Good day, and welcome to the Full Year 2020 Q1 Interim Management Statement Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mike Powell, Group CFO. Please go ahead, sir.
Paul, thank you very much and good morning to everybody. Welcome to the Ferguson conference call covering our first quarter results for the 2020 financial year. Good myself, Mike, I'm also joined by Mark Ferron and Pete Kennedy from our IR team. Now it's only been a few weeks since we last spoke to you at the full year results in October, and since then, we've been on the road seeing shareholders. So we've no major changes to update you on today.
In either the business or our end markets. It's still early in the year, of course, but we've continued to trade pretty well. In quarter 1, we've really seen a continuation of the market trends we saw in Q4 last year. And overall, the picture in the quarter is consistent with what we talked about at the time of the full year results Let me give you some brief highlights for the quarter and then we'll turn it over to questions as usual. But just before I start, it's worth noting that we have moved the UK into non ongoing operations.
And I'll talk about the results on an ongoing and a pre IFRS 16 basis just to aid the comparability of the underlying ongoing business. IFRS 16, it's worth noting added $18,000,000 to Q1 trading profit. So total growth for the group, ongoing group 5.4 percent at constant currency in the quarter. Organic revenue growth up 2.5% and acquisitions added a further 2.9%. Gross margins were a touch lower that operating expenses well controlled, which means we achieved decent profit growth in the period.
We remain vigilant to ensure that we stay on top of the cost base course in the lower growth environment, but we also continue to invest where appropriate for the future. Underlying trading profit came in at 400 and $33,000,000, up nearly 5% representing growth of $20,000,000 in the quarter. So a bit more insight into the operations. In the U S, we generated revenue growth of 6.2 percent, which compromised 3.1 percent organic growth, and a further 3.1% from acquisitions. Price inflation we saw at 1% to 2%.
Major business units have blended branches, waterworks and HVAC all continued to grow well in the quarter. Revenue in Industrial was lower against strong comp from the 2 large capital projects that we talked about last year. Overall, U. S. Markets broadly flat similar to the previous quarter.
Red indicators improved slightly in the period with commercial indicators moderating a touch further Civil and infrastructure markets remain similar to Q4 and industrial markets are weak. However, all in all, to generate low single digit organic growth in flat U. S. Markets. Gross margins as I said were a touch lower This was mainly a result of strong prior year comparators, and we remain confident in our ability here to continue to edge forward our gross margins over the long term.
And nothing has changed here in the marketplace. Operating expenses tightly controlled. They were up 3.8% against the total revenue growth of 6.2 percent. Majority of heads relating to the voluntary early retirement program had left the business by the end of the first quarter and the actions we've taken to right size the cost base for the current market conditions mean we're in great shape as we go through the rest of the year. Overall, in the U.
S, trading profit 425,000,000, that was up $25,000,000 ahead of last year. On to Canada, where we saw organic revenue decline 6.4%, residential markets remained weak as a result of the government measures to restrict mortgage credit and the impact of foreign buyer taxes trading profit $19,000,000, $7,000,000 below last year at constant exchange rates. There have actually been some signs, some early signs of stabilization in the residential markets in Canada with better data on single family. But clearly, we're maintaining a cautious attitude on the cost base until we see that recovery come through. Finally, in the UK, RMI markets where we generated the majority of our sales have been pretty weak.
Organic revenue declined 4.2% trading profit GBP 15,000,000, that's GBP 3,000,000 lower than last year at constant exchange. Given the challenging markets, we're continuing to actively manage cost base as well as continuing to simplify the organization structure. We incurred 1,000,000 of exceptional costs in Q1 relating to the closure of a further distribution center in Worcester and we've also completed some management delayering recently. The planned demerger of the UK business in 2020 remains on track. Let me move on to cash flow and net debt.
