from it, but there hasn't been anything, I would say, major or structural that's changed to the offtake on our business despite significant rises in other categories.

Okay. Regulation, another big topic. Keep coming. How do you see self-care regulation evolving and any big differences around the world? There's a lot of chat about a slightly easier environment in the U.S. with regards to Rx-to-OTC switches with the desire to push drug prices down, RFK Junior, blah. Do you -- is that something that you recognize that as potentially could be changing? Is there a movement to kind of lower prescription prices and democratize health care?

Yes. Look, we have always been a strong advocate of appropriate self-care. I think the key word in that is appropriate. Regulations change all across the world, and they have similar structures, but can vary quite greatly. This is where we use our local knowledge and understanding to both influence that, to make sure we're helping those government systems and health care systems understand the most efficient and appropriate way to best deal with self-care issues that can be treated in the particular market, while at the same time, continuing to try to influence there.

As things shift, we'll obviously continue to reassess the situation and understand how we can best utilize our portfolio, think about our product innovation. But I think what we've seen in the past, and we have a great new one that's launching in the next few months here with a new 12-hour product across cold and flu on our Mucinex franchise, once again, fitting into the existing U.S. system, still able to do it. So whatever the system is, I think we have the resiliency to be able to match and line up against that. But of course, the more we can get in consumers' hands, the more we can benefit that greater health care system and the cost to society.

The other key channel is obviously the pharmacy channel, right? And so there's lots of stuff going on with the pharmacy channel in the U.S. under pressure, but then you've got the pharmacy channel in Europe is a bit more sticky because of the way of the ownership. You can't own more than 3 pharmacies in most of Continental Europe. Can you talk a little bit about how you're positioned within the pharmacy channel, how big your pharmacy sales force is, and how you're engaging in the channel? And what differences are you seeing in the U.S. and Europe? Is the drug store still dying in the U.S.? Are they stabilizing? What's going on?

Yes. Look, it's a great question. And it actually is quite different by region and where you go into. But what is universally true is the health care professional tends to play a big role in people's choice in the category. It influences up between 50% to 70% of that end consumer's choice as you go through. So it's a key partner for us. As we look in Europe, they are really the frontline as well, too. When you think about consumers going into their local pharmacy, that pharmacist is there talking about products they believe in. So you need to make sure you have the appropriate staffing in there and the appropriate sharing of information with them. So they understand your brand, understand when to prescribe it and how it best fits their patients' needs and that your product is meeting that because that's how they maintain their customer, which is, at the end of the day, our same consumer.

When you go over to the U.S., it's a little bit different of a network because while you can talk kind of drug stores, I mean, Walmart's, Kroger's, grocery, mass, they all have pharmacy in store. So it's a little bit more ubiquitous back there, and it's not quite the same frontline activity set as it is in Europe. So it's still an important avenue and an important component, although the pharmacist themselves might play a slightly lesser role. Pharmacy is important. For us, all those key channels, still, you go across drug, you go across mass, you look at e-commerce, they're all critically important channels. So we look to partner with our retail partners to make sure we can get our products out in front for consumers in the best way.

Yes. And maybe keeping with the kind of channel, e-commerce clearly is key for this sector. It's driving a lot of growth. There was a number quoted this morning, over half the growth in the entire consumer health market is coming from e-commerce. So clearly, you're under-indexed in that, you've got a challenge in terms of beating the market in terms of -- how is Reckitt leaning into e-commerce? And how are you thinking about it in different regions?

Yes. Look, I think one of the advantages for us across the globe, as you look at health care, the role of e-commerce and the regulations around e-commerce are very different. In Europe, your ability to have online pharmacy is much greater restricted than it is, say, in the U.S. So there are variances that you have to keep in mind. The good thing for us is because of our portfolio, we have a breadth of products that bridges beyond traditional OTC, and that allows us to gather and garner lots of learnings from those around how to win in e-commerce. So as it starts, the regulations change and shift in, we're able to apply that to the health care side of our business.

We see it as a critical channel. You have e-commerce. You also -- if you look at kind of more Asian-focused businesses and you see this coming other place, social commerce starting to play a large role as part of that in maybe not traditional OTC, but certainly a broader set of categories that we play in. So it's something we always have a laser focus on. You've got to make sure you've got the right portfolio for it, the right content for the consumer that's shopping out there. And that you're showing up in those search algorithms appropriately.

So we're going to move into the second part, which is a little bit more Reckitt-specific. That was a little bit general around the consumer health. And the first one on Reckitt is obviously emerging markets, 41% of core Reckitt sales. It has been a standout business last year, particularly like China blown the lights out, the numbers didn't came out so great. Slowed a bit Russia, other issues. But what lies behind the fundamental success of how you've been outperforming so much in China and India, frankly, it's both. And then the kind of ancillary part is you're trying to build a third leg to your emerging markets by looking at other high-potential countries. How do you decide where to put your pieces on the chessboard to get the maximum bang for your buck?

Yes. It's great. Let me maybe take the first part of the question, and I may have to come back and get the second half for you after I answer that, early flight out this morning, so my apologies. Look, I think one of the things that is a competitive advantage for us is the way we've structured the business and the way we operate market first. Yes, we have these scaled category strategies, but that ruthless understanding in the market and being able to have that freedom within a framework to operate is what enables us to, I think, be distinctly successful in these channels.

You mentioned 2, and they're actually 2 great examples because we compete in slightly different categories. The market dynamics are incredibly different across those markets, and yet we're able to grow successfully in those markets ahead of our peer set. I think it's because on the ground, we look to have the flexibility and agility. So if you look at a market like China, where up to 80% of our categories that we compete in are now sold online and 40% of that is sold through social commerce. We've ramped up a significant engine to be able to operate in that same space with a social commerce-first kind of mindset. You come over to India. It is still very much about your distribution network and your sales channels and ability to reach. So the team there has done a great job leveraging AI technologies to maximize our ability on go-to-market and get penetration into as many stores as possible, which is the key lever there.

So once again, incredibly different options that are driving growth in both of those regions, but it's that local insight on the ground that enables us to do that within the freedom of the framework that we provide centrally on the categories and what we want to do with the brands. So that, I think, is kind of the first part of the question. And then remind me again of the second half?

Second part was the third -- you're trying to build the third leg. You've talked about Philippines, Colombia, Malaysia. There's lots of potential where you're way behind where the potential is much higher. How do you decide where to invest, which of those -- how do you rank those countries?

Look, I think it depends a bit by category. But I think one of the universal truths ,and Nitish talked this in our emerging markets focus on session a couple of months ago, if you look at that $25,000-plus household kind of this middle income class that's growing everywhere around the world, it will be bigger than the collective whole of the U.S. and Europe as you look forward. So the growth is going to come from there. There are key pockets when you start to look at that middle-class where obviously, the growth opportunity from a size of that middle-class is disproportionate. There are then also lining up our categories and how can we compete across there.

A couple of things we're doing that we found, as we think about China and the pace of innovation that's needed to deploy there, we have been able to take great innovations we've done in China and quickly reapply those and look to launch those in other markets as well, too. So that idea of innovating somewhere first, but doing it in a way that enables you to expand that globally, becomes incredibly powerful for us. I think secondly, and probably where this third leg really comes in as we think about health care specifically is our ability to go play into OTC in emerging markets.

We have a couple of great equities and a couple of great technology platforms in Gaviscon and Strepsils with both proven what we call global success models behind them. So we know the formula of how to launch them in the market. We continue to extend those businesses around, and they start to become bigger and bigger portions of our portfolio. Just within the context of the last 12 months, for example, Thailand moved into one of our top 5 markets on our Gaviscon business. So this is an area we'll continue to focus on.

Maybe are you able to build a little bit more on China? Because clearly, I think the e-commerce, some crazy stat. I think it was 20% of channel mix, 80% in 5 years. And within that, social has gone to half of it. Is that what you said, 40%?

Yes, yes, it's probably slightly higher today than it was. My stats a couple of months old. It's moving so fast now.

Yes, how have you been able to kind of get ahead on social commerce? And what is it? And I guess, how protectable is it? I guess other companies can see what you're doing on social commerce. Why -- you've got first-mover advantage, but do you think you'll be able to continue?

Yes. Look, it's a great question. And once again, I think the advantage of this is, as I mentioned a few minutes ago, is this idea of that freedom within a framework. So our brands, if you look at them, stay tried and true to who they are and what we want to drive innovation-wise, but they invented because we gave them the freedom to operate locally in an entirely different way of reaching consumers that was most relevant for the Chinese consumer. Our lead there has actually given us advantages we're looking at this across other markets around the world. So there's definitely a first-mover advantage in this.

While, yes, others can replicate it, that's no different than digital media and other things that have come before it. In all honesty, if anything, it plays to our strengths because in this environment, I heard a phrase that -- I was in Cannes earlier in the week where they have the advertising festival going on. Somebody articulated to me as the receipts economy, as in like this is a place now where you have to show me your proof, show me that you work. We have these great brands that are backed by fantastic science that when you get them home, they deliver for you. This is how you're going to continue to build on these equities. So it's the same, in my mind, tried and true fundamentals of the brands that we operate. You're just -- you're executing the marketing component of it in a slightly different framework.

And the other topic on China is obviously what's going on with the condom market with the VAT price increase at the beginning of the year. Your growth obviously slowed down a lot in the first quarter due to that and also due to competition taking advantage of that in terms of kind of promo spend. Can you explain a little bit what happened? And then why -- I assume you think it's temporary. And then maybe kind of reassure and kind of clarify why the runway goes back. Does it go back to where it was? Does it go -- is it slightly below? And then what does it mean for some of the adjacent brands like Intima, for example, has been, I think, growing triple digit in China.

Yes. Look, it was actually a bit of a double impact for us in China. So you had the VAT that you had mentioned as well, too. There were some social policies on algorithmic changes as well, too, that impacted our ability to reach consumers in the short term. On the pricing one, if you kind of look at the last 2 quarter run rates, so look at Q4 and Q1, which are both released, you'll see we actually took pricing in Q4 knowing that VAT was coming. We have a great brand with high equity, so we can lead in pricing on that front. So if you balance out those 2, you still see a pretty stable growth across the 2 quarters.

Now competition will manage through these pricing changes in different ways. So there is a bit more promotion than what you would have normally seen steady state. For us, the best way to manage through this is, once again, driving value for the consumer is innovating as we look out. So I believe the pricing bits are temporary. People will come up because they -- everybody wants to create value in the space. We do, our competitors do, our partners that we sell through do as well. And so we're going to look to continue to do that by bringing innovation and bringing things that meet consumers' needs.

On the algorithm piece, look, the only true consistency is algorithms change and algorithms will continue to change. This comes back to this first-mover advantage. We've been in the space for a very long time. So we understand what we need to test, how we need to push out, and how we need to adapt. So it's only a matter of time before we unlock that, and you already see some stabilization in how we're communicating and reaching consumers in that space. So in my mind, I think the growth trajectory goes back. The stat that always sticks with me that Charlotte, you guys would have met if you did our focused on event, who runs our Intimate Wellness business, is Durex is the #1 equity in this category, #1 brand in the world, and it only operates in 1% of all sexual occasions. So there's a huge amount of headwind in growth on this brand, and we have a lot of ambition.

And what about the adjacencies as well because some of them seem to be really booming.

Yes. Look, so adjacency-wise, this comes back to where the social commerce model, it can really unlock your ability to test new ideas very quickly and understand what works and what doesn't. You mentioned Intima before. It's a great example. In an old world, you would have had to have a big marketing campaign with a spend, a big distribution push to get it out. We could start small. You sell 1 million in the first year, 4 million the next, 10 million in the next, 40 million the next. This model enables you to unlock that. So we've got a lot of proof on our Dental side of the business, which is less about health care, but you have washing machine cleaner that went on the same journey.

You have Intima for us on the Intimate Wellness side that's done that. You have our Move Free brand in our VMS portfolio that's done that. And now our China business is actually bigger than the North America business as part of it. MegaRed is actually the next one we're seeing on that same growth curve. So once you've mastered that model, it enables you to test a lot of things very small. For those 4 successes, we probably tested 4 other things that didn't show that same growth pattern. So we quickly refocused to where we want to be. So it becomes an advantage.

I want to move on to Europe. Story in Europe. I mean Europe is never a fast-growing market. Lucky to get flat at best. So you've been down 4% in the last couple of quarters. And some of that is category. Some of it is competition outside of consumer health. But is there a case where you've had so much focus on emerging markets? You're obviously excited about China, India, these other emerging markets that perhaps you might -- have you taken your eye off the ball a little bit in Europe? And -- or put another way, what do you need to do to get Europe at least back into flat or small up in a market that's not going to give you any help?

Yes. Look, I think there's a couple of probably fundamental truths. So one, as we look at growth, we are fueling investment in growth through those markets. We're not taking and shifting fundings around from one place to another in order to drive growth. So the focus still stays in each of the areas and making sure we're maximizing growth in the area. The other fundamental truth in Europe is it is a tougher macro environment from an economic standpoint for sure, and that impacts everybody.

For us, we had a secondary wave. We have Strepsils, we have Nurofen Cold & Flu and a couple of other businesses that have been heavily weighted down by the season. And sore throat, I talked about that kind of post-COVID kind of settling back down to normal. If you think about the last thing you wanted to do during COVID was cough and public. So you had sore throat, you had cough products that were quite unindexed -- or quite over-indexed then. That has more normalized. But once again, similar to the U.S. situation I talked before, it was a relatively low cold and flu season for us.

When you look outside of that portfolio and look at things like our Gaviscon brand, our Durex brand, we're continuing to grow those brands. We're continuing to grow share within the marketplace. So we feel good about our position there. We're going to continue to invest appropriately in Europe to continue to drive growth. And as I said, it's a bit of external macro environment that we can't control. So we'll continue to drive our brands as best we can and then focusing on where we're seeing success.

I remember when I did my fireside chat with Kris Licht in Boston last year, he said that one of the most value-accretive things you can do in FMCG is kind of really breakthrough innovation, making markets like Lysol Air. And you touched on it a little bit with the 12-hour cold and fever product. I think it's the first new Cold & Flu -- Cold & Fever...

Yes, yes, it's Cold & Fever.

I get told off by John. But it's the first new product the FDA has approved in 15 years. And it would give the consumer a 12-hour benefit. And it's protected IP. Now clearly, there's been 2 bad seasons. But this -- I mean the way that Kris kind of talked about it was it could be as big for this category as, say, Lysol Air was for that category in terms of creating a new category. And so the question, I suppose, is if you have something like that, how do you actually get the most out of it? How do you decide what the price point should be? And how do you balance kind of going too quickly and creating a bushfire that you can't supply versus having something that's going to be part of your portfolio over the next 5 years?

Yes. Look, I think it's an excellent question. If I maybe just step back and think about the potential on it, I might use a slightly different benchmark. If you think about when Mucinex initially launched into over-the-counter medicine, you had only 4-hour cough solutions. We brought the first 12-hour cough solution. Mucinex has become the dominant #1 cough brand in the category worth hundreds of millions of pounds of sales through just that one particular product. What this is doing is bringing that same type of transformation into Cold & Flu. Cold & Flu is 3x bigger than the cough and congestion category. So it's a significant opportunity for us in the category. It's a significant opportunity to reinvent the consumer experience and what they deal with.

Now we've actually been working this for about 16, 17 years from the initial R&D development. So there's been a lot of research that's gone into it. That's how we get to the right price points and value creation opportunity for us as we go through. We see this as a long-term bet, much like -- and the way we're looking at it is more like an Rx-to-OTC switch than necessarily a new innovation. That's the way we've talked with our retail partners about it, how we should be shelving it. And if you look at those propositions, what you will typically see is it's year-over-year growth.

And so that's what we expect from this. Yes, we'll have initial great trial. We've got very good plans to go out with our retail partners with how we're going to communicate it out. We've got sufficiency of supply to be able to make sure we can meet a regular season, a high season on this one. But we see this as something that's going to grow 3, 4, 5 years for us on a continual basis there in the U.S. as more and more people transition into the 12-hour format.

I mean on self-care, so I'm jumping around here, apologies. But you have some very well-known brands, Gaviscon, Strepsils, Nurofen. We don't hear as much about them as some of the other bigger brand equities. But which of those are you most excited about and why?

That's a hard question. It's like I ask you to pick your favorite child. Look, if I think back out of those 3, probably the one that I'm most excited about, and it comes back to this emerging markets conversation we had, is Gaviscon. We have an unbelievably great technology platform that we have a significant process and manufacturing advantage in that we have a proven growth model behind. Whether it's been Brazil, or Thailand, or other markets around the world, it works. When we apply the model, it grows. So this is a key anchor for us to establish ourselves and continue to grow our presence in OTC in emerging markets.

Strepsils is much the same. We've had great success behind that brand, too. But I think Gaviscon to me is the one where the formula is perfect. We know exactly -- and it's got an incredibly strong foothold in Europe, and we'll continue to grow, but we have amazing opportunities to broaden the shoulder of that brand around the world.

Back on the power brands. I mean you've got 11 power brands. You did the seminar, super interesting, a year ago. But I guess my question is, how do you define what a power brand is? Is it always the same brand? Or can it change? And then the related one is what about the other 20% that are not power brands because you've got some stuff in there like Biofreeze that potentially, could be in the future. Are there other kind of fuels that perhaps have the potential to become the power brands of the future? So the first one is on the definition of what power brand and why? And then what about the rest?

Yes. Look, it's a great question. And there's no like defined number. It needs to be X million in revenue or this. We've kind of set 3 principles out against it. The first one is it's in a category where we expect to see positive tailwinds. If you look at every single one of our power brands, the categories they compete in have growth rates and growth expectations above the CPG norms. Secondarily, for us, it's about brands that have strong equities and have a strong underlying foundational technology platform that can enable those. And last but not least is having that right shape of the P&L for them because you need to be able to fuel the continued innovation, the continued marketing of those.

So that's kind of how we define the mix of what we call power brands. Our current make up about, they said, a little bit over 80% of our net revenue. there's actually a portion of that, that are our local heroes. So you look at a product like Lemsip here in the U.K. that's a Cold & Flu brand where we have lots of expertise. That's actually tied into our Cold & Flu category, and we look to share across innovation where we can on those. And then yes, of course, you have some of these local jewels that are continuing to grow. You mentioned Intima earlier in the conversation. We've got Move Free as another great brand. Biofreeze is another one you mentioned. So these are brands we're in the process of nurturing and continuing to grow.

As they get to that state and stature where we feel like they have a significant enough global presence, and we continue to see a pipeline of growth for the categories and the segments, we may switch them up into a power brand status, but it doesn't dramatically impact the support some of those new big ideas are getting because we see those as opportunities to invest.

One more for you, then we'll open it to the investors. Do think of questions, while I'm asking this one. The last one, really, is around supply chain because for as long as I've covered Reckitt, which has been quite a long time, there's been some ups and downs or bottlenecking, if you put another way. Whereas it does seem like now, there is investment really behind the manufacturing backbone in the business and there's also investment in R&D facilities in China. And clearly, you're the Chief Growth Officer. Is -- and even if you grow in 1 year, you need to know that you're going to be able to grow in year 2, means that you need to have a supply chain that is fit for purpose in a volatile world. So how do you -- when you take a step back, compare the sort of supply chain of today and the investments that are going into the kind of key investment lines R&D versus the past?

Look, I think you captured it great. You can't have growth without a good supply chain. So they're intricately connected. I think we talked with you all last time when we did the category reviews around the idea of these category leadership teams and how we've structured that organization around those. Myself, Harald, who's our Chief Supply Officer; and Angela, our Chief R&D Officer, we actually meet semi-annually as well, too, to reconcile those. So we see this as those 3 really need to work intrinsically together in order to be successful. You guys will know as well, or maybe even better than I do, looking at the numbers on the investment we're putting in to making sure we have a world-class supply chain. We want to make sure we have the right regionalized footprint that we can be responsive and local. And if you look at whether it be PFR rates, OEE rates, we continue to see improvement and consistency over that.

So Harald has done a great job stepping in, and we have plans to continue to do this over the future because as Kris always said, you can't have a good business without a great supply chain. So it's a key focus.

I could talk to you all day, Ryan, but I'm going to open the questions to the floor. So we got 10 minutes.

I tended to look at Reckitt through the lens of categories. And given the way you're organized now, it's a bit more market-led. And I understand you sit on top of the different categories. I guess I don't quite understand how Reckitt is shifting resources and coming from the lens of -- you speak kind of by category from my perspective, it's -- so like there's just been so much disparity by the market performance. And I imagine, let's say, your leader in Intimate Wellness saying, I can sell a lot more condoms in this market versus that market. Why are they dictating what's happening here other than -- yes, they're closer to the consumer, but can you sort of make sense of how you're shifting resources? Because you also said we're not shifting resources to drive growth, I think...

Sorry, that's more on the, call it, the marketing side by area. Let me maybe talk you through the process and how we deploy it because it is a bit of a 2-step process for us where both, once again interact, and that's where I think the power comes from. And ironically, just last week or 2 weeks ago, actually, we did what we call our annual strategy reviews, which are category-led. So we do deep assessments on a category level every single year. We, as a global exec committee, will sit down and align on the strategic directions of the categories. As we then take and convert that into the annual plan -- so that's an outlook of 3 to 5 years. And that's kind of longer term, thinking about what shape, where do we want to put our investments in resources? What do we need to do with our supply chain in order to meet that? Where do we want to invest in these categories around the world?

So you kind of talked to those big strategic moving conversations in those once a year. We set that strategy. That becomes the footprint and blueprint for then the annual plan that the areas will take and deploy in the next year. And then as we report out because it is P&Ls rolled up and they're going out by area, you guys will see it by an area lens, but it doesn't mean that's the only lens we're operating in. It is very much a matrixed organization where even on a quarterly basis, as we look at our results, we'll sit down with our area team and do a deep assessment on how is the category performing, sharing that back across the area of performance that comes in, and that's when we collectively make decisions as a GEC on how we want to think about the balance across categories and across markets.

And so I guess the nature of the question is how are you shifting resources? So if Europe remains soft -- let's say soft and [indiscernible], you pull resources away to fuel the fire somewhere else or...

It's a bit of a nuanced question without giving our strategy away. We will look at what's required in order to win. What we're not going to do is say we're going to abandon Europe because we want to win somewhere else bigger. We -- in these conversations, we talk about, okay, in each of the categories, what do we need to win in North America? What do we need to win in Europe? What do we need to do to further accelerate growth in our emerging markets business? So it's not a -- I'm going to take from here and put to here kind of conversation. It's about what's required to win. And then what we'll do reflecting back on that as we think about the innovation side of the resources, how do we reallocate across there.

Any more questions? There are microphones on the table.

Sorry. I can't tell it's like a giant bright light. So...

I wondered if you could just provide some more detail on whether there's been any sort of regulatory change around condom marketing in China over the last sort of 6, 12 months because there have been some suggestions that the way that contraceptives can be marketed on social media and in social commerce has changed, but I'm not sure if that's the case or if so, how meaningful it is? Or obviously, live commerce has been a great business for you. How you -- how long it takes to make changes to adapt to that?

Yes. Look, there have been some systemic changes that are regulatory based on what they want shown through there. And then obviously, the social platforms have made adjustments in their algorithms. The key intent, I believe, behind it is to make sure it's not overly sexualized in a way that's inappropriate based on what that particular government may want or not want within there. Within these, the thing, as I said before, that's constantly changing is the algorithms. So it's about understanding that new algorithm and then putting into play tactics that enable you to succeed in that space.

So if you think about the idea of on Durex as an example of oversexualization, you might pivot and shift and talk more about the great science of the brand and use things that are more about the functional, the scientific performance of it. Our team is running literally hundreds of tests a week on these different types of activities, different types of insights that come out. So it's not a will we solve it? It's a when do we have the unlock that continues to reaccelerate. And like I said, we've already, I think, stabilized what we're looking at on the business there from a content standpoint, and we'll look to turn the level as we go up.

Any more? Otherwise, we'll break for coffee. No? Okay. Thank you Ryan. Thank you very much.

Thank you, everybody. Thank you. I appreciate it. Thank you.

Thank you.

Welcome to Reckitt's Q1 trading update. I'm Nick Ashworth, Head of Investor Relations here at Reckitt. And I am here with our CEO, Kris Licht; and our CFO, Shannon Eisenhardt, who will take you through some prepared remarks before we then take your questions.

Before we start, I would like to draw your attention to the usual disclaimer in respect to forward-looking statements contained on Page 7 of our RNS published this morning. And I'll now hand over to Kris.

Thank you, Nick. Good morning, everyone, and thank you for joining us.

Core Reckitt delivered 1.3% like-for-like net revenue growth in Q1. This was impacted by the end of a very weak season, a competitive environment in Europe and particularly in the autodish category as well as geopolitical disruptions. Excluding the seasonal business, Core Reckitt delivered 3.1% like-for-like growth. This was led by high single-digit growth in Emerging Markets with China and India, both delivering double-digit growth, and Dettol continuing to perform strongly in both countries driven by innovation.

Our North American nonseasonal business was strong with Lysol up double digits in the quarter ahead of the spring cleaning season and continued strong performance of Lysol Air Sanitizer and Lysol Laundry Sanitizer. In Europe, autodish remains a very competitive category, but the actions we've been taking to improve our market share performance have led to Finish regaining leadership across our largest 7 markets.

But we have clearly seen headwinds in Q1. We've just closed on one of the weakest seasons on record. As an example, incidence levels across our categories in North America were down around 10% versus the prior season. We have seen similar dynamics across all our regions, impacting seasonal performance. Europe category growth continued to decelerate and a major focus for us is on improving our competitiveness as we move through the year. Innovation will also continue to be a key driver here. And even while delivering high single-digit growth in Emerging Markets, in line with our medium-term expectation, this includes the impact of geopolitical headwinds.

Notably, changes to the international sanctions regime has impacted our Russia Household Care and Germ Protection business. And we've also been impacted by the war in the Middle East, where a positive start to the year's trading has been eroded and the disruption has led to flat net revenue performance in our Middle East business in Q1. As you'd expect, we continue to monitor the evolving situation very closely. Impacts have been largely confined to our Middle East business and we've yet to see any significant spillover to trading in countries outside of the region. Beyond Q2, we cannot predict the course of developments in the region. But we are working on scenarios around higher input costs through the year and how we will mitigate these. Shannon will provide more details.

Winning in a tough competitive environment requires a great innovation pipeline. And in Q1, we've continued to launch new products across each of our categories, which will help us to continue driving growth through 2026 and beyond. We've launched formula upgrades across Finish and Vanish, and we're now bringing the very successful Dettol Activ Botany range into global markets outside of China. We continue to roll out extensions to the Durex Intensity range. And in China, we've launched Intima Foam Wash and high-strength MegaRed formulations aligned to local consumer preferences.

Turning then to our outlook for 2026. Macro uncertainty persists, and it remains unclear what the impact of the war in the Middle East will be on our categories as we look to the second half of the year. However, from what we know today, there are a number of reasons why we expect to deliver good growth this year and why Core Reckitt can achieve 4% to 5% like-for-like net revenue growth.

First, we're now out of the very weak cold and flu season, and the baseline has reset for the remainder of the year. Second, as I said, we are very excited about our innovation pipeline for the year and beyond. This includes the launch of Mucinex 12 Hour Cold and Fever, which we will start shipping later in Q2. Other innovation platforms, particularly as I think about Dettol, Durex and Gaviscon, all have very strong activation plans through the year.

Third, we have strong sustained momentum in our 3 largest markets. In China, this will continue to be driven by Dettol, VMS and Intima and the strong innovation pipeline we are delivering. In India, our expanded distribution reach will continue to drive growth for our market-leading power brands. And in North America, our nonseasonal business has strong momentum and is benefiting from our execution with partners in the fastest-growing channels. And finally, in Europe, we expect performance to improve in Q2 as the season resets, and we're focused on continuing to improve our execution as we move into the second half of the year.

Let me now pass you to Shannon to take you through our group and segmental performance in Q1 and the drivers behind that.

Thank you, Kris, and good morning. In Q1, we've reported like-for-like net revenue growth of 0.6% across the group, driven by 1.3% growth in Core Reckitt. Excluding our seasonal OTC business, Core Reckitt delivered 3.1% like-for-like growth.

Looking at the areas in more detail and starting with Emerging Markets. Growth of 7.6% included 0.5% from volume and 7.1% from price/mix. Volume growth was lower than recent quarters, impacted by the declines in Russia as well as flat performance in Durex China. China delivered its 11th consecutive quarter of double-digit growth, led by strong performances in Dettol, Intima and VMS, given the innovation launches Kris touched on. This strong performance came despite Durex being broadly flat in the quarter following the VAT increase on condoms at the start of the year and heightened promotional levels from competitors in Q1. India also delivered double-digit growth with broad-based strength across all categories, including a very strong performance in Dettol with Durex also up double digits. LatAm was flat with Brazil and Mexico showing marginal declines and with double-digit growth in Colombia.

Our MENARP region saw a double-digit like-for-like net revenue decline. This included the impact from changes to international sanctions around our Russia Household Care and Germ Protection business, with Russia declining double digits in the quarter, a 200 basis point headwind to area growth. To add some context to this impact, Russia accounts for around 2% of Core Reckitt net revenues with the impacted categories being less than half of that business. The changes to the EU sanctions came in towards the end of 2025, and our local teams have been working to mitigate the financial impact. These changes impact our ability to both supply these products and use global brands where the underlying product is restricted under EU sanctions.

Importantly, we now believe the impact we're seeing will persist through 2026. Consistent with what we have said previously, the process to transfer ownership of our Russian operations remains ongoing. In the Middle East, we have delivered a strong start to the year, but have seen a deceleration through the quarter due to the ongoing war resulting in flat like-for-like net revenues in Q1. Overall, despite these headwinds, our Emerging Markets business delivered in line with our medium-term guidance of high single-digit like-for-like net revenue growth in the quarter.

Turning to Europe. The end of a weak season, coupled with the weak consumer backdrop, saw a 4.2% decline in Q1 like-for-like net revenue with a volume decline of 4.5% and price/mix growth of 0.3%. Within that, mix was up 1.5% as we continue to drive our premiumization strategy, particularly in Finish. More than 1/3 of the area like-for-like decline came from our seasonal brands, and we therefore expect to see improvement in that part of the portfolio as we progress into Q2. Gaviscon delivered a strong performance in Q1, up high single digit, driven by the strong activation and expansion of the double action range. As we shared in Q4, autodish remains competitive with Finish declining mid-single digits in the quarter. However, as Kris said, our teams' actions have delivered encouraging market share momentum in the quarter for Finish.

Moving to North America. Performance was good. While the area delivered like-for-like net revenue decline of 0.9% in the quarter, the expected destocking at the end of a weak cold and flu season was the driver behind this. We delivered mid-single-digit growth in our nonseasonal business. with growth led by Lysol, up low double digits with continued strong performance from air and laundry sanitizer and strong sell-in ahead of the spring cleaning season. In Household Care, Finish was up low single digits. Volume growth of 1.5% was driven by strong performance of our nonseasonal portfolio, offset by price/mix decline of 2.4% from a weaker seasonal OTC performance, with like-for-like down double digits in the quarter. From an execution standpoint, we drove strong performance across Walmart and e-commerce, in particular, as we continue to focus on the fastest-growing channels.

Now moving on to our global categories. Self-care was broadly flat in the quarter with a double-digit decline in seasonal OTC brands, largely offset by strong double-digit growth in Emerging Markets. This was led by our VMS portfolio, in particular, Move Free in China as well as high single-digit growth in Gaviscon, which performed strongly in both Europe and across Emerging Markets. Germ Protection was our strongest category in the quarter, growing 9.5%, driven by double-digit growth in Dettol and Lysol, both benefiting from their innovation platforms.

Household Care declined by 7.6% with Finish down mid-single digit, driven by category softness and competitive challenges in Europe and the impact of sanctions in Russia, more than offsetting the growth in North America. Vanish was down high single digits, driven by weakness in Brazil and Russia. Finally, Intimate Wellness grew 0.3% with double-digit growth in Intima alongside a muted performance in Durex, which was flat in China, following the VAT increase in January with double-digit growth in India, South Africa and a number of ASEAN markets.

Turning to our noncore business, Mead Johnson Nutrition. As expected, like-for-like net revenue declined 2.7% as it cycled inventory rebuilding in Q1 of 2025 following the Mount Vernon tornado. We expect a return to growth from Q2 and for the business to deliver low single-digit growth for the year. We're continuing to progress our GBP 1 billion share buyback program and as of last Thursday, we bought back GBP 669 million of shares since this current program commenced in July of 2025.

Now looking to guidance and specifically Q2. In North America, we expect to benefit from the initial shipments of our new Mucinex 12 Hour Cold and Fever launch in June, and lapping the Mucinex Sinus PE reformulation in Q2 of 2025. In Europe, we expect a continued sequential improvement in like-for-like net revenue performance as the cold and flu season resets. In Emerging Markets, we expect Q2 performance to be broadly in line with Q1 2026, given the ongoing headwind to our Russia business as well as our expectation that the impacts we've seen in our Middle East business in March will continue until the end of Q2. As Kris said, we're maintaining our Core Reckitt like-for-like net revenue guidance for the full year at 4% to 5%. We also maintain our expectations around group adjusted operating profit margins for the full year.

When thinking about the shape of margin delivery through the year, as expected, this will be back half weighted. In the first half, we see the group's AOP margin to be around 200 basis points lower than the 24.6% we delivered in 2025. This is due to the half 1 impact from stranded costs, the impact of lower seasonal incidence on our high-margin seasonal OTC business in Q1 and some incremental costs from higher commodity prices. In the second half, group AOP margin will be much stronger than 2025. This will be driven by a greater level of stranded cost mitigation from our Fuel for Growth program, the reset of the cold and flu season, more favorable mix across our categories and our areas, continued activation of our innovation pipeline and actions to offset commodity price inflation. Bringing this together and consistent with what we said in March, we expect our full year group AOP margin to be up on the 24.9% we delivered in 2025. But not all the way to the 25.6% baseline when excluding Essential Home. This is reflective of our expectation to largely offset the stranded costs with our Fuel for Growth program.

Now looking at input costs. Our COGS base is around 40% of net revenues and split broadly 2/3 raw materials with the balance in manufacturing and freight costs. While crude oil is not a direct input cost to us, around 40% of our raw materials are correlated to oil prices. To provide some context, modeling a scenario of $110 per barrel for the rest of the year, recognizing this is above where prices are today, indicates around GBP 130 million to GBP 150 million gross impact on our input cost base in 2026. This is equivalent to around 3% of our COGS. We, therefore, see this as a manageable level to offset through flexibility and productivity in our supply chain, hedging activities, pricing and our strong gross margin profile. We have a strong track record over many years of gross margin delivery and a proven ability to offset and mitigate external costs, and we will use that experience as we continue to navigate the ongoing war and impacts from it.

With that, let me hand it back to Kris to wrap it up.

Thanks, Shannon. To conclude, we have faced challenging conditions in Q1, impacted by very low seasonal incidence, weak category trends in Europe and geopolitical disruption. However, despite these challenges and excluding seasonal OTC, Core Reckitt delivered 3.1% like-for-like net revenue growth with continuing good underlying growth across Emerging Markets and in our nonseasonal North America portfolio. While the economic backdrop is uncertain, we expect to see a step-up in performance in Core Reckitt in Q2 and beyond, and we maintain our guidance for Core Reckitt in 2026. This will be driven by sequential growth from our market-leading power brands as we continue to launch superior innovation, improve our execution across Europe and continue to drive strong growth in China, India and our nonseasonal North America business.

Let me stop there, and we are very happy to take your questions.

[Operator Instructions]

Right, Gavin, I think we're ready to start. Can we please start with Warren at Barclays. And then after Warren, we'll go to Guillaume at UBS. So Warren, over to you.

