Good day, ladies and gentlemen, and welcome to the
Call.
Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. William Lynch. Please go ahead, sir.
Thank you, operator. Good morning, ladies and gentlemen, and welcome to our conference call following the release of our 2018 Q1 and from management statements. My name is William Lynch, and I'm Head of Investor Relations. With me is Brian Megan, Kerry Group's CFO and Alrina Neely Group Financial Controller. I will hand over to Brian who will take you through a brief presentation capturing the key points of our Q1 IMS The presentation is available on the Investors section of our website, www.carigroup.com.
Following that, there will be a question and answer session which will be facilitated by the operator. Before commencing the presentation, let me draw your attention to be usually the same or regarding forward looking statements. I will now hand over to Brian. Good morning, ladies and gentlemen, time William, I'm just going to take you through, as we've inferred, 5 or 6 slides. Just a point here, 3 highlights.
I think you might even have had a chance in recovery. And so I jump straight in. Q1 highlights for 2018 on a volume basis 3.7%. Overall, taking efficient commissioning growth on 3% and consumer foods 1.6%. Adding to this 0.9% on a pricing basis.
Trading margin was maintained flat the same quarter in 2017, which represents underlying margin expansion offset probably the transaction currency that we would have mentioned back over the 2017 period in relation with Sterling. Although, I'll take the nutrition plan and plus 20 days as far as in Consumer Foods, underlying growth go back 60 basis points when the transaction currency is taken into account. Our net debt is a one point 3,000,000,000 terms at the end of the year, and we'll retain our full year earning guidance. So just for a moment, to focus on the environment and the markets that we're operating in, the developed markets, firstly, continue to experience significant churn and significant fragmentation from the consumer backward. Continued impact of personalized products, better for your products, the drive towards local and authentic.
And continues to impact the change in what consumers are choosing and drive significant activity and significant churn in our business which we see as a significantly positive thing. And then developing markets, the underlying fundamentals continue to improve driven by organization and the growth in the middle class, but I think it's fair to say, our business model, particularly in developing markets, is really resonating and driving our business forward. The highlights overall in terms of our volume growth, across the patch represents good growth and pretty much in line with our target across all our news markets. And that's the resignation of the partnership business model across all customer sites. That includes others.
We continue to win with many extensions and, there are a few launches as well as limited time offers. And we've had significant activity again in the first quarter with roughly 100,000,000 spent on acquisition. In Q1 of the year, and that continues to be a busy area for us. In terms of the overall business performance in taste and nutrition. As you said, continue to deliver across our end use markets.
And our 4 key strategies do we call out Capital Markets Day last year in terms of case, nutrition, food service and our focus on developing markets. All continue to be a significant focus for us and significant winning areas. And indeed in consumer pool, the adjacencies we called overall food to go and snacking, are delivering good growth as well in the period. Can we move on to the next slide and just look at the analysis of the revenue growth, which has 0.1% reported and 8 point 5 percent on a constant currency basis, comprised of the number of moving parts. And the like for like out, 4 point 5% comprises volume of 3.7% and price is 0.9%, offset by transaction currency of 0.1%.
With the acquisitions in the period, and coming through from last year, delivering an additional 4%. Tier revenue growth are implemented on a volume basis. So just to spend a couple of moments on each of the to divisions and start with taste and nutrition revenue growth of 4.3 percent, an opportunity based response in terms of trading margin. And that 4.3% represents an increase of 9.5% in developing markets. And 2.6% in developed markets.
And the key in these markets here that I'd call out in terms of being, stand out for promises in the period would be neat, beverage and the snacks in these markets. And food service and feedstock channels continue to live well as well with 6.1% growth in the quarter over the same period last year. And then, fair to call out that we are investing significantly across the customer base, but particularly to develop our in market and local connectivity with the winning customer base in terms of the medium and smaller customers across the developed and the developing marketplace. The raw material environment has eased somewhat 2017 where we saw 4% inflation, being recovered pretty much in the 2% pricing activity. Which is down in the first quarter to 0 point 9 percent and that continues to ease as we go into the second quarter.
