Ladies and gentlemen, welcome to the Dufry's Half Year Results 2023 conference call and live webcast. I am Alice, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. Webcast viewers may submit their questions in writing by the relative field. For operator assistance, please press Star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Xavier Rossinyol, CEO of Dufry. Please go ahead, sir.
Good afternoon, good morning, good evening, everybody. Welcome to the first half year 2023 Avolta presentation results. I'm here with Yves Gerster, our CFO. We are gonna use a presentation that we are gonna project, and it's also on our website. I'm very happy to present good results for the first half 2023, I'm even more happy to do it as one single group. We have fully completed the combination with Autogrill, we are very looking forward to this working together. I'm gonna start straight in page five. It's the next slide, please. No, the previous one. Thank you. I'm gonna start with some initial messages. We have explained Destination 2027 strategy many times, I'll keep doing it because a long-term strategy needs to be consistent over multiple years.
The four pillars of the strategy, as it is well known, is number one, refocusing the company on the traveler, on the consumer, and doing that on the physical store and restaurant, also digitally, and more importantly, combining F&B, duty-free and duty-paid. It's one single consumer with one single dwell time, and now as a combined group, we can address them in all their needs and in all their wishes. Number two, a very dedicated geographical strategy. We want to keep growing on our core markets and also develop the markets where we are less strong. Number three, very strong focus on operational excellence and operational performance. I think these results we are seeing today show that we can, at the same time, to take better care of the consumer and increase sales, but doing that in a very disciplined manner on the cost side.
Number four, having the ESG as one of our four core pillars, making it tangible on the day-to-day. Apart from a long-term strategy, a company needs very clear short-term priorities, and those are the ones that are in this slide. Number one, keep focusing on the daily performance. For us, the key performance indicators of that is the spend per head, what we can achieve on top of the delivery of passenger growth, our margin improvements, and our free cash flow generation, all of them with very on this first half of the year. Second, the integration. It's very important that we get this combination and this integration done, and we are advancing even ahead of the initial plan on the generation of the synergies.
Equally important, we are already working as one team, one group, and thanks to that, we start seeing, as I'm gonna explain later on, some example of combining F&B and retail in real world. Number three, discipline business development. We all know we need the spaces to sell at the airport, at the motorways, at the train stations, we are convinced that the future is investing in the business, investing in generating higher sales through a better retail, much more than the payments to the landlords. Our discipline approach to business development, and we have already proven that in the last few months, it remains intact. Fourth, continuing on the digital and customer revolution. We believe that on the long term, the only way forward is to do better job in understanding and satisfying the needs and wishes of our consumers.
I will have also an update on that later on. Last, but definitely not least, this focus on ESG, that we want not to be something nice we say, but something that affects the daily life of our people, of our customers, and our landlords, and the communities in which we all are. At the end of the day, as we all know, it's not only about having a long-term strategy, clear priorities, but it's about executing it on a daily basis. That's why I put execution three times, because that has to be the priority of the company. If we go to the next page, we can see some of the key figures for the first half. Yves is gonna explain that in detail later on, but only some flashes.
CHF 5.7 billion of revenues, which is a 31.5% growth versus last year organically. Those are combined numbers. All the numbers I'm gonna mention include, for this year, the two companies, Dufry and Autogrill, Dufry, six months, Autogrill, five, and everything for prior years is pro forma for the combined entity. July keeps trading clearly above 2022, 17%. Of course, the comparables become more and more difficult across the year, but still, even taking that into consideration, the activity remains very strong, and we see with our landlord partners, a very strong summer to come. Core EBITDA, CHF 492 million, 8.6% EBITDA margin, ahead of the consensus and ahead of our own expectations.
I think what we have achieved, it's something you always try, but you cannot guarantee, that is, the increased sales do not automatically reflect on the same manner on the increase of the cost. We have been able to keep a reasonable optimization of the cost basis. A very strong free cash flow conversion, with CHF 165 million of free cash flow on the first half of the year, with a conversion of 34%. As Yves is gonna explain, we are still catching up on the CapEx delivery, so there will be some CapEx that was initially anticipated for the first half, in the second half. Even taking that into consideration, the performance have been stronger than initially expected. The teams across the board have done a great job in managing all the key elements of the P&L and the cash flow.
Thanks to that, and thanks to the merger, our net debt, it is decreasing extremely fast, and our leverage level is in a record low, as Yves is gonna explain later on. That is also reflected on the rating agency's consideration. If we go now to next page, page seven, we can see the performance of the quarter one, quarter two. Of course, the comparables on the first quarter were easier than in the second quarter, but you can see that the growth is extremely healthy, and as I said, for July, it's again 17%, when last year, summer was already pretty strong. The numbers are strong, and all the indications we have for the summer, both on passengers and consumption, remain on a healthy side.
We go now a little bit on the key regions, next page, I think what is remarkable is that the good performance is across the board. Right now, all the regions, with the exception of Asia-Pacific, are ahead in sales of 2019 revenues, have been like that for the last five months. Only January and February were below 2019, from March to July, we are ahead of 2019 in all the regions except Asia-Pacific, for the reasons we know. Even Asia-Pacific is recovering, as we are gonna see in a minute, very fast. EMEA keeps having an extraordinary performance in the leisure destination, mostly at the south of Europe.
In certain key locations in Europe, we are still missing some of the Asian passengers and the Chinese passengers. Overall, the region is performing very well, and also very healthy business development. North America, again, very strong across the board, both F&B and retail. Only below 2019 numbers, Canada, which is in some locations, more relying more with Asian and Chinese passengers. On a consolidated manner, again, 22% growth versus 2022, and as I said, ahead of 2019 numbers on the same currency of reporting. If we go to the next page, similar in Latin America, very strong performance in Argentina, Mexico, across the Caribbean. Recovering, Brazil, also getting to better numbers. Also, some healthy wins. Latin America, as you know, the region where we will explore the F&B that is not present yet. Asia-Pacific, extraordinary recovery....
still missing significant passengers, but 168% growth versus last year. Again, some interesting business development, including one airport duty-paid in mainland China, the airport of Chongqing. If we go to the next page, we are getting used that in these calls, whatever you report, people immediately ask what is next, so we decided to give some figures before the questions. This page is probably well-known, but it's just to send two messages. Recovery on the traffic, of course, depends on the different scenarios. We show here a graphic of ACI, but it's consensual that we will have pre-COVID number of passengers next year, and in some forecasts, we are getting very close even to the trends we had pre-COVID.