Cash generation in the quarter was good, bit better than I expected mainly due to some timing around working capital and net debt at the end of the quarter at 0.8 times net debt to EBITDA. Since the end of the quarter, we've done a further bolt on acquisition SW Anderson, 10 locations across New York And Long Island, to major distributor of HVAC equipment and supplies to both residential and commercial markets. In addition to the acquisition, we paid the final dividend, which you saw last week, of GBP 328,000,000 and the working capital timing that I just talked about will clearly come back to us through November December. And therefore, as I sit here at the end of November, we're probably about just over one time levered. There's no change to our full year guidance on CapEx.
That'll still expect that to be about $300,000,000 to $350,000,000. The forward pipeline for M and A looks healthy, number of bolt on deals, and we're actually actually sorry, we're actively working a couple of interesting opportunities Nothing too large and will clearly have a better idea of the outturn for this, full year, by the time we next speak at the half results. Group's capital allocation policy is unchanged. We'll continue to maintain a strong balance sheet with net debt to EBITDA within the range of 1 to 2 times. We continue to execute the current 500,000,000 share buyback program which is ongoing.
We've about $65,000,000 to go as of today, and we'd expect to complete that most likely by the end of December. Turning to the outlook. We expect to make further good progress in the year ahead. While the U. S.
Market growth is currently broadly flat, consistent with recent trends, we remain confident of outperforming and our order books support continued modest growth in the months ahead. Our strong focus on growth with continued margin and cost discipline gives us confidence in our expectations for the full year we've banked an additional 20,000,000 of underlying trading profit, but we do remain focused on maximizing organic revenue growth tightly managing gross margins and costs. We're getting on with executing our successful strategy in North America whilst working hard to demerge the UK business. So Paul, many thanks. I'll hand it back over to you for questions.
Right now. Thank you very much.
You.
In the ask question box We'll now take our first question over the phone from L. D. Raul from JP Morgan. Please go ahead. Your line is open.
Thank you and good morning. I have two questions, if I may. The first one is, on current trading. I mean, could you give us a little bit flavor of how counter trading has been since October 31st in all of your markets? And second, on your guidance, so I know you confirmed your guidance in the U.
S. For low single digit growth. You've delivered 3.1% in Q1. We know that comps get much easier in H2. So at this point of time, given, I think consensus is around 3% for the year.
Do you think the risk is more on the upside or downside? Thank you.
The, I think in terms of we clearly don't get into monthly results, but what I've given you today is very much an inline statement, I think, we don't expect significant changes as we move forward. Clearly, I think our visibility is pretty limited in the market. But sort of linking your second question in as well, we haven't seen fundamental changes in the market. I think you've seen that from the external data that's available, through what has been our quarter 2 is not that much different to quarter 1. And therefore, I think our job remains pretty focused on outperforming what we see is broadly flat markets and continuing to just concentrate on providing great service to our customers, nudging up that gross margin for the service we provide and controlling our costs.
So that's the job in hand. I think in terms of, you're right, I think consensus is 3%, 3% pretty close to what we've delivered. I think given what we see with the market, and I think the uncertainty we see in most global markets actually and certainly in political environments. I think those are not silly numbers. People will clearly do what they what they wish to do with their own numbers.
But I don't think it's a it's a DAF number for us to be, basing the business on, and we feel pretty good about the next three quarters ahead for us to deliver.
Thanks. Thank you very much.
Question from Yvespromet from Exane BNP Paribas.
Good morning, gentlemen. I have a few questions actually. So first one is on the de merger in the UK. We've seen recently one of your peers who's paused its divestment process. So you do see this as maybe the current environment being probably not the best one to be a seller of such businesses.
Is there a limited interest or what what's the current situation here in the UK for yourself? My second one would be on the organic revenue growth in the U. S. Could you help us in maybe giving us the split between what you've seen in residential and non residential? And lastly, on the buyback, should we expect something new early next year?
Or is there a risk that some of the M and A opportunities that you have identified could potentially limit your buyback opportunities going forward? Thank you so much.
