Rémy Cointreau Stock

[Audio Gap]

2027 First Quarter Sales Presentation. [Operator Instructions] Now I will hand the conference over to your host, Luca Marotta, Deputy CEO and CFO. Please, sir, go ahead.

Good morning, everyone. Thank you for joining us today. And as highlighted in our press release of this morning, Q1 sales grew by 1.3% organically. This performance reflects: first, strong growth in Cognac of plus 7.7%, reflecting a limited decline in the Americas, driven by destocking in Canada and a high base of comparison in LATAM. Meanwhile, U.S. sales growth were particularly resilient.

Conversely, APAC generated a strong growth, supported by solid momentum in the remaining part of Asia and a slight reduction in China as expected.

Second element is a decline of minus 6.6% of the Liqueurs & Spirits division, driven by a slight decrease in the Americas due to a negative phasing effect following a strong rebound in Q4 of the previous fiscal year and a mixed performance in EMEA region.

Q1 sales performance breaks down as follows: a volume decrease of 1.5% and plus 2.7% increase of price-mix effects, largely driven by mix on the back, on the heels of stronger performance of Cognac compared to Liqueurs & Spirits. This performance is in line compared to our expectation for the full year trajectory.

Looking inside that, the overall sales performance by region, the Americas were down by low single digit, reflecting destocking in Canada and high comps in LATAM. U.S. demonstrates a very good top line resilience.

APAC, Asia was up by high single digit, supported by a good momentum across the rest of Asia, while China demonstrated a limited sales decline in line with expectations. EMEA region was down by low to mid-single digits amid sustained competitive pressure and moderate consumer demand.

One last word on the Global Travel Retail, which is a transversal business unit across the 3 regions. It was up by very strong double digit in the quarter, a very good performance to start the year. This is better than expected.

In terms of value depletion at group level, value depletion, which is the best approximation of final sell-out in value. Looking down into that, in the U.S., value depletion were slightly negative, including, however, slightly positive volume depletion.

In China, value depletion were down low single digit, which represents a good performance considering the current market and the low season. In EMEA, value depletion increased by low to mid-single digit, representing a clear outperformance compared to sell-in trends.

So what we can say that overall, Q1 group value depletion grew by low to mid-single digit compared to the previous year, outperforming sell-in trends. So best approximation of sell-out depletion in value better than sell-in trends.

To conclude on this very first slide, we are confirming our full year guidance.

Before looking at the performance in more detail, I would like to briefly highlight a few encouraging commercial performances from the quarter that you can see -- you can witness in Slide #3.

Although Q1 is historically a small quarter, we saw some early green shoots in both China and the U.S., supported by the 2 key commercial moments. In China, 618 e-commerce Festival, where our execution delivered very encouraging and positive result, growing result compared to the previous year and Cinco de Mayo in the U.S. centered clearly around Quatreau.

We also witnessed and saw encouraging early sign from our recent innovations, although it is still too early to draw firm conclusions. This include the global launch of Bruichladdich Yellow Submarine Limited Edition, celebrating the brand's 25th anniversary.

Mount Gay Silver, which contributed to positive value depletion for Mount Gay brand as the brand continues to recover and the very good performance of Remy Martin VS in South Africa.

Turning to Slide #4. Q1 sales amounted to EUR 223.2 million, representing an increase of EUR 2.4 million or plus 1.1% on a reported basis. This performance was shaped by the following factors: an organic growth of EUR 2.8 million, so as said, plus 1.3% performance, with this performance split between a negative effect of minus 1.5% in volume and a positive price-mix of 2.7%. Inside that, inside price-mix, we can say this is totally driven by the strong positive mix linked to the outperformance of Cognac.

Second point, a marginal currency translation impact, negative one of minus EUR 0.4 million, so less than EUR 1 million or 0.2% loss, which is the delta between 1.3% and 1.1%, mainly driven by the deterioration of the U.S. dollar for EUR 2.3 million, partially offset by the improvement translationally speaking -- translation speaking, sorry, translation of the Chinese RMB for EUR 1.9 million. So a limited impact in terms of published figure to the top line.

Now let's turn to Slide #5 to delve into organic trends by region. Let's start with the Americas, in which organic sales were down by low single digit. This performance includes a mid-single-digit decline in volume and low single-digit growth in price-mix, mostly driven by mix. What we have said at group level is reconfirmed also in the Americas.

Inside Americas, a very important part, chunk of it is the U.S., where sales grew by low to mid-single digit in Q1, mostly driven by Cognac despite high comps. In parallel, Q1 value depletion continued to improve sequentially compared to the Q4 of the previous fiscal year, being slightly negative alongside a slight positive volume depletion.

This is clearly encouraging, where we are not there yet and it's too early to conclude that this trend is sustainable, it's normative as the change of distribution also is bringing some positive one-off effects in this quarter. In this context, inventory level continued to be improving slightly, but in coverage clearly even more in absolute value and stood more or less 4 months of the end of June.

In Canada, we already said sales were down by high single digit in Q1, impacted by continued destocking. And in parallel, in LATAM, Latin America, sales were down by very strong double digit in the quarter, affected by comps.

One last word on Travel Retail Americas, which is part of this regional business unit. Sales were strongly down, but from very high comps. End of June, Americas accounted for 39% of our group sales, down 2 points.

Turning to the Asian region, Big Asia, APAC. Organic sales were up by high single digits in the quarter. Analyzing the volume value equation, the performance was mostly driven by a positive volume effect.

It is a bit of the opposite of the Americas region because here, we have the biggest country, China, in which sales were down by low to mid-single digit in Q1, but in line with expectation. Despite a still challenging -- very challenging market, we observed some green shoot and good performance during the short quarter, a very low season, such as the strong performance we recorded for 618. I want to reiterate that sales were growing and growing more or less plus 12.3% compared to the previous year.

In parallel, global value depletion were down by low single digit. Given that depletions are in absolute value above sell-in trends, inventory levels remain healthy across most brands at the end of June.

Elsewhere in the region, remaining part of Asia, recorded a very strong double-digit growth in Q1, driven by Cognac and to a lesser extent, Liqueurs & Spirits.

Finally, Global Travel Retail APAC, which contributes to this region was up by triple digit from very low comps. You remember, we are lapping also the closing of last year as well, but it's not only a technical factor, was clearly a strong overperformance compared to the expectation. End of June, APAC accounted for 39% of group sales, up 3 points compared to the prior year.

Then last but not least, EMEA, in which organic sales were down by low to mid-single digits, primarily reflecting a negative volume effect, while price-mix was positive. Inside that, we have to start with the first subcluster in terms of weight, which is Europe third-party distributors, where sales were down by mid-single digit in Q1, mostly negatively impacted by Germany, where consumption is weak and promotional activity is high and volatile.

Second subcluster, U.K. and Nordics, where sales were up by low single digits in Q1, mostly driven by the Nordics. Benelux and France, sales were down very sharply, affected clearly by the discontinuation of partner brands distribution in the Benelux from April.

Inside that, I have to highlight that France as a country was more or less flat. And lastly, AMEI and CIS sales were up mid to high single digit, led, as already said, by South Africa, very strong impact of Remy VS, while the Middle East conflict had a slight negative impact on the region, but not so important to change the global footprint. We remain positive for this subregion as well.

Overall, Q1 value depletion were up by low to mid-single digit. So being better than sell-in, inventory levels slightly decreased. This is an overall statement because inside that, as you understood, we have very different dynamics country by countries and performance there, here, a little bit Leopard dots and spots characterized.

One last word on Global Travel Retail, inside EMEA, it was up by strong double digit. End of June, EMEA region accounted for 22% of group sales, down by 1 point compared to the previous year.

Now let's turn to Slide #6 and the analysis by division. So starting with Cognac. Cognac division posted an organic sales growth of 7.7%, driven by a plus 15.9% increase in volume and a negative price-mix of 8.3%, equally split between price and mix. End of June, Cognac accounted for less than 64% of our sales, up more than 4 points compared to the previous year.

Let's start with the most important region for Cognac in terms of weight, so APAC, in which China sales, as expected, were down by low single digit in Q1. I repeat in a complicated challenging market marked by soft consumer confidence as regulatory restriction on alcohol consumption.

But this performance demonstrates the solid resilience of Remy Martin and the strength of our execution capability during key direct point of touch point with the consumer like 618 e-commerce Festival. Overall, e-commerce sales as a channel penetration increased by 7 points to reach a historical high of 43% compared to Q1 overall China sales.

But to that performance for APAC, Hainan, Macau and Hong Kong contributed positively because they clearly improved, while Taiwan remained more challenging.

Overall, this was sell-in. Talking about Q1 value depletion, so best approximation of sellout in the region, we were up by low single digit, driven in terms of product by Remy Martin Club. We consider that like a pretty good performance.

In the remaining part of Asia, as already highlighted, sales were up by very strong double digit in the Q1, mostly driven also by other types of products like Louis XIII, Remy Martin XO and Remy VSOP.

Second region by weight for Cognac Americas and start with North America, so a combination of U.S. and Canada, where sales were up by mid-single digit in the quarter despite high comps. This performance was mostly driven by the U.S. and more particularly by Remy Martin 1738.

In parallel, on a negative side, Canada was still affected by destocking. This was sell-in.

Talking about value depletion, Q1 value depletion were down by mid-single digit, but sequentially improving compared to the previous quarter. This is clearly thanks to the greater resilience of Remy Martin 1738, slight improvement, even if it's still negative for Remy VSOP, and the solid concrete positive performance of Louis XIII. 12 months value depletion included one negative point or negative price-mix effect year-end year-on-year, so on 12 months rolling basis end of June.

Latin America, Latin America sales were down by very strong double digit in the quarter, impacted by high comps. Just remind that last year, at the same stage, sales were multiplied by 3. So the comps are clearly stellar to match this year.

In EMEA, Cognac sales grew by strong double digit, so positive note, Cognac inside EMEA. U.K. and Nordics were up by high teens in the quarter, driven by 1738, VSOP and Louis XIII. This performance reflects what market share gains supported by greater pricing agility, new listing and improved in-store visibility.

Europe third-party distribution cluster was down by mid-single digit, but is clearly affected by Germany. Germany is playing a big negative role, overshadowing the performance of the cluster in the quarter. This was partially offset by some green positive performance by Czechia and Switzerland, but not enough. Germany is too important to beat, to offset.

AMEI and CIS for Cognac were up by strong double digit, boosted by South Africa, which fully offset -- more than offset headwinds in Middle East. And finally, one word on Benelux and France, where we were strong double-digit up.

In terms of Q1 EMEA value depletion, we are up by strong double digit, driven by very strong performance in the Nordics, France, Italy and South Africa.

Now let's turn to Liqueurs & Spirits division on Slide #7. Liqueurs & Spirits division reported a negative performance, minus 6.6% in Q1, mostly impacted by volumes. At the end of June, Liqueurs & Spirits accounted for less than 36% in sales, down by more than 3 points compared to the previous year.

Let's now review the division performance by region. And let's start with the Americas, the most important one, and North America, in which sales were down by low single digit, reflecting some phasing effects following a strong Q4 of the previous fiscal year, as you remember.

However, the LT tracker, so which is Q1 U.S. value depletion, showed a solid growth of mid-single digit, led by all key brands and more than the others, Cointreau, The Botanist, Bruichladdich and Mount Gay. This is very positive and bodes well for the future of our recent innovation launches.

Additionally, price-mix on Cointreau only, as shown in the spreadsheet in value depletion was down 2 points compared to the previous year for the 12 months rolling period ending in June.

In Latin America, sales were down as well by mid-teens in Q1, reflecting, as already said, overall for the region is valid no matter which division in terms of comparison.

In EMEA, second region by weight for the Liqueurs & Spirits, sales were down by low double digit. U.K. and Nordics were down mid-single digit, affected by tough market condition and some destocking at 2 important key retailers.

Europe third-party cluster was down by mid-single digits. I repeat myself, but it's very important, affected by Germany, but also Italy, partially offset by solid dynamics, but not enough in Greece, Spain and Czech Republic.

Benelux and France were down by very strong double digit, while AMEI and CIS also down by strong double digit on the back of Middle East conflict, as most of our footprint in Middle East for Liqueurs & Spirits in UAE. So in this division, we are not able to compensate, so the opposite in Cognac. This was sell-in. In parallel, Q1 value depletion in EMEA were down by mid-single digit.

In APAC, in China, sales were down by strong double digit, in line with value depletion, so negative performance. The market was for Liqueurs & Spirits particularly tough in Q1 and was marked by very strong promotional activities and price disruption.

Remaining part of Asia was up mid to high single digit, driven by Australia and Japan, mainly with Bruichladdich and Telmont Champagne, while New Zealand continued to face tough market conditions and negative performance.

Last but not least, a word on non-group brands, which represent today less than 1% of the group sales, and we were down by more than 0.5 points in terms of ratio compared to the previous year. They recorded a minus 47.9% organic decline, mostly affected by the Benelux following the discontinuation of distribution of partner brands from April in this area. This is what we expected. So it's a negative performance, but it's not more negative than the expectation.

Now let me now turn to the last slide before Q&A session and our guidance for the full year '26-'27, Slide #8. No change. We expect a return to organic sales growth for the year after plus 0.2% of the previous one.

And for profitability, we expect the operating profit margin, organically speaking, to remain resilient despite the impact of tariffs and to improve slightly organically clearly. The total impact from tariffs is currently estimated at around EUR 20 million negatively, including more or less EUR 15 million in the U.S. and EUR 5 million of price undertaking delta in China based on our current assumption.

This represents in global value an increase, an additional burden of EUR 5 million compared to the previous year. But as you know, tariff development and environment in the U.S. continue to evolve rapidly, some good news, some bad news.

Despite the recent update more on the positive side, I have to admit, we will continue to remain cautious and to assume in our budget and estimation a cautious approach of 15% tariff rate on European imports and at this stage, a limited impact on refunds.

On FX, so on the exchange rates, considering the positive evolution of U.S. dollar and clearly the Chinese renminbi in the period compared to the expectation, so it's better than expected, we now expect a negative impact of around EUR 15 million in sales, equally split between H1, H2, before it was a fork between EUR 15 million and EUR 20 million.

And we remain at the same level of negative impact on operating profit from switching to organic to published to minus EUR 5 million to minus EUR 8 million with the most of the impact expected in the H2.

At the same time, one word on very disciplined capital allocation that will remain more than ever a key priority, notably through tight management, inventories, working capital needs and capital expenditure.

Finally, we maintain and reiterate our debt ratio commitment and guidance to be below 3.5 at the end of the fiscal year, which it is a key commitment for the group.

Thank you for your attention. And now I'm happy to drink a bit of water and to answer to your questions.

[Operator Instructions] Our first question comes from the line of Laurence Whyatt at Barclays.

A couple from me. Firstly, your improved performance in the U.S., I was just wondering if you have any evidence of any sort of change in consumer that you're seeing in the U.S., whether you're selling more into the on-trade than before or whether your consumer base has changed in sort of age or any other type of change in your consumer base to sort of drive that improvement in the U.S. sales?

And then secondly, you mentioned that Travel Retail had very strong double-digit growth across the group. I was just wondering how much of a benefit you've got from the restocking in China following the sort of lack of sales into the China travel retail system last year?

How much that contributed to your significant improvement? Or how much was sort of an underlying improvement in Travel Retail, excluding that restocking benefit?

Thank you for your question. So no particular point to highlight in terms of change of consumer base in the U.S. So the underlying dynamics in terms of consumer, I'm not a marketing expert, I'm not a strategic planning expert, but didn't come to my attention and some significant changes.

In terms of channel, we can say that on-trade was a bit more dynamic, but the current trading with sales growth of between low to mid-single digit was clearly also an act of will and performance of our team with a stronger-than-ever focus on the execution despite a negative market.

So the most important message from myself today at the company level is that the market is still very complicated in the U.S. And we are doing our best. And so far, in a very humble way, we are beating the market.

So we are gaining, winning market share. We do all we can to realize the best performance possible with the means we have because also with the negative threats and the volatility of the tariffs question, you cannot overinvest very easily also because you don't know what will come through tomorrow, come across if it come across normally considers luck.

So in that case, it's not the perfect translation. So there is a cautiousness about that.

No change in consumer base, strong focus on the execution, unlock every possible means to speed up value depletion. They still remain negative. So we cannot consider that what we realize is a normative one.

We improve, we remain humble and we do the best we can to increase our performance in [indiscernible] because at the end, we are all paid and we are all judged on the profit and loss and free cash flow. So it's sell-in. So -- but depletion is nice, but the end needs to match with that.

In terms of dynamics by product and by division, as I highlighted, it's important to notice that Cognac did a very good performance in the U.S. despite the difficulties of the moment. So it has not ended.

It is not something that maybe will last forever, but we have to be very satisfied what we realized. Performance was driven by 1738. We highlighted also the top of the range, Louis XIII performance. So once again, why we realized that is less of the structural movement of the consumer base of the channel modification is more the strength of the execution.

Don't forget also what's happening with the Reyes getting all the -- not all, some of the states of RNDC, some disruption linked to these changes. We had some different news in the last 2 days also for the remaining part of RNDC with Chapter 11 that will cause some additional crystallization of the existing terms and existing situation in some states. So we can really be very satisfied of the performance.

I don't want to hide the negative point mathematically speaking on the U.S. of the [indiscernible]. So the Liqueurs & Spirits, we were bad? No, we were lapping a very strong Q4, preparing the Cinco de Mayo and value depletion are clearly better than sell-in.

So everything equals, we will continue to realign that. So in a nutshell, sequential improvement, strong focus to execution, teams fighting as never a little bit less than expected in terms of performance because of the slow in the market, we are winning and gaining market share.

GTR, no doubt, the performance is only in a minimal way, taking profit or lapping the miss of sales in China last year. It's much more broad, clear, once again, execution, attention, focus. One of the first things Franck Marilly said when I took the helm 1 year ago of the company, a little bit more than 1 year ago, is that attention to the top line and focus of the Travel Retail and as well emerging market, Travel Retail, which is already installed as a channel.

So it is also clearly the reflect of the strategic view that is hammering clearly and weighing positively so far in terms of performance. And we are there to continue to serve on the strength of the Travel Retail.

We will not be every time so good in every single quarter. But this performance is not dramatically in a terrific way influenced by lapping a miss of sales last year in the China travel retail. It's only marginal.

Our next question comes from the line of Edward Mundy at Jefferies.

Two questions, please. So I appreciate the RT Forward plan is a medium-term ambition, but you hinted at a few changes, I think, in the quarter, such as VS in South Africa and duty free recovery. But are there any other early shifts in the strategy that you can point to that are helping to drive top line growth at the business?

And then the second question is, could you provide a bit more color around what's driving the improvement in Macau, Hong Kong and Hainan? And is the environment in China getting any better or worse relative to last year?

Thank you. So in terms of the weight of the new territory or new products, clearly, without giving all the elements that will be discussed in end of November because we'll be part of the new strategic journey, once again, name -- I will name drop Mr. Franck Marilly, our CEO, because it's the result of the intensity is putting on new territories and to shake our heads to try to figure out more top line in new territories, increasing the pressure.

So we are starting this journey. So far, we can count on some additional innovation that we highlighted in Slide #3, but they are not so important mathematically speaking, apart from, yes, we will continue to figure out some of that.

In Travel Retail, it is not only a matter of commercial aggressiveness, also some specific products that has been created some years ago that is delivering very good performance. One of that is Club exception, which is a specific SKU that's been created for Travel Retail to avoid any face-to-face comparison or competition inside the [Technical Difficulty]

[Foreign Language]

-- from a normal offer to more new user habits change in terms of dynamics to increase the touch point and the wave of consumption.

In terms of the second question, how much Hainan, Macau, Hong Kong contributed? The quarter was very strong. As you have seen in the past, it's a bit up and down more for the Macau and Hong Kong.

Macau used to be a very strong territory. So if the game industry will be solid enough to be back, we can be back to some extent to part of what we had in the past, not totally 100%. Hainan and Chinese border are the opposite, much more standing and lasting source of growth.

So all in all, in the quarter, a strong impact. All around the year will be much more the internal China home, we call market dynamics, that will contribute. And performance like the 618 that combined with the Super Brand Day, now realizing 8%, 10% of the top line of the year, comfort ourselves on this strategy.

Last but not least, to be highlighted, the solid resilience compared to the relative performance of the e-commerce in China in which our digital knowledge and commercial, but not only supply chain marketing execution is clearly a competitive advantage in this market.

Our next question comes from the line of Andrea Pistacchi, Bank of America.

Sorry, I just -- and probably other people got disconnected now for like a minute or 2. I know Ed just asked about China, but I -- maybe other people didn't hear the answer.

So I just wanted to ask something on China, probably framing it slightly differently from Ed's question. Could you talk about, yes, the situation in Cognac in China? Because on the one hand, you mentioned a still challenging market.

But on the other hand, you reported positive depletions, which is good. And also one of your peers earlier this week sounded more constructive sequentially on China. So do you feel that China is, I mean, while still difficult, but on an improving trajectory? And how do you feel as we get closer to the peak season on China?

And the second question, Luca, is on the rest of Asia. You reported a very strong double-digit growth there. Can you explain a bit more what is driving that? Is it a comp effect shipment phasing?

Or is it maybe a reflection of your recent territory expansion plans? And on this basis, how do you expect rest of Asia to play out for the rest of the year? And can you remind us how much today rest of Asia represents of APAC? I reckon about a quarter.

Thank you. So let's start with the -- let's talk a bit more organically about China current trading and try to explain our performance without entering the comp and bench with the Hennessy communication yesterday, even if it's your question.

Q1 sales in China were down low to mid-single digits. Value depletion also were down by low single digits. So mathematically speaking, we are negative compared to previous year.

It is what you expected, yes. It is in line a touch better, in line mathematically, a touch better in terms of quality. Because inside a market which is still marked by soft consumer confidence in our opinion and regulatory alcohol consumption restriction and tension has not lifted.

And the fact that even if in a small quarter, we have to wait for Mid-Autumn Festival for a clear direction, every time we were able to be in touch directly with the consumer, we were resilient and beating our expectation, helped by clearly Club, which is our most important weapon, and we protect that.

We protect in terms of image, in terms of price inside China. Club, which was positive in terms of value depletion. And in terms of channel, not only e-commerce, but also exploring additional way to be even more directly in touch with our consumer.

E-commerce continued to overperform compared to the overall performance, plus 7 points to reach 43%. And every time we're increasing that, we are touching new consumer. We are getting new territories because we are not in Tier 2, 3 and 4 cities and going beyond our classical territories.

And on top, which is a slight positive element, the performance was homogeneous between a direct and direct channel, weighing for more or less 50% of sales in the quarter. So meaning that -- and this is something important, indirect and wholesaler Tier 1, we are not scared also to be in line with our performance.

So clearly negative, but still much less than could have been and in line with the expectation. The remaining part of the equation, which are inventory, inventory remains reasonably healthy across the brands in June.

In terms of performance, which is the part linked to the brands of your question, Cognac was clearly showing a great resilience, much better than Liqueurs & Spirits, driven by Club in sell-in and value depletion.

High-end brands were more contrasted. In Louis XIII, we need to split that. Louis XIII is more in our journey or change the way we are communicating and distributing that, even if we have to improve the top line and the sell-in impact in the very next future without delaying any further.

For XO, it is still something that needs to improve in China specifically and in which also the aggressiveness of our competitors, specifically only an XO was hitting our performance.

It is that we are bad compared to others. In my personal opinion, it's more a game of change of route to market inside the rhythm and the pattern of Big Asia for other peers than real consumption.

But the final result will be given by what will be published by every peers in the next quarter. Ourselves, looking into our house, XO performance was not in line with the expectation. For Club and other part of the Cognac portfolio was more than -- bigger and more than in line than our expectation.

Liqueurs & Spirits, very negative, a bit of deception. So no particularly negative feeling about the Cognac desirability in China and Cognac performance. It's more the other way around, a bit of unsatisfaction and need to correct the performance for BHD whiskey and even more strategic for Cointreau.

Rest of Asia is a bit what you said. There is some additional territories that are starting to ramp up. There are additional pressure and aggressiveness, and the performance of Travel Retail that in published figure is embedded in APAC region is clearly visible.

I repeat what I already answered to Laurence of Barclays. It is not only a matter of lapping negative performance or absence of top line of last year in China, which is explaining [indiscernible] performance.

We are doing things better. And inside that Club exception, it is a clear weapon that we gave some years that is improving in terms of performance inside Travel Retail. And being a specific SKUs makes no direct bench on comp negatively affecting Club into China. This is very important.

In terms of weight, today is a minor in part. China is clearly overshadowing the global part of the overall performance of APAC, but will be increasing and starting as it was when I arrived in the group 13 years ago, starting with Travel Retail.

Travel Retail used to be very, very much more important inside APAC. The important thing I insist is to develop a complementary offer in order to have a price war inside comp territories and Travel Retail's territories. So playing on different SKUs, different offer over avoiding any face-to-face comparison.

Otherwise, this is the destroying of prices of base of consumption. It is the devaluation war internally. We want to avoid that.

Our next question comes from the line of Trevor Stirling, Bernstein.

Two questions for me on the U.S., please. So I think in the U.S., if I got it right, you said that shipments was up low single digits to mid-single digits, depletions were down slightly negative, but the stock levels improved slightly at around 4 months. I just wonder if you could explain how that -- the math of how that works.

And the second thing perhaps more importantly, in the U.S., I guess it's over a year now since we have that change in leadership of one of your major competitors at the group level. Are you starting to see the pricing intensity lessen? Maybe just want to ask this, I don't expect to see prices get any worse, but are prices still falling in U.S. Cognac from your competitors?

Can you repeat the second one because I didn't hear well. So we have some technical probably today. The second one.

Yes. Sure, very shortly. Are prices still falling in U.S. Cognac? Your competitors, are they still further increasing the level of discounting? Or are we starting to see stability at the new lower price points?

Thank you. So I'll start with the second one. The same, the same that can be different in terms of promotional intensity. It can be different state by state, the more fighted one in Illinois, clearly, everybody is fighting with 2 nights and not one. If you go in more classical one, less of that. But no major delta, no major differences, still being a very big level.

First question, and thank you for your question. The math are correct. Actually, we destocked more or less EUR 5 million to EUR 6 million in the U.S. Why? Because the base in the quarter, the absolute value of depletion value was clearly bigger, higher than sell-in.

So even if you are growing from a lower base and they are decreasing, you are destocking in that way. So that's important. In a given quarter, it's not so important if you want, but we follow that, not only the percentage of growth, of reduction, of decrease, but also the absolute value because despite the dynamics of one quarter, in fact specific momentum like OND, October, November, December or the end of the year, when you do the financial statement of destocking and stocking, we rebalance that.

And as I said, last year was very important for the second year in a row, the absolute value, the value depletion estimated on a comparable basis was bigger, the absolute value of sell-in. So we are starting from a higher base of guests coming to our house to have dinner.

So we lowered what we have in the fridge compared to the previous year. Even if there were negative performance, the absolute value was big enough to justify a destocking. I hope it is clear.

Our next question comes from the line of Simon Hales from Citi.

So my first question was just carrying on the U.S. theme, if possible. You mentioned that you saw some one-off related distribution change benefits in the quarter.

I just sort of wonder how big a benefit that was and how we should think about those distribution changes continuing to impact future quarters from here? Or are those changes now largely in the base as far as the U.S. is concerned? So that's the first one.