And at this point, We will be seeing that as a flat to slightly deflationary on a full year basis. Maybe low single digit point on the EED and the year comps. In terms of margin progression of 20 basis points, good underlying margin progression probably double that offset by the investments we're making in Careconnect and indeed in the, the localization of development capability and applications cadences, clearly, in the fragmentation that's grown in the marketplace. Across the three regions, good growth, as we said, generally across all end use markets and carryout meat snack and beverage, really across the patch, Brazil, performing well. Mexico's salad, the acquisitions we made in 2017 in the Americas like kettle, daphley, spice, and gimme even on traveling pretty well at this point in time.
And in Europe, probably 3rd carload Puja, which will continue to be a really willing tightening for us. And just to mention, a recent acquisition of John Fincher that we've done called EZIA, which is a significant plant based protein technology that we would be very excited about regarding for the future. And then in APMEA, performing very well across the country, pretty much broad based performance. With the acquisitions of CSM and the season the season being started to be integrated. As well as the High Lin business that we've completed in the first quarter as well in that region.
So moving on from all the accounts to consumer food revenue growth of 1.6% pretty solid. And slightly behind maybe what we would have expected to to maybe some weather issues in the first quarter in Ireland and UK, but nonetheless, a pretty robust performance that I had in the assays in terms of, of 1.6% growth number. The trailing margin was flat to slightly positive on an underlying basis and an offset by the starting lease issue in terms of the exports of 3 particular product lines out of our inventory UK, which is something that we've called out that we are working very hard in terms of reducing that exposure to our mitigation program, which is progressing very well. And from a market perspective, the, the performance across everyday fresh, you know, driven by Richmond, Fire and Small, etcetera, performing very solidly. In the period.
Convenience means probably a little bit, a little bit challenged in terms of the significant reduction at at customer level and retail or around promotional activity. The frozen category continues to be challenged as well. But good progress in terms of, our significant innovation capability and a number of important effective largely around better value ranges. Good to go and snacking in particular around meat and dairy performing very well as well as our rollover technology into entertainment venues. The, the margin, as you said, underlying performance pretty solid, and that currency issue $1,000,000 as negative 60 basis points.
Just the 2 divisions, Test Nutrition And Consumer Foods. And performing at his overall pretty solidly, and to expectation. As we look forward for the the year at this point. It is, I guess, it's probably there, Jeff. We continue to win in the global market both developing with our taste and nutrition technology and our focus on food service and developing market strategy.
We're confident that that performance will continue to taste nutrition through the year as well as continuing to win in consumer foods in inquiries of our adjacencies and, and, proof of growth strategies. The one thing that continues to be a carload is, in the UK market, and North Star has performed very solidly for us. In the fourth quarter, but with the continued uncertainty around Brexit, we continue to be watchful in relation to the UK consumer and how that is performed through the rest of the year. And in case nutrition laughing some significantly good performances, particularly in food services in Europe, as we go through the second half of the year as well. We continue to invest for growth and the localization of some of our application technologies in country around the world.
We continue to focus on the opportunities in the fragmented industry that we operate in relation to anything opportunities and that pipeline continues to be robust and pretty busy for us. And the balance sheet as, as you know, is pretty strong at this stage as well. In relation to translation currency and, as we call it back in February, that a significant headwind from a reported perspective in 2018 where it was a headwind of 7% approximately back in February that eased somewhat particularly in the last week in relation to the dollar and notably around 6% or maybe slightly below that. If you take, yesterday's race. And but that's not something that, that that we as a team, people are going to take for the rest of the year.
So we're saying 6% to 7% is what we've only seen at this point in time. And the underlying business and the projection for the rest of the year, in terms of 6% to 10%. We're very confident that we'll deliver against, at that time, as the year progresses. So that's a quick run through the fundamentals and the highlights of the performance in the quarter. So with that, I was looking at some comments tonight at the end, but I don't hand over to the back to the operator for some questions at this point.
You. We
will
take open a question from Arthur Reeves of Societe Generale. Please go ahead.
Good morning, everyone. Two questions from me, please. The first about Consumer Foods, Is pricing easing in Consumer Foods? And does that do you expect that to make life slightly easier as the year progresses? And then my second question is about, America.
You're referring a statement to, ready to eat cereal being difficult. Does that make a a material impact to your growth rate in that region, please? And how long will it continue do you think that to be a drag? Thanks.