If we look at the graphics historically, 10 years, 20 years, 50 years, we see that the traffic goes up and down, but always on a increasing trend on long period of times. That's what we can see on the long-term ACI forecast. It's expected that traffic will almost double again over the next 20 years, and that has been consistently what we saw. Of course, the travel industry and the number of passengers is not fully hedged against economical cycles, but history proves that is less volatile. Because of the type of people that travel, the income they have, passengers adapt less to the economical cycle than high street. That's a little bit what we are seeing. Despite the high inflation, despite having record high travel costs, people not only travels, but also consumes in a very healthy way.
If we go to the next page, we included some of the potential supportive impacts we see and some of the potential challenges. I'll start with the challenges because then I can finish with the positives. Some of the challenges are well known, are external challenges, are microeconomic challenges, recession, slowdowns, inflation, political challenges. As I said, they are less of an impact in the travel industry historically than in other general economy. We keep vigilant because in case things slow down a little bit, we are going to be ready on the cost side. I want to be clear, and sometimes I receive this question many times, "But you are not seeing a slowdown?" No, we are not seeing it a slowdown. The summer will be strong. We cannot, of course, claim we are fully hedged on economic cycles.
If the general economy worsens, of course, it might have an impact. Also we need to remember one thing: our geographical presence. I think being in 75 countries with more than 5,500 points of sale, shows historically that we cope with regional shocks better than some of our competitors that have a more limited geographical scope. Every week, I start with something I didn't expect, but equally, every week, we have something positive we didn't expect. This balance, sometimes I think it's underestimate. Now more than ever, because we have the consolidation of the activities of retail and F&B. We are even more resilient because F&B consumption is a little bit more resilient at airports. That is because of convenience than some other aspects of our business. Of course, anything that pushes our cost up is also a potential risk.
We have had high inflation for quite a few months now, and our numbers on the first half show we've been able to either cope and maintain those costs where they need to be or reflect them on. Either our profitability has increased despite all this pressure on an energy cost, on labor costs, et cetera. Of course, on the positive side, we have more of some missing traffic. Still, Chinese, even if it's in low numbers, will only grow. Some emerging markets, India, to mention one, are more and more seen as a driving force going forward. Volumes could be enhanced by some people still not traveling. Business traveling is recovering, but could also keep growing because it's still not at the levels it used to be.
There are some underlying tailwinds on the number of passengers and the potential profile consumption of those passengers. Of course, we will have challenges and opportunities on the synergy side on the combination. As we're gonna tell later on in more detail, we are now, after six months of active managing of the integration, absolutely convinced that we will not only generate the CHF 85 million cost synergies we anticipated, but we will do that earlier. The CHF 85 million will already be fully in 2024, and also once we have done the full detail analysis, we believe now that the integration cost will be around CHF 50 million, CHF 25 million this year, CHF 25 million next year, and with that, we will be able to generate the CHF 85 million synergies. The reason is, because part of these synergies come from procurement.
When it comes from procurement, the upfront costs are very limited or maybe none. You really only need to put restructuring cost, integration cost, when you do a labor restructure. Part of these synergies are gonna be seen this year. We said around CHF 30 million, and the remaining next year. Now we have it mapped, and we are convinced they will be there. Because of all that, and if we go to the next slide, I just covered the synergies. Because of the synergies, because of the current trading, and even if we remain vigilant and we keep looking at the productivity of our people, we keep looking at labor costs, energy costs, we keep looking at potential slowdown on consumption. Even with all that, our best estimate is that we will be able to finish the year better than expected.
We had said that our EBITDA margin should be 30- 40 basis points better than initially anticipated, and also we are giving more granularity, both on the synergies and the integration costs. That I have to be very clear, that has been a demand of the analyst community, and we are hopefully being much clearer today on that. I remain very committed, not only to do a good integration, but to deliver it in actual numbers, and soon. If we go to the next page. That was financial performance, integration, the third topic I had in my first slide, business development. This is just one example, but we are particularly happy about it because of its size. We have renewed all the contracts in the four, around 95% of the business we used to have for 12 years.
More importantly, with 30% more square meters and with additional product categories that we used to sell 10 years ago, seven years ago, and that they were, for contractual reason, out of the existing scope, but they come back. With that, we believe, as we disclose, that this contract will be not only meaningful, but accretive in profitability and cash flow on the duration of the contract. Spain remains a strategic market for us, but not for any other reason than it's a good business. If we go to next page, that's the four pillar of our priorities, is delivering on consumer and digital revolution. We are more than ever focusing on consumer needs. You have here some flashes. I could fill 1,000 pages on the business analytics and the consumer analytics we have.
Just to show that, one, we understand the consumer trends, and second, equally or more important, we adapt our offering to those consumer trends. That could be very small things, like having better inventory management and having the right product at the right place, at the right time, for the right profile of consumers. Having the right pricing, going all the way to making absolutely revolutionary business concepts, retail concepts, food and beverage concepts. We go to the next page, you see here some pictures of actual realities. We are already deploying some hybrid concepts, Hudson Cafe, and in some cases, that Hudson Cafe might be branded with some of our retail brands. We will disclose that in due time.
We have done that in Atlanta, and we have a very clear path on opening specific hybrid concepts across the board, and they are scheduled on specific locations, specific timing. We are also seeing more and more interest by airports on developing combined concepts. Spain is one case. Spain allows F&B outlets inside the duty-free stores. That's gonna happen in Barcelona, in Madrid, in Palma de Mallorca. The reason is because makes sense. It's the same dwell time, the of the customer, therefore, the sales, and therefore, also the concession fee for the airport. We are also doing new targeted shops or shops in shops, from men's grooming, haute parfumerie. Again, what is haute parfumerie? To give an example, This is a real example of several shops we have in several airport.
Is putting together the most premium cosmetic and perfume brands in 1 single space because there is a type of consumer that is looking for items that might be 3x the average price in P&C. Mind, Body, Soul is also another concept that is already implemented, that targets younger audience, more worried about health and sustainability. I'll keep in future calls, give more and more example. Of course, my target is not to have nice PowerPoint pictures. Our target is that you see it at the airports, and more importantly, as I always say, you spend a lot of money buying on those shops and on those restaurants. If we go to the next page, also digital and phygital, as they say, that it's a combination of physical and digital. We have Fragrance Finder.