And then secondly, I wonder if you could just talk a little bit more generally about the EMEA region, particularly Europe. You talked about the high levels of promotional intensity you've seen there. Is that largely a reference to Germany and sort of competition on the ground there? Or is that much broader where you're seeing that promotional intensity sort of coming through?

And related to that, I wonder if you could talk about the exit rates and perhaps early trading in July that you may have seen in Europe given the better weather we've seen. Is that helping your Liqueurs & Spirits business in particular at all?

Thank you so much. So let's start with the last one, and we profit on that, not talking only about EMEA, but more overall. So what are the exit at the current trading in July at the group level, which is very important.

In terms of sell-in, July is in line with our expectation overall, with EMEA still a bit complicated, but Travel Retail overall worldwide level offsetting that. It's more important, the current trend and the current trading in July for value depletion.

Without giving specific figures a lot, but only want to give you the flavor of that. U.S. is still negative because the comps become higher. So we'll be back to the question number one, distribution changing up and down in the U.S.

EMEA remained contrasted. When I say contrasted, not everything is negative. So U.K. and Nordics, I highlighted this year seems to start with the right foot. Africa is doing very good compared to our peers, we are able to absorb, thanks to, yes, but not only more aggressive penetration inside some markets to compensate the Middle East. So for us, has been digested, so which is not evident at the moment.

Southern Europe is not doing badly, even if it's a lower scale. And other part, more [indiscernible] part spot performance are positive. So not everything is negative.

But the impact of Germany is so important and will be improving progressively because we are getting more promotional slots, even if the environment is negative, that is negatively impacting the global performance.

On top, do not forget also it is expected that Benelux loss of distribution is waiving not only on group brands, but also in our brands because we are adjusting the operation in terms of who will distribute our products in Benelux so far.

So EMEA is complicated, still contrasted, both in sell-in and sellout, even if not everything needs to be throw out with the water of the bathroom. There is some positive things.

What is missing, which is important for you to understand. What's happening in China in current trading in sellout of the value depletion. July is so far very positive. So it is something that will last.

We will see that only through Mid-Autumn Festival dynamics. July is not the biggest month of the year, but after a strong plus 12.3% in 618, running a very strong, I repeat, a very [Technical Difficulty].

We are reconnecting. Yes, sorry, we are experiencing a slight problem.

Maya, can we talk or it's not working anymore?

Yes, you can talk through this microphone. Thank you.

It's working now?

Yes, it is. You can just keep using this microphone. Thank you.

So this is an example of disruption on distribution. So you have up and down. So I don't know where you stand. I hope you listened to me. Houston, we have a problem.

So I tried to explain the exit rate. I repeat myself, good dynamics at the end, the glass is more full than empty in terms of value depletion, in terms of distributional changes in the U.S. concerning to the performance of the market and even more by ourselves. Q1 was a bit influenced by a lack of comp.

You remember last year, there was an impact because of the California change that made some important impact positively. So we need to lap that. We lapped that. So it's positive.

And the Reyes takeover from the part of some states of RNDC caused a speed-up of the operation. How much of that will be normative? We'll see at the end of the Q2. Clearly, month by month, when you have this kind of disruption, monthly results do not mean so much.

On top, I know -- I think that you witnessed that 2 days ago, RNDC remaining part, which is still important for part of our distribution between 5% and 8% of our turnover, considering our estimation so far for the full year has been put under Chapter 11.

So apart from some technical element linked to the existing eventually AR, account receivable position, but it's marginal. The point is what will happen in terms of dynamics of the top line.

When you are in Chapter 11, you crystallize a bit everything. So you put a bit of pause on all the operation by the law. So we suspect we might slow down a bit all the operational transition. We will see, but we need to -- we are waiting and thinking that will be -- eventually have a short-term negative impact on our operation.

We are doing everything we can to cope with that and to solve that. But Chapter 11 of the company is something that you cannot avoid if it happened. So it's the way it is.

So the distribution change of this year will be to wait acceleration when the transition from Reyes had been completed without any specific accident or delaying by the law and a bit more slow compared to the expectation when you have some states that were not sold to Reyes that need to be changed in terms of -- or to be -- to continue until the end of the year or when the Chapter 11 pause will be defined, somebody buy, I don't know, will be addressed.

So this will weigh a bit on the depletion and on the top line dynamics, making the expectation in terms of normative quarters more complicated than before.

But again, don't quit and don't say goodbye on this note, giving a negative point or negative impression about the performance. U.S. teams, like China, like every team in the world are fighting in a very complicated market, and they are committing and they are realizing market share gains.

And so far, we are continuing to fight and the guidance for the year is confirmed despite all the cloud or negative eventually threats that we might invent or finger there.

Sorry for the technical disruption of today. Clearly, I'm very, very sorry, I apologize. And hope that our figures will be -- continue to be better than our previous one. Talk with you in October and even more with Franck end of November. Until then, please keep safe and have a nice summer. Thank you so much.

Thank you. And we apologize as well, from the technical team, for technical problems. This concludes today's conference. You can now disconnect.

Good morning, everyone, and thank you for being with us this morning for Rémy Cointreau '25-'26 full-year results. I'm here with Franck Marilly, our CEO; and Luca Marotta, our Deputy CEO and CFO. The both of them will, of course, take you through the detailed results. Before we review the year in more detail, I would like to share a few reflections on where we stand today and how the Board views the future of the group. Firstly, it is with a clear head that we must acknowledge the reality we live in.

Over the past 3 years, Rémy Cointreau has operated in an exceptionally challenging macroeconomic and geopolitical environment. At the same time, our performance has fallen short of our ambitions. Consumer behaviors are evolving. Market dynamics are changing, and it is key for us to adapt accordingly. Yet, despite these numerous challenges, we remain absolutely confident in our ability to create value. We own a portfolio of exceptional brands with significant untapped potential. As illustrated by the image introducing this section, we believe our brands are uniquely positioned in a world where experiences rather than ownership increasingly becomes the focus of our customers.

Our brands are not simply offering products. They embody and deliver experiences by their very nature, creating memorable moments of sharing, celebration and connection. We are also encouraged by the first signs of recovery emerging across several key markets. Beyond cognac, we see attractive opportunities to accelerate growth and further diversify our sources of value creation. This confidence is reflected in the launch of RC Forward. More than a cost-cutting plan, it is an ambitious transformation program designed to unlock the group's full potential. Its objective is to simplify the way we operate, accelerate decision-making and strengthen execution across the organization.

By generating additional resources through efficiencies across everything we do, it will allow us to reinvest behind our brands and growth opportunities while building a company that is less cyclical, more agile and more resilient. Finally, throughout this journey, we remain guided by a long-term perspective. We will continue to invest in the strength and desirability of our brands while maintaining disciplined financial stewardship. As a family-controlled company with a long-term horizon, we remain focused on creating sustainable value for all our stakeholders and on strengthening the group for future generations.

With this in mind, I will now hand over to Franck, who will review our performance and priorities in greater detail.

Thank you, Marie-Amelie. Good morning, everyone, and thank you for joining us today. I will begin with a quick overview of full year '25/'26. Luca will detail our financial results, and I will conclude by giving you an update on the outlook and of course, our transformation plan, RC Forward. Let's begin with a review of our full year business performance. I'm now on Slide 5. Group sales totaled EUR 935.3 million, representing a slight organic growth of plus 0.2% versus last year. COP reached EUR 165.4 million, down minus 11.5% on an organic basis, resulting in a margin of 17.7%, down 2.6 points organically.

This evolution mainly reflects the decline in gross margin, including the impact of tariff as well as an unfavorable price/mix and higher production cost.

This was partially offset by disciplined control of overhead costs while we took the deliberate decision to maintain marketing investment at a high level with A&P at 19.7% of sales. Despite a challenging context, we have taken important initiatives to protect as much as possible our free cash flow generation. Consequently, it improved from EUR 19.2 million last year to EUR 53.8 million. In this context, our net debt-to-EBITDA ratio increased slightly, reaching 3.22x at the end of March. While these results are clearly not sufficient and remain below our ambitions, they are nonetheless consistent with the objectives we had set for the year and represent a first step in the right direction.

These financial results have been achieved in a responsible way. Rémy Cointreau continued to deploy its Sustainable Exception -- this road map and confirmed further progress in its transformational journey. Under a stellar pillar, the group committed in 2022 to aligning its climate trajectory with the Paris Agreement with targets validated by the science-based targets initiative. For the second consecutive year, the group's carbon emissions remain ahead of its trajectory, both for direct emissions and across its value chain with a 17% reduction versus the 2021 baseline.

This momentum was supported by concrete initiatives implemented across the group's houses, including the expansion of solar electricity production. The group also continued its trajectory to reduce water withdrawal, particularly at sites located in water-stressed areas. The objective is to achieve a 20% reduction by 2030 compared with '22/'23 levels. Once again, this year, performance exceeded the target trajectory with water withdrawals down minus 36%. This achievement reflects the continued mobilization of production sites around treatment process optimization, loss reduction and infrastructure improvements.

Regarding agricultural sourcing, the group continued supporting suppliers towards sustainable or responsible agriculture certifications, reaching 77% certified strategic agricultural raw materials compared with 68% last year. In addition, a key milestone was achieved in 2025 by Domaine des Hautes Glaces and Telmont, which obtained regenerative organic certified ROC certification for their owned estates, reinforcing their pioneering position in regenerative agriculture. Lastly, under the people pillar, the group confirmed further progress in diversity and equal opportunity with women now representing 50% of the Executive Committee, exceeding the permanent target of 40%.

Full year '25/'26 was clearly a transition year for Rémy Cointreau, a year where we started with building momentum while remaining fully aware that we are still at the beginning of a journey. Over the past 12 months, our priority was first to stabilize the business before reaccelerating growth. In this environment, we remain fully committed to our long-term value strategy while also demonstrating greater pricing agility whenever necessary to adapt to local market conditions and protect competitiveness. We also accelerated innovation with launches aligned with evolving consumer trends and new consumption occasions.

In the U.S., we started to regain ground with Remy Martin gaining plus 0.6 points of market share, including plus 1.1 points on VSOP, an encouraging first step in our ambition to reconquer this key market. At the same time, we continue to leverage our key strengths in China, where our brands further reinforce their leadership position. These are important first steps even if we are not yet where we want to be. At the same time, we remain extremely focused on defending profitability in what remain a very adverse environment. In this context, protecting our industry-leading gross margin remain a key focus.

We also implemented strict discipline on overhead cost without compromising our A&P investment and launched multiple mitigation initiatives to limit the impact of tariff. Finally, protecting cash generation and debt leverage as much as possible remains central to our actions throughout the year. We took decisive actions to protect cash, optimize working capital through a reduction of [indiscernible] commitments, and we reduced further our level of CapEx to essentials. Finally, this year was also about preparing for the future. We started evolving our organization to become more agile, more efficient and more business-driven.

This transformation journey is essential to strengthen our execution capabilities, accelerate decision-making and support a broader recovery over the coming years. A quick word on some of the year's achievement that helped stabilize top line performance across our key regions. Starting with the U.S. on Slide 8. After 2 years of underperformance, our brands are regaining momentum and regaining market share, both in Cognac and across our key liquors and spirits brands. Our total depletions remained negative at the end of March, but continued to improve sequentially in what remains a difficult and slowing market environment.

While our Liquers & Spirits portfolio volume depletions are still positive, there is still work to be done in Cognac. There are several positive elements to highlight in China, which is clearly the markets where we are significantly outperforming. Remy Martin gained an additional 3 points of market share in volume depletions during calendar year 2025, mainly driven by the strong momentum of Club -- at the same time, we further strengthened our leadership position in e-commerce, gaining an additional 10 points of market share. Our last key achievement that I would like to highlight on Slide 10 was also our ability to leverage additional growth opportunities across the portfolio.

First, we significantly strengthened our innovation pipeline with launches spanning Cognac, liquors and spirits, ready-to-drink formats and new consumer occasions. These innovations are helping us to reinforce the brand desirability, recruit new customers and adapt to evolving consumption trends while remaining fully aligned with our premium positioning. We also accelerated our presence in categories and formats with strong momentum, particularly around convenience, mixology and accessibility. At the same time, global Travel Retail delivered a strong rebound with sales up 15% versus last year.

This channel is clearly a strategic priority for us over the medium term. Today, we believe our position remains underscaled relative to peers, meaning there is still meaningful upside potential to capture going forward. This gives us confidence in our ability to progressively broaden our growth levers beyond our traditional markets and consumption occasions.

Thank you, Franck. Now let's look into financial statements, starting with the full year income statement. As already mentioned, organic sales were up by 0.2%. Based on this, gross profit decreased by 5% in organic terms, implying 3.7 points of deterioration in gross margin. This full year gross margin contraction has been driven by incremental tariff custom duties and unfavorable price/mix effect and some production cost pressure. At the same time, sales and marketing net expenses were down by 2.8% organically. But within this total, we have the A&P expenses line down by 3% organically, representing 19.7% of sales. i.e., an organic decrease of 0.7 points.

Despite the continued pressure on sales, we have decided to maintain our investments focus behind our brands to protect their desirability and to be prepared for the recovery. However, we did that while keeping a clear focus on efficiency and selectivity. As a consequence, we increased the share of below-the-line spending relative to the above the line during the period. As a result, the share of below-the-line investment was higher compared to the above-the-line spend. Above the line spend, what it is, as a reminder, is traditional media digital PR, which represented 45% of the A&P, while below the line more directly driven to sales and a quicker payback on volumes and values, investment represented 55%.

In complement, additionally, digital represented more than 65%, 2/3 of global ATL. So you can say that around 30% of our total A&P spending is digital. Now let's focus on distribution costs, which decreased by 2.5% organically, but also including a one-off related to a compensation indemnity, as you remember, already recorded in H1. Administrative net expenses were almost flat on an organic basis, reflecting continued discipline on overhead costs following optimization made last year.

Overall, current operating profit was down minus 11.5% organically and minus 23.8% on a reported basis after accounting for a negative currency impact of minus EUR 26.6 million. In terms of margin profile, COP margin stood at 17.7%, down 4.4 points as reported, but only 2.6 points organically. Now let's take a look at the group's operating -- current operating margin bridge. As said, it was down 4.4 points as reported, reaching 17.7%. This breaks down into an organic decrease of 2.6 points and a negative currency effect in terms of points of 1.8 points. The organic evolution of the current operating margin largely reflects a deterioration of the gross margin.

This deterioration was reduced by ongoing discipline in distribution and structure costs. More detail, -- gross margin, as already said, was down 3.7 points, of which more or less 40% is linked to incremental custom duties alongside tariff U.S. and price undertake in China, alongside an unfavorable price mix, mostly pricing in the current environment and inflation related to cost of goods, particularly on Cognac, ODD and cost of goods.

Second, A&P ratio decreased slightly by 0.7 points, as said, but remained at the high level compared to the turnover delivered.

Third, the ratio of distribution and structural cost was down by 0.4 points and decreased by EUR 3.7 million in absolute terms. Please remember that this is a key achievement considering the reintegration of around EUR 11 million of last year one-off savings. Let's move on, on the remaining items in the income statement on Page 14. In the full year '25/'26, operating profit included EUR 13.9 million of other noncurrent income or expenses. I'll be back on that point. Financial charges slightly decreased from EUR 42.6 million to EUR 42.1 million. As well, I will go into more details on during the next slides.

Reported tax rate was almost stable, flat at 28.7% -- no additional change related to exceptional corporate tax contribution in France has been recorded, you remember last year. So no additional this year. But excluding nonrecurring items, tax rates comparably increased by 1 point from 27.2% to 28.2%. For the next year, so already started '26-'27, we expect tax rate to land at around 29%. As a result, net profit group share came in at EUR 78.7 million, down 35.1% on a reported basis, i.e., a net margin of 8.4%, down 3.9 points.

Earnings per share came out at EUR 1.51, down 36% reportedly, but equivalent to EUR 1.71, EUR 0.20 more, excluding nonrecurring items. As said, now we need to analyze the nonrecurring items. Mainly inside this EUR 13.9 million, we have to highlight 2 different elements, notably an impairment on Westland assets for EUR 9.5 million and restructuring costs in Benelux related to the evolution of the distribution network. We are terminating our current distribution agreement and have launched an RFP for this cluster. This was the EUR 13.9 million negative, but we have also a tax shield effect, so EUR 3.4 million of positive nonrecurring tax items linked to this charge.

A few comments on net financial expenses, as promised, which amounted to EUR 42.1 million in full year '25, '26 compared to EUR 42.6 million for the previous one. Let's start with net debt servicing costs. We were almost stable in absolute terms at EUR 33.6 million, and our cost of debt decreased from 4.07% to 3.86%. Net currency gains stood at 0.8% this year versus a loss of EUR 1.3 million last year. And finally, other financial expenses stood at EUR 9.2 million in full year '25-'26. For the year '26, '27, we expect our financial charges globally to land at more than EUR 45 million.

Now let's analyze the free cash flow generation and the net debt evolution on Page 17. As already announced and explained by Franck, free cash flow increased this year from EUR 19.2 million to EUR 53.8 million in '25/'26 or if you want, from EUR 27.6 million to EUR 58.2 million, excluding nonrecurring items. But on top, excluding EUR 28 million tax refund that we had in '24, '25 related to prior overpayment, this represents a significant improvement switching from a negative free cash flow on a comparable basis last year to EUR 53.8 million this year.

This strong free cash flow improvement reflects a meaningful decrease in EBITDA, but underlying but more than offset by 2 factors. First, significant decrease of other working capital items outflow, i.e., as you can see, a positive variance effect of EUR 77.8 million, mostly driven by some phasing effect in trade payables between last year and this year. This improvement is very important, but not 100% of that can be considered as structural. In the same time, the working cap outflow related to eaux-de-vie, the most strategic part, let me say that and other spirits in aging process was also down as expected by EUR 14.1 million due to the reduction of eaux-de-vie purchases as part of the renegotiation of contract in March 2025.

Overall, total working capital outflow evolution is significant; favorable has been reduced by EUR 91.9 million. Second element, a decrease of the EUR 14.2 million of CapEx outflow following the optimization action that we decided on that line to protect even more at the maximum our free cash flow evolution. This was the operational part, but there are also other cash flow inflows outflows. In that case, other cash flows outflows increased, so it's a negative one, by EUR 23.9 million. This was mostly driven by the cash dividend paid last year from EUR 41 million to EUR 58.8 million.

As a result, at the end of March 2026, our net financial debt stood at EUR 690.4 million, up by EUR 15 million from March '25. Consequently, our ratio is up from 2.4x in March 2025 to 3.22x in March '26. Please pay attention, looking forward, our objective is clear, remaining below 3.5 in this kind of ratio, so below clearly our covenant at the end of the full year '26, '27. On Slide #18, as a matter of fact of additional focus we will be putting and we will be putting even more on free cash flow and conversion of debt into EBITDA in the future. Let's talk about these indicators, which is a very peculiar one for our industry, particularly for players heavily exposed to aging inventories.

The analysis of its evolution highlights a strong year year-on-year volatility, primarily driven by changes in EBITDA. As you can see, during peak periods, '20 to '21, the free cash flow conversion reached 45%, supported by the initial COVID-driven business boom and the measured level of ODV purchases. In '21, '22, free cash flow conversion was also high at 24%, driven by record high EBITDA during the COVID peak, but partially offset by the reinforcement -- strong reinforcement of our future [indiscernible] supply coverage. Structurally, our business model includes some inertia due to the today purchases being made and committed even before they will happen and to support future development and future growth.

I've told you last year that a more normalized level, excluding the positive effects of COVID and the current adverse context and also up and down in other working capital items would be in the range of 15% to 20% range. While achieving a 27% free cash flow conversion rate this year is a very important effect despite the impact of tariff is a very positive outcome I insist, it is important to recognize that part of that performance also reflects a favorable phasing effect on trade payables. To conclude, in a nutshell, this is a great achievement considering all the challenges we had to face.

It is sustainable, too early to say, but it is definitely our midterm goal. I'll be back even more clear on that during November presentation for the midterm plan. Now let's move on the impact of the currency hedges, a bit technical but important because EBITDA is also composed for a ratio by for exchanges. The group reported a negative translation impact of EUR 51.4 million on sales and a negative translation effect of EUR 26.6 million on operating profit in '25/'26. This mainly reflects the evolution of the U.S. dollar and the Chinese renminbi.

In last year, '25-'26, we recorded a deterioration of the average euro-dollar conversion rate from 1.07 to 1.16, which is a huge negative swings. -- more dollar for the same euro and the euro-renminbi same scale conversion rate from 7.76 to 8.23 for EUR 0.10. In addition, our average hedged rate deteriorated from 1.09 to 1.15 in terms of dollars in '25-'26 and deteriorated from RMB 7.65 to RMB 8.21 for EUR 0.10 in '25/'26. This was the past. Let's look at the forecast for the full year '26-'27.

Assuming a conversion rate of 1.19 on euro-U.S. dollar and 8.30 on euro-Chinese RMB as well as a hedge rate of USD 1.18, 8.25 on RMB, we anticipate a negative impact between EUR 15 million and EUR 20 million on sales with a phasing 50-50 H1, H2 and between minus EUR 5 million and minus EUR 8 million, so far less your previous estimation -- our previous estimation 6 months ago for the year '26, '27 on operating profit, and this will happen mostly in H2.

So still negative, but more modest and moderate compared to the previous estimation and we discussed together 6, 9 months ago. And you can read on the slide what is very important for you, the Forex sensitivity by currency. As the evolution of the U.S. dollar exchange rate remained very volatile also That of euro-renminbi we will continue to share with you an update every quarter. At this stage, for the year that just started '26-'27, we already covered more or less 100% of our net U.S. dollar exposure, but which around 60%, so more than the half of option.

So we'll be flexible with some reactivity. On Chinese RMB, we already cover 75%, so a bit less of our net Chinese RMB forecast exposure, of which 55% of option. Now let's move on the balance sheet overview, where total assets liabilities stood at EUR 3.46 billion, up EUR 32 million compared to '24-'25. On the asset side, the global inventory increased by EUR 62 million to reach EUR 2.17 billion due to the purchase of the young ODV and an increase in our inventory levels given the current context.

Inventories now represent 63% of our total assets, up 2 points from last year. This was the left side on the other part on the right side on liabilities, the shareholder equity is almost flat versus last year, mainly driven by the net income offset by the payment of the dividend related to the fiscal year of '24-'25. Net gearing, the group net debt-to-equity ratio was slightly up over the period from 35% to 36%, reflecting the increase of our financial debt. Now moving on the ROCE slide, Slide #21. Our ratio came in at 7.7% in '25, '26, down 2.6 points on a reported basis and down 1.4 points in organic terms.

This includes an organic decrease of 1.4% in ROCE of the group brands and the negative swing in the Partner Brands ROCE. ROCE evolution is the result of an asymmetry clearly visible between an organic increase of 2.1% in employed capital and a strong organic decline, mathematically speaking, of minus 11.5% in COP. The group continues to invest as part of this in long-term contracts. So it's quite normal to have this asymmetry so far. This is particularly the case for the Cognac division. Its ROCE declined by 1.7 points organically to 8.1% on the back of an increase, as I said, of 3.1% on employed capital and a COP decline of 12.6%.

In '25, '26, the group continued to invest in aging inventories as part of this long-term contract, less than before, but still and to a lesser extent on CapEx. Talking about Liqueurs& Spirits division, ROCE decreased by 0.3 points, so margin decrease to reach organically 10.8%. This evolution reflects a decrease of the employed capital as we have more flexibility compared to the Cognac or the long-term engagement, minus 1% organically and at the same time, a decrease of 3.1% in the operating profit.

Let's get a look at the employed capital bridge on Slide 22. The overall amount increased by EUR 32.2 million, mainly split between an organic increase of EUR 45 million and the negative currency impact in that case, it's helpful, the negative impact of EUR 12.8 million. On organic side, the 2.1% year-on-year increase in capital employed is mostly driven by strong increase in hedging inventories, partially offset by strong optimization of the other working cap items. Next, Slide #23, let's talk about the yearly dividend. In light of the current environment and our focus on deleveraging, the Board has decided to submit for shareholder approval a temporary calibration of the dividend while maintaining an attractive level of shareholder return.

At the AGM on July 21, 2026, shareholders will therefore be asked to approve an ordinary dividend of EUR 0.75 per share composed by EUR 0.50 in cash and EUR 0.25 with the option to receive the payment in cash per share. So there is a scrip option for 1/3 of the global amount. This proposal, mathematically speaking, represent still a 50% payout ratio based on EPS EUR 1.51 and a yield of 1.66%, on the average share price over the fiscal year, which was EUR 45.07. Last year, the yield was EUR 2.22. So 50% payout even if the dividend is cut by 50% compared to the previous year.

It will result in an expected cash outflow of maximum EUR 40 million to be compared to around EUR 59 million this year -- last year, '25, '26. This measured adjustment reflects our disciplined approach to capital allocation, protecting the balance sheet and supporting the deleveraging in the short term, while at the same time, remain confident in the group medium-term recovery and value creation potential. And clearly, on top, a shareholder return that remains attractive compared to the payout ratio that I showed just before. Thank you for your attention, and I will now hand over to Franck.

Thank you, Luca. Before moving into the detailed guidance, -- let me first highlight the broader context in which this guidance has been built. Several variables remain uncertain, including the level of U.S. tariff and the potential reimbursement of tariffs already paid, geopolitical developments in the Middle East, the global macroeconomic environment and consumer trends as well as ongoing regulatory restrictions on consumption in China. Some of these factors could potentially provide upside such as the reimbursement of tariff paid last year.

However, while these external variables may still shape the year, our determination is very clear. We intend to perform, transform and remain resilient amid persistent volatility. To achieve this, we will leverage innovation and greater pricing agility, accelerate our non-cognac brands while capturing all available opportunities in Cognac and turn the disruption in U.S. distribution into a growth opportunity. At the same time, we will not compromise on brand-building investment, but we will refocus A&P spending on fewer brands and regions to maximize impact.

Finally, we will place a strong emphasis on execution, efficiency, early wins from RC forward and a more agile organization to support delivery throughout the year. As you understood, top line recovery is my #1 priority. The recovery will be gradual, but the progress achieved in ' 25, '26 clearly needs to continue and further materialize in '26, '27. A number of initiatives are already underway across our key regions and brands, and I would like to highlight some of the key actions supporting our return to growth. Let me start with the U.S. on Page 26, where our ambition is very clear to continue outperforming the market and regain market shares.

First, we want to continue leveraging the rapidly evolving distribution landscape in the U.S. to optimize our route-to -market and capture new opportunities. The ongoing reshaping of the industry creates opportunities for us to be more agile, more targeted and ultimately more effective commercially. At the same time, we will accelerate in small-sized format and further strengthen our revenue growth management capabilities. Innovation will also remain a key growth contributor. On Cognac, the priority is clearly to rebuild momentum. We are launching a new global brand platform for Remy Martin to reinforce desirability while revitalizing VSOP through range extensions, increased A&P support and stronger RGM execution.

We also want to recruit new consumers and broaden consumption occasions, notably by capturing more spirit drinkers and developing new occasions with our Remy national rollout. Beyond Cognac, we see significant opportunities to accelerate our non-cognac categories through our key growth platforms, Cointreau and -- the Botanist. Moving to China on Slide 27. Our objective is to continue to gain market share while leveraging the solid momentum of Remy Martin Club as a key growth engine. In Cognac, the priority is first to sustain the strong performance of RM Club.