Thanks, Erica. Good morning. 2 good questions to started pricing in in the UK has used, a little bit in in in relation to our input costs in 2018, particularly around the coating and some basically a little bit. Obviously, pricing coming down is better than pricing going up because there's as I was a little bit of a lag effect. And we still needed to recover the inflation the ones that are through the back end of last year and we did the first quarter.
So I think that continues to be an active area. But as we cycle through the year, I would expect that to, to go past neutral and actually be deflationary into the 2nd half. Thank you. And then on your second question on List 3 Series, and I think that's just a very good example of the significantly turned that's happening in the marketplace. It's something we see across most of our categories in the Americas.
Given the very strong position we had, with the leading brands, Erica, and as a significant change in fragmentation happens across the county, we're working very hard for the science to reinvent the product offering. And indeed, in ready to eat dinner, as we re invest into more snacking, more to go more, I guess, better for you, high protein type offerings while the overall volume impact continues to be negative. There is a benefit certainly in terms of pricing and a positive margin mix impact. And it's something that probably continue for another, I would say, maybe a year or 2 years, but certainly as we re help our clients to reinvent that business in that category. We'd be excited that there's some very good business to be done in terms of that for health and nutrition, food snacking, and that would be as well.
Thanks. Could you
I know this is difficult, but could you quantify that at all in terms of without serial growth would have been in Americas?
Yes, look, I think it's fair to say that that, our service has been planned to possibly negative across the last couple of years. Quarter in the first quarter of 2018. So it's one of it's one of it's one of it's the news markets that we serve.
Yes.
Yes. It wouldn't have been fundamentally different if it was 3% rather than 1.5%.
We will take our next question from Fulvio Caso of Goldman Sachs. Please go ahead.
I've got 2. Firstly, on the breakdown of volume growth between food service and non food service, I make it up to be around just under 3 percent your volume growth outside of food service for pastry nutrition. I was just hoping that you could either confirm that. And if it's accurate, can you just highlight what the drivers versus the industry are because when we compare that performance to say, look, an SLA that delivered around 2.6 in the quarter, that's kind of imply that some of the smaller more regional players are not perhaps as active in Q1 in terms of innovation? Are you seeing the the bigger players, basically holding share, as opposed to what we've seen over the last few years I guess that's question number 1.
And then the second question is on the transactional FX headwinds. Can you give us a bit of a sense of how this is likely to phase, as 2018 unfolds, I. E. Is H. One going to bear the the bigger part of the impact on a full year basis versus the second half?
Or is it going to be fairly evenly split between the quarters? Thank you.
Thanks for you. Good morning. On your first question, Fars, you have the taste and nutrition overall of 4.3 comprised of 6.1 in food service. And it's actually 3.7 in the rest of the business, which been mainly into retail. So this section, a decent performance into the retail category, and I think it's It's fair to say that the, split between, let's say, CPGs and the rest of the business and the regional leaders and the notice continues to see a significant amount of time with the regional and and local hazard is probably still net winning, but we're seeing we are seeing green shoots in terms of it's more, it's more like repositioning than true innovation at this point in time, but certainly the CPGs are very focused very aware and very active in terms of new product development, in terms of looking at what the possibilities are.
To, and to address product quality as a significant opportunity in the market to meet the new demands of the new consumer. So it's that control materially yet from a volume perspective, but it's certainly a focus area for our video clients and energy for ourselves. In relation to the starting transaction impact, it's pretty much going to be even across the year. It's pretty bad. 2% which would make the 6% to 10% more like 8% to 12%.
If you, if you, in terms of our EPS forecast for the year is going to be pretty even across the quarters.
We will take our next question from Jason Mullins of Goodbody. Please go ahead.
Good morning, Brian, with a couple of questions, if you don't mind. Food performance, you obviously call that a relatively strong performance in the quarter. How does that compare, do you think, to the overall market growth? And then just on Consumer Foods, early days, I appreciate just wondering and your thoughts on potential impact, in the UK, with the Astra San Luis tie up, how do you see not playing out for Carrie, given they've been pretty clear that they're looking to equalize terms across their supplier network. Thanks.
