Okay. Good morning, everybody. Thank you very much for turning up for the Imperial Brands Fireside Chat. This morning, I have Stefan Bomhard with me, Chief Exec of Imperial Brands, and Lukas Paravicini, CFO. I'm Damian McNeela, Director of Consumer Staples. I recently joined Deutsche Bank as part of the M&A transactions and recently picked up coverage of tobacco sector. I think Stefan's gonna open with a few comments and followed by Lukas, and then we'll get into Q&A.
I think, first, I mean, Damian, thank you very much for the invitation, Deutsche Bank. All I wanted to do is just kind of frame our conversation today a little. I mean, it is now three weeks, and I think I need to click this somewhere. Okay. It's, it's now three weeks after we started our half year results of the year, and I think it's, it's a great time to have a conversation about Imperial Brands, because I think it's now three and a half years into our strategy with these half year results. And I think you, as investors, can see the progress that we're clearly making against our strategy. And there were kind of three key things that I would want to highlight.
The first one was about really making sure that we drive our core tobacco business into the right focus and specifically our top five markets, yeah, which in the case of Imperial, represents 70% of our business. I think what, what's exciting here, three and a half years on, in these top five markets that make 70% of our profits, we've been losing shares consistently year after year. Since we launched our new strategy, three and a half years in, every single half year, we've either gained market share or held market share, with the ambition of our strategy being that we do not want to be the number one share, but in these markets, and we've clearly done that.
What you can see here on the chart, the reinvestment in our brands and in our capabilities to support our brands, has allowed us to actually increase prices in H1 by 9%. That should give you, as investors, another sign of, or another piece of evidence that the brands and how we go to market is now rejuvenated to a very different level than they were. The second piece, important in our industry, is clearly also about the focus on NGP, on Next Generation Products, Reduced Harm Products. Yeah. And I think what is exciting there is that especially with these half year results, you can now see the reality of our differentiated strategy in the marketplace. Because what we're seeing in these half year results, we grew our business very substantially.
We're present in all three product subcategories, whether that's vaping, heated tobacco, or modern oral nicotine, where we've grown in all three. Where it started, we'd scale. Our cross-market was improved by 580 basis points. So we are now seeing, after an investment of phasing and finding out what is the best way of positioning Imperial in the space of NGP, you can now start to see the positive results of that work. And as we're on our path to profitability of this business, by the end of our current strategic plan, which is the end of fiscal year 2025. And I think what you can also see in the numbers that we've reported, that discipline and rigorous approach that we've talked in the past about, we're not here to copy what other people are doing.
We're here to have a specific, clear way, choosing very clearly the markets we'll go into, the markets we won't go into, and what is our proposition that we offer to a specific consumer set. The third point I would want to highlight, and it's quite less visible for you as investors, is the big change that we're driving on the culture of the company. What we've always talked about is strategy needs to be underpinned by the culture of the company, and I think it is a key enabler for the new ways how we do things. I think when we look at what has changed in the company in the last three and a half years, it is we're much more challenged in our industry today than we were three and a half years ago, as the smallest of the industry players.
But we're quite excited. We're turning it into a competitive advantage because we should be more agile, and I think today we find ourselves to be more agile, and we do things differently. So really happy with what we've achieved so far, but I think there's a lot more to come. With a lot more to come, let me briefly talk about the half year results that I referred to before. This is a dashboard we've used virtually for the last 3.5 years with very clear KPIs, and I think what is exciting to see, the last half year is no exception to us delivering on our strategy. I would want to just pick 2 KPIs from this one, because I think they're highly relevant to you as shareholders. Number 1, the 2.8% net revenue growth of the business.
That is the highest safe growth Imperial has experienced and delivered in more than 10 years. Out of that, already 0.5% came from our NGP business, so it starts to make now a difference in our top-line performance of the company, but also the underlying performance, 2.3% of our combustible business is our best performance in more than 10 years. And finally, the other number I pick on this chart is simple, the adjusted earnings per share growth. At 7.7%, you can now see the effect of the core of the business overall, delivering a better level of profitability. But combined with the capital allocation policy that Lukas will talk about in a second, you can see...
