Earnings Call: Q4 2017

Feb 12, 2018

Good morning, everyone, and thank you for joining us today for Heineken's 2017 Full Year Results. For your information, this conference is being recorded. There will be an opportunity for questions at the end of the conference. And Investor Relations. Thank you. Good morning, everyone, and thank you for joining us today for our 2017 full year results conference call. I'm joined by Jean Francois Van Boksmir, our CEO and Laurence De Bruc, our CFO for today's call. Following some prepared remarks on the results, we will be happy to take your questions. Please note that Jean Francois and Laurence have dialed in from 2 different locations today, so you may hear them coordinating live on the line. With that, I would like to hand the call over to Jean Francois. Thank you, Frederico, and good morning, everyone. I need to start on Slide 3. Our 2017 results were strong with all four regions contributing to organic volume, revenue and profit growth. The benefits of our balanced footprint once again is clear, enabling us to deliver broad based growth across the group. Our focus on premium brands led by Heineken and cost management initiatives helped us to deliver 40 basis points operating margin expansion, excluding the Thierry Brazil Punch and Lagunitas acquisitions, in line with our guidance and despite currency pressure. Revenue grew 5% organically with positive volume and revenue per hectoliter growth. Heineken, the plant, volume was up 4.5%, its strongest performance in recent years. This top line growth combined with our continued focus on costs delivered organic operating profit by a growth of 9.3%. Reported operating profit, BEA margin, was up 14 basis points and up 40 basis points adjusting for the M and A I mentioned previously. The diluted APS EMEA was up 7%, driven by organic growth and to a lesser extent consolidation changes and of course partially offset by currency headwinds. We expect the environment will continue to be marked by volatility and uncertainty. We are committed to long term value creation and will continue to strive for superior top line growth whilst working on improving our operating profit margin. For 2018, excluding the one time benefit of IFRS 16 implementation, we expect to deliver operating profit margin expansion of around 25 basis points, excluding again major unforeseen macroeconomic and political developments. Slide 4 now lets us see that Heineken's unique and diversified geographic footprint delivered strong balanced growth again in 2017. Positive organic volume, revenue and profit growth was delivered by every region. All regions accelerated volume growth in the second half of the year, except Europe, which saw a slower third, but returned to growth in the 4th quarter. Starting with the Africa and the Middle East and Eastern Europe, where consolidated beer volume grew 4.8% organically and revenue per hectoliter was up 9%. We saw strong double digit volume growth in Russia, Ethiopia and South Africa as well as new volume contributed from the Ivory Coast. This more than offset lower volume in Nigeria, where consumer confidence remains challenged, but trends slightly improved in the second half. Egypt and the DRC also recorded lower volumes as they faced a challenging economic environment and currency devaluations. Regional operating profit was up 33.8% on an organic basis with a significant negative currency impact. In the Americas, consolidated beer volume was up 3.3% organically, driven by strong growth in Mexico, which more than offset lower volume in Panama and the U. S. Revenue per hectoliter was up 1.7% organically. The Mexican bear market continued to grow strongly, allowing us to grow volume mid single digits despite the earthquakes, with both Tecate and Bozecis growing strongly and Heineken up double digits. In Brazil, we saw our volumes improve remarkably during the second half of the year after a challenging start. Volume from our existing operations was about flat with double digit growth of our premium and upper mainstream portfolio led by Heineken, Sol and Amstel. The former Brazil Kirin beer portfolio grew volumes by mid single digits. It will come back to comment I will come back to comment more on Brazil in a moment. In the U. S, despite volume declining low single digits, we are encouraged that Heineken Lager brand volumes have shown an improving trend and the Cape Light grew double digits, with Dozequis saw a low single digit decline. Overall, Americas delivered strong organic operating profit by a growth of 11.7%. Turning now to Asia Pacific. Volume growth accelerated in the 2nd quarter following a slower Q1, primarily due to the test timing. Consolidated beer volume was up 8.9% organically for the first half. Vietnam and Cambodia delivered double digit volume growth, offsetting weaker volumes in Indonesia and Malaysia. Volume in China was under pressure mainly in the first half of the year. Regional revenue per hectoliter was down 2.5%, adversely impacted by negative mix. In Vietnam, volume grew double digits as Tiger continued with excellent execution and expanded distribution to secondary cities in rural areas. The region delivered strong organic profit by a growth of 9.5%. Finally, in Europe, consolidated beer volume was up 0.2%. Growth was driven by our premium portfolio with Heineken up 3.1%, benefiting from growth in lager and the launch of Heineken 0.0. Revenue over hectoliter was up 1.3% despite deflationary and off trade pricing pressure. In the UK, although volumes declined low single digits on account of a partial delisting, our premium beer and cider volume performed well and the Starbucks and Bars business delivered good results. In France, volume was up low single digits as the beer category regains attractiveness through innovations. Spain grew mid single digits as the economy continues to improve. Netherlands declined low single digits as the market remains very competitive in the off trade. In Poland, volume decreased mid single digits as total market declined and we reduced our volumes sold through discounters. Regional operating profit was up 7.7% organically due to good revenue management, disciplined cost control, innovation and successful premiumization. Turning now to Slide 5. In 2017, Heineken volume was up 4 0.5% organically, with growth accelerating in the second half of the year. The brand grew double digit in key markets like Brazil, South Africa, Russia, the net benefiting from the steady growth of Heineken Lager as well as of the launch of Heineken 0. The latter one, Heineken 0.0 is now available in 16 markets and delivering encouraging results. You can expect to see it in more markets in 2018. Heineken 0 is at the heart of when you drive, never drink campaign and together with our sponsorship of Formula 1 provides this credible platform for sharing our responsible consumption message. Turning to Slide 6, I would like to walk through our priorities to deliver strong top line growth. In our portfolio of international brands, we include brands that have the potential to travel across geographies. Tiger, Cruzobice and Peramoretti all grew volume double digit. Growth of Tecate, Desperados and Red Stripe was robust during the year, whilst AMSO was flat as the growth in Brazil was offset by lower volume in Nigeria and Greece. We made good progress with our global Cider strategy as volume outside the UK grew double digits, especially in South Africa, Poland, Romania and Vietnam. In the UK, a partial delisting adversely impacted volume. We see significant potential in the low and no alcohol category as moderation trends create new drinking occasions for our brands. In Europe, low and no alcohol volume was up double digits, driven by Rubber and Heineken 0, largely offset by a volume decline in malts products in Nigeria and Egypt. Total volume for the category in 2017 was 12,500,000 hectoliter. Our craft and variety beers continued to perform well with volumes up double digit coming from both our international craft beers Lagunitas, Apligen and Morcubic as well as our local craft propositions. We acquired full ownership of Lagunitas and we strongly believe in the expansion of the brand as an IPA of reference outside its U. S. Core market. We continue to integrate around draught systems. The SUB, our at home draught system, is now available in 8 European