This year, we will notably further leverage collaborations and culturally relevant activations. We also see some upside in VSOP, notably through stronger on-trade presence aimed at broadening occasions and recruiting younger consumers. At the same time, we will continue to leverage dinner and banquet occasions to revitalize high-end segments. Beyond Cognac, we also intend to accelerate the non-cognac development to further diversify our growth profile in China. For Cointreau, the ambition is to maintain our leadership position within liquors while accelerating growth through new opportunities linked to cocktail culture, younger consumers and more casual on-trade occasions.

For Bruichladdich, the strategy is to evolve from a niche prestige positioning toward a more scalable super premium brand, benefiting from the steadily growing Chinese whiskey consumer base and changing consumption behaviors, increasingly focused on personal pleasure and experiential engagement. Finally, we also want to unlock additional channel opportunities across China. We will continue to leverage banquet occasions while adopting an increasingly client-centric approach and delivering a more seamless omnichannel experience. At the same time, we will support the growth of our non-cognac portfolio by expanding our presence in convenience stores and developing new on-trade opportunities.

To accelerate these ambitions, we are also implementing a new commercial organization designed to strengthen execution and support our new phase of growth beyond the Guangdong province. Beyond the U.S. and China, we also have several sizable growth opportunities across the rest of the portfolio and geographies that can meaningfully enhance the group's growth profile. I'm now on Page 28. Starting with Global Travel Retail. A new organization will be implemented shortly to accelerate execution and sharpen focus on airports.

We also want to accelerate our Louis XIII while leveraging the strong momentum currently seen on club exception.

Innovation will remain an important contributor alongside greater pricing agility on Bruichladdich. Moving to emerging markets, which represent an important long-term growth opportunity for the group and a key pillar of our diversification strategy. To fully capture this potential, we will establish a dedicated business unit in second half, providing greater focus and allowing us to prepare these markets for faster future growth.

In India, we are accelerating through a new route-to-market model that has been implemented since April and which should strengthen our commercial reach and execution capabilities. In Africa, we will continue to leverage the strong momentum generated by the successful launch of Remy Martin VS in South Africa and further build on this encouraging start. And in Latin America, we see additional opportunities to accelerate growth, particularly in Brazil. Together, all these initiatives will help establish emerging markets as a meaningful new growth platform for the group over the coming years.

Let me now turn to our guidance for '26, '27 on Slide 29. As discussed earlier, the environment remains volatile and visibility is still limited on several external parameters. Nevertheless, based on what we see today, we expect to return to organic sales growth for the year. On profitability, we expect COP margin to remain resilient despite the impact of tariff and to improve slightly organically. The total impact from tariff is currently estimated at around EUR 20 million, including approximately EUR 15 million in the U.S. and EUR 5 million in China based on the current assumptions.

This represents an increase of EUR 5 million versus last year. Tariff developments in the U.S. continue to evolve rapidly. Based on the information available today, we have assumed a cautious 15% tariff rate on European imports. On foreign exchange, we expect a negative impact of around EUR 15 million to EUR 20 million on sales and around EUR 5 million to EUR 8 million on COP. At the same time, disciplined capital allocation will remain a key priority, notably through tight management of inventories and CapEx. Finally, maintaining our debt ratio below 3.5x at the end of the year is a key focus for the group.

Beyond the short-term guidance, we're also taking decisive actions to strengthen the group structurally through RC Forward. This transformation plan is designed as a strong enabler to support our medium-term strategy and progressively reduce the group's dependency on macroeconomic cycles. The ambition is threefold. First, strengthen our foundation and better prepare the group for the future. Second, unlock additional top line growth through sharper and more effective execution across markets, brands and channels. And third, generate value across all levels of the organization in order to fuel top line growth while reinforcing COP profitability.

As part of RC Forward, our ambition is to generate significant gross value creation of EUR 100 million over the next 3 years, all things alike and at the constant foreign exchange versus '25, '26. The objective is to progressively deliver these gains by '28, '29 through a combination of top line acceleration, stronger commercial execution and procurement optimization. Three main levers will drive this plan. First, driving sizable top line project that will help shape our medium-term growth trajectory; second, improving sales execution across regions and channels; and third, unlocking procurement efficiencies through greater centralization and tighter discipline.

At the same time, we're conducting an ongoing in-depth analysis across our current brand portfolio with no sacred cows. Overall, the gross efficiency gains would be equivalent to a 3-year COP CAGR of 17%, all things alike. Let me now briefly illustrate the 3 major battles at the core of RC Forward on Slide 32. The first battle is to drive sizable top line projects that can shape our medium-term growth trajectory. This includes launching a breakthrough cognac innovation in Q1 of '27, '28 in the U.S. aimed at recruiting new consumers and creating new occasions, unlocking the full potential of Remy Martin XO, starting with Asia as a key market and fully capturing the potential of our Prestige division.

At the same time, we intend to scale up emerging markets and accelerate the expansion of global travel retail, both of which represent important growth platforms for the future that we expect to double by '28, '29. The second battle is to improve sales execution. This starts with a full reassessment of our go-to-market models in the U.S., targeted route to market. In Europe and adapting sales forces to better capture white spaces opportunities in China.

We also want to further strengthen revenue growth management and maximize returns on A&P investment by refocusing allocations on key brands and regions, optimizing media mix and improving ROI measurement capabilities. The third battle is procurement efficiency through greater centralization. The objective is to unlock synergies across markets and brands, notably in A&P purchasing, optimize the operating model, improve spend visibility and discipline centrally and challenge specification through packaging, re-specification and supplier negotiations.

Finally, all of this will be supported by a clear and more agile organization, notably through a clarification of our marketing operating model and a simplification of internal processes within support functions to ensure greater commercial focus and faster decision-making.

Thank you very much. We are now very happy to take your questions.

[Operator Instructions]

We now have our first question from Edward Mundy from Jefferies.

So my first question is around this EUR 100 million gross uplift by fiscal '29. And I appreciate we might need to wait until November for a bit more detail. But as you think about the 3 main levers, Franck, of the 3 big buckets, are you able to provide a rough split between what falls in which bucket? And I think the market is really trying to understand how much of the EUR 100 million come from top line and how much of it comes from bottom line. And as part of that same question, do you have a sense of what level of reinvestment there might be, i.e., what portion of the gross might equal net?

That's my first question. And then my second question is coming back to Slide 32, you alluded to a Cognac innovation launch within the U.S. Would love to get a little bit more color [Technical Difficulty] of that, why not potentially earlier? And also, where do you think within the Cognac hierarchy that innovation might sit?

This is Luca speaking. I will answer to the first one, and Franck, please feel free to complete. So the aim of the slide in which we highlight an objectives in 3 years, all things equals to an improvement of profitability of 17% in CAGR the next 3 years to be equal to EUR 100 million is to give you the magnitude of the engagement, the commitment that we are putting at the end of this journey. Franck highlighted in a clear way 4 elements, 3 of them more linked to the top line, one efficiency.

So meaning the first part of the message is part of that very important part will be based on improving sales globally in terms of conversion of additional volumes in sales in terms of additional value for the same volume, so GTM and RGM on top, efficiency to be converted in sale faster and quicker and deeper in A&P and procurement.

How much is the split of each layers, we will not disclose that now because this needs to be embedded in the strategic journey will analyze altogether on a longer period in November. But the first part of the message is that top line increase, top line execution and return on the same volume compared to today to be increased and A&P procurement will deliver a big part of this EUR 100 million, everything equals.

The fourth one is that more agility, simplification of roles, accountability with an increase of direct responsibilization under the umbrella of a greater centralization on some topics to be more focused on overall all objectives to be concur. But in the slide, there was also the fifth line as well. Don't forget about that one. So this fifth element was that there are no sacred cows anymore inside our current brand portfolio.

So it means that also proactive thinking in terms of asset rotation is not out of this. To be back to your question in a very concrete way,so we will not disclose today by substream the detail of the EUR 100 million. The CAGR, it is 70%, but maybe will not be straight line also because at this stage, no final location has been made between us because FC Forward is an enabler.

It's the flame. And then during the summer, we will use this flame to feed all of the work that needs to be done to be officialized to you, our Board of Directors before you in November to put that altogether in a global service of the midterm plan in which also the strategic part will be clearly combined to show you what this EUR 100 million and maybe more can be put under the service of what by brands, by region, by objectives. What does it mean? And then I will stop. No final location. We are on purpose preserving our own intellectual flexibility, depending also the market condition because we are clearly starting with some new rule of the games.

We are much more aggressive on some topics. We are not denying our DNA, but we are changing a bit gears, improving speed, improving simplicity, improving what is the boldest in the long term, but market is part of the game.

So if market also is a little bit more positive than today, this EUR 100 million. I'll tell you what, maybe can be bigger, but in the top line and top line means also additional cost investment to feed that. It is more complicated, can be more in the option 3 and 4 and 5. So more cost cutting. But this is not a cost-cutting plan. This is the enabler for a greater growth because at the end, if the free cash flow conversion rate to be improved, EBITDA and reduction of working capital is the name of the game.

To do that, you have to at the end of the game, more operating profit and less debt, less negative cash. So we will be adjusting that. What does it mean for you? Did the EUR 100 million at risk? No. Is the profit and loss profile in the future is less important as a target than what it was 5 years ago. It's more the absolute value, what we deliver and what is the final exit in terms of financial, less sentimental, more financial basic under the shield of a huge, quicker, strong strategy.

So I'm smiling because Luca has been much broader than EUR 100 million on the scope and the reason why RC Forward. Let me bring some substance, first of all, on what is happening. A company turnaround doesn't happen because market depend on -- do not depend on market recovery, but the turnaround happens when a company takes back control. This is the first step, RC Forward to fix the fundamentals in our company. Then as a second step, we accelerate. But as Luca illustrated, there are many points in this RC Forward. Opportunities, its not a cost-cutting exercise indeed.

It's all about optimizing our resources and putting the right resources in the right place. It is discipline, is making sure we get a good return on investment on our A&P. We have a good focus. We have good working -- ways of working, clear ACs. We leverage every opportunity we can in go-to-market, in RGM, in A&P, as I said, in execution, which is very key. Taking control for me is very meaningful. We need to decorrelate ourselves from the negative markets, even though we're increasing gradually, step by step, but surely. It is about clear strategic focus, one being on the core brands.

We need a clear focus on the core brands on the key geographies, the key markets, even the key cities in some instances. It is about RTM excellence, getting better at execution at store level and what are the expectation behind our distributors' engagement, whether it's a direct model or JV partner model or through a distributor, we need to accelerate the in-store execution, be more visible. We obviously need to work on the desirability of our brands, which is very key.

We know about the stock issues in the different markets, but we need to operate in a different way. We need to have discipline with inventories. We need to have stronger execution, as I said, to deplete faster, but we also need to rebuild a fundamentally important equation about consumer pull, and that's what we are working on. So basically, RC Forward is sequential. As I said, we first fix and then we accelerate. We clean the base. We restore control and credibility in-house.

On your second question, very key question. I won't say too much, unfortunately, because it's too early for me to say, but I can say to you, it's a more affordable version, a beautiful Cognac, very enticing, calling on our heritage, on our savoir-faire. Remy Martin is an amazing house with 300 years of history. Who else can say that? We have an amazing heritage. Our heritage should be our gravity. We need to build desirability, and this is part of it. We need to create new occasions because the consumers' tastes are evolving, the ways we consume are evolving, not only in China, also in America.

So this is going to be really a beautiful innovation that is going to make a difference for us, even though we need to continue to build a fundamental around the VSOP, 1738, which is a singular product in the U.S. and the rest of the portfolio. But I think I get more questions about the rest of the portfolio. Even on Cognac, let me clear -- let me be clear, it's the #1 priority because this is the biggest proportion of our portfolio.

More quesitons please.

Our next question comes from Richard Withagen from Kepler Cheuvreux.

I have 2 as well, please. Yes, first, on fiscal '27, on the margin bridge, you expect organic EBIT growth ahead of top line growth. Can you talk a bit about the moving parts behind that? Are you looking to improve the gross margin? Or should we expect some contribution from overheads as well?

And then the second question is on the U.S. I mean, on the market share gains, you mentioned VSOP, but can you give some more details where you are gaining market share by channel? How is the higher-end segment doing? And can you also talk about the sustainability of those market share gains too?

[indiscernible] We'll take the first one. So you are asking where do we stand compared to the consensus. I would like to have some guidelines the profit loss [Technical Difficulty]

I'm not sure.

Yes, there was a technical problem. So let's start with where do we stand compared to the consensus. The sell-side consensus, so your opinion is that we will deliver plus 3% top line, 3% and plus 5.4% in operating profit. I will say that I need to confirm -- I want to confirm the guidance is to improve, to grow top line and bottom line. It's too early to comment to be more precise because we have just started the year and many elements remain very unknown, as I said during the conference call, top line conference call at the end of April.

We have some positive, some negative, the geopolitical context, still question mark on tariffs. You have seen the news of yesterday. So a lot of combining moving pieces that makes us to be very conservative and cautious at this stage, but the guidance here. What is certain, I can tell you, however, the company consensus is currently factoring, if you consider plus 3%, plus 5.4% around 40 bps, if I'm not wrong, organic operating profit margin improvement, which does not align with what I consider a slight improvement.

So I will not be more precise defining the mathematical expectation compared to the consensus. So I will stick to that. Some ins in terms of profit and loss profile, whatever it is. Clearly, we have seen that the pricing power and the need to acceleration, improving the go-to-market, also a new kind of market mix compared to the previous year with a low COGS increase, but still stability [indiscernible] low COGS increase, the gross margin less to be a tool to improve the profitability.

So where the profit comes through, come through by the overheads leverage effect because we need to grow top line faster than the previous year, clearly. And A&P efficiency, meaning not reducing them in terms of support, but trying to have additional euro saving to be invested in additional program to speed up the first line, which accounts for everything, which is final sellout, final depletion and reinforcing the cycle of shipment. So a bit less of benefit of gross margin an increase between overheads and A&P as an effect of the leverage.

I suppose you finish answering the question, Luca.

Yes, for you.

Thank you for your question. The U.S. is an amazing market. It is our #1 market. Personally, I lived 3 times in my life in the U.S., so I feel very close to this market, as you can imagine. There is a lot of stake. A lot of people are concerned about the reshuffle of distribution. I actually see that as a massive opportunity. Reyes is coming into place with all due respect to the amazing work that RNDC did, the super team of RNDC. There is going to be a new dynamic in the market. Needless to say, we want to reconquer this market. We want to get stronger. rebuild our fundamentals.

First of all, we put the place in a new leadership in the U.S. Secondly, we're going to be targeting new distribution channels, which haven't been explored so far, like convenience stores. For that, you need to be sure you have the right formats. You may need some pricing agility from time to time, even though let me reassure you, we're staying a premium company, luxury brand with luxury brands with a strong -- maintaining and protecting the strong equity because that makes a difference even in a turmoil in a difficult marketplace.

nonvenience stores, on-trade is very key. Experiential, liquids to lip is very key today. We have to let the world know our consumer know we have the best products in the world, the best quality of the world. I don't hesitate in saying that. We need to let people know. We have to make more storytelling about that. We're working on it. On-trade e-comm, we are underpenetrated. We are around 15% to 16% share today. In China, for different reasons because we have a different ecosystem, as you know, we are at a 30% share. One should not prevent from having higher ambitions to get a higher proportion.

It is feasible. I'm thinking also about a high net worth individual, which should work harder on the D2C, thanks to Louis the XIII, undeniably the best Cognac in the world, the most amazing brand with the highest equity luxury in the world. There's much to regain on Louis treize, which has been a little bit understated in the last 2 years. Lastly, I want insist is not just cognac, as I said, we have 3 key priorities in the U.S., one of them being, obviously, the cognac first, but then the Cointreau. Cointreau is an amazing brand, gaining share, incredible share in Texas, for instance, but more to come in getting shares and more execution on reaching more higher targets in Cointreau.

And The Botanist. The Botanist, we feel has a super potential in the U.S. that we need to exploit. So U.S. represent -- there is a lot of stake in the U.S. As I said, the SOP 1738 and now the new cognac coming soon will make definitely a difference and backed by Louis treize, where we feel we have a lot of work with XIIIs where we have a lot of work to do. But there is a new mindset in the U.S. I want to stress that, new leadership, people very engaged, loss of capacities, loss of awareness of where are the challenges.

We need -- in the U.S., we have 50 states, where you cannot be focusing on all the states, 5 of the states represent the 80%. That's where we need to be even stronger. Focus our energies, challenge our distributors. I said I see a great opportunity with a family at Rayes, who is very committed to grow our business, to be behind the business, to increase the backup in having more people on the field and increasing the number of point of sales and better committed to better in-store visibility. That's why I think the U.S. is a super mega opportunity for us going forward.

Next question is coming from Trevor Stirling from Bernstein.

Two questions from my side. The first one about the U.S. consumer, Franck, probably one for you, particularly around the African-American consumer. [indiscernible] Always been a huge part of cognac consumption. We have been seeing a drift away towards tequila away from cognac. Where do you think stands in that context and indeed the health of the African-American consumer?

And then second question, more for Luca. As I'm thinking about cash flow in FY '27, Luca, if you hit your organic top line growth and your margin expansion, then a bit of FX had, we're looking at EBITDA flat to maybe up a little bit, ODV down, dividend cuts, tax up a little bit, interest up. But I guess, critically, the other working capital item, how should we think about that in FY '27? I think that will be critical to what the final cash flow is.

So thank you, Trevor, for your great question. As you say, that community, African community you mentioned remains very strong. However, they're not buying the same levels of basically creating the same value as other pockets of consumers. We need to go in every direction, capture a greater amount of consumer base through also the digital transformation we're operating through the -- having a better CRM, targeting better.

AI is going to play a big role in this in identifying and helping us to support better marketing, targeting and commercial efficiencies. So we need to grow bigger, and we need to adapt to the evolving consumer in the U.S. is very different from China, I think. The U.S. consumer is -- there has been a very strong post-COVID consumption, as you know. Premiumization has been very important. Trading up has been important. Now we're more in a crisis, even though it's a very resilient market.

There's less uncertainty maybe compared to China, but there is a more selective spending. There's a bigger desire for value and experience. That's where we need to focus. This goes well beyond the communities. Of course, we can also target the Asian community. For instance, we know the highest pockets of Asian communities outside of China are in the U.S. We know exactly where they are. We need to pinpoint the potential where it is. That's why I mentioned the key cities early on.

So we have to have the right format, the right pricing agility in different states. It doesn't mean having the same pricing agility everywhere. We need to maintain our value, our gross margin as much as we can.

However, let me be clear, I'd rather have a bit more volume to offset our cost and rebuild capabilities to reinvest in A&P overall. So as the world is changing, we have to adapt as well. So answering to your question, African community, yes, we continue to be important, but we need to go much beyond than that, creating value and creating desirability in our brand, creating new moments. That's why we need innovation. To that extent, talking about innovation, I created an innovation lab headed by Douglas as part of our Executive Committee to generate more innovation.

But more impactful. I'm always saying less is more. It takes time to create innovation, but we need to create value at the same time. We need to be very consumer-centric, much more than we have ever been. That's why we put in place many workshops between the brands, between the regions, which did not really happen before. I really want the people to be in tune on the potential and answer the needs of the consumers.

So the African community is very important, but many other communities are very key. All consumers are appealing to us. We need to reengage the consumers. I think you mentioned CSR is very key as well. It's a matter of rebuilding the trust as much as we can in this world. We need to -- CSR is creating a competitive advantage.

It's creating value creation and a commitment to our consumers. So I hope I answered your question, but it goes much beyond targeting one single community. It's building a strong desirability, answering the different ways of consumption, whether it is in the U.S. or in China because in China, it is fundamentally changing as well. It is a very key market as well. So we have to be very opportunistic in every way we can, but still protect our brand equity because it's a very differentiating point from all our key competitors.

About cash flow for the full year '26, '27 estimation. I will do the opposite of what I do normally. I will not do the bottom up. We'll do the top down, and then I will try to explain. So this year, the conversion rate has been at 27%. It's an important indicator, always but always been there, but it will be even more important in the future.

It contains a part of other working capital nonrecurring, but a bit extraordinary effect, one of them being the huge swing in the Chinese New Year investment, previous one of the investments were done and paid this year, the delay of that and the increase of the spend makes a huge swing of the debt that was not paid at the closing. But overall, also some more lasting effect like to give you an example, a strong decrease with a positive effect of EUR 23 million in stock of other element out of ODV and H bulk.

So it means that overall, all the brands, all the teams, supply chain makes a hell of a work to reduce the un- necessary stock engagement and realization for the last year. Part of that [indiscernible] be so far before the new plan being adopted and FC Forward bearing a fruit being a normative element. The normative one for the next 1 or 2 years out of the transitional year '26, '27 should be more around 15%, 20%.

Specifically, in a nutshell, for the full year '26, '27, I can confirm that will be positive out of nonrecurring eventual events, clearly, positive one and more in the range of between 10%, 12%, 13%. So without going through all the hypothetical, let me say, free cash flow 3, some elements to factorize that.

You have understood yet top line and bottom line will be growing with a slight improvement in marginality. And then taxes, we said that EUR 29 million compared to EUR 28 million as an increase in financial expenses in terms of book, does mean being equal in terms of cash out on financial effect. And CapEx still standing around the same level, maybe lower, around EUR 30 million, so some savings.

ODV working capital variation, the aim to be around EUR 90 million, EUR 100 million if we can to improve even more compared to this year's saving. Other nonworking capital item, again, to deliver positive inflow, but a lower spend compared to this fiscal year. And on top, ForEx is negative, but less than this year. So the organic element will be having a higher -- a bigger way. So in a nutshell, '27, not possible in percent conversion rate in '26, '27, we are more between 10%, 12%, 8%, 9%, 11%, more than out of nonrecurring positive or negative potential events.

I will now take the last question. Question is coming from Olivier Nicolai from GS.

Just in interest of time, I stick to one question on China really. If you could give us a bit more of an update on the underlying demand and what you could expect for this year? And what specific actions you're taking to unlock the VSOP potential there?

Thank you very much for your question. China is equally important as much as the U.S., even though nobody asked me question about emerging and GTR, which are going to be fueling a big, big way our growth going forward. In China, we have to expand our territories, first of all, beyond Guangdong, as I said. We're resetting the organization, commercial organization to have the means to go further. We need to also grow our other brands, not just be dependent so reliant on club. We need to grow XO. We have a big workshop going on with the Chinese team, ongoing XO, of course, and with treize, where we need to regain energy, even though that will be done in 2 steps.

So the Chinese consumer is evolving. I mentioned the American consumer. You have to understand, you have to be consumer-centric to understand the trends to adapt to those trends when it comes to innovation, but also the way you market your products. the Chinese consumer today, there is a crisis, real estate crisis, not so much trust in the government policies today, they're saving money. However, they're ready to spend in the right places, right occasions and are definitely looking for value in the products, trading up, but also looking for experience.

So we need to gear our strategy towards that. The Chinese consumer now wants more discretion, is more rational, cautious spending, less visibility, less ostentation. A lot of drinking happens at home nowadays. So it's not as extravagant as it has been at one stage, if I may say this word, but there are new policies, new scrutinies from the government. The macroeconomic pressure is there. So you need to diversify the occasions to have more local relevance to be less reliant on gifting, for instance.

So there are many ways to look at it. But we're geared towards -- we have a high ambition. We have a super team in China.

Every time I come back from China, where I go quite often together with the U.S., I can feel the energy of the team, the determination. I don't know if this is my last question, by the way, but I want to finish on a specific touch. It's important for me to say we're a smaller company. We don't pretend to become the #1 company. That's not the case.

However, we have an amazing portfolio, amazing selective portfolio with 300 years of history. We have amazing people in this company who are highly determined. RC Forward is also generating new energies, new ways of looking at the business. creating accountability, responsibility at all levels, killing the silos, which we don't have time for. We have, as I said, this new energy of going forward, new ambitions, the emerging market, we are creating a new area for emerging -- new leadership for emerging markets.

The GTR. This is going to create a new dynamic within the company. And because we're smaller, by definition, I just want to say we have higher possibilities, capabilities, untapped territories when it comes to untapped distribution channels, as I mentioned, convenience stores for the U.S., but it also applies to China, for instance.

Territories where we're not go beyond Guangdong and China, but emerging market has not really been worked like Africa, we need to go further with VSOP, not only VS, obviously. Middle East is a key market for us. Southeast Asia, we need to go further and Latin America. That's why detach Latin America for U.S. domestic to give it the right focus because we know there is a great potential. I mentioned Brazil, but we also have Mexico, for instance. Mercosur, as you know, may help in some ways to lower the barriers in terms of pricing barriers.

So we have many opportunities. The U.S. is -- the new distribution model is another one. GTR emerging, expanding distribution, conquering India is another one where we're very small today, but we can definitely only get bigger. New channel distribution. E-commerce is important going forward. D2C, I did not mention B2B is another exceptional opportunity for us, which we never really explored. And last but not least, it's showcasing our exceptional sites. We were so happy with the company yesterday because we received a second star of the Michelin guide for cognac being an exceptional site, which I invite you to visit.

Experience is what money cannot buy. Believe me, I went through this, and it's amazing. And that's why we need to bring more traffic to let the world know about those exceptional sites that we have. I hope I summarized well all the opportunities going forward. I tend to look at the glass full of opportunities. And thank you for your commitment. Thank you for listening to what we had to say, and I look forward to the next meetings we have together.

Olivier, clearly, a very strategic point of the situation done by Franck. So you understood that we have a huge ambition despite a huge headwind. And to complete on the -- not financial, but mathematical part of your question, what are the expectation in China? -- despite an environment which remains low and the market is pretty tough and very promotional.

We are very humbly gaining market share. We expect to be positive on the full year '26, '27 in China, even more in APAC, capitalizing on the acceleration of travel retail, Asian travel retail and as Franck said very clearly on other Asian countries, so up in sales and in depletion, more in volume, but less in value, but depletion and sales positive as a target in APAC and in China for the full year.

VSOP is less important there than XO and Club here, as you know. What is the current trading? So what's happening right now, 6/18, 18th of June, which is very important, started very strongly. So first sign that even if the 2 months of the year, the first 2 months are not so important in terms of weight, the sign that situation is complicated. But...

We are fighting in more than a decent way, and we are getting more than our previous shares.

Welcome to the Remy Cointreau 2025-2026 Fourth Quarter Sales Presentation. [Operator Instructions]

Now I will hand the conference over to Luca Marotta, Deputy CEO and CFO. Please, sir, go ahead.

Good morning, everyone, and thank you for joining us today. As highlighted in our press release, Q4 sales grew by 8.9% organically speaking, including 4 points of Chinese New Year calendar effect.

This performance reflects strong growth of Cognac, plus 15.5%, including 7 points of Chinese New Year calendar effect positive, mainly driven by China, which benefited from a favorable base of comparison, including the end of the disruption in the Chinese duty free. As a reminder, was clearly present in the previous year in Q4. And clearly, another positive element, which is the good resilience during Chinese New Year.

In parallel, Americas recorded a moderate decline due to high comps in the U.S. and some phasing effects, specifically in Canada.

Second important point to highlight and to explain this plus 8.9% Q4 performance, stable performance in Liqueurs & Spirits division, minus 0.1%, which reflects a solid momentum in the U.S. and China, but more contrasted performance in EMEA on the back of phasing effect.

