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. Morning to everybody. Welcome to the Ferguson conference call, covering our first quarter results for the 2020 financial year. You've got myself, Mike. I'm also joined by Mark Fearon 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. Since then, we've been on the road seeing shareholders. 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. 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. Just before I start, it's worth noting that we have moved the U.K. 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 million to Q1 trading profit. Total growth for the ongoing group, 5.4% 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, but 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, of course, in the lower growth environment, but we also continue to invest where appropriate for the future. Underlying trading profit came in at $433 million, up nearly 5%, representing growth of $20 million in the quarter. A bit more insight into the operations. In the U.S., we generated revenue growth at 6.2%, which comprised 3.1% organic growth and a further 3.1% from acquisitions. Price inflation we saw at 1%-2%. Major business units have blended. Branches, Waterworks, and HVAC all continued to grow well in the quarter. Revenue and Industrial was lower against strong comps from the two large capital projects that we talked about last year. Overall, U.S. markets broadly flat, similar to the previous quarter. Resi 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, we feel good about our ability to continue 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 a total revenue growth of 6.2%. 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 million. That was up $25 million 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 million, $7 million below last year at constant exchange rates. There have actually been some early signs of stabilization in the residential markets in Canada with better data on single family. Clearly, we're maintaining a cautious attitude on the cost base until we see that recovery come through. Finally, in the U.K., RMI markets, where we generate the majority of our sales, have been pretty weak. Organic revenue declined 4.2%, trading profit $15 million. That's $3 million lower than last year at constant exchange.
Given the challenging markets, we're continuing to actively manage the cost base, as well as continuing to simplify the organization structure. We incurred GBP 5 million 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 U.K. business in 2020 remains on track. Let me move on to cash flow and net debt. Cash generation in the quarter was good, a 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, S.W. Anderson, 10 locations across N.Y. and Long Island. It's a 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 $328 million. The working capital timing that I just talked about will clearly come back to us through November and December. Therefore, as I sit here at the end of November, we're probably about just over one times levered. There's no change to our full year guidance on CapEx. Still expect that to be about $300 million-$350 million. The forward pipeline for M&A looks healthy. Number of bolt-on deals. We're actively working a couple of interesting opportunities, nothing too large. We'll clearly have a better idea of the outturn for this full year by the time we next speak at the first 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 one to two times. We continue to execute the current GBP 500 million share buyback program, which is ongoing. We've about GBP 65 million to go as of today, 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, which remain unchanged. In summary, we're pleased with the first quarter results.
We've banked an additional $20 million 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 de-merge the U.K. business. Paul, many thanks. I'll hand it back over to you for questions right now. Thank you very much.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you would like to ask a question via the web interface, simply type your question in the ask question box and click send. Once again, that is star one to ask a question and we'll just pause for one moment to allow everyone an opportunity to signal for their questions. We'll now take our first question over the phone from Elodie Rall from J.P. 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. Could you give us a little bit of flavor of how current trading has been since October 31st in all of your markets? Second, on your guidance, I know you confirmed your guidance, in the U.S. for low single digit growth. You've delivered 3.1% in Q1. We know the comps get much easier in H2. 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.
Elodie, thanks very much for your questions. 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 you know our visibility is pretty limited in the market. 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 two is not that much different to quarter one. Therefore, I think our job remains pretty focused on outperforming what we see as 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. That's the job in hand.
You're right, I think consensus is 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 wish to do with their own numbers, but I don't think it's a daft number for us to be basing the business on. We feel pretty good about the next three quarters ahead for us to deliver.
Thanks. Thank you very much.
Thank you. We'll now take our next question from Yves Bromehead from Exane BNP Paribas.
Good morning, gentlemen. I have a few questions, actually. The first one is on the demerger in the U.K., where we've seen recently one of your peer who's paused its divestment process. Do you see this as maybe the current environment being probably not the best one to be a seller of such businesses? Is there limited interest or what's the current situation here in the U.K. 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? Lastly, on the buyback, should we expect something new early next year or is there a risk that some of the M&A opportunities that you have identified could potentially limit your buyback opportunities going forward? Thank you so much.
No, listen, thanks for your questions. Let me take questions one and three, and I will introduce Mark to answer number 2. Your question on the demerger. Of course, we will crack on with the demerger, and we will get that done in 2020. You're right, Travis Perkins have announced a pause to their divestment. I think importantly to note here, we are demerging the business. The simplest way I describe this to our associates is taking a share certificate, ripping it up into two pieces, one large one small one, and shareholders will still have both pieces of paper, of which they are clearly free to do what they want with either piece. The demerger is totally within our gift of process, if you like. It is a rather long process, but it is a process that we just need to get through.
We have 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 plc portfolio, it is viewed with a different lens. Therefore, I think for Wolseley UK, the demerger is the right option, and we will crack on with that. As I say, that is entirely within our control. We do not need a buyer, clearly, as it is a demerger process. In terms of your buyback question, I think I will just go back to our capital policy is unchanged. Just to remind everybody, I know I get a little bit boring on this one, but we deploy capital in the following order: back into the business for organic growth, we clearly continue to do that. For dividends, you have seen us continue to do that.