markets and the U. S. And China and is performing well. We also launched the Blade across Europe this year, which is our proposition to extend the draft experience to small outlets. It is showing promising results to date in the 11 markets it was launched. And we also launched the new e commerce initiatives for both business to business and business to consumer platforms, such as for the latter, Beowulf, which is now which is our new craft and variety online business channel for consumers in the Netherlands, and we're going to extend that in Europe. Moving now into Slide 7 to provide you with an update on Heineken Brazil specifically. As you know, the Pirinha acquisition closed in May last year. This transaction transforms our existing business across Brazil, extending our footprint and increasing our scale and platform for further premiumization. We are very encouraged by the progress we see in the integration and the results to date. For example, Eisenberg has now grown to more than 1,000,000 hectoliter, bringing our estimated share of premium slightly above 30% in that market. You are well aware that we decided to migrate the Kirin to Kirin's route to market in the future and that we are currently in discussions with the Coca Cola bottlers. Formal arbitration proceedings are running at the moment and until these come to a conclusion, Heineken Brazil is not able to migrate. We cannot speculate about a possible date for migration given legal proceedings, which are protected by confidentiality obligations. We believe we can handle both systems for now and we'll remain discussing and evaluating all possibilities to implement the migration. We will not comment further on this matter. Moving to Slide 8, I would like to update you on our Growing a Better World agenda. As you see, during 2017, we made significant progress on our focus areas on sustainability. And for example, we reduced water consumption in water stressed area to 3.2 liters of water per liter of beer, down from 3.8 in 2014. And we also surpassed our 2020 targets for CO2 emissions. That's a 41% decline in emissions per hectoliter since 2,008. We aim to reduce these even further and have set new ambitious targets for 2,030 with our Drop to Sea program. I refer to you to our press release this day for more on this topic. And now with that, I would like to hand over to Laurence for the financials. Thank you. Thank you, Jean Francois. Good morning, everyone. So going to Slide 9, as explained by Jean Francois, the 5% organic growth in 2017 was a result of positive momentum in volumes combined with growth of 2.1% in revenue per hectoliter. The good performance in the first half continued into the second half of the year with strong volumes in the final quarter. Operating profit now, operating profit day out was up 9.3% organically reflecting growth in revenue, the benefit from premiumization cost efficiencies as well. And in line with our guidance, operating profit margin increased by 40 basis points excluding the impact of Brasil Turin, Lagunitas and Punch acquisitions. This corresponds to 14 basis points, all inclusive. What I can add here is that Brazil Tier 1 was dilutive, but due to good integration and a very encouraging performance, maybe not as dilutive as expected. Moving to net profit, it reached €2,200,000,000 up 9.3% organically, the same level of growth as operating margin, operating profit. Please note that the tax line in particular included a few favorable one offs leading to an effective tax rate of 27.6 percent reais and for 2018 we're guiding to around 28%. When you look at net profit reported, you see a 25.6 percent organic increase, so significantly higher than billion numbers. Here you have to remember that 2016 increased an exceptional impairment charge of €286,000,000 for our operations in the DRC. Diluted EPS of €3.94 was 7% higher than in 2016. Free operating cash flow robust with almost 15% increase or €258,000,000 on last year and at the end of the year, our net debt to EBITDA ratio was slightly below 2.5 times, so in line with our target. Moving to Slide 10, which provides a bit more insight on revenue growth. Revenue by average €21,900,000,000 with an organic growth of 5%, which Jean Francois has already commented on. Consolidation changes added 4.3 percent or €891,000,000 mainly driven by Brazil Kirin of course as well Lagunitas in the Americas and to a lesser extent Punch in Europe. As expected, the negative impact of currency was significant, reducing revenue by €870,000,000 or 3.9 percent mainly attributable to the Nigerian NERA and to a lesser extent the Congolese France, the Egyptian pound, the British pound and the Mexican peso. Whilst we had a more limited positive impact from Russia, Brazil and South Africa. Going to Slide 11, operating profit reached just under €3,800,000,000 Consolidation changes added €80,000,000 or 2.2 percent coming largely from Brazil Kirin. Currency impact was negative again, reducing operating profit by €188,000,000 or 5.3 percent with the Nigerian naira being again by far the most impactful and much smaller impact seen from the Egyptian pound, the Vietnamese dong, the Mexican peso and the British pound. Excluding consolidation changes in currency, operating profit was up by a strong 9.3% as discussed, which merits a little bit more detail on our cost. If I look at input costs first, raw material and packaging, they saw an organic increase of 4.7% overall and 1.8% on a per hectoliter basis. This increase includes significant savings achieved through procurement and with that we managed to offset inflation on raw material, but only partially offset the significant transactional currency headwinds. Now marketing and advertising expenses, they increased organically by 0.9% with the higher growth during the second half of the year, resulting in a ratio of 13.2% of revenue for the full year. If you remember, we come from 12% in 2012 and we've been moving up since. This illustrates the 13.2%, which is a bit down from last year as a percentage of revenue, illustrates the results of the commercial spend productivity efforts that we've been mentioning to you in the past couple of years. And to a far lesser extent a few adjustments, but really this is commercial spend productivity and we are quite satisfied with the level of spend behind the brand as a percentage of revenue. Overall, support costs increased less than revenue, reflecting our attention to costs in general as well as a number of targeted efficiency programs in key countries. And that leads us to the aggregate delivery of 9.3 percent organic increase in operating profit, despite again significant transactional currency headwinds, so which we consider a pretty strong result. Slide 12 now walks us through the development in diluted EPS during 2017, EPS up 7% with $0.34 coming from organic growth and $0.05 from consolidation. And again here, currency translation had a significant negative impact with $0.13 On Slide 13, you'll see our free operating cash flow for the year. We continue to have robust cash flow generation with just over €2,000,000,000 in 2017 compared to €1,800,000 last year, driven by lower cash flow from our operations last year and also slightly lower level of capital expenditure this year. So higher cash flow from operations this year and slightly lower level of capital expenditure. The cash flow coming from changes in working capital is pretty much similar last year. The CapEx of €1,700,000,000 represented 7.7 percent of revenue. This value is lower than our guidance as some of the planned investments to expand in Mexico, Vietnam and Ethiopia will partly fall in 2018, so more phasing than anything else. And CapEx for 2018 is expected to be skewed growth CapEx and to developing markets, investing for future growth in Mexico, Vietnam, Ethiopia, Cambodia or Mozambique. Given our plans, we're guiding for just above €2,000,000,000 in CapEx spend for 2018. Net debt to EBITDA ratio, again, 2.48 times, so slightly below 2.5 times at the end of the year compared to 2.3 times in 2016, in line with our long term target. Jean Francois already mentioned, we maintain and I'm moving to Slide 14 about the year outlook, the full year outlook. We maintain a long term view of value creation. We really put our talents, our passion, our resources to deliver the superior top line growth over