Q4 sales decline increase breaks down as follows: volume decrease of 2.4% and plus 11.3% of price/mix effect, largely driven by mix on the back of strong outperformance of Cognac versus Liqueurs & Spirits. This performance brings annual growth to plus 0.2%, in line with guidance and represent plus 1% growth, excluding the duty-free impact in China at yearly level.

This was a broad picture. Looking at the overall sales performance by region, Americas is up plus 7.2% on a 12-month basis, which includes a slight decrease in sales in Q4, mostly driven by negative phasing effect in Canada and high comps in the U.S.

APAC is down 4.3% on a 12-month basis, of which 2 points of duty-free disruption impacted yearly level. In Q4, APAC generated a very strong growth led by China despite soft consumer confidence and tightening regulatory environment.

Indeed, clearly, we have to acknowledge the region benefited from a low base of comps and around 12 points of the Chinese New Year calendar effect, but at the same time, a very good resilience during Chinese New Year. So it's not only comps or technical effect. That's the message.

In parallel, rest of Asia performance was weak, affected by tough market conditions. EMEA was down 3.1% this year and continue to display mixed performance in Q4 as well as consumer adopted a more cautious approach.

One last word, a little bit more trans -- sorry, on Travel Retail, Global Travel Retail across all the regions. The business unit more than a division, can we call it, was up by low double digit over the year, including a strong double-digit growth in Q4, led by APAC, also considering the low base of comps and EMEA. This was sell-in shipments.

Now let's talk of value depletion group level, best approx. of sell-out. In the U.S., value depletion declined by mid-single digit year-on-year over 12 months. of which a decline of mid-single digit in Q4, including a decline of low single digit in volume.

In China, value depletion were down low to mid-single digit year-over-year over 12 months, but up low single digit in volume on a yearly level. Looking inside Q4, value depletion recorded a very strong double-digit growth, helped as well by a positive calendar effect. And in EMEA, value depletion decreased by mid-single digit year-on-year and up low single digit in Q4, clearly influenced by the performance of the Cognac.

What we can say in a nutshell. Overall, 12 months group value depletion fell by low single digits year-on-year, slightly underperforming sell-in trends, plus 0.2%. But this is not true if you look at the absolute value because in absolute value, we realized a clear destocking as the generated outflow in depletion was bigger than sell-in inflows. This is mainly driven at yearly level by the U.S.

I'll be back on that point during the presentation also in the Q&A because it's a very important point. Percentage growth decrease in depletion and in sell-in are now sit on a basis in which depletion in value are bigger than sell-in. So it's clearly an health check point that has been ticked.

To conclude on the first slide, we are confirming our full year comp guidance, and we expect an organic decline between low double digit and mid-teens, including tariffs. So after this big entree order, turning to Page #3, a quick note on the Chinese New Year, very important for us, clearly, which was obviously a key factor in Q4.

Market environment in China remains highly complex with continued pressure from alco restriction measures and still subdued consumer confidence. Despite this challenging backdrop, the group has delivered its objectives and achieved a slight growth in value depletion. I repeat, a slight growth in value depletion on a comparable basis, i.e., Chinese New Year '26 versus Chinese New Year '25 adjusted for calendar effect.

So we can say that it seems that the year of the war has brought us a little bit of luck and that our Cointreau has been perceived as particularly relevant even if considering the context, which is not yet totally straight and linear and positive.

This performance stands out in the context of the sharply declining market and therefore, represents a real achievement. However, we shouldn't declare victory too soon. The market remains challenging, and it's a daily battle for our teams. And in the near term, the road ahead will still have a few bumps along the way.

But at this stage, I would like to thank warmly Chinese teams for their strong execution and the multiplication of impact of reiteration on the ground for a Chinese New Year that was considered in the context, not bad at all.

Turning to Slide #4. Full year sales, so back to [indiscernible] figures amounted to EUR 935.3 million, representing a year-on-year decrease of EUR 49.3 million or minus 5% on a reported basis. This performance was shaped by the following factors: an organic growth clearly of plus EUR 2.1 million, so plus 0.2%. This performance is split between plus 3% of positive volume effect and minus 2.8% of price/mix. Price/mix is negative, mostly impacted by price, while mix was slightly positive.

Second point, and as expected, a negative currency translation impact of EUR 51.4 million or minus 5.2% in terms of loss linked to the foreign currencies, mainly driven by the deterioration of U.S. dollar, which accounted for EUR 29.2 million and for EUR 15.2 million linked to the Chinese RMB.

Now Slide #5, let's delve into organic trends by region. Starting with the Americas, in which organic sales increased by 7.2% this year, down by high teens on a 6-year basis. This year-on-year performance include a mid to high single-digit growth in volume and a slight growth in price/mix, mostly driven by mix at yearly level. In the U.S. specifically, inside Americas, sales grew by low to mid-single digit in Q4, mostly driven by Liqueurs & Spirits despite a high base of comparison.

In parallel, on the depletion sellout side, Q4 depletion continued to improve sequentially in volume year-on-year, so compared to Q3, for instance, and specifically at minus low single digit, representing a decline of mid-single digit in value. This is encouraging, but clearly not enough because it is still negative. Overall, full year value depletion stands at minus mid-single digit, significantly less negative than last year, but still negative.

In this context, inventory level in the U.S. is slightly improving at remaining in terms of months that as you know, it's an uncomplete compounders measure at 4 months at the end of March.

Inside America, there's also Canada, in which sales were down by a very strong double digit in Q4, impacted by concrete and real phasing effect and destocking. Conversely, in Latin America, sales were up by low to mid-single digit in Q4, mostly led by Cognac. End of March, Americas accounted for 39%, 39% of group sales, so 2 points more than the previous year.

Second region in terms of weight, we now APAC in which organic sales declined by 4.3% year-on-year over the year, but increased by high teens on a 6-year basis. So in the short term, Americas plus 7%, APAC minus 4%. In the longer term, longer view, clearly, down high teens for the Americas versus '19/'20, increased by high teens on a 6-year basis.

Analyzing the volume -- value equation of the region overall, all brands included, the performance were mostly impacted by negative mix price, while volumes were stable. Inside China, sales were up by very strong double digits in the last quarter, helped by low comps and a positive Chinese New Year calendar effect, as said, of 12 points at APAC level.

What we can say to give some more color that against persistent soft consumer confidence and regulatory consumption restriction, Chinese New Year depletion proved to be resilient on a comparable basis. Looking at the channels, growth was driven by wholesaler, direct e-commerce and PCDs.

In parallel, global value depletion were down low to mid-single digit year-on-year, but up low single digit in volume. This yearly performance includes a very, very strong double-digit growth in the last quarter.

Given depletion are more or less in line with sell-in trends in 12 months, inventory levels in China remained healthy across most of the brands at the end of this fiscal year. Elsewhere in the region, in APAC, rest of Asia recorded a decline of mid-teens in Q4, impacted by Cognac in a challenging economic environment alongside intense fierce promotional activity. By the end of March, APAC accounted for 38% of group sales, down 2 points compared to the prior year. So Americas, 39% and APAC 38%.

Finally, the last region in terms of weight, EMEA had organic sales down by 3.1% over the year and around minus high single digit over 6 years, primarily reflecting a negative mix effect.

In this big region, we have many subclusters. Let's start with the third-party distributor in which sales were slightly down in Q4, mostly impacted negatively by Germany and more generally on all the countries representing the cluster by weak consumption trends driven by macroeconomic and geopolitical context.

In the U.K. and Nordics, sales were slightly up in the last quarter, mostly driven by Nordics. U.K. was impacted by tax rises, a tougher market and some additional impact on high-end brands for the promotional intense activity.

In Benelux and France, sales were up by low double digit in Q4, led by Cognac and to a lesser extent, Liqueurs & Spirits, particularly in Netherlands.

Last but not least, AMEI and CIS sales were down by double digit in Q4, impacted by a high base of comparison in Africa and to a lesser extent by the Middle East conflict. For the full year, value depletion were down mid-single digit in EMEA, but up low single digit in Q4. Overall, this slight imbalanced picture determined that inventory slightly increased. End of March, EMEA region accounted for 23% of group sales, flat versus the previous year.

Now let's turn to Slide #6 and the analysis by division, starting with Quin, which is the Cognac. Cognac division posted an organic sales decline of minus 0.5% over the year, so almost flat, driven by 7.8% increase in volume and a negative price/mix of 8.3%, equally split between mix and price. End of March, Cognac accounted for 61% of our sales, down 1 point compared to the previous year. It was the overall picture.

But let's start with the APAC region, the biggest one for Cognac. -- and specifically with Mainland China, in which sales grew by very strong double digit in the last quarter, helped by low comps, positive Chinese New Year calendar effect, 7 points at Cognac level specifically.

Despite a context market by -- marked by soft consumer confidence and regulatory consumption restriction, Chinese New Year depletion showed, I repeat, but it's very important, resilient trends, slightly up versus last year on a comparable basis, benefiting from the continued success essentially mainly of Remy Martin Club.

Elsewhere in Macau reported a weak performance as wholesalers continued to face cash constraints. Hong Kong sales were up strongly, showing slightly improving underlying trends, while Taiwan was slightly up.

Overall, in terms of depletion, 12 months value depletion were down by mid-single digit year-on-year and slightly up in volume. The performance includes a very strong double-digit growth in Q4. In the rest of Asia, sales were down by very strong double digit in Q4, affected by challenging economic environment and strong promotional pressure.

Second region by weight, which is Americas and start with North America, so Canada and U.S., in which Cognac sales were down by mid-single digit in Q4, impacted by continued destocking efforts and base of comparison and also the Canada impact. In parallel, depletion remained negative, but showed a sequential improvement in volume Q4 versus Q3. All along the year, we witnessed that, mainly driven, and this is very important in terms of ranges by Remy 1738 and XO.

Depletion variation on VSOP was also quite a positive one because stable versus the previous quarter despite a slowdown of the category. So overall, not yet on a positive lens, but continued ongoing improvement.

Q4 U.S. value depletion were down mid to high single digits, of which down low to mid in volume, so a touch better in volume compared to value. And 12 months value depletion included minus 3 points. So we can see that on negative price/mix year-on-year at the end of March, but on a 6-year price/mix remained positive, plus 9 points.

In Latin America, sales were up by very strong double digit in Q4, driven by Remy VSOP and Remy XO.

Last but not least, EMEA region inside Cognac, sales grew by low single digit in Q4. Inside that, we can say that U.K. and Nordics were up by mid to high single digit in Q4, driven once again by Remy VSOP and Remy 1738 with market share and new listing gains.

Europe III party distributor was up very strong double digit in Q4, including some positive phasing and calendar effect. AMEI and CIS down by strong double digit, impacted by high comps in Africa and also especially on Cognac, Middle East conflict waived a bit, while Benelux and France were up very strong double digit.

Lastly, full year EMEA value depletion were down mid to high single digit versus last year, but up very strong double digit in Q4. So overall, an acceleration in the Q4 in terms of Cognac depletion.

Digging into Liqueurs & Spirits division, Slide #7. Liqueurs & Spirits division reported plus 2.8% organic sales growth in the '25, '26 fiscal year, driven by a solid volume increase of 2.6% and a slightly positive price/mix effect of 0.2%, mostly linked to a positive mix. End of March, Liqueurs & Spirits accounted for 37% of sales, increasing 1 point versus previous year.

Now let's review the division performance by region, starting with the biggest one, which is America. And in America, let's start with North America, in which sales were up mid-single digit in Q4, driven by Cointreau, Botanist and Bruichladdich.

Q4 U.S. value depletion, specifically of Cointreau and Botanist were up by low single digit. So this is positive. So it's not only an improvement, it's positive, which is clearly a good performance given the current market.

Additionally, the price/mix was down 2 points compared to the previous one for the 12 rolling months ending March, but increased by 15 points, so more than the Cognac on a 6-year basis.

In Latin America, sales were down for Liqueurs & Spirits division by low double digit, impacted by high base of comparison.

Second region in terms of weight for Liqueurs & Spirits is EMEA, in which sales were down by mid to high single digit in Q4 following a very strong quarter in Q3 due to phasing effect and also promotional activity.

So talking about the division, again, the flat performance minus 0.1 has been driven by this performance of EMEA clearly much more than the other 2 regions. Breaking sales down further inside EMEA, U.K. and Nordics were up low to mid-single digit in Q4, led by Cointreau, Bruichladdich and Botanist reflecting also greater pricing agility and new distribution listing.

Europe third-party distribution down clearly by mid-teens in Q4 and the 2 negative countries in terms of performance were Germany and Greece, more lack of promotional space.

And last but not least, Benelux & France, up mid-single digit. So this quarter, Benelux & France, even if it's not so big at group scale, we are highlighting positive performance. We were up mid-single digit, while AMEI and CRS down double digit. This was sell-in.

In parallel 12 months value depletion were down by low to mid-single digit versus last year. So a slight increase in inventory Liqueurs & Spirits division in Europe.

In APAC, Liqueurs & Spirits division performance was clearly driven by China, in which sales were up by very strong double digit in Q4 driven by Bruichladdich, number one, and to a lesser extent, Cointreau. Full year value depletion were down by high single digit, but basis were unbalanced, so depletion already bigger than sell-in.

Remaining part of Asia was up by low single digits in Q4, supported by Japan, mainly Bruichladdich and Cointreau, while Australia and New Zealand continue to face tough economic and geopolitical and market conditions.

Last but not least, non-group brands represent 2% of group sales were stable in ratio year-over-year. They recorded an organic decline of 22% -- 22.4%, affected by Benelux and the U.K. Almost finished, and then we'll switch to Q&A.

Let's now turn to Slide #8 and '25, '26 guidance. Today, we are reconfirming our operating profit guidance. In a nutshell, we expect an organic operating profit to decline between low double digit and mid-teens, including tariff in the U.S.

In addition to this organic performance, there are also currency effects, and we reconfirm the previous expectation between EUR 25 million and EUR 30 million negative in terms of impact.

One final word on our transformation journey, Remy Cointreau Forward or RC Forward. As mentioned in our last press release, the April 8, the program is now effectively underway. This plan marks a decisive step forward aimed at regaining momentum in its market and maximize the potential of our brands.

Our objective is to clearly decouple ourselves from economic trends and build and realize a self-help story given the ongoing volatility in the global economic and geopolitical environment.

Through this plan, whose full effect will be delivered over the next 3 years, our ambition is to generate value in every action, every single action we undertake, can be in distribution in the way we invest in A&P or through greater centralization.

Setting clear governance rules also as well between brands, market and corporate function is also a key component of the program. But we look forward to meeting with you and clearly our CEO, Franck Marilly, on June the 4th to share our ambition in terms of value creation of RC Forward. Thank you for your attention. Now I am happy to answer to your question.

[Operator Instructions] The next question comes from Richard Withagen from Kepler Cheuvreux.

Two questions from me, please. First of all, you continue to invest in the U.S. and in China in the past year. Is there any reason to change the investment materially as we enter fiscal 2027? Are there any markets where you intend to increase or decrease your investments?

And then the second question is on the announcement from early April. the launch of the transformation plan, you also include some changes in the organization. The top structure may look a bit complex with the steering committee, some cross-functional roles, et cetera. So how do you make certain that decision-making remains effective and quick if needed?

Thank you for your question. In terms of speed and shift between A&P or global investment, not only A&P, it can be also CapEx, specific overheads, also revenue growth management. The whole pack in terms of region will be progressively increased in the major pocket of growth in China and the U.S.

We still have some deep blue ocean to fulfill and also increasing the support of emerging markets, new ways of building the growth in some new territory. So we need to balance that to fuel a top line, which is a strong part of our future plan because clearly, we need to improve the top line efficiency and productivity to be able to support this increased footprint in A&P.

In terms of choices, it might be more clusterized with a clear call in terms of brands than in the region. So we will clearly even more than in the past, make some prioritization call in terms of brands, not divisions entering inside each division and also ranges allocation. So this might be changing and clearly will be discussed and delivered during the Q&A in the future session because it's part of the -- not only transformation plan, also the midterm plan that, as you know, will be also clearly delivered in November.

So I will say support new region, increased for some deep blue ocean inside U.S. in China, Travel Retail as well in which we have strong ambition and emerging markets, but more twisted maybe a more opinionated and clear call than before in terms of brand prioritization.

The organizational change, as we made is quite the opposite in our opinion. It is the way was working that are behind allows to have a clear call in terms of accountability, focusing region and brands on their core activities and avoiding to think of sometimes back office of accessory activities that are disturbing the attention on the realization.

So what it seems to your eyes, I get it's an increased complexity. In reality, it is a more clear allocation of where the decision are taken and the execution and the management or the ownership of the profit and loss, free cash flow, even more importantly before and balance sheet key element are designed and where they are realized. So to do that, we need to put them in a clear way. At least this is our will and our goal.

The next question comes from [ Thomas Hall from Goldman Sachs ].

So firstly, you've highlighted the Middle East impact within EMEA alongside weak consumption trends in specific markets driven by the geopolitical context. Could you provide a bit more color on the size of the impact that you saw throughout the quarter and any of the impact seen on Travel Retail?

And then secondly, perhaps a question for the full year results in June. But following some of the headlines we've seen related to U.S. tariff reversals, how should we think about the impacts going forward to Remy and any retrospective adjustments to prior year impact in the U.S.

Thank you so much. So Middle East impact at the full year basis has been not so important. So I didn't highlight that as a technical factor because we are talking EUR 1 million or EUR 2 million. So if I want to be trying to get up with the company consensus price, I will highlight that as a technical factor. So it was not the name of the game. It is marginal.

What is more important is the disruption, not in terms of figures, in terms of confidence in all the ecosystem of the European level, not only in the specific region that are affected because it's part of the wider geopolitical momentum in which the ongoing uncertainty wave on the ability to carry a little bit more stock even if you have some competitors improving. So it's more a disturbing elements on the way we are working than in the actual figures.

We built the budget just before the war started or the conflict started. We did not adjust that because at group level, so far, touching woods is not a major in terms of financial impact. It is more disturbing in terms of the way we operate every day and clearly logistic -- remaining logistically the different route to market and the way we are refurbishing our key market and key customers.

Travel Retail, we had a good year. We have a strong ambition. Clearly, conflict, once again, not only in terms of ability of flight, but also in terms of people working, people being able to spend to have based on consumption, which is organically growing might be impacted in terms of global attitude.

So far, once again, our results are not showing that and touching woods, we have no technical factor to highlight, more global negative cloud in terms of ways of working.

Can you repeat me, please, your question on the full year consensus? I didn't get if it was a specific one on the U.S. or more what we are thinking in terms of our full year consensus [indiscernible] in terms of operating profit at company level. So please precise your question, if you may.

Yes. No, sorry. So the second question was related to the U.S. tariff reversal headlines that we've seen. So how we should think about that in the context of the group going forward? And then any retrospective adjustments to impact from this year?

Yes. So technically speaking, but I cannot comment specifically on the value because it will be part of the result, the presentation on the June of 4. I will highlight the impact on the specific closing. So far, it is estimated [ EUR 25 million ] -- EUR 20 million and EUR 5 million, EUR 20 million for the U.S. and EUR 5 million for China, so for price undertaking.

So what we are expecting in terms of the future? So are we expecting to be reimbursed? So Department of Justice filed a declaration with the Code of International Trade, CIT on its proposal for custom border protection to implement the refund process, and we followed that.

So on April 20, Phase 1 has been followed by our team to begin a call for tariff refund. And as such, as a custom broker filed on our behalf, what will be expected as a refund in the 60 to 90 days. News are evolving clearly every day regarding the U.S. tariffs in terms of application, in terms of the ability to get the money back.

As such, more pragmatically, we have not yet included any kind of refund in our budget '26, '27. But clearly, this is now a serious hypothesis all along the Q1 or maybe Q2 when the refund should happen because it's 60 to 90 days. So we are talking between end of June and July. When I see the color of money, I will react [ in a war ].

Which tariffs do we expect for '26, '27, which is not the reimbursement, what we took into account. Considering the strong volatility of the environment of the rules also for U.S. tariff, we prefer to adopt a very cautious approach when building the '26, '27 budget, and we do not change it.

As such, we forecasted, we included in our expectation 15%, 1-5 of tariff from Europe and 10% from U.K. and Barbados, and we did not include any refund. So what does it mean? Refund happening give us additional means to support the top line journey and the operating profit journey as well and as well, budget expectation might change according to the change of tariffs, can be positive if the stand is positive, can be negative. I don't master that.

I can only be transparent with you and adjust our expectation. We are clearly calling at this stage for a cautious approach because situation is clearly -- is still very complicated and cloud.

The next question comes from Trevor Stirling from Bernstein.

Two questions from my end, please. I'm looking really for a bit more color on your 2 key markets, Luca. So the first one in the U.S., you've seen slightly better trends on 1748 (sic) [ 1738 ] and XO. But does that imply that actually it's your U.S., African-American consumer that remains the pain point, and that's where the weakness is?

And the second question then on China, just looking for a little bit more color on that slightly up depletion trend. Is that excluding the reopening of Chinese duty free? So that's really the underlying demand you're saying is slightly up?

I didn't get the sound on the first one. Can you repeat on the U.S. trends?

Certainly, Luca. The U.S. trends, you say that 1748 (sic) [ 1738 ] and XO were doing a bit better than the Remy Martin and VSOP. Does that imply that your pain point, the big area of weakness in the U.S. is your African-American lower income consumer. Is that the big area of weakness in the U.S. in terms of underlying demand?

So no, I don't think so because it's more that VSOP stabilized at an increase, Q4 equal to Q3. So in terms of variation modification quarter-over-quarter, it is more skewed to 1738 that was clearly suffering more than VSOP in the short term. So we highlighted that 1738 and XO because they were suffering more than VSOP in the short term.

So it's not imply a structural change of the consumption base or the consumer switch eventually, we want to highlight that. So it's more that after having stabilized VSOP with specific A&P and pricing agility program that even if admit more slowly than expected, started to pay, I don't say dividends, but to pay back a bit and will now stabilize.

1738 and XO, they were a little bit trailing, running behind, recovered in the quarter, and I hope that we will continue because they are very important as well. VSOP it is the cash cow. The other are the clearly even more interesting in terms of margin. So an acceleration on that can play an additional role in terms of our journey in profitability and in valorization on depletion and sell-in as well.

So that is why I highlighted that because it's very -- it's a positive testing point. It doesn't mean that VSOP is weak. No, it's stable. Does it mean that we lost a part of the consumption base. If we have lost it, it's already lost in the last 2 years. We didn't lost additionally.

China underlying trends, no, it's not only technical. So if you consider overall the special Chinese New Year performance was strongly, strongly positive. But I need to adjust that for calendar effect, a bit of duty-free impact, which is positive, but stripping out all that remain slightly positive. It touch clearly compared to competitors and market were negative.

So without being too positive because I know the market is still very complicated, very volatile, very fragile. What do you want? It was not the Chinese Year of the century, but we had and we gained market share. We were able to realize a better performance than the market and our biggest peer.

On -- the underlying was more solid, which kind of channel is very important. Not only this time, e-commerce, direct e-commerce, D2C and B2C and PCD, but also some wholesalers, which is the indirect part, which means slightly touching woods regaining of confidence in terms of the intermediary channel, which is always an important small positive sign. In terms of ranges, clearly, Club has been the king of Chinese New Year for our performance.

The next question comes from Ashutosh Jain from Barclays.

Just one from me, please. Can you comment on the level of promotional activity you are currently seeing in Cognac, particularly in the U.S. market? And how are you responding to the excess inventory and pricing pressure across the value chain? Specifically, we would be interested in understanding whether introducing lower value or, say, more accessible SKUs in the U.S. is part of the solution?

Thank you for your question. So small formats and convenient offer are part of our -- not solution, we will say, offer to the market, taking into account a lower level of spending revenue by the consumer without changing totally the DNA of our spectrum. So it is, at this stage, a clear switch, but more tactical than a definitive ultimate switch.

We'll be bigger than before, but we remain in a wait-and-see attitude to see if we have to go further than we realize or we need to stop that. So it is an adjustment more than a clear inflection.

In terms of promotional activity, it is still very strong. Some peers stopped to decrease the official list price. So this is a good point. But promotional activity is still very strong. And can we witness that also with the difference -- discrepancies of performance state by state. The more fierce promotional state witnessed the highest volatility.

Let's take Illinois. 12 months ago, we realized a big -- very big performance of 4 or 5 quarters, and then we have a huge up and down, like everybody else. When you have big volatility in some key states that are affected by fierce promotional activity, it demonstrates that it continues to be there and to impact the performance. And the long term need to be stabilized to be able to have a price offer, which is clearly calling for a consumer habits that more stable than before.

So it has solved the promotional competition environment question, not at all. Are we reacting in which way to that? And the last 12 months, after 2 years remaining clearly right in our shoes, we decided it was better to try to step out and to walk a bit becoming a little bit more flexible. So we increased a bit the promotional activity. And we also rightsized sometimes the price of some key ranges like VSOP [ 4999 ] in the major part of our key markets.

Last but not least, depletion footprint in the U.S. is and will be probably also clearly influenced by the change in route to market and distribution footprint that we are witnessing for us are very important with some distributor gears that are changing with some switch from [indiscernible] new actors, new ways of working by our peers that will play clearly a role in terms of the ecosystem in terms of depletion and retail level.

The body point seems to be that the new operators, even if they don't have a very strong experience in Liqueurs & Spirits, they have a lot of financial solidity and robustness. They want to win in this race. And also, we think the global market would be profitable about the additional weapons put on the field.

The next question comes from Tilly Eno from Morgan Stanley.

Just one quick follow-up on China. Obviously, a lot of moving parts with the Chinese New Year timing, but that's slightly up year-on-year. Do you think -- do you see that as a sort of sustainable reasonable run rate in China? Or was there any sort of concentration of activity around the Chinese New Year period?

And then just my second question, given the input cost backdrop, have you seen any impact on your distribution or logistics costs yet? And anything just on how you're thinking about that?

Can you repeat the second one, backdrop of what?

Input cost inflation. So just with rising energy costs, if you've seen any early impact on distribution or logistics costs?

So I'll start with the second one. Input costs are slightly increasing clearly because the effect also the conflict and the global geopolitical situation. So far, it remains at a very reasonable level and manageable inside our building blocks and the compounders that we used to define this fiscal year. So the reason why I confirm the guidance and they are not calling to change the budget footprint. So quite manageable. Yes, some negative, but manageable.

In terms of China, what is underlying, it is something that we can build on quarter-after-quarter, too early to say. Q1, talking about the short term, clearly is a small quarter. So we might have in China some volatility, positive and negative. Market is still tough and day-to-day battle. So I'm moderately optimistic, but I cannot grant so far that the positive underlying challenging performance will be continued all along the year.

It will be part of the 4th June discussion because clearly is a clear hypothesis on which our guidance of '26, '27 will be built. We will do whatever we can to realize another positive year compared to the market condition. Base of comp in Q1 are quite tough in China. So remember as well. So moderate optimism.

Great. And could I just squeeze in one more just on EMEA, Liqueurs & Spirits. I think you mentioned inventories are slightly higher. Should we expect that to unwind in Q1?

Yes, a bit, but it's not high. There was a slight increase. But considering that and some specific country situation, country situation in terms of promotional slot, i.e., Germany, might weigh a bit on the Q1? Yes. The answer is yes.

And we'll take our last question from the line of Gen Cross of BNP Paribas.

Just a couple of questions for me. The first one is just on the balance of value depletions relative to organic sales that you expect in FY '27. So can you explain the dynamic where you obviously had growth in your Americas like-for-like sales this year despite the fact that depletions are negative and inventories have come down, so you've destocked inventories. Do you expect the next year value depletions and like-for-like sales will be more aligned? That's the first question.