Morning, Jason, I think in relation to food, you're asking globally. So at at 4.3% volume growth. That's against global market that's probably growing at roughly 1% to 1.5%. So significantly outperforming the market, that's probably breaks on about 0.5% in developed markets and maybe 4.5% in developing markets. And so I think it's fair to say that, that our model is winning against you know, probably pretty flat particularly in developed markets in terms of the underlying market growth rate.
And then in relation to consumer food, and the overall marketplace including the, as it's saying, the tie up. I mean, that's something that we would have seen as an organization many, many times in our careers, particularly in the case of nutrition business. And where many of our customers merge together and very often be merged as well. And everybody, well positioned around that kind of activity to be out significant assistance to our customers and a new combination like that in terms of our total footprint and the innovation we bring individually can be significantly enhanced when we bring it in terms of more critical mass. It will put as there stands the, in the UK context of Alphalanta, the customer in terms of market share, And that's certainly something that we believe that we can win that into the future.
Okay. Sorry. Just coming back, the the Taste Nutrition performance there, particularly around food service, the 6.1%. Any sense of where the market was, NASH, versus your own performance?
I would say, I would say the market probably is about 2% globally in terms of food salvage, I'd say growing at twice the rate, at least of, the retail sales in in developed markets, and and I would say maybe even faster than that in in developing So maybe overall 2, 2.5% market growth, I think, 611.
Okay, perfect. Thanks.
We will take our next question from James Follett of Berenberg. Please go ahead.
Hi, good morning, everyone. Two questions from me. Firstly, Jesse, just coming back to Foodservice, you mentioned your comps get tougher as we go through the year. I just wondered if you could give us some color on what the service grew in the the first half of last year and versus the second half of last year. So we can see how material that is versus, I guess, the 6% you did in Q1.
And then secondly, just on Americas, sorry, if you're repeating yourself, but just could you give us then the great rate in North versus Latin America. And particularly regarding Mexico, you mentioned some disruption from customer order timings. Just wondered how some and that was? Thanks. So in
relation to food service, James, good morning. Yes, it was a really good year last year in foodservice. So we caught over lead European market as a defender performance. I would say globally, we've in excess of of 7% last year, and that was, probably a little bit higher in the second half than it was in the first half. It can be a little bit, up and down in relation to what comes on and off in relation to limited time offers.
But number that's a very strong performance asset and continuing into the first quarter in relation to the food service. Can you just repeat the second question you had, James? I misheard you down.
Yes,
I will do that. I just wanted to check on the foodservice. So there wasn't anything that wasn't a big difference in growth rates. Thank you. 1 in H2 last year in Foodservice?
And maybe 1%, maybe 1%.
Sure. And second question was just on America's a difference in growth rate between North and Latin America. And then, within Latin America, how significant the impact of the customer order timing was for Mexico?
Yes. Look, I would say, I would say the performance in both the North America and and and LatAm, was was very solid through last year. I would say picking up in LatAm in Q1. We'd certainly be optimistic for accelerated growth in LatAm across the year in 2018. Mexico has been the standout performer far over the last 3 or 4 years, in the LatAm context with Brazil, the significantly more volatile.
So driven by it is actually up to $3,000,000 in the last the quarter, it's more in recovery mode than what has been a very solid business for us in Mexico. So I'll remove that answer your question. Yeah, sure.
Our next question from Ian Hunter of Investec. Please go ahead.
Good morning, gentlemen. I'm moving to a couple of questions for myself. Brian, you called out, that you were growing in your food side, things 4.3% global versus 1 to 1 a half for the, versus the kind of global rates. And I'm just wondering how much of that volume growth is new client wins and how much is increased business from existing clients that you mentioned to build on. And maybe, also as well on a regional kind of side of things, are you in a position able to break out how you're doing in the old paper and a dinosaur in the old APAC region within apnea not only APAC, but maybe give us a feeling of how you're doing in China at the moment.
And you have seen the overall growth rate of 4.3versus1.5 is I would, it's significantly focused on new wins with existing clients, but we have a significant I guess, customer position and partnership right across the leaders globally regionally and locally. However, 30 days, put the reinvestment back into market and the, of applications capability and fair capability into contrary is resonating very well in terms of that move back to local. So, you know, there's there's a number of new clients coming through at that level. And and if you move to market in terms of how we access and choose and win with the loyalty customers, which is something that we see as being quite a landlord, but certainly, early indications are there are investments in that currently are women. And then in in relation to the, reset of our our APMEA business or our, our India business into APMEA.