time, continuing to build our brand with bias towards premiumization, while still working on improving our operating profit margin. And this is really our midterm ambition. If you base your model on the currency update that we provide, assuming rates for the full year as they were on the 7th of February, so not a guidance, but a pure calculation based on spot, then you could conclude that FX would have a negative translational impact of €190,000,000 at operating profit and €105,000,000 at net profit. The year is far from being over, of course. So all in all, what we expect is that the economy condition in 2018 will remain volatile. And so we really assume the full year and this is a guidance that the negative impact from currency will be in the end comparable to the one that we had in 2017. Considering this, we will improve we will continue to improve our operating profit margin and we expect to deliver an expansion of around 25 basis points in 2018, which includes the residual dilutive effect of Brazil. This excludes, of course, major unforeseen macroeconomic and political developments as always. And also this time, we exclude the one time benefit of IFRS 15 implementation on the operating margin level. And touching on the some of the more technical financial guidance for 'eighteen, as you've read, we expect an average interest rate broadly in line with 2017 and an effective tax rate at about 28%. Finally, CapEx again slightly above €2,000,000,000 that's our expectation. And with that, I'd like to hand back to Federico and then to the operator to open the floor to your questions. Thank you, Laurence. Before we go to Q and A, let me remind you that we will be hosting another call at 10 am Central European Time on Tuesday, 20 February to discuss the implications of IFRS 15 and answer any questions you may have on that topic at that time. Back to the operator and the Q and A. Okay. Thank you very much. And the first question comes from the line of Simon Hales from Citi. Please, Simon, go ahead. Thank you. Good morning, everybody. Two questions, please, if I can. Firstly, Laurence, I think you've been quoted on Newswire this morning about talking about longer term guidance, perhaps you're providing that next year. I wonder if you could talk a little bit about why you haven't done that with this set of results and you've only given that 1 year forward 25 bps of guidance? And then secondly, on Brazil, I know you said in your prepared remarks that the integration of Covenues was still clearly dilutive to group margins in 2017. But how close to profitability or breakeven now is that business? And I wonder if you could talk a little bit about the integration that you've done to date, where you've seen savings from that integration, how we should think about that as we move into 2018? Thank you for your question. On the margin guidance, because we were a number of us around the table when we spoke to the press agencies this morning and we are absolutely sure we didn't say as this so this was a pure misunderstanding, which we're correcting right now with them, because definitely we're giving you what we're giving you today and that was not something that we're planning to give next year. So talking about this guidance, what we want to give you is something that is very in tune with our long term strategy. And then Jean will probably add something, which is to be really in the mid term, in the long term, going to get toward value creation through our top line growth, superior top line growth, that's very important for us. And we've been able to deliver that in the past few years based on building our brands and winning on our market. And at the same time being very conscious that we need and we're continuing to work on improving our operating profit margin. And depending on the year, you might have more of 1 or more of the other, but this is a focus that we keep doing one while doing while continuing to work on the other. So this is our mid term ambition, which we're sharing with you. And that is really the way we're driving the business internally. And then we quantify it for you for next year. And here again, we want to be very transparent. When we acquired and closed the acquisition of Turing was about midyear. This integration is going well. It is going it is margin dilutive in the 1st year or so. So it was margin dilutive in 2017 integrating the 1st 6 months. And then there will be a residual effect in 2018. The underlying trend is not changing. It is really that we need to allow for such a large acquisition to integrate and frankly, it's actually going much quite faster than what we had expected. Jean, you want to add something on the margin? I think, Laurence, you said it very eloquently. I'll just add one perhaps historical dimension to it. When 4 years ago, Rene and myself decided to give a Precisor margin improvement guidance, it was because back then we felt that we were clearly at a miss toward one of our competitors who today is not in existence anymore. And we felt comfortable in guiding on that because we had a job to do on margin, which we have been doing very consistently for 4 years in the role. Going forward, and as Laurence has been mentioning, it is important that we maintain an ambition of growing our top line. The top line, when we define it as superior, we mean that we want to do better than our competition. That's the first thing. Whilst continuing to work on improving our margins, inherently built into the model for margin improvement is, on the one hand, our portfolio of markets, where the number of markets where we have higher margins naturally is grew quite significantly in the last few years. But also we have a SKU organically working more on the premium end of our portfolio, bringing intrinsically improvement of margins. At the same time, we have done an acquisition in Brazil, which we knew would be margin dilutive on the medium term, but creates a platform for growth and better margin in the future. That is the reason why we do not want to give a mechanical guidance going forward of how much we can improve the margins every year. It does not take away the ambition that we have to do so, but we want to take away a kind of a drumbeat where just improving the margin will be leading our whole business. Again, leading our whole business is improvement of our top line and improving the margin. This the way and the balance by which the improvement of top line and margin comes year after year can vary. Therefore, we have chosen and elected to give guidance on margin on a yearly basis for now was maintaining also our medium term ambition to grow our business. I hope that clarifies. That's great. Thanks. Moving to your second part of your question on which was more on Brazil. So I want to reassure you that this acquisition is actually earnings accretive in 2018. So I was really talking about the margin, but in terms of earnings, it's earnings accretive in 2018 and that we are seeing the synergies kick in. We told you that we would not report in detail on the synergies, but we've seen them kick in and in particular as regards supply chain with the Toale breweries that we acquired, we had 5, we've already decided to shut down to actually optimize the footprint. But now we're really national. We have really nice synergies coming from global purchasing. So putting the 2 organizations together and having a global approach to our suppliers to the Brazilian operation and definitely fully on track to deliver a return on net asset above the cost of capital in year 5 as we have said. So this is and it's coming from the sources that we had named. So supply chain, procurement, support costs, and it is going quite well. So still margin dilutive in 2018, but already earnings accretive and creating more synergies. And can I just check-in terms of the 25 basis points of group guidance for the year, does that assume that there is no resolution with the bottlers in Brazil as things stand? I'm not going to give you our underlying assumptions. This is really a confidential matter. And beyond what Jean Francois said in his remarks, we're not going to go in detail. What should be reassuring is that we feel that we can deliver quite a bit of those synergies and this is not hindering us in this integration process at this stage. Very clear. Thank you very much. Okay. Thank you. The next question comes from the line of Trevor Stirling from Bernstein. Please. Trevor, go ahead. Good morning, Laurence and Jean Francois. Three questions from I'm please. The first one coming back to the issue of the dilution and the residual dilution. If I take what you've already reported, Laurence, for the 1st 8 months of the integration and sort of try to project that forward, I end up with something roughly around 10 to 14 bps of dilution, residual dilution in 2018. Does that sound the right ballpark? 