Therefore, what I call buckets three and buckets four, bucket three is M&A, good M&A opportunities, totally in line with our strategic intent with good returns. That comes ahead of repatriating money to shareholders in buybacks. I think you actually said, is there a risk that buyback will be limited by M&A? Only if it is better. If we do M&A, then clearly we won't be into bucket four, but depends how much we do. The balance always between repatriating capital to shareholders is, as you point out, how much M&A we do. I don't see it as a risk. I see if we do M&A, and a good M&A for us in North America, they will be great opportunities that will be better for our shareholders than giving the money back.
Clearly, to balance that, if I don't believe there is a healthy pipeline and we are towards the bottom of our range, clearly, you have seen in recent history, we are 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. 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&Ls for resi, non-resi. It's probably more helpful for me to 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 all look at. Resi broadly grew about 1% in our business market in the first quarter. Commercial is probably a tad better than that, sort of 1%-2%. Infrastructure is a solid 2%. Industrial markets, as we said, are probably tougher at sort of flat. Overall, total markets are sort of flat to 1%. Hope that helps.
Yeah. Thank you so much for that. Thanks.
Thanks, Yves.
We'll now take our next question from Paul Checketts from Barclays Capital.
Good morning. I've got three questions, please. Mike, on the factors 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? Then the last is on acquisitions, the S.W. Anderson acquisition. Remind me, have you got HVAC exposure already in New York? Or you've made that acquisition to bring that exposure? Thanks.
Sure. Paul, thank you. Yeah. 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 basis points 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 structural reasons 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. Again, I think that backs up what we're saying. There has been, of course, slower top-line growth. 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 near double-digit growth to low single digit, and therefore working that through.
There has been a little bit of impact from commodities as well. I think a 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. In terms of the voluntary 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. That's all gone to plan, Paul. Mark.
Just on the Anderson acquisition, Paul. You're right. This is New York, so the business has got a 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. You remember last year we acquired Wallwork, which was also a specialist HVAC business, and Blackman. It actually builds out our range of OEMs that we can stock for customers, and that choice is really important for them. No, 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 comment 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 edges, 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. There is always a big pipeline of acquisitions that we're working on. You're probably right in the sort of softer sentiment that there's a couple, but as I say, by the half year, I might be sat in front of you, back to [Inaudible] , saying, "Actually, those have gone away," and we'll be looking at other ways of deploying capital. 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 we're paying silly multiples at silly points in the cycle.
I think you know our acquisitions are always long-term relationships and great businesses that we want to own and want to be part of the Ferguson family. If that helps, Paul.
Thanks. Yeah, it does. Cheers.
We will now take our next question from Clyde Lewis from Peel Hunt.
Morning, Mike. I've got a couple as well, if I may. Can I come back on the gross margins? Obviously you flagged the two big projects that you're missing this year that you had last year. Would it have been fair to say those two big projects would have attracted a lower gross margin last year, and maybe then the underlying gross margin change is a little bit bigger within that? Was 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.
Yeah. Clyde, on industrial, I'm sure you're right in the detail. They're pretty small. Industrial is 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 more to read into that. The second question on run rate, sorry, just remind me.
Sales inflation.
Sales inflation run rate. 1-2 is probably on selling price inflation. Cost base, labor is probably 2.5. It's probably not got a 3, but it's probably 2.5 overall. 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. We'll cope with inflation. We'll keep nudging the gross margins, we continue to invest in the business where we need to. 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 us to 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. Does that help, Clyde?
Yeah, it does. The follow-up I did have as well was on, I suppose, on Canada as well. Given the difficulties you're still facing in terms of the marketplace, what are your thoughts about the underlying cost structure there? Are you having-
Yeah, no.
thoughts about what you-
Yeah, no, it's a good question, Clyde. Canada has been tougher than we expected. We sort of exited Q4, it was pretty tough, and that 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 further cost cuts in Canada. Put those two together, it probably tells you that we're feeling a little bit better. We remain 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 does tend to be much more volatile than the main U.S.A. markets. Mainly oil related and various economies.
The West has been pretty weak in Canada. I think, listen, Clyde, 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 6-12 months in Canada. 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, Clyde.
We'll now take our next question from Suresh Thini Baranashi from Goldman Sachs. Please go ahead. Your line is open.
Hi. Good morning. Just a couple from me, please. On the U.K. demerger, you mentioned it's 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 2020? The second one is on the listing of the U.S., Canada business. When can we expect further details of this, please? Where it'll get listed and how the listing will be done? Thank you.
Thanks, Suresh. No more specifics on the U.K. demerger. I think people will know me. I mean, we will get on with it as quick as we can. Demergers require lots of process, so I think you'd expect us to get on with it. 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 advisors. At the full year, we said we would update the markets, 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 Drabble, who's in the chair as of a couple of weeks ago is working that pretty hard with the advisors.