With the share buyback that drives that on top of the dividend yield we offer you, you can see, with the retirement of our, of our shares, you can see the effect this is having on the EPS. So I leave it there, and pass it over to Lukas, who will just give you a bit more on capital allocation.
Thank you very much, Stefan. Sorry. Good morning, everyone. I think it's, I just want to round up this brief introduction by going to the capital allocation of Imperial. A capital allocation policy that we presented together with the strategy and which is a key value driver for Imperial. Our first priority remains to invest in our business to support the strategic delivery. I think it is important that you dimensionate what that means, investing in our business, in terms of our strategy is largely an organic strategy. There is, there might be some bolt-on, and a good example is what we did last year in the US, which was a small bolt-on, but with a huge opportunity. Our CapEx is light, you know, around GBP 350 million we have guided the market over the last few years.
That's not gonna change. We innovate together with our providers. Therefore, you know, that is also very different from our competitors. That gives you an idea of what we mean by investing in our business. Our second priority is to keep a strong balance sheet. I think that has been helpful in the recent past as well, and we're very pleased to see Moody's having upgraded us, or sorry, having put us on a positive outlook. We have reached destination, being at the low end of 2-2.5 times EBITDA to net debt ratio. The third priority is a progressive dividend. We have committed, and we are committed to increase our dividend year on year. Lately, at the half year, we committed to a 4% interim dividend for this year.
Finally, we are committed to an ongoing multi-year share buyback, with this year a commitment of GBP 1.1 billion share buyback, which we are well on track to deliver. Just to put this into context, if you add share, you know, the dividend and share buyback together, we're well on track to deliver a GBP 6 billion cash return to shareholders over a three-year period, a significant amount. And I think our capital allocation actually underpins the value for, shareholders in terms of what we can generate in return. Our current free cash flow yield is 18.2%. Our dividend yield is more than 8%. It's more than twice the global FMCG average, and the dividend yield and share buyback this year equals roughly 15% return to shareholders. An attractive investment case for shareholders.
With that, I'll hand back to you, Daniel. Thank you very much.
Thank you very much, Lukas. I did actually cover the tobacco names-
Yeah.
Several years ago, and one of the biggest differences revisiting, the companies is the shift in culture at Imperial. I think you mentioned you working with Stefan, that there's more to come.
Yeah.
Can you just talk about how far along the journey to becoming a full-on challenger you've come, and what, what should we expect going forward from that?
Sure. And Damian, I very much appreciate you picking up culture, because I think for investors, it's always one of the pieces that's the least tangible, but I think it's one of the key drivers of this change in performance that we've seen in this area. And I think what's exciting, to be honest, 3.5 years, one of the questions, and when I came in 4 years in the company, we released the strategy 3.5 years, is I, I think what, what's exciting, that people are ready for a change. Yeah? So I, I found very little resistance, and I think one thing that we covered this space a long time, but I also remind people, Imperial used to be the challengers in the space. Yeah?
When Gareth Davis built this company, we were number 16 in the industry, and with the acquisition the company made, we came from number 16 to being number 4. Yeah? So that spirit of challenger, the little underdog from Bristol, to challenge the bigger boys and the bigger companies, was set, but it kind of gotten a bit lost in the meantime. So it was more a story of rejuvenating what was there and bringing the pride back to being the underdog in our industry. And I think, I think there is still quite some way to go, but I, I think for me, there are two examples I would give you that give you some sense of what's different. The one in the core business, I picked Winston in the U.S. Yeah?
A brand that has consistently declined for a long period of time under different owners, and also in the early phase when Imperial acquired it. One of the things we said, "Look, what are we gonna do differently?" One of the things, we are clearly the smallest player here, but what the team with that challenger mindset is saying, our key competitors have built huge databases of their consumer base. We don't. We're smaller players. But who else has big databases? And the big databases, with 70% of cigarettes being bought at convenience stores, sits with the convenience. And surprise, surprise, the convenience stores have huge databases. So one of the big insights was, why don't we partner with the convenience stores? We also had... As you know, Winston was built with the Winston Cup in NASCAR historically, that's what the brand stood for.