2nd question, head office costs were €100,000,000 higher in 2018 2017. Can you give us a little bit of color on that? And is there anything in there that might drop out or is that a new sort of likely range? And the third thing maybe for Jean Francois, Africa had a very strong second half Jean Francois. I know it's incredibly volatile region, but do you think we're through the worst in Africa? I think I'm going to take Africa and leave the head office to Jean Francois. No, that was a joke. I'm very comfortable with the head office though. Okay. So on the dilution, let me just put things a bit differently. We're not I'm not going to answer how much dilution we have in our annual plan for Brazil. What I'm going to tell you is that the underlying trend in for our business has not changed from last year and that the way we're progressing it in terms of margin is pretty consistent. It's too early in the year to be quantifying this by saying, is it 12, is it 17, is it but that's really you don't have any breaking in the trends that you've seen in the past few years here. For head office, so about €100,000,000 more than last year, 50% of that, a bit more than 50% of that comes from our commerce initiative. So you're talking including the platform, including Formula 1, including our innovation, including launch of Heineken 0, including a number of also from us we put behind e commerce. Then 25% of the or 25,000,000 or about comes from initiative on our systems. Actually, some of those systems upgrades supporting the e commerce development, quite a bit of it, but also initiative to beef up our ERPs, really given ourselves the means to provide data and insight to the whole organization to move forward efficiently. And then we have a bit of one off as well. So that's how I would spread it. Thank you, Laurence. That's an eloquent answer on the head office. I couldn't have done it better. And for Africa and the Middle East, yes, I would like to have a crystal ball. The performance is very different. We put also Russia in that region and we have had a better performance in Russia last year and perspectives look a bit better than in the last few years in Russia. That's a big element. Our South African business is going fine. We have to add value to that business. And I think we will enter in 2018 in that zone, if you will. So but it's difficult to say if West Africa and in particular Nigeria really turns around. Oil prices are getting better as the situation is improving slightly. It remains volatile. But okay, when you say it's the worst over, I hope so. Jean Francois, maybe if I may add to that. We did say at the first half that some of our new ventures, our new bets were helping with the volumes already, but not yet with the margin. So we're talking about taking control of our future in South Africa. We're talking about Ethiopia, which is still quite recent. And we're talking about the greenfield in Cote d'Ivoire, which is even more recent, of course. At the time, the margin was still very dilutive. And we see this actually the result in terms of also margin improving on those bets, so which is really good because it starts with the volume and now the results are coming to improve. And that does play a role apart from the very good performance of Russia that does play a role in the second half margin in the region. Thank you very much. And we'll start up an operation in Mozambique also, which as you can imagine in the beginning phase is also dilutive in terms of margins. But again, to my earlier point, it creates a platform for further growth of our business. And at the end of the day, we will also engineer the margins at the level we want to have them. So we remain medium and long term, we remain very optimistic on the future of our business in Africa. Thank you. Okay. Thank you very much. The next question comes from the line of Mitch Collett. Please, Mitch, go ahead. Hello. Quick question please. Firstly, I guess your call is Sorry Mitch, we can't hear you. Can you speak louder or closer to the speakerphone? Yes. Is that better? Thank you. Oh, it's much better. Thank you. Sorry. Your comments around growth versus margin, I guess, imply that growth is perhaps more the center of gravity in how you're managing things going forward. Obviously, you had a 5% organic revenue growth in 2017. I know there's some puts and takes by market, but several of them several of the big ones got better in the second half. Do you think better than 5% is a realistic aspiration for F 'eighteen and maybe beyond? And then secondly, on your marketing investment, you indicated it was down. But in the statement, obviously, you said that you are continuing to increase your support behind your brands. I know there's some efficiency measures going on, but is there a way you can quantify how you're increasing your support for your brands? And I think you implied that it was at around the right level currently. Does that mean that you're likely to keep it flat year on year for F 'eighteen? Thanks. So maybe I start with the advertising and selling marketing and advertising expenses. It is actually up in terms of in absolute value. There is growth in those expenses. They grow less fast than the revenue, which is why you see as a percentage of revenue, it is slightly down from 13.6%, I think last year to 13.2%. But we're still continuing to invest behind our brand and to invest more behind our brand. What you also have in that investment, which is not marketing and advertising, you have what we call feet on the ground. So you do have some your commerce organization and that's not in that number also put people to go and visit the outlets, the Orica. And one country where we've been doing more of that, for instance, is Vietnam. Vietnam, where we have a beautiful development in the cities and where we started 2 years ago to also really go outside of the cities and become more focused on some rural areas and that you do less through what we call ATL, VTL than through actual visit and commerce action with the in the outlet. So this is also part of supporting our brand. But again, the advertising and marketing investment is increasing behind our brand in terms of absolute value. It is in percentage of the revenue that is more or less stabilizing. Jean, I'll Yes. The top line is you asked the right question, but I won't answer it because you are intrinsically asking me for a guidance on the top line, which we will not give. We just say we're committed to have a superior top line, which means we measure ourselves towards competition. And we invest a lot in things that are promoting the top line. And our long term growth of the markets, investing in premium Heineken, premium international brands, premium craft and variety brands, also cider, which is often a premium proposition in many countries where we introduce it and low and non alcohol, which often by the virtue of these delineated tax issues on non alcohol makes that it is a premium margin proposition. All this is geared also towards boosting our top line. But to give a precise number on that, I will stay short of that. Understood. Thanks. Thank you very much. The next question comes from the line of Olivier Nicolai from Morgan Stanley. Please, Olivier, go ahead. Hi, good morning, Jean Francois, Laurent. Three questions, please. First of all, Jean Francois, on Brazil, improved strongly in H2, which I guess was led by some market share gains in the premium segments. Just could you please provide an update on the consumer there and what you're seeing on the ground? And also how big do you think the premium segment could become in Brazil as a, let's say, percentage of total volumes? Secondly, there was a headline on Bloomberg, so I just wanted to make sure that it's correct, this one, Talking about raising aluminum costs, just overall, what kind