That is a new way to interact with, with looking for, for new perfumes in a much more smart, entertaining way. Increases the spend per head. Virtual makeup, the same thing. You try on the makeup, and then also your experience improves, also consumption tend to increase. The smarter stores, already deployed in six stores, as we said. We are now better than ever in understanding how people behaves in our stores, buying or not buying, because as we said in the past, we worry and we focus on our consumers and our customers, but we also try to understand why the non-customers are non-customers, and we can bring them into the stores. If we go to the next one, fun and gamification. We do believe that there is a big opportunity, especially on certain demographics, on making our shops more entertaining.
Again, all these pictures are not mock-ups. They are real things that could go from. A lot of that we do it with our brands, that could come from, you jump into a virtual motorbike, or you game, or you see a pricing, lotteries, et cetera. What all that does is to increase the penetration, to increase the footfall, and at the end of the day, to increase the chances to have higher consumption. Again, all real cases. Also on this pillar, we are deploying, and we are doing better than ever, a good job on bringing spend per head up. We go to the next page, and with that, I will finish my section, is ESG. ESG on protecting the environment, on our people, on our partners and community, and in our governance.
I think we have now, at the group executive committee, at the senior management, a dedicated person on ESG that is driving this, and the target is to make it tangible for all our people and for all our communities. We are in 100 locations in the world, and in all those locations, we play a key role on those communities, an airport, a motorway, a train station, and we want to be active and seen actually improving the reality of those communities. We remain absolutely engaged and committed to ESG, but to make it tangible and real. I'll come back in a few minutes for a final conclusion, but now Yves will explain the results in detail. Thank you.
Thank you very much, Xavi, and good afternoon to everybody on the line. Let me start directly with the top line, with the turnover. We have seen a turnover of CHF 5.7 billion, which represents an organic growth of 31.5%. Our business is very well diversified, as you can see on the slide. Let's look at a few of those aspects in more details. Looking at the geographical split, around 50% of our revenue have been generated by EMEA. With North America contributing to 32%, LATAM by 14%, and APAC by 5%. The different business lines contribute evenly to the results, as you can see on the bottom left chart. On the top right, airports remain our core channel. It's by far the biggest channel, with a contribution of 82%.
Net sales, followed by the several other channels we have. We have a well-balanced category mix, now including also food and beverage, coming from Autogrill, in addition to the duty-free exposure we already had. Moving on to the next slide with the P&L. As you know, this is the first time that we report the full P&L and cash flow statement, as well as the balance sheet combined together with Autogrill. It is important to remind you that the two heritage companies showed very different P&Ls and cash flow statements in regard. This is something which is important to keep in mind when we go through the details of the P&L and also the cash flow in a minute. Looking at the detailed P&L, we saw very strong cash flow turnover, as already mentioned. Gross profit margin came in at 64.4%.
This is supported by the continued strong demand, on one hand side, by the travelers, as well as active and improved commercial management. Core EBITDA came in at CHF 492 million, or 8.6% of turnover. I'm really pleased with the result, as an amount, as well as a percentage over turnover. There are certain factors to be mentioned. We achieved a very solid gross profit margin, as mentioned before. Secondly, our personal expenses reflected number results of our continued cost control initiatives on the one hand side, but also some further hiring to be expected in the second half, also related to seasonality. Thirdly, integration costs will come in, in the second half of this year. Depreciation and amortization is now lower due to impairments done, and slightly below usual levels due to the lower CapEx we have seen in recent years.
With no specific remarks on the financial result, income tax, and NCI, equity holders, which amounts in total to CHF 124 million. Moving on to the next slide with the cash flow statement. Equity-free cash flow came in at CHF 165 million. There are no surprises on the cash flow statement. I just want to point out two topics here. Number one, CapEx was influenced by some phasing of projects. We have indicated for the full year for around 4% of CapEx over revenue, and as you can imagine, this is typically not spread evenly between the two different halves. The reported CapEx of CHF 184 million reflect only 3.2% of turnover. Secondly, the decrease of net debt is around CHF 5 million.
The difference between the equity-free cash flow and the change in net debt is mainly related to the combination with Autogrill. We have spent around CHF 29 million on transaction costs and around CHF 116 million for the acquisition, and this amount includes, on one hand side, the net debt of Autogrill at the beginning of when we combined the group, and on the other hand, the relatively small amount of cash proceeds from the MTO. Moving on to the next slide. Net debt, as Xavi has mentioned at the beginning, stood at a record low of CHF 2.8 billion. This reflects once more, the lowest level since 2015. Again, you need to take into account what I've just mentioned before when discussing the cash flow.
The change in net debt also includes the net debt of Autogrill, as well as the cash proceeds from the MTO. Moving on to the next slide with the financial covenants. The group shows significant deleveraging over the last quarters, reaching now a level of 2.6 times. This is supported by the combination with Autogrill on one hand side, and also the good financial performance of the group on the other side. Moving slide. With the maturity profile. The company has a very well-structured debt profile in respect to product mix on one hand side, but also maturity profile, as well as the exposure to fluctuation of the interest rates. Currently, around 76% of our debt is based on fixed rate coupons and only around 25% of variable interest exposure. During the half year, we have further increased our RCF in two steps.
The total facility amounts now to CHF 2.6 billion, of which only CHF 800 million is currently used. Moving on to the next slide. We are very pleased to have received upgrades by the two rating agencies over the last quarter. Moody's has upgraded us by 1 notch, and S&P Global rating by even two notches. This reflects the good position of the group, position we are in, and we are extremely pleased with that development. Moving on to the next slide. Just a quick word on the mandatory takeover offer. We have entirely completed the Autogrill transaction, including the MTO process, and since the end of July, as you know, Autogrill is delisted. Subsequently to the completion of the MTO process.
We understand from the market that the transaction has been perceived as complex in certain aspects, but we have executed it exactly according to the timeline and also as planned. With having said that, let me hand over back to Xavi.
Thank you very much. If we go to the next page, is the conclusion. The conclusion is in one word, is execution. We are delivering in everything where we put our priorities. We are delivering on the financial results, both on revenues and cost, also cash generation. We are delivering on the integration even ahead of time. We are delivering step by step on redefining our industry with the travel experience and digital revolution, and we are also delivering in the integration. With that, we will go to Q&A, but first, we will have a small. You know we love videos, because we think that it's a way to summarize visually and strongly the way not only we think, but also we communicate. It's not a small example, but we apply the same philosophy on the way we communicate to consumers, the way we communicate to landlords.