You can't go into NASCAR any longer, but the team in the challenger mindset, what can we do? They came up with this brilliant idea. It's very simple. We sponsor a car in NASCAR, not with Winston, but we give every race the car to one of our trade partners, who will run it with their advertising, and in exchange, they allow us access to their database and factual products. So it was a great example. It's a great example for me of that challenger mindset. It's about how we're doing different things to the other players, and how do we leverage something that is one of our strengths. So I think it's, for me, a great example in this space. And I think also our NGP strategy is clearly differentiated.... But if you ask me, are we there yet?
No, I think there are many more examples to go, and I think that's the more, and I get this question internally, what does it mean, challenger mindset? The exciting piece is I think our people increasingly understand what we want. I think we're increasingly building examples of it, so I really believe this will drive business performance for many years to come.
Okay, that's pretty clear. Thank you. You've touched on the sort of the U.S. performance, and I think could we—I mean, it's very strong performance in the first half.
Mm-hmm.
I'm just wondering if you could touch on, some of the reasons. I mean, obviously, partnering with sort of NASCAR-
Yeah
... is one of the underlying sort of strategies. But more broadly-
Yeah
... what are the things that are going right for you in the U.S., and perhaps how you're grounding it into the current consumer behavior?
Sure. I mean, if you look at the US, I mean, there are some very clear strategic pillars that underpin our performance. That's why since we launched the strategy 3.5 years down the road, our US business has grown net revenues, bottom line, and market share. Yeah? Despite what has been quite a volatile market in the US. But it's underpinned some very clear macro wins back as what we've defined as part of our strategy, which was a reinvestment in our sales force and sales capability, in quantity as well as quality, and a reinvestment in our key brands. Yeah? And I think what-- why have we been able to outperform the market quite substantially in the last 3.5 years?
We've started to address some clear gaps we had in our sales force coverage, as well as the quality of sales force execution. And again, there's more to come. The quantity is quite finished, but I think the quality, I think we have hired more than 30% more sales force than ever before, than, than what we had before. I think that is great. You see that in numbers, but the, there's still a learning curve for the many new sales people. At the same time, we've invested in our brands, very specific positionings. Virtually, we used to have one advertising agency in the US. We now have an agency per brand, which is more boutique agency, which really will focus on the brand. With a clear understanding of who the brand speaks to.
Structurally, what's always there, one benefit, I think, a competitive advantage we have: we have the most complete portfolio. We have brands at every single price point in the U.S. So we don't have to fractionally brand across different price points because we have them specifically positioned, and that is today a competitive as well. Yeah.
Another market that's been going really well for you has been Spain.
Mm-hmm.
I mean, I think it's 50 basis point share in the first half?
Yeah.
Yeah. Again, can you just talk about what's happening in Spain to drive that performance?
Sure. I pass it to Lukas because he's a Spanish speaker, but he can talk in English.
No, I think, Spain is a good example where historically we have been focusing on international brands. But when you look at our strategy and you are consequent by putting the consumer first, the consumer will tell you that actually they love our local jewels, our local brands that we acquired over time. And then, if you then look into and listen to the consumer, you then hone in on those local jewels. If you take, for example, Nobel, which is very, very much linked to art and artists and music, we actually took that brand, innovated the packaging, linked it to artists, made limited time editions to support the Pride Festival, for example, and expanded the product range by introducing a slim line for female smokers.
You know, by listening to the consumer, adapting or applying our strategy, that has turned out really well, and you can see the results in that market very well.
Now, one market that hasn't been going too well is Germany, and I think you had identified it when you came in sort of 2.5, 4 years ago. We're still yet to see... There's early signs of it starting to turn around, but can you sort of provide an update on where we are on Germany?
Sure. I mean, Germany, you're absolutely right. I mean, 3.5 years ago, we kind of asked, okay, all the top 5 markets are all kind of have been losing share.
Yeah.
Which one would take the longest? And I said then, "It's Germany." And it is Germany.
Yeah.