of input cost inflation do you assume in 2018? What is included in your 25 basis points of EBIT margin progression for this year? And lastly, a question for Laurence on FX and your hedging policy. Considering the dollar weakened against the euro and your hedging rate is 1.14 for 2018, is it fair to assume some negative transactional FX impact in 2019, which will impact your organic EBIT growth because I think you put the transactional within the organic calculation? Thank you. Yes, absolutely, we put the transactional within the organic calculation. The transactional is also fully impacting the operating profit margin. So the guidance that we give to you is a guidance where we absorb both the transactional and the translational. So here, for instance, we might have had less devaluation from emerging currencies and what we had maybe expected, but then in turn the euro will first against all currency. So all in all, the impact was pretty much what we had expected. So I'm not going to quantify that, but rest assured that our 25 basis points after the dilutive effect of Brazil includes mitigating for these factors. Now going to the inflation on input costs, yes, we do expect that there will be inflation and transactional impact on input costs. We do hedge on our raw material, whatever there is a market for and then actually using our global scale more and more than what we did in the past. We edged aluminum, for instance, and there we're pretty much hedged for 2018 already. So we are able to when we again, when we give you a guidance, we're able to have a good estimate of what that will be in that guidance. I'm not going to give that detail. But on this, the volatility will be less. You cannot edge everything, yes? And then definitely transactional impact will be felt on input cost if the currency go the way we were expecting, completely factored in our guidance. Then I go over to your question about Brazil. The Brazilian market is a bit difficult to read. And I think that our larger a broader over there will have perhaps better data points than we do have. But if you take Nielsen and that only covers 60% of the Brazilian market, it suggests that the market would have been down by 1.7%. But again, this is only a partial coverage. With the premium segment up 20%, that's a bit how the market developed. But I think it's good to cross check that. We're not so sure that the market went down by so much if we believe what Petropoli's numbers are saying. But anyhow, we are more invested in the premium end of the market, and we are growing fast. But Vysers is still slightly ahead of us as the 1st premium brand in the Brazilian market. It still leads Heineken by 1 or 2 points in the premiums segment. But we now have, thanks to the Kirin acquisition also a brand like Eisenberg and Davasa, who are also growing the high double digits and contributing to us having a position of over a third of around a third of the premium market now occupied by us. And it's our primary growth engine for Brazil going forward. And that's good. And frankly, there are a lot of reasons why Brazilian consumer embrace premium brands. It is a mix of aspiration drinking smaller sized brands, because mind you, Eisenbine and Delassa are total local brands. They are slightly premium in price, but they are local brands. I think it's a mix of wanting something new that is aspirational and also product quality. All these beers have in common that they are full malt beers, I have to say. De Vasa is, Eisenberg is, and so is Heineken. And I think the taste profile of these beers and the fact that we are unapologetically a beer made the German way, if I may say it like that, that attracts a lot of consumers in Brazil. Now those are just a few reasons why our business in the premium end is going very well in Brazil. The next question comes from the line of Tristan Van Stryne from Redburn Partners. Please. Tristan, go ahead. Thank you. Good morning, guys. Three operational questions from my side, please. Just on Vietnam, it looks like on my numbers you're very close to capacity and it keeps growing. So I was wondering, is there any physical or governmental limits to adding capacity? And are you also maybe importing like Heineken and Tiger from other markets to supplement your growth there? The second question is on the 2 Congos. It looks like DRC and both the Republic of Congo and Associates are not looking great at the moment. So my concern is much more about your Coke franchise there, which seems to be keeping those businesses alive at the moment. Is there any danger of you losing that franchise in the near future with all the Coke changes? And then the third question, if you just give a bit of a color on your Russian strategy. It seems like you've had a good volume push there, but that's very much driven by your push into discount brands in the traditional trade. So I just want to know what's your thinking around that? Thanks. Maybe I'll just take the one on Vietnam to tell you that we are continuing to add capacity and that as we discussed when we acquired the former brewery of Carlsberg, Guntao, we have plans to actually upgrade increase the capacity at that brewery, which always goes a bit faster than building completely a new brewery. So in Vietnam, as you know, the capacity authorization is something that is very well administered and then you have to go and ask for it. And we have a full fledged plan and then we're continuing to add behind the capacity behind the growth. So, in the short question, we don't have capacity constraint in Vietnam. We are very well covered going forward. The DRC, yes, it's a very difficult environment, as you know. It's the most difficult country we have in the set in Africa to operate. It's really, really difficult. And so it's already a challenge to keep our heads above the water. But it's we try to manage it as an option for the future. It's a big market. There are people living there, 80,000,000 people, and these people love beer. And if they would have purchasing power, if they would live in a country which will be better run, if they would have a little bit more purchasing power, I think it's a market where it's worthwhile to stay invested in and that is our approach. Now, specifically to your Coke, and we have a contract with Coke, so there is no immediate short term, I would say, risk that we would lose the contract. There is only one alternative for Coke to operate the licenses in the Congo. And you know it well, it is Castel. So that is no secret to anyone. At the end of the day, Coke decides what he wants to do at every renewal between the incumbent and other people who might be interested. Yes, it helps the total business because it absorbs and contributes to a part of the fixed cost. And in a difficult environment as we know it, it is certainly helpful to have it. But on the other hand, long term, we are a beer business and we would ever survive, if any, without it. But that's not what I wish for. We have dedicated people for a long time behind the Coke portfolio in many places in the BRC. And our firm intention is to continue that. We have a cluster of Coke licenses around the 2 Congos and Rwanda and Burundi, which makes it a coherent territory to work from. And we intend to continue to make that category grow as much as we do for our own beers. Thank you. Maybe I'd just add on Russia that, yes, there were some discounts, but what you can see is on the premium side, we grew pretty much. Heineken grew very strong double digit and the launch of Heineken 00 is very positive. So there is also some light at that end. So you're doing both sides of the equation, both the economy and Yes, absolutely. In Russia, that's true. And Christian, I'd add to Laurence's point. Our strategy has always been high and low in Russia. We have no proposition in the mainstream. So, it has always been and that is a little bit contradictory to what we normally do, where we try to do mainstream and premium. Here, we do value the lower end of the market and the higher end of the market. That's the 2 weapons that we have. And these are the ones we use. I mean, both segments we have had very good rights. Thank you very much. The next question is from the line of Richard Withagen from Kepler Cheuvreux. Please, Richard, go ahead. Yes, good morning. Thanks for the questions. I have 2. First of