And that's only about 3% overall in terms of the Middle East and Africa, which is, and I guess it's a slower growth rate than what Asia Pacific was, and it's a faster growth rate than what Europe was. So a slight dilution of both numbers, but mainly that's a very good category for us and geographical region, which we continue to see opportunity to invest in. Overall, China continues to perform very well. I think at this point, the spread of our technologies, the recent investments in terms of churning and the hangman in terms of our taste positioning, is resonating already and the opportunity around the CS facility to build out our positioning in large and China and something we're quite excited about as well and we'll be putting a significant CapEx in behind that opportunity. So overall, China continues to do, to the right side.
Okay. Thanks very much. I just want to be a follow-up on your capital allocation priorities for FY 2018, because you did say you've got a strong balance sheet. And, Brian, a couple of times, you talked about investing for growth and investing for client contact etcetera. So I'm just wondering what your priorities are that versus M and A, versus returning capital to shareholders
Yes, Ian, the priority is reinvestment for Ross. Which we've we've laid out, I think, pretty clearly at our Capital Markets Day that we see significant growth opportunities and then the need to put CapEx behind the organic growth opportunities around based nutrition from a technology perspective and food service and developing markets from a market perspective. Do we continue to do that? And we we indicated that the CapEx for the year would be in the order of 5% of revenue, which is which is higher than we would have traditionally spent around 3 or 4. So we're certainly investing into pass see for growth in, in, in those strategies.
And then in terms of M and A, you know, we, we, we, we, we, see our industry has been significantly fragmented, on both, small, medium size and, and then the lounge acquisitions are something that that we're we've built a model and a platform with our 1 carry investments to continue to be different color later in in our industry, and we'll continue to deploy a couple in that regard and probably less likely in terms of doing, I mean, significant returns to shareholders other than continuing to increase our dividend double digit on an annual basis. We will
take our next question R. D. Vesterinen of Exane BNP Paribas.
So a couple of questions. I was positively surprised by the U S as many others have been talking about a weaker environment, so far this year. So can you talk about what drove strength? And did you see any changes in the environment at all relative to maybe end of last year? And on that region, some have talked about higher costs, for example, around freight or cold weather related costs.
Has that been an issue for you? And then the other question is on food service. You do have quite a big exposure, I think, to the UK in, taste and nutrition. Should we be concerned about the restaurant closures that we've been hearing about in the UK?
Good morning, Haidu, so firstly just to state your U. S. Questions. Yes, I mean, the U. S.
Marketplace continues to evolve. I mean, when we talk about churn, it really is about change. And the focus and the acceleration around personalization better for you key levels, nutrition, wellness, and has the ages. They're all significant drivers have changed and indeed, the millennials and generations zed, in all of you, that's not going to change, that's not going to south. And we will see, and we are seeing a response from the winners and losers in every market and definitely the losers over the last couple of years are responding.
And as you said, it's not necessarily true innovation yet. It's more about repositioning and the truckload of it is a brand new marketing investment as opposed to new product innovation, but certainly we have a healthy interaction, a healthy pipeline in terms of all of this the drivers that I just called out. And in relation to costs and the transport costs, reliability of labor and the impact of weather. I'm sure all of those things are a little bit more negative in there. Obviously, there are partners that they haven't been significantly negative impacts on our business in 2017, R and D, in 2018.
And then in relation to, at the food target, there will be, there will be changes in relation to footprint in various different customer sets and chains and moves between chains and independents in different marketplaces. But overall, the trend for food service, Heidi is, is, is increasing. Across the base different in each different market. And we're revising, we have phenomenal capability to to service the food service industry across both their their food menu board and their beverage menu board. And you know, a focus area is around increasing our access and increasing our or commercial effectiveness around making that capability available more and more broadly across the customers across individual market sources.
So with more about individual changes, closing some stores from time to time. Thank you.
We will take our next question from Ms. Cohen of Davy Research. Please go ahead.
Morning, Brian. Good morning, William. Thanks for taking my questions. Just a few questions for me, please. Firstly, on Europe, are you able commonly on the, the growth of Russia.