And the second question is just on China, and you've already touched on the fact that the market is still quite soft and you're outperforming quite significantly. Just looking for a little bit more color on if you've seen any change at all in the Chinese market and whether there's been even a modest improvement in consumer confidence.

At this stage, we are seeing more -- starting with the second one, a change market, which is not yet stabilized more than is changing. So in terms of all the indicators we have, quantitative and qualitative are not showing this kind of structural movement. It's more that the market is globally more complex. So we need to focus on a daily battle, and I know it's not totally satisfying for you as an answer because I cannot give you grant positive or negative on the visibility in the next 4, 6, 10 quarters. It's more quarter-by-quarter, momentum by momentum.

In terms of value depletion, let me -- sorry, because I see some -- I hear my voice returning coming back. I have echo. Okay. I need to take 2 or 3 minutes because this is a very important point and drives yourselves also to '26, '27 in terms of simulation of consensus without giving any guidance.

Okay. Let's start. On a full year basis, depletion variation has been talking about percentage, worse than sell-in, sell-in plus [ 0.2 ], depletion value negative. But basis, we are noncomparable in absolute value, consider the strong destocking over the last 2 years, and we continue to destock.

So if you compare the flows in million euro at the same valorization by SKUs, so apple-to-apple, we have destocked more or less EUR 35 million to EUR 40 million in the fiscal year '25, '26. So the inflow in sell-in was lower than the outflow mostly driven by the U.S. This is the yearly level.

Now in a nutshell, the absolute value of depletion is bigger than absolute value of shipment. So that's the reason why in the future, you don't have to overreact overall if you see a percentage of growth of depletion, which is lower than shipment like this year because not -- it doesn't mean that there is automatic restocking and [indiscernible].

But what we -- I didn't highlight in the presentation, but it's very important to understand, Q4 dynamics were also giving that value depletion up low double digit, higher in percentage and absolute value than sell-in. So it's even more healthier.

So in Q4, the destocking was very strong as well, even bigger than the destocking EUR 35 million at yearly level. And this was mostly driven by China, which is an additional positive health check. Why that? Because the overall year was U.S. and the short term was China.

So the compounders in the short terms without giving certain for the future are going in the right way mathematically speaking. So does it mean that I can give you all today a guidance? No. But what we can say it's important for you to have some strange discussion in the 4th of June and later on.

Let's talk consensus that you have on Visible Alpha today, for instance, for '26, '27. Sales is 4.5%, if I'm not mistaken, and operating profit, it is 6.5%, 6.8%, something like that. It is right, is wrong. As you have understood, my speech was more focused on the short term to the visibility.

This is early stage, too early to discuss about this because we publish our full year results in June and we'll discuss analytically with Franck Marilly about all that, taking into account quantitatively also the RC transformation journey. But already, you can consider the global equation is very complex for next year for everybody. It involves several moving parts, positive and negative.

Let's start with the top line. We have some positive expectation in terms of strong will of growth in terms of sales, depletion and sellout. So I don't give you numbers. I give you what we highlight what we are looking for. But at the same time, always on top line, I cannot acknowledge that geopolitical economic context is very uncertain and volatile. So you have strong will, positive economic context, something that I cannot manage 100%, which is negative.

So what is the balance between the positive and the negative. This will be condensed, compensated put together in a recipe and discussed in the 4th of June. Same thing, even more complicated for operating profit. Several factors should not be under evaluated because they can have an impact. Impact is not by definition, negative. It can be positive and negative.

U.S. tariff. U.S. tariff has 2 [ souls ], refunds, '25, '26, maybe lower the rate for -- compared to budget, but can be also negative increase in the rate and no refunds. So I have to cope with that. So far, cautious approach.

And clearly, even more complex to analyze today, it is the contribution of RC Forward transformation plan in year 1. As we said, we are looking for a lot of clear goals on the span of 3 years. Year 1, it is '25, '26, '27. So it's a matter also phasing.

And this is something which is quantitatively positive, clearly, in terms of top line and in terms of return on operating profit. but also on -- not in the negative, but in the ways we are operating, learning by doing, coming back to the first question, applying new ways of working between brands, market and corporate fraction because we will behave and we will act and operate in a different manner.

And for a company when you have this kind of changes, there is always some time of adaptation. So I will not tell you if the consensus is right or wrong. I only give you some food for toast to understand that we have a lot of moving parts on the positive in our commitment and on the negative of threat side.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

No. Thank you so much for your attention. It was a call highlighting that we realized our guidance. Some of you said there was a small miss. I prefer to highlight that there were 3 quarters that are positive or 4 in the last fiscal year. So I'm happy also to celebrate small positive element after 3 years of negative perception of result at least in the operating profit because it will be clearly negative this year to as part of the guidance. So that's also what we realized positively at the not half empty, but half full glass.

We will capitalize on that, and it's very important to have our global discussion with Q&A on the magnitude of the RC transformation plan on the June of 4th and what are the implication in the short terms for the guidance '26, '27 in a complicated and unpredictable world. The UCA continue to be here clearly. So we have to cope with that, all of us. Thank you so much, and have a nice day.

Welcome to the Rémy Cointreau 2025-2026 Third Quarter Sales Presentation [Operator Instructions] Now I will hand the conference over to Luca Marotta, CFO. Please, sir, go ahead.

Good morning, everyone. Thank you for joining us today. As highlighted in our press release, Q3 sales grew by 2.8% organically, and this result stems from mixed regional trends, mainly driven by, on one hand, solid growth in the U.S. for a fourth consecutive quarter, supported by clearly low comps and improved sequential depletions.

They are slightly improving compared to Q2, but less than expected, and they are still negative, talking about depletion in U.S. In addition, EMEA is back to growth in Q3, driven by both divisions, Cognac and Liqueurs & Spirits. And last but not least, on the other hand, China is relatively resilient considering the continued challenging market and excluding an unfavorable calendar effect due to the shift of Chinese New Year timing, which accounts for 3 points in Q3 at group level, i.e., 1 point if you consider the year-to-date 9 months basis.

Let me put everything differently. We would have been flattish over 9 months, excluding those technical effects. Q3 sales decline breaks down as follows: a volume increase of 8.7% and 5.9% in price/mix effect. Clearly, Q3 sales increase, largely driven by Cognac, mostly in EMEA and China, which is impacted by the underperformance of the high-end brands.

Looking at the overall sales performance by region. Americas was up by high single digit over 9 months, of which a low to mid-single-digit growth in the Q3. APAC sales decreased by low double digit over 9 months, of which a decrease of low single digit in Q3. This performance is up mid-single digit, excluding the negative calendar -- Chinese New Year calendar effect, which is 8 points if you consider that at APAC level. EMEA declined by low single digit over 9 months, but with an increase of high single digit in the last quarter. This was the overall sales performance by region, 9 months with a specific touch on the last quarter.

Let's do the same thing at least at 9 months value depletions at group level. In the U.S., value depletion declined by mid-single digit year-on-year over 9 months, including a decline of low to mid-single digit in Q3. In China, value depletion were down high teens over 9 months year-on-year, including a negative calendar effect in Q3 that waves also in depletions clearly. And in EMEA, value depletion decreased by mid-single digit year-on-year.

So what you can say overall after 9 months. As a picture, 9 months group value depletion fell by mid- to high single digit, more or less minus 7%, minus 8%, underperforming sell-in trends minus 1.9%. Why that? Essentially because of the U.S. restocking from a low basis without increasing the level of stock in absolute value. However, the gap has widened compared to the H1 beyond the U.S. and the calendar effect in China, global depletion in Q3 were still lacking a bit of momentum.

I'll be back also with some absolute value during Q&A session, I'm sure. To conclude on this first slide, we are confirming our full year organic guidance. We expect the organic full year sales to be between stable and up low single digit, while we expect organic full year operating profit to decline between low double and mid-teens. The latter, of course, includes the estimated impact from tariffs in the U.S. and price undertakings in China. So in a nutshell, no change in guidance compared 3 months ago.

Now let's turn to Slide #3, in which we can witness 9-month sales that amounted to EUR 735.4 million, representing a year-on-year decrease of EUR 52.3 million or 6.6% on a reported basis. This performance was shaped by the following factors: first, an organic decline of EUR 15.3 million, as said, minus 1.9%. This performance is split between plus 4.5% of positive volume effect and minus 6.4% of price/mix. Price/mix effect, the combination is negative and has been impacted by both price and mix in the same proportion.

Second, a negative currency translation impact of EUR 37 million or 4.7% loss, mainly driven by the deterioration, conversionally speaking, of the U.S. dollar accounted for around EUR 20 million less on top line and the Chinese RMB for EUR 11.8 million. Now let's turn to Slide #4 to delve into organic trends by region at group level. Let's start with the Americas, in which organic sales increased by high single digit over 9 months. i.e., down more or less low to mid-teens on a 6-year basis.

Year-on-year performance includes a low double-digit growth in volume, a low single-digit negative price/mix impact, mainly driven by pricing adjustment. In the U.S., specifically inside Americas, sales grew by low single digits than last quarter, driven by both divisions on the back of a low base of comparison clearly, but another slight sequential improvement in value depletion, which is a positive news, but it is not as much as we expected, improving nonetheless, but less than expected.

So what does it mean? Down by mid-single digits year-on-year in 9 months, of which down low to mid in Q3. In this context, what happened to inventory level in the U.S. in months recoverage more or less remains around 4 months at the end of Q3. In Canada, sales were up mid- to high single digit in Q3, underpinned by both divisions, very balanced picture as well. And LatAm, sales were also up very strong double digit in Q3 and there mostly led by Cognac. End of December, Americas accounted for 39% of group sales, up 4 points compared to the previous year.

Now turning to APAC. Organic sales declined by low double digit year-on-year over 9 months, but increased compared to '19/'20 to mid- to high single digit. Looking at the volume value equation, the performance was impacted by low to mid-single-digit volume decline, while the value part was negative at more than mid-single digits. Why that was driven by the underperformance of high-end brands and ranges and increased promotional activity.

In China, sales were down approximately more or less low double digit in the last quarter, impacted by the market conditions, which remains very challenging and the strong, I repeat, is very important, negative Chinese New Year calendar effect. At APAC level, 8 points, I repeat, at 3 points on the Q3 at group level. However, the overall performance is almost flat, excluding this technical effect, benefiting from the return to normal trading condition in Travel Retail and a very solid Double 11 festival.

Specifically, these events was more or less plus 15% compared to the previous year. This was sell-in. Talking about global value depletion, they were down high teens year-on-year. Given that depletions are roughly in line with sell-in trends in 9 months, inventory levels remained healthy at the end of December. Elsewhere in the APAC region, rest of Asia showed a strong improvement compared to the Q2, posting a very strong double-digit sales growth in the last quarter, mostly led by Cognac, Remy Martin and Louis XIII. End of December, APAC region accounted for 37% of group sales, down 5 points compared to the prior year.

And then EMEA region, in which organic sales were down low single digit over 9 months and around high single digits compared 6 years ago, primarily reflecting a negative value effect. Inside this region, talking about the subregion, third-party distributors cluster recorded a mid-single-digit sales increase in the last quarter, driven by Germany, Greece and Romania. Most of the growth came from Cointreau and Metaxa.

U.K. and Nordics, sales were down by high single digit last quarter with sell-in below sell-out trends due to the high base of comparison in sell-in and sell-out was positive in a declining market. Benelux and France, sales were up by low single digits in the last quarter, essentially led by France and in both divisions, Cognac and Liqueurs & Spirits. And last but not least, AMEI & CIS sales were up by very strong double digits, boosted by the successful launch of [ RM VS ] in South Africa and Nigeria, which bodes well for the next year.

This was sell-in, talking about value depletion, they declined by mid-single digit year-on-year in 9 months. So overall, with the slight disconnection in EMEA in the last quarter, inventory there slightly increased. End of December, the EMEA region accounted for 24% of group sales, up 1 point compared to the previous year. Now let's turn to Slide #5 and the analysis by division. Let's start with the queen of the division, which is Cognac. Cognac division posted an organic sales decline of 4.3% over 9 months, driven 9 months by a 5.4% increase in volume and the negative price mix of around 10 points, 9.7%. End of December, Cognac accounted for 61% of our sales, down 2 points compared to the previous year. What happened there?

Let's start with the biggest region inside Cognac, which is APAC and inside APAC, Mainland China, in which sales declined by low double digits in the last quarter, affected by the continued complex market condition and clearly, as I said, the Chinese New Year calendar effect. Excluding this technical effect, China would have been almost stable, helped by strong performance during 11/11 Double 11 festival in e-commerce and a return to normal trading condition in Travel Retail.

In this very tough context and given Mid-Autumn and [ wedding season ] were ahead of Chinese New Year, all channels were down compared to the previous year. Elsewhere, Taiwan reported a weak performance, selling and depletion. Hong Kong and Macau were up strongly, helped by positive phasing and some promotion. Overall, 9 months value depletion were down by high teens year-on-year. In the rest of Asia, sales were up by a very strong double digit in Q3, mostly led by Remy VSOP and Louis XIII. Americas. In North America, so U.S. and Canada, Cognac sales were up by low single digit in Q3, underpinned by a low base of comparison and slight sequential improvement in depletion.

Talking specifically of the last quarter, Q3 U.S. value depletion, they were down mid- to high single digit year-on-year on Cognac. 12 months value depletion included less 3 points a negative price/mix effect on depletion of 3 points year-on-year at the end of December. But on a 6-year basis, price/mix on value depletion remains up double digit, plus 10 points.

In Latin America, sales were up by triple digit in Q3, driven by VSOP and Louis XIII. In EMEA, Cognac sales grew by high teens in Q3. U.K. and Norway were down double digit. However, in sell-in impacted, as said, by high base of comparison, while sell-out was back to positive, supported by a more targeted pricing approach, new listing, and I remember in a very negative market. Europe third-party distributor was flat in Q3, strongly -- strong improvement versus Q2, helped by a more flexible pricing approach, leading to market share gains.

And AMEI and CIS were clearly up by triple digits, leading the EMEA and Cognac progression in the quarter, led by South Africa on the back on the heels of the Remy Martin VS recent launch. Finally, Benelux and France were up by mid- to high single digit. Lastly, 9 months EMEA value depletions were down low double digit year-on-year.

Now let's turn to Slide #6 and the same analysis for the other division, Liqueurs & Spirits. Liqueurs & Spirits division reported a plus 3.7% organic sales growth in 9 months, driven by solid volume increase of plus 5.7% and a negative price/mix effect of 2.1%. End of December, the division of Liqueurs & Spirits accounted for 37% of sales, up 2 points versus the previous year.

Now let's review the division performance by region. Let's start with the Americas, in which North America sales were up by low to mid-single digit in the quarter, driven by Cointreau, Botanist, which both delivered positive depletion in Q3 as well in a declining market. Specifically, Cointreau and the Botanist Q3 U.S. value depletion were respectively up by low single digit and low double year-on-year. Additionally, price/mix was down only 2 points compared to last year for the 12 months rolling basis period ending December, but increased by 16 points on a 6-year basis.

So valorization compared to 6 years ago in both [indiscernible] and even more on value depletion is bigger, is higher on Liqueurs & Spirits compared to Cognac. Latin America, sales were down by low single digit in sales in Q3, impacted by price increase in Puerto Rico on Cointreau and following tariffs and fake also alcohol issues in Brazil, in Sao Paulo. In EMEA, second region by importance for this division, sales were up by mid- to high single digit in the last quarter and breaking sales down further.

U.K. was up there by low single digit in Q3, led by Cointreau, Port Charlotte, Octomore, and Telmont. The quarter benefited from the positive effect linked to the distribution gains. This is particularly the case for the Botanist from new innovation launches, Cointreau RTDs and a greater pricing agility. Overall, the U.K. is gaining market share alongside positive sell-out in a declining market. Europe third-party distributor sales were up there by mid- to high single digits in the quarter, led by Germany and Greece.

As said, overall, we recorded a solid growth from Metaxa and Cointreau. And finally, Benelux and France were up by mid-single digit in Q3, while AMEI & CIS was down mid-single digit. This was sell-in. In parallel, 9 months value depletion were down by low single digit year-on-year. And then inside this division, we have APAC, in which in China, sales were down high single digit in Q3, mostly impacted by Cointreau, which faced aggressive price environment and competition.

And in parallel, 9 months value depletion were down by low double digit. Rest of Asia was down by low double digit in Q3, impacted clearly by Australia due to phasing and very high comps. We are missing a part of the turnover here, which is the non-group brands, which represents 2% of group sales and they were stable year-on-year in terms of weight, but they recorded an organic decline of 1.9% in 9 months, affected clearly by the performance of the most exposed country, which are Benelux and U.K.

Approaching to the end of the prepared presentation before switching to the interesting Q&A session, let's now turn to Slide #7, talking about this yearly '25-'26 guidance. We are today confirming our expectation, both for sales and for operating profit. In more detail, we expect organic sales growth to land between a flat and low single-digit increase. At the same time, we expect an organic operating profit to decline between low double and mid-teens. So nothing changed compared to 3 months ago.

This guidance clearly includes the net impact of tariff, which estimated at this time of the year at around EUR 25 million, net, of which EUR 5 million in China and EUR 20 million in the U.S. In addition to this organic performance, there are also currency effects, which remains very negative and highly volatile. While our hedging policy helps to mitigate part of the adverse impact, the recent evolution and ongoing evolution of the dollar/RMB leads us to expect on sales between EUR 50 million and EUR 60 million reduction of the turnover and published rates, of which 60% occur -- will occur in the H2.

And operating profit, it is a bit reversed in terms of phasing between EUR 25 million and EUR 30 million negative effect, of which 1/3 should occur in the H2. Exchange rate volatility is likely to persist throughout the year, which is why I will continue to keep you updated on a quarterly basis. But please highlight the fact that so far has not changed compared to 3 months ago as well.

One final word on our transformation journey. As mentioned in the press release, the program is now effectively underway, starting with a very granular diagnostic phase across the main value creation levers. So what we are talking about, route to market, number one, revenue growth management, number two, A&P and procurement 3 and 4 as well a more generic broader review of our cost base and operating model in line what we shared with Franck Marilly at the end of the H1 during end of November presentation.

By the end of April, next conference call on Q4, we expect to be in a position to communicate the key strategic priorities that will start to be implemented in the fiscal year '26, '27. Thank you for your attention, and I'm happy to answer to your question, give me a second to drink a bit of water. Thank you.

[Operator Instructions] The next question comes from Laurence Whyatt from Barclays.

A couple for me then, please. Firstly, in the U.S., we've seen reports of some substantial improvements in some of the depletion data, and I appreciate it's a short time period when we look at the weekly Nielsen data. But of course, do you think we should be taking this seriously? Or do you think there's some sort of timing effect that perhaps means that these improvements are perhaps erroneous and due to other effects? And then secondly, you may have seen today there's some reports of some very strong sell-in into the Chinese New Year period in China. Do you think those reports real? Are you seeing similar effects on your brands going into the Chinese New Year for 2026?

Thank you so much. So let's start with the U.S. As said, we are both at the same time, positive and a bit less positive news. When I'm saying that, we are continually improving that. And we think that we'll continue to improve to your question. So yes, we are on the right track. But the speed, the magnitude of the improvement is a little bit a deception compared to our expectation. Why that? That we are sleeping and we are not so good.

Market is really declined in a bigger way compared to our expectation. So even if our performance are not excellent compared to last year, not positive and a bit of deception compared to our expectation, the market declined as well. So in this specific moment, we are performing better globally than competition, which is something which is very important to highlight. So it is not what we expected totally. So a bit of the deception, disappointment. But considering the global environment, we are doing a hell of the job on the field. So kudos to our teams.

Chinese New Year dynamics, it is globally this morning, global good touch, but has just started, so we are relatively optimistic. It is not so far what it seems to be the Chinese New Year campaign of the century. So we have been in a better position before. We are in wait and see with an hoping attitude by ourselves as well, like the market. So far, so good. Coming weeks and days are very important, but we are not excessively optimistic, but we are not negative as well. So quite a balanced attitude still at the beginning of Chinese New Year and also to manage expectation, it will not be the Chinese New Year of the century, but relatively optimistic.

And just on the first question, I was specifically referring to the data we've seen in January in the U.S., some of the extreme improvements in the U.S. Nielsen data. It sounds like you're doing things that is a sustained improvement, but...

Yes, it's very complicated to comment on that because the first -- but don't remember, there is also a lot of weather bad condition right now that could impact the second part of the month. So right now, also the depletion on an effective way because there are some problems in many states where there's no storm. And technically, depletion can be affected by that. It is true that what's happening is helping declining the stock at retail point of sales.

Once again, moderate optimism, we are doing a touch better of the competition, still negative. So for us, it's very important, like for everybody, for us even more because it's tough to have a negative depletion figures since a lot of months. It is very important also in terms of symbolism to switch to positive land. So relative optimism and cautious and overall touch or modest optimism overall for the China and the U.S.

That's also the reason why despite the mathematical negative forks between sell-in and sell-out in the Q3, we are confident so far at this stage clearly to confirm the guidance because even if there is this fork and then we're back on this point because we have to look at that on absolute value, not only as a percentage, it is clearly not affecting our guidance at this stage.

The next question comes from Edward Mundy from Jefferies.

Two questions, please. The first is your comments on doing a touch better than competition within China. I think you've historically said on these conference calls that your mix, i.e., bigger in club and smaller in [ XO ], your route to market, i.e., that big direct-to-consumer business and your channel exposure, i.e., probably smaller in the traditional on-trade has allowed you to outperform competition.

Could you perhaps talk about some of those drivers? And if the market starts to improve, should you be one of the first companies to see that improvement? That is my first question. And then the second is on currency. Clearly, you're keeping your guidance unchanged for fiscal '26, but there have been some recent strengthening of the euro versus both dollar and Chinese yuan. I know it's probably a little bit too early to start giving guidance for fiscal '27, but based on what you're seeing on spot prices and what you know about your hedged rates, is it a roughly similar outlook from a percentage standpoint for fiscal '27 relative to fiscal '26?

So as I said, as you understood, Chinese New Year just started. We are in a very cautious position, but I repeat, it will not be the Chinese New Year of the century, but there's no need at this stage to be negative as well because some good dynamics are installed. So relative optimism and a clear reactivity on all channels.

In terms of channel exposure, I repeat, even if all channels in Q3 were negative in China, including the e-commerce. So we cannot deny that the global confidence of all channels is reduced compared to 1 year ago. Globally, we are in a position which with a wave with a lift of the global situation, we can profit that essentially with e-commerce. The fact that as you highlight, we are less focused on trade.

Today, we are between 5% and 10% on trade compared to the other. The fact that we are more direct than others, 1/3 of our top line is direct to client with no indirect wholesaler or indirect channel framework involved makes that we should be in a position to profit. But as well, we need to look at another element compound, which will be very important for all our region for the company as well, which is the needs also to improve the free cash flow conversion as well.

So there is a point that today it is early to talk about that, with clearly, a triggering point to be analyzed during June full year presentation and where with Franck, we will detail the guideline for the year '26, '27. So there is some opportunity to grow and then needs to be profitable, but even more important and a faster cash conversion growth compared to the previous EBIT. In terms of currency, There, as you may understand, it is really, really, really crystal ball because it is very, very early to talk about ForEx impact for the next fiscal year. So I understand your point.

Let me share you where do we stand for next year in terms of coverage. So far, for the '26, '27 estimated net currency needs in terms of U.S. dollar and pegged currency, we are more or less covered between 65% and 70% at more or less $1.16 with 60% of options. So very -- a bit costly, but very flexible. This year, we'll be landing between $1.12 and $1.13. So there, there is a negative hedging impact. I'm not talking about conversion because this is also influenced by a lot of macroeconomic and macro and geopolitical element that I do not master. I watch them and adjust. I cannot do more than that.

For Chinese New Year, which is increasing the weight, so the weight historically was far bigger. Now it's 50% of our needs of net currency are U.S. dollar pegged and 34% is Chinese Yuan RMB pegged. So the Chinese Yuan is very important, much more important than the past. We are 60% more or less hedged at 8.4% with 70% option. This year, the hedging average weighted rate will be between 8%, 8.10%. So once again, in both of them, we need to understand that without being precise in terms of the absolute value, the hedged granted coverage rate for '26, '27 will be giving less euro than this year.

So let me be clear on that. How much I want, I won't, I don't know, which is important also to be taken into account for our EBITDA, including the ForEx, clearly cannot drive the management of the company. We are organically driven, but need to be considered for the free cash flow conversion rate, which I repeat will be more important. Is already the case, but even more important than in the previous past as an element to manage the company and the compounders. I hope it was clear.

The next question comes from Chris Pitcher from Rothschild & Co Redburn.

Two questions, please. Firstly, on your U.S. price/mix. You've clearly gone through a big adjustment from where you were sort of during the pandemic to, I think your 10 percentage points still above. I mean, Franck was quite clear on the previous call that you were going to be less dogmatic about price. Are you at the level where you're comfortable now the relative pricing? Or do you still see further weakening in price/mix, particularly as you're starting -- you're seeing the outperformance from Louis XIII?

And then secondly, I'm just intrigued by your comment, your specific reference that you're using an external consultant or support from an external consultant in your diagnostic. Can you sort of explain what it was that you think Remy was lacking that you needed a sort of external set of eyes to try and work out the strategy because it sounds expensive to me.

Thank you so much. So let's start with the business question and then let's talk about transformation, which is business as well. So price/mix is negative as visible, 3 points, declining a bit compared to the previous year-to-date. What this reflects right now, let's explain, and then we talk about the future. Price adjustment to $49.99 on VSOP on most states. Price adjustment XO also because NSCXO also price architecture fell down a lot. We are not a leader on XO.

Clearly, we need to be a follower, reminding that gross margin, even if we didn't disclose the absolute -- the figure, but gross margin XO for everybody in the industry is clearly a very strong element. It is -- every time we are able to increase one case of XO, you increase clearly the accretive impact in cash and profit and loss profile big time. High-end segment underperformance on the 12 months compared to the mix. the revitalization of VSOP, the resilience of 1738, squeezed a bit not as an effect, a mathematic effect, the weighted average.

Negative format sometimes also on Louis XIII, because limited editions such as Rare Cask last year are not replicated when you have this kind of limited edition can play a role. A lesser extent, talking about Cognac specifically, the price reposition on Remy V. And on top, as a company, you have clearly the overperformance of Liqueurs & Spirits compared to Cognac. What will happen next year? Are we improving the price/mix?

It's too early to answer in a very precise way, but we need to understand that the gross margin target at group level and clearly also in the U.S. as an important element target remains. But the fact that we need to improve every year in gross margin, it is not the way the world today is composed. So we cannot grant that we are able to have the same pricing power of 2, 3, 5 years ago. On that, I'm back to the free cash flow improvement.

We need to be a bit more commercial and need to move volumes a bit faster to improve globally the turnover and the free cash flow conversion. I'm not saying that in the future, the profit will fall. I'm not saying that. But free cash flow conversion and profitable, but also liquid growth, it's more a priority now than in the past.

And the global environment is less keen to absorb price increase or if we do that, we will eventually have an impact in volumes in declining complicated market. So in a nutshell, you cannot modelize big price increase overall in the future and more playing on to improve the gross margin to adjust it or to limit the fall in mix game, channel, territory and new format, new product eventually, improving the speed of the innovation.