It's Warren at Barclays. I guess the first question is on the guidance. Can you maybe, Kris or Shannon, kind of outline a little bit the moving parts given the weaker start to the year and this incremental or Russia headwind and your kind of confidence or you kind of -- your wiggle room, I suppose, within the 4% to 5%, how much are you putting down to innovation and the Mucinex 12 Hour? How much is cough, cold, flu dropping out? Any other kind of swing factors we should be thinking about that gives you the confidence on the on the guidance? And then maybe just on Russia, Shannon, can you maybe sort of outline a little bit more the background on what happened there? Because I think for some people, it's going to be new news.

Okay. Great. Thanks for the question, Warren. So regarding the guide, we are absolutely reiterating what we laid out at full year from both the top line and a bottom line standpoint of the 4% to 5%. And to your point, obviously, there have been new developments since we shared that original guide. Kris and I, I think, have been pretty transparent over the past few years that we always head into guiding externally with an intention to be as prudent as possible and how we lay out those expectations for the year, knowing that there are always unknowns that will develop over the course of the year.

And so while we're certainly managing through some of those unknowns, we do feel confident as we look forward and think through the next 3 quarters, that there are significant upsides that will help us continue to deliver that 4% to 5%. And I think we've tried to call those out clearly. I would start with the fact that we're resetting the season. And we have discussed the fact that we had an exceptionally soft season on top of a soft season from the prior year. And so our expectation that is that if we can just get to a normal season, that will be a significant tailwind for us as we head into the remainder of the year.

We've also talked about the specific innovations that are launching. Those are a little bit more weighted towards the back half. We'll see the initial shipments from that Mucinex 12 Hour product come through in June, and then we'll see more of that as we head into the back half as well as other innovations across our categories and across our areas. And so that really is what gives us confidence when we combine that with what we believe was an appropriate and prudent guide to start the year that we can maintain that 4% to 5% guide looking forward.

Okay. Warren, it's Kris. Let me address your question on Russia. So before I respond, I should note that due to applicable sanctions, there are restrictions on our personal involvement in Reckitt's Russia business. So we rely on appropriately authorized teams for matters relating to Russia. Russia represents around 2% of Core Reckitt net revenue and the impact from these changes to sanctions have been predominantly in the Household Care part of our business, and that makes up a little less than half of the total business in Russia.

We said in March that Russia is not a focus of ours. It's not a driver of growth, and it's not a market we're investing in consistent with what we've said before. However, the changes to these sanctions came into force towards the end of 2025 and our local teams have been working to mitigate the impacts in compliance with various sanctions. Through this quarter, it has become clear that there's a more structural impact on that piece of the business. And so we now expect this to persist through the full year, clearly subject to any future changes to sanctions. As we've said previously, we continue to pursue the process to transfer ownership of our Russian operations, and that remains ongoing, and we will provide a further update on that when we can.

And just quickly to clarify, Kris, that 80 bps impact that grew 200 bps in EM, that's not just a Q1 issue. It's something that will run through for the rest of the year. It's kind of like it's a step down. You're not expecting to kind of -- you're not assuming that recovers at some stage. You can maybe just clarify that?

That's correct.

Thanks, Warren. So we're going to move to Guillaume, UBS. And after Guillaume, we'll go to Sarah at Morgan Stanley. So Guillaume?

Kris and Shannon, two questions. One is on your margin guidance because it now implies a 200 basis points plus improvement in the back half of the year at the time when you could be facing higher commodity costs. So just trying to understand, what is underpinning your confidence in achieving such a significant margin improvement? Shannon, I think you alluded to Fuel for Growth, the savings. But does the guide also assume a particularly strong cough and cold in the second half? And maybe some rationalization of your BEI, of your brand equity investments. So any color on the key building blocks, particularly for the second half margins would be helpful.

And then my second question is just on Durex, flat in the quarter seems to be attributable to some decline in China. I thought at the time of the full year results back in early March, you sounded quite confident about Durex continued momentum in China. So here, just wondering if the impact on the VAT increase and content restrictions was maybe a bit more pronounced than you initially expected. And I guess more importantly, is Q1 a simple glitch in direct success story in China? And should we expect some acceleration from Q2? Or could it be a bit slower for longer?

Okay. Let me take a crack at the first question and then Kris will talk about Durex in China. So if you think about the margin guide that we've provided, you're obviously hearing us accurately and it does assume a significant step-up in our margin delivery in the back half. And so I'm going to take it in a couple of chunks.

First of all, what I'd say is if you just think of the underlying business and our plan for the year, there are some dynamics that we expect to take place that will naturally provide that uplift in the back half margin delivery. And so we've tried to lay out those clearly. The first really is, as you just think about how stranded costs are materializing and the ability of our Fuel for Growth program to offset those. All of the stranded costs for the Essential Home divestiture come in as of January 1. And as we progress through the year, our Fuel for Growth program will be able to offset a larger and larger percentage of those stranded costs. And so that will be the first dynamic that gives us confidence in our ability to step up our margin delivery in the back half.

The second real driver is just thinking through the category mix of the business and the significant impact that this very weak season that we've seen come to a close in Q1 has had on our margin delivery. And so to answer your specific question, we're not assuming an exceptionally strong season. We always plan our business, assuming a normal season, it is important to note, though, that even in the context of just experiencing a normal season, that would be a significant benefit to our operating margin delivery in the back half of this year.

And then finally, we expect to have area mix that will also help us as we think about Europe and an improving performance of Europe as we head into the second half, again, really driven by just the season coming to an end and then assuming a more normal season as we head into the back half of the year. And so that's sort of the underlying drivers that start to or that really give us the confidence in that back half delivery.

Then if you think through the context we've shared around what we expect to see from a COGS impact because of the war that's going on in the oil prices, we're managing that in a very separate way. And so we're not trying to use Fuel for Growth savings to offset an increase in our COGS from oil, we have very active and deliberate work streams going on as we think through how do we mitigate inflationary impacts coming from oil prices. And our expectation and what we've seen in the past, if you think of tariffs last year, where we found out about tariffs, frankly, around the same time and we were able to mitigate the impacts of those tariffs within the year and actually expanded our gross margins last year. And so we're running a somewhat similar offense where we really look at our ability to leverage our supply chain to make choices within a flexible supply chain to take pricing to mitigate those COGS impacts, and we're confident that we can take action that lands within the back half of this year.

Okay. On Durex, yes, it was a slower quarter. We are not any less confident in Durex as a power brand. And we know we have great innovation with Durex Intensity and other products that we're launching. And so I remain extremely comfortable with, with the outlook for Durex and our ability to drive really strong growth. I do think it's fair to say that, yes, the impact of the VAT increase along with some more promotional spending from some of our competitors in China caused the quarter to be a bit softer than we expected.

I fully anticipate that correcting itself through the balance of 2026. And like I said, there's nothing fundamentally that worries me about our ability to drive very strong growth in Durex for '26 and beyond. I just also want to mention that China actually had an excellent quarter despite that slower Durex performance. And that's due to the fact that Dettol is the largest business in China and is growing very strongly and VMS is also very successful. In fact, the growth we're seeing in China is very broad-based. And we can see that the advantaged capabilities that we've talked with you about before that we have in China, they are really applicable to the whole portfolio. So just feeling quite good about that performance.

Thanks, Guillaume. So we're going to go to Sarah, and then we're going to go to Nicolas at Bank of America. So Sarah.

I also have 2. First one was on cold and flu season. So Shanon, as you said, we had a very weak season on the back of another weak season. So as we think about kind of what's going into your thought process here, what would you classify as a normal season? I mean, are we kind of thinking a rewind to 2023? Is that kind of how we should think about it? And then the second one was around -- you talked about taking potentially some price to offset COGS. Should we think about a bit of an extra pricing component as part of the way to deliver that 4% to 5% as we're thinking about how your expectations have evolved and your ability to deliver 4% to 5%, there's more price in there now than there was before.

Thanks, Sarah. I'll start on cold and flu. Well, it's important to remember, as we said, this season, now we can see the full season Q4 and Q1 taken together is very weak and on the back of what was a weak season the prior years. So as -- when we plan the business, we obviously have a lot of experience navigating this kind of seasonal fluctuation.

When we plan the business, we always put ourselves in a position to meet demand should it be elevated and should the season be high, so that our consumers can always find our products. But when we plan financially and as we think about our guide, we try to be prudent, as Shannon said earlier. And so that's what we've done this year as well. I think it's reasonable to think that we will revert back to sort of the average of seasons. And when we look at averages, we look both at pre-COVID and post-COVID, we try to exclude the COVID period because obviously, that was highly elevated with many symptoms from COVID that look like the other incidences that we treat.

So yes, I would look at seasonal averages. Sometimes we consider 17% to 19% to be a good range, but we think these choices based on all the information that we have. And so when we plan, we try to plan prudently around that.

Yes. And then to your question on pricing, Sarah, the way we think about pricing in this kind of situation is really thinking through how are we managing the structural profitability of our brands, how are we managing and maintaining our earnings model. It's a really granular approach to looking at SKU level, country by country, what are the impacts we're seeing from these potential input cost changes to the structural profitability of our products and our brands. We don't take an approach of what's the pricing we need to take to deliver our top line guide.

So as we do take pricing, that's really focused on looking at SKU by SKU profitability, there obviously would be some top line benefit that would flow through. But that's not our starting point for how we think about what makes sense to do from a pricing and from a consumer value standpoint.

Okay. Thanks, Sarah. I move on to Nicolas at Bank of America, and then we'll go to Jeremy at HSBC.

Kris and Shannon, Could I come back on China? You mentioned the growth rate was double digit again this quarter. Could I just clarify if it was starting with the one? And then do you think the Chinese government is starting to take a negative view on the condom category because we've seen the VAT increase. I think you mentioned marketing restriction. Do you think there's a structural change in there? And then the second question is on the raw material. Are you starting to see any shortages on your Home Care business at this stage. Have you looked at the inventory level across the supply chain? Do you think that at normal level at the moment?

Okay. Let me start, Nicolas. So China, look, I don't think that there's any structural change there. I mean, we have seen some of these evolving regulatory frameworks for content change before, and they'll probably change again. And I don't see anything that's really structural or anything that I think will limit the possibility of growing the category. But we obviously pay a lot of attention to what we see from the regulator, and we'll continue to do that.

And then from a raw material standpoint, our teams are obviously highly engaged in looking through all of our various raw materials and understanding potential impacts and implications of what's going on in the market today. We have not seen any shortages or had any challenges thus far around our ability to procure necessary materials.

Thank you. So we're moving on to Jeremy now, and then we will go to David at Jefferies. So Jeremy, over to you.

So just first of all, a couple of questions for me. First of all, on Europe. So you talk about an improvement in Q2 relative to Q1. Now clearly, you're not going to have the flu impact affecting Europe in the second quarter. So is the improvement simply because of the flu impact dissipating? Or would you expect to see some sort of kind of underlying improvement in the business sort of excluding any sort of seasonal impact? And would that be in autodish or in some of the other categories?

And then the second question is if we take the Middle East business and that weakness you saw towards the end of the quarter, was that kind of a consumer offtake point? Or was it more of a kind of supply disruption point and kind of inability to get the product to consumers? If it's the latter, how would you see that sort of resolving itself?

Okay. Thank you, Jeremy. I think I'll answer both of your questions. So for Europe for Q2, I mean, as you said, it's the seasonal mechanics of the season resetting and it was a very weak season in Europe. So that's not a small factor for us. Obviously, we're now going to be out of the main season, and we're going to start to prepare for the coming season. So that's one thing that we know will happen.

There are 2 things going on in Europe. So one thing is that we are seeing good signs from the actions that we're taking and the investments we're making. And so from a market share standpoint, I'm feeling optimistic and good about the trends we're seeing. It's just that the European environment is very soft. And as we said in the script earlier in our remarks, this is a decelerating environment. So we have to see what happens now that energy prices will be higher and how European markets will absorb that. And so that's also in my mind. So I would say I expect us to continue to see very good results from the actions that we're taking, but it is a tough environment, and I expect it to remain tough. So that's Europe.

In the Middle East, it's very different market by market. But if you think about a market like the UAE, it was, of course, significantly disrupted from the conflict in the month of March and remains somewhat affected. So we did see offtakes lower in that market and a few other markets showed a similar trend. But there's also some markets in the Middle East where we did not see much reduction in offtake. It depends very much on local dynamics and who's most impacted. But also, I would say we took steps to keep our people safe, and that included closing our production facility in Bahrain, which we have reopened because we deem it to be safe. But that obviously limited our ability to ship certain products for the duration of the closure.

I don't anticipate these things to necessarily linger on for a long time. But as we've said, as we look at Q2, we do anticipate there being an impact to sales in the Middle East. It obviously all depends on what happens with the actual war and the resolution of this. And we are paying close attention to that, but we have no further information than you do as it pertains to the war.

Thanks, Jeremy. So we're going to go David now at Jefferies, and then we'll go to Celine at JPMorgan. David?

I'm going to do 2 follow-ups and then a question, if I can. So just on the follow-up to Guillaume's question, I think you mentioned BEI phasing. Is that going to be a little bit phased more with the first half spending, I guess, around the Mucinex launch part of that maybe. So just trying to understand whether there is a little bit of a BEI swing in first half [indiscernible] the margin impact as well.

The second follow-up is just on the Durex in China. You mentioned competition. Is that just price led? Or is that also competition catching up in terms of the streaming airtime and that's being a little more competitive in terms of getting the audience as it were? And then my question, just in terms of Europe, you talked before about unsustainable pricing levels of competition. I just wonder is that now? And related, the retailers more delisting for other companies like delisting in the retail in the first quarter? Was there a sort of delisting dynamic and then those have been resolved in terms of getting back on shelf and that's going to help the second quarter versus the first.

Okay. So I think I'll take the BEI one to start. Sorry that I forgot to answer that the first time around. So from a phasing of BEI standpoint, I mean, first and foremost, we continue to prioritize our BEI spend and our objective is that, that grows as a percent of net revenue year in and year out. Obviously, it varies on an area basis and a brand basis as we look at which brands are most receptive to BEI, and we have some environments where it's making sense to shift some of that investment into trade versus BEI. From a weighting across the year, I don't expect to see a significant difference between the front half and the back half from a percent of net revenue standpoint. Obviously, different innovations hit at different times. But when you look at the group level, I don't expect there to be a significant difference.

I think your next one was China, so I'll hand it to Kris.

Yes, Durex China, I think you asked about the nature of competitiveness and promo. I mean it is just promotional investment. And some of our competitors have decided that they wanted to add some promotional offers that go beyond what we saw in last year. And obviously, some of that probably has to do with the VAT increase and sort of prices being a bit higher. We have not seen the need to do that yet, and we're keeping an eye on that. But I think it's -- again, it's sort of -- I would describe it as tactical promo activity and not something as market leaders that I think we need to be overly concerned with, but we're paying attention to it.

From a competitive standpoint, China is a dynamic market. And obviously, we've done really well, and we're doing well, like I said, in all our businesses in China, not just in Durex. But I think what's probably worth highlighting is there are some competitors that we have competed with for a long time, and we have done well over the years. And then I think there's newer competitors that are starting businesses that are more e-commerce driven and sometimes more niche or focused on a particular consumer. And some of those are doing a pretty good job. I mean, so I think this will remain a competitive marketplace. We are not worried about that competition. It makes us better, too. And as we've shared before, we have some very advantaged capabilities that we will continue to harness in China, and I have a lot of faith that, that will go well this year.

You asked about delistings. That was your third question. I would say this has not been a major factor for our business. I mean, obviously, as with any large consumer goods company like us, you see listings coming in and coming out, but I wouldn't say that there is any sort of significant delisting impact. If anything, we've done really well in some of our recent reviews with our largest customers, and we referenced good progress on that earlier. So I'm actually pleased with how selling into our customers is going.

Thanks, David. Okay. We can then go to Celine. And then after Celine, we're going to go to Jeff at BNP. So Celine, over to you.

My first question, if you refer to innovation in Mucinex, is it possible to quantify -- I mean, Mucinex is more than $1 billion brand in sales. So how big that launch could be in relation to the overall sales because it seems that a lot of the growth acceleration we see in North America coming from that.

And my second question, which probably is quite related. If I look at the 4% to 5% guidance and trying to look at the building block, but from a regional perspective, so you're guiding for high single digits, so 7% to 8% for H1 for Emerging Markets, which are facing tougher comps, especially in Q4 and then the Russia impact will be there. So I would presume you could even see a deceleration in the second half in Emerging Market.

So that means the developed market has pick up quite materially and we should probably be around, I don't know, 2% to 3% for the year. I just want to understand whether is that a fair way to look at it? Both Europe and North America to be positive, maybe North America more positive? And maybe that's linked to the first question on Mucinex.

Thanks, Celine. I will start on Mucinex. So you're right, Mucinex is a very large business and a power brand and a leader in our categories. Obviously, Mucinex as a range always responds when we have a strong season, right? So now that the season resets, Mucinex is again looking to meet consumer needs. And I'm sure that Mucinex will perform well in a more normal seasonal environment. And that's in and of itself a really big significant swing, okay? So it's not just reliant on the innovation. We happen to have a really strong innovation lineup for the year for Mucinex and the 12-Hour Cold and Fever product is uniquely new to the category and one of the biggest innovations that we have been able to bring to market in some time.

We typically don't quantify those. I think I probably told you before that I prefer that we speak about the numbers when we have delivered them rather than what we expect them to be. And so -- but obviously, the reason why we're talking about it is because it's quite significant. So the sell-in of that has gone well. We started shipping in June, and then we'll definitely share with you in the coming quarters how that's going, but I expect it to go well.

Then I can take the question as far as the guidance goes, Celine. I think the way I would think about the halves and the guidance is I'd start with the fact that our Q1, when you back out the season for Core Reckitt, we were at 3.1% like-for-like growth. And so we will need an acceleration, obviously, as the year continues to progress. But I think it's a pretty manageable level of acceleration that we're looking for. And so while we don't guide at the area level, you're absolutely right, and we've tried to give some proof points today around the belief that our developed markets together that we will see that acceleration. And so again, for both North America and for Europe, it's the fact that we're resetting the season for both North America and for Europe, we've talked about innovations and the strength of innovation, our innovation pipeline that we expect to deliver.

And then again, I think it's worth noting that our emerging markets business, even with these headwinds is delivering right in that range of high single digits, and we continue to see really strong growth coming through both China and India. And so we are confident that we can deliver against this acceleration that gets that 3.1% when you exclude the season up into core Reckitt delivering that 4% to 5% growth over the course of the year.

Can I -- just want a follow-up, which may be quick, but there has been news that one company may be looking at Mead Johnson. And I want -- obviously, we still have this ongoing litigation. So I just wanted to understand whether selling Mead Johnson with maybe separating the litigation could be something that you would be looking at as a potential? Or is there anything you can tell us about potential timing on settlement?

I think you said that this could be long or short. I mean the short version is no. There's no new news that we can share today. But I understand that you're interested in this topic. All we can say is that we continue to review our strategic options for Mead Johnson. It is a noncore business. It is a good business, and it's trading well, and we will keep you posted when there's new information to share.

Thanks, Celine. Okay. We're going to go to Jeff, and then we're off to Tom at Deutsche. So Jeff, over to you.

Just really a sort of housekeeping question. But if I put together everything that's been said, so it strikes to me that there shouldn't really be any material movement in consensus earnings? And is that your expectation?

I think that makes sense when you put together what we've tried to provide as the context of the guidance. Yes, I agree with that.

Thanks, Jeff. Tom, and then Olivier is the last one online and then we've got a couple of questions that have been typed in. So Tom, over to you.

Just -- sorry, coming back to the seasonal product improvement in H2. Do you see that as H2 or Q4? Because your seasonal OTC business, you said last year was down a little over 3% in Q3, which is weak, but is not that weak. And you said that you lapped a COVID spike in Q3 '24. So are you saying that your seasonal business will go back to the level that you saw of a COVID spike in 2024? I don't quite see whether it's a Q3 sell-in, which you say every year is the same or whether this is Q4 improvement on sell-in and sell-out, please? And then on Russia, obviously, it's a bit of a surprise that you would have asked about the full year. What visibility do you have on the Russia business? When did you find out this was an issue? And how much cash at all is kept in the Russia business because I believe it's probably 3-plus percent of the...

Okay. Thanks, Tom. I'm going to start on cold and flu. So the first thing to remember about this is our net revenues are obviously a function of the pattern of shipments and sell-in to the trade. And so we sell in a season starting in June, and then we go all through Q3 and Q4. So fluctuations in incidences and offtakes are not that closely related to our seasonal sales through that period because, as you know, we ship to a season and then that inventory makes its way to the shelves and is available through the season. And then, of course, if there's high levels of demand, we ship again at points in the season. So I just want to make sure it's clear that these things are not directly related sort of week by week, month by month because of how the industry functions. This is not unique to us. This is how the category is shipped.

That being said, yes, we're saying we expect to have some good tailwind in the seasonal business in the second half. And we have this exceptional innovation that we're very focused on and harnessing the full potential of that in the fall and then obviously, into '26 or '27 rather, that will be an important growth platform as well.

Then I'll take the Russia question. And similar to Kris, I'll just call out the fact that there's obviously restrictions around our personal involvement in Reckitt's Russia business, and we rely on the local teams to really manage that business. From a visibility of the sanction standpoint, it was really late '25 is when we had visibility to the potential implications of the changes in sanctions and how we think through our categories and businesses within Russia. At that point in time, our belief was that it was an impact that would happen for a quarter or 2. I think the key change is that we now believe, and obviously, it's a complex and dynamic situation, but we believe that this is an impact that will persist for the foreseeable future.

And so as the length of the impact has crystallized and as we now believe that to be a full year impact, that's why we're now taking time to communicate that and to ensure folks have the right expectations around the impact that, that has on our overall emerging markets results. Obviously, we're very pleased that even in light of these kinds of volatilities and headwinds within emerging markets, we're still delivering within that high single-digit guide that we've been talking about for many, many quarters at this point. From a trapped cash standpoint, we do not disclose the amount of trapped cash that our Russia business currently has on hand.

Okay. And sorry, if I could just come back on the seasonal part. I mean, I'm trying to understand, is Q3 just a regular sell-in or -- and the growth or the benefit is coming in Q4? Or do you think that Q3 should also be showing a decent sell-in benefit because obviously, as you say, it's not a big instance quarter. And is Mucinex 12 Hour -- I mean, is the innovation coming at higher price? And is pricing an important aspect of this growth as well?

Yes. So Tom, let me try to be clear. So Q3 is when we ship most of the products for the season. And so anything that pertains to our shelf position, our new innovation will be an upside. If those things go well, our growth will come through in Q3, if that makes sense. And yes, our innovation is premium priced because it delivers a whole new benefit to the category. And obviously, that's our whole model. We premiumize with new innovation and better products. So I don't know if that answers your question, but our performance in the seasonal business in Q3 is a function of all the parts that we do to drive growth in our business.

Okay. All right. The last one online is from Olivier from Goldman. Olivier, over to you.

Two questions, please, just to finish. Could you first comment on seasonal OTC profitability? I remember that most of Mucinex supply to the U.S. is currently imported from Europe. Considering the increase in freight cost and the current disruption, should we expect a material impact on profitability there? And secondly, going back to Household Care and Finish specifically in Europe. I think you flagged that the innovation of Finish Ultimate Plus delivered double-digit growth, yet Finish overall was quite soft in Europe. So how do you interpret this bifurcation in consumer strength?

Okay. Thanks, Olivier. So cold and flu, we have very high gross margins. We don't disclose the gross margins for individual product lines, as I think you know. But let's just say these are very high gross margins. And that means that any impacts in these particular categories from cost increases are generally small. In addition, we, of course, know that we have leading equities, #1 equities, and we have excellent innovation. And so if we have to make any adjustments, we certainly have the ability to do that. And over the course of the years, when we've had to offset bigger cost increases, we've been able to do that in the health portfolio with really no meaningful impact, especially in this high-margin segment.

Yes. And then on Finish, I mean, it's worth noting that we called out the fact that in our Europe results within that, we had 1.5 points of positive mix coming through within our results. And so that was significantly driven by our results on Finish and by the success we're seeing at the more premium levels of our Finish business. However, we also called out the fact that the Finish business overall net revenue was down. And so I think that's a reflection of what Kris has been describing as far as the consumer under pressure and being that more at the low end when you think about sort of tiers of consumer. And so that's that sort of bifurcation of results that you're seeing come through in those numbers.

Thanks, Olivier. So I think those are all the ones we calling in. I've got a couple written in. So from Karel at Kepler. Based on your comments for core markets, do you expect that in Q2, you are back in the 4% to 5% growth range? And can you expand on what is driving on the drivers of improving underlying ex flu trends in the North America market, what's driving North America? And then do you want to give any specific guidance for Core Reckitt in Q2?

I don't think so beyond what we've provided is trying to shape what the geographies are going to look like. But I think we can talk to the nonseasonal North America business.

Yes. Yes. I mean it's just a really strong performance. And it's broad-based, but Lysol is the standout. So really excellent performance from Lysol, and this has been an accelerating business for some time now. And this shows the power of our innovation. I mentioned earlier that both Lysol Air and Laundry Sanitizers are doing extremely well. And these are really platforms that we've created that are new to the category that continue to provide great growth and do premiumize the category, too.

So just our playbook at work, I would say, and just a really great example. We're also seeing really good traction with our retail partners in North America, and I'm very pleased with executional improvements that I'm seeing on that front. And I also think our supply chain is getting stronger. So in North America, we have a lot of things coming together to contribute to what I think will be a strong year.

Thanks, Kris. And just to flag that we will obviously be talking in more detail about North American market, our record focus on in November in New York, and you can already sign up for that.

The second question is from Callum at Bernstein. China and India are still very strong in Q1. Can you talk about how growth in those 2 big markets evolved through the quarter? Did you see any impact or slowdown in growth towards the end of the quarter in the wake of the Middle East conflict and its impact on gas prices, et cetera?

Sure. Yes, they were very strong, both of them. And actually, as you can see, India is accelerating and China has remained very strong for 11 quarters, and we continue to expect it to be strong. We have not seen any impacts on trading really. So I think you're thinking about did something happen in March or towards the end of March. We haven't seen anything yet. But obviously, we're paying close attention to it. And we have nothing more that we can share on that today.

All right. Thank you very much, and thank you very much for joining the call. I think that's it for questions. If you have any more, please do reach out to me and the team. We're around today. And just to say, the next time that we will be with you is the Reckitt Focus On: Digital Science, May 14. It's virtual. Hopefully, you can see it on the screens, and you can sign up now and look forward to seeing you then.

Hello, everyone, and thank you for joining this Reckitt fireside chat. I'm Guillaume Delmas. I head the European Food and HPC team at UBS. So today, absolutely delighted to be joined by Reckitt's CFO, Shannon Eisenhardt. Shannon, thank you so much for being with us today.

Thank you.

So for the next 45 minutes or so, I thought I would divide this fireside chat into 2 parts. First, addressing the 3 key debates on Reckitt at the moment. And then in the second part, assessing Reckitt's transformation journey, where we are and what lies ahead.

So without further ado, let's start with the 3 key debates and the first one being the sustainability of your like-for-like sales growth in emerging markets.

So Shannon, last year, like-for-like sales growth in emerging markets accelerated very significantly, well ahead of your medium-term ambition of high single-digit like-for-like sales growth. First, big picture-wise, what do you think has fundamentally changed about your EM business compared to, say, the last decade? And then secondly, zooming in on 2025, what were the main factors behind this very strong performance and were there some temporary one-off factors in that performance?

Okay. it's like 3 questions. This is your numbering system, Q1 parts 1, 2, 3. Let's see. I think that the emerging markets growth we saw in '25, absolutely significant acceleration. The first thing I would call out is the fact that when we shifted from running a GBU model into a geography model, and we started that January '25, one of the benefits we thought we would see from that and we had called out was this greater focus on emerging markets should drive an acceleration in growth of emerging markets.

And so if you think back into our old structure and our old model when we were running health, hygiene, nutrition GBUs, what we saw was that our developing markets, as we called it at the time when we disclosed, we're growing maybe 100, 120 bps ahead of our developed markets. When you just look at the size of the business, the footprint of the business, the investments we've made over the years, I would have thought we should see more outsized or a larger differential. And so as we shifted into a geography model, we went from a world where an opportunity in India or an opportunity in LatAm in emerging markets in hygiene was priority #6 on a GBU President's list to Nitish running Emerging Markets with a fully dedicated leadership team whose only focus is how do we drive outsized growth in Emerging Markets.

And so I think some of what we're seeing is just the benefit of the new structure starting to take place. Having said that, you obviously don't get that switch immediately. And so I think we're also seeing benefits of for decades, we've been investing in China. And so we talked a lot in '25 around the outsized growth that China is contributing to Emerging Markets and to Reckitt. And I think we're seeing the benefits of the fact that we've been in China for decades. We've invested significantly. We have a manufacturing facility in Taicang, which is really a state-of-the-art facility that has the opportunity to continue to expand as we bring new products into China.

We have live streaming capabilities that we can come back to because I think that's a differentiator for us. But we've been investing in those capabilities and studios for a number of years. And we announced last year an R&D facility that we'll be opening later this year. That's an R&D facility in China for the Chinese consumer. So I think what we're seeing is we're really getting scale and momentum behind 20 years' worth of investments in China.

And I think we've been very consistent in that investment. When I first went to China 2.5 years ago when I joined Reckitt, it was an environment where a number of multinationals were sort of pausing or pulling back a bit on their commitment or investment into China, and we've really stayed the course there. And so I think we're seeing the benefit of that as well.

And zooming in on China, I mean, it's 1/3 of your EM exposure, last year close to half of your like-for-like sales growth. Was China significantly ahead of your own expectations in 2025? And looking ahead, what do you think are your key strengths, competitive advantages in China that should drive future outperformance? And I guess, can you maintain that double-digit pace in China going forward?

Sure. So look, we were very pleased with the performance we saw from China in 2025. And I think there are a few things worth calling out because, of course, we constantly are asked around the sustainability and how do you comp the comp, and it's a big market, how can it keep growing in that way. So China delivered double-digit growth in 2025. With Q4, what we shared was it was our 10th consecutive quarter of double-digit growth in China. We've been really transparent.

As we look to '26, my expectation is China will deliver double-digit growth again. We feel confident that we have momentum and we have the right plans in place to continue to drive that outsized growth coming from China. So why are we able to do that? What's different of us than some of our peers? I think the first piece to call out is really around our where-to-play choices and what constitutes our business in China.

So our 3 largest brands are Durex, Dettol and Move Free. And so if you think of those brands, they're squarely in consumer health. And what we've seen in China is that there's a high level of interest of Chinese consumers in the space of consumer health. So that's helping us. Another tailwind in consumer health, which is a bit different than if you think of companies that have beauty care or personal care businesses is we're seeing that the Chinese consumer puts a real value on Western branding within consumer health.

There's this authentication that comes from some of these Western brands in this space. I think that's different than maybe in beauty or personal care, where when you see a product that's working, there's very quickly a local competitor that comes up and is able to steal that market share. So I think that's one of our differentiators. The other one that I think is important is around our e-commerce and live streaming capability.

And so we've shared that 80% of our business in China is e-commerce. If you went back to pre-COVID, that was about 20%. And so we've seen a really dramatic shift out of brick-and-mortar and into e-commerce. And that shift is driven by the Chinese consumer. It's where do they want to find our products and our brands. And our local team in China saw that shift happening, I think, very early on and caught that shift.

And what that allowed us to do was years ago, we were establishing e-commerce capabilities. We were meeting the consumer where they wanted to be met, and we were establishing these live streaming capabilities, which if you haven't seen it firsthand, it's sort of hard to wrap your mind around what do we mean when we talk about this live streaming business. But it's literally the habit you see in the China marketplace is folks get home from work, they have dinner, they get on their phones and they spend a couple of hours watching live streaming.

And it's a platform where we're able to entertain, educate and then drive to purchase Chinese consumers. And we've been doing that for a number of years. And now we have many, many studios that have talent that are literally operating 24/7 live streaming. So I think we shared a statistic at CAGNY that 800 million Chinese consumers are on social commerce each month. So the opportunity is enormous. And our ability to do that and meet the consumer there has really helped us and allows us to very quickly iterate and optimize our messaging to consumers.

And from China to India, which is your second largest emerging market, I mean, first, can you say a few words on whether you've seen any change in the consumer environment post the change in GST at the end of September? Or would you expect a pickup in demand in India? And secondly, I mean, a very vast question, but how is your strategy for India different to what you're doing in China?

So it's completely different. It's great to use those 2 markets as the examples because they're sort of the bookends of emerging markets. You have China, where I said we have 80% of our business online. you flip to India, which is vastly, vastly continues to be a brick-and-mortar market. And it's all about points of distribution, operational execution on the ground and ability to really drive that business every single day.

And so in China, what we've seen, to answer your GST question, it causes a little bit of phasing across quarters, but we've not seen a step change in consumer demand in India. Our expectation is that India has been delivering high single-digit growth very consistently, and we believe will continue to deliver growth at that level in India. We internally frequently talk about some of our very best operators are in India. I mean we really have a sales team in India that knows how to get that business done. We've been expanding our points of distribution and our coverage of the India marketplace. And we believe that, that expansion and ability to continue driving growth is very much present in India.

So that was debate number one. The second one is, can Reckitt achieve robust like-for-like sales growth in mature markets. I think the focus at the moment is particularly on Europe. We've had a pretty muted like-for-like sales growth performance in 2025. What did drive this slowdown in category growth to the point like there's pretty much no growth right now in Europe? Was it broad-based in terms of categories, in terms of countries? Was it more led by volume or pricing? And how is this impacting also like the competitive landscape in the region?

Sure. So we'll start with Europe, but we're going to hit North America, right?

Of course.

Okay. So Europe, if I think about Europe in 2025, it was an interesting year. If I go back to the beginning of 2025, we were seeing category growth rates around 3% to 4% in our categories in Europe. You then fast forward to half year, we were talking about, all right, we've seen a deceleration. Our categories are growing around 1%, maybe a little bit less than. If you then get to Q4 and exiting the year, what we've seen is category growth is nonexistent right now in our categories in Europe.

And so we're very much operating in an environment of no category growth. As I look forward to 2026, I don't see any catalyst that makes me think we're going to get back to our categories delivering growth in '26. So I think we are making plans based around an assumption that we're going to be operating in a European environment that has flat categories, no growth.

So within that environment, first of all, I'd be the first to acknowledge that it will be hard to drive volume growth because at the same time, we're seeing a heightened level of promo activity in Europe. And so we're very focused on ensuring that we're executing with excellence across Europe every day. We're focused on that across channels. So whether it be large grocery, small pharmacy, discounter channel, we absolutely need to be showing up competitively for consumers.

We've been talking for the past 12 months around the fact that we have been seeing value-seeking behaviors coming through consumers, more frequent trips to the grocery store, smaller cash outlays looking for smaller-sized product. And so we're just very focused on how do we remain competitive, how do we keep holding and gaining market share and how do we compete well in an environment where our categories aren't a tailwind for us.

And moving to North America. I mean, above and beyond that short-term drag from cough and cold that we saw in Q4 and should impact as well the first quarter, would you expect a pickup in like-for-like sales growth in North America in 2026 versus the flattish development we had in '25?

I do. So I think when I look forward into 2026, my expectation is North America will contribute to our growth of core Reckitt in a much more significant way versus what we saw in '25. The reason to believe for that is if you look at our 2025 results and you strip out the seasonal impacts, we were seeing an acceleration over the course of the year, and we saw good growth coming from our nonseasonal businesses.

So if I start with Lysol as an example, we've been delivering really good growth in Lysol for 2 years, and it's broad-based growth. We're seeing growth from categories we created like Lysol Air Sanitizer, Lysol laundry sanitizer, but we also talked about in Q4, the strength we're seeing in the wipes business. If you move over to VMS, that's a category that in '24 and the first half of '25 was pretty subdued in the U.S.