Now, listen, thanks for your questions. Let me take questions 13 and I'll introduce Mark to answer number 2. Question on the demerger, of course, with the demerger, we'll crack on with the demerger, and we'll get that done in 20 20. You're right, Travis Perkins have announced a pause to their divestment. I think importantly to note here, we are demerging the business So, the simplest way I describe this to our associates is taking a share certificate, ripping it up into two pieces, one large one, one small one and shareholders will still have both pieces of paper, of which they are clearly free to do.
What they want in either piece. So the demerger is totally within our gift of process, if you like. It's a rather long process, but it is a process that we just needed to get through. We've a good management team. The UK business with a different lens on it is a good business.
It has good cash flows. Just within the Ferguson of PLC portfolio, it is viewed with a different lens. And therefore, I think for Walls of the UK, the demerger is the right option and we'll crack on with that. And as I say, that's entirely within our control. We do not need a buyer clearly as it's a demerger process.
In terms of your buyback question, I think I'll just sort of go back to our capital policies unchanged. Just to remind everybody, I know I get a little bit boring on this one, but, we deployed capital in the following order back into the business for organic growth, we've clearly continued to do that. For dividends, you've seen us continue to do that. And therefore, what I call sort of buckets 3 and buckets 4, buckets 3 is M and A. Good M and A opportunities, totally in line with our strategic intent.
With good returns, that comes ahead of repatriating money to shareholders in buybacks. So I think you actually said, is there a risk that buyback will be limited by M And A? Only if it is better? If we do M and A, then clearly, we won't be into bucket 4, but depends how much we do. So the balance always between repatriating capital to shareholders is, as you point out, how much M and A we do.
I don't see it as a risk. I see if we do M and A and a good M and A for us in North America, they will be great opportunities that will be better for our shareholders than giving the money clearly though to balance that, if I don't believe there is a healthy pipeline and we are towards the bottom of our range, then clearly you have seen in recent history, we're not shy of giving money back to shareholders when we don't need it. We have a good track record of doing that both under my stewardship and pre Mike Powell. So I think you should expect us to be very capital disciplined, as we have been up to now. Mark?
Steve, we obviously don't have P and Ls for resi non resi. So it's probably more helpful for me to sort of give you a sense of market growth. Our resi markets, I know there's been a little bit of an uptick in recent weeks in terms of some of the indicators that we will look at but resi broadly grew about 1% in our business market, in the first quarter. Commercial is probably a tad better than that sort of 1% to 2%. Infrastructure is a solid 2% and industrial markets, as we said, are probably tougher at sort of flat.
So overall total market is sort of flat to 1%. Hope that helps.
Yes. Thank you so much for that. Thanks, Heath.
We'll now take our next question from Paul Checketts from Barclays Capital.
Good morning. I've got to ask three questions, please. Mike, the fact that in the gross margin being down in the quarter, would you just run us through those please. That's number one. The second is on the voluntary redundancy program.
Did that go as expected? And then the last is on acquisitions, the SW Anderson acquisition. Remind me, have you got HVAC exposure already in New York or does that is that sort of you've made that acquisition to bring that exposure? Thanks.
Sure. Paul, thank you. Yes, no, gross margin, as I say, we feel still good about gross margin. Our guidance is always just every year, we generally say, we always budget to nudge it up 10 bps as we provide good service to the customers, which help our customers. Clearly, there's no coming off that.
We don't see any market a reason for that at all. Q1 comp last year was pretty tough. It was actually our highest, gross margin in the year. Sequentially, so Q4 to Q1, gross margins are up. So again, I think that backs up what we're saying.
There has been, of course, slower top line growth. So we are and have had to work pretty hard with our vendors, to work through rebate structures because of course the market has moved quite dramatically from sort of near double digit growth to low single digit and therefore working that through. And there's been a little bit of impact from commodities as well. So I think the number of factors, Paul, I think the main one, to focus on was Q1 comps last year. And fundamentally nothing changed in the market from our perspective.