Is it unrealistic to consider you might come back into VS?

Never say never to nothing, to anything, but so far, no way on the U.S., no way. Why? I read some of your pre-notes today. Let me -- I will not drop the name, but when talking about we will recognize himself, we cannot consider that VS is a technically positive effect in this moment in EMEA because every time you do that, you have some dynamics, maybe also cannibalization, and you have to count about that. So doing that as VS globally as a name in the U.S., I don't think will happen.

But you have witnessed the presentation of Franck Marilly end of November. I'm not talking about VS, but also a placeholder for a launch of eventually new products, clearly for the American market, with a different approach. So I'm not talking about VS, but I repeat a more spread tackling new segment of market, higher and lower of the all brands, including Cognac.

In the future, I think the name and the codes of the competition face-to-face will change and everybody will try to get rid of it, launching new concepts, new products, they are able to install new price positioning inside the global category being more interesting, sometimes wild in terms of competition. But the word of franchise fighting each other with the same name, I think, could be bypassed. One second as I drink a bit of water.

The next question comes from Trevor Stirling from Bernstein.

No, sorry, I need to answer the other question of Chris of the consultant as well. I answered only to the question number one. So the second question, so why going externally? They have a huge, lot of benchmarks to leverage, quicker. We need to install a mentality of change. And having this kind of example, benchmark, will be very concrete to show what we can do better without denying the values and the things we are doing correctly right now.

At the same time, we need teams to be focused on a daily operation because we are running at plus 10 without any problem. So what a point to lose 1 or 2 points commercially. So we have to have teams that are there that teach on the field to try to grab any single bottle. Doing that with the help of the external qualified organization will also limit the focus on these specific projects inside the company. There is -- they know all players.

So there is -- as you highlighted, we are doing that quite widely, talking about top line, A&P and also operational footprint. So it is 360 degrees more or less. There is a strong mutation for the wave of consumption all around the world. We need to touch point in different ways. So if we don't do that with a specialist, the A&P ratio, which is already at 20% for us, risk to increase without having the payout to be measurable, needs professional to be able to increase the touch point at the same time, deliver efficiencies and maybe stop doing some other touch point.

So we need clearly this help to open our eyes with an additional qualified opinion that will help us decide. And then we will decide. We are quite opinionated. We will not buy everything. We are quite respectful of the history and the tradition. You know that is a very strong asset of the group. It sometimes can be also considered an element that means that we are maybe sometimes a bit less fast than others, but we are more consistent maybe. And that's the reason why.

On top, the clear triggering point is to improve top line and turnaround of the company, increasing the capacity to win -- to gain market share, volume and value on the market, improve the free cash conversion -- free cash flow conversion without forgetting that even if we are still a bit -- we have a strong weight of cost compared to our size today. Don't remember we already cut EUR 230 million, more or less 12% of our overheads and 9% of headcount.

So we can do it on a base with already without any specific global restructuring plan on a day-by-day improvement and without any big plan already reset a bit the base. It is enough? No. We can -- we need to go further. But these are the main reasons why we needed to do with an external help and more than that, an external eye to be able to watch what's happening for us a bit more than the past.

Trevor Stirling from Bernstein.

Two questions from my end, Luca. So first one, returning to China. You mentioned that excluding the Chinese New Year effect that you thought China was flattish. But presumably, that means you've got that easy comp in travel retail. So the other channels, ex travel retail are still negative or presumably mildly negative on an underlying basis. I just wanted to check if that was the right way to understand it.

And the second thing was intrigued, Luca, in your presentation, I think 3 times you referenced Louis XIII strength in Asia, ex China, in the U.S. and LatAm. Is this just easy comps? Or is there something more in terms of the underlying improvement for Louis XIII?

Thank you for your questions. For your first one, yes, GTR gave some room to -- so out of GTR, we are not at the same level of performance, but only for the Q3. If you consider GTR for the 9 months compared to previous year, and we have the most important operators are still in double-digit negative compared to the previous year. So I expect this to continue.

And technically speaking, the same comment for the VS. For me, they are not technical effect. This one are more than a catch-up of the normal way of acting. So yes to your question, but still on 9 months, it is not accretive. The GTR reopening is still a big negative, big, big negative. So it should be better. Louis XIII, a bit of a momentum and highlighting that we are there.

So Louis XIII, it is clearly not the same without giving any figures, in the same shape and weight than 5, 6, 7 years ago, but our teams continue to fight and to be able when we can to grab specific market share even if the global worldwide environment is less keen to this kind of high-style product. There is a specific market. It is not only a matter of pricing, but there is a bit of momentum that we count to improve to have an additional positive impact clearly in terms of image and DNA, but even more in terms of our compounders, our financials.

The next question comes from Pierre Tegner from ODDO BHF.

Pierre Tegner speaking. I would like to come back on your previous very interesting comments on adapting the asset rotation equation of the economic model. My question is how we have to think about the future in terms of better balance between the P&L and the balance sheet. What I mean is are we to think about more asset rotation at the same level of operating margin? Or is there much more a kind of trade-off, if I may, in terms of margin and asset rotation?

Thank you for your question. Very interesting. Please forgive me because I cannot be totally precise because, as you know, Franck said very clearly, guidance for next year will be shoot in June and some -- and all plan for the future 5 years will be disclosed later -- far later in this calendar year 2026. But generally speaking, clearly, we need to think of future of the company, we will be a bit less sentimental in terms of brand asset, everything.

So DNA is the same, but cold pragmatic real compounders figures will be even more on the table to be discussed, then the decision will be, at the end, a collective Board of Directors' vision, Franck direction. But the financial point of view will be increasingly important. And on that point, thank you for your question. You have to put a scale or weighing the 3 big elements we have financially speaking, which is balance sheet, free cash flow and P&L.

All 3 are very important, but it will be even more skewed towards free cash flow generation, free conversion, progressive balance sheet, solid robust dynamics, increasing the age and balancing long-term asset and liabilities with a bit of more flexibility inside asset priority rotation. And as a consequence, the profit and loss still remain very important because EBITDA is an important compounders of a ratio clearly, so we wouldn't forget it. But more in absolute value than in profit and loss model in percentage base. Absolute value, absolute cash, absolute EBITDA are more important, the percentage of operating profit compared to the top line. I cannot be more precise than that, sorry.

I will take a last question. The next question comes from Tilly Eno from Morgan Stanley.

The first is on the U.S. I mean, while your depletions and sell-out trends are declining at a similar rate in Q3 as in Q2, the overall spirits market saw quite a sharp deterioration over calendar Q4. Could you just talk a bit about what you're seeing at the wholesaler distributor level in terms of behaviors and if there's any sort of indirect impact from potential inventory pressures on your plans?

And then my second question is on China. You've spoken previously about some heightened promo activity. Just wondering, are those pressures largely within the Cognac category? Or are you also seeing a bit of price competition from other international spirits categories like, say, the sort of lower-priced whiskey?

Sorry, I didn't get the second one clearly because...

Sorry, just the second question on China, where you've previously mentioned some sort of mix impact from promo activity. Is that largely concentrated within the overall Cognac market or other subcategories?

So talking about U.S. depletion in terms of flexibility, we'll try to speed up that switching progressively also the A&P mix, more the fast-moving Cognac lines. And for Liqueurs & Spirits, we did already part of this job and is witnessed by the performance. In terms of distribution, clearly, situation is not totally sit on a very easy way because everybody knows some of the different situations that are happening right now inside the wholesaler footprint.

But -- all in all, to improve the depletion U.S. speed, we are switching part of the, as I said, A&P more on BTL, so less brand awareness in long term and more in the short term. For the China promotional activity, it is a bit spread. It's not only inside our category, but our category even more. And on that, we are increasing as well, but far less than our competitors also because as was highlighted before, we have one weakness that becomes a strength when you're talking about promotional activity, which is our exposure to the on-trade, 5% to 10%, which is low in terms of brand awareness in the long term. but protect us a bit in terms of promotional debt.

In that case, we have many types of forms of promotional support that can be driven not only money, but also tasting bottles and so on, banqueting and so on. We increased our promotional footprint far less than the competition is more general, not only specific for our category.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you so much for your time today. So I would like also to end with the last point. The question was not asked, but it's very important. If you look at the Q3 between sell-in and sell-out dynamics, it seems that sell-in is positive, plus 2.8% and depletion negative. So the normal brain reaction is that you are stocking. The answer is many languages, no [indiscernible].

Because if you consider the absolute value of the depletion is more than EUR 20 million comparable basis compared to the sell-in. So what we have done in -- altogether in the 3, 4, 5, 6 quarters to rebalance sell-in and sell-out has helped us to land in a very balanced stock equation in absolute value. Clearly, we have exception state by state.

But overall, even if the compounding and percentage level will show -- will tell another story, is not the case. It's not the case. Q3 was destocking even if sell-in was increasing and sell-out was decreasing as a percentage because the base of sell-out was -- and it is bigger than base of sell-in. Thank you so much. Talk again at the end of April and stay tuned.

Good morning, and welcome to the Rémy Cointreau 2025, 2026 H1 Results Presentation.

[Operator Instructions]

Now I will hand the conference over to Marie-Amélie De Leusse, Chairwoman, please go ahead.

Good morning, everyone, and thank you for being with us this morning for Rémy Cointreau's First Half Results. I am here with Franck Marilly, our CEO; and Luca Marotta, our CFO. Both of them will, of course, take you through the detailed results.

Let me begin by sharing a clear and honest picture of where we stand today. As you can see in the next slide coming up, part of our portfolio has already returned to growth. Please, this slide. Thank you very much. It seems we have a small technical issue, but we will resolve this in just a few seconds. Bear with us, and apologies for the delay.

So as you can see, part of our portfolio has already returned to growth. In Cognac, 40% of our organic sales are back to positive territory. And in Liqueurs & Spirits, that figure rises to 85%. These are encouraging signs, which confirm the strength and relevance of our portfolio.

But we must also acknowledge that despite this progress, it is clearly not enough. Yes, momentum is emerging across categories, but we remain far from where we need to be. This is why under the leadership of our new CEO, the group is entering a real turning point, a decisive moment where we deeply challenge ourselves, rethink our priorities and set the foundations for a stronger future.

This transformation is anchored around 2 immediate priorities. Priority #1, revitalize Cognac, the historic heart of the group and a category with strong potential.

Priority #2, accelerate the expansion of Liqueurs & Spirits, a resilient engine already showing solid signs of recovery. Our ambition over time is clearly to provide greater volume scale to absorb fixed costs, rebalance working capital, broaden our geographic footprint and reduce sourcing constraints.

Our conviction is that we have everything we need to succeed. We can leverage the unique strength of our portfolio made of houses that have shaped our identity for centuries. We can rely on our highly committed, passionate and talented teams who continue to demonstrate remarkable dedication and resilience in every market every day.

And we now have a clear direction, renewed energy and the willingness to move faster. This is the transformation we are now putting in motion. And I strongly believe that we can look to the future with confidence because our brands, our consumers and above all, our people give us exceptional foundations on which to build.

The journey has begun. And together with determination, we will write the next chapter of Rémy Cointreau. Franck, the floor is yours.

Thank you, Marie-Amélie. Good morning, everyone, and thank you for joining us today. I'm glad to be here for my first results presentation. I will begin with a quick overview of first half '25, '26. Luca will then detail our financial results, and I will conclude by giving you an update of the group situation and the outlook.

Let's begin with a review of our first half results performance. I'm now on Slide 6. Group sales totaled EUR 489.6 million, representing an organic decline of minus 4.2% versus last year. COP reached EUR 108.7 million, down minus 13.6% on an organic basis, resulting in a margin of 22.2%, down 2.7 points organically.

This performance reflects, first, a gross margin contraction of minus 2.4 points impacted by tariff, an unfavorable price/mix and to a lesser extent, some production cost pressure.

Despite this additional tariff, our gross margin remains strong at 70.1% organically, slightly above H1 of '19, '20. Second, our deliberate decision to maintain marketing investment with A&P at 19.4% of sales, up 0.9 points year-on-year.

These efforts were almost fully offset by continued discipline in cost management with OpEx declining versus last year. In this context, our net debt-to-EBITDA ratio increased slightly compared to March, reaching 2.96.

Let's begin with our 3 main highlights for the semester, starting with the U.S. on Slide 7, our largest and most strategically important market. After 2 very challenging years, our underlying trends in the U.S. continued to improve during the first half, allowing the group to return to sales growth in first half.

The improvement is real and consistent even if the pace of recovery has been slightly slower than we initially expected. On depletions, Rémy Cointreau U.S. shows a clear sequential improvement. Month after month, depletion volumes have strengthened, supported by gradual normalization of inventories at our distributors. Since the start of the calendar year, we have seen steady progress, bringing total volume close to stability by the end of the period.

This confirms that the worst of the correction is now behind us. On sellout, Rémy Martin is now outperforming the Cognac category. After several quarters of underperformance, the brand has regained momentum, thanks to sharper pricing alignment and improved commercial execution.

This marks an important turning point for the brand in the U.S. At the same time, Cointreau continues to demonstrate solid resilience, both in absolute terms and relative to its category. Despite a difficult market, the brand maintains healthy consumer demand and benefits from a strong brand equity and efficient brand activations.

Overall, these trends give us confidence heading into H2, even though the U.S. spirits market remains challenging in the current macro environment. The sequential improvement is underway. Our objective is now to build on this momentum.

I'm now on Slide 8. The market in China has become increasingly challenging during the first half, leading to a sharper-than-expected decline in our business. The overall environment has softened over the period, and the base of comparison remained high. As a result, sales in China were down mid-teens in the first half, in line with value depletions. Consequently, inventory levels remain healthy, providing solid fundamentals ahead of Chinese New Year.

The execution of our Mid-Autumn Festival strategy has been complex, but the outcome is clearly positive. MAF has finally taken off. Greater pricing agility to adapt to the new market dynamics, combined with strong commercial execution and a relevant product offering has generated a favorable elasticity. This is an encouraging sign in a market where consumers are increasingly selective and value-driven.

MAF delivered a low single-digit growth over the period, while our performance during the recent Double 11 e-commerce festival was also strong, with sales up plus 15%. These successes confirm that our strategy is the right one, even in a more challenging environment. Overall, while China remains difficult, we are seeing early green shoots that support our confidence over the midterm.

A final word on the EMEA region on Slide 9. Consumption trends remained soft across most markets in first half, reflecting a more cautious consumer and pressured discretionary spending. That said, the region will benefit from solid drivers to support a rebound in H2, notably innovation, distribution gains and targeted pricing initiatives.

In Africa and Middle East, the rollout of Rémy Martin VS is progressing well in a market largely driven by the VS segment. Our performance with wholesalers is currently ahead of our objectives, reflecting strong initial traction.

As a result, we will be increasing our shipments in the coming months. In the U.K. and Nordics, we expect to improve sequentially. We have secured distribution gains on the The Botanist, Rémy Martin 1738, Telmont and Bruichladdich that should start to deliver in H2.

We are also implementing smart pricing initiatives during the peak season, ensuring competitiveness while remaining aligned with our value strategy. In parallel, we are leveraging our innovation pipeline with recent launches supporting brand visibility and product testing.

Across Europe with third-party distributors, our brands continue to gain traction. Our new Metaxa campaign was launched in key markets, driving awareness and recruitment.

For Cointreau, on-trade activation will contribute to sustaining momentum despite softer category trend. We also expanded our presence through new launches, such as Telmont Rosé in Italy & Spain and secured additional distribution gains in Germany.

Overall, while H1 remains soft, the region is building the right momentum and assets to support the expected improvements in H2.

Thank you, Franck. Now let's move to a detailed analysis of the financial statement, starting with the H1 income statement. As previously mentioned, organic sales were down by 4.2%. Based on this, gross profit decreased by 7.4% in organic terms, implying 2.4, 240 basis points of deterioration in gross margin. this is still representing a slight improvement compared to pre-COVID levels.

This H1 gross margin contraction has been driven by incremental customs duties, clearly, and unfavorable price/mix effect on the top line and to a lesser extent, some manufacturing and logistic cost pressure.

Sales and marketing net expenses were down by 4.6% organically, so more or less in line with sales. Inside this total, we can say that A&P expenses were up plus 0.5% organically, representing a ratio of 19.4% of sales, which means an organic increase of the A&P pressure, compared to the top line of 0.9 points.

Despite continued pressure on sales, we have, as you can see, decided to maintain our investments behind our brands to protect their desirability and to be prepared for the recovery.

However, we have done so all that while keeping a clear focus on efficiency and selectivity. Accordingly, we increased since some quarters, the share of BTL, below-the-line, spending relative compared to the, above-the-line, ATL during this period.

As a result, the share of BTL investment is higher now or the above-the-line spend. What is inside that? Above-the-line, as a reminder, it is traditional media, digital, PR, and that represented 45%, less than 50% of the total A&P, while below-the-line clearly represented 55%.

On top, as a transversal point, digital investment inside A&P represented more than 65% of the ATL. So 2/3 -- So 2/3 multiplying 45%, we can say that around 30% of our total [ A&P ] spend is linked to digital activities and support.

Talking about OpEx, let's start with distribution costs. They decreased by 10.6% organically, mainly due to a one-off related to a compensation indemnity.

Administrative net expenses were almost flat on an organic basis, reflecting continued ongoing discipline on overhead costs following optimization made during the last 2 years, essentially, but not only. Overall, as a result, current operating profit was down 13.6% organically and more or less the double minus 26.2% on a reported basis.

Why that? Because we have to take into account the negative currency impact of EUR 18.7 million on the bottom line. Talking about margin. COP margin stood, as Franck already highlighted, at 22.2%, down 2.7 points as reported, of which 5.4% clearly organically.

Compared with H1 '19, '20, the margin is down by 4.7 points despite a slight improvement in gross margin, plus 0.4 points. So why we are down compared to pre-COVID level of margin because of the sharp increase of A&P investment, 4.4 points. Overheads were slightly increasing, but more or less in line and touch more than the top line.

So let's move to Slide #12 to dig inside the group current operating margin bridge. It was down 5.4 points as reported, as said, reaching 22.2%. This breaks down into organic decrease of 2.7 points and a negative currency effect, the same magnitude, 2.7 points. The organic evolution of the current operating margin largely reflects a deterioration of the gross margin, which nevertheless remain, I repeat, it's very important, above pre-COVID levels, plus 0.4 points.

This deterioration was likely amplified by the sustained level of A&P spend, along with continued discipline, as you can see, in distribution and structural costs. To be more precise, gross margin was down 2.4 points, of which more than 1/3 is linked to incremental custom duties alongside an unfavorable price mix on the top line, both in mix and in pricing in the current environment clearly.

And to a lesser extent, inflation related to the cost of goods, particularly on the Cognac eaux-de-vie that has been bought and supplied some years ago.

Second point to highlight is the A&P ratio. It increased by 0.9 points, as already said. Third, talking about OpEx, the ratio of distribution structure cost was down 0.6 points and decreased by EUR 9 million in absolute terms. This is an important key achievement considering, as you remember, the reintegration of more or less EUR 10 million of last year over one-off savings. So it is clearly a good performance in our opinion. Slide #13.

Moving on the remaining items of the income statement. We can say that in H1 '25, '26, the operating profit included almost no other nonrecurring income or expenses. Financial charges were almost flat and slightly increased from EUR 21.1 million to EUR 22 million, but I will be more precise going more details on this in the next slides.

Talking about tax rates, increased from 27.5% to 28% but is a global first sight analysis because it's mainly due to the additional charge related to the exceptional corporate tax contribution in France linked to 2025 French Finance Law.

So if we exclude these nonrecurring items, tax rate are actually decreasing from 27.7% last year to 27.3%, a small one, but a reduction of 0.4%. For the full year, as a guidance, we expect the tax rate to land at around 29% partially, including 1.5 points of exceptional tax.

As a result of that, net profit group share came in at EUR 63.1 million, down 31.3% on a reported basis, i.e., a net margin of 12.9%, down 4.3 points. EPS for the semester came out at EUR 1.22, down 32.6% as reported.

As promised, a few comments on Slide #14 on net financial expenses, which amounted to EUR 22 million charge in H1 '25, '26 to be compared to EUR 21.1 million last year the same period.

Net debt servicing costs were slightly down in absolute terms, as you can see. As a consequence, our cost of debt -- pure cost of debt decreased from 4.17% to 3.78%. Net currency losses increased from a loss of EUR 0.5 million last year to EUR 1.1 million, primarily due to the hedging of intragroup financing.

Finally, other financial expenses stood at EUR 4.8 million in H1 '25, '26. For the year, globally, we expect as a guidance, financial charges to reach less than EUR 50 million.

Now let's analyze one of the most important chart, as you know, in my opinion, for a company like Rémy Cointreau, which is a business model which is based on buying today where we can sell tomorrow and the day after tomorrow and the day, day after tomorrow, which is the free cash flow.

Free cash flow generation and net debt evolution on Page #15. Free cash flow was negative in H1 '25, '26 and stood at EUR 16.5 million to be compared to a negative [ one of EUR 7.6 million ] in H1 last year. But last year, we had EUR 28 million of tax refund in '24, '25 related to prior overpayments done by ourselves to the tax bureau.

And this represents, so in a comparable basis, an improvement from minus EUR 35.6 million to minus EUR 16.5 million, still negative, but on a comparable basis, improving.

If we exclude this tax repayment refund, quite an exceptional one distortion, free cash flow evolution reflects a meaningful decrease in the first line, which is EBITDA, partially offset by 2 factors. First, a significant decrease of the other working capital items outflows. Actually, we had a positive variance effect of EUR 59.5 million. Why? While the working capital outflow related to eaux-de-vie and spirits in aging process was slightly up by EUR 10.8 million due to lower eaux-de-vie outflows for the same level of purchases.

At the same time, we can say that the H1 of balance sheet eaux-de-vie that you can read inside our reporting and not in the slide, already recorded a reduction in commitment compared to the future. If you compare this year, long-term off-balance sheet commitment to what we reported 3 years ago at the same time when we have signed the long-term contract engagement, you can see that there will be a saving of more or less EUR 110 million.

As I repeat that, it is not visible in this slide, but it's very important. Our future commitments have been reduced substantially and is clearly visible in off-balance sheet reporting.

The first impact on our financial account, so let's back to this year result will be only -- will be recognized and visible at March 2026. Overall, global working capital outflow evolution is favorable and has been reduced by EUR 48.7 million, mostly driven by some phasing effect in trade payables between H1 last year and H2 -- H1 of this year. Why that? Because it depends on the timing and the phasing of the buying essentially A&P activities.

Second element is a decrease of EUR 7.2 million of CapEx outflow following the optimization action that we decided to protect cash. In parallel, other cash flow items inflows decreased by EUR 7.9 million, and this was mostly driven by our equity investment made through RC ventures for minority shares in some companies.

As a result, at the end of September 2025, our net financial debt stood at EUR 686.7 million, so slightly up EUR 11.3 million compared to March 2025. As a consequence, NE ratio is up from 2.4 in March 2025 to 2.96 in September 2025. If you compare ourselves to September last year, so in 1 year, not only 6 months, net financial debt increased by EUR 42.4 million and A ratio clearly is increasing more from 1.90 to 2.96 in September 2025.

Now let's move on and talk about the impact of currency hedges, a very technical slide, I know. But in this moment, it's important to be the most precise we can in this very complex and volatile environment for currency.

The group, as you have seen, reported a negative translation impact of EUR 21.7 million on sales and a negative transaction effect of EUR 18.7 million on COP in H1. This mainly reflects the evolution of the U.S. dollar and Chinese renminbi.

In H1 '25, '26, we recorded deterioration of the average euro-dollar conversion rate from RMB 1.09 to RMB 1.15 per euro and the euro-RMB conversion rate from RMB 7.84 to RMB 8.28 for EUR 0.10. This was conversion. But our process of hedging determined that our average hedge rate deteriorated from USD 1.07 to USD 1.13 per euro in H1 '25, '26 and deteriorated at the same time from RMB 7.66 to RMB 8.37 for EUR 0.10.

That's the reason why mathematically, we have a loss in bottom line. Looking at our forecast, which is most important, looking not in the past, but for the future. For the full year '25, '26, as you can see, -- assuming a conversion rate of 1.15 on euro-U.S. dollar and EUR 8.26 on euro-Chinese yuan as well an hedge rate of 1.12 on euro-U.S. dollar and EUR 7.94 of Chinese yuan, so better than conversion, we anticipate a negative impact between EUR 50 million and EUR 60 million on sales, of which 60% will be in the H2 and between minus EUR 25 million and EUR 30 million on negative in COP, of which only 1/3 will be in H2.

So a dephasing between conversion and transaction. As you can read on the slide, you can have also the ForEx sensitivity by currency. As the evolution of the euro-dollar and also euro-RMB exchange rate remains very volatile, we will continue to share with you an update every quarter.

At this stage, for the full year, we have already covered 95% of our net U.S. dollar exposure, of which around 60% of options. So we are still flexible. On Chinese yuan, it is 80% of our needs that we cover, net, of which 40% touch less on option.

Now let's move to the balance sheet, Slide #17 overview, where total assets and liabilities stood at EUR 3.46 billion, up EUR 87 million compared to last year at the same time. On the asset side, global inventory increased by EUR 129 million to reach EUR 2.1 billion due to the purchase of young eaux-de-vie and also an increase of our inventory levels given the current context.

Inventories now represent 61% of our total assets, up 3 points from previous year. This was the left side. Talking about the right side, the liability side, shareholder equity is up by EUR 25 million, mainly driven by the net income, partially offset by the payment of the dividend related to the fiscal year '21 -- '24, '25. Net gearing, so the group's net to debt-to-equity ratio was slightly up over the period from 34% to 36%, reflecting the increase of our financial debt. So now I get the mic back to Franck.

Thank you, Luca. To conclude on the short term, let's now turn to Slide 19. A few words on the guidance we updated a month ago. We are today confirming our expectations, both for sales and for COP. In more detail, we expect organic sales growth to land between flat and low single digit.

For COP, we anticipate an organic decline ranging between low double digits and mid-teens. This guidance includes the impact of tariff, which we estimate at around EUR 25 million.

Finally, we expect a negative ForEx impact of between EUR 50 million and EUR 60 million on the top line and between EUR 25 million and EUR 30 million on COP.

As we confirm our guidance for the year, it is also clear that the environment ahead demands more than short-term adjustments. We need to step back, reassess our assumptions and rethink how we operate across the entire group. It is time to challenge the way we think in that and to lay the foundation for the next phase of Rémy Cointreau long-term journey.

As we step back, it is important to recognize the environment in which we are operating today. I'm on Slide 21. What we see is a transitional context, one that is mostly cyclical rather than structural.

The industry continues to face a series of global headwinds, including the persistent increase in the cost of living and the ongoing geopolitical tensions.

If the U.S. consumers remain relatively resilient, but they are also more polarized and increasingly price sensitive. Societal anxiety is also weighing on shopping behavior, adding further volatility to demand patterns.

These pressures are contributing to the evolution of consumer dynamics. You're already familiar with them, so I will not detail them here. Taken together, this shift defined a landscape that is challenging, yes, but also full of opportunities for those who adapt with agility, discipline and clarity of focus.

When I joined the group last June, my first priority was very simple, take the time to listen.

Over the past month, I traveled across our regions, met our teams, visited markets and partners. This listening phase was essential. It allowed me to understand our strengths and our challenges on what truly matters to our people and our consumers.