But in the back half, we saw ourselves driving growth in VMS in North America. We had a launch in Neuriva of a new Neuriva 3D product, and we're seeing success with that. And so innovation, of course, in these categories will always be important. And then when you think of Finish in the U.S., it's been closer to flat performance. But Finish is a spot where even when we're not gaining market share, the category is growing and premiumizing and we can drive top line growth.

So my expectation, to your point, I think Q1 will be a tough quarter for North America. I think we have to remember that Q1 is when now that the season is wrapped up, we're going to see retailer destocking because the season is over and they no longer want to hold those inventory levels. But I do think that in Q1, and then you'll have clearer line of sight to it in Q2, 3, 4, what you're going to see is strength coming from that nonseasonal portfolio where we're growing ahead of category growth rates. And we are seeing categories grow in the U.S.

So there was debate number two, which gets me to debate number three, how should we think about Reckitt's earnings growth in 2026? That's a lot of numbers on the slide.

Guillaume, I think we could teach you some things about slides...

We favor numbers over, yes, aesthetics.

I'm not going to -- I'm going to answer with my own numbers.

Yes, do not get distracted. So maybe if you can walk us through the key moving parts of your margins. And let's start with the gross margin. I mean would it be fair to assume that in terms of the core business, consistent with what you've been saying now for more than 18 months, we should expect a relatively flattish development gross margin-wise for the core business. And then next to that, Mead Johnson, we should anticipate some kind of a gross margin contraction because '25 was a bit flattered by strong operational leverage. That was mostly around the third quarter and also the insurance payment.

So insurance wouldn't have been in gross margins. But other than that, you're correct. So gross margins, we've been very consistent. I'm not looking to expand Core Reckitt's gross margins in the near term. We've talked a lot over the past 2, 2.5 years of our expectation and need to be stepping up our capital investment in our supply chain and our manufacturing capabilities, and we're doing that. You saw that in our 2025 numbers where we spent 4.2% of net revenue on CapEx. So gross margins for Core Reckitt assume flat. Gross margins for Mead Johnson, we had elevated levels of product going through our manufacturing sites as we were restocking the trade post tornado. And so yes, Mead Johnson gross margin, slight contraction.

So then if we move further down to the operating expenses. So here, the way to look at it, BEI, you've been saying the ambition is to grow BEI ahead of sales every year, 2026 should be no exception to that rule. Second ambition is to reduce further fixed costs in absolute terms, but not as a percentage of sales given the deconsolidation of Essential Home. So adding all that together, it seems like the ambition for 2026 is to expand margins relative to the 24.9% group margin you reported in 2025 but probably margin being slightly down relative to the 25.6% margins when we only combine Core and Mead Johnson. Would that be a fair guidance?

Yes. I mean the way I would walk through it is we exited 2025 at the 24.9%. When you pull out the Essential Home business, that becomes a 25.6% operating margin if you're thinking like-for-like from businesses. Exactly as you said, we are very focused on offsetting the stranded costs from the Essential Home transaction with Fuel for Growth savings. We made a ton of progress on our Fuel for Growth program over the past 2 years. We're very confident that when you look beyond '26, we're going to exit '27 having more than offset all of those stranded costs, and we actually changed our guidance to get to below 19%, but we're not confident that we can fully offset that within 2026.

And agree, we've been very consistent on BEI. We want to have the flexibility to drive the brands and invest in our brands. And so we want that to be growing year-on-year as a percent of net revenue. So that 25.6%, I think we will be slightly below that in 2026.

And then moving further down, how do we think about the contribution from Essential Home? So I think you mentioned a GBP 25 million pretax income from services provided to Essential Home. And then do you have any visibility on this year's associate income from your 30% stake in Essential Home?

Yes. So GBP 25 million, that comes from a number of different transitional agreements we have around manufacturing, around distribution, around service supply. As far as the income that will come from the 30% stake, we haven't given specific guidance. I think you see in our year-end results, you can see the profitability of Essential Home when we owned it in 2025.

I think it would be fair to assume that, that profitability might look different in first year of ownership under a new owner. I then think you need to think through what the leverage would look like on that business. I think we saw sort of what the trend of business results was in 2025. And so as you put all of that through, then just remembering that we're a 30% shareholder in that vehicle going forward.

So that was debate #3, which means we can move on to Reckitt's transformation journey. Starting with your portfolio. I mean I think that's been the most visible achievement of your transformation with Essential Home being deconsolidated from the 1st of January of this year. Now you still report Mead Johnson as a non-Core asset. Anything you can say about the next steps for Mead Johnson? And maybe if you're already getting some interest for this asset, so a process that could be quite different from the one you just went through with Essential Home.

So I'd start with we're really pleased with the performance of Mead Johnson. We've been clear it's non-Core. I think we've gone through the rationale and the reasons for why we don't believe we're the best owners of that business. Having said that, we are the current owners of that business. And so we're focused on making sure we continue to appropriately invest and deliver consistent results with Mead Johnson.

If I then move into process, it's really dependent on the time line around the litigation we're dealing with in the U.S. And so we haven't set out any sort of time line around when we think we would be able to potentially transact on Mead Johnson. And so I don't have any new news to share there. I will say, I think it is a very different potential transaction.

And so it's an existing business that operates relatively independently today within our portfolio. as contrasted with Essential Home, which was a business that didn't exist that we were carving out and looking to sell. And so I do think that when we get to that point, a transaction will look a little faster, a little clearer, hopefully more straightforward. The only other thing I'd say is I've been at Reckitt for 2.5 years. There's consistent inbound around interest in the business. And so I'm confident that when we get to that point, we'll be able to move forward, but there's no time line to share.

For Core Reckitt, I mean, do you see any clear gaps in your portfolios of brands, so something you would like to fill via acquisitions?

I think now that we have Essential Home behind us, we probably have a little more mind space to be thinking about potential M&A. I think Reckitt has an amazing history of bolt-on M&A and has generated an incredible portfolio of power brands that we sit here today responsible for. And so I think we could be interested in bolt-on M&A opportunities. If I think of what would be most interesting, I think our self-care category would be really interesting. It has a long runway for growth. It has incredible structural economics. I think within emerging markets, self-care is a very nascent or underpenetrated category where it could make some regional brands of interest. So that would probably be top of mind as I think about those opportunities.

Great brands and much improved innovation in recent years. So as things stand today, how would you rate your current innovation engine? And maybe can you touch a little bit on the progress you've made in the past few years on that front?

Yes. So we significantly stepped up our investment in R&D, trying to think of the time line now, probably back in 2018, '19 sort of time range. And so we're now up to about 2.9% of net revenue. We're investing into the R&D function. And we're really comfortable that we're at the right level. And why are we comfortable? It's to your point, we're seeing now the benefits coming to market of that step-up in investment.

And so obviously, that time line is different depending on if you're thinking through health products or more traditional hygiene products. Hygiene products, 2 to 3 years from when you increase that investment to when you're going to start seeing the new technologies coming; health, a little bit longer. But if I just think through, we're creating new categories, Lysol Air, Lysol Laundry. We recently announced at CAGNY the new 12-hour cold and flu multisymptom product for Mucinex, which is a really significant innovation.

We've been investing behind that for 17 years, and so we are super excited to bring that to market this season. So summer is when that will start selling in. And then we talk about more everyday innovation. But when you think of Activ-Botany, which we've been talking about on Dettol, that's driven a ton of growth in China, which is different scents, different formulation. Nurofen mini capsules, we talked about, larger innovation around Durex Intensity across Europe, the first nitrile condom. I mean I can go on and on. We have examples we share every quarter. But I think as we look at the sufficiency of our innovation pipeline, we are confident that across all 4 categories, we have the right amount of innovation to sustain 4% to 5% top line growth.

And the right amount of innovation, does it mean you do not expect a step-up in the number of new product launches going forward? You find like right now, you've got the right level of innovation or as the industry also seems to be launching more products, level of competition increasing, you may be forced or have to also step up the number of new product launches.

I mean I think we own our destiny. No one is going to force us to do more, right? We want to make sure that we're driving the right level of innovation. And it's a little bit less about number of launches because it's hard to compare, right? A new product development like this Mucinex product is very different from a new scent of Lysol as an example. So it's really about as we move these projects through our pipeline, looking at what's the size of revenue we expect to generate from them and is that sufficient to deliver our top line ambitions. And so I think you'll see variability in number of launches year-to-year. But I think what you should see is that we have the right level of newness and the right level and balance of innovations to support that top line growth.

So that was portfolio innovation. If I switch gear and look at your supply chain because there's been a complete mindset shift from, I think, cost focused to more being value focused. Can you talk about the visible benefits from this change? So where -- which KPIs do we see improving and likely to improve further as a result of this change of approach and mindset?

Sure. So that's a great CapEx chart. That's exactly what we wanted to do. So I think we've been really transparent, Chris and I over the past 3 years that we think supply chain resiliency and the importance of being a world-class manufacturer is paramount within our business and our ability to continue to drive sustainable growth. And so we've been talking actually for a few years that we've been guiding CapEx at 3% to 4% of net revenue, and we kept saying we want to be at the top end. We want to be at the top end. And then for 2 years, we were at 3%, 3% and change. And this year, we did it. We got to 4.2%, which feels great.

And we guided for '26 around 4% because now we want to sustain that. So we feel like with Harald as our Chief Supply Chain Officer, he brings incredible capability of what does world-class manufacturing for an FMCG look like. He's hired a team that knows how to execute these large projects with excellence, and we have the confidence now that when we invest that level of capital, we're going to see the benefits and the ROI that we're looking to see.

And so what are some of the more visible KPIs that you'll see? I mean some of them are just brand-new manufacturing facilities. So we announced the Wilson facility in North Carolina in the U.S., which will go live in 2027, which is suddenly getting quite close. That will be a health manufacturing facility for our North America business. And we've shared that, that will bring us from 2 years ago, we had about mid-50s, I think it was 56% of the product we sold in the U.S. made in the U.S. When Wilson is up and running, that will be above 80%.

And so for us, it's not just about, oh, it's great that we have more local manufacturing. It's that if you think of a health business, a Mucinex business where demand can be so inconsistent and when the season hits, the season hits. Having that product manufactured in North Carolina is going to allow us to make sure we can meet that consumer demand.

So if I were to rewind back to '23 when I joined in October '23, we were missing millions of dollars pounds of revenue opportunity because the season hit and we weren't ready and we couldn't get the product there fast enough. So another KPI you'll see is I think you'll see additional top line or confidence in the ability to deliver that top line because we have more reliable manufacturing in the right place, making the right products.

I think longer term, what you'll see is that we'll get to a place where we're back to expanding our gross margins because we're going to have manufacturing facilities that just run more reliably, more efficiently, and we're going to start to see those benefits flow through to gross margins. But I would put that out sort of 3 to 4 years before we're expecting folks to be seeing that or would want to rely on that.

And then it's your Fuel for Growth efficiency productivity program. You revised your ambition on Fuel for Growth last week when you reported your full year results. Goal is now to be below 19% by the time you exit 2027. I mean can you maybe shed some light on why Fuel for Growth is running ahead of plan? And in which areas do you see incremental opportunities? And I think you always like to remind us that there's no finish line.

There is no finish line. Fuel for Growth, why is it running ahead? I mean I think there's a piece of it that is, of course, when we put out expectations, we want to make sure that we're going to be able to deliver against those. And so some of it is there are so many different moving parts in what was intended to deliver the transformation of our fixed costs and drive these savings.

We've been able to just execute against that a little more quickly than what we expected. And so we have been seeing those benefits flowing through. It's important to remember, while we ended '25 at 19.4%, when you look at that percent in '26, it will likely go up a bit because we now have the headwind of the stranded costs from Essential Home.

However, when you think about what do we still have to do that gives us confidence that we'll not only get to 19%, but actually below, it's really sort of the final 2 large buckets of the program around shared service and around GenAI. And so again, we started sharing these ambitions 18 months ago, 24 months ago. We had plans in place around what should shared service look like at Reckitt, what do we think the size of the prize is.

We had ideas and had started work around GenAI and what we thought the applications could look like and where we would go. But if you fast forward 18 months, the plans that we now have in place and the progress we've made on shared service just provides us with a much higher level of visibility of exactly what are the savings. We have a roadmap by market, by function. We have 3 hubs set up and running, hiring people, ready to move work from markets into hubs.

And so that's giving us the confidence in the GBS space. If you think about GenAI, we started our work on Gen AI in October '23. We started within the marketing function. We've now moved on to the R&D function into the supply function. And we know that in 2026, we'll be really going hard around HR, finance, legal, more enabling functions. And so again, it's -- we have learnings from marketing and from R&D, where we now know how do we do this and how long does it actually take? And when do you actually start seeing savings? And so as we then model that forward, it just gives us a lot of confidence on over the next 24 months what does delivery look like.

And Fuel for Growth has allowed a significant step-up in BEI, brand equity investments in the last few years. Maybe can you talk about the areas where you've been allocating this incremental BEI? And I guess taking 2 steps back, this increase in BEI, how should we be looking at it? I mean is it Reckitt keeping up with an increased cost of doing business in the industry? Or is it Reckitt looking at strengthening its level of outperformance and market share gains and ability to fast premiumize?

Sure. So first and foremost, every year, when we're putting together our plans on BEI, what's most important is innovation and how are we making sure that we're really sufficiently and fully funding new product launches and those innovations that are so important to driving the sustainable top line growth. So if you bring that example home in 2026, our largest innovation is this Mucin next 12 hour. So we've had many conversations over what does it look like to really set that product up to fully leverage the newness and the technology as we launch that.

After that, it really comes down to looking at all of our brands by brand, by country, what's our share of voice, what do our market share results look like? Where are we not delivering in line with our expectations? How do we compare versus our competitors and then deciding, okay, what are the most important priorities and where do we want to allocate incremental BEI. We evaluate over the course of the year as well to see what's working, what's not.

Do we want to put money elsewhere? Do we want to make changes or shifts. And so to your latter point, I don't view this as we're trying to somehow catch up with our peers. I really view this as it's so important to drive sustainable top line growth, 2 things. One is that we have innovation and the second is that we're fueling our equities. And so this intention and strategy of growing our BEI year-on-year as a percent of net revenue is about making sure that we're really fueling our ability to sustainably deliver top line growth.

And then if we move on to a continued reinvention in a world of big data and artificial intelligence. I mean starting with digital and consumer data. China is probably the most advanced country when it comes to digital use of consumer data. Does your success in China in recent years give you an edge and particularly as you try to roll out some of these best practices in other parts of the world?

I think it does. I mean I've said, I think we were a first mover in that space in China. So I think that we have a lot deeper and more robust learnings. And we're actively discussing where do we think those learnings can best apply, where do we think we're going to see those consumer shifts or consumer trends moving next. And so we're already thinking through testing and learning in other markets of emerging markets. How do we think through social commerce? Where do we think that's going to develop? Where do we see live streaming going next? How do we get a similar first-mover advantage in those markets so that we can try to replicate what we've seen in China elsewhere.

And do you see big data, it's to be the buzzword of the moment, but do you see big data as a new source of competitive advantages for large companies such as Reckitt? Or will it create a more level playing field? Like how do you think about big data and how you're using it and embedding this in the way of doing business at Reckitt?

I think it can be a competitive advantage. I don't think it's a given that it is for us or for any large company, frankly. I think it's really a matter of how do you prioritize which data sets you think can be a competitive advantage versus sort of being baseline available to everyone? What's the unique sort of filter you can put on that data that's really specific to your business, your brands, your consumer to turn that into a competitive advantage. I think if it's just sort of big data, we're trumping through it, but not with this really specific lens of how or why you are in service of what, then I think it's not a competitive advantage.

Do you rely a lot on first-party big data, like thanks to direct-to-consumer, some of that you've got in China. Do you have a lot of consumer data that are like proprietary to Reckitt? And what do you do with it at this point in time?

We do have a lot of consumer data, proprietary to Reckitt. That was actually one of the reasons why when we went back and you think through in 2023, how did we decide to have the marketing function as our first application of GenAI, it was really taking a look at our data across Reckitt and trying to think through where do we have proprietary data that's well structured that we think we can use an LLM in a really efficient and unique way. And so that's what first guided us into marketing.

And so we've shared some examples, a video at CAGNY around how we're using that consumer data around concept generation as an example. And as a plug, we have our next focus on event in May, which is all about digital science. which will share more on how we're using digital and AI to create products and connect with consumers.

And then my last question would be about artificial intelligence. How do you make sure Reckitt is AI ready? Like does it require a lot of upskilling of your employees? How do you approach this internally?

I mean, absolutely, we're having active conversations on how do we think differently about talent because as we sort of roll through function by function, wanting to figure out what are the opportunities for AI, how do we leverage AI, it then becomes a very live conversation of what are the different skills our current employees need so that they can really embrace this and not feel uncomfortable or scared or resistant because I'll say one of the learnings we've had as we rolled AI through the marketing function was you go through sort of these acceptance and rejection curves as the employees who are being asked to change their ways of working to do things differently.

I think you sort of start from some fear. Then I think as we educate people, they get more excited. Then when we roll out the tools, there's a really high level of adoption at the start. Then when we go back and look 30 days later, it's starting to -- people are going back to old ways of working. Maybe there are certain tools they really like, but others, they don't. And so it's a constant effort around really landing new ways of working and getting folks comfortable and upskilled and knowing how to do this.

And just a quick follow-up. But over the next couple of years, where do you see the biggest AI-led opportunities? I mean is it more on the efficiency side of things, so ability to free up more resources to improve free cash generation? Or is it about speed, ability to launch products much faster from idea to shelf, reducing the lead time and there, the benefit would be more on the organic sales growth?

I think it's both. I really do. I think we approached AI initially as a company more through a lens of productivity. I think today, the conversations we have around AI, it needs to be and. It's the power of and. It has to be about productivity and how it's going to contribute to the Fuel for Growth ambitions and how it's going to help us to continue to fuel this growing BEI investment.

And we see really tangible ways that AI is going to help us drive top line. And so as a quick example, if you think about R&D, which was the second function where we've deployed AI, that shrinking of the time line it takes from idea generation to launching a product. The faster we can run that innovation cycle when you start to layer that on, you see more and more top line opportunity. So I think it will be both.

Very last follow-up, I promise. Compared to peers, where do you think you are AI-wise?

That's a great question. Well, our advisers who are supporting us tell us we're well ahead. I honestly, I think that's really hard. I was in a meeting this morning discussing it with one of my colleagues. I think it's really hard to judge. I mean if I judge based on what other companies are sharing externally, I think we're in the ballpark. I think we're doing well. I don't think we're behind. I don't know that I would say we're cutting edge. I don't know that we're striving to be leading edge. It's a debate we've had internally. But I also don't -- we don't share everything externally. So it's hard to know that that's the right benchmark.

And with that, thank you all for joining. Thank you very much, Shannon.

Thank you very much.

see you very soon.

So good morning, everybody, and thank you for joining us for Reckitt's full year 2025 results presentation. I'm Nick Ashworth, I head Investor Relations here at Reckitt.

So before we start, can I draw your attention to the usual disclaimers in respect to forward-looking information. So presenting today, we have our CEO, Kris Licht; and our CFO, Shannon Eisenhardt. Following the presentation will be the usual Q&A session. We're going to take questions from the room first, as we always do, and then followed by the written questions via the webcast. For those of you who have joined online, please feel free to submit your questions via the questions tab, which I think is at the top of the screen, and I will read them out. And if you've got further questions after the event, please feel free to reach out to me or the team, and we'll be happy to help.

So with that said, I'm going to hand over to our CEO, Kris Licht, to start the presentation.

Thank you, Nick, and good morning to everyone in the room and those who have dialed in. I'll start with an overview of our 2025 results and some of the key highlights from the year, and then Shannon will take you through our financial performance. I'll then come back and provide an update on our key priorities for 2026 and some of the elements of our winning playbook. After that, we'll both be happy to take your questions.

2025 was a year of strong financial delivery as we continue to deliver on our strategy. Core record net revenue grew 5.2%, ahead of our improved half year guidance of above 4%. Group net revenue increased 5%, including Mead Johnson growth at 3.8%. This was driven by Emerging Markets, with China and India growing double digits in the fourth quarter. In our developed markets, a weaker season held back growth and the consumer environment in Europe remains tough. However, this was more than offset by a strong nonseasonal performance in North America.

Adjusted operating profit increased 5.3%, underpinned by the benefits of the Fuel for Growth program. Core Reckitt margins expanded 90 basis points to 26.7%, with Emerging Markets margins growing 210 basis points to 20.9%. We are delivering profitable growth at scale. EPS grew 1.1% and was supported by our ongoing share buyback program, offset by a higher year-on-year effective tax rate, in line with our guidance. And we delivered another year of strong cash returns with GBP 2.3 billion returned to shareholders through dividends and our share buyback program.

Looking at our noncore businesses, we completed the divestment of Essential Home to Advent in December, and we returned a further GBP 1.6 billion to shareholders via a special dividend in February. Mead Johnson Nutrition grew net revenues by 3.8% as trading normalized. We continue to consider all strategic options for that business. So we made strong progress delivering against all our strategic priorities during the year. We simplified and sharpened the portfolio, supported by the divestment of Essential Home. And this has allowed us to focus exclusively on 11 high-growth power brands with increased investment, increased accountability, faster decision-making showing through in our results, in particular, in Emerging Markets.

We delivered superior innovation with launches across all our categories. Some were new products with the power to disrupt such as our Durex Intensity condom, which we've rolled out to 18 countries in 2025. And many others are extensions and improvements helping us to grow loyalty and win new consumers. They included new fragrances for Lysol air sanitizer for Dettol antiseptic liquid as well as Nurofen mini liquid caps and dual-action cough and sore throat products from Strepsils.

We've generated significant benefits from our Fuel for Growth program. This has supported increased investment in our brands to drive revenue, expand margins and deliver our ambition of sustained earnings growth. We feel good about the program, and we believe we can go further. Shannon will come to this later.

And finally, improved execution has strengthened our competitive position. In China, strong e-commerce growth has enabled us to capture more digital-first consumers. And in North America, our omnichannel partnerships and quick commerce are accelerating and widening access to our portfolio, for example, by bringing Mucinex to consumers in 30 minutes with 68% of buyers new to the brand.

Building on this final point, executional excellence can only happen with a strong supply chain. This has been a big focus of mine since becoming the CEO. It's critical to have a supply chain that reflects the quality of the brands and the products that we make. Historically, modest investment in our supply chain created risk and led to inconsistent performance. We have started to address that by investing in greater levels of localization, automation and digitization, building a supply chain that is more scalable and resilient as we continue to grow.

You can see this in the actions we're taking. On the manufacturing side, there is a lot going on. For example, we're rationalizing and improving our China footprint, installing new Durex lines in our state-of-the-art Taicang factory with a new China Science and Innovation Center due to open this summer in Shanghai. We're increasing our North America footprint with our new factory in Wilson, North Carolina, which is on track to open next year. And we've also enhanced our Lysol toilet bowl cleaner capacity and capability at our Belle Mead plant. We're adding a new generation of lines at our Polish factory to support innovation behind Finish. And we're investing in new Gaviscon capacity in Thailand, initially to support growth in Europe and Australia and ASEAN in the longer term. And as part of Fuel for Growth, digital and AI and GBS will enable greater effectiveness and efficiency right across the supply chain.

We've stepped up investment in CapEx to GBP 592 million in 2025. And this is starting to deliver results across the portfolio with a few examples shown here on the slide. Our service levels have increased across Europe and North America, and we're driving improved factory operational performance with good early results, in particular, in Emerging Markets. There's more to do, but we have made great progress on the supply chain over the past 18 months.

So in summary, I'm proud of what our teams have achieved in 2025. Our actions have repositioned Reckitt as a world-class health and hygiene company. Our focused portfolio of power brands are in the right categories, driving premiumization and benefiting from geographic diversity. We have a proven playbook for how to grow and expand our brands, and we're executing more consistently against it. Our foundations are strong, and we're making them stronger.

There is much more to do, and I will come back to you to talk about our priorities for the year ahead shortly. But let me stop now and hand over to Shannon for more detail on our financial performance.

Thanks, Chris, and good morning, everyone. Let me start by running through the key financial highlights and the strong progress we made in 2025. Core Reckitt like-for-like net revenue grew 5.2% with volume growth of 1.5% and price/mix of 3.7%. Excluding seasonal OTC, Core Reckitt grew 7% year-on-year. Core Reckitt's growth was led by Emerging Markets, up 14.6%. Group like-for-like net revenue increased 5%. We held Core Reckitt gross margin flat at 62.2% with group gross margin above 60%, expanding 10 basis points year-on-year as productivity efficiencies more than offset the impact of tariffs.

Adjusted operating profit margin for Core Reckitt increased 90 basis points, helped by our Fuel for Growth program, with group adjusted operating profit margin up 40 basis points to 24.9%. At constant currency, group adjusted operating profit grew 5.3% year-on-year with adjusted diluted EPS up 1.1%.

Looking now at volumes for the year, where Core Reckitt volumes grew 1.5%. In Emerging Markets, we delivered broadly balanced growth with volumes up 6.7%, led by online launches and increased penetration in China as well as expanded distribution reach in India. In Europe, volumes declined 3.1%, reflecting category growth rates slowing throughout the year. This was compounded by a weaker cold and flu season in Q4. In North America, volumes were flat. Encouragingly, volumes improved sequentially in the second half, driven by the performance of our nonseasonal brands.

Turning next to performance across each of our areas and starting with Emerging Markets. Growth was broad-based across all categories and all regions. China delivered its 10th sequential quarter and another year of double-digit growth, driven by strong performance in Dettol with innovations and extensions such as Activ Botany, ongoing strength in VMS and sustained market leadership in Intimate Wellness across both Durex and Intima.

India delivered high single-digit growth for the year, driven by our offline execution as we continued to increase distribution points. We have also seen double-digit growth across a number of our smaller markets, including Indonesia, Colombia and Malaysia. We're pleased that we're driving this growth while expanding our adjusted operating profit margins 210 basis points on the prior year to 20.9%. This has been driven by continued gross margin expansion, which includes mix benefits from continued outperformance in Self Care and Intimate Wellness.

Moving on to Europe, where net revenue declined 1.4% for the year. During the year, category growth rates slowed to being broadly flat. We saw increasing promotional activity across the area as well as a softer season in Q4. However, our premiumization strategy continued to deliver price/mix benefits. We continue to focus on our power brands and showing up competitively on shelf for our consumers every day, which enabled us to maintain market leadership positions.

Finish declined low single digit, but remained the category leader in Europe, supported by continued premiumization. In Self Care, nonseasonal OTC grew low single digit, led by strong performance from Gaviscon, partially offset by a mid-single-digit decline in seasonal OTC brands. Durex delivered low single-digit growth, driven by the successful launch of Durex Intensity, our new nitrile condom, enhancing our category leadership.

Adjusted operating profit margin was 31.4%, up 130 basis points on the prior year, with strong delivery from cost savings and efficiencies, offsetting stable gross margins and volume declines. Now in North America. Like-for-like net revenue growth was broadly flat at 0.2%. Our nonseasonal brands, which represent around 70% of our portfolio performed well with low single-digit growth against a soft category backdrop. Lysol grew low single digits, supported by strong core business execution, particularly in wipes and the continued momentum of recent innovations with laundry sanitizer and air sanitizer, both growing double digits year-on-year.

And while our seasonal OTC business declined mid-single digit, reflecting the soft season, our nonseasonal Self Care business grew double digits in 2025, driven by successful innovation launches across Neuriva, Move Free and Biofreeze. Adjusted operating profit margin at 30.1% was down 30 basis points year-on-year with cost savings partially offsetting a decrease in gross margins driven by category mix.

Now turning to our categories. Self Care net revenue increased 3% on a like-for-like basis. Seasonal OTC declined mid-single digits, more than offset by high single-digit growth in our nonseasonal Self Care business. Gaviscon grew high single digits, and we delivered double-digit VMS growth for the year. For Germ Protection, net revenue increased 8.4% on a like-for-like basis. This was led by double-digit growth in Dettol across emerging markets, including high single-digit growth in India and double-digit growth in ASEAN and China behind the launch of new innovations. Harpic grew mid-single digits with emerging markets offsetting a softer consumer environment in Europe.

Moving on to Household Care. Like-for-like net revenue declined 0.4%. Finish was broadly flat year-on-year with double-digit growth in emerging markets, offset by softness in both Europe and North America. Vanish was flat with strength in China, offsetting softness in LatAm and mid-single-digit declines in Europe.

Finally, Intimate Wellness was our fastest-growing category with net revenue up 12.5% on a like-for-like basis. Durex delivered double-digit growth, supported by ongoing product innovation, notably the successful launch of Intensity in Europe and additional Durex launches in China and India. Veet also delivered double-digit growth in 2025 and Intima's like-for-like net revenue almost doubled as brand adoption in China accelerated. Looking at our market share data. As expected, our seasonal business has some share weakness given the soft season. So 51% of Core Reckitt's top CMUs were in gain or hold territory for the year.

Turning to our noncore business. Mead Johnson Nutrition delivered like-for-like net revenue growth of 3.8% in 2025, driven by our specialty brands, particularly Nutramigen in the North America business with favorable price/mix. The business also benefited from rebuilding retail inventories following the Mount Vernon Tornado in July of 2024. Mead Johnson Nutrition international grew low single digits. Adjusted operating profit margin increased by 150 basis points to 20.4%, reflecting favorable gross margin progression on higher-than-normal production volumes as well as insurance proceeds.

Essential Home is excluded from like-for-like net revenue growth following the disposal completion before year-end. Operating profit is included until the disposal on December 31, 2025. Our Fuel for Growth program continues to drive meaningful simplification and improved effectiveness across our business. We've made strong progress against each of our focus areas, and our actions are enabling us to deliver savings faster and more efficiently than originally planned. Our investments in digital and AI are creating value, particularly in marketing with automation and shared services also progressing well. The larger impact from these areas will build progressively over time.

In 2025, group fixed costs were 19.4% of net revenue, a 150 basis point improvement year-over-year. As expected, this ratio will rise in 2026 before declining again in 2027, driven by 2 factors: first, the mitigation of stranded costs following the sale of Essential Home; and second, a smaller net revenue denominator resulting from the transaction. Program delivery costs in 2025 were below our GBP 500 million guide due to pacing and phasing of costs and around GBP 200 million of restructuring and separation costs that were offset against Essential Home proceeds. With this progress and disciplined execution, we remain on track to deliver within the GBP 1 billion investment envelope and now expect to exit 2027 with a fixed cost base below 19%.

Reviewing our progress shows the benefits this program is delivering. We delivered 90 basis points of savings in 2024. 30 basis points went back into increased BEI investment. In 2025, we've driven 150 basis points of savings, which enabled 120 basis point step-up in BEI investment. We're investing more behind our brands to fuel our top line growth while also growing our margins. And importantly, we're enhancing our functional capabilities to enable sustainable growth going forward. In 2025, consistent with our guidance, we grew group adjusted operating profits ahead of net revenues, up 5.3% at constant currency. Our Fuel for Growth savings enabled us to step up investment behind our brands and also drove group operating profit margins up 40 basis points to 24.9%.

Turning now to earnings. EPS grew 1.1% over the year to 352.8p. This was driven by net revenue and profit growth and further supported by a lower share count resulting from our share buyback program. These benefits were partially offset by a higher effective tax rate and adverse foreign exchange impacts, both totaling a 7% headwind to EPS. In total, we returned GBP 2.3 billion to shareholders through dividends and share buybacks. This included GBP 900 million of share repurchases, and we will shortly commence the final tranche of our current buyback program, which was announced at the half year.

We delivered free cash flow of GBP 1.7 billion with a conversion rate of 71%, including one-off cash costs associated with transformation and restructuring. Net debt to adjusted EBITDA closed the year at 1.6x, reflecting the proceeds received on December 31, 2025, from the Essential Home divestment. Adjusting for the GBP 1.6 billion that was returned to shareholders last month via a special dividend, our net debt-to-EBITDA ratio would have been roughly 2x at the end of 2025.

As we move through 2026, we expect leverage to rise towards 2.5x by half year, given continued investment in the group and the lower EBITDA denominator post divestment before starting to trend back down through 2027. The Board is proposing an increase to our full year dividend of 5%, consistent with our aim of delivering sustainable dividend growth.

Our disciplined capital allocation framework remains unchanged. Our priority continues to be investing in organic growth as we've done in 2025 with a step-up in investment behind our supply chain and R&D capabilities. We aim to continue to pay a progressive dividend, and we will manage the portfolio for value creation, continuing to return excess cash to shareholders through our share buyback program as well as any excess proceeds from future transactions as we look to continue to deliver attractive total shareholder returns.

Now turning to guidance for 2026. First, Core Reckitt. In 2026, we expect to deliver 4% to 5% net revenue growth, in line with our medium-term guidance. This again will be led by emerging markets growth. We expect the challenging environment in Europe to remain where we're taking actions that are already having an impact. And similar to the fourth quarter, Q1 will be negatively impacted by the softer season. Given these factors, in Q1, we expect Core Reckitt net revenue growth to be below our full year guide.

In our noncore Mead Johnson Nutrition business, we expect low single-digit like-for-like growth in 2026 with a mid-single-digit net revenue decline in Q1 as we lap retailer inventory build from Q1 2025 post the tornado. At the group adjusted operating profit level, we aim to largely offset stranded costs associated with the Essential Home divestment through our Fuel for Growth program.

Finally, looking at EPS. We'll receive income from our participation in Vestacy, the Essential Home vehicle in 3 different ways: noncash interest income from our USD 300 million vendor loan note, which is part of our net interest guide; associate income from our 30% equity stake; and around GBP 25 million of pretax income from service and other agreements we're providing. The share consolidation and ongoing share buyback will reduce share count, and we'll provide updates on foreign exchange impacts as we progress through the year. Our ambition remains to deliver long-term sustainable EPS growth, acknowledging in 2026, the dilution headwind resulting from the divestment of Essential Home.

I'll now hand back to Chris to talk about our strategic priorities for the year ahead.

Thank you, Shannon. I want to spend the last part of the presentation taking you through our key priorities for 2026 as we continue to strengthen Core Reckitt's foundations for long-term sustainable growth. Before I go through each of our areas, I want to revisit a chart that you may have seen me use recently. It's a great chart because it marks an important inflection point. For the first time, emerging markets have more households with $25,000 disposable incomes than developed markets. That's a big shift in terms of where global purchasing power lies and Reckitt is in a strong position to benefit.

As our results show, we're capturing these consumers through category penetration and category creation. But it's not just about emerging markets. The opportunities across developed markets also remain exciting. Our power brands are at the premium end of the market where consumer loyalty is high. We're building that premium position with new launches and by expanding our categories. We have the portfolio to win in both developed and emerging markets.

So turning to our areas and starting with Emerging Markets. As we said at our December event, we expect the strong trajectory to continue with high single-digit growth over many years. The number of consumers able to buy our products increases every day. And in many ways, we're only just touching the surface. Consumption patterns are changing fast, supported by the growth of households that own dishwashers and an increasing number of consumers paying much more attention to their health.

We have 3 clear priorities for the year ahead. First, to increase penetration in mature categories, driving our distribution strength to reach more consumers through efficient and digitized execution in India and Sub-Saharan Africa and to continue our success of expanding into new categories in China. Second, to develop nascent categories. In December, our Emerging Markets President, Nitish Kapoor, spoke about growing levels of dishwasher penetration and our focus on rolling out our self-care portfolio across many parts of the area. This is working well with Finish and Gaviscon both growing double digits in 2025.

Finally, to scale up the next tier of countries. We're already seeing very strong double-digit growth across a number of markets that are small today, but they have very high potential. We will continue to drive executional excellence by increasing OTC medical expertise in Latin America, making our sales teams in Africa more digitally enabled and modernizing our go-to-market capabilities in ASEAN.