all, Jean Francois, you talked in the media release about future operating margin growth and one of the elements there is cost initiatives. Can you be a bit more specific? I know you're obviously focusing on cost efficiency for a long time already, but in what area specifically do you expect some contribution from cost initiatives in 2018? And then the second question is on South Africa. You mentioned it already a couple of times. I mean, can you elaborate a bit what the plans are in South Africa? I hear that it's more promotional beer markets right now. Still your volume growth is pretty solid. So can you give some more details on South Africa, please? Yes, okay. On the I'll start perhaps with the latter point on South Africa. There also there is a strategy, which is essentially geared towards the premium end of the market. And we see the premium end of the market in South Africa growing higher than the total market. And we can maintain value in the premium end of the market. And this is where we develop. We have it also cyber in South Africa. Now cyber was very much a 1 player's game with Distell in the lead by far and still in the lead. But I think when you look at South Africa and you say, well, you come from a situation where you had long standing very efficient monopolies, South Africa is moving into a full fledged modern economy, and we'll have competition. Now, we can play our part in that. So we're confident that we can continue to grow in South Africa. And our angle of attack, and it's no mystery, it's in the more premium end of the market. And that includes not only cider, but it also includes more recently some inroads into craft brewing. There is a nascent interest for craft brewing in South Africa. And so we kind of participate in 2 initiatives to participate to that development of the market, which in principle is again like premium end in the market. That is for South Africa. The cost efficiency, it's an array of different programs. It's not only the continuation of programs we have in supply chain improvements, they have been initiated long, long, long time ago and they still continue. So supply chain is still delivering its part to the improvement of productivity. And it's a virtuous circle of improved technology applied and new organizational skills that leads to better productivity in some regions. It's easier than in others. But you have to realize we constantly integrate new acquisitions toward in our system. And so there is always a big productivity leap to close. That is for the supply chain. If you go into what I call administration, the whole admin part is still a way to go into improving its productivity. Think about the optimization of our shared service centers, not only the one in Europe, but also what we do in Mexico, but also all our local administrations in Asia and Africa, which are currently in the review to kind of relaunch ERP systems, which will be more effective and less costly than the previous generation of ERP systems we had, just as an example of what we do. But also our Growing a Better World program, the sustainability efforts, reducing the CO2 footprint goes also is reducing your energy bill, and that will continue to go in the future. Logistics costs are also a very big field, where we still make progress. And in some countries, we can even do more progress. And then I close the list by also speaking about productivity measure in ATL, where it was correctly spotted that as a percentage of the revenue, we spent a bit less. But in terms of efficiency, we do better because we can have a better profile of top line growth. And that is always difficult to measure, but there are a number of measures taken in our company to promote and to cut the waste also in commercial and marketing support and having our commercial investment and marketing investment much more productive. So all that scala of areas or functions, they contribute to productivity. So it's not one big like we did some 10 years ago, a big cost reduction program, which is at stake. That can happen. You can do a cost reduction program in particular countries. We call it 0 bad costs. It's an exercise that we do very regularly on operations to reset the counter on fixed costs from once in a while. But that together with all these functional improvement programs we have, that has to lead to improvement of our productivity base. Okay. Thank you very much. The next question comes from the line of Edward Mundy from Jefferies. Please, Edward, go ahead. Hi, good morning everyone. Three questions please. Just going back to your medium term model and striving for superior top line growth, are you able to share what you think the peer set is growing at when you're benchmarking there? The second, just a point of clarification around, I think, Laurence, your answer to Trevor's question. I think you said that the underlying trend on margin is unchanged and there's no break in the trends relative to the past few years. I know that you're not explicitly splitting out the impact from Brazil in 2018. But is it fair to conclude that underlying 40 bps is generally what you're aspiring for pre Brazil? And then the third question, Heineken 0.0, I think you said that there are more markets for it to be rolled out to in 2018. Do you see a lot of white space opportunity in emerging markets for the low alcohol, 0 alcohol at Heineken? So I'll start with your question on the underlying margin. We're not giving you a precise number, but I would say ballpark, this is continuation of what we've done in the past 2, 3 years. So yes, you could say around 40 basis points, but we're not pointing at this 40 basis points now. It's a bit too early in the year to but yes, no break in trends. That's pretty much what we mean when we say that. On the medium term model, of course, you're not in the you're neither in the plans of your competitors, nor do you have a crystal ball to know what the environment will So I mean, even if we were in the plans of our competitors, what we have to do in this business is drive our long term strategy and that we're trying to really do in a relentless way for top line growth and working on our margin with a real focus bias towards top line growth and building our brands. And then you have to be very agile to react to whatever market conditions that you encounter. And that is not even global, that is a market by market reaction and that is where you have to win on the market by market. It's really been the essence of the strategy, which is why, I mean, we do understand that what we're giving you today might be less comfortable for the models. But we hope that it gives you the comfort of being very close to the strategy that you have been you have seen in action and that we've delivered on in the years that you've been following us. And so that is really the idea behind it. And for the Heineken 0 growth, we're not kind of announcing what the next countries, but if it was born to serve mature and markets in Western Europe, we see clearly opportunities to also make such a proposition work in some emerging markets, and we will certainly come back in some emerging markets from next year. However, we won't tell which ones. Okay. Thank you. Okay. Thank you very much. The next question comes from the line of Sanjit Azula from Credit Suisse. Please go ahead. Two questions, please. Firstly, on revenue per tonneiter trends in the second half slowed and were ballpark flattish in the Americas and Europe despite the premiumization initiatives. So can you just talk about the underlying trends there? And also can you just allude to the market share dynamics you're seeing in Brazil and Mexico specifically? Thank you. You want to start with the market share dynamics? Go ahead, Lea, Laurence. Okay. So in terms of revenue per hectoliter, what you're seeing here, well, it's also a matter of comparables, but definitely it's a matter of mix of country and then of growth of country with, I would say, lesser price. There is no specific thing to read into long term trends into the difference between these two apps. One thing I'd like to mention is that we did tell you that we had kind of a correction on the revenue on the excise tax, the way excise tax was treated in the UK. It doesn't play on full year, but it does play on the second half because last year we took the correction in full for the