Based on this diagnosis, it is clear that the transformation is needed and transformation requires rhythm. There is a time to listen and time to rethink and a time to reignite while acting fast. This slide reflects the timeline I have set for us. We're currently in a rethink and reset phase while targeting quick wins that will help us regain agility and improve performance in the short term.

By June, we will be able to articulate a clear annual guidance. And by next November, we will present a detailed midterm roadmap. From this first diagnostic, I have identified 5 short-term priorities: first, accelerate decision-making by building a more agile, business-driven organization.

Second, optimize and strengthen our commercial resources, ensuring we are fully equipped to capture market opportunities. Third, redefine how our brands express their DNA to ensure relevance amid evolving consumer trends and unlock additional growth.

Let me be clear, this is not about changing who we are or diluting our identity. It is about redefining our own limits, understanding how far we're willing to stretch a brand while remaining true to our identity. In today's environment, we must be less dogmatic and more pragmatic. Redefining our DNA boundaries means embracing these opportunities where they make sense in a way that strengthens our brand rather than limiting them.

Fourth, stay true to our value strategy while revisiting mix and pricing with greater sharpness and alignment to today's market conditions. Here again, let me be clear, this is not about changing our strategic North Star. We remain fully committed to our value strategy. It is part of who we are, and it has served us well over time.

But we also need to be less dogmatic than we were 2 years ago. At that time, we made the deliberate choice to make no concession. Yet today, the context has changed, reigniting volume growth has become essential.

And lastly, shift our A&P allocation model and review our brand portfolio to better manage the long tail and maximize ROI. These priorities will help us stabilize the business, regain momentum and prepare the group for the next stage.

Because once we emerge from this crisis, we must and we will go further. We will broaden our horizons and shape the medium-term future for the company. This is a journey we are on together listening, rethinking, resetting and ultimately, reigniting Rémy Cointreau for the next chapter.

As part of the assessment phase, my objective has been to identify what will matter most for the next chapter of Rémy Cointreau. Building on the diagnostic, we have defined 5 strategic priorities that will guide the reset of the group.

First, we need to reignite growth with a strong focus on immediate value creation through top line initiatives. This means renewing our go-to market, strengthening our revenue growth management, leveraging innovation more effectively and reallocating A&P with greater discipline and impact.

Second, we must reassess our brand portfolio architecture to simplify its complexity and enhance A&P ROI. This is essential to ensure that our investments are concentrating on what truly drives value. Third, we will unlock efficiencies to reverse the COP trajectory, fuel future growth and ultimately improve cash. That includes procurement synergies, simplifying operations and streamlining the way we work.

Fourth, we need to improve cash generation. Beyond reigniting COP growth, this requires reducing order repurchases, being extremely selective on CapEx, keeping a consistent and reasonable dividend policy and reviewing our brand portfolio through a cash generation angle.

Fifth, we will build a new organization that is more agile, faster and better connected, breaking down silos and enabling teams to execute with greater clarity and alignment.

All of this feeds into a broader ambition to unlock the resources needed to dissociate our performance on the macro environment and fuel the next phase of growth. This is why we are now structuring these priorities around 10 concrete levers that will be fully detailed in the next stage.

Let me finish with one important message. My intention today is to be transparent with you, to give you as much visibility as possible. And to show you clearly where we stand. We are driving a real transformation, and we need the time to implement it properly.

As you saw on the timeline, there will be, of course, a moment in a couple of months. when we will be able to detail this road map much more concretely. Today is about the directions. The next steps will be about execution. And while we're building the strategic plan, we must also seize every short-term growth opportunity available to us. This is not an either/or situation.

We are transforming the group while continuing to drive the business forward. And one of our strongest short-term levers is our innovation pipeline. For the next 6 to 12 months, we have a robust and exciting set of consumer-driven launches.

First, the trend of convenience. This is exactly where our pipeline gives us an edge, where quality meets convenience, the recent RTS launch from Cointreau is a perfect illustration of savoir-faire. The quality is truly exceptional. Second, the trend of affordability. Consumers are looking for accessible propositions that remain aspirational. The rollout of Rémy VS in Africa is a perfect example that offer potential for next year.

And beyond that, we are working on a very exciting project for Rémy Martin that I hope will see the light of day in 12 months. This will allow the brand to recruit more broadly in the U.S. while staying absolutely true to its core DNA.

Third, the trend of flavors and cocktail culture. We're seeing consumers increasingly seeking flavors and cocktails. This opens up new possibilities for refined spirits and helps broaden recruitment and enhance relevance among consumer, younger consumers.

Taking Mount Gay as an example, the silver expression will be a perfect ingredient for Mojito, the world's third most consumed cocktail. Fourth, the trend of cultural relevance. We have opportunities to bring our craftsmanship and heritage into formats and stories that resonate more deeply with local culture, where savoir-faire meets cultural relevance.

In parallel, we are also acting on 2 other critical short-term levers, enhancing pricing flexibility, combined with the growth of small format, maintaining strict overhead discipline and optimizing cash generation.

As we come to the end of this presentation, I'm going to leave you with one clear message. Rémy Cointreau is at the pivotal moment in its history. We are only at the very beginning of this journey. What I have shared with you today may still stand somehow conceptual and that is normal.

A true transformation always starts with the vision with clarity of direction and with the conviction that we can and must do better. But let me reassure you, behind this vision, there is total determination, mine and that of all our teams across the world, we are already in motion. We are rethinking how we operate, we're setting our priorities, reigniting innovation desirability and already preparing the group for the next chapter.

I'm genuinely excited about what lies ahead. And I look forward to presenting the full plan and more importantly, to show you the first tangible results of this transformation over the next 12 months.

Thank you. We're now happy to take your questions.

[Operator Instructions]

The next question comes from Richard Withagen from Kepler Cheuvreux.

I have two questions, please. First of all, Franck, you talked about quick wins. So let's take really Rémy Martin, which remains the biggest brand of the company.

So what kind of quick wins are you thinking about specifically? Is it more about better marketing or more marketing? Is it about price changes? Do you think about distribution changes?

So some more color on that would be useful. And the second question is on the balance sheet. That's the balance sheet at 3x net debt-to-EBITDA limit or flexibility in strategy execution.

Thank you very much for your question. I will answer the first question on other quick wins. Quick wins means being opportunistic in a crisis. There are always opportunities to look for. This translates into additional A&P, where we're certain to get a right ROI. This is an example of what we did during MAF Festival.

I'm glad we put more money on the table as we had a very good positive return on the sellout performance. It can be on extension of geographies as well that we are looking at right now. It can be, you mentioned, the price flexibility, price supporting activities on the trade as well.

It could be into specific promotional activations in the trade, in the points of sales as well. It is depletion incentives that we have already in some regions. It can be business developments in other geographies as well. It's a set of different opportunities. We're looking at everything that is possible today. Everybody is in a difficult situation, and we have to be having a fighting spirit in that case and really be opportunistic while preserving our DNA, honoring obviously, our brand equity.

On the balance sheet structure, I will answer. So today in terms of global resources, we are clearly well equipped compared to crisis 2008 or previous one. The group has a lot of weapons to face. Clearly, it's more the EBITDA depressed in the last 2 years and this year, we are guiding for a negative impact, on top, we have ForEx negative wins. -- that is causing the increase of the ratio to almost 3 now.

Let me surprise you. It is a welcome and candid friends. 3 is a very good news. It's a spicy news. It obliged ourselves to react, to rethink, not to sleep with a large pillow, but with a cervical pillow that drives your head more right.

So everything, Franck as highlighted, will be more focused on cash generation. P&L for Liqueurs & Spirits company, even more for aging company, it's only a small part of the true. We have to think more, more than we are used to in terms of free cash flow and balance sheet shifts on the very long term, even before P&L. So it's not limiting. It is a candid friends waking up every day with the need and eager to improve ourselves on the cash generation side.

The next question comes from Trevor Stirling from Bernstein.

So 2 questions from my side, please. The first one in terms of sell-out trends, it sounds as if you're getting a little more optimistic on China, those numbers you were quoting for Mid-Autumn Festival and D11 sound very positive. .

Maybe if you have any -- is that right that we're exiting the half in much better shape in China. But at the same time, perhaps things getting slightly worse in total in the U.S., relative trends are a little bit better, industry trends a little bit worse.

So if you can comment on that, that would be great. And the second question, Franck, intrigued by your reset and reignite and your question around moving from dogmatic to pragmatic, and it sounds as if in particular, you might be looking reexamining your pricing strategy in the United States. Is that the right way to interpret what you said?

Thank you, Trevor, for your question. There are many questions in one question. Let me start with China and be very pragmatic. As I mentioned before, some of the quick wins were to reinject some A&P with a measured ROI, obviously, as a target. That's what we did with our Chinese organization. I'm glad we did that because CLUB was the only brand positive in Cognac during the MAF, we had a good double-digit increase actually in sell-out.

So we were very proud of that. It is obviously down to the great execution of the team together with our distributors. This is one clear example it can work. To your second question, price elasticity. Yes, there's no taboo about that, we're on a crisis, I mean, we could talk about brand margin. We could talk about elasticity, the impact it can have.

At the end of the day, what do we want? My #1 objective is to grow the top line. We need to reconquer our position. Obviously, we're looking -- targeting a profitable growth. We need volume. We need to reignite the top line starting with Cognac, where our stronger categories to fuel the other brands as well in the second stage.

So this is really the top priority, grow the volumes. So price elasticity, yes, it is something I'm looking at, absolutely, in different regions, including the U.S., as you mentioned, the U.S.

To complete on the -- to complete at this point with some indicators or the temperature of the depletion and the best approx of sellout, let's start with the short term and then go to the guidance for the full year of depletion according to the top line.

So what happened in the last 2 months to 3 months with some volatility between months, we can say the last 2, 3 months in top line, so talking about sales has been improving, as you can see, still negative, it is improving.

In terms of value depletion, to be more granular in October, China, as I highlighted, was clearly very positive also for a calendar effect, but not only because Mid-Autumn Festival has delivered a very very good growth, clearly beating the market and with CLUB playing the big guy role and Double 11 as well.

So overall, every time we have the possibilities to get in touch with the consumer in China in a very humble way, we are beating competition. But it is more volatile because of the context and the lack of trust to the wholesaler. So the indirect part, which is waiving more than 50% is more volatile.

So it's true compared to the month of -- compared to June, July, our result in China overall in terms of depletion are a bit down. U.S., it is improving, still on negative land, but is improving constantly. This was the reason why the top line at the end of the Q2.

So the H1 was positive on sell-in. And EMEA depletion still negative so far, but improving a bit. So this is the short term. But what is important, what look to the full year. And then one last point, a technical one, which I never touch base, where I thinks is important.

So talking about the top line is in -- for the group, it's low to mid to -- flat to low single digit, 0 to 2, 0 to 2.5, something like that in your translation.

Americas, clearly U.S. in terms of top line sell-in will be high single, low double, because we have the restocking part which is already there and then the compound part linked to the depletions. For what concerned value depletion. We are improving, but still for the year, we are targeting the Americas level, so including Canada, LatAm, flattish to minus.

For the U.S., a touch lower. So in value depletion something between low single-digit decline. Are we stocking? No. Because we are destocking. That's an important point that I will be back maybe also next week in London, even more clearly if you want.

Overall, the absolute value at comparable unit value per product sold is showing this year, like last year that the absolute value delivered in depletion is bigger than the sell-in. So plus one in sell-in and minus 1 in depletion, if you want, is giving destocking because we destocked so hard in many markets in the U.S. in the last 2 years enough that the base and rebalance and are more healthy.

Talking about Asia Pacific and China in terms of the full year algorithm, top line, it will be around mid- to high single-digit decline with a value depletion better than that. So still negative, but better. And for EMEA, top line will be low to mid-single-digit decline with better performance in the but not a fantastic one. As a transversal channel, one point on Travel Retail. Double-digit sales, double digit in sellout. It is enough? No. We count a lot to reimprove, to reaccelerate on this channel for the future as well.

One last point in terms of division. Clearly, this is a year of Liqueurs & Spirits and less of the Cognac. We are improving Cognac. We are still lagging behind the performance of Cognac of Liqueurs & Spirits division, that is a bit more dilutive. It is an impact on the profit and loss. Sorry, it was a bit long, but I think it's interesting for you, both in the short and for the full year guidance.

The next question comes from Laurence Whyatt from Barclays.

A couple from me, if that's okay. Just firstly, on your inventory on eaux-de-vie. We've seen a number of, I guess, false starts in both China and the U.S., where you've sort of been expecting improvements and perhaps they haven't materialized and they're coming through now. But in terms of Cognac, of course, you need to lay down stock many years in advance before the product is produced.

As a result, given that perhaps the China and the U.S. are somewhat weaker than you predicted years ago, are you potentially sitting on still quite a lot of stock in terms of aging eaux-de-vie ready to go into bottle now.

And I was wondering if you could give a commentary not only on your own inventory, but perhaps what you see in the wider Cognac sector, if you're saying that the industry perhaps has a lot of stock or the right level of stock for what you're expecting in terms of Cognac sales over the next few years.

And then secondly, with regard to a lot of your comments, Franck, you clearly pushing more volume growth, you talked about volume growth becoming more essential. Slide 24, when you're talking about your new products, a lot of those seem rather entry-level products with relatively low price points versus the rest of your portfolio.

And you also talked about revisiting mix in your portfolio. If we see sort of lower price point products across Rémy, what sort of expectation can we have on the margin going forward, given that was one of the key areas of gross margin improvement over the past few years when you premiumized your portfolio?

I will let Luca answer the first question and answer on the second question.

Yes. So eaux-de-vie stock, we have 2.1 billion stock, 80%, 85% is eaux-de-vie of cognac sold daily. We have a lot of stock clearly quantity is unbeatable. But it's more in terms of the spectrum of the stock that we need to reassess the priorities that is in terms of do we have another stock, which will not be able to sell considering the footprint, our future plan. .

Knowing that the first priority of our new general manager of the company is to reignite and put the top line as the first priority is reassuring a lot also this financial because all innovation project will be driven to speed to foster the working capital speed to market.

If you look at the eaux-de-vie free cash flow for the H1, more and the guidance for the year will be more or less EUR 100 million. So more or less what I shared with you some months ago. But inside that, the point that we are increasing the speed of the exit rate, if you want or the volumes of the Cognac to be able to accelerate the capital rotation.

All the innovation projects will be focused on that. So also, your second question, which will be answered by Franck, every time you are able to increase volume, we'll be able to generate cash. The only point that you might, for the future, as all analysts reconsider and we will be more precise also during next quarters and the 4 years is that consider all the context, tariff and a more convenient and more pragmatical approach by the company, gross margin in terms of ratio is a little bit less global priority, compared to the global amount massive margin and absolute value and generated cash.

So that pushed pressure on the profile of P&L. So I insist on what already Franck said, ROI and streamlining and focus on A&P and clearly, rethink the way we are doing things to be able to generate additional synergy and overheads. We cannot count our margin -- gross margin go to 72%, 75%, 77% that we were projecting before.

It is another world, in which gross margin is less of help in terms of ratio but in which top line increase can give a lot more of cash to increase the -- improve the return on capital employed.

Thank you, Luca. I fully agree with Luca on the fact that growing the volumes would grow our cash, obviously. To grow our cash, there many perspectives later on the reduction of our cost of goods. There are many ways to reduce our cost of goods, and we started working on that already. .

Optimizing our A&P is crucial, obviously, where is it generating value creation in what region or what brands. Setting priorities is extremely key. Cognac is very key, and there are many, many opportunities ahead.

Cognac is far from being dead, like I read in the newspapers at some stage. We need to work on streamlining our overheads as well, which is important. The whole objective is not just to put this in COP, but also to grow our A&P capacity to be more competitive in this difficult environment. On your question on Cognac start going back there, it is my key priority because we need to deplete the levels of stock, obviously, we'll be having a great financial impact on our company.

But not only that, Cognac is a high proportion of our business. We have extraordinary brands between Rémy Martin, but also Louis XIII. We don't talk so much about Louis XIII. We need to reignite Louis XIII as well. It is an amazing brand, the maximum of the brand equity. Talking about lower prices, yes, of course, to a certain extent, we're preserving our brand equity.

This is very important. There are just some euros, dollars, some reduction we need to make to be more competitive. And some euros can make a difference in the sell-out perspective. Of course, there will be an impact like on your question on the gross margin.

As Luca perfectly illustrated, we're in a different world. There will be a natural erosion. What we're looking is for volume at the end of the day, top line and cash. We're looking at generating cash. So there should be no taboo on this as well.

Again, we're not talking a dramatic reduction of prices or whatever. It's just being flexible to be in line with the realities of the market. I said to you earlier on I spent a lot of time on the field. I probably need to spend even more time. I very much enjoy visiting the stores and making comparisons by category. So I think we need to go a little bit further. It doesn't take so many efforts. That's why I call it a quick win.

There are many opportunities on how to sell more Cognac according to me, let alone the expansion, geographic expansion. Luca mentioned GTR. I think we have some wealth of opportunities in GTR, where we're tracking -- 80% of our business is done in airport. GTR is much bigger than airport. There are many other channels in GTR, let alone the cruises, for instance.

Channel diversification is very key as well. We're looking at that in different channels. Digital first. Digital is very important because it also gives us the control of our distribution, and is generating profits.

Efficiencies in A&P, as I mentioned before, ROI, but also experiential luxury is important in today's world. It's more important than owning the product to some extent in some geographies. And we might take away amazing brands, we can deliver amazing experiences. We have amazing sites, production sites for people to visit.

So I want to expand that activity as well to grow our visitor centers to leverage a D2C business. D2C is very key through CRM to e-com, e-retail. I want to leverage our B2C business as well, where I think there is a great wealth of business, a lot of potential there.

I haven't mentioned emerging markets as yet, but emerging markets are very key. I have a long list of emerging markets where we can do better, like Brazil to start with, like Middle East, like India.

I know the limitations about India, but we can -- we have to crack the system for some groups, India represents a big business. I know we're touching a different business model, but why should we not be looking at? They're not frontiers, where there is a will, there is a way. So we need to explore any potential opportunities.

The next question comes from Sanjeet Aujla from UBS.

A couple of questions from me, please. Franck, just touching upon your comments on A&P. Do you think the current ratio has scope to go lower, I think -- can you make it more effective? I think some of your peers have been on a journey of really trying to get more out of the A&P bucket. I'd love to get your thoughts on that.

And is that how you can fund some of the price adjustments you're talking about? So shifting from A&P to price adjustments? And secondly, just coming back to the portfolio, I think you highlighted in your presentation, complexity tail disposals potentially on the table as well?

Thank you very much for your question. The ratio of 20% is not a bad one. I believe in essence is quite competitive. It's just 20% of the level of net sales we generate. It's just not enough in value. But for what it is worth, we have to play with what we have in a good way, in a positive way.

That's why I require a lot more analysis on how we spend on our efficiencies? Is it above the line? Is it below the line? What is it exactly? Is it bringing value to our business. So I need really to look at strong KPIs to measure, to monitor like I really want to do small on our novelties, less is more.

Innovation is a key driver for growth. Maybe we need to do a little bit less but with a stronger impact. A&P needs to support those launches. A&P is very essential. So the growth is going to be fueling basically those A&P.

I believe, it's Richard, who asked me about quick wins. Quick wins are also on the effectiveness of our procurement. We need to leverage efficiency in our procurement. What we're going to leverage or the economies we may realize will go into A&P.

I really want to boost the A&P to be even stronger than what it is today. This is going to be fueling the growth but we need to spend really that money in the right place. I just want to...

Portfolio disposal.

Portfolio disposal. Again, there is no taboo here. Our portfolio is something we're considering looking at obviously might take away, when I joined this company is that we have amazing brands. Believe me, I've visited most of them. I haven't been to some locations as of yet, it's a matter of time.

But while we have beautiful brands, we have to consider our future now. It is important. We need to strengthen our core portfolios. It is important. We cannot be dilutive in our spending. We cannot just be -- we have to set priorities on the geographies on given brands basically. So we are -- I have no decision at that stage that is taken, but we're looking into it. I don't want this to be a taboo either, but nothing has been decided at this point of time.

Sanjeet, one additional comment on your first question. In this world, which is changing with -- changing the rules very quick, and we need the reactivity. We need also to be able to get a different reading of the financial dynamics.

And we have all, as an industry, to make good improvement in that, starting from ourselves. Classical P&L, as I said, is not enough. Classical way of analysis of P&L is not enough.

We need to be able to dig in and to be able to valorize what we are doing all along the P&L. Sometimes the feeling that all starting myself, we consider A&P quite a novel land and overhead land of cost and chunky -- and chunky money. It is not that way. When we say that we need to be more convenient with different packs, small sizes, part of the gross margin dilution can be also be valorized and put in place as an alternative way to do A&P.

So when Franck is saying, clearly, efficiency is talking also as well as a different transversal way to let the profit and loss, able to talk a more comprehensive and understandable language because otherwise, we will remain in silos also inside our reading of the P&L, which is not we can do in this changing environment.

There are no more questions. So I hand the conference back to the speakers for any closing comments.

One very quick comment from my part. Thank you very much. It's a pleasure to get to meet you for the first time. And thank you for your great questions. I just want to say as a closing remark, if we want to dream big, we really need to act bold.

We need to make a transformation as a team. Collaboration is very important. We need to be bold. We need to be audacious. We need to have ambitions. We need to have creative thinking. We need to drive altogether with my team a real transformation. We need to challenge inertia. We need to challenge the status quo. We need speed, energy and that's also why I'm looking on new governance and a new organization, and we'll discuss that more at a certain time, obviously, building on the team and the tapping into the great talent we have in this company. Again, thank you very much and look forward to talking to you again soon.

 Hello, and welcome to the Remy Cointreau Q2 Sales Conference Call. Please note, this conference is being recorded. [Operator instructions].

I will now hand you over to Luca Marotta, CFO, to begin today's conference. Thank you.

 Good morning, everyone. Thank you for joining us today. As highlighted in our press release, H1 sales decreased by 4.2% organically. This performance includes a minus 11% decline in Q2, which should be, as expected, the lowest quarter of the year. It reflects some adverse phasing effect in a still challenging macroeconomic environment. This result stems from mixed regional trends, mainly driven by, on one hand, strong sales growth in the U.S. Cognac division for the second consecutive quarter, supported clearly by low comps, but also improved sequential depletions. They are definitively improving depletion, but less than expected, and they are still negative. 

On the other hand, depressed cognac sales in China, affected by an increasingly difficult market and unfavorable calendar effects due to the shift of the Autumn festival, and some residual disruption in Travel Retail China. This effect waving for 0.7 points in Q2 or in H1, 1.4 points at group level. Specifically, the Q2 sales decline breaks down as follows: volume decrease of minus 4.7% and minus 6.2% in price/mix effects, largely driven by the underperformance of high-end brands, cognac, and some price adjustment. 

Now looking into the overall sales performance by region. Americas recorded a plus 12.8% sales growth in H1, including a slight growth in Q2, mostly driven by a solid robust performance in cognac. In parallel, the Liqueurs & Spirits division turned negative, affected by adverse phasing in Q2, but following a very strong Q1 and despite a resilient depletions environment. APAC, Asia Pacific sales decreased by 14.8% with Q2 strongly impacted by China, which is facing tighter market conditions and an unfavorable mid-Autumn festival calendar effect. At the same time, the rest of Asia generated a mid-teens growth over the quarter. EMEA, big EMEA region declined by 9.2%, posting in Q2, a similar performance to Q1 in an environment, global markets still affected by subdued consumer demand. This was sell-in. 

Now let's talk H1 value depletion estimation at group level, so the best approx of what is the final sellout. In the U.S., value depletion declined by mid- to high single digit year-on-year, including a decline of mid-single digit in Q2. So better improving compared to what we recorded in Q1, but still negative. Compared to pre-COVID 6 years ago, H1 value depletion are down mid- to high single digit, but stripping out the VSOP range, they are at plus 40%. In China, value depletion were down mid-teens year-on-year in H1 and up by high teens versus H1 '19/'20. Beyond unfavorable calendar effect in China, this performance is clearly disappointing for us and reflects tougher, more complicated market conditions. 

In EMEA, value depletion decreased by mid-single digit year-on-year, and they are performing more or less the same level, negative mid-single digit compared to H1 '19/'20. So what you can say overall in terms of sell-in, sell-out equation at group level. We can say that H1 value depletion fell by high single digit year-on-year, more or less minus 8% underperforming clearly partially sell-in trends that were minus 4.2%. Why? Because essentially, the U.S. restocking from a very low base without increasing level of stock would be positive on sell-in even if depletion dynamics were still improving, but still negative. 

To conclude on this very first slide, considering all that, we have decided to lower our full-year organic guidance, and I will come back to the main drivers at the end of presentation. All in all, we now expect the organic full year sales to be between stable and up low single digits, while we expect organic full year comp to decline low double digit to mid-teens. The later one clearly includes the estimated impact from tariffs in the U.S. and price undertaking in China. 

Page just from 3 to 5, I would like to come back very briefly on the main marketing initiatives of the quarter. Let's start with Louis XIII, which is extending its brand universe beyond testing with the launch of its very first Art de la Table collections. The initiative is fully aligned with our long-term strategy to reinforce the Maison positioning at the very top of luxury to enrich and complete the consumer journey and to create new opportunities for differentiation across our freestanding store boutiques and key markets.

To bring this project to life, Louis XIII partnered with Chef Alain Passard, a [Indiscernible] Michelin-star chef at L'Arpege in Paris. This collection was created in partnership with the French Porcelanhouse, J.L Coquet. Each collection consists of 6 pieces to start with, designed and crafted for -- by over 40 artisans. They translate to the Maison's founding pillars, tire and time. 

From a commercial standpoint, this launch also play a pivotal role in animating our boutiques, enhancing visibility and driving traffic. Overall, Art de la Table reinforced the brand's cultural equity, expands its experiential ecosystem, and underlines our ability to innovate within the codes of ultimate luxury. 

Page #4, I'd like to highlight our last innovation and belongs to the brand Cointreau, is entering Cointreau in a new territory this year with the launch of its very first ready-to-serve spirits in the United States. Why ready-to-serve rather than ready-to-drink? Because ready-to-drinks already represent close to 12% of the alcohol market, Ready-to-serve remains a fast-growing niche today worth more than $0.5 billion in the U.S. and actually outpacing ready-to-drink's subcategory in terms of growth and potential. Ready-to-serve cocktails are strongly associated with hosting occasions when consumers want both convenience and the ability to impress.

We see clear spikes in sales around holidays, confirming that ready-to-serve has become a trusted solution for entertaining. Looking ahead, this segment should continue to grow through premiumization, flavorful proposition, and ease of consumption.

Our objective with this launch is to extend Cointreau's footprint into new daytime occasions to recruit a younger consumer who are seeking convenience to modernize even more the image of the brand and to gain additional shelf visibility in a highly competitive and crowded environment.  The product itself has been carefully designed as a ready-to-share EUR 750 miller bottle at 10.5% ABV. It comes with 3 variants: orange and broad orange, Lemon Lime, and grapefruit and tangerine. Each recipe is crafted with Quatreauly, French white wine, cyos juices, and natural flavors, but without any artificial flavors or colors. 

Consumer testing results are excellent. We launched end of September 2 flavors across 9 key U.S. markets with a retail price of EUR 19.99. Distribution is already confirmed in more than 1,000 points of sales in terms of numeric distribution through major Liqueurs chains, and sell-in is ongoing to support a national progressive iterative rollout, including the third flavor in March 2026. 