Next, turning to Europe. Our performance in 2025 was impacted by the challenging market backdrop, a slowdown in our categories throughout the region and weak seasons. We expect consumer sentiment to remain weak, and we've already taken actions to improve our competitive position with early positive share results. And while the season has continued to be soft in Q1, we have maintained our market share, and so we're well positioned looking forward. Our priorities in Europe are, therefore, to capture trade-up and premiumization, and we're doing this. Our highest tier dishwasher tab, Finish Ultimate Plus all-in-one grew double digits across Europe in 2025, driven by the formula upgrade. Competition will remain tough, but the mix opportunity for us remains.

Next, we will drive category expansion through innovation. We will continue to successfully roll out Durex Intensity as well as launching Nurofen mini liquid caps into a number of new markets. And finally, we'll take steps to strengthen our competitive position. A big focus will be on the pharmacy channel, working with pharmacists on product education and by better equipping our sales force with improved technology. We will also strengthen e-commerce and tailor our North America omnichannel best practices for Europe. And then finally, North America. I believe this area has great opportunity for us. 2025 saw good progress, and we're encouraged by the momentum we saw through the second half.

Our nonseasonal business is strong, outperforming low single-digit category growth, offset by the weaker seasonal OTC. The investments we're making in our supply chain and in our iconic brands are strengthening our platform for further growth in 2026. Our priorities will be to expand our premium categories. We built a strong track record of category expansion, moving into laundry and air sanitizer with Lysol into lozenges and pediatrics with Mucinex, and there is much more to come in 2026. We will work closely with our partners to deliver customer-centric growth. This means greater online and omnichannel focus and continued focus on winning in the club channel. Innovation and digital execution are helping us do this, whether it's through exclusive SKUs, pack sizes and variants for specific retailers or working together with quick commerce partners to accelerate and broaden access to our brands.

And finally, we want to deliver consistent operational excellence. We've seen improved performance in Lysol wipes in 2025 as we invested in our largest U.S. factory in St. Peter's, and this will support greater consistency in 2026. We will also continue to invest in our supply chain in North America with our Wilson, North Carolina site moving towards operational readiness by 2027. And there's more work to do, but the future is an exciting one in North America.

Moving to our seasonal business, which represents right around 12% of our core portfolio. The past few years, we've seen the natural volatility that we all associate with this category, but it doesn't change the attractiveness or strategic importance of the portfolio. Even after a couple of weak seasons, the upper respiratory category has still grown at a 5% CAGR from 2019 to 2025, supported by strong macro tailwinds from an increasingly health-conscious consumer base. When viewed through a longer-term lens rather than just a 1-year basis, the trajectory is good. Strepsils delivered a 7% CAGR between 2019 to 2025, while Mucinex grew 5% in the same period. These are 2 of the highest gross margin brands in the portfolio. The strength of these brands is underpinned by leading brand equity, superior claims and a consistent track record of innovation.

Part of our excitement for 2026 in North America is around Mucinex. This is a brand with a great history of innovation, powering growth. This slide shows you that it has delivered a number of firsts over a number of years, and I'm proud to say that we're going to continue this strong track record in 2026. Mucinex 12-hour Cold and Fever will be launched later this year. It is the first and only 12-hour cold and fever multisymptom remedy in the market. This is a real breakthrough. It lasts 3x longer than other cold medicines from just a single dose. It took us 15 years to develop. It's the first FDA-approved new drug application in the upper respiratory category in over 15 years, and it's our first approved NDA. So when I talk about superior innovation, this really is an excellent example of our teams delivering, and we're doing this right across our portfolio and all around the world.

This slide shows some of the other launches we've delivered in 2025. Innovation is integral to our ongoing success because it enables us to grow our categories, it strengthens further loyalty to our brands. It captures more consumers, and it drives pricing and ongoing premiumization. The investment that we've been making in R&D will ensure that our pipeline remains strong to underpin a steady stream of launches in 2026 and the years ahead. As many of you know, we started our series focus on educational events last spring. For 2026, I'm pleased to announce our next 2 events.

On the 14th of May, we will showcase digital science with our first virtual event where our digital and R&D teams will come together to show how we're applying new digital and AI technology to innovate faster and better. And then on November 19, at our new office in New Jersey, we will host our first event in the U.S., showcasing our North America business. So there's a lot to look forward to in 2026.

Shannon took you through our guidance for 2026, and I want to reiterate our confidence in delivering on our medium-term ambitions. Our strategy is focused on positioning Core Reckitt to consistently deliver 4% to 5% like-for-like net revenue growth alongside annual EPS growth. Last year, we saw a tough consumer backdrop, and 2026 doesn't show much sign of improvement, especially in Europe. However, I'm confident that our portfolio, geographic footprint, executional excellence, combined with continued investment and innovation puts us in a strong position to deliver our targets.

So in summary, we achieved a lot in 2025. The transformation of Reckitt is well underway. We've simplified the portfolio. We've reduced costs. We've expanded margins, and we've invested behind our brands to accelerate growth. We have iconic brands in categories with decades of runway for growth. We have the innovation pipeline, the executional capabilities and the financial model to win. Core Reckitt is built to deliver sustainable profitable growth year in and year out, and that's what we're focused on doing in the year ahead.

Thank you for listening. Shannon and I will now be happy to take your questions.

Thank you very much. And yes, so as we said at the beginning, we'll take questions in the room first and then we'll go online. And if you're watching through the webcast or listening through the webcast, then there's Ask a Question box. So please put the questions in there and they'll come through to me and I can read them out. To start in the room. James got the first. Wait for the mics as well, I should say, if you can introduce yourselves.

It's James Edwardes Jones from RBC. Two questions, if I may. Obviously, you're not giving explicit margin guidance for 2026. Can we interpret your comments as being that margins for Core Reckitt are likely to decline in 2026? And within that, can you give any indication on brand equity investment sales whether that will go up to support all those innovations you're talking about?

Secondly, you said 51% of your top CMUs are gaining or holding share. I'm not sure if that was Q4 or full year. So clearly, 49% are losing share. Is that something we should be concerned about? Is there any intensification in the competitive environment?

Do you want to handle margins? I can do the share.

Yes. I'll start. Okay. So from a margin standpoint, we exited the current year at 24.9%, which is what we shared in the release this morning. Obviously, when you think about it from the group level with the Essential Home divestiture, that will be a positive tailwind to our operating margins in 2026 just because it's a lower profit business that we're divesting. We will, however, be facing the stranded costs coming from Essential Home. And so what we outlined was that we expect to largely offset those stranded costs with the Fuel for Growth program in 2026. So the expectation would be that operating margins will increase. However, the amount of increase is obviously dependent on how much of those stranded costs we offset within 2026. We're confident as we then head into 2027 that will more than offset those costs, and that's why we also changed the guidance for the Fuel for Growth program to now get below 19% as we move forward.

Shannon, just to check, so operating margins for the group, you expect to increase, but not necessarily for Core Reckitt.

For Core Reckitt, I think it will be the same dependence around exactly how much of those fixed costs we offset because we have to metabolize that within Core Reckitt, obviously, going forward without Essential Home. From a BEI standpoint, we remain very consistent in the fact that our intention is to be growing BEI as a percent of net revenue year-on-year. We believe it's important to be investing behind innovation. So we'll continue to focus on that in 2026 as with any other year.

On your question on market share. So 51% it's a full year number for the CMUs. One of the things that happens when we have a weaker season is some of our self-care brands that are highly efficacious and medicated and premium lose a bit of share. Conversely, when we have strong seasons, they gain a bit of share. So we did see Mucinex suffer some share loss during the year because of that weaker season. Mucinex is a really big CMU. If you consider that effect, how we're running is okay. Obviously, I'm not happy unless that number is 60% or higher. But with a weaker season, we know and expect that that's a headwind on share, and it's temporary.

Jeremy Fialko, HSBC. So a couple from me. First one is, can you delve a little bit more into Europe and what's going on there? Because you talked about the markets being broadly flattish at the end of the year. Obviously, you were down somewhat more than that. So talk about why there's that difference in the market, what the sort of the seasonal bit there is and how you think you can get at least that back to, let's say, around flattish or into positive territory during '26, your confidence in that?

And then secondly, maybe we have a bit of a follow-up on this margin question. If we think about some of the other components of margin. So for example, would you expect some -- any progress in gross margins over the course of the year? Would there be any leverage as other factors beside this sort of fixed cost versus this -- fixed cost versus stranded overheads point?

Let me tackle Europe first, and I'll hand it to you. Look, the first thing I'll say is we had a tough quarter in Q4 in Europe. A part of that was the season being weak, as we talked about. And so that's sort of quite understandable. And obviously, we hope that the next season will not mirror that. The other part of it is a very competitive environment, slowing category growth to broadly flat growth in our categories in Europe and a more competitive environment. So more promotional activity, deeper promotional activity. In that environment, we need to stay focused on being competitive, but we also have to strike the right balance. And some of the promotional activity in Europe at the moment, we feel is excessive.

So we saw a return to what we would say was normal promotional activity last year after the period of time when there was almost no promotions when we were all passing on the COGS increases, the unprecedented COGS increases. But now the promo has gotten to a level that we think is probably not sustainable. However, we are very focused on being competitive. We're very focused on striking that balance, and we have taken some actions, and we're seeing some good early share results as a consequence of that.

However, I would say that Europe will likely remain tough. Everything that we see in terms of consumer behavior, category dynamics and really the outlook for growth in Europe is not particularly strong. So that's why we were clear and even in -- when we discussed our guide. We're setting that guide knowing that Europe will be a tough marketplace to operate in and will be highly competitive. But we have a portfolio that can handle that. I think the point of really the 2025 results that we're showing is, yes, Europe was tough. Yes, we had a weaker season, but look at what we delivered in terms of top line growth. So I think that speaks to the strength of our company.

Yes. Do you want me to answer the second? Look at that Nick was not going to answer your second question. So the other components from operating margin, I think I'd call out -- I mean, gross margins, we've been pretty consistent in discussing over the past 2 years that we have sector-leading gross margins. We're not looking to drive significant expansion there, particularly given the increased investments we want to be making in supply chain. You saw in the current year, we did end up expanding gross margins by 10 bps. But if I think looking forward, I wouldn't change the general theme that we're not looking to drive expansion in gross margins.

I think the only other driver I would call out is obviously geography mix plays a role. You can see the various profitability levels across our geographies. And so we've talked a fair amount around the fact that we do expect to see developing markets deliver more in 2026. And so that would obviously roll through as well from an operating margin standpoint.

Olivier Nicolai from Goldman Sachs. Two questions for you. First, a quick follow-up on Europe, perhaps on auto dish specifically, since you mentioned high promotional activity in end of '25. How much room do you see for premiumization in the category there? And do you think you've reached somehow the end of the journey in terms of how much you can premiumize that category auto dish?

And then secondly, perhaps for Shannon, on free cash flow delivery, it was down year-on-year, reaching GBP 1.7 billion. You mentioned the higher cash costs associated with Fuel for Growth and the CapEx that led to about 70% free cash flow conversion. What are the building blocks for 2026? And how can we expect the free cash flow conversion to improve from there?

So just on Europe, I mean, I said a few things already, but auto dish is actually the category that's most promotionally intense to your point. Premiumization is entirely doable. In fact, we did really well with Finish and our ultimate all-in-one range, which is the most premium offering we have, and that grew really strongly in the year, and we will continue to fuel that. The tiering that we run and moving consumers up that ladder, that's absolutely critical in our playbook, and we'll continue to run it. And we're seeing no signs that, that can't work.

I think the promotional intensity is really more on sort of base products, and that's where we're seeing that. And again, I hope that we can return to a more rational environment. I think right now, the consumer is under a lot of pressure. Retailers are wanting to provide great value, and some of our competitors are promoting in very deep rates, and we're just trying to strike that balance.

The thing about Finish that's also important to remember is we have a good, strong business. We're market leaders in Europe, and obviously, we'll defend that position. But at the same time, the runway for growth for Finish in emerging markets is the exciting part for this franchise. So we'll continue to premiumize and innovate in Europe, and I think that will deliver good results in a tough environment, but I'm really very focused on making sure that we win in emerging markets because that is the future growth for the franchise.

So for free cash flow, the impacts you referenced in 2026 around the one-off restructuring costs as well as the heightened CapEx spend, I would expect those to continue in '26 and '27. And so we'll exit that restructuring program at the end of 2027. From a CapEx standpoint, I'm sure you saw the guide for '26 was around 4%. And so a higher guide than last year, but consistent with how we ended up spending last year. I would expect the restructuring costs, as I said, roll off when we enter '28. The CapEx, I think we intend to continue to be investing for the foreseeable future at that higher level of CapEx. From a free cash flow conversion then, I think you'd see it around similar levels in '26, '27. And then we would expect once we're through the restructuring program that free cash flow conversion would get back to more normalized historical levels.

Tom Sykes from Deutsche Bank. Just one question, firstly, on Russia. How much is Russia now of your sales and I guess the ecosystem that supports into Russia? And how much would that be of Intimate Wellness, please, which is obviously growing quite quickly?

And then just sort of further on that CapEx point, could you give a feeling for what the geographic split between EMs and DMs on the CapEx is because your D&A to sales that you give in the release for the EM business is relatively low, it looks like. So I was wondering how hot are you actually running the EM businesses? And how quickly can the CapEx actually give you more capacity in EM to continue that growth, please?

Okay. Just on Russia. So what I can share with you, we've shared this before is Russia today is part of our MENARP business. It's about 15% of sales for Core Reckitt. It's -- for Emerging Markets and Core Reckitt. Russia is not a driver of growth. It's not a place where we're investing, and this is what we've shared before. And so the growth performance you're seeing is not -- there's no contribution to that from Russia. So it's not significant, including for Intimate Wellness.

Yes. Then on CapEx. So expect to spend around 4% of net revenue on CapEx. Within that, when you think about it, the majority of that is supply chain CapEx, manufacturing CapEx. When we look at how that splits across our geographies, I'd say it splits I'm not going to say evenly, but it's across all of our geographies. So we've talked around the Taicang facility in China has been a place within developing markets where we've been investing CapEx. We've just overtaken or Harald, our Chief Supply Chain Officer, overtook an entire review of our manufacturing footprint around the globe, and we'll be spending across all 3 geographies to support growth. So we've talked about the Wilson facility in North America, which will be a significant source of CapEx spend, but it will be spread across both developed and developing markets.

Edward Lewis from Rothschild & Co. Redburn. A couple of questions. I guess just on the first year that you've done the change in the organizational structure. And clearly, that benefited the emerging market business with the strong results there. Can you just talk about the impact that's had on the developed market business, Europe and North America, where obviously contrasting performance is relative to the emerging markets. And then, Kris, you mentioned about bringing omnichannel capabilities in North America into Europe. What sort of opportunity is that? Could you elaborate further, please?

Sure. So let me start with the organization. Look, I'm very pleased with the way the new organization is functioning, but it's also year 1. So I think it's important to know that there's more benefits that will come from the simpler organization that we have now. And obviously, we have more scale in our markets when we are not split into GBUs, and that's a benefit that will keep paying off for us.

Emerging Markets was one of the main reasons why we changed the structure because they were -- they didn't receive the level of focus that I think is important for them to receive. And obviously, we can see what happens when we set them up for success like we've done in China and India, but we want to do that in many more markets. This organization facilitates that. So very pleased with that. Europe went through a lot of change last year. And obviously, going through a lot of organizational change takes up some time, some capacity of the organization, but that's behind us now. And so therefore, one of the reasons why we believe Europe will be able to demonstrate improving performances because they have that stability and they have greater scale in what they're doing in a number of markets.

In North America, we're actually quite pleased with how the business is doing. So I mean, recognize that it's not quite the growth rate we're realizing in Emerging Markets, but it probably won't be, but actually, we're outpacing our categories. And as we shared, the nonseasonal business, 70% of the business is doing really well and I expect it to do really well this year. And then with the innovation behind Mucinex, I think we'll see a strong year from North America.

That's my expectation. They are an energized organization at this moment. We were actually just with them and spent a lot of time with the team there, and they're fired up. And I'm very pleased with what I'm seeing there. And I think we're laying the foundation for very good performance. So North America will definitely also benefit and is benefiting. And as you said, now we have to see the benefits come through in Europe, too.

Omnichannel. So omnichannel is really the name of the game in terms of how increasingly our business operates. Obviously, we have very sophisticated capabilities in China, and the business there has really moved quite heavily online. The vast majority of the business is now online. In North America, it's been a more measured evolution, I would say, and the majority of the business is certainly still offline in the U.S.

But leading retailers are now operating in an omnichannel way, right? So you're seeing many of the retailers that are succeeding are really running multiple fulfillment models and relatively seamlessly moving across the screen in the store and combining these 2. So that means that we have to work with them in that way, too. So we can't do the traditional thing that we did where we had a separate team doing e-commerce and separate investments and separate P&Ls. And now we have to unite it and we have to run optimization and growth initiatives across these platforms seamlessly. So we have to activate online, offline in a very cohesive manner.

And the U.S. is ahead of Europe on this dimension. So European retailers are certainly investing in this space, but they're not as advanced as the leading retailers in the U.S. And so that's why we can take what we do well in the U.S. because we really are quite successful with the leading retailers in the U.S. on this dimension. And so we want to move those best practices to Europe. And we'll do that gradually as the trade landscape in Europe evolves and gets more advanced.

It's [indiscernible] from RBC. It's a question for you, Shannon. So Reckitt's share is not very cheap anymore. And with the level of leverage at the moment and the planned spending on CapEx, what's your view on share buyback going forward?

I won't address the not very cheap comment. But on the share buyback, look, we view the share buyback program as a really important lever in how we return value to shareholders. And we've talked pretty consistently since that started in October of '23 around the fact that we view it to be an ongoing component of how we think about capital allocation and of how we return value to our shareholders. And so we mentioned today the fact that the next tranche of our already announced program will be announced imminently to finish up that program. And then my expectation would be that it will be an ongoing program. Now we've also talked that the magnitude of the program can vary. And so that can be impacted in line with our capital allocation principles around our net debt ratio and other uses of cash, but we view it to be an important component.

Great. So we have a number coming online. [Operator Instructions]. I'm just going to work through an order. So starting with Feng at Jefferies. She's got 3 questions. The first one was around operating margins for Core Reckitt. I think you've already answered that one, Shannon. So I'm going to move on to, can you talk about the price/mix for Core and/or Emerging Markets, specifically, how much of EM price contribution reflects underlying pricing versus the VAT increase on contraceptives? And have you secured the California WIC contract? And if so, when should it start contributing to Mead volumes and revenue?

All right. I'll do emerging markets price/mix. So we've talked around the fact that our ambition is that price/mix, we want to drive balanced growth. So we want our growth across all of our geographies to be balanced across volume and across price/mix. Specific to emerging markets, if you look at the first 3 quarters of the year, our results were very balanced across volume and price. When you look at the Q4 number, it's important to note a couple of things.

One of them is the fact that we did have a realignment of some of our marketing investments where we moved that from an accounting standpoint out of trade spend and down into BEI. And so that was a onetime contributor of seeing more price/mix driving growth. We did also, and I think she mentioned it, we had condom pricing in China ahead of the new VAT policy. And so we took that pricing a little bit early. And so that influenced. And then we had some positive mix coming through India as we look at the Dettol products that have been driving growth for us in India. And then California WIC.

California WIC. So that's a contract we secured last year, and it is contributing. I think that's all we can say about that.

Okay. So the next, I've got a couple from Callum at Bernstein. The first one, I think we've already answered, it was around the free cash flow conversion, a step down to 71% this year. And what's the outlook? And I think you've already talked about that, Shannon. So then the second one, strong progress of Fuel for Growth in 2025. Can you help us understand the 19.4% fixed cost in 2025, what does it look like if you adjust for the Essential Home divestiture?

I mean I think the answer is that we haven't been sharing a specific number around stranded costs for Essential Home. What we're really focused on is getting to the target we set out, I guess, 18 months ago around getting to 19%, which we're seeing strong progress. It's coming in faster than expected. It's coming in more efficiently than expected. And I think a reflection of our confidence came through today and the fact that we've now increased our ambition that as we exit 2027, we'll be below 19%, which obviously reflects more than offsetting any stranded costs from the Essential Home transaction.

Thank you. Next up from Guillaume, UBS. And Guillaume, I can see that you've sent me through a few. So thank you. I'm going to start with the -- I'll start with the first 2 and then come back to some of the other ones later. The first one then on Latin America. Region's like-for-like was down mid-single digits in Q4. Can you shed some light on the main drivers behind this decline? And what do you expect for the year? Is it going to be similar challenging trading conditions or some gradual improvement?

And then second, on the tax rate, you're guiding to around 27% this year. This is the second year in a row where tax is increased. What's driving the uptick? And how should we think about it over the medium term?

So let me answer on Latin America. So obviously, we run a seasonal OTC business in Latin America, too. So some of that weakness is directly impacted by a weaker season. The other thing is it is a subdued trading environment, and it is highly competitive in some of our categories. We're also changing a couple of things about how we enhance our go-to-market system. And so I fully expect Latin America to get back to growth, but those are some of the drivers why we've seen the weakness.

Then from a tax rate standpoint, so it's important to remember, we exited 2024 with what we had called out as an abnormally low tax rate. I think we were around 22%. So for 2025, we'd guided that we'd be 25% to 26%. We came in a bit under that with 24.7%. 2026, guiding the tax rate at around 27% is just reflecting that we're getting -- returning back to our more structural tax rate. And so there's no specific driver other than the fact that we're coming off of an abnormally low base in 2024.

Perfect. Thank you. Diana Gomes at Bloomberg. This is a question around the current geopolitical events and the impact on gas and oil prices. So have you talked about hedging levels for 2026? How should we think about gross margins as we move through the year?

So I think the first thing I'll just say on that, and maybe you want to talk about hedging. I think the most important thing for us to say on current events is we're watching it very closely, but our overwhelming focus right now is the safety and well-being of our team members in these markets and their families and anyone that's impacted by it in our organization. And obviously, we hope for a resolution soon.

Yes. I mean I would just say we obviously have an active hedging program to try and mitigate risk and to provide some level of consistency or ability to forecast gross margins. As we head into 2026, we hedge out 12 months, and we have about 55% of exposures hedged at this point in time. And so we'll continue to run that program and to manage volatility as much as possible.

Thank you. So next up from Warren at Barclays. A couple of questions. So the first one, I actually think has 2 parts. On the modeling for 2026, what associate contribution would you expect from Essential Home? And on 2026 fixed costs, I assume they go up before they go down to below 19% in 2027. So can fixed costs be above 20% in 2026? And then how much more below 19% could they get to in 2027? So I actually apologize, I'm not sure that was 2 questions. I think there's a few more.

Yes. I would say 5 questions from Warren. Okay. I'll do my best here. So on the associate contribution to EPS, we're not providing a specific figure. I think the variables that would be important to think through as you model that would be, we obviously shared last year the profitability of Essential Home. That level of profitability will change as that comes under new ownership. I think it's important to remember that it will be highly leveraged, and that will have an impact. And then that we're a 30% shareholder in that business. And so to reflect that as you think through the modeling.

From a fixed cost standpoint, the question was fixed costs, will they go up before they go down. And so I think the answer is yes, consistent with the language around Fuel for Growth largely offsetting, which would imply it doesn't fully offset. From a number standpoint, I'm not going to provide a specific number of guidance on fixed costs for 2026. But I will say that we'll be below 19% as we exit 2027.

And then a second one from Warren sort of. It's on the volume price mix. And so some of our peers put mix into volume. Can you, therefore, try to give us a feel for what mix is versus pricing in Q4, given volume was a little bit weaker. But then, as I said, others put mix into volume. So is there an argument that we should be doing likewise?

I saw Warren's request bolded and underlined in his note this morning. So it's on my list of things to talk to Nick about. I mean I don't think we have a specific mix number to share. We've talked around the fact that we want to drive balanced top line growth that we would expect that to look like a point or 2 a year from volume, a point or 2 a year from price and a positive impact from mix.

I think the only thing to add is in emerging markets, we are seeing really good mix benefits. And that's a function of the innovation. It's a function of the fact that we're driving growth in categories that have better structural economics than the base business. So there's sort of a benign trend there that we think will continue, and it's significant.

And coming back to Guillaume again, a couple more. Thank you, Guillaume. So on condoms in China, do you expect a material impact from the recent change in VAT on category growth? And so how could this affect Durex's momentum in 2026? And then on brand equity investments, it increased 120 bps as a percentage of sales last year. Which brands and geographies got the lion's share of this increase? And are you satisfied that you're getting the right returns on that incremental investment?

So on the VAT change and the sort of outlook for Durex, I fully expect Durex to have a good year in China. Durex has been growing really well in China for a very long time. I mean it's a very steady pattern. And so obviously, when you have changes flowing through like the change you're asking about, it can have short-term impacts and a little bit of upside and a little bit of downside in the next quarter, but it's not going to change the trajectory of Durex performance. And I think Durex will do well in China in '26.

Yes. From a BEI standpoint, I mean, I think the best way to think about where are we putting incremental BEI is we always want to prioritize innovations and making sure that as we launch new innovations that those are fully funded and that we're really driving to make sure those launches are as successful as possible. Beyond that, we look across all 3 geographies and really go sort of think of it as going brand by brand, country by country to understand where are we investing in line with what we view as the minimum levels of BEI that we'd want to be spending and where are we below that and then deciding where it makes the most sense to put the incremental investment each quarter, if not more frequently. And again, our intention is that, that BEI as a percent of net revenue should be increasing year-on-year.

So just a couple left. [Operator Instructions]. So a couple from Celine at JPMorgan. Firstly, on China, I'm not sure whether we might have answered this already. Have you seen higher orders ahead of the VAT implementation in condoms? And what has been the impact on pricing that you mentioned? And then on Mead, you mentioned you were looking at all strategic options for Mead. Can you help us understand what those are and any time expectations around litigation?

So China, I mean, yes, we saw a little bit. But again, like I just said, we're not expecting this to be a significant headwind for Durex in 2026. For Mead, I would say that we've been very clear. We're looking at all strategic options, and we've been consistent about not setting a time line for that so as to give ourselves the flexibility to do what's best for shareholders. And of course, as you know, we're working to resolve the litigation. So the -- today, we don't have a lot of new news on that. I think the thing to maybe just focus on is that Mead Johnson is trading well. And Mead Johnson had a good year, and we expect them to have another good year this year, and that's a positive.

And this is the -- for now, the final one I have online. So it's from Juan Rios at Santander. Again, a couple of questions. Firstly, on Mead. There's been some turbulence in infant nutrition market recently. Could you comment on whether this has any knock-on implications for the Mead Johnson brands operationally and from brand perception? And secondly, regarding issues in the Middle East, can you provide some color on how you're thinking about the potential impact on your business?

So I think it's easy to answer the first one because it had no impact on us. So we were not involved in it, and we haven't seen any commercial impact because we don't operate in the markets in question in any significant way. The geopolitical events, look, it's too early for us to really assess where this is going. The range of possible outcomes, as you know, the uncertainty is extremely high. It's developing live, and we're just paying a lot of attention to what's going on, obviously, mostly focusing right now, as I said before, on the safety and well-being of our employees and of course, protecting our assets, our business. But it's too early for us to quantify any impacts.

That was everything online. Anymore in the room? We've got through a lot. Perfect. So look, with that, we will call it the end. Thank you very much for all the questions and interest. And I will just highlight the next slide, which is going to come up on the screen as if by magic. The next focus on events. The next one will be May 14. And hopefully, we will see many of you then. Thank you very much.

Good morning. It's a pleasure today to welcome Reckitt back to CAGNY. Today, we have CEO, Kris Licht; and CFO, Shannon Eisenhardt, with us. Reckitt has been on an incredible journey since he last joined the CAGNY stage in 2024. First, in announcing a strategy update that very summer and then successfully delivering against that plan and exceeding it with asset sales, productivity savings, strong performance in core Reckitt and home to many of the brands that we know near and dear, such as Lysol and Mucinex.

Through these efforts, complexity has been greatly reduced. Earnings visibility has been enhanced, and growth has accelerated. I really look forward to hearing more about Reckitt strategy and their next chapter of evolution as they are at a critical inflection point. And I want to hear [indiscernible] 2026. Kris, Shannon, over to you. Thank you.

Thank you very much. Thank you for that warm welcome. It's great to be back at CAGNY. We are going to talk to you today about a simpler, sharper Reckitt. Before we do that, just take note of this, please. As you know, I'm Kris. I'm the CEO of Reckitt, and Shannon is here, our CFO, and we're going to share with you all the work that we have been doing and where we're taking the company next. What you're going to hear is that we have been busy.

We have really done a lot of work to improve our business, improve our company. It's been a lot of work, and it's been very satisfying to see the progress that we've made. I think I can safely say for both Shannon and I, we're very proud of our organization, of our teams and what they are achieving at the moment. We're going to talk about the growth that we see ahead of our business from a category standpoint and most importantly, for our power brands, we have 11 power brands, and we're thrilled to be the custodians of these brands, and they can grow very well.

We're going to talk about how we're winning in the marketplace today and how we continue that in the future. And therefore, hopefully, at the end of the presentation, you will understand why we feel confident about our outlook in our business. So let me tell you just a high-level summary. This is a very high-level summary of all the work we've done in terms of executing the strategic plan that we set out for the company in the summer of 2024. First of all, we have sharpened our portfolio.

We declared 2 segments of our business non-core; we carved out and executed one of those. We called that one Essential Home. It's now known as Vestacy. That was sold as a business, but actually what that was, was more than 90 brands, tail brands in our Hygiene and Home business that we did not feel satisfied the criteria for sitting in our portfolio of world-class power brands.

And so we carved out and exited those over a 12-month period. Mead Johnson, our nutrition business, which is a good business, is also non-core and we continue to look at all avenues for the future of Mead Johnson. So what does that leave us with? It leaves us with the circle you see here, a much simpler and sharper core Reckitt business that is organized in a much simpler way. We took out multiple levels of management. We reduced the number of executive roles.

We drove a much higher level of accountability. And therefore, we can drive much more direct line [Technical Difficulty] executed. We also took out a lot of costs. Shannon is going to talk to you about the progress that we're making on our Fuel for Growth agenda, which will continue. We are making good progress, but we have more work to do. So overall, we have made great progress creating a simpler and sharper Reckitt, which is the foundation for the sustainable growth that we're now looking to deliver.

Just a few stats for those of you that don't follow us that closely. So the 2 non-core segments make up about GBP 4 billion in sales. So what's left after this restructuring and what we really want you to focus on is the core Reckitt business, about GBP 10 billion of net sales or USD 13 and change billion. If you break it down by area, we have 3 geographic areas. One of the defining characteristics of core Reckitt is that emerging markets business is the biggest part of our business is 40%. And that's very important.

We're going to talk about that in a second, why is that so important? Obviously, we have big business in North America and Europe. We operate in 4 big categories. What's great about these 4 big categories is they all have very fundamentally attractive tailwinds. And I'll show you some examples of that in a bit. Health care is our biggest business and inside health care is really the OTC business, the biggest business. We have a very large world-leading germ protection franchise.

We have a very strong household care business, and we are leaders globally in intimate wellness. And this is why these are the 11 power brands that are at the core of our portfolio. I just invite you to consider these brands, #1 equity positions in their categories. They're very premium brands. They're very strong equities. They enjoy extremely high levels of consumer trust. We're going to talk more about some examples of that in a second. What's also great about them is they have a clear runway of growth.

They are very strong equities that can stretch into adjacent territories. They can build categories in new markets, especially in emerging markets, which we're going to talk more about. And finally, because they are premium in their categories. They sit at that high end, the best premium offering available in their categories, they come with very attractive earnings model. Many of you will know that we have very high gross margins. Core Reckitt enjoys very high gross margins.

And that's because of that premium position and the strength of the equity; we can sustain that. And that earnings model is what allows us to invest back in the brands, in advertising, in innovation, and in particular, innovation is really the lever that I'm very excited about talking to you [Technical Difficulty]. So this leads us to a very clear ambition that we've set. We aim to grow core record at 4% to 5% like-for-like growth and really powered by very strong growth that we anticipate in emerging markets.

By the way, we're already seeing strong growth in emerging markets, we expect it to continue. And I'm very pleased to say that while we haven't reported full year results for '25 yet through the first 9 months of the year, as I'm sure many of you saw, we are delivering in this algorithm. We are very committed to growing our EPS. It's very clear that that's one of the things we need to be doing as part of being a leading company in our industry.

And Shannon and I are very committed to that, and Shannon will talk more about some of the levers that get us to sustainable EPS growth. So before I talk more about the brands, I wanted to take a step back and share a fact, some of you may be aware of this, in that event, I apologize. But this is a really critical insight, and it's not just for Reckitt, for the whole industry, something has changed. If you go back to 2004, this chart shows you how many households that have income in excess of $25,000 a year.

Why is that important? This is important because those are the kinds of households that can participate in our categories. They have the breathing room financially, they can afford to buy world-class health and hygiene products and by the way, many other CPG products. So we call these middle-class households. Of course, in some markets, that kind of household income wouldn't be middle class. But if you look at it globally, this is a very good yardstick for when people can start participating in our categories.

So in 2004, North America and Europe was clearly the majority of these households globally. Then we go forward to 2014 [indiscernible] the case, but emerging markets and especially some of these markets started to be very material. You really had to pay attention to what was going on in China, in India and Brazil. This is certainly the time when we talk a lot about BRICS -- BRIC countries. But look at what has just happened in the last 2 years.

In the last 2 years, emerging markets taken together in terms of households that can participate in our categories and similar categories exceed the combined total of North America and Europe. That's very exciting because it highlights a massive runway for growth. And this is unlikely to change. In fact, that bar on the right is going to keep going up and the bar on the left is probably going to contract.

So winning in emerging markets is now absolutely critical. That's not to say that we don't have opportunities everywhere, we do. Because in North America and Europe, we have a huge opportunity to premiumize in our categories. And as branded leaders in our categories, that's very much our job. And we can also expand categories which we have done successfully, and I'll share some examples.

But actually, that emerging markets growth engine, growing penetration, creating the categories that we already have in North America and Europe, that's the biggest strategic priority for us as a company. In addition to that opportunity, we have tailwinds in our categories. Here are just some examples. Consumers are much more engaged in self-care. Consumers are very interested in protecting themselves and their families from germs and bacteria, of which there are a growing number of threats all around the world.

At the same time, only 14% of households have a dishwasher today globally. And that's going to change. Back to that point I made before about households that can now afford things, they can also afford dishwashers. And there's a huge runway for growth for Finish from that number going from 14 to 20 to 25 and above that. And finally, intimate wellness, where we are global leaders. Our brands are only present in 1% of occasions. That is a big opportunity. So we have a lot of tailwinds in our portfolio.

These are the power brands that we can use to capture those tailwinds, and there's not a single brand in this portfolio that I don't feel is positioned to be able to grow and harness that opportunity. Before we talk about some examples of these brands, I just want to show you some examples of how we activate them around the world. Please roll the video.

[Presentation]

Great examples of how our brands come to life. When I see that Mucinex ad, I'm reminded of how much misery we put Mr. Mucus through on a daily basis. But that is our job. So the winning playbook that we have that we run each of these brands with is consistent and it's the same all around the world. Of course, it takes a different expression by market.

It's about iconic brand building, consumer obsession, superior innovation and executional excellence. I'm going to talk about the first 3 of these, and Shannon is going to talk about the executional excellence. So let's talk about iconic brand building. I'm not going to drain all this information on this chart, but I just invite you to look, every one of our brands have been around for either decades or in some cases, a century.

And every one of our brands have either defined the standard of care in a given health care category or solved a specific public health issue, cholera, the Spanish flu for Lysol, maternal sepsis for Dettol, the list goes on. When you have brands that have this level of credibility in the medical community and with consumers, this is a big privilege and it's what we harness to build these categories in markets where they are not large yet.

When we show up in an emerging market, we show up with a decade or a century of credibility in terms of science, medicine and how we engage with this community. So this is the backdrop for all our brands. Let me talk about a few of them, Dettol. Maybe so many people in the room don't use Dettol because Dettol is the Lysol for the rest of the world, so ex U.S. But in most parts of the world, Dettol is a love mark. You can see some of the stats here, #1 most trusted, high consideration.