We not only have to be different from the rest of the industry, we also have to make sure people feels that difference. Now, and we come back in a minute and a half for the Q&A. Video on, please.
Together as one, we unleash a travel experience revolution. From retail to food, unique and bespoke, catering to evolving consumer needs, elevating customer engagement across all touch points, diversifying our geographical presence, fostering a culture of continuous improvement, with ESG at the core of our business. Rooted in a deep understanding of our stakeholders' needs, we create long-term and sustainable value for investors, attracting consumers with an exciting and memorable offering, actively cooperating with our landlords, and strengthening our relationships with retail and food and beverage brand partners. Powered by our people, we establish an integrated global travel experience player and shake up our industry. Dufry: From a store to a story.
Thank you very much. Now we can go to Q&A.
We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to choose only handsets while asking a question. Webcast viewers may submit their questions in writing by the relative field. Anyone who has a question or a comment may press star and one at this time. Our first question comes from the line of Gianmarco Werro with KBW . Please go ahead.
Good afternoon, everyone, and congrats to the strong profitability increases. Three questions from my side, please. The first one is on your personal costs, and they're one of my, let's say, worries, is wage inflation. Can you give us a bit some details about what you see currently in relation to wage inflation from a temporary staffing and also perm staffing, especially for the second half of the year? What was just catching my interest is in your P&L, you have other other income also of CHF 80 million. Can you maybe elaborate a bit how this supported your EBITDA and how we have to understand this, especially on a full year basis, what is the run rate we need to consider here as other income, as this is something pretty new to us?
Just a, a third question on your joint venture with Hainan, in Hainan, with Alibaba. I mean, I expect that this must boom at the moment if I look at the Chinese politics and the Chinese doing tourism within China. If I look at your financial income from associates, I can see only around CHF 2 million profits being considered here. I mean, I know you have only 49% in this joint venture, but you're operating around 39,000 sq m there. Can you explain why this share of profit is only so small? Thank you.
I'll take two, if we'll take 1. On the personal cost, look, of course, we are seeing pressure on the inflationary cost of the people, but we are coping with that on one side, on productivity, using, for example, QR codes for the ordering or self-checkout. On top of that, our focus is on how we can get the personal cost as % of sales at a reasonable level, and that is what we have been able to do. Yes, we have cost pressure, but up to now, we've been able to reflect it properly on our sales, and we expect to continue doing so.
On Alibaba, yes, we have a joint venture with them, but we have a joint venture to manage the activity, not directly into the activity, because in China, you cannot even be on a minority stake on an operator of duty-free license. You can only advise and supply. That's why the amount you see on the consolidation numbers is so small. The real value of the strategic collaboration with Alibaba is not only what we do together in China, is they are our digital partner for the Chinese traveler, also outside China. We are gonna see that step by step when the Chinese traveler becomes again, another significant force in, particularly in Asia and across the globe. We will have a better understanding than ever before on that passenger, and we will be able to do a better job on serving them.
On the other income, this is mainly coming from Heritage Autogrill, and it's related to services we are providing, mainly in the US, as a service to airlines, slash landlords or concession partners, which do not reflect direct sales, and therefore they are not considered in the turnover of the revenue, but it's a service-related business, which we are providing there to our, to our partner.
the normal.
Regular income.
The normal annual run rate is around CHF 150 or CHF 160 then, that we should consider on an annual basis?
No, I wouldn't, I wouldn't consider that, no. No, it's less than that.
Okay, thank you. Just on the joint venture with Alibaba, sorry, as a quick follow-up here. As you are only managing those activities there, this is also something we should now consider, like, your management fees for those operation. In the end, we should not expect more than CHF 5 million on annual basis as a profit from this partnership, despite, of course, digital investments and also actions that you take together with Alibaba.
I will take a slightly different approach. On one single contract is what it is, and that cannot change materially until the Chinese legislation changes. On the digital, of course, you're not gonna see it as a fee. You're gonna see it as additional sales when the Chinese travel. The value will be there, but of course, it will be through sales and margins, not through an specific fee line. I don't know. That's, that's the way I look at it.
Okay, thank you.
Thank you.
The next question comes from the line of John Cox, Kepler Cheuvreux. Please go ahead.
Yeah, good afternoon, guys. thanks for the, the Q&A. A couple of questions on my side. First one, just on the the sort of lack of increased guidance on your, sort of organic sales growth for the year. Clearly, you're running at 30% or so in the first seven months of the year. You know, what, what are we missing? You seem to be implying that you're actually gonna see an organic sales decline with that existing guidance of 7%-10%, even though I know it's for the, the group as a whole. That's my first question. Second question, you're around 2.6x net debt to EBITDA. You're probably gonna be a couple of notches lower by the end of the year.
There's, there's nothing in, in the release today about maybe a commitment to starting a dividend again or thinking about a buyback, given, you know, the, the sort of like quite a heavy dilution for shareholders as a result of all of the transactions through COVID, and then most recently, with Autogrill. Just as an aside, potentially, this is why the stock is not reacting as well as some of us might, may have assumed with the good print you had. Just a question on the sort of hybrid concept. Just wondering, give us any, any sort of indication of the uplift you're seeing. I know it's very early in some of these stores.
You know, if you put a, you know, cafe bar corner into a Hudson News store, you know, can you give us an idea of any uplift there? And then maybe as an add to that, you know, you talk a lot about spend per passenger and what you wanna, what you wanna do there. It'd be very useful for us to know how that is increasing, and I wonder if you can give any indication on that, because you, you seem to be saying for the last year or so, spend per passenger is up, even though maybe, you know, back a year ago, we went back to 2019. Just wondering if that trend is still intact. Can you give us any percentage at all? That would also be pretty, pretty helpful. Thank you.
Thank you, John. Look, it's not that you're missing anything. I mean, the comparables are different. People tend to forget now. We still had some Omicron at the beginning of 2022, so January, February, March, the comparables were very easy. 2nd quarter, a little bit more challenging, 3rd quarter, a little bit more, the last quarter, last year, was surprisingly good, everybody was very surprised that we were in the last quarter of 22, very close to 20. The comparables, just because of that, the growth will be lower than what we have seen on the first half. We still expect to see growth versus 22 in quarter three and in quarter four.