3 early retirement program that has been executed absolutely to plan. I'm very pleased the associates in the U. S. The management team have got through that. In a good style.
It is important for us with our values and our culture to execute these things properly and appropriately and those heads have now left the business, as I said, at the end of the quarter. So that's all gone to plan Paul, Mark?
Just on the Anderson, acquisition, Paul. No, you're right. We this is New York. So the business has got number of sites across the New York Metro area, which is obviously one of the largest, trading regions in the U. S.
So really important for us. And you remember last year, we acquired Woolworth, which was also a specialist HVAC business, and Blackman. So it actually builds out our range of OEMs that we can, stock for customers and that choice is really important for them. So No, it's a great it's a great deal for us because it gives us that broader, OEM offering for customers, which is what they want.
Thanks. It sounds like your commentary on acquisitions is probably a bit more positive than it was at the full year results. Is that fair, Mike?
Yes, I think around the soft agencies, Paul. I think we're probably,
a touch,
more optimistic we could close a couple now than we were at year end. I think I'm always cautious on acquisitions because they are binary, of course, they there was always a big pipeline of acquisitions that we're working on. You're probably right in the sort softer sentiment that there's a couple. But, you know, as I say by the half year, I might be sat in front of you back to each point saying actually, you know, those have gone away and you know, we'll be looking at other ways of deploying capital. So I think it's one of these things, Paul, that you'll never get right, we always actively work the pipeline.
We're pretty active right now. Don't take that for you know, we're paying 2 multiples certainly points in the cycle. I think you know, our acquisitions are always, long term relationships and great businesses, but we want to own and want to be part of the Ferguson family, so, if that helps.
Thanks. Yes, it is.
We'll now take our next question from Clyde Lewis from Peel Hunt.
Good morning, Mike. I've got a couple as well, if I may. Can I come back on the gross margins? And obviously, you flagged the 2 big projects that you're missing this year that you had last year, would it have been fair to say those 2 big projects would have attracted a lower gross margin last year? And maybe then the underlying sort of gross margin changes is a little bit bigger within that.
The sort of first one. The second one I had was just really an update as to where you think the run rate currently is in terms of both sales price inflation and underlying cost inflation at the moment?
Yes. Clyde on Industrial, I'm sure you're right in the detail they're pretty small. I mean industrials are a small part of our business less than 10% and clearly therefore the impact on them is pretty small. And therefore, I don't think there's anything anything more to read into that. The second question on run rate Sorry, just remind me.
Sales inflation, sales
inflation, sales inflation run rate. 1 2 is probably on selling price inflation. Cost base, labor is probably 2 2a half. It's probably not got a 3, but it's probably 2a half overall. So clearly, we need to, keep an eye on that.
I think the other thing, Clyde, just on inflation, back to Paul's question a little earlier, we continue to invest where we need to invest as well. So, we'll cope with inflation we'll keep nudging the gross margins, but we continue to invest in the business where we need to. So it's really important for us not to run the business q by q, as I've always said, and make sure, we can cope with inflation. That's what the voluntary early retirement program allows do is to get fit for the business that we see going forward with the revenues being a bit lower, but also to allow us to invest and make sure that, we can pay our associates who deliver the value, wage increases, for example. So does that help?
Yes, it does. I mean, the follow-up I did have as well was on I suppose on Canada as well, given the difficulties you're still facing into the marketplace? I mean, what are your thoughts about sort of as far as the underlying cost structure there? I mean, you're having
Yes. No, it's a good question, Clyde. I mean, Canada has been tougher than we expected. We sort of exited Q4. It's pretty tough And that's continued certainly through, the majority of the Q1 I think the very fact that I've commented specifically that we have seen some early signs of some stabilization more laterally in Canada.