And I understand that Russia is now included within has remained within Europe. And secondly, can you just talk a little bit more on the, I think it's a JV you mentioned in
the Netherlands.
A plant based protein manufacturer. And then just peridly just in terms of, you know, team label, you know, we've, we've, it's clearly a driver in, in terms of, you know, in terms of the Americas and it's the demand for clean labels still, accelerating for you in that market.
Good morning, Liz. Yes, it's a good topic to start with. Russia has always been pretty good marketplace for us and indeed quality partner and remains part of our European business. It is a marketplace that we sell and canceled from many different parts of the world, including our Asia Pacific region, services into that marketplace as well. We currently are in progress in terms of completing a facility, underground to manufacture locally in Russia.
And, and, and, it join a good growth, okay, that there has been various different accelerators and decelerators, I guess, across the last 3 or 4 years. In Russia, but overall, and fundamentally, a really good growth market as far as someone we're going to continue to invest in, in the future. In relation to India, this represents a further expansion. It's not completely impressed. So it is a technology that we're we're quite excited about.
It's a further expansion of our protein business. And we've had obviously, for Bengal years, a significant investment in a variety of different programs, but we believe this is it's been a significant enhancement to our overall, protein portfolio. And we'll be able to lead to both businesses, both our consumables and our taste and nutrition business. And then in relation to your question on key label in the Americas, absolutely, there's a minimum in terms of the current recipe deck across the, the core food and beverage offerings in the UK market, I would say, we're probably on the 20% along that journey in terms of possible into the future. So we would be, we would be quite, optimistic about the future of that as a significant trend into the future.
Okay. Thanks very much, Brian. Just so I have if I may have one follow-up question. And just regarding CapEx, just as you mentioned there, the new facility manufacturing facility going into Russia, are there any other key projects you've called out for 2018, just in general, your outlook for CapEx for full year?
Yes. As I said, Liz, it will be significant this year, up around, up around 5 percent of revenues. And as in the last couple of years, we focus on developing markets and putting capacity on the ground to meet that 10% growth projection we have in the Asia Pacific region of the APMEA region, as you're probably in all around countries like Malaysia, Indonesia, significant CapEx that I mentioned in the new acquisition in TS in Northern China. And the continued investment in our taste facilities in, in the US, supporting the Landau acquisition which has been, has been farming ahead since we acquired it, 3 years ago. And then lead our footprint in in in in in our New Jersey facility as well.
So it really is backing the taste and nutrition technologies and the, developing markets, volume capacity challenges we have. We
have a question from Jamie Norman of Societe Generale Please go ahead.
Good morning, Brian. Good morning, William. I'm just a slightly deeper delve into the U S. In terms of the larger player, as you talked about some welcome brand repositioning. But, if you look for example at Kraft Heinz numbers, yes, a day, I mean, North America volumes are down by 4.1%.
I mean, in your view, does something much more fundamental need to happen? I mean, is it in their gift and is it in your gift to help them, really to move that needle more significantly? And to sort of redress the balance between the giants who have been struggling and the smaller medium sized businesses where you've been gaining just be interested just a deeper dive.
Yes, look, Jamie, I guess, every company is different, and every every company is is has it, I guess, we need cash rigs and, and, challenge strategies. Certainly, the customers that were focused on, on the center of the store, and has been more focused in the last 2, 3 years on margin rather than growth. And that's obviously something that that they say. There's of course, the company that they can say it. So I I would say it's exclusively, those companies are refocused on growth.
It hasn't happened yet, but they certainly are trying to figure out how they can how they can generate the connectivity with the consumer and speed speed is many of the previous challenges, Jamie, and and, you know, as as the time to anniversary, becomes a more and more important feature as the market changes. If things return nearly 6 to 5 months, it would take me about the month or 2 years to develop a new product. Obviously, that sounds quick enough and we could say it's a significant role. In accelerating that new product development capability across that whole industry. And it's something that that we've, we want to get traction on thoroughly the Asia, so we'd be quite an optimistic.
That's interesting. Thank you very much.
We will take our next question from Alex Smith of Barclays. Please go ahead.
Hi, morning. I just had a follow-up on the question you had on clean label in the U.
S. I think you said being labeled in
the U. S. Is around 20% through, the journey. I was wondering if you had a similar stat for that in Europe. My impression is the U.