And by the way, it's been that way for generations. You saw the ad we just ran for Dettol. Dettol is a family brand. It's about mother and child. It's an emotive brand. People have a connection to it that's unusual for our category. And you can see the growth we've seen. Dettol is now used over 1 billion times a year, 2,000 times every minute, and it stretches. We've stretched it into more than 10 categories. That's also unusual for a brand in our business. It speaks to the strength of the equity.

Here's Lysol. I bet many of you know this brand very well. You can see what we've been able to do with Lysol over the past 5 years. Household penetration is up 1,000 bps. We've expanded to multiple categories. We're 6 now. Some examples on the right. Lysol Air is a fantastic product. I don't know if you've tried it, you should. We developed that in collaboration with the EPA and it's the only one of its kind. Before that, we built the laundry sanitizer category with Lysol.

So that, again, it's a testament to the power of these brands. Lysol is the #4 most trusted brand of all brands in North America. Think about that, a cleaning product. So this is a testament to these brands being a lot more important to consumers than what you may realize. And that's, of course, the super power that we have. So we need to build those iconic brands and continue to fuel them. Consumer obsession. Many people in our industry, we benefit from lots of data.

We have lots of data about consumers. We talk to consumers all the time. But actually, part of the issue is we have too much data. So one of the things we have put AI to use in our company recently is that let's try to use AI to actually get much more out of this wealth of data, do things that tools can do powered by AI that people can't do. It's just not humanly possible to analyze that much data and put it all together.

So we have built tools that get us much faster concept generation and much better concepts from -- for innovation to really fuel the top line. We can also be much more efficient in how we do those things. And I think everyone understands the power of AI for efficiency. But I get excited when I think about the fact that we can put better products on the shelf by leveraging these tools.

Rather than talk a lot about AI, I want to show you how it works. So we're going to roll a video that just shows you our concept generator that's our tool proprietary to Reckitt that has all our IP in it and help our marketers today build our innovation. Please roll the video.

[Presentation]

So I think this is pretty exciting. When we started that project, which is not that long ago, our VP of R&D for Finish, where we built this tool, we said there's no chance this is going to work. I've done this in my whole career. This is not going to be better. But we can try it if you're really insisting. And these are the results.

And I think our VP of R&D for Finish Now today is absolutely a believer in this and says our innovation is going to be far better. And our organization is now focused on rolling this out to the rest of our brands because this is exciting. This [Technical Difficulty] anything we want to do. And we're going to put that right at these business opportunities that we have.

We have a huge opportunity to continue to premiumize, which we are doing successfully with Finish in developed markets, introducing good, better, best architectures and introducing new innovation that provides a superior clean. And so that drives the price per dose, as you can see on the left in a very significant way. That's a very exciting lever for premiumization and growth. But the one I'm maybe the most excited about is the box in the middle.

You can see here some examples of markets where dishwasher penetration is still very low, right? You can see it's growing, doubled in Egypt. It's growing very significantly across these markets, but it's still very low. But the exciting part is that the middle classes in these countries, those $25,000-plus households are really growing fast now. Some of these markets, we can see them, they're on the S-curve and they're going to take off. Vietnam is a very exciting market as an example.

And on the right-hand side, when we do that, we partner with all the manufacturers who also stand to gain from this and create a really big category for themselves. And we partner with them to educate and drive habits around this. So this is an example of how we work on consumer obsession. Now the one I'm most excited about, which is innovation. Here's an example of Durex. Durex Intensity is a first of the world condom, a new material that's superior for consumers. We are the only one making it.

We worked on this for a long time, and it's been a very successful launch. But if you look at what we've done with Durex and innovation, I'll point out the road map that we have been through in China. About 6 years ago, we had really missed an innovation cycle. We did not have market-leading innovation in China. And we set about changing that as we rebuilt and reinvigorated our R&D operations. And so we invested in material science. And these are 3 launches that have all been very successful.

Polyurethane condoms was the first one, and we cracked that quickly, and we're now market leaders in that. Hyaluronic acid condoms was next [Technical Difficulty] year. Benzocaine condoms for increased [Technical Difficulty] made out of a material that hasn't been used for condoms [Technical Difficulty], which has superior properties and consumer preferred. This is what it looks like to lead with innovation and real science, real breakthroughs in materials and that's the kind of leadership that will give us sustainable growth and margin expansion.

Similarly, in OTC, where, as you know, we have our Mucinex business, we also have Strepsils, which is a #1 brand in many markets around the world. This is a very attractive part of our portfolio. It does have seasonal fluctuations, right? Seasons are strong, seasons are weaker. But if you look at it from a long-term earnings perspective, this is one of the best things in our portfolio. good tailwinds, strong growth, track record of strong growth.

You can see here the CAGRs for Mucinex at 8%, Strepsils at 10%, very high gross margins, some of the highest in the industry and obviously, very strong brands. So when we innovate behind these brands, and here's an example of all the innovation we've had in Mucinex, it's very clear that we can expand these categories, we can bring new benefits to the market.

As long as we have meaningful breakthrough innovation, you see examples here of a lot of firsts, including most recently the first children's cough relief for 4 hours with our Mighty Chews. These are great innovations, and we are fueling that to continue to grow our brands. Here's the thing I'm most excited about for 2026. We have worked for a very long time to create this product.

This is the first 12-hour cold and fever multi-symptom relief product in the category and it's coming in 2026. Why this is a big deal is it's the first of its kind. It is consumer preferred. It solves a problem for consumers that today they cannot solve, which is all day relief. You get this product, you take the medicine, and you don't have to worry about it. You can get on with your day, you can get through your whole day, and you can feel far better. This is something consumers look for.

We know that. We have been chasing this for a long time. This has been over 15 years in development. It is the first FDA-approved new drug application NDA in the UR category in the last 15 years. Retailers are excited about it. We're excited about it. And I think Mr. Mucus is definitely not excited about it. And with that, I'm going to hand it over to Shannon.

Thanks, Kris, and good morning. I'm going to talk to you about how we're driving consistent operational excellence, which is already enabling us to deliver against our financial top and bottom-line objectives. All right. And we've already announced the launch and here we go. So I'm going to cover 4 different things today. First, I want to talk about the advantages of our simpler, sharper operating model, which Kris talked about a bit.

Next, the opportunities that we see across our portfolio of markets, talk about how we're driving this executional excellence as well as our confidence in delivering sustainable momentum around both top and bottom-line delivery. Let's start with our new structure. Our new organization, as Kris said, has eliminated layers and it's increased our speed of decision-making. Our global structure has brought together our global teams, our category teams and our local teams much more closely.

And you can already see the benefits of this when you look at our emerging markets delivery and the outsized growth that we're seeing from our newly established emerging markets team and winning execution. We're less people dependent now, and we have a clearer organization structure and processes in place to really enable this consistency of winning execution.

And these changes under our new operating model are what are enabling us to already deliver against our top line objective of 4% to 5% revenue growth year in and year out. Our Fuel for Growth program is enabling many of these changes, and there are 4 buckets of cost savings that we're driving behind our Fuel for Growth program. The first is around simplification, again, eliminating [Technical Difficulty] driving clearer decision rights and standing up the unified category offense.

Second, we've been focused on rightsizing investments. We're focused on really looking at where are we putting resources and investments and making sure it's in areas that will enable us to drive growth as well as deliver an ROI to Reckitt. These include places like emerging markets and like our supply chain. Third is automation and shared service. Shared services specifically is a huge focus across our organization. This is an area where we know we're lagging behind our peers.

We have clear plans in place around how we'll stand up GBS across Reckitt. And we're confident that with the technologies that exist today, we're going to be able to leapfrog and really make a lot of progress on a short time line across shared service. And lastly, digital and generative AI. Kris shared some of the ways we're applying Gen AI. It includes content generation as well as the technology we're enabling our sales teams with and how we're able to really optimize our social e-commerce opportunities.

And we'll get into that a little bit more in a specific example to China. What's important to note is that Fuel for Growth isn't just about cost optimization program. It's really around what's enabling our enterprise to drive the kind of sustainable growth that we're going after. We announced that we're looking to achieve a 300-basis point improvement in fixed costs by the end of 2027, which would allow us to reach a target of 19% of net revenue, and we are on track.

At half year '25, we shared that we'd achieved a 20% operating overhead cost structure. The first 2 buckets that I just talked about, simplification and rightsizing investments have delivered early and fast savings to help us deliver this 20%. And as we look forward, we expect shared service and Gen AI to be what really delivers the rest of the way to our target. These programs are taking a bit longer, but that's what we would have expected.

As we've been moving through 2026, what's important to remember is that while we continue to drive progress across shared service and across Gen AI, we're also facing some headwinds coming from the stranded costs with the Essential Home divestiture. However, we're on track to deliver against our 19% target as we exit 2027. So with our Fuel for Growth program enabling these tools to drive the business forward, how are we thinking about the opportunities across our geographic areas?

I'm going to start with emerging markets, which is our largest geography. It's about 41% of core Reckitt net revenue, and emerging markets have been delivering outsized growth for Reckitt. Our growth has accelerated over the past decade. In the first 3 quarters of 2025, emerging markets were delivering 14% top line growth. China has been the largest driver of growth with emerging markets. India is our second largest country and has been consistently delivering high single-digit growth.

And we've talked before around these clusters of smaller countries that we believe have incredible potential to continue to fuel emerging market growth for Reckitt. We're particularly focused on developing nascent categories that continue to exist today in emerging markets, and that includes a real focus on self-care as one of those categories. Now moving to Europe, which represents about 1/3 of core record. Europe has seen decelerating category growth across 2025.

And frankly, we've seen consumer sentiment get tougher and tougher. However, we're very focused on ensuring we show up competitively in Europe day in and day out. And as Kris shared, we have incredibly strong brand equities across Europe. Our team is focused on making sure we're competitive as we move through '26, and you can see this in the priorities listed on this slide. We're focused on driving trading up and premiumization, and Kris shared a bit of this with his Finish example.

We know that our Finish tabs are about 20% less expensive than the competition on a cost per dose basis, which gives us clear visibility to how we can continue to drive this premiumization across Finish across Europe. We're focused on category expansion and innovation, and innovation is going to take a lot of different forms. It can be new product developments and large launches, which are great because they drive sustained growth over multiple years.

It will also look like smaller day-to-day innovations, thinking of that as claims or packaging improvements. And lastly, our team in Europe is very focused on showing up competitively in the market. And we know that we have to do this, whether it's at large retailers, at discounters or in pharmacies. Lastly, North America, which is about 1/4 of core Reckitt by net revenue. So North America is actually our smallest geography, but it has great opportunity.

When you think of the brands that are the foundation of our business in North America, it's brands like Lysol, Mucinex, Finish. These are an incredible foundation for us to continue to drive growth in North America. And we're focused on driving this growth through the 3 priorities you see on the right side of the slide, expanding premium category. So Kris just shared the great news that we have the Mucinex Cold & Flu 12-hour launch.

This is an example of a large innovation that will drive growth year after year. Other examples in recent history are Lysol Air Sanitizer, Lysol Laundry Sanitizer. We're focused on driving customer-centric growth, and I'll walk through an example with omnichannel in North America in a few slides. And lastly, again, we're focused on consistent operational excellence.

We've talked before around seeing an opportunity to do much better in North America across supply chain and across the day-to-day execution with our retailers. And this is a space where we've made a lot of progress over the past 18 months, and we know there's still opportunity to do even better. Now I want to go into executional excellence with a couple of specific examples.

I'm going to walk through China online, and then I'm going to walk through omnichannel in North America. Starting in China, consumer behavior has changed dramatically over the past few years. We're really proud of the fact that we have delivered 9 consecutive quarters of double-digit top line growth in China. Now if you take a moment and step back to pre-COVID, the vast majority of our business in China was brick-and-mortar business.

However, today, 80% of Reckitt's revenue in China was coming through the e-commerce channel. And while traditional e-commerce continues to deliver strong growth, social e-commerce is really accelerating. TikTok alone has 800 million monthly active users in China. And our local team has an incredible expertise in the e-commerce space that's helping us to really maximize our growth potential.

We're particularly focused on social e-commerce as it's the fastest-growing channel within e-commerce, and it gives us an opportunity to educate, entertain and sell to consumers all in one environment. So now we have a video with Vivian, who is our Marketing Director in China, and she's going to share a little bit more with you on exactly what we're doing with social e-commerce in China.

[Presentation]

Hopefully, that gives you a little bit more flavor of how we're driving that kind of growth in our China business. Now let's look at North America and an example in driving growth within the omnichannel. Obviously, omnichannel is growing and e-commerce is growing significantly faster than traditional brick-and-mortar business. And 75% of shoppers are leveraging omnichannel when they're in-store shopping. They have their phone in hand.

They're using it to check their shopping list, to understand inventory availability and figure out where the products they're trying are available. And when shoppers are leveraging omnichannel and retailers are offering an omnichannel option to shoppers, those retailers are winning. They're seeing about 2x spend from consumers who are using omnichannel. So what does it specifically mean for Reckitt?

When you think about our business, we have categories that really lend themselves to online. We have consumers who are more and more focused on the topic of health brand. And this is a win for consumer -- for retailers when they think about the products that we have available. And so we have a couple of examples of where we've been really able to drive outsized growth focused on omnichannel in North America. And the first is in a partnership we had with Walmart.

So if you typically think about upper respiratory, it wouldn't necessarily be a category that you think of as being an online category. However, we partnered with Walmart to launch a 30-minute delivery service on upper respiratory products. We then drove a very targeted advertising campaign against that partnership with Walmart. And what we saw was that 68% of purchasers who leverage that 30-minute delivery service were new consumers into Mucinex at Walmart.

Another example is with subscribe and save opportunities. And so if you think about our VMS business, this is a business that's ripe for subscribe and save. And as we focus on driving loyalty through subscriptions, what we've seen is that we've gotten to a place where some of our key VMS brands, Neuriva, Move On (sic) [ Move Free ] have more than 30% of their purchases on Amazon are coming through a Subscribe and Save program.

So Kris and I have set out the categories that we play in, the strength of our power brands and how we're activating our winning playbook. So now I want to talk about how this comes together in our earnings model. And it's pretty straightforward. Our expectation is that we'll deliver balanced revenue growth coming from price and volume. Kris referenced our sector-leading gross margins. You can see here that we've had gross margins around or above 60% for more than the past decade.

Our Fuel for Growth program is on track and is delivering significant cost savings, which we're taking a significant portion of those savings and reinvesting that back behind marketing. Our expectation is that our marketing expense as a percent of net revenue will continue to grow year-on-year. So when you put this all together, this will allow us to deliver a leveraged P&L, where we'll be growing our operating profit ahead of our net revenue growth.

With our sharpened portfolio of power brands, we're confident that we can grow our net revenue like-for-like 4% to 5% every year. With this top-line growth, you'll see our ability to deliver consistent and sustainable EPS growth as well. Why are we confident that we'll be able to continue delivering against this ambition? The first is the fact that we have strong pipeline of innovation. We've shared some examples of that today.

We have premium products, assortment of premium brands playing in great categories and our geographic footprint, which allows us to deliver outsized growth from our largest geography of emerging markets. When we put this together, we are confident that we'll be able to deliver against these ambitions, and we believe it sets us apart from our peers. Disciplined and focused capital allocation supports this kind of durable growth. Our top priority continues to be investing in the brands we have today.

You'll see this investment takes the form of increased marketing investment behind new launches. Increased investment in our supply chain and in R&D. And we continue to expect that our capital expenditure will be around 3% to 4% of net revenue. We've maintained our progressive dividend policy. We continue to target a single A credit rating and target leverage of around 2x.

This gives us the flexibility to be able to pursue bolt-on acquisition activity where we believe it can create value or bring us necessary capabilities. And as you've seen with the Essential Home divestiture as well as our ongoing share buyback program, we're very focused on returning cash to our shareholders.

We're a new Reckitt, and we've been providing proof points of our ability to deliver against our 4% to 5% top line ambition as well as sustainable EPS growth. And we're confident that we will continue to deliver against those expectations and objectives as we move forward. And now I'll hand it back to Kris.

Thank you, Shannon. As you can tell, we have worked hard to create a simpler and sharper company. And our performance is improving and is in the range that we set out to deliver. We're very pleased with that. We also understand that our company has changed quite a bit. And so we felt that it was important to explain and introduce everyone to elements of our company and why we're excited about our future and the value creation that we can deliver.

We started last year with a series of events; we call them Focus On. And the first one, as you can see here, was a global category review where we talked about our global category leadership team, our brands, our innovation and the runway for growth. The second one was a deep dive in emerging markets because as you could see from the presentation, this is where we have to win, and this is where we will win.

And these 2 presentations took place last year, but they're available on our website, if you're interested in learning more. It also gives you a great chance to get to know our bigger team, our leadership team a bit better. This year, we're going to keep this going, and we're going to have 2 focus on events. The first one, we're going to deep dive in what we're calling Digital Science. So you saw that little example of Finish. We are doing a lot more with technology and with AI across marketing and R&D.

And our team here, Bastien, Angela and Nigel, is going to host a virtual session where they take you much, much deeper into this world and show you what's possible is very exciting. The second event we're going to do is going to be an in-person event later in the year in New Jersey in our new headquarter. And Jerome, our President, is going to host that event, and that will be another opportunity to understand the opportunities in North America that Shannon just mentioned.

So stepping back, we feel that we have brought our company back to its rightful place. Not to say that we don't have a lot more work to do because we do. We have lots more to do. But we have a simpler, sharper company. We're delivering good performance. We are in the right categories. We have an outstanding brand portfolio, and we have very good structural economics. And therefore, we're very excited about the future and what we will deliver going forward. Thank you very much.

Thank you, Reckitt, and please join us in the neighboring room for a breakout session with management.

Hello, everybody, and welcome to what is our second live Reckitt Focus On event and today, we're focusing on emerging markets. So shortly, you will be hearing from Nitish Kapoor and the team as we take a tour of our emerging markets.

But firstly, I'd just like to say thank you very much for being here. I'm Nick Ashworth. I head Investor Relations here at Reckitt. It's lovely to see so many of you here on a wet, cold afternoon in December here in London. But I know we've also got a lot of people dialing in as well. So thank you very much for joining us.

I'll start with the usual disclaimers around cautionary statements. There's a couple of slides in the pack. I'm sure you will all read them in due course. As with the first event in May, we will spend a bit of time going through the presentation. [Operator Instructions]. But before that and to start the event, I will hand over to our CEO, Kris Licht. Kris?

Hello, everyone. Thank you for coming. It's great to see a full room, and thank you for joining to those of you that are online. Today, we're going to talk about emerging markets, as you know. This is the largest of our 3 geographic areas. And while it wouldn't be good form for me to pick a favorite business and certainly not in public, I can tell you that this one is exciting.

I think you're going to leave today with a deeper understanding of our business, but importantly, of the growth opportunities that we see in this business going forward. You may also develop a sense of why we feel confident that we can capture this growth. You'll see our brands, you'll see our innovation, you'll see our execution. You'll see examples of our capabilities when we're at our best, and you'll get a sense of the plan we have to broaden those capabilities for even stronger results.

You will also get to meet our team. Members of our team under the leadership of Nitish, our President of Emerging Markets, and you'll get a sense of the depth of our local know-how, which is very important in these businesses. And finally, you'll get a chance to interact with them and see some of these capabilities more closely.

Emerging markets has obviously been around as a concept for a long time. But actually, when you travel to these markets, as I'm sure many of you have done, you realize that some of them have already emerged. Some of them are still emerging, but some are among the most advanced markets in the world. And so this is a vast set of different markets, all of which hold very significant opportunities for us. So I'm going to leave it at that and get us started. Over to you, Nitish. Thank you.

Thank you, Chris. I think you made it pretty clear that you have a favorite. I'm not sure it's going down very well with people who are listening in from everywhere else. But hopefully, we'll demonstrate to you that we are capable of that trust.

Good afternoon. Welcome to our emerging markets presentation. I'm very excited to present our business to you. Along with me today will be presenting Ryan Dullea, who I think you met at the first focus on event in May, who's our Chief Category Growth Officer; and Shannon Eisenhardt CFO, who I'm sure you meet very often.

Let me start by introducing myself. I've been with the company for 32 years. I know I don't look that old, but yes, I have been here for a long time. I started as a management trainee. And while I've never changed my employer, my employer has chosen to change their name many times. So it was a [ Reckitt and Colman ] when I started, [ Record Banks], [ RB ] and now Reckitt. And I was thinking, and if somebody was asking me, are you aware of what the name of the company was before this and I went and I looked it up, it was [ Reckitt and Sun ] in 1938. I missed that by just a few years.

Over the course of my almost 3 decades in the company, worked in sales and in marketing in the countries, in frontline sales and marketing. I worked in marketing in the global category organization that Ryan now leads and I've had many general management roles. I've had the privilege of leading our India business, our U.S. health business, the global category health organization in the U.K. and also some experience in Europe as General Manager, Portugal and in Africa as Marketing Director for South Africa.

But it's not just me who has this deep experience like Chris was referring. Across all of our emerging markets, we have very experienced leadership. The team that reports to me directly, the regional directors have an average tenure in the company of 21 years, in Emerging Markets for 14 years, and we're very lucky that we have continuity with them in their current roles for the last 4 years on average.

It's not just them. The level below them, which is country leadership, so marketing director, sales director, general managers. They too, on average, have been in the company for 12 years, of which 10 have been in Emerging Markets and 3 in their current role. So I'm very proud to lead this team that knows the company that knows Emerging Markets and has had the chance to really spend some time in their own markets.

Today, we're going to talk about 3 things. So there are 3 sections to our presentation. Firstly, we believe we have very strong foundations in Emerging Markets. We've not been here for a few years. We've actually been here for more than 100 years. We've built some brands that are trusted and loved everywhere in the world. I'm sure many of you would have heard of them.

With those strong foundations, we have accelerated steadily over the last 10 years from mid-single-digit growth to high single-digit growth more recently. And like Chris said, we're now the largest area for Core Reckitt. So Core Reckitt, obviously, does not include Essential Home and Mead Johnson. We believe that with our foundations and the acceleration that we've seen were set for sustainable growth which is high single-digit growth that will lead to value creation. And I'm very proud of our execution, and you will see many examples of this excellence.

So let me give you a short history of our time in emerging markets. We have a really nice archive in [ Hull], if any of you have ever been there, it's a little bit of a museum. So we got some of these pictures from there. So our first recorded event in emerging markets is actually in 1899, right? So even that makes me feel a little bit old. But in 1899 is the first distribution that we had for the company outside of Europe and North America. We had our first factory in Brazil, and I can see that we have a lot of people from Brazil over here, almost 100 years ago in 1933, a distribution agreement in Egypt in 1953 and another distribution agreement in Nigeria in 1965. So obviously, some of this means that we were not directly in those markets at that time, but we already had some trading relations.

The thing that got me on this slide is basically, of course, you would expect a British multinational from those times to be in many commonwealth countries, but we were one of the first companies, I think, that even went to Latin America, so almost 100 years ago. Over the 100 years, these brands are all very familiar to you. We have created some brands that I really loved have tremendous stature. So Durex was launched first in emerging markets in the 1960s, as was Harpic. Vanish is a more recent brand that we started with in Latin America in the 1990s, but the brand that really defines us in most of our emerging markets is Dettol.

So Dettol, which you know well. I'm sure everybody in the U.K., I hope, has had the occasion to use Dettol. If not, please make sure that you get one soon. It's been around almost 100 years and this -- every time I look at this statistic, I'm kind of surprised myself as [indiscernible]. It's used over 1 billion times a year. So there are 1 billion usage occasions for a brand like Dettol which means 2,000x every minute. So as we've been speaking, it's been used, I think, 12,000 or 13,000 times already.

And it's not surprised really because this is a brand that's loved and trusted by consumers everywhere. So you see some of the bigger countries in which we operate in India, in Saudi, in China, in Hong Kong, in South Africa and in Malaysia. In all of these markets, it's either the #1 trusted health care brand or the #1 trusted germ protection pack.

So we've created very, very strong brands. We are very proud of that. But in some way, we are also the pioneers of these categories in Emerging Markets. So antiseptics, the brown liquid, of course, we were the inventors and therefore, we were the first to take it to emerging markets. but also in many categories that are now of scale, like toilet cleaners, condoms, more recently, auto dish, a lot of our self-care products like [ gastro], we have been kind of the people that built these categories. And we don't just build them and just wait for maturity. Once they have the stature, we stretch them into adjacencies.

So the best example that we have of that is Dettol, the brown liquid, which was originally launched in the 1930s until about 50 years ago was pretty much 100% of that business is now 1/3 of the franchise that is called Dettol because it is stretched into personal care, it's stretched into laundry and also into washing machine cleaners recently in China.

Harpic, it was actually the first brand that I managed as an assistant brand manager. And I was trying to do the math, lots of currency fluctuations and size. And I calculated that 27 years ago, it was basically less than GBP 0.5 million in revenue in India. And this year, I think we're going to cross GBP 250 million.

So that is the kind of scale that we have bought to many of these categories in Emerging Markets. And on Durex, of course, in China, we have a really, really large business, which is lots of it is condoms, but increasingly also lubes and toys. [ Finish], Gaviscon, these are more recent entrants. But in [ Ryan ] section, you're going to see how they've also grown very rapidly. They're converting habits, and we have very, very strong plans for them.

We now reach consumers and HCP. So HCPs, health care professionals, doctors, pharmacists, key opinion leaders at really serious scale. So last year, our products were available in over 10 million stores. I know that sounds like a lot, but please wait until you come to a little presentation we have from India to tell you just how many stores they're up. We shipped 125 million orders online and we engage directly with 150,000 health care professionals. So this is last year.

We now operate in 67 countries, right? So we operate means that we either have direct operations or a distributor and these are managed through 6 regions. Our largest region is Greater China. The largest country within Greater China is, of course, Mainland China, but we have Hong Kong, Taiwan, South Korea and Japan.

We have South Asia as our second largest region, the big country here is India. We have Bangladesh, Sri Lanka and Nepal. Our third largest region is Latin America. And here we have 2 scale countries. We have Brazil, we have Mexico. And increasingly, we have Colombia and the neighboring countries around it, Ecuador, Peru, Chile, that are acquiring scale.

We have the Middle East, North Africa, Russia and Pakistan region, which is more or less the same size as Latin America. And then we have 2 relatively smaller regions, ASEAN 8% of our business and Africa, 6%, but we have very exciting plans to grow these, and you're going to see this as the third pillar of our growth later on.

So we are very well spread out, as you can see all over the globe. So Emerging Markets, like Chris said, some are emerging. Some are kind of semi emerging and some have emerged, but this is how we manage that. But there is obviously the markets that really make the bulk of our revenue that are very, very important to us. The top 10 markets are 85% of our revenue. You can see them here. I spoke about some of them.

Power brands, which I think you would have definitely seen in Ryan's presentation in May, we have 11 power brands in the company. We have 10 of them in emerging markets. They are 70% of our revenue. The only power brand that we don't have in emerging markets is Mucinex, which is mostly a U.S. brand. But we're also very, very lucky in emerging markets to have a big portfolio of strong local heroes.

So very quickly to give you an example of what a local heroes that you might understand, Lemsip is a very strong brand in the U.K. for us. It is not a global power brand, but think of the stature that it enjoys here. We have many brands like this around the world that we would have inherited over decades that actually gave us the first entry into distribution and really built a path for many of our power brands to follow.

So if you've traveled to these markets, you've heard of some of them, but I would just pick Mexico as my favorite country here as having all of these brands that are #1 in their health care category. So [ CECO ] in intimate wellness. [ Pact and GI ] granted in, which is the Strepsils equivalent that we have here. And again, you'll see some examples around that, and Tempra which is a children's pain relief brand.

So we're really proud of these foundations. We've got trusted love brands. We have developed the categories that are now very sizable in size, and we've got some very strong established markets. And all of that has led over the last 10 years or so, to very steady acceleration from mid-single-digit growth to high single-digit growth, and like I said, we're the largest area for Core Reckitt.

So over the last 10 years, from 2015 to 2019, emerging markets was growing roughly at an average of about 5%. For the next 5 years from '19 to '24 at 8%. And for the last 9 months, 9 months of this year compared to the 9 months of last year, we have strong double-digit growth at almost 14%. Like I said, we're now the largest area for Core Reckitt. We were 39% of the business 10 years ago, were 42% estimated at the end of this year. Three of our largest countries for the group are in emerging markets, China, India and Brazil, and I think 1 or 2 are kind of competing, hopefully, one of them is going to bring them -- get on to this list by the end of this year.

But also our CMUs, what do we mean by our CMU. CMUs are country marketing units, which means the brands and market. Now if we manage these wells, these are the real big pillars of our business, we obviously get everything else around it, right? 7 of the top 20 are now from emerging markets. And it's not just those 7 in the top 20 but we're very proud of the fact that we're actually creating a big pipeline of these heroes coming through.

So we defined GBP 50 million as a sizable scale, GBP 50 million in [ your ] sales, in terms of saying this is becoming a really serious business that needs attention. That number of brands was 11 in 2019, and now it's 23 and the really good thing about this is that, of course, you would expect to see brands from cleaning from jump protection. I spoke about the heritage of these categories. They were always there. But increasingly, we are finding brands from self-care, Finish, Intima. So this is really expanding our presence in emerging markets on the lines of the portfolio that we have everywhere else.

We enjoy leadership positions on most of these brands across the regions. And this is, of course, the great innovation that our category organization delivers, but also local customization, local execution. You're going to see some examples of that and we are very we're very proud of the fact that we've sustained these positions over many years. So we've been accelerating growth. We have some really scaled countries and CMUs and we have market leadership positions.

So this brings us to our plans for the future, where we really believe that this growth is sustainable. We really believe that it can be high single digit in the midterm, creating value. You will see much more of that in Shannon's presentation. And one of the reasons for that confidence is apart from the categories, the brands, the consumers that are evolving here, we have excellent execution in many of our markets, which you will see later.

So broadly, why are we excited about the future in emerging markets? So no surprise to anyone. There are rising incomes, new consumption habits everywhere in emerging markets. And we believe that we more than anybody else have the right portfolio for these evolving consumer needs. So as consumers are coming into new FMCG categories, we are very well positioned with our expertise from Europe and North America. We have strong brands, as you saw, and we have the ready innovation pipeline to lift and shift very quickly from Europe and North America.

So we go in and we know already what we're going to do in the next 3, 4, 5 years, right? We have that. We know that that's available. And then we have industry-leading go-to-market strength in off-line execution. So that's basically traditional trade, where we reach a lot of stores in countries like India, online where we have a fantastic business in China that's industry-leading and actually helping us scale up everywhere else in the world, too, and increasingly OTC.

So roughly 1/3 of our business globally is in OTC, but in emerging markets, it's only half of that. So it's basically a big, big opportunity. But we have a region that's showing us the way, Latin America, and that is, again, excellence that we want to spread everywhere.

I'm going to share some numbers with you that I don't think are going to be a surprise to anyone. By 2030, emerging markets is going to contribute to 50% of world GDP, right? So from 37%, 20 years ago to 50%. And the thing that's really most interesting for us in terms of focus is that the top 7 emerging markets are going to grow at twice the rate of the top 7 developed markets. So E7 versus G7, that's macro that affects everybody. But in our categories, to we will see an increasing share of consumption from emerging markets.

So this year, emerging markets contributed to roughly 40% of all consumption in our categories. In 5 years from now, that will be 43%. And the really interesting fact about this increasing consumption is where it's coming from. So traditionally, in emerging markets, we would look to the box that you see on the left the $10,000 income -- disposable income households that are coming into these categories, we would call them middle class.

The ones on the right, $25,000 that's upper middle class. This is not a luxury upper middle class that we're talking about. We're not talking about people who are buying fantastic cars and things like that. But in the context of the CPG industry, they are the ones that are moving beyond basics to the next level of consumption. And this, I'm pretty sure is one of the reasons why Chris has decided that we are his favorite is because this shift is quite rapid, right?

Basically 20 years ago, the number of such upper middle-class households in North America and Europe were about 150 million more than those in emerging markets. That narrowed down to 70 million 10 years ago. And for the first time last year, we actually have more of these households in emerging markets than we have in Europe and North America combined. And I would say this is probably the single largest fact in terms of where incomes are increasing, that makes us very excited about the potential of our business.

What this does, the fact that we both have these middle class households and these upper middle-class households, it gives us an opportunity to, of course, continue to grow in our mature categories but also to start introducing and growing what we call nascent categories. So some examples, the mature categories are categories that have been around for 25 or 30 years, bar soap, toilet cleaners, condoms, stain removal, that's Vanish, handwash and multipurpose cleaners. Nascent categories, our vitamins business, which was only in the U.S. until about 7 or 8 years ago, is now gaining scale. And in fact, one of the brands is bigger in China than it is in the U.S.

The self-care categories sore throat, gastro, all very, very small categories a few years ago are getting substantial size. And actually, my favorite on this page is intimate hygiene, which for the longest time, brand name Intima in France was a well-respected solid brand, maybe about $15 million to $20 million, we've taken it to China. And over the last 3 or 4 years, we've made it 5x that.

So the potential of taking things that work and then taking them to markets that are actually not just emerging emerged, have many new ways for us to exploit new channels is not just limited by the size of what they were in Europe. We actually believe we can make them even bigger. And like I said, we can launch these categories, but we also know that we have a ready future pipeline, right? So at some stage, 5 or 6 years later, of course, there will be more innovation required, and that's already happening for Europe and North America. But for emerging markets, this pipeline is already available. Example here, Strepsils, which we've launched into emerging markets as a sort throat remedy lozenges. In Europe, we've already extended into cough.

And over the next few years, I'm sure we're going to make it successful, which means that 3 or 4 years down the line in emerging markets, we already have a ready proposition, to extend Strepsils sore throat into Strepsils cough. Another example here, I would say, we're not just limited by the brands that we have in emerging markets. We borrow technologies, new platforms from other brands. Lysol has a great air sanitizer business. This is something also that can travel very quickly into emerging markets.

And as you can imagine, with this the higher-priced innovation, we are able to expand our margins. So for example, the original Dettol brown liquid, if that is basically price per mill index then our latest innovation there is 2.5x that. So this is giving us some pricing power in emerging markets. And along with the mix of self-care and intimate wellness going up, our GM is expanding, and you will see some numbers that are very, very interesting. First ever in my career at least in emerging markets that have seen this kind of expansion on gross margin, you'll see that in Shannon's presentation. So it's all very exciting.

There are lots of opportunities. We have the right brands. We have the right categories, but how do we ensure that we are fully focused on doing what we have to do to get this growth? And our success model is really very, very sharp. We have 3 growth pillars, and we have 3 execution pillars. Our growth pillars are that, of course, we must continue to grow penetration, in the categories that we've been in for many, many years.

I gave you the example of the fact that Harpic [ 0.5 million], [ $250 million], still growing at double digit, lots of runway, developing nascent categories, right? So finish, that is still very small, can be much, much bigger, again, you'll see in Ryan's presentation. But also, there are some countries and I think Chris has referred to this many times as the third pillar of our growth. There are many countries where we have scale.

But equally, there are countries that are getting much bigger on population with lots of GDP growth where we still have a long runway for growth, and we'll speak about that. But we have all of these opportunities. We know how to grow, but what is the differentiating factor between us and anybody else is, I believe, our execution excellence in 3 areas.

Off-line go-to-market excellence. This is really how we reach big number as number of stores in a vast geography. Online, how do we engage with digital shoppers. I'm sure many of you, I don't know when was the last time that you bought grocery actually by physically going into a store versus getting delivered at home. And I can tell you in some of our countries, this is really maybe 50%, 60% of all growth and then, of course, OTC excellence, right?

So the 3 channels we must execute really well, off-line, online and pharmacy. And that kind of reflects our portfolio. So to speak about the first 2, how we consistently drive penetration and how we grow our categories, I'll hand over to Ryan.