Giving outlooks or forecasts is always challenging because it depends on so many things, that we are taking, a position which might be correct or incorrect. We give some indication, you will do your own indication, but we expect to have a good summer, and last quarter, also a little bit better than, than last year. On the, on the potential dividend, as we answered in the past, this is a decision of the board of directors to recommend the general assembly, and the board will discuss that later on. They believe, and I totally agree with them, it's too early to start discussing this because we need to see how the year progresses. The board is very reasonable, and they know that if the leverage is where we expect to be, in order to have proper capital allocation, the shareholders will need generated accordingly.
We have no specifics, but clearly, in due time, the things that need to happen will happen. On the hybrid, as you said, a specific uplift, giving specific numbers is a bit too early because we are developing them. It's not only the potential uplift you have compared to if you put a hatch on it, converting a hatch of cafe. Of course, the sales increase very materially. It's also something that sometimes we miss, is the optimization of the space. We are not doing there where we can, we do it where we think it needs. Now, having the two businesses in certain airports, we can say, "Look, we need more space for coffee because the current outlets are already saturated." Then the uplift could be very material. In other places, it could be more limited.
In no case, what we see is a drop on sales. In all the cases, it's additional sales. On the spend per head. Look, we monitor the spend per head on a monthly basis. Why we don't disclose consolidated numbers? Because consolidated numbers mean nothing, and I'm gonna give a few examples. What you need to do is to monitor spend per head in a bunch of different categories, which include profile of customers. The typical one is nationality, but is not the only one. Long haul, short haul, because that changes. Point-to-point or transfer passengers, because that also changes. If there are things like a change in legislation, where duty-paid sales become duty-free sales, an event like Brexit, that helps. All those affect the consolidated weighted average of spend per head.
What I can confirm, that with a few exceptions that we are monitoring, we see increase in spend per head versus 2022 and versus 2019 in all the relevant categories I just mentioned. Percentage vary a lot, very single to double digit, but that depends on our ability to manage those sales and also, of course, other aspects. I think that's the right answer, because if I give you a consolidated number that is affected by all these moving parts, it might mean nothing. On this detailed monitoring, we are doing better. It's even more important another thing, we monitor it. When we don't do better for whatever reason, we have the team taking a look in why is that happening and trying to act, because we are never 100% perfect.
The importance is when you are not perfect, when you're doing something that is not the right thing, you correct it. That's why we have created a way of working for which this becomes an essential part of our day-to-day. We are putting a much more closer monitoring to the stores on local basis. Now, our speed of reaction on assortment, on promotions, on pricing is faster than it used to be. The reason is because we have put a new governance and a new structure that facilitates a quick reaction. Thank you for all your questions.
I wonder if I could just come back with a couple of follow-ups. Thanks so much for that, Xavier. Just on the in terms of top line, I'm sorry to push you on this, but, you know, 7%-10%, you're 17% in July. You're talking about a strong summer. Q3 is your strongest quarter, typically, and you're saying Q4 is going to be up? You know, it's not hard to extrapolate a 20% organic sales growth from those sort of comments. That's the first one. A second one is just on the what you were saying about the, you know, with the, where we are in terms of net debt, EBITDA, et cetera, and the board recognize this and will act. Just wondering what sort of target, sort of net debt, EBITDA ratio are you guys looking for?
'Cause you wanted to get below three. You're you're miles ahead of your, your plan. This is, this is the point I'm trying to get to. You know, should we think, you know, anything below, you know, 3, you'll start to, you know, try and leverage a bit more with dividends or buybacks or whatever it might be, or is it 2.5? You know, what, what are your thoughts on that? Maybe that's a question for Yves, but I don't know.
On the sales, don't worry, I don't feel pushed. I know all of you need to do your job. Look, the only thing I will point it out is October, November, December last year were particularly strong. The uplift on the last quarter will be reasonably, of course, I hope it's much better, but reasonably, the upside on the last quarter is much more limited than in the rest of the year. September was also particularly strong last year. Let's remember one thing: across Europe, you had material issues across several airports. One thing we believe it could be that September and October last year were as particularly strong because of the disturbances in July, August.
Nobody can guarantee that, because maybe September and October this year is again, once more, a longer summer season than we used to have. But I like to see twice before I make it a rule. So that's why maybe I'm more on the cautious side. I rather deliver a good summer than expect a good summer. So the year will be good. The remaining of the year will be good. I will encourage you, you do your own numbers. Summer will be good, last quarter will be good, but of course, with less growth compared to 2022. On the dividend, Eve can answer, but up to now, the board, it's a topic is analyzing. They want to see how the summer goes and then take a decision on, on the policy.
Let me not be more precise now, but you will have news, and you will like the news, but in due time. I cannot publicly discuss what the board has not decided yet. They, they, they need to take a decision, but they know that is something they need to come up with a, with a clear indication, but they want to wait a few months. I have to say, I also prefer it. It's a very interesting conversation with you, the analyst community and the investors. A year ago, or, or 14 months ago when I joined, the question was high leverage. What are you gonna do? What are the risk of the companies? All of a sudden, now everybody wants dividends or, or-- well, not everybody. You want dividends, or you're asking about dividends and share buyback.
I think we want to prove that we keep delivering good cash flow and good deleverage, and then the board will address the dividend topic. I think I'm being very clear, and you understand what I'm saying. Let's keep it like that.
Great. Thank you very much.
The next question comes from the line of Harry Gowers with J.P. Morgan. Please go ahead.
Yeah, afternoon, gents. Thanks for taking the time. The first question was on the EBITDA margin. You've just done 8% margin in H1. I mean, what's stopping you from potentially doing another 8.6% margin in H2? Would it be possible to get to that level if all the stars align? Just on the cash conversion, the upgrade to guidance, I mean, should we see that mainly as a one-off benefit this year or more midterm, actually, because your midterm guidance potentially be upgraded to 35% or 40% on the cash conversion? Thanks.
Thank you very much for your questions. Look, on the first one, I have mentioned it earlier, the EBITDA margin we have seen in the first half of the year was fantastic. As Xavi has mentioned, better than what we have expected and better what the market has expected. For the second half of the year, we have a number of elements which are to taken, to be taken into consideration, and I've mentioned them. One is the personal expenses. We are still catching up with the hiring, and there might be some seasonality effects there, which may result in a little bit of pressure. Number two, are the integration costs, which I have mentioned, which are also affecting and mainly coming into the second half of the year.