Lastly, for the marketing and colorful experience from the business and brands on Page #5, a few comments on a minor point, which is Mid - Autumn Festival in China, 25% in terms of weight of our sales in China. So, it's a very important one. I was clearly joking. During the Mid - Autumn Festival, our priority was to sustain demand and engagement in what is a softer consumption environment, even if first results show that we continue to gain market share. I'll be back on that point even more in Q&A session. 

We, therefore, focused our effort on a few high-impact, cost-efficient activations designed to keep our brand visible and relevant during this key consumption moment. Starting clearly with the Remy Martin Club, we celebrated the brand's 40th anniversary with a strong integrated campaign running from August to October. 

We leveraged our brand ambassador, Li Xian, across digital, social, live stream channels, building a strong reach and engagement at a limited cost. The limited-edition design and creative gift purchase mechanics have stimulated the sales across key markets, so Mainland, but not only also Hong Kong and Macau. Campaign generated a lot of prescribing and a high immediate return GMV from live stream session alone, confirming a good consumer traction despite the muted and depressed environment. 

The same time, Remy Martin XO gained exceptional visibility in Middletown Festival in China with the launch of Anish Kapoor limited edition, a creative collaboration, reinforcing the brand's prestige and desirability. Altogether, this initiative allowed us to maintain strong brand visibility, support our partners during the peak season, and reinforce confidence among distributors. They also demonstrate our ability to stay disciplined and impactful in our marketing investments, keeping our brand aspirational while driving the best we can sell out efficiency during a very and more challenging festival season. 

Turning now to Slide #6. So, turning now to numbers. H1 sales amounted to EUR 489.6 million, representing a year-on-year decrease of EUR 44.1 million or minus 8.3% on a reported basis. This performance was shaped by the following factors. First of all, an organic decline of EUR 22.3 million, which is minus 4.2%. This performance is split between plus 2.4% of positive volume effect and minus 6.6% of price/mix. 

Price/mix negative impact results from a slightly negative pricing effect and low to mid-single-digit negative mix effect. Why? This is linked to the underperformance of high-end products inside any given brands and clearly by the Cognac division's performance compared to the weighted average. Second, a negative currency translation impact of 21.7% or minus 4.1% loss, mainly driven by the deterioration of the U.S. dollar, which accounted for minus EUR 11.3 million, and the Chinese renminbi, which accounted for EUR 7.9 million. 

Let's now turn to Slide #7, dig delve into organic trends by region. Let's start with the Americas, in which organic sales increased by 12.8% in H1, i.e., down more or less 15% on a 6-year basis. This year-on-year performance includes a mid-teens growth in volume and a low single-digit negative price/mix impact, reflecting an unfavorable mix, first of all, and some adjustments on VSOP. 

In the U.S., sales grew by mid-single digit in the quarter, Q2, driven by a strong performance in cognac linked to a low base of comparison and a continued sequential improvement in value depletion, not as much as expected, but improving nonetheless. In this context, inventory level in the U.S. remained close more or less to 4 months at the end of Q2. Canada sales were down mid- to high single digits in the quarter, impacted by phasing effect between Q1 and Q2. Why? Because overall, sales were up high single in H1. 

And LatAm, Latin America, sales were also affected by phasing effect between Q1 and Q2, down strong double digit in Q2, but up strong double digit in H1. So, Canada and LatAm, a bit of phasing between Q1 and Q2. End of September, Americas big region accounted for 39% of group sales, so increasing 5 points compared to the previous year, clearly, plus 12.8% on top line compared an average performance minus 4.2%. 

Turning to APAC, Asia Pacific, organic sales declined by 14.8% in H1 but clearly increased by more than 20% on a 6-year basis. So, on the short term, China is performing and APAC negatively compared to the Americas. But if you compare the 2 biggest regions to 6 years ago, the dynamics are reversed. 

Analyzing the volume value equation of APAC, the performance was impacted by high single-digit volume decline, while the value part was negative and more than mid-single digit, driven by the underperformance of the high-end brands and more promotional activity. In China, sales were down approximately minus 25% in Q2, impacted by tighter market condition, including stricter discipline and austerity measure, which should lead to a global overall as a market soft mid-term festival. 

This performance reflected an unfoldable calendar effect and some residual disruption in travel retail. So, if you compare this technical effect to APAC level only, not a group level, we have 1.5-point negative impact in Q2 and 3 points in H1. This technical effect will normalize from Q3 onwards. By channel, direct e-commerce was the only growing channel in China with sales up more than 10% in this quarter, bringing the overall e-commerce ecosystem penetration rate at the end of the H1 at more or less 25%, this was sell-in. 

In parallel, global value depletion in China were down mid-teens year-on-year and up high teens versus '19/'20. But once again, during Q&A, we will talk about the calendar effect and what is a more normalized performance. Given depletion and aligned with sell-in trends in H1, inventory levels in China remained healthy at more or less at the same level as before at the end of September. Compounders are saying the same things in terms of stock coverage. 

As were in the region, rest of Asia showed a strong improvement compared to Q1, posting a mid-teen sales growth in Q2, led by Cognac and to a lesser extent, by the Liqueurs & Spirits division, with 2 growth regional engines of this quarter, Australia and Japan. End of September, APAC accounted for 39%, so the same weight of the Americas, but in this case, it's down 5 points compared to the prior year. 

Last but not least, EMEA, in which organic sales were down 9.2% in the H1. And more or less, we are down minus 10% compared to 6 years ago, primarily reflecting a negative value effect. Inside that, we need to analyze by subcluster subregion within Europe.

Let's start with what we call the third-party distributors region, 3PD, recorded a mid- to high single-digit sales decline in the quarter, impacted by Germany and Greece. In parallel, Czech and Poland, Czech Republic showed good momentum in the quarter. 

Overall, talking about brands, Metaxa was strongly up, and Cointreau gained market share in many markets, but the category is declining, partially offsetting the rest of the portfolio. Second subcluster, U.K. and Nordics, sales turned positive at low single digit in the quarter, showing solid sequential improvement versus Q1, led by Cointreau, Mount Gay, and The Botanist. The performance reflected a significant rebound in Cognac versus Q1, which was almost flat in Q2, rebound still cumulative on the H1 negative quarter. 

Benelux and France, sales were clearly declining by strong double-digit in the quarter, impacted by competitive promotional pressure in Cognac and softer trends in Liqueurs & Spirits. Last but not least, in MI and CIS, sales were down low double digit in Q2, impacted by Remy VSOP performance, while the launch of Remy DS in South Africa and Nigeria is giving -- bearing some promising fruits. In H1, value depletion, so talking about sell-out, declined mid-single digit year-on-year. And on CS basis, excluding Russia, is more or less the same performance. 

Overall, inventory levels remain healthy across most areas. And end of September, EMEA region accounted for 22% of group sales, which is stable compared to the previous year. Let's now turn to Slide #8 and the analysis by division, and we start with the Queen division, which is Cognac. Cognac division posted an organic sales decline of minus 7.6% in H1, driven by a 0.7% increase in volume. So volume of Cognac were positive and a negative price/mix of 8.4%. End of September, Cognac accounted for 61% of our sales, down 2.5 points compared to the previous year. 

Starting with the APAC only Cognac. In Mainland China, sales declined by around minus 25% in the quarter. So the same performance if you consider the global portfolio or only Cognac in China, i.e., a mid-teens decline in H1, but up more than 60% versus H1 '19/'20. Comps clearly overall over this year, we are building some blocks that are now clearly high. This performance has been affected by tighter market condition, including a stricter discipline austerity measure, which clearly do not allow consumer confidence to recover quickly. 

In addition, the sharp decline includes a calendar effect from the late month as well as travel retail disruption, now on a path during the Q3 on normalization. In this context, indirect channel remained under cash pressure, while direct e-commerce was the only growing channel, turning up -- increasing its performance more than 10%. Elsewhere in China, Hong Kong, and Taiwan reported weak performance in both sell-in and depletions, impacted by same challenges in China. Macau, even from very low figures, was strongly up, helped by clearly favorable phasing, some promotion, but a little more dynamism. 

Overall, H1 value depletion in China were in line with the sell-in, so down mid-teens. On a six-year basis, this is equivalent to a plus 20% growth. The remaining part of Asia, sales were up strong double digit in quarter in Cognac, led by Australia and the Philippines. In Americas, let's start to begin with North America, so the combination of U.S. and Canada. Cognac sales were up by mid-teens in the quarter, supported by a low base of comparison and continued sequential improvement in depletion, mostly in volume. Q2, specifically for the U.S. value depletions, declined by mid- to high single digits, of which down low to mid in volume, mostly driven by Remy Martin VSOP improvement. 

Given this factor, Cognac inventory coverage still close to four months at the end of Q2. And on 12-month basis, value depletions so include minus 5 points of negative price/mix effect year-on-year. But on a six-year basis, price/mix remains very up at plus 11 points. Latin America, the remaining pieces of Americas, sales were down for Cognac by strong double digit in Q2, impacted by negative phasing. Sales were up by a very strong digit -- strong double digit in H1, driven by VSOP and Louis XIII. And then the third region inside the Cognac in terms of weight, EMEA, in which sales declined by mid-teens in Q2, affected by very strong and competitive promotional pressure across most major markets as soft demand. 

U.K. and Nordics that were flat in the pork driven by Louis XIII, Remy 738 in a category marked by intense promotional activity. Europe third-party distributor was down by double digit, mainly due to Germany, where the market remains very soft and highly promotional. And at the end, MI sales declined by mid-teens, even if early results are encouraging for Q3 following the launch and the follow-up of VS in South Africa and Nigeria. Last but not least, H1 EMEA value depletion were down for Cognac double digit year-on-year, down very strong double digit versus six years ago. 

Now let's talk of the remaining more or less 40% of the sales because 61% was the Cognac, in which we have for 37% Liqueurs & Spirits, Slide #9. Liqueurs & Spirits division reported plus 4.1% organic sales growth in the H1, driven by a very solid volume increase at plus 5.2% and a slight minor negative price/mix effect of minus 1%. End of September, Liqueurs & Spirits accounted for 37% of sales, up 3 points. Let's now review the division performance by subregion, and let's start with Americas and North Americas, in which sales were down by mid-single digits in the quarter, affected by adverse phasing after a very, very dynamic Q1. 

Sales were up high single digits in H1. Both key brands, Cointreau and The Botanist delivered solid performance over the semester, supported by a resilient depletion, the success of the latest campaign, the recent launch of the ready-to-serve Cointreau Citrus Spritz. In parallel, Cointreau and The Botanist Q2 U.S. value depletion, so best approx sellout were flat year-on-year. In terms of price/mix was down only 1 point compared to last year for the 12-month period ended September, and increased 18 points on a six-year basis. In Latin America, sales were down by strong double digits in the quarter in a softer consumer environment for Liqueurs & Spirits. 

Second region in terms of weight for Liqueurs & Spirits is EMEA, in which sales decreased by mid-single digit in Q2, so declined, affected by all subregions, except the U.K., while H1 value depletion were up slightly year-on-year. Breaking down sales down further, the U.K. and Nordics posted a sequential improvement with sales up by mid-single in Q2, led by Cointreau, which is gaining market share; Mount Gay, which is benefiting also from a lower ABV for version of Eclipse and Botanist, we continue to secure new distribution listing. 

And Europe third-party distributor cluster, which sales decreased by low to mid-single digit in Q2, impacted by Germany, Greece, and Spain. In parallel, Poland, Czechia, and Romania posted strong momentum. Overall, in terms of brands, the growth -- solid growth from Metaxa, Cointreau, and Mount Gay, partially offset the impact of a softer consumer environment.

Finally, Benelux and France were down by strong double-digit in Q2, while MI and CIS was down only by mid-single digit. Third region by weight is APAC, in which China sales were up by low double digit in Q2, driven by Brucladio and Botanist. In terms of value depletion, H1 value depletion were up slightly. The remaining part of Asia was up mid-single digit in Q2, driven by Australia and Japan, strong momentum for Bruichladdich, notably the release of the Octomore Series 16 in Japan and the further market share for Cointreau in Australia and New Zealand. This was 37% of our sales, Liqueurs & Spirits division. So if you combine 37%, Liqueurs & spirits, and 61%, which is cognac, it doesn't give 100 because we have non-group brands, which represent now more or less 1.5% of group sales.

Sales were down 0.5 points year-on-year, 1.5% compared to 2, and they recorded a very strong decline in H1 of minus 35.7%, mostly affected by the negative -- sharp negative performance on good rents in Benelux and the U.K.

To conclude, let's now turn to Slide #10, which I think is an interesting one for a few comments on our lower guidance for the full year '25, '26. The deterioration of market conditions in China and the weaker-than-expected sales rebound in the U.S., even if it's positive, but it's weaker than expected, have led ourselves to revise our assumption for the year. For China, we had already adopted caseous assumption for China, and we're anticipating a slight annual decline. However, market conditions have further tightened following the implementation of the new alcohol consumption restriction for official while increased - strongly increased promotional activity is also prompting us to show greater flexibility on pricing.

Regarding the U.S., we still expect a strong growth for the year, supported by the continued ongoing improvement in depletion, but it is clearly not enough to maintain the initial forecast for the U.S. Consequently, we now expect group's organic sales growth to range between flat and low single digit, and before was mid-single digit. In this context, we now expect the group's organic comp to decline between low double digit to mid-teens, and before was mid-single-digit decline. Beyond the revised top line, which is clearly the trigger of the margin deterioration, I'll be back on that point on Q&A because we have to remember the weight of the top line, more or less EUR 1 billion, and the weight of the operating profit of last year, more or less a bit more than EUR 200 million. So we are on a scale of 1 to 5.

Beyond the revised top line, this new guidance reflects the fact that we intend to support the recovery of the underlying depletion sell-out, which is clearly improving in some key regions like the U.S., continuing our investment in A&P with the sales ratio maintained at the level before pre-COVID. So we are not doing also mad things as well. Keeping a tight control over our overhead costs while maintaining strict operational discipline. But remember that the last 2 years, we already made a strong cost-cutting. So at the end, we need also some people and operational OpEx to be able to pulverize and contribute to the rebound, or otherwise, the rebound will be weaker.

In parallel, we have updated tariffs' net impact to EUR 25 million on COP, in line with our lower expectation in sales, of which EUR 5 million in China and EUR 20 million in the U.S. net impact. These estimates include the mitigation plan because the gross effect is clearly higher, which account for the 55% more than the gross impact as well, as I already said, an increased A&P support in China and the U.S. to favorize the rebound.

In addition to this organic performance, there are also additional negative currency effect, which remain very negative and highly volatile. While our hedging policy has to mitigate part of the adverse impact, the recent evolution of the dollar and the RMB leads us to expect now on sales between minus EUR 50 million and minus EUR 60 million in terms of translation top line, which is unchanged compared to our previous estimation. 40% of this impact should occur in H1 and 60% in H2, and operating profit between minus EUR 25 million to minus EUR 30 million before it was minus EUR 15 million to minus EUR 20 million. 2/3 should be booked realized in H1 and 1/3 in H2.

Exchange rate volatility is likely to persist throughout the year, which is why I will continue to keep you updated in any occasion that we will talk, so 6 times a year.

Thank you for your attention. And now I am happy and open to answer to your questions.

[Operator Instructions]

The first question today comes from the line of Laurence Whyatt from Barclays.

A couple for me, if that's okay. Just firstly, on the guidance, I was wondering if you could give us a bit more detail on what specifically changed between the end of Q1 and now, and whether that was really the disruption in Q2 that caused you to make the change? Or is it more about your expectation for the second half of the year?

And similarly, you talked around specifically the U.S. being a bit weaker, China being a bit weaker, Travel Retail not recovering in the way that you were hoping in the U.S. I was wondering if you could say if any of those were dramatically more than any of the others in causing you to make that change? And I suppose you didn't really mention Europe in terms of your expectations versus where they were at Q1 with regard to the guidance change and whether the changes in Europe have caused you to change your guidance as well?

And then secondly, you sort of flagged it when you were making your comments around the ongoing normalized performance in China and where that currently is. I was wondering if you could tell us where you think the current normalized performance is in the market and whether you're seeing any letup of the government crackdown on alcohol consumption at all, if that's sort of reducing towards the end of the year. What you're seeing in the travel retail channel, if you're seeing a bit of an improvement in sell-in, and whether you think the soft mid-Autumn festival is going to lead to a soft Chinese New Year when it comes early next year.

Thank you so much, Laurence, for your question. They are very broad and wide, so I'll be a bit long. I will try to talk slowly because they are very important answers and questions as well. So the change in the guidance, which is sales and profit warning because they are combined, has been driven by the fact that some key compounders to be able to deliver the sell-in were not supported enough, even if improving compared to our trajectory. In terms of importance drivers of the sales warning because I repeat, the operating profit is a consequence, but the main triggering point is the sales performance, which is not going the way we expected. It is, first of all, China because Q2 was clearly worse in terms of performance of what we expected until mid to end of July.

And I will be back on this point, so I will remain -- I don't want to confuse you. So I remain very factual now. First is China. Second is U.S. Even if it is growing, you have noticed that it's still growing, cognac is performing. But depletion, even if improving are still negative and with the mix with a slightly negative compared to volumes. So it is inferior our expectation.

The H2 big rebound based on the heels of the mathematical restocking. If you don't have, I repeated many times, a solid and at least marginally positive depletion is more fragile. So in this moment, in terms of dynamics of top line, we are well aligned, but we need to align depletions as the reality is, which is improving, but it's not still positive with the top line to come. So China, second U.S., and third, you're right, I didn't mention because it is less important in terms of impact compared to China and the U.S., but EMEA is growing the same way negatively. So clearly, EMEA, even if it has a lower impact, it is not respecting its budget footprint as well.

But it is less important in terms of compounders, and sorry, I don't want to say that for the European people, but it's less strategic in terms of the quality of the mix. So I repeat, these are the mechanics on the war in terms of sales, which is the first triggering point. Second point, it is the mechanics of the P&L because I read some first note by some analysts today, not you specifically, but some. So please remember, relation 5:1.

Now we are a company which is EUR 1 billion, more or less top line, EUR 200-and-something million in operating profit last year, published rates, which is the organic base of this year. 5:1. When you decline top line of -- if you consider zero is EUR 50 million from EUR 5 million to zero. is EUR 30 million, you consider our gross margin expected, the decline should have witnessed in bottom line is higher than what we are highlighting. It means compared to some comments like Edward or Jefferies, for instance, there is not a deleverage, quite the opposite because the mechanical one should have been bigger than a switch from minus 5 to organically, because then we will talk about ForEx, which is something else. There is some leverage even if we are maintaining our key investment.

So in terms of mechanics, you do the exercise, you have EUR 30 million to EUR 50 million, you apply our gross margin. And you see that at the end, we are declining to low double to mid-teens. If you consider you stretch at the maximum, which is mid-teens, it is 10 points compared to minus 5 is EUR 22 million. So mathematically, you have a leverage of something which is between EUR 10 million and EUR 15 million.

So let's talk very analytically, so you can do your model. Clearly, you are very aware of the fact we declined the impact of tariffs. Tariffs are giving everything equals EUR 5 million because it was EUR 30 million. So there's some marginal additional leverage. So after the math, which was important, let's relook at the main engine of the warning, sales, repeat, China, U.S., and to a lesser extent, EMEA. Gross margin because even if the EUR 5 million are playing positively compared to your guidance, in terms of mechanics compared to previous year, China is more promotional. We want to continue to influence our improvement in the -- also in the U.S. Even if we are not right at the right spot we want to be, we cannot give up looking only to the bottom line because bottom line is infused by the top line.

As I said, the top line is the first reason why we are reducing that. So we don't want to unfuel too much. And on top, don't forget that China in terms of cost of operation is more costly than previous year because price undertaking has been a relief compared to the antidumping, but it is clearly more costly. Don't forget that tax duties last year were 5%. This year at 7% because it was an exception.

What gives us confidence is the continue improving on depletion even if they are calling -- I'm talking about for all countries out of China, which is more complicated and erratic to analyze. And it is clearly something which is sustainable with an improvement in the second part of the year depletion in the U.S. and major European country, but not clearly factoring the budget one. So we reduced as well depletion trends and not only selling trends.

We directly and indirectly, we are able to support this kind of journey with some more additional millions on A&P and specific OpEx and also sometimes a specific operation in terms of market share, in terms of penetration of top line, without changing the gear, the picture of the weight of any given cost line compared to the top line. So top line is declining, but we are able to get still a leverage and not a deleverage, I insist on that because otherwise, P&L should be worse. It is not massive. We are talking about a leverage, which is at the end, between EUR 10 million and EUR 20 million. But for a company like us, which is -- now we are smaller. We have no more than EUR 1.5 billion, EUR 1 billion.

So our boat -- the sale boat we are, we are not a transoceanic boat, needs to be able to hoist on sales when the wind is there. The point is that the wind, mainly in China, is not yet there, even if our performance is better. So we are confident being very cautious in terms of adjustment of the top line and depletion estimation, and forecast for the second part of the year.

In terms of rhythm will be essentially on the Q4 because Q3 will be flat plus. A&P ROI, it is measured in a very art-crafted way, I can say. So Franck is clearly, very clearly instructing ourselves to try to reinject additional money to be able to have additional sales, even if they are not so visible compared to our hopes, because the environment is very complicated. So it is a complex job to do because we are talking more in terms of what I get in terms of sales that otherwise will be avoided. So the point is that if we unlock this additional money, we are able to be able maybe to land at plus two. And we are more on the cost-cutting side, plus two become the lowest bracket of the fork. And as I said, with the gross margin we still have as a company in terms of business model, top line is the first trigger, top line, top line, top line. Now that we have EUR 1 billion company, top line is the most important one.

Last point, exit rate. Inside all that, current trading in October, what's happening? To give you some color. In terms of sales, without giving specific figures because I can't, we are positive. And mainly more important in terms of value depletion, U.S. depletion are improving, but still negative. EMEA and rest of Asia out of China are slightly up in terms of value, not volume, volume is better. In China, they are very strongly positive, clearly, very, very strong because there is a boost to the positive calendar effect.

So if you normalize Mid-Autumn Festival on a comparable calendar compared to last year, I repeat, apart from the effect from the calendar, we are more or less in value depletion flat plus, flat to low single-digit increase in China in Mid-Autumn Festival, and more positive in volume because we are between mid- to high single-digit increase. So the point, start to get confidence, confidence is the wind. It's the wind for the sales. And we need to believe to hoist that.

Just on your commentary on Mid-Autumn Festival, obviously, volumes ahead of value. But does that surprise you that it's as resilient as that, given all the pressures in China from a macro and also sort of a regulatory standpoint?

For us, it is -- you can say it's resilient. There is a negative impact, let me say, 5 to 8 points, which is for us, it is something negative, very negative compared to our previous EBIT. And the environment in terms of competitive footprint is much more around 15, 20 points of value destruction. So I agree with you, it's quite resilient so far, at least in China. The promotional activity is increasing. So that's the reason why in the prepared remarks, I said very clearly that we need to be ready also to be present not only in pure A&P battle, maybe also in the promotional activity battle when we have a strong market share position to maintain in a country in which one line is very important for us, which is club.

So more than Remy Cointreau, club needs to be protected. And if there is a promotional war, we need to be a little bit more flexible than in the past because volumes are very important for us in China for club.

And we'll now take our last question, which comes from the line of Chris Pitcher from Rothschild & Co Redburn.

A couple of questions. Firstly, on the U.S. price mix, which is now cycling the period of negative momentum. Are you able to give us a bit more color on that negative price mix? How much of that is you being more competitive, as you've referred to? How much of that is perhaps negative mix within the portfolio or channel mix? And when we should think of that price mix potentially stabilizing? And then secondly, again, coming back to the margin point, the largest supplier in the industry is reporting operating margins that are materially below the previous lows for the industry. Have you and Franck had a chance to really rethink the fundamental profitability of your cognac business, particularly in light of the comments you've just said around the higher cost to compete in the U.S. and China, and the need also to invest in new markets to generate growth. Should we expect at the first half results, a more comprehensive review of what you think the real longer-term profitability of this business is now? Or is it still too soon with the complex market backdrop? Thank you.

Very important question. Price mix negative in the U.S. and the cognac it is negative because you remember price adjustment in VSOP, which is now bearing some fruits in most states, the more fighted one, take the example of Illinois $49.99. So now we are sickling that. It is more installed in 12 months baseline. Some price adjustment made on XO, and also a mix effect because the high-end segment underperformance. On Louis XIII as well, even if we don't dig in too many details, but Louis XIII also is quite low in terms of valorization, not because of the price, but because that year, you have some special edition, you have a CASK. The year after, you have less CASK's paying a role very, very very easily, and the price reposition of Remedy.

All in all, this deterioration of the price mix in the U.S. has been cycled. What we have to expect and when we will end, we still need to be very cautious in terms of pricing superiority and pricing increase in terms of price, price plus mix, because the environment is still very promotional. We are not in some fighted category. At the same time, we cannot sing totally another song inside this environment. So we will be adjusted and we'll be recovering progressively, but I will not bet in the next 12 months to have a price/mix turning positive in the U.S., both on saline or in depletion. What does it mean?

And you have heard also my subliminal messages that we are compared to the previous past without denying the strategy that is not changing, but also listening and watching more attentively to volumes, absolute value more than profile, which drips ourselves to your second question, marginality, business model group Roust Group, and vision of the future. I can't answer that because clearly, it's part of the -- what needs to Franck to assess with us, with all the teams during next month. It is very complicated to do that when you have a very complicated period like this one, which disturb our ability to be totally focused on the medium to long term. We are a company to mid long term. At the same time, the short-term issues are quite annoying.

Clearly, something that will be addressed with Franck during next months, quarters. And so far, I cannot answer for that because it will be only a personal point of view, which is not yet discussed. And if there is a reset needs to be embedded by Franck and validated by our Board of Directors. Today is -- we are not there.

Would it be fair to say that we don't have a clear view on how the competition are acting, and therefore, it's very hard in a way to assess what the real cost of competition is because it's still very uncertain out there, particularly as you mentioned.

In terms of business model as a group or in terms of action in the U.S.

More globally, how the big players, Hennessy now to get their own volumes moving.

We have some means. We have some ideas, but it's part also when I said it belong also clearly, not also Franck, the Board of Directors, because we have some means, we have some discussion. We look into what the competition is doing. There is some adjustment necessary to us, but it's part of the final footprint, the final output that is not yet ready. So we are looking at that. We are looking at the dynamism in auto brands. We are looking at their obsession or the change. We are looking into that. No new plan that has been decided and approved by the Board of Directors so far.

And this ends today's Q&A session. So handing back over to you, Luca Marotta, to conclude.

So thank you so much for your attention today. Today was a sales conference by the end, turned out to be much broader because of our warnings, both on sales and on profit, even if it is the most important part, I insist is the sales element. And the second point is that if you look at added number like they are, situation is not getting also some positive hints that are there. First of all, improvement in the U.S., even if not the scale of what we expected.

Second, on a comparable basis, our performance on the field in China are less negative, sometimes positive in the moment, which somebody else is doing, minus 20%, 25% on the field. Europe, still soft, but is less strategic in this configuration. All these points, including the guidance and a more strategic point of view that I'm not ready to give today because it's not my job as well, will be delivered during the first half conference call end of November with our CEO, Franck Marilly, and Marie-Amelie De Leusse. So thank you so much, and have a nice day.

Thank you for joining today's call. You may now disconnect your lines. Host, please stay on the line and wait for the instructions.