Thank you, Nitish and hi to everyone in the room. It's great to see everybody again here today. Last time we were all together, we kind of talked about 3 core buckets of things as we think about growing our category growth and how we manage our portfolio. The first is the strength and quality of the portfolio we have and the power brands that we've discussed today. The second is actually our winning playbook. And the third was how we've restructured our organization in order to ensure we can win today and going into the future.

Nitish talked a little bit already about that portfolio. So we're going to focus today a little bit more on how that winning playbook applies to emerging markets and then how our new operational model help enables that as well. With that, let me start with a quick reminder of what we talked last time on our winning playbook. It all starts with the consumer and having deep, rich consumer understanding.

This has always been at the forefront of how we've built our businesses and grown our brands. We continue to adopt this and continue to invest in it with human interaction with generative AI, but it continues to be in the foreground of that deep consumer understanding. And you'll see that come to life on a market-by-market basis as we talk about a few examples.

The second big thing is around superior innovation, bringing superior products that consumers are willing to pay a premium parts for that deliver against their needs and their desires in that marketplace. Third on this was our iconic brands. We have a fantastic portfolio, but you need to continue to invest in those brands with innovation, with marketing spend, with the right supply chain to an order you can get these to consumers where they need them most. And last but not least is the execution. I'll spend a bit of time talking about the first 3 of these in context of emerging markets and how we really use those to think about driving penetration as well as create new categories.

First, let's talk about continuing penetration in our mature categories, the existing ones today. As you think about this and look at our big markets like our intimate wellness business in China, or our Dettol business in India, Middle East, ASEAN, a lot of those same general metrics of how we focus on the consumer, how we bring innovation, how we build brands is the same.

But sometimes, it requires a deeper understanding and it requires habit change and changing consumers' habits in order to open up their minds to categories and penetration in a different way. Let me first share an example from Nigeria. So if you look at Sub-Saharan Africa, you actually have 150 million STIs, sexually transmitted infections annually. 60% of HIV infections in the world are in sub-Saharan Africa. That's about 25 million people infected with HIV.

Now we and our brands can play a meaningful role in helping societal change, but also helping build business as we look into the future. Unfortunately, there are some common miss there around using antibiotics and other activities that might prevent STIs that are just not true. So a large part of what we started was thinking about how do we communicate in a people's way to help educate help inform them about these situations. But most importantly, is making sure there's products available when and where the consumer needs them and wants them.

So in Nigeria, we created a lower price point pack with a more affordable condo material that enabled us to drive significant change in our overall reach and penetration. You can see over here on the left, the number of stores. So from 2022 to 2025, with the addition of this SKU and enabled us to increase our store penetration by over 50%. That puts products more readily disposable and more readily available for consumers around the world.

If you look at what that means for our brand and we think about the awareness of Durex in Nigeria, it went from 26 million households being aware of us in 2022 to actually 68 million households being aware of us by 2025. So a significant increase in the awareness of the brand. penetration for the brand also more than doubled, going from 2% in 2020 to 5% in 2025 and our overall CAGR over the course of the 10-year horizon there in the market was 33%.

So significant benefit society, significant growth for our brands. It all started with a deep consumer understanding to understand how to help change habits, creating the right innovation and the right pack sizes in order to drive penetration and creating that accessibility when and where they needed it.

Let's flip to a slightly different category, and we'll talk a little bit about Harpic. Now if you guys remember back to our May presentation, you'll remember Pankaj talked about the [ mega watch ] and some of the great progress we've made in [ hygiene ] and the partnerships through that on our Dettol business through hygiene and hand washing in partnerships with governments, local entities, celebrities as well.

If you move over to Harpic, we've also played a significant and meaningful role in this particular business. You may look up there and see the acronym ODF and be wondering what that is. It's open defecation, open defecation. Probably not a phrase you would have thought you would have heard, but it is actually a meaningful society and health impact. When you have a situation like that, you have significant transmission of fecal pathogens, which can lead to diseases such as [ colorat,tifloid ] and other significant illnesses that can dramatically affect populations and impact overall health and well-being.

If you reflect back to 2014, the simple way to think about this is there were about 60% of homes in India that didn't have a toilet in the home. That's 60% of homes didn't have an active toilet in their home. In partnership with local government, with societal engineering over there as well as our brand playing a role in how we communicate and how we talk, we've actually been able to help grow that to 99% of households today. So 99% of households now have a toilet with an access in their home. This comes through meaningful partnerships with local entities but also meaningful comps around consumer change. So let me just share with you a Harpic spot that we can take a look at. Maybe if we can play that, please?

[Presentation]

Okay. So great communication of the ad helps talk about the need within the area, but also the superior benefits that our products bring and the superior cleaning our products bring. In combination with that, similar to the example we shared on our intimate wellness business in Nigeria, you need a product at an affordable price point. So having a proposition below INR 40 and ordered us to change and step change how we were thinking about penetration and reach and availability of our product in store.

You see great growth, if you look at the chart on the far left from the year 2000 to the year 2012, nice steady growth. Since we've engaged in the partnership, a significant acceleration of that. So availability of our overall products is a key meaningful component. This has enabled us to step change a few things. First and foremost, let me start in the middle with penetration.

Going back to 2015 to today, we've more than doubled the household penetration of the brand itself. So going from 13% up to 34% of households today. In addition to that, we've actually improved our equity on removes the toughest stain. The through driving the societal change and speaking about our products benefit to the consumers, the #1 equity driver in the category is about removing the toughest stains. We went from 69% of the population believing Harpic was the best brand at removing stains, up to 82%.

This has led to a net CAGR RAV growth of 12% year-over-year for the last decade for us on Harpic. So 2 great examples of brands, how when we look at meaningful habit change, we can not only provide societal good, but also significantly grow our brands and the categories themselves to even higher levels.

Let's now step in a look at something different, which is actually developing these nascent categories that Nitish talked about earlier in the set. And I'm going to share with you 2 examples, and I think you'll see some others from the different folks speaking as we go forward as well.

I'm going to start first with dishwashing. Now if you rewind back to 2015, there's kind of 2 ways to think about emerging markets and automatic dishwashing detergents. If you look at the penetration across markets like Egypt, Malaysia, China, Vietnam, you'd say, look, these are markets with less than 2% penetration of households of dishwashers. If you don't have a dishwasher, you can't really have a dishwashing detergent. Or the other way to look at it is when you think about that burgeoning middle class, Nitish talked about our upper middle class that Nitish talked about of that 25,000 growing, the sheer size of the handwashing category, this represents a significant opportunity for growth.

So we've been investing in these markets and with the dishwasher manufacturers to help continue to drive the overall installed base of dishwashers. And I'll talk in a slide a little bit about how we do that. But if you take a look at the chart on the far left here, you'll see over the course of the last 10 years, there's actually been 40 million dishwashers added, installed in emerging markets. That's 40 million extra households that become a category increase in size.

Now the most amazing thing is you're starting to get to a tipping point now, and this growth is becoming more exponential. So the projections from folks like Euromonitor are that over the course of just the next 5 years, we'll add another 40 million dishwashers as an installed base in households. When you think about the impact this can have and the materiality of that growing middle class or upper middle class that Nitish talked about earlier, the opportunity is significant.

The good thing is we've been doing this for a while, and we have a model of how to do this well. First and foremost, you can't really have an automatic dishwashing detergent business without automatic dishwashers installed in people's homes. So one of the core things we do is partner with manufacturers around the world. We're actually the #1 brand recommended by automatic dishwashing manufacturers around the globe.

But the interesting thing of how we partner in these regions is slightly different than how we think about it in our developed worlds. The benefit of all of our partnerships is the first time you use your brand-new automatic dishwasher and the partnerships we have, there's [ Finish ] there for you to operate with, detergent as well as [ Renate]. That's fantastic for people who are new to a dishwasher because it establishes the brand as one they trust, but also for people who are new to automatic dishwashing and establishes the brand is the first thing that comes to people's mind. So there's an inherent benefit that we're in all these new bases that are going to be installed.

But secondarily, there's an opportunity to build our equity even further as these markets develop. So what we've done in addition to partnering in the traditional ways, you'd partner with the dishwashing manufacturer of getting our products in and having good relationships and how they're developing machines and how we're developing detergents to match is how we're actively communicating with them in the different markets to both help drive penetration, but also establish the equities that we know will drive our brand now and into the future. If we can maybe play the 2 examples of the finished spots, please.

[Presentation]

So you'll see a lot of similarities with some of our dishwashing advertising in our developed markets. but you'll see some unique components there. Obviously, very relevant household situations and moments as well as relevant foods for the local markets. But in addition to that, you'll see some more tie-ins around time savings, efficiencies and how that can help benefit you. So it helps both serve the need and desire of growing dishwasher penetration, but also establishing our equity as we move forward.

Over the course of the last 10 years, that's driven a net revenue CAGR for us of 14%. When you start to think about this exponential growth of the household penetration of automatic dishwashers in emerging markets, we continue to see significant growth coming on to this business and being an enabler of our total growth for that overall category of household care.

Let me use one last example [ turn ] and talk a bit about our self-care business. As Nitish said, this is one of the big levers we think we have a significant opportunity to grow in emerging markets. There are both material market trends as well as overall health care trends that you see coming through.

First and foremost, diet and obesity. Unfortunately, we continue to see rising issues with weight and obesity in developing markets, the same as we've seen in developed markets. 43% of the population is projected to be overweight. This will lead to issues with things like mobility will lead to more gastroentero, those issues and other health concerns as well. In addition to that, we see a significant amount of urbanization, people moving into cities. So as you think about infectious disease, air quality, other things impacting and affecting overall day-to-day health.

And last but not least, is an aging population. As society, health care systems continue to improve in these markets, you continue to see an older and older population coming through and projected that we'll have about 20% of this population over 65 plus. With that does come, chronic conditions and health care things that you need to make sure you're maintaining and driving against as well as you get older.

The good news for us is over our time in emerging markets and some of what we've learned, we've established a very proven success model of how do we develop our brands and how do we develop these categories in these markets in order to be successful today and into the future. First and foremost, when you bridge beyond kind of typical consumer packaged goods and into health care, into self-care, the health pyramid becomes incredibly important. That's how you interact with governments, policymakers, regulators, health care professionals, key opinion leaders, all in the total pyramid before you get to the consumers.

As part of this, of course, we have very robust plans about how we talk to our health care professionals, how we talk to the government policymakers, regulators about our individual products and the benefits those products provide but we also invest and partner in really great overall partnerships. I'll give you an example of one, which is our global respiratory infections partnership.

This is a collection of leading medical experts, key opinion leaders, academics, microbiologists, talking about upper respiratory infection, which is obviously a big portion of us between our Mucinex businesses, our Strepsils businesses around the world. What you see as part of this is there is a large portion of our overall upper respiratory infections that are actually treated with antibiotics.

Now for those of you that know the science behind that, 8 out of 10 upper respiratory infections, aren't bacterial based. So they do not need or require an antibiotic. The overuse of antibiotics leads the development of super resistant bugs, which is actually today the third leading cause of death in the globe. So as we look at this, it enables us to both partner with these organizations to step change behavior change as well as drive and establish our categories. The second piece then is consumer education, and I'm going to share with you 2 spots around us to talk it through. Can we maybe play the Gaviscon spot first, please?

[Presentation]

So now within this, you'll see some very similar things if you've watched any of our Gaviscon advertising here in the U.K., but you'll also notice some unique differences. A bit more focus on the science of what causes heart burn, where is it coming from and a bit more on the mechanism of action of how we work. Also the introduction of that health care professional at the end of the spot, which is that warming reassurance that this is something health care professionals will recommend.

When you marry that up with the consumers going into their local pharmacies when they do have a sore throat and speaking to their pharmacist or speaking to their general practitioner, they then have the same messaging and share the same point of view on Strepsils, which -- sorry, on Gaviscon, which drives great trial of recommendation.

Let's now take a look at a second one on sore throat from our Mexican office. Now the thing I will share with you beforehand on this one is I talked about this idea of antibiotic overuse and antibiotic resistance. In some of our developing markets around the world, there is a significant over prescription of antibiotics, more so than the developed world.

So really tapping into that and helping people understand this is not necessarily going to have an impact or help your current situation and condition is really critical and important and a key driver for us in our business. So if we can maybe play the Strepsils ad, please.

[Presentation]

So you would have seen in that spot a slightly different approach from the broader context of our Strepsils [ mentions], but the same general end result of people looking to want to try and buy our overall brand there, which is [ granite], which is the local equivalent of Strepsils. The interesting thing you'll see on both of these brands, these are the same underlying technology platforms on Gaviscon, but you see that coming to life as [ Loftogastro ] in Brazil because we have a strong local hero there and [ Loft ].

Same thing with Strepsils. It's our same underlying platform that's enabling us to win in other markets around the world. But because we have a strong local brand in Mexico that can carry it better, it comes under the [ Grandin ] branding.

Last but not least on this is once again really about that idea of making sure we're driving accessibility. And one of the key unlocks for us in OTC, considering the complexity of bringing these out and sometimes the time frame to establish is really making sure we have that model right. So if you take a look on the left-hand side of the screen up in front of you, what you'll see is our focus on mega cities. You'll hear a bit about this in a little bit around the size. And obviously, I just talked about the idea that 80% of the population will live in more urban environments.

But what this enables us to do is 2 things: reach a high amount of population, but also prove out the model before we then expand geographically into other parts. So in Brazil, we actually started our Gaviscon or our [ Lofdaastro ] expansion in just Rio and Sao Paulo. This allowed us to prove out the model of what's needed for health care professionals, what's needed from a consumer investment lens in order to drive the results and the share of results we want to have in market.

You can now see currently, we've expanded it out to other megacities across Brazil and are continuing to grow this business and brand then. The end result of this leads to fantastic results here and now, but also setting us up for future success.

I'll start on the left-hand side. If you look at our emerging markets overall net revenue CAGR over the course of the last 5 years it has been 12% on our OTC business. You start to look at things [indiscernible] and you step in [ Lutagastro], which was launched within the last decade. [indiscernible] is currently the #1 most prescribed brand for upper for heartburn and indigestion remedies in Brazil. That is also now true in Colombia as well, too. In Colombia, comes under Gaviscon. So where we have local heroes, we play those where we don't, we use our Gaviscon brand.

Move over then to [indiscernible], which we saw the ad up there for as well, once again, #1 most prescribed brand by GPs in Mexico. That is now the same thing and it's true also as we think about our Strepsils franchise, which is what the brands carried under in Brazil, and a strong #2 coming and growing in Colombia. So continuing to expand out this piece around the HCP endorsement, strong consumer comms, married up with the right distribution and infrastructure as we move through cities.

Let me finish with a little bit kind of a summary and talk about how we're continuing to leverage that winning playbook in order to make sure we're investing to grow in our emerging markets. First and foremost, R&D centers around the world. I think Nitish mentioned a little bit earlier, we have an opening coming up or maybe it was neck around some of our facilities in China, but we have great R&D facilities in LATAM, Africa, India, China, ASEAN. This is making sure that we have local understanding of needs and able to translate those across and has been something that's been embedded with us for a while.

In addition, with our new operating model, we have taken people that are part of our global category teams and also embedded them into markets and regions, so that they understand the local teams needs the local team's desires and what we need to do to make sure we're winning with the local consumer and can translate that back to the global organizations, developing the projects, developing the innovations that come forward.

The second big piece is continuing to drive superior innovation. One of the ways that we can do this is actually looking at bringing products at the right price points and the right sizes for our consumers, whether that's through Dettol and the powder to liquid opportunity that enables us to get broader depth of distribution, still deliver the great same hygienic benefit of Dettol. Over to Strepsils, once again, getting it in the right size, the right type of packaging in order to maximize our distribution through channels. And then we talked about the [ Direct Nigeria ] story early there.

So both high-quality innovation, we think about some of the trade-up examples we talked, but also the right mix of pricing and sizing as we bring things to market to enable that depth of penetration that provides access to these great products for a wider set of consumers going forward.

And last but not least is this combination of our portfolio. What we really have an amazing blend of in our emerging markets, as Nitish alluded to earlier, is a very strong set of our global power brands. But we also have a host of local heroes that carry some of those power brand innovations as well as enable us to hold meaningful distribution footprints in the markets where they are. With that, I'm going to wrap up and turn it back over to Nitish to focus a bit more on the execution side of it.

Thank you, Ryan. So as you saw, we have 2 very clear pillars, penetration, category expansion. And each of those pillars have very consistent frameworks, exactly the same thing that works over and over again. The thing that really excites me the most is all of those results are double-digit CAGR over a long, long time.

We come to the third growth pillar, which is scaling up the next year of countries. You know that we have many countries operating at scale. We spoke about some of them. But equally, there are many large countries, both in terms of population increase and in terms of GDP growth, where our businesses are not that large. We've focused on 6 Colombia, Nigeria, Kenya, Malaysia, Vietnam and Indonesia as the next opportunities. Our businesses here are beginning to grow but we believe that they can grow much faster. And today, we're going to showcase 2 examples from Africa and from Vietnam.

Starting with Africa where over the next 5 years, there are going to be 100 million more urban consumers. So just the scale of the opportunity in terms of consumers and you saw from Ryan what urbanization does to the kind of categories in which we play, 100 million more, and they're focused mostly in 12 mega cities. So we'll see a video now from Africa, from my colleague [indiscernible] who's the SVP there.

[Presentation]

So by the way, this is one of my favorite regions. I was the Marketing Director here. It's full of opportunity, and I think we're doing really well. The thing that really is very, very interesting here is that Africa is vast. It's -- as you can imagine, I think it's almost like 19 countries and there's opportunity. There are some countries, but we can't go everywhere. So we are focused in these 12 mega cities.

The advantage of doing that, like Ryan mentioned, for the [ LuftaGastro ] example in Brazil, is that we can perfect it. We can know exactly what works before we go any wells, and we would have reached most of these prosperous consumers. We'll move on to Vietnam where we have a 100 million delta population in Africa in Vietnam. There's a 100 million population, but this is the fastest-growing GDP in ASEAN, consistently 8% for the last many years.

So Chris and a few of us, we traveled there recently. And frankly, what we saw gave us even more confidence in our ability to make some of these markets much bigger. We're going to hear from our SVP and ASEAN, Vijay.

[Presentation]

So it sounds that's very ambitious, but we have a small business. So really, in terms of 3x by 2030, it means we should just grow about 20% a year, which we're very confident of doing. And by the way, I hope you saw that there is a little bit of a competition going, somebody wants to be 2x, somebody wants to be 3x, which is very good because we want that ambition to play out.

So we've spoken about our 3 growth pillars and we'll move on now to our 3 execution pillars, right? And again, we may have these brands, these categories we know how to communicate, but unless we can reach our products to consumers in the 3 channels that really make a difference to us. We're not going to win as much as we have the opportunity to. So off-line, online and OTC. We're going to start with off-line and our center of excellence, actually, I would say, our center of brilliance is in India, which has 11 million stores.

So we spoke about the fact that we're available in 10 million stores. Actually, there are 11 million stores in India alone. And I know that sounds quite incredulous given that you have less than 11 million stores in all of Europe put together, but that's what it is.

Off-line is still very, very important, right? So it's a country that's modernizing, it's growing a lot, but a lot of people still shop in these stores and 85% of our sales of any other FMCG company still come from here. So what do you do when you've got so much land mass to cover and so many choices to make, and we have to be precise. And the way that we win in India, as you will see, is that we have very carefully picked the right towns to serve, the right stores to target, once we are in the store, the right assortment to sell and also to make sure that once we have our product in the store, that it looks great.

This is a massive difference from many, many years ago, my first week in the company when I was walking around taking orders with a paper with a paper and a pencil walking to the new post office that we had mailing the order and then the order would come maybe a week or 2 later. And I think that data and technology, as you will see in the India example is a strategic advantage in sales, and we're doing really well in exploiting that. So we're going to head to India and hear from [ Gaurav], who is one of our most experienced leaders.

[Presentation]

A sense of the sheer number of stores and how complicated it can be to cover them, but how using technology, we are very precise. So actually, at the end of the day, we have an experience both for you here, [ Anurag], who is on the video, our sales director in India, will show you how exactly those handhelds work. Every one of our 5,000 people on the street selling products are using that technology every day, they have an action that comes from AI that makes their sales pitch better, their assortment better at their execution better. So please do stop by. That's probably one of the most exciting things that we have in store for you today.

Let's move on to online. So India, the center of brilliance for off-line. China, as you would expect, is the center of brilliance for online. And here, store surprise that 50% of the world's e-commerce is actually in China. So we have to be very good at this if we have to win. But even within e-commerce, platforms are evolving all the time. So what you and I use every day in terms of ordering things, they already call traditional e-commerce, right? And now they're moving on to quick commerce and social commerce.

And social commerce is really an area of advantage that I think we have done very well. We are world class at this, and you will see some examples. Just for perspective, tick talk, which in China's called Douyin, has 800 million monthly active users. So you would say these guys, they're probably just looking at entertainment, that's not true. 50% of them are actually buying our categories on TikTok, and they're spending 2 hours a day on that platform.

With the expertise that we have, we think we are ahead of our competition when it comes to speed of innovation, we are able to launch many new categories and products much quicker. Our content is powerful. It is customized we use that content and the fact that we have these digital conversations all the time for a very fast feedback loop, and we back that with great customer service. So how data and technology drives offline. Similarly, data and technology drives online, and we're going to head to China now to hear from Arjun and Vivian, our team in China.

[Presentation]

So I must say I've visited this facility more than once. And every time I go, I'm like a kid in a candy shop. It is like such incredible learning for us. My favorite quote from this is actually what Vivian said, which is what used to take us months and years now takes us weeks and days. That's the speed of being able to launch new brands to customize them, to make sure that basically your message is correct, and we can do that many times on the same day. This is the other experience booth that we have for you after the event. So the India off-line, India, China online if you like, you can see some live streaming, even though it will be 1 a.m. in China, I think we sell a lot of product even at that time. And Vivian, who was in the video marketing director in China is here to take you through that.

This brings us to our last execution excellence pillar. So we've spoken about off-line trade, online channels and now OTC, right? So OTC, of course, is pharmacy. But as you're going to see, it is also a lot of preparation in terms of regulatory and medical excellence. We're going to head to Latin America which is, for us, the North Star as far as OTC is concerned, I mentioned that for the company, OTC is about 1/3 for emerging markets, it's only 14%, but Latin America is showing us the way it's already at 29%, and a lot of that is because of the work they've done over the last 10 years. We're going to hear from Alison and from Laura, our colleagues in Latin America.

[Presentation]

So that long-term vision that [ Alison ] spoke about, not just Latin America, we're taking it everywhere. And this is a classical example of how we need to work with many other functions to really help grow our business, regulatory, medical is as important in terms of partnership as sales and marketing or category.

So these centers of brilliance, we've got excellence, but I really think that we are setting the standards for ourselves every year to improve the one in India for offline, the one in China for online and the one in Latin America for OTC. The objective from these is to keep on raising the bar not just in terms of what we know internally, but also externally. And I'm pretty sure that some of the examples that you saw are really market-leading in all of those countries.

Once we perfect it, we take it everywhere. I gave you the example of the China playbooks being rolled out in many other parts, starting with ASEAN. So this is really what gives me and my team a lot of confidence in how we're going to keep growing sustainably. We have a lot of penetration opportunity. You saw some examples from Ryan.

We have a lot of new categories that we can quickly roll out. We already have an available pipeline that we can follow with. And then we've got some scalable playbooks that you saw off-line, online and OTC. This is what gives us confidence that we can keep delivering the growth that we have. But how is this growth going to lead to value creation? I'm going to hand over to Shannon, who's going to tell you more about that.

All right. Hello, everyone. Very happy to be here to talk to you about emerging markets and the key role it plays within core Reckitt. I'm going to try and bring us home just to set expectations. I think I only have like 7 or 8 slides. So then we'll get into, I'm sure, the eagerly anticipated Q&A.

There are 3 key things that I want to hit within this section on value creation. The first is I'm going to talk just a tiny bit about the net revenue where Nitish gave all the examples of how we're driving this growth, but hopefully build your confidence in the sustainability of growth and the ability for us to achieve high single-digit growth in emerging markets for years to come.

Second, I'm going to hit on foreign exchange a bit to help you understand how we think about FX and how our teams in market, think about managing through the implications FX has on our business. as we work really hard to make sure that emerging markets growth translates through to the bottom line in earnings. And lastly, I'm going to hit on the profitability of our emerging markets and the role that that's going to play in helping racket deliver our ambition to grow our profits ahead of our net revenue year in and year out.

And so first, thinking about emerging markets net revenue growth. So we have a strong track record of delivering like-for-like growth in emerging markets. If you look at the left of the slide, you'll see that our 5-year CAGR in emerging markets starting in 2019 is high single-digit growth. We've grown at 8%. If you look at the right, what you'll see is that in 2025, clearly, that growth has accelerated. We're almost at 14% growth in 2025. And it's important to note that our net revenue growth in emerging markets in 2025 and our ambition moving forward has been really healthy growth. Roughly 50% of that growth is coming from volume growth in 2025.

Now Nitish walked through a number of examples of what our teams are doing to drive growth across emerging markets. And over the past few quarters, we've consistently talked around the fact that our emerging markets growth has been broad-based growth.

And so I just want to do a quick recap across those regions to remind you what's driving this broad-based growth that we're delivering across emerging markets. So you saw the video in China, where we do expect our current growth rates to moderate but we expect China to remain a strong driver of growth as we continue to roll out power brands and new categories, coupled with that strong online execution that you saw and that Vivian can demonstrate afterwards in the auditorium.

In India, we have world-class execution that's delivering high single-digit growth today, and that's driven by off-line digital capabilities, which will show you some of that in the breakouts as well. In ASEAN, we have significant opportunities with household care and self-care and you saw in the video that we're already the market leader in intimate wellness in Vietnam, and we're really growing our finished business there strongly.

In [indiscernible], we've seen double-digit growth coming from germ protection and intimate wellness. And we see really good growth opportunities as we look forward in that region. Africa, while we've talked about the fact that it's small today, we have strong brand heritages and favorable demographics that give us confidence that this is a strong opportunity. And as you saw in the video, we feel germ protection, intimate wellness and self-care are all big opportunities for our Africa business moving forward. And finally, in Lat Am, you heard us say, it's our OTC North Star. And as we expand growth beyond Brazil and Mexico, and you saw that rollout with Gaviscon into other countries in the video, we're confident in our growth there.

The momentum that we have, the capabilities that we have with our teams on the ground in these markets and the opportunities that we see with small, high-growth markets is what gives us confidence that emerging markets will grow at a high single-digit rate moving forward. We believe this is a growth that we can achieve sustainably and consistently year in and year out. And this high single-digit growth from emerging markets will be underpinning our long-term Core Reckitt addition of growing 4% to 5% each year. And that's the guidance that we shared around 18 months ago when we said that Core Reckitt, we felt had the right portfolio to consistently deliver 4% to 5% top line growth.

So I want to take a second and talk about foreign exchange. I obviously get a lot of questions regularly around how do we make sure emerging markets growth is profitable? How do we make sure it translates to the bottom line. And so we wanted to show you how we manage the impacts of FX in emerging markets. So on the left-hand side of the slide, what you'll see is the past 10-year net revenue growth CAGR at constant FX. And so for emerging markets, over the past 10 years, we've grown at a 6.5% CAGR.

What we've done on the right-hand side of the page has gone back and calculated what's that growth in actual FX. And you can see it's just shy of 5.5%. And so we've had about 100 bps dilution coming from FX volatility over that 10-year period. Now our teams on the ground are really focused on the structural profitability of their businesses and maintaining the structural integrity of their country P&Ls. And they have a lot of levers that they can use to do that.

They look at the sizing and the category mix of their specific portfolios within their markets to make sure that they're maximizing both the revenue and gross margin opportunity. We have an expectation that we aim to price in a very consistent way. And so as we see currency fluctuations and devaluation, our teams are looking at the brand, the strength of brand equities. They're looking at our product performance, they're keeping an eye on maintaining the appropriate consumer value equation, and they're taking consistent pricing.

We actively manage our raw material sourcing as we think about what's happening with FX as well as other manufacturing decisions, and we maintain a consistent hedging policy. And all of these actions are what are allowing us to deliver the results you saw in the prior slide, where it was a relatively minimal dilution coming from foreign exchange top line delivery in emerging markets. It is important to note that we don't run our business with an expectation that within the business year or within a fiscal year that are -- that we will offset foreign exchange fluctuations, but we do have that expectation over the midterm.

Lastly, I just want to talk about the profitability of emerging markets. And so what we've done on this slide is try to lay out how we're actively driving our mix towards high-margin categories. And so what you can see is that self-care and intimate wellness towards the right-hand side of that pink triangle, those are our 2 highest gross margin categories.

And if you look at our results over the past 5 years and what our category mix in emerging markets looks like, what you'll see is we've shifted about 6 points of category mix into those higher gross margin categories of self-care and intimate wellness. And this is a shift that we expect to continue as we look out into the future.

Now over that same time period, our emerging markets, gross margins have expanded by 300 bps and one of the big drivers of this gross margin expansion has been that active shift into higher-margin categories. And hopefully, you saw through Nitish's presentation, the fact that when we look out across the regions of emerging markets and identify where we see opportunity, you saw a lot of that was coming through in self-care and in intimate wellness.

So I've talked about how premiumization and mix is driving gross margin expansion. Now I just want to briefly move down the P&L a bit. When we look at our emerging markets profitability and compare that across our peers, it's good. We have strong profitability in our emerging markets. We've talked about the opportunity I just shared with you on how we think we continue to have gross margin opportunity in emerging markets.

Many of you have heard me talk about our [ Fuel for Growth ] program where we're optimizing our fixed cost structure. And that also applies to emerging markets, and we'll see benefit flow through the P&L to emerging markets from that. And our intention is that this gross margin upside as well as a portion of this fixed cost optimization is going to be used for us to continue to drive top line growth in emerging markets. We see the opportunity there. You're seeing us deliver that growth today, and we expect to be able to reinvest and continue to reinvest to drive that growth sustainably moving forward.

At the same time, if you look at the profitability of our emerging markets versus our developed markets, there's a differential today that we see. And we believe that over time, that differential will start to narrow. And again, that will come from the benefits of margin expansion as well as the benefits of fixed cost optimization. But to be clear, the priority for us today is driving top line growth and reinvesting behind top line growth.

And this ability to continue to narrow that gap and to drive profitability and improve profitability in emerging markets is going to be one of the levers that also helps us to deliver against our group ambition of growing Core Reckitt profits ahead of net revenue, year-end and year out.

And so if I just land there with if there's 3 financial takeaways for you to have from today, the first would be, I hope you leave the room with more confidence than you might have had coming in that emerging markets can continue to deliver high single-digit growth in the years ahead. I hope that you understand our focus is on driving reinvestment and continuing to drive reinvestment to capture that top line growth opportunity that we see across emerging markets. And I hope you understand that we believe we can continue to improve the already strong profitability of our emerging markets business, and that that's going to help Core Reckitt deliver against our financial ambitions of a leveraged P&L, where we're growing our profits ahead of our net revenue. So with that, I'm going to pass back to Nitish to truly close this out.

Very quickly, just going to summarize what you've seen over the last 90 minutes because I think Nick is looking at his watch now. We believe we have very strong foundations. Our emerging markets business is not new. We've been around for many, many decades with trusted brands and with very experienced leadership that has translated into steady acceleration.

You have seen that we've been consistently mid-single-digit through category development and execution excellence and we believe this is sustainable. It is sustainable at the high single-digit growth level that's value creating because we already have all of the scalable playbooks. So I hope that you would have got from this presentation that we have strong, steady, sustainable value-creating growth in emerging markets. Over to you, Nick.

Thank you very much, Nitish. I don't think I need that. So look, we are now going to move into the Q&A section of the presentation. We've got a bit of time for that before we head out to the breakout. We'll just set up the stage. And then joining on the stage will be the 3 presenters you've seen today. So it'd be Nitish, Ryan and Shannon.

We'll start with the questions in the room. And then for those listening online, as I said, there's -- hopefully, you can see the [ Ask Question ] box in the corner of the screen. If you type in questions in there, it will come to me, and I can read it out on the stage and hopefully get some answers from the panel. So with that, let's start.

Right. Let's start from the room. Who wants to -- who will take us off? Guillaume, I saw your hand shoot up first. Just before [indiscernible], name and where your from will be great as well, just for everyone listening.

It's Guillaume Delmas from UBS. Couple of questions for me, please. First on the OTC opportunity in emerging markets. Clearly, LATAM is the most advanced region. Is LatAm more advanced also because of all these local heroes and many of these brands came with the Bristol-Myers Squibb acquisition back in 2013. So for Asia, Africa, Middle East, is there a need to do some bolt-ons? Or you're confident in your ability to drive this OTC opportunity organically?

And then the second question is what this target for emerging markets mean for mature markets, so high single-digit like-for-like. Does it mean low single digit is only what's required and expected for mature markets. And similarly, gross margin-wise, I think at the group level, Shannon, you're not expecting much of an expansion going forward. Yet for emerging markets, I think the scope is for further gross margin improvement. So a bit of a tale of two regions with mature markets maybe only expected low single-digit like-for-like flattish to decline gross margin.

So do you want to start with the?

Yes, I can start with the first one. So of course, the Bristol-Myers Squibb acquisition that gave us all of those brands was a real [ impetus ] for us to start in Latin America 10 years ago. You saw some examples of regulatory preparedness, medical capabilities. But that's also a template that we've taken also increasingly to ASEAN. In ASEAN too, we are seeing very good results. So our contribution there is also in the 20s with our existing brands. We have some local brands also in other geographies. For example, in Africa, we have [ TRANZACT]. In India, we have [ moved]. And we believe that we have lots of organic opportunity. But of course, if there is an acquisition that creates value that we would basically like, we will, of course, consider it seriously.

If I can maybe just build on Nitish's point. I think in LatAm, we acquired a business, I think what that enabled us to do is acquire some capabilities I don't think it's as much the local heroes. They do help, but it's more of the defining capabilities. They've had a longer track record of running that we've implemented into other regions and markets around the world.

If you take a look like Nitish has mentioned, ASEAN, Thailand is actually one of our top 5 Gaviscon markets in the entire world now. So we are able to take those general lessons learned there and applied them to other places. They started with a bigger base, and we're looking to accelerate and grow in the other places.

Shannon, guidance.

Okay. So guidance, I'll start with net revenue, then I'll hit gross margin, and let me know if I don't get there for you. Again, Core Reckitt, [ 4 to 5], we've been consistent in communicating that. I think Chris and I have also tried to be really clear. Our goal is to set guidance that we can achieve. And so we believe that 4% to 5% is what this portfolio can deliver consistently year in and year out.

Obviously, you all can do the math on if emerging markets is 40% of our business. And if we are going to deliver high single-digit growth in emerging markets, you can back into what that might mean for developed markets. We haven't shared a specific range, but I think that what you've seen this year is that outsized growth has been coming from emerging markets and we got developed markets growing in the back half.

We certainly believe there's lots of growth opportunity in developed markets in all 4 of these categories. And so I don't know that I would provide specific guidance for developed markets, but we're very optimistic with our ability to continue growing those as well.

From a margin standpoint, what I've said is that in the near term, so the next -- I think I've sort of used 1 to 3 years, not providing guidance around expanding our gross margins. But that's primarily driven by the fact that we've also been really clear that we believe there's a lot of opportunity to spend at the upper end of our CapEx range. as we continue to be focused on investing in our supply chain, building the resiliency of our manufacturing footprint. And obviously, as that investment increases, it will come back through and have an impact on margin.

I do believe when you get out sort of beyond that range, we should be expanding our gross margins because lots of those investments are going to provide productivity improvements, and we'll see those benefits ultimately flow through the bottom line. So I'm not in any way trying to guide on contracting gross margins anywhere else again, I would think of it as generally in the next few years holding. We're sort of industry-leading, sector leading in the low 60s. We're very comfortable with that, but we want to continue to make smart investments.