Number three, we have seen some benefits in the first half of the year with very good performance in some of the concessions or some of the locations which have a relatively low concession fee. Depending if that continues or depending on where the mix effect will be in the second half of the year, this may also change a little bit. With that, we come up with our updated outlook, which Xavi has mentioned before.
On the equity-free cash flow conversion. Look there, we have provided a outlook for this year. Xavi has mentioned it, and we cannot provide any further information for the outer years, and for the next years, 2024, 2025, 2026. What still remains valid is what we have mentioned previously. We still feel comfortable with that, but there is no news in that regard, from that side.
All clear. Thank you.
The next question comes from the line of Ali Naqvi with HSBC. Please go ahead.
Hi, thank you for taking the, the questions just through from myself. There's been a bit of talk from the U.S. airlines and hoteliers about the composition of traffic going from domestic to more international based. Are you seeing any, either weakness or strength, just depending on where your locations are? Secondly, on the Aena contract, could you just explain the differences with the contract pre and post the tender? Is it gonna be margin accretive from the point your new contract term starts, and when is that? Third question, you had some concession growth this year. How do you expect that-- sorry, this half. How do you expect that to develop in to the second half, and where is the priority for this going forward?
I know you're not necessarily talking to rates of growth, but any guidance, would be appreciated.
Thank you for your questions. Yes, we are seeing a lot of North Americans, U.S. in particular, in Europe. Again, it shows a very particular feature of Dufry, that sometimes is not properly factored in, which is we are not only in many locations, but we also cover many consumers. Europe is performing super strongly because we have more Americans and less Chinese, and that's something people sometimes forgets. We consistently, over the years, we show that we cope with more and more individual risk because of our geographical exposure. Now with Autogrill, is even more true. Look, on the Aena, like in any other contract, we cannot disclose specific. We are even legally forbidden. The landlord can publish, we cannot. This is the rules of the game.
What I can tell you is, the contract in Spain is gonna be accretive in a EBITDA and accretive in cash flow. It's 12 years contract. Of course, we have to do some investments during 2024 and 2025 to bring the store meters on the new category, so it's a transition period, but it's an accretive contract. We will not give specifics on semesters or quarters on business development, because this is not the way it works. The cycles are longer than that. We said in the past, we expect on the mid and long term, that new concessions are slightly positive. We make no secret that a few more concessions or a few less concessions, if they do not bring the right profitability, we are not interested.
We keep a massive discipline in making sure that any concession we add, at least we expect to be accretive. This year, this first half a year, we had more concessions because there were more tenders. In the second quarter, there might be more or less. Summer, normally you don't have a lot of tenders because people is busy on the high season. Every year changes depending on the portfolio. We have today more than 2,000 concessions around the globe, which also makes us more resilient than ever before. I think the largest single concession today, the largest single contract, because even Spain is five contracts, is less than 2%-3%. We are also not dependent on any specific concession, which I think it's also a very good message from a resilience point of view. Thank you for the questions.
Thank you.
The next question comes from the line of Tharman Jare with RBC. Please go ahead.
Good afternoon. Thank you for taking my questions. I just had two, if I may. My first question was on the July trading figure. I wondered if you could give any more color on how trends have evolved in July by region or by channel? My second question was on the U.S. given the high level of investment we're seeing into U.S. airports, I just wondered how you view the opportunity in the U.S. and perhaps how you see the pipeline for potential tender contracts there. Thank you.
July is very similar to what we saw in, in May and, and June. It's across the board, growth everywhere. The year-to-date numbers is a reflection. Of course, the ones that have the highest base already in 2022, they grow a little bit less. Asia is the one growing more in relative terms, but we see healthy growth across all the geographies. Yes, we see the investment in the U.S. airports as a very interesting opportunity for us. Remember that the two most important segments in the U.S. is F&B, number one, number two, convenience, number three, duty-free. Thanks to the combination with Autogrill now, we can address three segments, but we can address very materially the two main segments. We remain very bullish about the opportunities in the U.S.
Good news is we have already combined the teams, so they are working already together. They are learning from each other. They are working on the hybrid concept. So I think it's a very, very big and very resilient market, and it grows. It grows in a very consistent manner. The two companies, HMSHost, HMSHost, and Hudson, that are the two brands we use in the US, have the leadership and a very consolidated appreciation by the airports. So we believe we will keep leading those markets clearly, and we see opportunities to keep growing there. It remains number one market for us and also, one of our key priorities.
Understood. Thank you.
The next question comes from the line of Jaafar Mestari with Exane BNP Paribas. Please go ahead.
Hi, good afternoon. I've got two questions, please. The first one is on free cash flow. In Q2, it was EUR 340 million, and that's the highest you've ever reported, I think, in H1. It was EUR 320 million. You flagged CapEx, something like EUR 45 million below budget. Just keen to discuss if any other cash flow items in H1 need a bit of adjusting when we think about a normal full year free cash flow. Things like, what's the normal working capital movement in the H1? How much of your tax, how much of your interest costs would you normally pay in the H1? These all look very optimal in H1. Just on your medium-term targets, more of a format question.
You gave this guidance in October and November last year, still many uncertainties. You, you didn't say today if you were gonna review it formally, but is that the right format to have a very open-ended guidance with percentage growth and free cash flow conversion above some percentage? Or do you think with a year's worth of visibility and the Autogrill integration, maybe something a bit more precise in Swiss francs or a narrow range is something you could be in a position to provide?
I'll take the second one. Look, I'm not a fan, and the few of you that knows me, I'm not a fan on outlooks, guidance, or anything like that, because I think the focus needs to be on delivering the day-to-day. We gave some indication because we thought that with integration of Autogrill and coming out of COVID and with a new strategic plan, it was difficult for people to figure out what type of company we were. Now, we believe that with the last few quarters, with more visibility on the figures, the consensus we see is pretty good. More than now, boring you with a bunch of numbers and scenarios, et cetera, we believe that the consensus for 2024, 2025, it's pretty reasonable.
We do expect some upgrade of the numbers for 2023, some of you might take that also forward. I think that's the best way I can answer your question. On the first one?
In regard to the cash flow, look, out of or on top of the CapEx, which we have mentioned and discussed, there is nothing specific to be mentioned. The cash flow, beside of that, is a clean number. Look, as a more general answer, you will always have a little bit of swings here and there, be it on the interest expenses, because Treasury may decide to draw more on one month, three months, or six months duration, or because you have some swings in the minority interest, because you have the meeting with the joint venture partner a month earlier or later in the year, and that will then delay the cash flow in that regard. Look, those swings are relatively small in the overall scheme of things, and the same actually applies for net working capital.