And also we haven't announced sort of further cost cuts in Canada, put those 2 together. It probably tells you that we're feeling a little bit better. We remain a pretty cautious, if Canada doesn't get better, and as a CFO, I'm always the most miserable one in the room, if Canada doesn't get better, we will clearly look at the cost base again. I think early signs, not bad, somewhat better than it has been. Canada, it does tend to be much more volatile than the main USA markets, mainly oil oil related and various economies.
The West has been pretty weak in Canada. So I think, listen, Clive, we'll keep an eye on it. As you know, it's an important market for us. It's got a good management team up there, there's a good ability to generate good profits, it's a good profit pool. It's just been a pretty tough probably 6 to 12 months in Canada.
But as I say, it is showing some signs of getting a bit better. We'll keep a very close eye on it.
Okay. Thanks, Mike.
Thanks, Scott.
We'll now take our next question from Sureshini Bernasi from Goldman Sachs. Please go ahead. Your line is open. Hi,
good morning. Just a couple for me, please. On the UK demo, you mentioned going to get completed in 2020. Do you have any further detail on the timing of it? Will it be in the first half or second half of twenty twenty?
And the second one is on the listing of the U. S. Canada business. What can we expect for the details of this, please? Where it will get listed and how the listing will be done?
Thank you.
Thanks, Suresh. No no more specifics on the UKD merger. I think people are Naomi, I mean, we will get on with it as quick as we can. Demerges require lots of process. So I think you'd expect us to get on with it, but 2020 is as good as I'm afraid I'm going to give you.
Right now. In terms of the U. S. Listing options, clearly, I think your question is just really about the listing review. The board continued to work that hard with advisers.
At the full year, we said we would update the market, but that was unlikely to be in 2019. That still remains the case. I think rest assured, the board, now of course led by Geoff Drbul, who's in the chair out of a couple of weeks ago. Is working that pretty hard, with the advisers, and clearly we'll update our shareholders and the market in due course, but I don't think you should expect that to be 2019. Thanks, Huresh.
We'll now take our next question from Gregor Kuchlitsch from UBS.
Hi, good morning. I've got
2, 2, 3 questions.
So the first one is for the more an important one. Can you just maybe walk us through what you're thinking on margins for the U. S? Obviously, you've commented on gross margins sort of 10 basis points, but on the OpEx line, what opportunities do you see kind of on a sort of your view. That's the first question.
The second 2 are a little bit more technical. Can you just update us on, I think, in the full year results in October, you were guiding for $15,000,000 incremental from acquisitions on trading profit. You just update where we are on that given the sort of new transactions, please? And then similarly now for 2016, so I think you said 50 annual 18 in the quarter. Just want to check if this is still okay.
And then in that context, when you say you're in line with expectations, are you referring to the group, the published consensus on your website of, I think, roughly 17, 20 including accuracy. Is that what you're talking about?
Okay. Thanks. I think there's four questions there. So let me take U. S.
Margins, I think you're talking about profit divided by sales. So as I say, we'll we continue to work gross margins, cost base I've already explained. I think overall, we we said at the beginning of this this year, there's no change. What's important for us as a team in terms of delivering for our shareholders and delivering the right service to our customers is in low growth environments, making sure that growth in the bottom line profit is at least or greater than the growth in the top line. So, we need to continue to do that.
You've seen we did that in the quarter. I have to tell you, I'm pretty pleased with that. I know from a spreadsheet perspective, you like I probably plug it into a spreadsheet and you rightly expect us to go away, deliver it tech, we expect us to deliver it. I'm pretty pleased as the CFO that, we have got after that because it has been a big change for this business to move from nearly double digit revenue growth environment to flat markets and it is great that the team have gone after and delivered bottom line growth at least in line with top line growth. That has been a big transition for this business, and the team have worked really well with it.
So I am pleased about that. And I think you should expect that as we go forward. In terms of acquisition guidance, I think it's minimal change. I think we put 15 up I think with the new acquisition, you could move that to 20. So I think that's a small adjustment.