[indiscernible] at Barclays. I've got a couple as well. The first one, was that preempting what we're going to see outside, I'd love to hear a little bit more about the live streaming economics. How many people watch these live streams? What kind of sort of -- maybe just one is the outside, but kind of the click-through of that because it seems like that's a real differentiating reason why you're doing so well in China currently. Just trying to understand how it works in practice and how differentiated is it? Is it something that can be taken to other ASEAN countries? Or is something quite unique for China? That's the first one.

And then secondly, one for Shannon. On the margins, again, you said that the emerging market margins would narrow the gap over time with developed market margins. I think the gap is about 1,000 basis points at the moment. Without sort of being specific, when you invest in places like Africa, I'd imagine that that's quite margin dilutive. Does it need to go down a little bit first because you're investing in some of these new countries before it goes up? Or does it go up, notwithstanding the investment that you're going to be making?

And then just a housekeeping, you talked about high single digit in emerging markets. Can you just confirm that's also your ambition for 2026 as well?

I can go first. Yes. So actually, it was on one of the slides in my presentation. So a lot of people to answer your question, watch live stream, right? So 800 million just on that one platform, which is TikTok up. And of course, you would expect that a lot of that is content that's around entertainment, but 400 million of those people are actually buying CPG categories, right? So that's a lot of people, 400 million.

It's not limited only to China. We're seeing live streaming, social commerce also getting some momentum in ASEAN. The difference is, of course, that in China, we have 1 country, we can address all of these people together. In ASEAN, we have many small countries. And therefore, what we're doing is we're consolidating our live streaming expertise in one location and then spreading it from there the other countries. So in Malaysia, we have a live streaming center, which live streams into all the other countries. The platforms are common and the content can also be quite common made with some changes in language. So China is big and ASEAN is getting bigger.

Okay. So it was -- the first question was on the profitability. Second was on emerging markets top line for '26. So profitability, you're right, it's about 1,000 bps differential. I expect that, that will narrow over time, although I've talked before around the fact that it's not in a situation where we internally have a target that says by 2035, this is what it will be.

I think that for us, we continue to see a lot of opportunities to be reinvesting to drive top line growth. And so that is more the priority right now versus trying to drive a sudden improvement or narrow that gap immediately. I don't expect because I think the beauty of our emerging markets portfolio is it's so large and there are so many different regions at different stages of development that I don't think I would make an assumption that as we want to invest in Africa or in Indonesia, it means that you would see an impact on the area from a profitability standpoint.

I think we have plenty of levers to be able to manage that over time. Then I think Nick would tell me, I'm not giving 2026 guidance today for top line. I've been very well trained.

Who wants to go next? Sarah.

Sarah Simon from Morgan Stanley. Can you talk a bit about quick commerce? Because obviously, that's another thing that's growing extremely fast. We have a bit of it here, but it's much bigger out in some of those markets. And what are the economics on that like?

Yes. So actually, yes, quick commerce is growing very fast. And I would say we have some very good partners across the world. So in Latin America, we work with [ Rappi, with Mercado Libre ] in India. We've got [ Zepto]. We've got [ Instamart ] in China, too, there is a big quick commerce player called [ MET]. Also in some of the smaller countries, as far as our business is concerned, in the Middle East, [ Talabat].

I would say it's more of a game changer in the countries where e-commerce has hit a block and not grow at more than -- not gone to more than 14% or 15% of the business. quick commerce is unlocking a lot more shift into online in those countries. We're growing very well in all of those countries with quick commerce partners.

[Operator Instructions]. I had a question coming from [ Carol at Kepler]. And just on this topic, you asked [indiscernible] leveraging the quick commerce boom in India. So can you talk a little bit about that specifically?

Yes. I just said. So in India, for example, our -- I mean when I was there 10, 12 years ago, e-commerce was less than 1% of our business total. It went up from 1 to about 7 or 8, and then it went to 10, it got stuck. Quick Commerce has actually enabled that to go up to about 15%. So the partners that I mentioned, [indiscernible], we work proactively with all of them. They're also great platforms for us to introduce new brands.

Edward Lewis from Rothschild & Co Redburn. Just a couple of questions. Firstly, just the competitive dynamic in emerging markets, how that's faring? If it's local players, how they're picking up their act, I guess, or just sort of the global players you see, I guess, probably more in the Europe and the U.S.?

And then I guess we've had changes in the organizational level. You touched them on a bit, but it seems as though your business benefited probably more than, say, some of the other businesses from the way in which you reorganize the business. So perhaps if you could just talk about the benefits you've seen from that.

Yes. Sorry, what was the first question?

Just in terms of competition.

Competitive, yes. Yes. So yes, I mean, competition exists everywhere. And I would say that, of course, we have all the global players that you see in Europe and North America also in emerging markets. Local competition in terms of the quality of their brands, the innovation are definitely getting much better. And clearly, we have to make sure that our innovation is addressing what they might be kind of leading in terms of insights.

So Ryan spoke about how we have R&D centers of excellence not just in Europe and North America, but in many of these countries to be very close to the ground in terms of what these brands are doing. Then I would say the trust of the local brands versus our brands, we've been in these countries for many, many years. We have equally strong consumer engagement, and we are able to compete very effectively. And that was --

There was another --

There was another one, actually, [indiscernible].

Organizations change.

Organization -- yes, absolutely. Apart from what Chris said about maybe us being as favorites. We have gained a lot of advantage to the new organization. For the simple reason that everything that we do is now scaled together in all of these countries instead of being divided between hygiene and health GBUs.

So when we go to one of these countries and we try something new, we get the scale, we're not split. India, as an example, our direct reach combined is more than what the sum of the individual reaches were when we had the business units. And clearly, we benefit also from the fact that [indiscernible] partners with us very well in terms of recognizing what emerging market needs are. So yes.

Tom, I see your hand go next.

Tom Sykes from Deutsche Bank. Just going back to the margin differentials. Could you say something about the gross margin difference between your DM and EM business? Because it sounds like from what you're saying on CapEx, you're quite well depreciated. And obviously, if your operating margin has that much difference than potentially your pricing points were a little bit different on similar products, maybe DM versus EM? So just be quite interested in that, please.

And then when you think about the degree of investment that would be required and your comments about stepping up CapEx, do you think your cash flow would grow at the same rate as your profitability in EMs? And when we look at the remuneration of your EM managers, is that in local currency or hard currency, please?

Just thinking back to what was the first question. All right. The first question was around gross margins for -- across the areas. So we actually don't disclose our gross margin rates across the 3 different areas. I think Chris has shared in the past that we've made a lot of progress on narrowing that gap where historically, there had been a pretty significant differential, but I think that's about what I would share there.

Your next question was on -- was it CapEx next and cash flow? So CapEx, we want to spend at the top of the 3% to 4%. The 3% to 4% is a Core Reckitt or actually a group figure. But again, we don't break out that by area. And so we're not changing the guidance on CapEx. We've been at 3% to 4%, at least since I've been here, and I think before I came.

What we are doing is emphasizing more that we want to reach towards that top end. And I don't believe that on an ongoing basis, that would have a significant impact as we think through cash flow and what that has looked like historically? And then the last one was on remuneration of emerging markets leaders.

Yes, I can answer that. So for most of the emerging markets, teams, it's in local currency, but some leaders are in hard currency.

Who wants to go next? [Operator Instructions]. Do you have one? [indiscernible].

This is [ Niko, Columbia Threadneedle]. Previously, you've spoken to channel shifts and market share trends in condoms in China and well done on that execution. But I was just wondering, is there actually more sex going on in China? What's actually happening to the overall market that's driving this -- what looks like growth because I understood actually that some segments aren't having as much sex?

Ryan, I think that's a consumer question.

We can certainly follow up with you on the specifics of the consumer habits. I don't think there's a massive increase in the number of occasions. I think we have significantly increased our share of those occasions, and it's really through delivering superior propositions. So if you think about some of our new innovations like a [ hydrolytic acid ] as a core lubricants on our [indiscernible] condoms in the market there, create a meaningfully better benefit and better experience for consumers on that front.

Same thing with some of our performance-based condoms, which are all about enhancing the performance experience. So I don't believe there's a net underlying habitual increase in a number of occasions. But I do believe -- I know for sure, our share is growing within the mix of the occasions that are presented.

[indiscernible] Intelligence. Just going back to the quick commerce question, if a topic, if I may. A lot of those players are actually still quite unprofitable also if you could share some insights in terms of what's the promotional investment effort that is needed in those markets to sustain the growth, but also eventually to translate that into a better gross margin improvement over time.

And then in terms of Latin America, I believe the pharmacy channel is still quite important. Just if you could shed a bit more light in terms of how Reckitt is doing in that particular channel and partners also in terms of the pricing power of your brands?

Yes. So on quick commerce, there's no significant difference in, let's say, our margins with trade. We invest when we see an opportunity to create growth and wherever we find partners that are really driving these categories, we invest more.

Pharmacy is actually, you're right, very, very big in Latin America. In fact, you saw a lot of that in one of the videos in terms of how we really have expertise in that channel. Again, we have very significant partnerships. We have a big medical sales force. So in most of these countries, we will have people calling directly in the pharmacies. In Brazil, we have about 65 people. In Mexico, we have over 100 people. So yes, it's a big part of our focus in terms of sales excellence.

I think to build on what Nitish said is we talk health care professionals or HCPs, a pharmacist is a core point of entry for sure across most of our markets, and that holds true in Latin America as well that Nitish talked about, our sales force investment. And when you marry that up with this idea of kind of that mega city approach and this idea of then prove and scale, that's what's really enabled us to do this effectively and profitably while still continuing to grow our brands and our businesses in those markets.

It's [ Eddy Hargreaves from Investec Investment Management]. Just a quick one with the speed of the world and the agility that you need to satisfy customers and with the quick ordering on e-com and whatever. I imagine this has some implications for your inventory levels. Do you find that more difficult to manage? Do you need a higher safety stock than you used to have? Does it have any other implications?

I can take it. No, there is no significant inventory reduction increase that is required. In fact, there are some advantages of this model which is, for example, when we launch a new brand or a new category, we don't have to fill the pipeline, as you can imagine, with many stores and then 1 level below. We order smaller quantities. We see whether the launch is working. And if it is, then we scale up. And if it's not, then we would not have ordered the kind of inventory that normally we would have. So for the most part, actually, it's an advantage.

We have another one online then. Let's just come through from [indiscernible], BMP as of a glass half full. If you had some trade spend issues in the Middle East in early 2024, what changes, if any, were made across the broader EM business following that? And then secondly, if you had GBP 10 to invest in emerging markets, where would you put it? So do you want to start?

I can do the first one. And [indiscernible] do you want to do where would you put the money. So the question is what changes did we make coming out of the Middle East at the end of 2023? I mean, I'd say, first of all, we did a significant review of thinking through what other markets might look like a Middle East market where we have those issues to understand and go in and check to confirm that we, in fact, didn't have issues.

We then obviously spent a lot of time doing a deep dive with the team in the Middle East to understand exactly what controls might have broken down or what went wrong that would have allowed that kind of issue to happen, put together a playbook of how do we address those issues specifically in the Middle East, but then how do we roll that out across not only, frankly, emerging markets, but all of our markets to make sure that we would not find ourselves in that sort of situation again and that we would have made systemic fixes to ensure that we couldn't have similar trade spend issues going forward.

GBP 10.

Well, I was hoping there would be more than GBP 10, but if there was only GBP 10, I would say that we have 3 very clear growth pillars. You saw that. So we're talking about more penetration, new categories, new geographies. I would be most excited about the new categories, right? So the new categories is really where the potential is to get many more consumers in. There's premiumization. So if it was only GBP 10, first priority would be new categories.

More from the room? Guillaume.

A couple of very quick follow-ups. Just to follow up actually on the last question. What's the split between mature categories and nascent categories in emerging markets today and how it compares to North America or Europe? And would it be fair to assume that nascent categories command higher gross margin relative to mature ones?

And the second question is on the third pillar, the next 6 countries. How big are they today as a potential of core record cells? And as you're doubling down on them, which line of the P&L should be the most affected? Is it distribution cost? Is it I -- any light you can share on that would be helpful.

Yes. Actually Sharon had a slide about the nascent category. So most of the nascent categories are in intimate wellness in self-care. And to that, I would add Finish. So yes, they are definitely higher gross margin than the household care and germ protection categories.

And your second question is the 6 countries. So again, we don't disclose numbers by country, but they are -- let's just say, you heard some of the numbers in terms of how they could double and triple. So they're very small, and we expect them to grow at least at 15% to 20% a year.

We'll go to [ Oren ] first and then we can go to Tom.

Yes. So a question for Nitish. Can you talk a little bit about how many people report to you or the structure below you? Because you're Head of Emerging Markets, but I noticed, for example, [ Arjun], who was Head of China, I think is now Head of North Asia and China. So it looks like the people below again expanded roles. And how does the reporting structure, how has it changed? And what does it mean in terms of the organization in terms of the organizational change of having a single head of emerging markets in terms of that being an unlock? I'd love to hear your perspective on that.

So we have 6 regions, like I said. So Greater China, North Asia is one. That's [ Arjun], who you mentioned. We have South Asia, which is India, Srilanka. That's another one of the regions. [indiscernible], you saw him in one of the videos. Then we have Latin America. We have Africa, we have Middle East, North Africa, Russia and Pakistan and what am I missing, ASEAN, right, ASEAN. So those are the 6 regions that report to me. Of course, they have countries reporting into them.

The span of control for most of these people will be not more than 1 big country and maybe 2 other countries to make sure that they are managed with adequate focus. The only exception to that is ASEAN, which is quite fragmented. I think the change in the organization, frankly, is that all of these businesses have got consolidated into 1 business unit instead of 2. So in many of these countries, we would have had split ownership of the P&L between health and hygiene. And with all of that coming under one leader, obviously, things move much faster. Decisions are I think more on the basis of P&L than just allocation in BUs. So it's really working well. And actually, I'm very happy with the new organization.

I think another benefit is, I mean, you also have reporting to you functional leaders, right? So a Head of Finance, Head of Supply, Head of HR. And so if you think back to when we were run by [ GBUs], I mean, I've talked a fair amount in investor meetings around it's probably hard to believe that an emerging market issue or opportunity was ever quite top of the list for a President of Health or President of Hygiene. But now there's a leadership team that you're only focused on emerging markets. And so it's just that ability to move quickly because of that senior management focus.

Okay. Given time, I think we'll do Tom, and then we get outside to the break house.

So keep it quick. Just, I guess, share gains aren't necessarily what you're about when the markets are growing so quickly. But could you just say something about the competition and the competitive nature in the markets you're operating in? And do you expect that the [ BEI ] spend over time as a proportion of sales would have to go up as those markets mature. Obviously, there's a gross margin opportunity that goes along with that as well. But just something about the competitive intensity within the biggest markets or CMUs particularly that you're operating in, please?

I can do the -- so I would say that in our larger markets, so India, China, Brazil, Mexico, it's always been equally competitive, right? I mean there's really not been a time when we would say competition is not serious or is not innovating at the same rate as us. Some of the innovation that some of the competitiveness that we see is more at the B brand level, right, which is basically a lot of brands that get into these categories that we have created with pricing that is lower.

But generally, the quality is so [ poor ] that consumers really don't prefer those brands, and that's what we are focused on, make sure that our quality remains very high. Our availability remains very high. I think Ryan had a really cool example of how pricing really helps drive much more access. So not any major change in competitive intensity.

We also have the same so the 60% target that we've shared for Core Reckitt for CMUs holding and gaining share. I mean we're shooting for that same level of excellence and growth in emerging markets as we would be in developed markets, just to your initial question.

Nick, I just wanted to add one thing. We haven't spoken a lot about our supply chain today, but there were some questions about CapEx. And obviously, when we're growing at this level, we're going to need to invest CapEx in this business too. So we're going to look to run at that high end of 3% to 4% range that Shannon talked about. There's actually a fair amount of CapEx needed to enable this growth whether it's R&D centers, which we're investing in, whether it's manufacturing sites and just capacity. So I just wanted to sort of round that out. Our Chief Supply Officer, [ Harold ] is not here today, but he would have talked about that. So that's another important element to the plan.

Well, we are out of time. We've just gone over, and we've got the breakout that we want to get to. So look, firstly, just thank you very much, Ryan. Shannon and of course, Nitish for the presentations today. I hope -- my 2 takeaways. One is that everyone leaves as excited as we are about the opportunities we see across emerging markets. They are -- there's a lot of them, and I hope you've taken that away with you.

And that, that leads the confidence that we have around being able to deliver high single-digit growth across emerging markets consistently and sustainably from here. As I said, please don't dash off there's something on India, something on China, which I think, and I hope you'll find it really informative, useful and educational. So please stop by and chat to the teams on that. If you have any questions, I'll be around, the team will be around. We're available and ready to continue engaging and look, thank you very much for coming along. I hope you've enjoyed. I hope you continue to enjoy it. And happy holidays, everybody, and we'll speak to everybody soon.

Good morning, everybody, and welcome to Reckitt's Q3 trading update. I'm here with our CEO, Kris Licht, and our CFO, Shannon Eisenhardt, who will take you through some prepared remarks and then we will take your questions.

Before we start, I would like to draw your attention to the usual disclaimer in respect to forward-looking statements contained on Page 7 of our results statement published this morning. And with that said, I'll hand over to Kris to start the call.

Thank you, Nick, and good morning, everyone. We have delivered another quarter of strong execution and performance with our third quarter results in line with our expectations, keeping us on track to meet our full -- our upgraded full year guidance we provided in July. Core Reckitt delivered 6.7% like-for-like net revenue growth with sequential volume improvement to 3.4% and a well-balanced algorithm with positive price/mix contributing 3.3%. This progress is being driven by the strength of our 11 Powerbrands, which -- with benefits coming from ongoing investment in premiumization and brand equity, innovation and new category creation and continuously improving in-market execution.

Core Reckitt's year-to-date like-for-like net revenue performance now stands at 5%. As expected, our developed markets businesses in Europe and North America returned to growth during the quarter in what remains a challenging trading and consumer environment. Volumes improved sequentially in Europe, led by nonseasonal Self Care and Intimate Wellness, and we delivered ahead of category growth rates in North America with a strong performance driven by Lysol, while seasonal OTC had a softer quarter.

Emerging Markets had another standout performance, growing 15.5% in the quarter. This reflects broad-based growth across all categories, double-digit growth in a number of smaller but high potential markets, such as Indonesia, Malaysia and Colombia, and continued strong in-market performance in India and China.

Let me now talk a little bit more about China, a market where we have delivered 9 consecutive quarters of double-digit growth. This consistent outperformance is driven by the following: First, we are focused on consumer health at a time when the Chinese consumer is very engaged and knowledgeable around that space. Second, we really know our consumer, and we've invested behind that knowledge with brands and claims that resonate. Third, our track record of innovation is very strong. And last, we know how to launch new brands and grow them, a great example of being Intima, where we have doubled net revenue this year.

Our strong in-market execution underpins all of this. Our focus on e-commerce allows us to engage directly with the consumer so that we can test and learn with new products very quickly. We are celebrating 30 years in China. Our foundations are strong. Our team is executing at a high level. Given all of this, I am not surprised by this performance, and I believe China will continue to be a very meaningful growth engine for Core Reckitt going forward. We're looking forward to sharing more with you about our businesses in China and India as well as some of our high potential markets across the area at our Reckitt's Focus on Emerging Markets event on December 4.

For the group, we delivered like-for-like net revenue growth of 7% in the quarter, driven by Core Reckitt and Mead Johnson Nutrition, which was up 22%, cycling its most impacted quarter following the Mount Vernon tornado. This was marginally offset by a 4.9% decline in Essential Home, where we remain on track to complete our announced divestment by the end of the year. Overall, we are continuing to execute our plan and make progress against our strategy, delivering results from our sharpened operating structure and enhanced focus on our power brands.

Let me now pass you to Shannon to take you through our group and segment performance in Q3 and the drivers behind it.

Thank you, Kris, and good morning. In Q3, we delivered like-for-like net revenue growth of 7% across the group, taking our 2025 year-to-date performance up to 3.3%. Within Core Reckitt Q3 like-for-like net revenue growth was 6.7%, taking our year-to-date performance to 5%. As expected, all three of our areas were in growth in Q3. This was led by Emerging Markets with like-for-like net revenue growth, up 15.5%, delivering balanced growth with 7.4% volume growth and 8.1% price/mix.

As Kris highlighted, China's continued strength has been driven by our executional excellence with share gains across key power brands in Intimate Wellness and Germ Protection as well as a strong performance in the VMS segment of Self Care. India grew low single digit in the quarter with the change to GST resulting in a shift of trade orders to Q4. Sell-out remains strong and year-to-date, our like-for-like net revenue growth in India remains at high single digits.

Performance was mixed across our LatAm business in Q3 with a challenging consumer environment in Brazil, impacting growth across Self Care and Intimate Wellness while we delivered encouraging growth across all categories in Mexico.

Now moving to our developed markets. In Europe, market-wide category growth was broadly flat in the quarter. Against this backdrop, Europe delivered 0.8% like-for-like net revenue growth with volumes at minus 0.5% and price/mix of 1.3%. The area continues to deliver sequential improvement in volumes, up from minus 4.7% in Q1 and minus 1.9% in Q2. We continue to drive premiumization and innovation contributing to positive mix. The launch of Durex Intensity across a number of markets has driven strong growth for us across the category, already delivering high rankings on Amazon, and high single-digit market share across the total condom category in France. We're continuing to launch into more markets through Q4.

Despite some softness in seasonal Self Care, nonseasonal OTC performed strongly, driven by the continued success of Gaviscon as well as benefits from the launch of Nurofen mini liquid capsules during the year.

Moving to North America, where revenue growth of 2.3% and price/mix of minus 1% delivered like-for-like net sales growth of 1.3%. Growth in North America was driven by our nonseasonal brands, which delivered mid-single-digit like-for-like growth in Q3. Lysol delivered high single-digit growth across its broadened portfolio including laundry and air sanitizers as well as core disinfection. Finish performance was resilient. And within nonseasonal Self Care, Neuriva delivered a good performance. Our seasonal Self Care OTC brands declined mid-single digits in the context of double-digit category declines across the market. This was a function of lapping a COVID spike in Q3 of 2024.

While we expect the challenging growth environment in our developed markets to continue, we will benefit from ongoing innovation launches and our premiumization strategy across our Powerbrands.

Now moving on to our global categories. Across Self Care, seasonal OTC brands declined low single digits, predominantly in North America, as already mentioned. Excluding seasonal OTC, Self Care delivered 12.3% like-for-like net revenue growth in Q3, led by strong growth in our VMS portfolio, particularly in China, and this was supported by Gaviscon and Nurofen performance in Europe. For the category as a whole, we delivered 5.6% like-for-like growth in Q3.

Germ Protection delivered 9.2% like-for-like net revenue growth, led by double-digit growth in Dettol as the brand benefited from new innovations and go-to-market excellence across our Emerging Markets. Lysol delivered volume-led high single-digit growth in North America, and Harpic showed strong performance in Emerging Markets, while in Europe, growth was tempered by the more challenging environment.

Household Care was resilient in Q3, growing 0.2% on a like-for-like basis. Finish grew low single digits, benefiting from our continued category penetration in Emerging Markets, alongside our premiumization strategy. Vanish delivered growth in Emerging Markets, offset by a mid-single-digit decline in Europe.

Our Intimate Wellness category continued to deliver very strong growth with like-for-like net revenues up 13.5% in Q3. Alongside Durex Intensity in Europe, we're driving share gains across Emerging Markets, led by China with our upgraded lubricants and benzocaine condoms. Veet delivered double-digit growth in emerging markets with mid-single-digit growth across Europe. And Intima continues to perform very strongly in China, with the brand more than doubling net revenue in 2025 on a like-for-like basis.

Turning to our noncore segment. Mead Johnson Nutrition grew like-for-like net revenue 22% with a volume increase of 12.4% and price/mix of 9.6%. As you'll recall, the prior year comparative net revenue was significantly impacted by the Mount Vernon tornado, which destroyed Mead Johnson's primary U.S. warehouse in July of 2024. The business is returning to a more normalized underlying growth and has now regained its market share leadership in North America. Outside of North America, the international business grew low single digit in the quarter.

Essential Home's like-for-like net revenue was down 4.9% in Q3, reflecting volume growth of 0.6% and a price/mix impact of negative 5.5%. The European business is delivering as expected. However, Essential Home's performance continues to be significantly impacted by a tough Brazil pest season comp as well as continued underperformance in U.S. Air Care. We now expect Essential Home like-for-like net revenue to decline mid-single digits for full year 2025.

Turning to our share buyback, where alongside our half 1 results in July, we announced another GBP 1 billion program, which began on the 28th of July. As of this morning, you'll see we've completed the first GBP 250 million tranche of this program.

Finally, turning to guidance. We maintain our fiscal year '25 outlook, which we upgraded in July. We expect group like-for-like net revenue growth of plus 3% to plus 4% and in Core Reckitt, we expect to target above 4% net revenue like-for-like growth for the year. Our Fuel for Growth program is expected to help drive adjusted operating profit ahead of net revenue growth and we expect to deliver another year of adjusted diluted EPS growth.

With that, let me hand it back to Kris to wrap up.

Thanks, Shannon. Let me briefly summarize the key messages from the call this morning. Number one, we're executing on our plan and progressing against our strategic objectives. Number two, the enhanced focus on Core Reckitt and improvement in in-market execution is delivering meaningful results. And three, our ongoing investment in innovation, premiumization and brand equity continues to strengthen our power brands. We still have more work to do, but we have made great progress this year, and we are confident in delivering our objectives.

Let me stop there, and we are very happy to take your questions.

[Operator Instructions] We'll take our first question from the line of Guillaume Delmas from UBS.

First, very quick housekeeping. Would it be fair to assume that the short-term disruption in India, which is linked to the GST change, that shaved off roughly 50 basis points of your like-for-like sales growth in Q3? I mean, just the difference between low single-digit like-for-like and high single-digit like-for-like in India gets me to 50 basis points. So just a rough quantification of this would be helpful.

And then my two questions. So first, on seasonal OTC because I think it's the fourth consecutive quarter, seasonal OTC is shaving off more than 150 basis points of Core Reckitt like-for-like. So my question here is, do you think there's an issue with your seasonal OTC portfolio, I mean above and beyond just the persistently soft category growth? Or do you actually see the glass being half full, I guess, and think that this is a very nice basis of comparison for the next 12 months, assuming a normal incidence of cough and cold?

And then second question on Europe. I mean, Shannon, you did mention a particularly challenging pricing environment, I think, in Household Care and Germ Protection. Wondering here if this is mostly retailer led, so just the usual tough negotiations, threats of delisting or whether you think it's more consumer-led, consumers trading down or buying more on promo? And I guess, do you see this as a temporary headwind or something a little bit more structural?

Thanks, Guillaume. I'm going to start with your question 2 and 3, I think. So seasonal OTC, look, if you take a longer-term view, this is a great business. We have leading brands. We have seen great performance from them. We have a track record of successful innovation. We have really good innovation in the market. We have more coming. So I feel a high comfort level with our seasonal OTC business. And I think we'll see good performance from it. As you say, when -- it's always a function of what we're doing in the market, but importantly, what we're lapping and so this quarter, as we discussed, there was a COVID bump in the summer last year, and that did affect us a little bit in terms of what we're lapping.

But it really doesn't speak to underlying strength of the business. I don't think there's any structural issues. I think it's purely a function of the strength of the season, and we'll know more about that as we get into this next season. So that's probably hit on seasonal OTC.

On Europe, it is a tough trading environment in Europe. As you know, the consumer is feeling some pressure. Consumer confidence is not high. I think European retailers are always focused on providing good value to shoppers and I don't see anything really changing in how they're operating. But I think they're responding to a consumer that's really feeling some pressure and is displaying some value-seeking behavior.

And so that's why our categories are flattish in Europe, and that's obviously not an ideal place to be. I don't think it's necessarily permanent. I don't think it's structural to your question. I think it's reflective of the fact that we are in a moment where consumers are uncertain. We have come out of a very inflationary period and now consumers are looking to catch up to that inflationary pressure that passed through the whole industry and the economy. And so I think that's why we are where we are. I don't think it's permanent. And hopefully, we see some stronger growth returning in Europe in the coming years. I think on India, I'll hand it to you, Shannon.

Okay, thanks. Guillaume, on the GST impact, I don't think my math would line up with 50 bps. We've talked about the impact in Q3 of GST phasing being low to mid-single digits and that our India like-for-like was low single digit in Q3. I think I would just anchor on that in year-to-date, India has delivered high single-digit growth, and we expect this to simply be phasing. So we expect India to continue contributing in that way going forward.

Your next question comes from the line of Warren Ackerman from Barclays.

It's Warren here at Barclays. Two questions as well. Firstly, on the guidance, you've done 5% on Core Reckitt at the 9 months. Your guidance is above 4%, and obviously, anything could be above 4%, but you chose not to raise the guidance despite the big beat in Q3. Is there any reason you're being cautious on Q4 other than comps? Or is it just conservatism? Can you maybe sort of just elaborate if there's any moving pieces that you'd like to call out for the fourth quarter?

And then one for, I guess, Kris. Thank you for the color, Kris, on China. I was wondering whether you can maybe dive a little bit deeper. Why is the consumer so engaged in consumer health at this stage? And what are you seeing in terms of kind of category growth? How much has that accelerated? What's happening in market share terms in China? What you're seeing on the ground? Any color to give us sort of confidence that this, because it looks like on my numbers, China growth is probably over 30%. I know you can't comment, but just given it's 15% on EM, and we know about India and Brazil.

So it looks super, super strong on China. So if you can just maybe clarify on that. And then one quick housekeeping. Just on the negative pricing in the U.S. Shannon, is that just related to the seasonal piece being down mid-single digit? Or is there anything else you'd call out on U.S. pricing?

Great. I'll hit guidance, and I can do your quick housekeeping question and then pass to Kris for China. So on guidance, I would start with that we're really pleased with Core Reckitt's performance year-to-date. If you look at the robustness of that growth, we have -- all four categories are in positive territory for volume and for price. We have volume momentum across all of our geographies, and that 6.7% Q3 Core Reckitt growth is very balanced across volume and price.

As we look to Q4, as we discussed in our comments, developed markets we expect will remain challenging. When we look at the category growth rates we're seeing, we see Europe roughly flat. We see low single-digit category growth in North America. From an Emerging Markets standpoint, we expect Emerging Markets will continue to deliver outsized growth, and we do have a tougher comp in EM in Q4. So when we were thinking about our guidance, we're happy with the current guidance of above 4% for the core. We believe it's inclusive of a range of potential outcomes.

From a negative pricing in the U.S., yes, that's really the impact we see from the mix across seasonal versus the rest of our business in North America. And then I'll just hand over to Kris around China.

Yes. Thanks for the question, Warren. So I mentioned, we've been successful in China for quite a long time. Our performance is indeed accelerating. And it is genuinely outperformance, and it's been that way now for several quarters in a row. I think one thing that's important to note is that the Chinese consumer is a really well informed consumer and we see a lot of segments of Chinese consumers that are very engaged in health. And that's actually not a new thing. That's been the case for quite a while.

We get to engage with them quite directly because we do a lot of business on e-commerce, and we have very successful live streaming operations. We have a very direct and current interaction with consumers. And so we see a high level of knowledge, a high level of interest. Obviously, this is an aging population in China now. It's a fairly affluent population actually. So there's real spending power, and there's a real willingness to spend in our categories. And it's really not unique to one or two categories. It's very broad-based across our portfolio.

And so whether it's new brands that we're launching that we're bringing from elsewhere in our portfolio or new innovation with new benefits that we're bringing to market, and that's working really well, we're just seeing a very receptive consumer that is willing to try new things, willing to pay a premium for improved performance and effectiveness. And I think that's a good place to be. So I am not surprised that we're having this traction in China because we have been doing that for some time. It's just that our team is incrementally executing at higher and higher levels. And I think that's what's coming through in the results.

Your next question comes from the line of David Hayes from Jefferies.

So two for me. Just on the Emerging Markets performance, which continues to build, you called out just now, Shannon, that the comp gets more difficult. But looking at the comp, it was very price led last year, volumes didn't necessarily step up that much. So just trying to understand there was kind of an outlier on pricing mix in the fourth quarter last year. Can you just remind us, you may have talked about it, but then I can't remember, but what's going on there? And then just how difficult the comp is in that regard?

And then I guess more broadly, it feels like when you read the release, we listen to you, the innovation levels, the category market developments are incredibly intense at the moment, which must be difficult to manage and keep investing in. So the question is, is this -- is that running at a max level now? Or can you build on that again as you go into 2026? And then in some ways, in terms of profitability, often those kind of initiatives are upfront loss-making and then you kind of leverage into them, but your profitability still seems to be very secure. Just wondering exactly what the dynamics are in terms of financing that intensity of innovation whilst profitability continues to stay stable?

Great. Let me start with your last question and then I hand to Shannon. So we've been investing in innovation and in our pipeline for years now. And what we're seeing today is a product of years of work to really bolster the pipeline and create meaningful big innovation platforms. And so I would say we have had the capacity to make these investments for a while, a good while. And we certainly have it today. The Fuel for Growth program that we are executing is delivering significant benefits. So that gives us incremental firepower to invest in new innovation and scale up existing innovation.

So I am not concerned with the affordability of that. Obviously, to your point, when we are successful with innovation, we tend to premiumize the category and grow the category and we end up with a larger business. And that, of course, produces leverage through the P&L and gives us fuel to invest even more. So overall, I think what we're seeing now is a function of years of work, years of investment, and it is intense, but in a positive way. And we aim to continue to fuel that. I mean innovation is incredibly important for us as a company and as a market leader with the Powerbrands that we have, we really need to lead on innovation, and I'm quite pleased with how that's going.

Great. And then your first question, David, around our expectations and the type of growth we're delivering from Emerging Markets. So nothing specific to call out from the delivery or the base last year. I'd say we're very pleased with the balanced growth that we've been delivering from Emerging Markets across both price and volume. We've called out the fact that it's broad-based growth. China, obviously, it's our ninth quarter of double-digit growth, but we've also been seeing strong growth in some of our smaller markets and really do view Emerging Markets as a geography that will deliver sustainable growth and continue to be delivering outsized growth for the group as we look forward.

Your next question comes from the line of Celine Pannuti from JPMorgan.

My first question is on North America. Shannon, you said that the market is down, losing up to single digit and you expect it to be like that in Q4. Is that right? Just wondering whether what expectation you expect into a seasonal OTC and how we should be looking at this in the light of quite an easy comparative for you from Q4 of last year. And the second question is on Europe. Can you I talk about whether you think the environment has worsened sequentially? And how your market share has performed across the different categories?

Sure. I'll take North America and then let Kris speak to Europe. So what I was calling out in North America, Celine, was just as we look at what we've seen develop over the year from a category growth standpoint, when we entered the year, we saw North America categories growing sort of at the low end of mid-single digits when we headed into the year in January. What we've now seen is that, that category growth has stabilized or appears to have stabilized at sort of the low end of low single-digit growth.

And so as you look forward to Q4 from a seasonal business, we plan assuming a normal season. It's obviously very hard to predict exactly what that means or to predict when a season will hit and what the shape of that season will be. But our planning assumes a normal season. What we are really pleased with is the nonseasonal piece of our North America business, which is growing mid-single digits in Q3, and that's a business that's obviously much more within our control versus having to wait a bit to see the shape and strength of a season.

On Europe, Celine, I would say that it's, as we said before, a challenging environment. And in the face of that, actually, satisfied with our performance. It's good to see success with big innovation like Durex Intensity, which has really proven to be a winning innovation in the marketplace. But I think our European team put in a resilient performance. Market shares are around the level that we've discussed before, which is a pretty good level. It's intensely competitive.

So we are doing everything that we can to be as competitive as possible, but I'm satisfied with what the team has done. The growth number is not eye-popping, but like I said, it is quite a challenging environment in Europe and probably will remain so for the foreseeable future.