full 2016 year on the month of December. So it gave an artificial boost on the half to half basis to the second half of last year. So no, no break in trend, most of the impact and of the imbalance between the two comes from this one off and then nothing really else to mention. Got it. Doesn't have an impact on the full year and doesn't have an impact moving forward. Okay. And then for you had a specific question about Brazil and Mexico. Is that right? Yes. Just on the market share dynamics, do you think you gained share in both those markets in 2017? Yes. We gained markets in we gained share in Brazil, particularly in the premium segment. And this is where also our business comes from. So that is the good news. And then overall in Mexico, we also progressed our share. We're happy with the way we have progressed our share in Mexico. So yes, that's good. Very good. Thank you. Okay. Thank you very much. The next question comes from the line of Fernando Ferreira from Bank of America Merrill Lynch. Please Fernando, go ahead. Thank you. Good morning. I have a question on 2 important markets that have continued to perform weekly, namely China, right, and the U. S. I understand you've spent some time recently working looking closely at both operations. So can you comment on your medium term plans to improve performance in both? And then second, just a follow-up on the price mix or revenue per hectoliter. Can you comment on your efforts on net revenue management for 2018 as both currencies and raw materials remain a headwind? Thank you. Three questions. I don't know who gives you my agenda, my travel schedule. China, U. S, those are 2 identical business models, business models where we are a small player. We have elected to stay in the premium end of the market. The difference between China and the U. S. Is that the U. S, we started already in 1933 and China is much more recent. In the U. S, you can you have access to distribution because of the 3 tier system. What changed in the U. S. Over the last 15 years is that it became way much more competitive than ever before, not only in the beer category, but also between the beer category and the spirits category, it remained the competition increased. And yes, we suffered from that in the U. S. So it's a mixed picture of some light and some still suffering. In China, it's another thing that we in the U. S, we operate already a portfolio of brands or premium. It's not entirely depending on the Heineken brand, whereas in China, we are totally depending on the Heineken brand. Our geographical coverage of the U. S. Is again way better than our geographical cover of China. And last but not least, in China, you don't have a 3 tier system. You have a more free system whereby local incoming brewers have a high power over these distributors. So those markets are different. The U. S. Has a financial impact on our results, and it has been performing well over the last year. So despite a kind of flattish market performance in terms of financial returns, it is well managed and it returned well for us. The U. S. And China has never been a big contributor to our business because we reinvest all the growth margin in growth over the last few years. And yes, we had a disappointing year, specifically this year, because we were under severe competitive pressure this year. I have to say that situation is improving since the second half of this year. So I remain optimistic. So we have a setback. But our approach is insofar different in China. We come from a much, much lower base. The brand is attractive to Chinese consumer. It is more difficult to wait to work your way into the distribution system in China. It's even more difficult than in the U. S. To do so. But we stay tuned to that strategy. That's about the color I can give you about our China and our U. S. Business. And then you ask for Maybe on your question on the revenue per hectoliter, well, in a business, in a company that is so as broad based as we are, of course, it's a combination of many things. So what you have in there, it's an impact from country mix. And then definitely we do have some fast growth from countries where the prices are a bit lower on average. I mean, the fast growth of Asia weighs on the revenue per hectoliter. It's very good news. It's very good news on the profitability as well, but it weighs on the revenue per hectoliter. Then you have within a country, you have your mix of product. And here's the fact that we are geared towards premium helps us and will continue to play for us. At the same time, yes, we just added a lot of mainstream in Brazil, for instance, and that will come back up in time. And then you do have the revenue management initiative. And here, if I talk about the major market, definitely your capacity to price is pretty low in modern retail. So you have to go with negotiation year after year after year. And then you also have in a number of countries the pricing that you take because you need to protect your business and your profitability, while currency are evaluating. So this is really a mix of very different factors. I would say at the end of the year, if you drive your business towards growth and towards premium, there is a bit of an upward trend that takes you. But how this plays and how the combination plays exactly next year and revenue management is a way of doing business and it's not a one time initiative. So you always look at where it's most profitable to and better for your business to put your discounts for instance And that you do more and more efficiently as you have more and more precise data about your customers and your consumer. And that's also where you're being equipped with the right ERPs and the right tools is very important these days because you can make very granular decision. So it's a bit of a long answer, because really our revenue per hectoliter progression is made of all that. Sure. I think it was worthwhile for Laurence to explain that. But one what you have to take away is that when we talk about revenue management, this is done at the local market level. And so you can never translate 101 programs of revenue management into the hectoliter price we have by region, which is the most granular thing that we publish. Even on a regional level, it is not meaningful because there are too many countries in there. And so revenue management is exactly to the point that Laurence explained. And revenue management techniques are very different in mature markets where you are for 70% dependent from modern organized retail, then revenue management would be done in Nigeria of or let alone Vietnam, where for 90% you are dependent on individual traditional retail stores. So but in all geographies, you have to manage your revenue in an articulated way. That is what we mean by revenue management in Heineken. Perfect. Thank you very much. Okay. Thank you very much. The next question comes from the line of Eddie Hargreaves from Investec. Please Eddie, go ahead. Hi, good morning. Question broader question on the Heineken brand, which I think is about 15% of group volume and 30% of group profit still. So obviously very important. And it appears to certainly in H2 here being firing on all cylinders with strong growth in numerous markets that you've mentioned with the rollout of Heineken 0 and Light. So really it's just a question of can we sort of expect this sort of progression for 2018 or was anything exceptional in here? Would it be too much of a stretch to expect this Without giving any Without giving any particular guidance on one number, you clearly identified rightly that the Heineken brand is one of our key pillars for growth, both in terms of volumes as well as in terms of profits. And we are confident that this will continue to grow that way. If we wouldn't believe in that, I don't think we would have embarked in the investment programs we have undertaken and noticeably in Formula 1, which added a layer of cost on the short term. It's a real investment. I think there are more geographies and markets where Heineken has a good growth in perspective than geographies, a limited number of them, where Heineken could do better, I may say. So we remain very confident in the future of the brand. It makes our company apart. We might not be necessarily the largest premium brand in the world by volume, but we are certainly the most internationally available. And by that fact, we can exploit in a more in an effective way much more markets to make our brand grow. And so, we're confident, yes. Okay. Thank you very much. Just to let you know, panelists and ladies and gentlemen, we have 2 more questions in the queue. The first one comes Three questions, please. First, I completely understand that you don't want to guide to a specific margin expansion number for each individual year over the medium term. But do you think that the old guidance of 40 bps would still serve as a reasonable guide to what you might hope to achieve on average over the medium term? Or might that now be slightly lower if you are increasing the focus on the top line? That's the first question. 