Yeah. So it's not really a surprise. But I think if I may also make the point, the strategy doesn't require us to have positive share growth in all five. Actually, honestly-
Yeah
... it ain't going to happen because it's unrealistic in such a highly competitive industry. The strategy was about moving from being the number one share owner in our industry in these top five markets, combined to a position where we'd hold share or potentially sometimes gain share. That we have achieved, despite the continued share losses in Germany every single half year in the last three and a half years. On Germany, reality is that Germany has. Why is Germany so complicated? Now, number one, it's been the one that declined before the longest. We've lost market share prior to the strategy starting for more than 10 years, and every year around 80 basis points. Yeah? It's also a very open market still from a marketing perspective and sales force investment, and this is a market where we're historically underinvested both.
So the playbook that we've applied is very similar in Germany to the U.S., that we talked about before. It just takes longer in Germany because the level of competitive intensity is quite strong. The reality is also to implement cultural structural changes in a German organization, is takes longer than it would do in the U.S. So the exciting piece is that with these half year results, I didn't mention it, Germany saw a meaningful improvement in share performance. It still lost market share, but it lost 25 basis points market share, when in the prior years, it would have lost 80 basis points. So it's far too early to declare victory. But I think from an investor perspective, this is what's exciting after. We always said Germany will get better.
This is the first half year where we can show it.
Yeah. Thank you. As we move then from sort of the combustible side to next gen products, can you just sort of talk about a bit about what you changed when you came in, and then specifically, if we look at, your key initiatives in, heated tobacco and vaping?
Sure.
at the minute?
I mean, what's changed? I think the benefit when you come from the outside and can look at the data, and it was very, a couple of things. It's very clear, we are the smallest. So doing similar things to our larger competitors is normally not a successful strategy to challenge it. So we became very clear in saying we want to build a sustainable and profitable business and be much more selective where we want to compete, and also become much more selective what target consumer we go after. Which is possible for us, because reality is, if we want to achieve our fair share of NGP, our ambition is significantly smaller because our NGP, our market share in combustible is significant, so. So it's we selected a strategy that's appropriate for Imperial. That is probably the single biggest change. Yeah. I think the...
If you look at vaping and heated tobacco, I think what we did, again, I think in vaping, the great news, many years of investing by the company in the blu brand, was something that we could benefit from because it is one of the most well-known brands. But what we did change across all three categories, we believe big time in a, in a modeling with partners. There's a lot of innovation in here. There's lots of people specifically out of China innovating in this space, and we said, let us partner with them. Let us bring our consumer insight, our route to market, our brand capabilities to them, but let's partner with Chinese manufacturers who we use as suppliers to it, which has allowed us to be clear. The vaping market has changed since-
Yeah.
Last three and a half, big times from a pod-based market primarily, to a market that is a combination between a pod-based market and a big, big disposable market. And in that challenger mindset, we're today, and you can go into stores here in Paris, but also in London, where we have the one, the blu bar with 1000 puffs, which is the highest puff count. It's a very important consumer attribute, how many puffs can I get out of device. Of all traditional industry players, we're the one with the highest puff count out of that partnership with our Chinese partners. On a heated tobacco, as you asked for that second category, on heated tobacco, I think we've also made good progress. We are today, we've done a lot of testing. It's a very competitive field.
We've done a lot of testing to identify what is the consumer segment that we want to go after? What are they looking for? We've launched Pulze 2.0, the second version of our product, which offers you 25 consumption of sticks out of one device, which is important. If you're on the building site, if you don't have access to recharging your device, it is a really competitive advantage, and we also launched iSenzia, which was one of the first non-tobacco devices. So, again, it just gives you examples of where we are today, but I think what you should take away, what has changed in the last 3.5 years, we are now able to compete in this space because we're very clear who we want to go after with what product.
I should say, by the way, if anybody wants to ask a question, please just raise your hand and I'll put it in. Just moving on to modern oral, you've recently-
Yeah.
launched Zone in the US.
Yeah.
Just wondering if you could talk about how you see the development of the US modern oral category and what you think it is?
Sure.
that Zone brings and helps differentiate?
Yeah. I mean, I think Zone is a great example of our strategy, to exemplify for shareholders to see. It's an element of that very, very kind of rigorous selection process, which markets we compete in. Reality is, if you go back 3.5 years when we wrote our strategy, the modern oral nicotine market in the U.S. was well below the threshold where we said it's sizable enough for us to come in. But what's happened, it has become the fastest growing NGP segment in the U.S., and we could see as the growth curve accelerated, that it would reach a point in time where it would be making sense for Imperial to compete in that market.