Your next question comes from the line of Jeremy Fialko from HSBC.

A couple of questions from me. The first one is if we go into the Emerging Markets, you've highlighted some of these smaller countries, Indonesia, Malaysia, Colombia, the 3 mentioned in the statement. Is there any chance you can size of those businesses roughly sort of what percentage of the kind of EM region they are, what sort of growth rates they are, just how sustainable you think this is for the kind of distribution growth standpoint?

And then the second thing is just coming to this pricing question is in Europe. Is -- you are just seeing promotion from your competitors. I believe you're seeing kind of increasing trading down from consumers, the retailers. Has retailers' behavior changed? Just give us a bit more detail on what happening from this standpoint?

Okay. Great. Let me take both of those. So Emerging Markets, thank you for the question. I think this is a really important thing about our plans and our forward outlook. We have a very successful business in China. We have a very successful business in India. Both of those businesses have been delivering, great performance now for a long time. We have a big opportunity to take the next tranche of markets to that level of excellence and execution. And that's a big focus at the moment in our Emerging Markets portfolio. We think that a short list of high potential markets like Malaysia, like Colombia, like Indonesia, but there's more that they taken together can be a third engine for growth that will be of similar size once we execute at that level to India and China.

So this needs to become the third engine of growth, and it's really nice to see that we have the momentum that we now have in these markets. So we're going to talk a lot more about that at our Focus On event, and you'll get a real chance to understand how we're going to grow the business. It is a mix of fundamentals and investment and innovation, but you'll see a lot more of that when we get together later in the year.

In terms of Europe, we've seen the return of promotions. I wouldn't say that it is an abnormal situation. It's just that we have normalized after the inflationary period where promo was less prevalent and maybe less of a focus. So now we're back to a fairly normal level of promotions, and it's just important to be promo competitive and put a great offer in front of the consumer and yes, executing that at a high level, and that's what our teams are very focused on.

Your question about trading down. Look, we are seeing some value-seeking behavior. People are cutting back a bit on trips, on quantities, and we are seeing private label growing in certain segments. But it's important to note that private label for us is a little bit less of an issue than if you are positioned solidly in the mainstream. We are premium, our brands are premium and they are market leaders. And the equities are very, very strong. And so while we always watch what's going on with private label, and it's certainly always something that we're thinking about, it is not a major drag on our performance to this point.

So we're going to continue to focus on being competitive in Europe, and it's a challenging environment. And so I anticipate this to be a thing that we need to stay focused on through next year as well. But it's not something that I'm concerned about in terms of our ability to drive good performance.

[Operator Instructions] And your next question comes from the line of Edward Lewis from Rothschild & Co., Redburn.

Yes. I guess just looking at the results and the commentary, I mean you've kept guidance the same, but would I be right in thinking that your sort of thoughts on the global categories that you're playing in or the global sort of [category] environment is softer. So your relative performance you're feeling sort of more confident about. So is it really sort of the uncertainty around the categories that's holding you back? And then I guess we have -- no one's asked you yet around inventory levels. I mean, particularly in the U.S. retail channels, you've been, I think it's fair to say, relatively sanguine against peers on this point. Do you still see sort of that the case, it not necessarily being as much of an issue as say others have called out for you in the U.S.?

Okay. Let me take those in turn. So on our categories, our categories enjoy good tailwinds. They're fundamentally attractive categories. And we think we have the right portfolio to win in our four categories. So overall, I would say we have a high comfort level that our categories are good categories with runways for growth that extend far into the future. It is true that there's always going to be some variability in the shorter term, right? Whether it's the shape of a season like Shannon talked about or it's tougher environments from a consumer standpoint that we're facing in developed markets.

So I think what you're seeing us do is we're being prudent. We upgraded our guide three months ago, and we're very comfortable with that upgrade, and that's really where we're at. So there's no major worry that's driving our decision-making. We upgraded guide and we're comfortable with it.

In terms of inventories, you're right, we did see a little bit of destocking in certain retailers in the spring. But since then, we haven't seen this impacting our business. So nothing really on inventories. We're comfortable with where we're sitting. And it's not an adverse impact on the business.

Your next question comes from the line of from Rashad Kawan from Morgan Stanley.

Just two for me, please. First, at the risk of preempting some of the focus on presentation content later in the year. As you think about the different categories across Emerging Markets, are there some where you're seeing more opportunities than others? And then second, just quickly on Essential Home. Just any comments there around whether the sale and carve-out is on track for a pre-year-end completion here would be helpful.

Okay. So for Emerging Markets, look, I think that next tranche of markets, our whole portfolio is relevant, and we know how to activate the portfolio in these markets. We know the importance of things like opening price points and kind of the tiering that we need to bring people into our brands and then trading them up over time. So I think all our brands are relevant. I think if I had to pick a few, it's very clear that Intimate Wellness can be a strong growth driver in these markets. And Self Care can be a strong growth driver.

So I think what we are certainly going to focus on is ensuring that we build leadership in those categories over time. In some places, we're already leaders with Durex. In other places, we have big opportunities to build leadership. And when we do that, the structural economics of those categories are really great. And so that creates a nice foundation for us to grow the whole portfolio. So it's -- really all our brands are relevant, but we -- you might see us sequencing and investing slightly heavier on the health side of things.

And in terms of Essential Home, I mean, we're on track. Yes, there's really no significant news to report. It's going well in terms of the carve-out, and we expect to complete it before the end of the year.

Your next question comes from the line of Tom Sykes from Deutsche Bank.

Just on seasonal OTC, so the Q3 sell-in is normally very profitable when you don't have the advertising. So does that mean that we should think about OTC being lower margin this year even if you do have a regular season in Q4? And is the FX that's baked into the inventory in Q4 and Q1 peak, is that lagged FX? Or would that be spot FX? And just on China, you've obviously talked about the growth of live streaming. How big is live streaming as a proportion of your sales? And when you think about where people are that are buying the products, is it Tier 1 cities? Or are you seeing high growth in Tier 2, Tier 3, please?

Great. Let me take a couple of these, and I'll hand it to Shannon on your FX question. So look, on OTC, I would say, no, I'm not expecting there to be any differential in the margin profile that we'll see. I also wouldn't really venture a guess as to the shape of the season yet. I've seen enough seasons to know that you can't sit in October and no, it's not realistic. So I would say I would not anticipate there being any significant differences in terms of the margins or the profit delivery of OTC in the coming quarters. But we will certainly update on it when we know more.

I think on China, live streaming is a significant part of our business. It is not the majority of our business, but it's fast growing and it's very much where the consumer is. We have discussed before that our business in China has moved to be quite heavily online. So e-commerce is a really big part of our business now, is the majority of our business, but live streaming is a smaller component of that that's growing quite fast. We are good at executing there. And I think that is one of the ways in which we successfully engage with consumers and build relationships there.

In terms of coverage in China, these channels cover more or less all of China. So we used to have this discussion about Tier 1, Tier 2, Tier 3 cities. At this point, the fulfillment network for e-commerce is more or less national in China. And so we can execute at a very high level across all significant urban centers in China in a similar manner. So it is no longer really a question of tiers for us. It's a national go-to-market model.

Tom, I'm sorry, but [Technical Difficulty] FX question, so I can answer that for you. I didn't catch it fully.

Yes. It's just, I guess, because you, at the moment, will still import quite a lot of the OTC from in North America and the U.K. is just in the inventory that you would be selling into the U.S. What's the lag versus spot -- what's the FX in that versus the spot rate? Is it lagged? Or does it come in at spot, particularly in, I guess, Q4, Q1 because you obviously come up against tougher comps on sterling versus the dollar?

Yes. So I think -- I mean, that obviously would be coming through in our gross margins, which the guidance we've given on gross margins and what you've seen throughout this year is roughly flat versus prior year. And I think we've guided that we don't -- that that's the right expectation from a gross margin standpoint is how I think about that.

There are no further questions on the conference line. I want to hand over to the management, Nick Ashworth, SVP, Investor Relations.

Thanks, Gavin. So we've got a couple of questions, I think, coming through on the text box, if I can read them. So first one from Jeff at EMP.

You've got nearly 11% price/mix in Intimate Wellness. What's driving such a strong development, that maybe mix?

Yes. So I can take that one. Intimate Wellness, we continue to execute against the strategy around premiumization, which is driving positive mix benefits within Intimate Wellness. And then one additional specific example of that, which we've talked about, I think, every quarter this year is the launch of Durex Intensity in Europe, which is also driving a positive contribution there.

Thanks, Shannon. And then we also have an from Carol at Kepler. Can you expand on the performance of Finish and Vanish? What's holding back growth? Is it pricing in Europe? Or is it more broadly difficult market? I know we sort of talked a little bit about the dynamics of Europe but specifically on Household Care.

Yes. I mean I would say it's a resilient performance. It's very competitive, as I said before. Finish is a market leader, and we're very focused on making sure that we remain the market leader and that we're very competitive. But I think it's going to be a focus of ours as we move through the next couple of quarters given the overall pressure in terms of consumer sentiment. But I think we have all the ingredients to be successful with that.

I think Vanish you're seeing a bit of a mixed performance in some markets and developed markets. We're seeing good performance in some European markets. I'm not completely satisfied with what I'm seeing. And so on balance, that's a place that we can do better. And I'm sure that we will.

Thanks, Kris. Gavin, are there any more questions coming in on the phone, otherwise, I will wrap it?

There are no further questions on the conference line.

Brilliant. Look, thank you very much, everyone, for joining today's update. As a quick reminder and following Kris' earlier plug as well, our next event is going to be the Reckitt's Focus on Emerging Markets, which will be led by Nitish Kapoor, our President of Emerging Markets. It's Thursday, the fourth of December, it's in London. So you can join us in person or you can watch online, and all the information is available on our website.

As ever, all materials from today, including a recording of the call can be found on our website. If you have any further questions, please feel free to reach out to me or the team. We look forward to catching with you soon. Thank you very much.

Okay. I think we're going to get cracking. I think I've had a signal, so we're going to get cracking. Hopefully, the lunch was great. And we've got Reckitt here today, Kris and Shannon. Thank you for attending and supporting the conference every year. We appreciate that.

So the format today, as has been the case already, is going to be a fireside chat. We are going to do a breakout, by the way, next door afterwards for 15 minutes for those who want to join.

So I've got a lot of questions for you guys. So we're going to try and get through as many as possible.

But maybe to kick off, Kris. Can you talk a little bit about the new organization? You're talking about a more accountable organization. Why and how is that an unlock? And how would it help you deliver and execute more consistently because, obviously, consistency is the name of the game.

It is. So thank you for having us. It's a pleasure to be here.

So I felt strongly that we needed to simplify our organization. And I would say the main driver of the changes that we've made was really about simplicity, effectiveness, accountability and hopefully speed. There's a byproduct, which is it's less costly. We have fewer senior executives. But I think the overwhelming focus is for us to create a simple and fast organization. And we heard that from the rank-and-file in the company for a while that they felt that was an opportunity to get to faster decision-making, and I felt clarity around accountabilities was important.

So what we did is we took out a couple of layers of management. It's quite a significant change. And then we simplified the geographic reporting. So we now have 3 presidents that are accountable for all execution. And that makes it much easier for me to work with them and drive good execution, but also, of course, to make sure we have clarity of accountability. And by the way, that is also the case below. We simplified our regional structures quite a bit, too.

So we made this change 6 months ago. So we've been living in this new organization for -- well, the year has gone fast. It's 8 months now. But I think it's going well. We're capturing benefits from it. But I would also say any big organizational change like this, it takes a year or 2 before you get all the benefits. So there's more to come.

Maybe moving to innovation. Innovation is the lifeblood of consumer staples. Can you explain the one Reckitt way of brand building, building categories? You've done it with Lysol Air. You've done it with Lysol laundry sanitizer, which have made new markets. And it's allowed you to get a price premium given the level of differentiation.

So the question is can you replicate that market-making model to other Powerbrands? And is your R&D set up enough so that you can do it more quickly and more agile? Or are these big breakthroughs quite infrequent events?

So which technologies are you most excited about in terms of innovation that can really move the top line needle. So it's a question around innovation.

Warren, that feels like 5 questions, but...

One big question.

Let's take them -- one big one. Let's take the elements of the big question in turn. So innovation is our lifeblood, and we have been investing in our pipeline and in our R&D capabilities quite a bit. And it takes years. So we did have a period historically where we didn't invest enough. And then it's a catch-up process. The good news is we're done with the catch-up. So we're now in a position where we have really meaningful innovation.

To your point, you don't want actually too many of them. You want sort of a cadence of big platforms, 1 or 2 that land in the market every year because the job isn't just to launch them and land them. The job is actually to use 3 or 4 years to scale them because we want them to be permanent new additions to the portfolio.

Category creation is the most valuable kind of innovation that we can do. And the way that you do that is, obviously, your fundamentals have to be good. You have to be consumer obsessed. You have to see a need in the market. You have to have the technology solution that is really going to deliver on the promise. But I think what is helpful for us is you really have to have a #1 equity to -- your brands have to have the right to create categories.

And one of the things that we're spending a lot of time on is understanding which of our brands have that right and where can we do it, to your question. But You look at a brand like Dettol where we've dramatically expanded the number of categories that Dettol operates in, in a market like China, that's a big part of our growth. And so much of it comes back to do we have the right brands. And the good news is in our Core Reckitt portfolio, we only have very strong Powerbrands. It's really the whole idea behind the plan.

I'm bringing you in, Shannon. I'll try to make it a bit shorter this one. On the fixed cost reduction, it looks like you're tracking well ahead of your targets. I think you were already at 20% at the first half against your 19% target. You talked about 2 big areas of scaling shared services as an opportunity and also working with generative AI to reduce overhead.

So just interested if you can maybe elaborate a bit more on those 2 points. And I guess, given where you're tracking, is there any reason why you don't hit that target a little bit earlier than you said given you're already well ahead.

Yes. We're super pleased with the progress we've made to date. As you said, savings are coming in quite quickly from overheads. I think that as far as resetting any targets, not really looking to do that. I think 19% is the right target for us. We're committed to getting there as we exit 2027. I would say, of course, there's no finish line. So once we get there, we can talk about going further.

To your point, I think what's important to remember is while we've had strong delivery early on in the program, if you think about 2026 and 2027, first of all, in '26, we'll be needing to mitigate stranded costs from Essential Home. So if you think of that trajectory of savings delivery, I think that could moderate a bit in 2026.

And then if you think of those 2 buckets you called out, so shared service and Gen AI, we absolutely think there are large opportunities. We think they're very structural, sustainable opportunities. So once we have that capability up and running, we think it's something that for the long haul will continue to drive savings. But it's also 2 opportunities that take a lot of work to really get them going. And so those are the 2 pockets of savings that I would see coming into play as we get into '26 and then in a really significant way in 2027.

Okay. And maybe just touching on advertising spend because that was up significantly in the first half, I think, 130 basis points from 13.3% of sales to 14.6%. That's a big jump.

Can you maybe outline where that money is going? What are the top priorities for that spend? Maybe how much of that spend is digital today, if you have that number? And should we assume it kind of levels off or does it -- just in terms of calibrating modeling, what's the thought process about what the right level of spend should be in the business?

Sure. So in addition to innovation, I'd say one of -- the second most important thing, I think, for FMCG is to be really investing in our brand equity and making sure we're fully supporting our brands. And so our intention is that over time brand investment as a percent of net revenue should absolutely be growing.

And so in '23, we had a significant step-up more than 100 bps. In '24, we increased it another 30. Year in and year out, you should be looking for that to be increasing as we take some of this fixed cost optimization and put it back in to invest behind our brands.

As far as where that goes, I mean, obviously, one of our top priorities is that when we do have great innovations, we want those to be fully funded. And so that would be the first place that we're putting incremental BEI. But we're constantly looking at country-brand combinations to understand where do we think we either have clear opportunity to drive high ROI investment, where do we think we're behind some of our key competitors and we're very targeted in where we put that incremental spend over time.

And then another one on EPS growth. I know you had it a few times, but for some of us, it's quite hard to model. And there's a lot of moving pieces. You said that EPS will be up in 2026 after the Essential Home exit. And so you've got a few things going on there. You've got a minor -- you've got the 30% associate that we need to model. You've got the stranded overheads. So can you maybe help us a little bit sort of bridge that to give us confidence that actually, indeed, the 2026 EPS will be up? What would you outline what would you point to?

Sure. So absolutely, our ambition is that year in and year out, we're growing EPS. I think both Kris and I recognize that if you look back historically, it's been a bit of a missing piece if you think about consistency of EPS growth from the Reckitt story for the past few years. We had great results last year. We're confident this year that we'll be growing EPS.

When you look into '26, the building blocks I would think through are, obviously, the sale of Essential Home is dilutive. It's about GBP 2 billion of net revenue. What bridges us to growing EPS and the ambition to grow EPS is, first of all, Core Reckitt top line growth and so we expect strong top line growth. We've guided 4% to 5% as our midterm outlook for Core Reckitt.

Going back to the Fuel for Growth program, we expect to deliver cost savings in 2026 from Fuel for Growth, which will help drive operating profit expansion. That will all be compounded by we've had an ongoing share buyback program that we launched in October '23, which will continue to be a tailwind on EPS. As we have the special dividend with the Essential Home transaction, there will be a share consolidation with that, that will be a tailwind for growing EPS.

And then to your point, we would expect to have some benefit coming into EPS from both the interest on the vendor loan note associated with the Essential Home transaction as well as the 30% stake. Obviously, FX, I can't predict that. So we'll see what the impact is, but those are the building blocks.

Okay. Thank you, Shannon. Super useful. Maybe back to you, Kris. Got to ask you about the U.S. market. You've called it as hard to call, lots of moving pieces, a lot of channel shift going on, a lot consumer shift.

How exposed are you to the declining drugstore channels versus the growing channels of Amazon, Walmart and Costco? And how are you trying to improve execution with the winning retailers like Walmart? What investments are you making in supply chain, technology, people maybe to win in the U.S. almost regardless of what the macro does?

Great question. So yes, I think the U.S. is quite dynamic. It's tough, although it's stabilizing. So actually, if anything, from what was quite a concerning outlook in the middle of the spring, I would say, it feels more stable now. Our categories are pretty stable. It's a low growth environment, but it's an environment that we can work with and we can drive a reasonable performance.

Our brands are quite strong in the U.S. We are leaders in most of our categories. And that means that our brands find their way to consumers' pantries irregardless of channel shifts. We're available broadly. We win with lots of different retailers. And so I'm not so concerned that the consumer won't find our brand. In fact, we have good traction and execution is improving and -- that's really good to see.

So we're watching channel shifts. The drug channel is obviously having a tougher time. But we've been winning with -- winning retailers for a long time. So Walmart, it's not a new focus. Walmart has been a winning retailer for a long time and a focus of ours for a long time. We have a great partnership with Costco. We have great partnerships with many retailers, and we do well online.

So I'm not so worried about these shifts. They tend to happen quite a bit, and we have to be able to navigate that and deliver performance regardless. I don't think the shifts that we're seeing in the U.S. are dramatic. There's other markets around the world where we're seeing far more dramatic channel shifts like China. And so I think we can navigate it.

Okay. And maybe a specific one on the U.S. I think it was down to 2.7%, I think it was, and you said that a lot of that was due to the reformulation of Mucinex?

Yes. So we were reformulating the sinus range, the Mucinex and that product is then going back -- the reformulated product went back into the market at the beginning of Q3. So it's a bad guy in Q2, a good guy in Q3.

Was it most of that minus 2.7%? Just want to understand. And does it mechanically completely come back in Q3?

Yes. I mean, we obviously have to execute that well and we've been micromanaging that execution. But yes, I would expect it to come back fully.

And in terms of sell-in/sell-out dynamics, are you seeing -- where are inventory levels today? Is that also improving or normalizing? Maybe are you able to say how much stock is in the system to give us an idea of where it goes?

There was a bit of destocking in the spring. I think a lot of that had to do with the confluence of what inventory levels were after a relatively weak start to the season and then a very sharp decline in March after a robust season in January, February. That gave retailers, I think, the opportunity to just work through the inventory they already had.

And I think -- so I think my interpretation, a bit more of a short-term situation that was very reflective of how the season was moving and also what was happening in the macro at that time.

We're not seeing destocking as a significant impact for our business now. We don't anticipate it being a significant impact. In fact, we're quite happy with the sell-in and the shipments for the season that's upcoming.

So net-net, would we expect the U.S. to therefore be up in the second half given Mucinex is coming back?

Yes. We expect the U.S. to grow. Yes.

And maybe turning to Emerging Markets, that was obviously a star performer in the second quarter. It was up from 10% to 15%. I think you've got mini-CMD on EM coming up in December, which would be super interesting.

But when you think about the sustainability of that growth in Emerging Markets, Reckitt has been a bit up and down, I would say, in EM in the past. How can we get comfortable that this time it will be more sustainable? That you can actually grow EM, I don't know, high single digit?

And are you confident you can comp the comp? Because Q3 is fine. In Q4, Q1, Q2, you start to get into much tougher comps. When that happens, would we still expect to see maybe not 15%, but still high single-digit growth?

Yes. What we've said about this, and I believe that to still be true is we shouldn't get used to growing at double digit just because it's unlikely to sustain itself quarter in/quarter out, year in/year out. But high single digit, I feel very comfortable we can do consistently. And as we can see, the business can definitely do more than that, too, as it has been doing now for 3 or 4 quarters.

We have been successful in China and India for a long time, and that's really the markets that are driving most of that growth, not all of it because it's broad based, but most of it. And we have the ingredients to be successful in those markets for a long time. We have very strong brands. Much of our growth is volume-driven growth because we're competing very effectively in the online channels in China, and we're expanding our off-line footprint in India. Much of the growth is in Health and in Intimate Wellness, where we are leaders and have a big runway for continued household penetration.

So I'm very happy with the teams we have in place. They really know what they're doing. I think we have some advantaged capabilities. So for China and India, I feel quite confident that we're going to see continued strong growth.

Then the most exciting part about this footprint to me is the remainder of Emerging Markets, where we have a cluster of 6 to 7 markets that taken together will be and is of the size of India or China and has the same growth potential. And so actually accelerating those markets is a big priority of ours for the coming years, which will also support the...

So which countries would you call out? Colombia? Is it Colombia, is it Malaysia, is it Indonesia? What would be the most exciting?

It's -- yes, so there are some good names in there. So we have, for us, Malaysia, Vietnam, Sub-Saharan Africa, Colombia and Mexico and Brazil, where we have nice businesses today.

Now there's more markets than that, but those are the ones that are on my radar in terms of really big growth potential.

And how do you seed those markets? How do you -- how are you actually going about trying to grow them? How do you prioritize? Is it Sub-Saharan Africa versus Indonesia? What's the kind of priority?

Well, we have a lot of conversation about this. I mean, I don't want to prioritize too much because there's so much growth. So I would like most of it if we can find a way. But obviously, that's already a subset of markets that we've picked.

The good news is we're not starting from scratch. So we have pretty good businesses in these markets. They just haven't been, let's say, the biggest priority for the organization. And so that's what we're changing. And what that looks like is investments in the brands, in supply chain. In some places, we can have more capable R&D that's a little closer to the market to get the innovation really firing.

So every market is a bit different. But what's exciting about it is our people know how to do this. And so our new structure where we have Emerging Markets under one roof with some very capable, experienced leaders, they can start to really spread these capabilities and playbooks in a more effective way. That's probably the thing that I'm most excited about our new organization.

Okay. Maybe back to you, Shannon. As we're staying on the geographical talk, maybe we can turn back to Europe. I think you said that the Q1 sales Europe would be kind of up low single digits. It ended up being flat. So that was one of the few areas that was a little bit behind what you had thought.

Can you maybe outline why that was? And where do you see kind of category growth in Europe share? Do you expect Europe to be back into positive territory in the back half as Kris does for North America in Europe?

Sure. So Europe, I mean, I'll start with your last point. We do expect Europe to be back into growth in the back half. I think the dynamic we saw in Europe in the front half, there were a couple of aspects to it. One is we certainly saw category growth rates declining if you go back to January and sort of map that out through the front half.

We do feel like that's now stabilized. And so when we look at category growth rates today in Europe, we're seeing them pretty flat, but we see that as stabilizing.

We talked about the fact in our half 1 results from a share standpoint, we feel good about what we're delivering in Europe. We talked about it's the first time that we've been market leader for Finish in all large European markets. So we feel like we're getting to a place where we're showing up very competitively for the consumer.

We have some good innovation. We've been talking about Intimate Wellness in Europe and innovation there. And so I think as we look to the back half, we see sell-in and sell-out should be converging in Europe. And even with very low to flat category growth rates, we're confident that we'll be delivering growth in the back half.

And you touched on Finish, Shannon, so I want to ask you one about that. It's one of your biggest brands. And what we're seeing is some different dynamics in the U.S. versus Europe and the U.S. is obviously you're up against a big competitor.

Can you maybe sort of just outline where market share trends are for Finish in the U.S. and Europe? What you're trying to do to improve it where it's not currently there?

And then sort of a second one on the Finish as well. The other thing that really struck me at the CMD, I think you said that you sell Finish to 27 million Australians, more than the 4.8 billion Asian consumers. So that kind of shows you the potential that the brand has in some of those other EMs. But how do you actually think about playing? How do you actually crack those markets? Is it just about dishwasher penetration? Or how do you drive the category? So one about the Europe, U.S. and one about EM on Finish specifically.

Yes. So Europe, U.S., I mean, you have to remember the competitive dynamic is totally different. So in Europe, we're the market share leader. As I just said, market share leader in all large European markets. In the U.S., we're obviously in the challenger position.

And so the activities across Finish, though, are quite similar. I mean, it's a brand where it's really important to make sure from a media standpoint, we're supporting the brand in the right way. But almost even more importantly, that every day when consumers go into retailers that we're showing up in a competitive way.

And so starting in the back half of '24, we were talking about the need, particularly in Europe to really make sure we had the right level of promo, right frequency, right depth. And as we got that right market by market by market in Europe, that's when we really started to share -- saw the share results turn around. And so it's a very different dynamic.

Good part of being challenger in North America is that even when we're not gaining share, we can be growing revenue quite nicely. And so of course, our intention is we want to be gaining share. And it's the same levers that we saw in Europe that we're playing with in the U.S. to try and get to that place.

From a long-term potential of the business, I mean, this is one we talk about us having decades of runway. And so when you go country by country and look at dishwasher penetration, I mean, it's very surprising to even see in Developed Markets, you have markets where the penetration is well below 20%.

And so that will be one of the key enablers for long-term growth for Finish is as we see that dishwasher penetration move forward, we're very focused on making sure we're there, we're partnering with the manufacturers of the machines. So that we're really the first brand that new consumers to the category are learning from and growing with.

Okay. Kris, talk about Intimate Wellness. It's your star category. We've seen a step change in growth. What is driving that? How sustainable is it? It sounds like it's adjacencies, and particularly your China business, your market share was -- I'm not going to say nowhere, but 5 years ago it was much lower than it is today, you're a clear market leader. And the brand Durex is GBP 1 billion in revenues. What is the real potential for this brand? If you look at crystal a ball, how big could this brand be?

It could be very big. So -- but obviously, we have to do the hard work to get it there. So I think Durex is maybe one of those brands that exemplify what we talked about before, which is the power of strong R&D and breakthrough innovation. We have really made big strides in our IP, our capabilities as it pertains to materials innovation. And in condoms, it's really all about materials and what benefits they bring. And so we are now clearly global leaders again, and that's why I want us to stay.

We have a big runway for growth. It's actually not just China. I mean, Durex is growing double digit in many Emerging Markets and it's got a big runway for growth in Emerging Markets, kind of similar to Finish. I mean, really, the category needs to be built and we're the right people to build it.

Then we also have adjacencies. So female intimate wellness is a growing space. And we have a really great brand called Intima, which is indeed now growing very fast in China from European roots.

I think, triple digit, isn't it?

Yes. So it's fast. So now we can't sustain necessarily that kind of growth rate, but it's just an indication, back to your question, I mean, how big can this be. I think it's just a function of how good of a job we do to create categories. I don't think there's really a clear ceiling. It's a question of category adoption, education, capturing people at the right age to teach them about how to be healthy and safe with this category. So we have a lot of work to do there.

I also want to touch on brand stretch because one of the big things that came out from me at the CMD was your Dettol brand, and the performance in India is incredible. And it's also in 13 subcategories.

Yes. We've expanded it significantly.

I mean, most of your others are in 2 or 3 subcategories. So why is Dettol an outlier? And can you replicate that playbook with some of your other Powerbrands? Or is there something about Dettol that's different? And if you can replicate it, which of the Powerbrands would you like to stretch more into adjacencies?

So most Powerbrands have the ability to stretch because they are trusted, they are the #1 equity, they're well known and they deliver. So I would never say that any of our Powerbrands cannot stretch. They can all stretch. The question is how far -- how many categories can we sort of straddle and when is the right time, what's the right product proposition because, again, efficacy is everything. So it has to deliver.

So Dettol is the brand that we've successfully stretched across the most categories. It is a phenomenal equity. And in that part of the world, it's really a beloved brand. But look at Lysol, we've stretched Lysol into multiple categories. Durex, we've stretched into multiple categories. Finish is both auto dish tablets, but it's also cleaners and other things.

So I would hesitate to say that we have any brand that can't stretch. And if I showed you our strategic plan for growth for the next 3 or 4 years, unsurprisingly, brand stretch and category expansion is a huge part of our growth. So we have big plans, I would say, for every one of our brands to stretch into new categories. Probably Dettol is always going to be the shiniest example that we have. But that's okay. We don't need 13 categories for each brand. We just need to successfully stretch into...

And what's the brand doing in India now in Dettol? Where is the growth -- how big was it like 10 years ago? Where is it now? Where is it going? Is it still growing because it's been around a long time.

It's growing, it's growing.

And where is it growing? Is it...

Yes. So we develop new formats and we do line extensions. Dettol in India is a very mature business, right? It's been around for 100 years. It's bar soap, it's ASL, antiseptic liquid. That's the core of the brand. But then we're extending it into new formats and new benefits. In bar soap, we've been selling Dettol bar soap forever, but now we have our Cool platform that's driven some great growth, and we do other things that's more dermatological that will also bring good growth.

But actually, Dettol, the best case example for what Dettol can do is China because in China we've really stretched the brand far beyond even what we managed to do in India and that's where the 13 subcategories happens.

And why is that? What is that actually?

Yes. I think we cracked the code on some really good propositions. In China, we have found a way to engage with consumers that's highly impactful. So we can explain to them a new proposition. And Chinese consumers are really engaged in our categories. It's probably one of the, if not the most curious and well-informed consumer we meet anywhere in the world. And we've cracked the code on how to connect with them online to explain the benefits of new categories, new products, and that's really helping.

Shannon, I want to turn it back to you and ask you a question on free cash flow conversion, free cash flow yield. I think free cash flow conversion was only 54% in the first half. I know there were some one-offs in there, but we normally would expect Reckitt to be 90%, 100%. Even if I ex out the one-off, it was still a little bit lower than that level.

Were you disappointed by that performance on the free cash flow conversion? And maybe what should we expect for the full year? And maybe can you maybe parse out for us the phasing of the restructuring costs and where you see the biggest opportunities to improve free cash flow because I imagine exiting the Essential Home may be a bit of a drag on the cash. So when you sort of take a step back and look through the ups and the downs, and I know there's lots of moving pieces, how are you feeling about the underlying free cash flow generation of the company?

Sure. So I'll start at the end. So we feel good about the underlying cash flow generation of the company for sure. I mean, it's one of the hallmarks of the investment case of Reckitt is our free cash flow.

From a free cash flow conversion standpoint, the biggest driver far and away of that decline is, in fact, the restructuring costs and those one-off costs. Expectation is that those will continue in 2026 and be a substantive headwind conversion in 2026. I would expect that to really be tailing off in 2027. I fully expect that when you get through that restructuring program, Reckitt -- Core Reckitt free cash flow should be back up into the 90%-plus, which is much more in line with historical levels.

Okay. And the final one for you, Kris, and it's about the kind of the guidance and the 11 Powerbrands. You've got these 11 Powerbrands, you've got the target of 4% to 5%. You raised the guide to above 4% already.

For the year.

For the year. So you're on track, you're kind of on the journey. When you look at that 4% to 5%, how would you compare that to market growth? What would you expect, I know it differs year-by-year, the split between volume, price and mix to be? And when you've got these 11 brands, which of them do you think has the biggest potential?

And then which are the non-Powerbrands, you've got lots of non-Powerbrands like things like Biofreeze, which could be the next Powerbrands of the future. So a little bit about getting comfortable with the 4% to 5% and then a little bit also around some of these other jewels that maybe we don't hear as much about.

Yes. So I think for the Powerbrands, it's a terrific portfolio. It is a portfolio that's designed to grow and grow for a long time. We said the 4% to 5%, we feel good about that. As you said, different years, different dynamics. Obviously, this year is quite unusual.

But our medium-term framework is 4% to 5%, I feel good about that. I think if everything goes right, we can beat that and that's probably a good place to be so that we can deliver consistently and then sometimes we might be able to beat. So that's how we thought about that.

I think in terms of the algorithm, it's a balanced algorithm that we want, 2 points of growth, 2 points of pricing, a little bit of mix. This would imply slight outperformance in our categories, but we don't have to do anything extraordinary to deliver in that algorithm vis-a-vis category growth. So I feel like it's good, it's solid and we can work with that.

In terms of the smaller brands that we have, we do have some smaller brands and we don't have a lot. So we're 80% Powerbrands now, so we're quite concentrated. The things that we didn't divest were things that we wanted to keep for a reason. So a lot of the things there are health businesses that are not as big, but can be big one day. Biofreeze is one. Obviously, topical analgesics has slowed down as a category, but Biofreeze is a great brand. I think once we get out of this economic cycle that we're in right now and the consumer is sort of freed up a bit to spend again, I think topical analgesics will grow fast, and I think Biofreeze will do well.

We have some other health businesses that are small, but growing so fast that soon they can become Powerbrands. Some of our VMS brands are in that camp. Who knows, Intima, if it keeps growing like this, one day, Intima might be a power brand.

Okay. And maybe just in Self Care, I mean, we don't hear that much about brands like Gaviscon and Strepsils. What are the plans for those kind of brands?

Gaviscon and Strepsils are sort of slightly unsung heroes of our portfolio. They have grown steadily and they have grown fast, much faster than OTC averages. And part of that is because they're growing in Emerging Markets. Gaviscon for a while, we grew faster than we could actually supply. That's moderated a bit, but still, these are growth businesses. And for each of them, we have a plan for brand stretch, category expansion, geographic expansion. And Emerging Markets remains a really big part of that growth.

And within that, with all the growth -- hopefully, the growth that's coming through, do you think the manufacturing configuration is such that you can supply the demand because historically I know you've had issues with bottlenecking and sometimes it's been more the supply than a demand issue. Can you maybe explain what you're doing to actually ensure that the manufacturing footprint is optimized for that higher growth?

This is my favorite question of the day. This is a topic I'm very passionate about. So I say to our team all the time, you're only as good as your supply chain. At the end of the day, we're selling consumer packaged goods. We're selling products in boxes and cans and they need to be available. And we have historically not invested enough in our manufacturing footprint as a company and we have been on a journey to change that.

So we're building a big anchor facility for our Health business in North America. We've built a mega-factory in China. There's more CapEx coming, more investments in that manufacturing backbone. And it's critical for growth and so -- and it does drive growth.

I'm really happy that we've seen over the past year a sharp recovery in our service levels. So I feel that our supply chain team is very much on this and they're doing a nice job, but we have years of improvements to make. And every time we can deploy CapEx in a good way that strengthens manufacturing and the footprint, we can grow off of that and we can get some good productivity.

Well, I'm glad I asked your favorite question last. We are actually in a buzzer. So thank you, Shannon. Thank you, Kris. Thank you, everybody, for listening. And we've got a breakout next door for 15 minutes, if you want to join us. Thank you.

Thank you.

Thank you.