In regard to net working capital, I think what is important to note now with the combination with Autogrill is that we have a slightly different pattern. We in the heritage duty-free world, we do invest in net working capital, and you have a certain swing there when you grow. In the heritage Autogrill world, the situation is slightly different. You typically don't invest that much into net working capital, and actually when you grow, you have a negative effect in the sense that this helps you. So from that perspective, nothing unusual, nothing to be mentioned or pointed out for the first half, with the exception of the CapEx.
Thank you. That's very helpful. Thanks.
The next question comes from the line of Russell Philipsky with Carloway Capital. Please go ahead.
Thank you for all the input and feedback provided on the call. With respect to the July heritage, duty-free, result of +4.7%, I think in the first quarter trading update, you had provided a number of +2.3% for February. I just wanted to confirm how that had trended sequentially month-over-month in between, from May to June. While August is only the 1st week of the month, more or less, you know, I think you've given some good insight as to you see continued firmness in, in travel activity. Just to see or confirm with you how that, you know, sales figure has trended would be helpful.
So as said earlier, I mean, January, February were the only two months where we were below 2019 levels, at same reported currency. March was ahead, April was ahead, May was ahead, June was ahead, and July is, is, is ahead, both for the Autogrill and the duty-free sites. The pattern is very, is, is very similar. August, I'm always very careful to give weekly sales because they depend on holiday days. I mean, if the 1st of August is Wednesday, Thursday or Tuesday changes the pattern, so we have to be careful. Up to now, I haven't seen anything materially different from what we have seen in the last couple of months.
Great. Thank you for everything today. I, I think you guys are doing very well, so I appreciate your execution and vigilance.
Thank you very much.
Thank you.
The next question comes from the line of Olivier Calvet with Credit Suisse. Please go ahead.
Yes, good afternoon, Xavier, Yves and team. I have a few questions left, if I may. Firstly, you know, just on, on, a big picture question, was wondering in airports where you've seen, carry-on technology being rolled out, have you seen any impact on customer behavior? Can you give a bit of color on, on your different verticals and how you can adapt to potential changes in, in passenger behavior there? That would be the first question. The second one would be more of a, a technical one on, on the Aena contract. Is there anything unusual to note in terms of the cash flow profile that we should have in mind?
On equi- you know, below equity-free cash flow, in terms of transaction expenses, I see, I see you've disclosed CHF 29 million cash outflow in the first half versus, I think, an indication of CHF 100 million. So I was just wondering if there was anything there, or if it's just because of the listing of Autogrill in August, in July, sorry. Yeah, that would be my questions. Thanks.
Look, your first question on the, on the technology that makes a seamless experience. Anything that calms down the passenger is helpful. If people has more predictability on the time of security check, check-in, et cetera, all that is helpful. Delays of planes, for example, if it's slightly short, it's also helpful because increases the dwell time. If it's a lot, it might stress out. We, we need the right balancing to right dwell time and non-stressful dwell time. The air force- airports are putting on making the security checks easier, are in general, helpful. And it's very simple to understand. I mean, if you have been for two hours into check-in, security, et cetera, you end up being very stressful, and that's not what we want.
What we want is passengers that are calm, that they have some dwell time to get a coffee, to get a sandwich, to get a salad, to get a perfume, to get a good bottle of wine. That is the type of passengers we want. The trend is very clear on that direction. We welcome that. We would love that it's quicker than, but the time, it's big investment. Our airport partners are making significant efforts to move ahead. I think the disruptions we had last year are helping to accelerate that process. Many airports realize it's the only way forward to guarantee good airport experience. There is nothing unusual on the Aena contract. It's a long-term contract. Maybe that's the only, the only thing I would point it out.
It's very large, but everything else is like other type of contracts. On the equity cash flow, Yves?
Look, on the equity free cash flow for the first half of the year, yes, there is a CHF 100 million going out below the equity free cash flow, between the equity free cash flow and the change of net debt. That's mainly related to the combination with Autogrill. It's actually twofolded. One, Autogrill had a relatively small amount, but still an amount of net debt when we started to consolidate the group at the beginning of February. It's point number one. Point number two is, while the transaction has been financed mainly with equity, i.e., duty-free shares, a relatively small amount of give or take CHF 40 million-50 million was financed with cash. That's also reflected there in that amount.
Just, just to clarify on that, on that last point, I saw the transactions cost of CHF 29 million, but what you're saying is, the overall, CHF 100 million that you were guiding for in terms of transaction, expenses is already, you know, in the H1 number?
What is in the H1 number, as you mentioned, is transaction costs of around CHF 30 million. There might be a small amount coming in in the second half of the year, but that's then probably about it.
Let's be clear, the total transaction costs are going to be materially lower than initially anticipated, simply because we anticipated that there will be some costs related to some bridge financing that is not going to be needed now because it was mostly done by shares. You will not see big things coming up for the rest of the year. It's basically a little bit to come, but largely done.
Okay, fair enough. Thank you.
The numbers we report are going forward and in the, today and going forward, as clean and without major adjustments. I think that's something everybody appreciates. It is what it is. No recalculations you need to do to get there. I'm just checking if there are any additional questions. There are... Okay, there are still more questions.
Yes. The next question comes from the line of James Cawthorn with Barclays. Please go ahead.
Hi there. Thank you for your time today. Just a quick one from me. It's on the refinancing of the 2024 notes. In the previous quarter call, I think you said your intention was to take them out maybe between 12 and 18 months ahead of maturity, and more likely 12 months. I just wondered if you could give us an update on how you're thinking about addressing those as they come due.
Sure. Absolutely. Look, I think one of the key intentions we have when it comes to financing is to reduce and eliminate any potential refinancing risk to the extent possible. From that perspective, it's important for me and for the organization to refinance any maturity between 12 and 18 months ahead of maturity. In that specific case now, with the available liquidity we have of close to CHF 3 billion, and the CHF 3 billion is basically the sum of the available credit lines together with the cash we have on the balance sheet, which is slightly above CHF 1 billion at the moment.