And then the challenger mindset came in that I talked before, where the management team said, because you have the uniqueness of the regulation process and the approval process in the US, you had to find a product that was in the market before a certain deadline, but we wanted to have a differentiated product. Competing with a me-too is normally not a successful strategy as challenger. And after a long search, we found a partner who had a product in the marketplace that is a more moist product, more typically what you would be selling in Scandinavia. And we did a lot of consumer research, and we clearly identified that the consumer segment that prefers this type of product, as Lukas referred to, that was one of our bolt-on acquisitions. We bought the rights to these products in the United States from a Canadian company.
We relaunched the brand. We're under the name Zone, because it had a different name before. The product is unchanged, changed the packaging, and we now launched that into the marketplace. It's very early days, but I think, it gives you a sense of the agility that will happen. It gives you a sense how we do things differently. We didn't have to develop the product in-house. We partner again with somebody who had the right product. Yeah?
Yeah. And in terms of the wider sort of profitability from NGPs-
Mm-hmm.
I think maybe one for you, Lukas. I think you lost GBP 140 million last year. I think we're aiming to lose around about GBP 100 million this year. What's, what's the path in the near term, and then, perhaps longer term, what are, what are the aspirations around NGP?
Yeah, I think if you take the strategy that is fit for Imperial that Stefan just explained, you know, you can see that our objective is a sustainable, profitable NGP business over time. And that we would like to achieve, and we are achieving through scale. Through scaling up, this year, this half year, again, our gross margins have improved, at half year, over 500 basis points. You'll see towards the end of the year point, a further reduction of the losses because we are growing further our business. And towards the end of next year, that growth in scale and that scaling up will mean that we will be exiting or break even the business in NGP. And our objective remains is to build a sustainable, profitable business in the future.
That will not end next year, but that is where we will break through the breakeven.
Thank you, Lukas. I think, Stefan, you mentioned it in your opening comments as well, about the amount of work that's gone on in the background in operations.
Mm-hmm.
You've recently talked about sort of implementing a new ERP system.
Yeah.
I don't know who's best placed to talk about what are the benefits that could come through from that, where are we most likely to see that benefit the business?
Sure. I mean, I'll probably pass it over to Lukas. I think what's important... I give you the frame, Damian. I think what is a great example, if you look at it, if you follow the industry for a long time, when we went from number 16 to number 4, we bought a lot of businesses, and these businesses weren't integrated to the level that you would have many other consumer goods companies integrate that. Partly because the investment would have been significant, and there was people saw less of a benefit. But if you want to run it as one company, I, this is, for me, why I'm so excited. There's such a self-help opportunity, which, to be fair, our competitors have taken care of many years ago-
Yeah.
But Imperial still has that opportunity.
Mm-hmm.
So that's kind of for me, the big umbrella theme, that that's why I joined Imperial, because that's such a great opportunity to deliver a better improved performance out of it. Yeah?
Yeah, I mean, that, that goes really at the heart to our strategy again. You know, it is part of the simplified and efficient operations that we have stated, and to catch up with the industry. We look at it as a business transformation on the back of probably, to your point, the ERP rollout, which is an S/4HANA rollout over the next five years, and a GPS model, which is the Global Business Shared Service Center that we have built. And that is a progressive rollout that will give us a constant flow of self-help. And what we're looking here at is probably as a benefits case, is the fact that we will have better and faster data, and therefore, also faster and better decision-taking processes in the company that will support delivering our strategy going forward.
What's the time frame? Is it three years from-
So, I mean, I think it is an ongoing program. The ERP in itself, the S/4HANA, is a 5-year program, roughly GBP 350 million investment, which will be covered in the envelope of the GBP 350 million CapEx that we mentioned before. And GPS, and all the rest that goes with it, is also around for 5-6 years.
Okay, thank you. Perhaps another one for you, Lukas. In order to sort of hit current FY 2024 guidance, we need to see an acceleration in the second half. What are the things that sort of given you confidence to see that-
Yeah
that you will be able to deliver that today?