2nd question, the mid single digit growth of the ex Kirin portfolio in Brazil, is that still being helped by aggressive price and promotional activity in line with the strategy of the previous owner? Or have you changed that approach? And then 3rd, just to clarify, when you say that the currency headwind in 2018 will be similar to 2017, Am I right in thinking that you're only referring to the translation effect there or not also to the transaction effect? Thank you. So to answer you on the currency first, we're only guiding on the translational effect, which is the one that we're updating you on with the calculation for the model release after release. So we are definitely talking about that one. They will be we're expecting some negative transactional effect headwinds as well, but we're not guiding on the quantum of it. It is all inclusive in our guidance on the margin. So you read it well, it is translate. In terms of quantum, this is a translational that we're talking about here. Really, we're giving you this guidance, I would say, from the way we manage the business, the way we plan. And I think it's very important. I don't think it's anything new. I mean, I would say, conference after conference, we also really insist on the fact that in order to create long term value, you really need to have this bias towards top line growth and towards profitable top line growth, of course, but put the right means behind our brands and really see it as a balance. And the superior top line growth we've been able to drive while improving the operating margin, operating profit margin is something that we want to continue. And by quantifying this for the next year in terms of margin, we're also giving you what we have the visibility on, at the same time continuing to provide you with the ambition. So again, I understand it is less comfortable for models. I perfectly understand that. But it really is the world in which we're operating. And then we hope we can get some credit for delivering in the past couple of years and showing you that we are not stopping. We are not stopping on the premium bias. We're not stopping on the finding new places where we can actually build breweries and start increasing our volumes and then tomorrow our profits. And we're not stopping on looking at our costs, whether it is productivity of our commercial spend or whether it is our support costs, there is still a way to go there. We see things that we still want to do and we're actively going after them. So this really corresponds to the way we drive the business. Well said, Laurence. And very quickly on Brazil, no, it's not it is not the case. We are we operate in a very highly competitive market in the mainstream. Our stance is you cannot be overly aggressive. You're not determining the rules of the game there. And by the sheer fact that the premium end of the portfolio of Kirin as well as ours are growing, that is which the points we build our business to. So by saying that we still rely on heavily promoted volumes as a heritage of practices of Kirin wouldn't be fair. Thank you very much. Very clear. Okay. Thank you. The last question for today's event comes from the line of Andrew Holland from Societe Generale. Please, Andrew, go ahead. Yes, thank you. A couple of questions. Firstly, just on Nigeria. Can you talk a little bit about your pricing there in 2017 and your prospects for pricing in 2018? Do you expect better pricing in 2018 than 2017? And then rather separate from that, could you just sort of update us on the various delistings that you seem to be suffering from, particularly in the UK, in particular, the cider one that you mentioned, who is that with? When did it start? Is it has it already finished? Or is it likely to finish? And could you update us on the delisting from Tesco's for your sort of range of European brands? Is that still active as it were? I'm going to start with Nigeria. We do price in Nigeria. And let me put it that way, it's very much a function of the currency and the currency availability. That is and so it's very erratic and it's difficult to plan. But definitely, we want kind of to land in a more stable situation. At the end of the day, the level at which the price level at which we operate our business in a sustainable way, you can set that one in dollars if you want. And even if we have an increasing part of entrants coming from local sourcing and which make us less vulnerable to the lack of availability of foreign currency. It remains so that we have to hook our business, if you will, on the dollar. So but the fact that this currency has been going down with erratic steps makes up the business is quite difficult to manage, but I think we have it well. I think the last price increase dated from July 2017, 2018, the timing of so well, that depends very much how good. But at the end of the day, you have to think that we kind of pinpoint a level at which we have to operate in dollars to create stability going forward. I don't think that 2018 will be a lot more bumpy than 2017. The rhythm in which it could increase, I can't predict frankly because it does not only have to do the oil price, which is slightly helping lately, but it is also to do on all sorts of political developments in the country, which frankly we cannot totally oversee. But I would say so far so good, even if we have to be frank about it, we lost a lot of our profitability in Nigeria over the course of the last 3 years, it remains a very difficult country to operate in. But again, when you look at the long term, you would look 30 years back and you look 30 years forward. I think it's worthwhile to be in Nigeria. Okay. And just on the delistings in the UK? Sorry, I forgot that one. I thought you would forget about it. We never ended no, we never go into all kinds of details, the why and the because those are commercial and competitive relationships, so you cannot comment on that. I'm just saying we are we will fare in better circumstances in the UK in 2018. Let me put it that way. It's not uncommon that you have a big dispute with one of your big clients from once in a while and it can happen in countries. We have had it with Carrefour in France. We have had it in the Netherlands with Gymbore. We have it with Skope in Italia, just top of my mind. I mean, this is a big falloff of volumes from 1 year to another for partial delisting and protracted negotiations is and for all of us in the industry, that's an issue and that won't go away. So we worked our way through. One has to realize that often volume effect is spectacular, margin effect is relatively reduced because those affect kind of products that unfortunately are often in that deflationary territory in modern retail in Europe. And that means that there is not an awful lot of margin for the retailer and there's not an awful lot of margin for the producers as well. So you have big volume effects and sometimes revenue effects, but relatively, let's say, limited margin effects on these kind of things. But yes, better weather for the UK in 2018. That's the only thing I can say. Okay. Thank you very much. No more questions in the queue. So I'll hand back over to you, Jean Francois Laurence, if you like to adding any concluding remarks. Thank you. No, I don't think we would like to thank you for your genuine interest as ever. And thank you, operator, for having facilitated the conference on the sea, let's wait between 2 locations instead of 1. And thank you for all you listening in. Have a good day. Bye bye now. Thank you. Goodbye. Thank you for joining today's conference. You may now replace your handset. Thank you.