We have just increased our RCF by around, give or take, CHF 600 million, and with that, with those CHF 3 billion of available liquidity in total, I feel absolutely comfortable to be in a position to refinance the outstanding bonds which mature in 2024, at any moment in time, either with that or alternatively, if we want to keep the capacity, with a new bond. What I want to say with that is flexibility, and because we have the CHF 3 billion of available liquidity at the moment, which is almost guaranteed or is guaranteed a little bit closer to maturity, this is beneficial for us, given the relatively low coupon we pay there of only 2.5%. Economically, it would not make sense to do that at this stage.
We also discussed that with the rating agencies, they also feel comfortable, and I understand that approach.
Thank you very much.
We have a follow-up question from Mr. Cox with Kepler Cheuvreux. Please go ahead.
Yeah, just to, just to follow up on a couple of things. Just on working capital, there was a, a positive contribution there. Just wondering what you think for the, for the year as a whole. When I look at the, the balance sheet now and the various lines, it looks like you've gone to negative working capital, pretty much when I look at the various components of that, which is not uncommon with food companies incidentally, as I'm sure you're aware. Just wondering what, what your thoughts are on that working capital going forward. I know you guys did a lot of work, you know, as you were going into COVID, well, even before COVID, on, on reducing your working capital needs. That's the first follow-up.
Second one, just on business travel, just wondering where you think we are, in terms of business travel, from your own experience, you know, where, what percentage it was, what, what it is now? I don't know, I'm, I'm probably, you know, I'm sure I'm not the only one on the call, whose boss keeps telling them to get on the road and go and see people. It seems like we're, we're not far off where we were, prior to COVID, maybe not quite there yet, but it certainly seems to be getting there. The last one, just on clarification, you mentioned $100 million originally for the transaction costs. You seem to be saying now it's all in, and that's around $50 or so. I wonder if you could just clarify that point. Thank you.
I'm gonna take the middle question on the business travel. Look, we are not at the level we used to be, but it's clearly, it's only going 1 direction. People is traveling for business every, every period, a little bit more. Second consideration: there is a new, thanks to the hybrid working model, people are taking more short breaks than it used to have. You have people that can work from a remote location on a Friday, and therefore they can maybe extend a break that they didn't use to, to do. This is a new hybrid type of, of traffic that we didn't see, that is different. It's difficult to qualify because you don't know if it's work or it's, or it's pressure.
The most important consideration for me-- Look, I have been receiving the question, business, leisure, low-cost carriers, full service, carriers, Japanese, Chinese, Americans. It's a all kind of questions on a little bit, which is the preferred segment. My answer over the years, now that maybe I'm a little bit more mature, is I don't think that's has to be the focus. The focus is we need people traveling, and then our job is to adapt the offering to what they need. Any passenger that travels, whatever is the reason, whatever is the distance, wherever it comes from or it goes, is an opportunity. The key point for me is to make sure that all the teams constantly focus on that.
If you have an airport where you see more business people that have more experience, that they have less dwell time, convenience might be the key factor. Then you push for self-checkouts, and you maximize that. In another place where you have more transferring passengers and the dwell time is longer, then maybe what you want to do is to have shops that calm down, that have wider space, and invest more on the training of the sales force that are key to help that passenger that has more time, or put more of the some of the things I showed today that is more entertaining because they have time. If somebody's gonna fly 12 hours, probably goes to the airport to a time to kind of spend on holidays, you put one of these...
I, we have one here in the, in the board room that is. It's a very cool thing we did with, with Prada, which you can. It's, it's you put on, on goggles, and you can play like a laser sword. With that, you attract maybe teenagers, but then the rest of the family that has the, the teenager in the shop browse around and spend money. For me, the key concept is whatever is the type or segment of passengers, we have to address it in a way that we optimize the potential. Sorry for the long speech, but coming back to what you said, yes, we see more and more increasing business traveler, and we think that we'll still have some room to, to catch up on historical levels.
On the networking capital, two aspects there. Look, in the medium term, it basically depends on two aspects I want to mention, or probably three. Number one is the growth, and there is the growth in regard to the organic growth, and also the growth or like-for-like growth, and also the growth in regard to new concessions. Depending if we grow more into travel retail or food and beverage, the trend will go in a different direction. As you have rightly pointed out, in retail, we do invest in networking capital, and in food and beverage, you typically see a slightly negative networking capital. When it comes to new concessions, that trend in that new concession obviously is leading to an acceleration in that regard.
Number two is that obviously, as you have also mentioned, we are keen to optimize networking capital, as part of our continuous improvement we are doing internally. Obviously, we want to become better every day in everything we do, and this includes also networking capital. From a modeling perspective, to assume fundamental changes there, I wouldn't do. In regard to the transaction costs, look, there, you're right, and as Xavi has mentioned before, transaction costs, ballpark figures are spent, so there's nothing or nothing materially which should come up in the future. The main reason for that, as Xavi has mentioned, is we have completed all the relevant products, so the MTO is completed, Autogrill is delisted. In our initial assumptions, we have considered that part of the MTO is financed with cash.
We need to keep a bridge facility for a longer period. On top of that, the bridge takeout would need to be done by either a capital increase or a new bond. Those products, as you know, come with expensive price tags. Because we didn't have to do them, we could save that money.
Great, congratulations again.
There are no more questions on the telephone at the moment. We have one written question coming from Santiago Domingo with Magallanes Value Investors: Are you satisfied with the current footprint? Where would you like to invest and divest?
What current footprint? Geographical footprint.
Look, I think diversification, as I said, is an asset in itself. It's very difficult to anticipate what is gonna happen in the world if you are in the right locations. As a general principle, of course, I would like to keep growing in the U.S. and in North America. It's a strong market, as I said, and it behaves a little bit different from the rest of the world because it's more domestic and less international. Therefore, it's a very good hedging strategy on the global. Of course, I would like to keep increasing our footprint on the main markets in EMEA and Latin America, and of course, also to grow into Asia-Pacific, where our market share is the slower. Disinvest, we have been doing it. A year ago, we had a few locations where we were, in our view, structurally making losses.
We have exited by now all of them or we have renegotiated the conditions. There is one minor where we still are structurally deficient, and we are working on that. The geographies are clear, and then the contractual obligations have to be negotiated or exited if they cannot be negotiated. Thank you for the question. I think with that, we are finished, if I understand well. I really thank everybody for attending the call, and as some of our employees are also watching these conferences, I want to thank each of you for your contribution. We are here just because of your daily work. We appreciate that. We thank you that, and of course, we ask you to keep doing it, because as you can see, analysts and investors always expect more. Thank you very much.