Yeah. Good, good question, and I think it is also going back a little bit to what we said last year and the beginning of this year, that we tend to be more backloaded with the profitability. I mean, this first half is actually very good, and so we're on track to deliver the full year. I think there's probably the normal sort of effects that we expect. You know, pricing going ahead of volume decreases. We had very strong pricing in the first half that will carry back, carry on into the second. We will continue to do pricing as regular in the second half as well, but you have that boost from the first half. You have the ongoing NGP losses reduction, as you pointed out before. We expect it to be lower than last year again.
And you have a specific effect this year, which is as we pointed out at half year, our ACE region, is or triple A, Central and Eastern Europe, region, has had a more difficult year, first half, because of this very strong comparator. Let's not forget that triple A and Central and Eastern Europe have grown significantly ahead of everybody else in the two previous years, therefore, have a strong comparator. But that also has been compounded by the Middle East effect that we had through the geopolitical situation. But we do expect that to be normalized by the end of this year. So you will get a boost in the second half by that region normalizing. So, you know, operational gearing, NGP reducing, and ACE, normalizing. That is where we look at the full year guidance.
Okay, thank you. I don't know whether you want to share this. This is in two parts, this question on capital returns.
Yeah.
So I mean, you committed to sort of growing the dividend, and an ongoing buyback. So first question is, what could blow you off course?
Mm-hmm
on delivering those shareholder returns? And then secondly, how do you think about the trade-off between dividends and share buybacks?
Okay. Sure. Let me do the first question, I'll leave second to Lukas then. What could have blown us off course? I think, look, I think we have a very robust program. I think we are seeing what is important to understand, this isn't one pillar that drives the strategy. This is quite a model with several drivers of performance. And I think if I step back and look at it, I mean, it isn't that the last 3.5 years we haven't dealt with some unexpected headwinds. I mean, as we're here in the consumer goods conference, yeah, in reality, the level of cost inflation we had all to deal with was unprecedented. I haven't seen it in 30 years in the consumer goods industry. Yeah?
We had to deal with it, and we still delivered the numbers that were promised three and a half years when we were completely ignorant what would be happening. Number two, in our case, also, you will be aware that we are one of the few companies in the consumer goods space and in our industry who's left Russia. Yeah? I mean, a lot of time had to be invested of extracting ourselves from Russia and also the surrounding countries. So it isn't that there weren't certain kind of storms that we had to master the last three and a half years. I always want to be humble.
You don't know what the storms that lie in front of us, but I do believe that given that our strategy really rests on several pillars, yeah, I can't see anything that would blow us off course in any material way for the next one and a half years and beyond. Yeah?
Yeah. And if I may just build on that, I'll come to the second comment or question. I think, you know, you've seen that we have a strong profitability now and a strong cash flow. We have a disciplined capital allocation as well, and I hope you've seen that we also tend to be cautious in terms of keeping always a bit of headroom when we go out and do the share buyback announcement. And I think that makes me very confident that we can support a year, you know, multi-year share buyback going forward. Okay? Now, to your second question on, you know, how do we look at dividend and share buyback? You know, Stefan and myself, we look at this as an and company.
You know, given where we are, as I just said, our strong balance sheet as well, we are confident that we can deliver both. And there are shareholders who value both elements, a dividend policy and a share buyback. And as I said before, I think we are committed to that progressive dividend policy and the share buyback, on a multi-year dimension, and we will come back every year in terms of what the value is of those programs to make sure that we get it right for the company, but also for the shareholders.
Okay. Just on illicit trade, I mean, I think Australia is probably the market where you're most impacted by illicit. How do you work with governments to change their, the way they approach their regulation? What more can you do? What more can they do?
Yeah.
Um...
I mean, I think it's a great question, and in principle, we try. I mean, the reality is that nobody's benefiting apart from the wrong organizations, I mean, criminal organizations from this. In reality, the government loses tax revenue, the consumer gets a product that might be cheaper, but nobody has ever controlled whether this is a safe product to consume. Yeah? So let's be clear, this is the right thing to do. Yeah. What you would observe, in many markets, the governments work with the industry, which is the right thing to do, because ultimately, it's just not something the industry can address, and honestly, also what the regulator finds to address.