S. Has been catch up in Europe, but where are you on this journey in Europe do you the tailwinds, from that dynamic or is growth in Europe really more about production and consumer segmentation and just general health and wellness? Thanks.
Yes, Andreas, I think, Alex Fagongli is that the U. S. Over a good number of years have become a more, I guess, sophisticated, food and beverage marketplace in terms of the evolution and development of packaged foods and in the food service. And I think, you know, from a consumer perspective, it's probably done a little bit too far in terms of, you know, what was natural and far food from food type ingredients. And is is reversing a lot of that in terms of the tariff impact in the media in relation of in, what's actually in the food climate.
I don't think Europe and Ghana frac different markets are different. Possibly UK had and has evolved more than mainland Europe and has left to reverse in mainland Europe, but nonetheless, and the core consumer foods developed markets have a long way to go to I guess, achieved, you know, the the the needs of the consumer, desires of the consumer in terms of see on their labels in terms of it being, very much along the lines of what I said in terms of ARPU from full principles, you know. So I would say I would say busy category for us in Europe, but not as busy as we live in the U. S.
Got it. Thank you.
It will take Our next question from Virginia Dusa of Deutsche Bank. Please go ahead.
Yes, good morning. It's Virgini Bouchekase from Deutsche Bank. Can you hear me?
Yes, we can virtually.
Okay, perfect. And I have a question on M and A. And apologies if someone asked the question already, but I just on the call, satinate, you reiterated that M and A remain the priority in your capital allocation strategy However, M and A valuation multiples seem to be reaching records, especially for larger deals, as we've seen with Givaudan and Natchex, certainly matter and above what you have been willing to pay in the past. Can you give us your view on asset prices currently Do you think you can see time relatively attractively priced targets, especially when it comes to big M and A? So can you see the credit value in this high price environment?
Virginia. Yes, I look at the, every acquisition, every target is different. On there with, yes, the headline numbers in terms of, certain, which would be scarce enough resources or scarcity of targets in certain categories do command a higher price because of the market position or because of the the scarcity of assets within there's many other opportunities that are they're not in scarce and they can bring good value in terms of integrating them into, into the bigger players from the many, many smaller acquisitions don't command anything like to say multiple as some of the ones that are have fit the headlines, of yours. And the only thing I'd say is, look, you know, the the the entry multiple is only one part of the equation. It's, what will that do for your business?
And certainly we look at it on a return on investment basis. And, what would an acquisition do even the curve in the carry forward and operating off the carryforward platform. I mean, some good examples are like, Rodaro or like division, or well known, or even technologies like, are endorsed. That we could buy in a certain region that has a certain reach under their existing ownership, and then we can take it on to our platform. And take it around the world into all of the markets that we serve.
So, and we believe that the investment that we've made in the 1 very far from gives us the ability to continue to do that. And indeed, the leverage and a significant return value to the shareholder in terms of taking that in and leveraging across our footprint. Thank you. One is that not all acquisitions are the same, but they command different prices. And secondly, it's about to return more importantly than the entry price.
And is there any, post synergy, valuation multiple level you wouldn't want to exceed? After synergies?
Yes, look, it's we look at each one individually and we have a variable price of, of matching, targets to our strategy both short term, medium term and and and longer term and, and, you know, our our our financial ratios are are pretty strict as well in terms of, all aspects of that. So I wouldn't, I wouldn't color the perfect, so hardly read, particularly just that it has to deliver against our group effort.
As we have no further questions, I would like turn the call back to the speakers for any additional or closing remarks.
Okay. Thanks everybody for taking the time to join us fine. And indeed your question, which was very insightful with that, and then just hand you back to, William, with a few comments before we close. Thanks, Ryan. And before we finish, we're delighted to announce that we've hosted an Investor Day at our Regional Technology Innovation Center in Singapore, on 25th October, on the day, Edmunds, some of the group execs and their local Aptia team will give color and insights into the ongoing evolution of the consumer landscape and how we will continue to deploy our business model to deliver growth in the region.
We hope that you'll be able to join us, and we will be in contact in due course. 3 pass, we'd like to say thank you, as joining us on the call today and we hope you have a great day. Thanks.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.