IFRS 16 yeah, we guided 50, again, I think, Satya today, as you say, we did 18 in the quarter. It's probably near a 70. That probably links into consensus, Mark, as well in terms of what we're
trying to do. Yes, Gregor, you're just under seventeen-twenty is right. I mean, it's 1717 on the website today. Just bear in mind, just because there's a few moving parts at the moment given IFRS 16 and some analysts got it in their numbers and some have we've adjusted everyone's numbers for our original guidance of 50, which obviously probably needs to come up slightly But that includes the UK as well. So that's an all in number.
But you're right, just under 17 20 is consensus.
Thank you. We'll now take our next question from A. Z. Lammin from Canaccord.
Hi, good morning. 2 from me, please. Firstly, just on the UK, I wondered if you could give a bit more color. Sounds obviously organic growth down 4 there was any price inflation in that? So what were volumes?
And has there kind of trend into October, November got worse? Maybe if you could say a bit more on the competitive environment in that context as well? And then just second one, just following up on the earlier response you gave to the about the U. S. Listing structure.
Is it right to interpret that? You said the board's working hard on that, the kind of decisions that's been made to lift in the U. S. It's just or really now haven't spoken to shareholders about how you go about doing that? Or have you still yet to confirm that you will definitely you've taken the decision that the U.
S. Listing would be the best way to progress?
Thanks. So on the listing, let me tell that first. The there has been no decision to change the listing what we have said we will do because shareholders have asked us to do it is to look at the options, and clearly those options are bound by staying where we are, moving to a full U. S. Listing or listing elsewhere, but clearly that would most likely be a U.
S. Listing or anything in between. So there have been no decisions taken. We have certainly had a 1st round discussions with shareholders, John said, at the year end, there was a wide variety of views, which remains true, and we continue to look at all of those options in the interests of all of the shareholders. So there has been no decision taken, and we continue to do that work.
At pace. And in terms of the UK, the price inflation is about 2% in the UK, same in Canada, a little bit lower in the U. S. And in terms of any significant moves, again, If I just stick with the market rather than our own performance, I don't think the market's changed dramatically. I think large contractors, it's pretty tough.
And UK uncertainty continues. So I don't think it's dramatically changed, market wise.
All right. Well, very clear. Thank you very much.
Thank you.
Our next question comes from Stephen Golden from Deutsche Bank.
Thanks. Just I know you've talked about it already, but just if you could give us a bit more color on how you see the resi markets? Obviously, some of the home sales data has picked up quite a bit recently. Any kind of views on how you're seeing that flowing through and your kind of high level thoughts on the consumer and whether any signs of weakness coming through there? 2nd one would just be on, the degree of outperformance versus the underlying market.
Historically, you've managed about 3% on top of the market and that's basically what you've done now. How how confident are you that this can continue? Do you see this, running out steam at certain points or do you think there's still a fair bit of runway to go on that degree of outperformance? And last question would just be, you've obviously talked quite a bit about cost control. If things do turn out to be a bit weaker than you'd thought, what levers do you have?
What further levers do you have to pull on cost to maintain margins over the next few quarters? Thanks.
Yes, let me take the cost leaders and then, Mark will touch on the market. Cost leaders, again, we said this on record before, we will if we need to pull cost levers, we will do most of our cost base is pretty variable 60% of our cost base is actually, human beings and its associates. We are always a pretty damn careful to pull that one carefully because they're also the people that generate, the service and the knowledge base that generates our gross margin. So you pull that very carefully, and only if you believe that downturns are persistent. I do not pull those for quarterly results purposes, because that would be choking off future growth.
So I think, listen, this there's opportunities there. I think we demonstrated that in the downturn. I think we've demonstrated it when we saw the market change some 9 months ago. That we can pull those levers. But again, it is a bouncing act not to choke off future growth and to ensure we really give our customers great service, to allow them to win business.