I think Australia is a bit on the continuum, a bit more to the left, unfortunately, because you have a government that has a quite negative attitude towards the industry, yeah, and therefore has, in the past, proactively collaborated less with the industry to stop the inflow of illicit products. But what we are encouraged about when we see the last 12 months, there's clearly, based on the public interest, yeah, a lot more pressure on the Australian government to do more about it, and we see more activities from the government side. And wherever we can help, we'll help because I think there's a win-win situation for all parties involved.
Yeah, pretty clear. Just checking if there are any questions from the audience. If not, I'll carry on. DM, I think you said at the start, we're sort of 3.5 years into a 5-year-
Yeah
... plan.
Mm-hmm.
So we're coming towards the end of that first phase. So couple of parts to this question.
Mm-hmm.
What can we expect for the next phase? Will it be more of the same, do you think, or are there some big opportunities out there which you feel Imperial will be able to sort of take advantage of once you've got through the first one?
Sure. I mean, you would, you will know what you, you get as an answer. There's still 1.5 more years-
Yes
... to run in the current strategy, where this management team is absolutely focused on delivering, because I think that's, that's about our credibility. That's about the promise we make to our shareholders. We will deliver the strategy. That's where the attention goes. Priority number one. Now, we have as one of the behaviors about inventing the future, building the future. So in parallel, we are now looking at what the next years will look like for the company, but it would be too early to say what it looks like. I just leave you with one thought on it, because you've known the industry a long time, and you've observed us.
I think what is exciting to look at for me, as a team, is the Imperial that will start a new strategy period in October 2025 is a different Imperial than the one that started this current strategy. We're better placed as a company within our industry. Our core business is in a better place to run and, and grab opportunities, and I think especially when we finish this current strategic plan, the fall of next year, we want to be in a better place on our NGP business. And I think the cultural change will probably be as difficult to prove to you in a one and a half years' time, but it will have progress first. I'm quite excited that this is a rejuvenated Imperial, looking at the opportunities that will present itself in 2025 and beyond to take advantage of.
... And just on Imperial being in a stronger place, are you seeing that with your customers as well, the people that you deal with? Are you seeing a different reaction to how they engage with you?
Yes, I do.
Yeah.
I tell you, I can give you example. I've spent in the US, which is the largest market with 35%, there's a North American convenience store conference.
Yeah.
Yeah? And one of the benefits, I now come and join the team on occasion, but with the key customers. And the number one line they say to me is that, "Look, Imperial has woken up. You're really now a great partner." Now, they will still want to get a better price. They will still want to have better conditions. But I think what is exciting, and I think it's, for me, a wonderful validation of that challenger mindset, because I've worked for challengers before. I worked for Burger King. Trust me, when you're competing against McDonald's, you know what a challenge is, yeah? The reality was, I always believed in an industry that is as highly concentrated as ours, where our category is super important. If you're a US convenience store, tobacco is a very important category to you, yeah?
And given how concentrated our industry is, our trade partners typically crave for a challenger because it keeps the industry honest and makes sure that you, as a retail partner, get the right trade terms from everybody involved. So to a certain extent, I felt we were running in an open door-
Yeah
... in many of our markets, and they're saying, "Hallelujah, finally, Imperial is delivering what it's supposed to do, so I can keep some of the other players in check." I think that's exciting. You feel that it's different today. That doesn't mean we're perfect. I want to be very clear, there's still quite some way to go, and certain things we can't do because we're smaller, yeah? The exciting piece is that we're much more seen as a partner by our trade partners. We talked about the Zone launch.
Yeah.
Honestly, the great news was we're coming in a very crowded field, but there wasn't a single customer who said, "No, I'm not interested." They all think, "Come, can I have it faster?
Yeah.
Yeah. And that's, for me, a validation that we're playing our role-
Yeah
... as a challenger.
Yeah. As I said at the start, I think the shift in culture is powerful and yeah, doing an excellent job. So, I think there's only about a minute left on the clock. I don't have any questions. If there are any questions in the room, happy to take them, but, I think, I will end it. Thank you very much, Stefan. Thank you very much. Thank you, guys.
Thank you, Damian.
And thank you, everybody else. Yeah. Thank you.
Thank you.