Which plays our gross margin.
Mark? Just on resi markets, just to remind you, obviously, 50% of our business goes into resi. But about a third of that is new resi. I think quite a lot of people have been picking up on the fact that I think particularly new residential indicators have been ticking up a little bit. It's not a massive part of our business, and therefore, I don't think we particularly noticed it in an uptick in our business itself.
I think in the broader market, which is really where we play repair and maintenance, an improvement market. You know, some of the data there is still pretty stodgy. If you I'm sure you guys follow LIRA's as we do that, that looks, I think, a bit optimistic at the moment, but they've got sort of there starts coming down to sort of a broadly flat market, over the next 12 months, which which looks a pretty steep decline, but the sort of the broader and wider market context in terms of existing home sales, which is good indicator that we look at. That's ticked up. And the broader U.
S. Consumer numbers are all positive. We've got good employment statistics in the U. S. The U.
S. Population is growing by sort of 30,000,000 every 10 years. Great job creation stats, you know, 2,000,000 jobs a year, low unemployment at 3.6 percent and wage growth. So there are some reasons to be, a little bit optimistic about the U. S.
Resi, but we're not seeing it in the numbers today.
And in terms of the outperformance, no, I mean, very simple answer, yes, we continue to challenge ourselves and expect ourselves to outperform the market. So There is a history of doing that. I don't think we see, that runway changing. It is about us sticking to the qualities of our business. That is a service knowledge business.
And we need to make sure we have great product availability, great associates. So a little bit back to your other question, we need to make sure we continue to deliver that service, and therefore outperform market. So no change in that expected.
Question from the webcast because it's from a U. S. Analyst, Catherine Thompson at TRG and considering she got up 3 o'clock in the morning after the field duty bound.
Catherine, you deserve it. To answer your question.
The question is one of your key suppliers in its September quarter end results. Noted that the U. S. Market affirmed up at the beginning of calendar Q3 with a notable difference in September carried through into October Are we seeing any improvement in momentum in the U. S.
Market? I mean, I think I've covered it, Catherine, not noticeably I think we see the U. S. Market broadly as flat and we haven't particularly seen an uptick in recent weeks that we could point Hope that helps.
All back to you.
Thank you. Our next question comes from John from my apologies from Christian Holt from Numis. Please go ahead. Your line is open.
Good morning, everyone. Just a couple from me. First of all, given the lower growth environment in the U. S, are you seeing much in terms of competitor price action? And the second one, as we stand today, looking at H1, H2 splits for the year overall, do you expect it to be broadly in line with, historic averages?
Sorry, I missed your second question. I got the first one. Just remind me Sorry.
The second was just on H1 H2 split. As we stand today, do you expect the year to play out similarly to lower on average levels?
No, thanks. So competition in the U. S, no, I don't think I mean, listen, the tariff causes quite a bit of noise. Political tweeting causes a bit of noise, and clearly there's lower environments that everybody is having to adjust to. You can see from the publicly available information of both our vendors and our customers, everybody is managing to adjust to that quite well.
And you're not seeing a great change in the shape of anybody's results, coming through other than of course the top line. So there isn't a dramatic change think everybody needs to continue to work hard at that, but we're not seeing a significant shift. In the competitive market?
I think I would I would assume on shape of the numbers. I wouldn't I wouldn't expect the shape to be particularly different, in terms of I think you're talking. You're talking froth? Yeah, yeah, I think in terms of terms of seasonality of the business that there's no reason why that mix should change. I think Paul operator, I think that we have got a couple more questions on the line, but I think on the basis that we probably quite a lot of ground.
We'll probably leave it there if that's okay. And we're happy to for people to call us afterwards if you've got any further questions.
Paul. Over to you. Thank you very much everybody for joining and thanks for your interest where we are. If you need to grab hold of us, please do so. We're at your service.
Thanks very much, all.
Thank you. This concludes today's call. Thank you for your participation.