Clearly we'll update shareholders and the market in due course, I don't think you should expect that to be 2019.
Yeah.
Thanks, Suresh.
We'll now take our next question from Gregor Kuglitsch from UBS.
Hi. Good morning. I've got two, three questions. The first one is probably the more sort of 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 and basis points, but on the OpEx line, what opportunities do you see kind of on a sort of multi-year view? That's the first question. The second two 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 million incremental from acquisitions on trading profit. Can you just update where we are on that, given the sort of new transactions, please? Similarly, now for 16, I think you said $50 annual with $18 in the quarter, just want to check the $50 is still okay.
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 GBP 17.20 including acquisition? Is that what you're talking about? Just basically, what is your view on that?
Okay, thanks. I think there's four questions there. Let me take U.S. margins I think you're talking about profit divided by sales. As I say, we continue to work gross margins. Cost base, I've already explained. I think overall, we said at the beginning of 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 the growth in the bottom line profit is at least or greater than the growth in the top line. 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, tick. 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. 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 coped really well with it. 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 GBP 20. I think that's a small adjustment. IFRS 16, yeah, we guided GBP 50. I think sat here today, as you say, we did GBP 18 in the quarter. It's probably nearer GBP 70.
Yeah.
That probably links into consensus, Mark, as well, in terms of what we're trying to do.
Gregor, your just under GBP 17.20 is right. I mean, it's actually GBP 17.17 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 have got it in their numbers and some haven't. We've adjusted everyone's numbers for our original guidance of GBP 0.50, which obviously probably needs to come up slightly. That includes the U.K. as well. That's an all-in number. You're right, just under GBP 17.20 is consensus.
Thank you. That's clear. Thanks a lot.
Thanks.
Thanks, Gregor.
Thank you. We'll now take our next question from Aynsley Lammin from Canaccord.
Hi, morning to from me, please. Firstly, just on the U.K., wondered if you could give a bit more color. Sounds obviously organic growth down 4%. Was there any price inflation in that? What were volumes, and has the 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. Just the second one, just following up on the earlier response you gave to the question about the U.S. listing structure. Is it right to interpret that you said the board's working hard on that, the kind of decision has been made to list in the U.S. is just all really now, having spoken to shareholders about how you go about doing that?
Have you still yet to confirm that you've taken the decision that the U.S. listing would be the best way to progress? Thanks.
Thanks. On the listing, let me take that first. 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. 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. There have been no decisions taken. We have certainly had first-round discussions with shareholders. John said at the year-end, there was a wide variety of views, which remains true. We continue to look at all of those options, in the interests of all of the shareholders. There has been no decision taken, and we continue to do that work at pace.
In terms of the U.K., the price inflation is about 2% in the U.K., same in Canada, a little bit lower in the U.S. 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. U.K. 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. 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? Second 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 confident are you that this can continue? Do you see this running out of steam at a certain point, or do you think there's still a fair bit of runway to go on that degree of outperformance?
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.
Yeah, let me take the cost levers, and then Mark will touch on the markets. Cost levers, again, we said this on record before. 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 it's associates. We are always 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. 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. I think, listen, 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 nine months ago, that we can pull those levers. Again, it is a balancing act not to choke off future growth and to ensure we really give our customers great service to allow them to win business, which pays 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 construction indicators have been ticking up a little bit. It's not a massive part of our business. 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 and improvement market. Some of the data there is still pretty stodgy. I'm sure you guys follow LIRA as we do. That looks, I think, a bit optimistic at the moment, but they've got their stats coming down to a broadly flat market over the next 12 months, which looks a pretty steep decline.
The broader and wider market context in terms of existing home sales, which is a good indicator that we look at, that's ticked up. 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 30 million every 10 years. Great job creation stats, 2 million jobs a year, low unemployment at 3.6%, and wage growth. 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.
In terms of the outperformance, very simple answer, yes, we continue to challenge ourselves and expect ourselves to outperform the market. 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, a knowledge business, and we need to make sure we have great product availability, great associates. It's a little bit back to your other question. We need to make sure we continue to deliver that service, and therefore outperform the market. No change in that expected.
Great. Thanks a lot. Can I just jump in, Paul, and ask a question from the webcast? It's from a U.S. analyst, Kathryn Thompson at TRG, and considering she got up at three o'clock in the morning, I sort of feel duty bound.
Kathryn, you deserve it.
to ask the question.
You deserve your question.
The question is, one of your key suppliers in its September quarter end results noted that the U.S. market have firmed up at the beginning of calendar Q3, with a notable difference in September carry through into October. Are we seeing any improvement in momentum in the U.S. market? I think I've covered it, Kathryn. 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 to. I hope that helps. Paul, back to you.
Thank you. Our next question comes from Christian Hoff from Numis. Please go ahead. Your line is open.
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 competitive price action? 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 of the second?
Sorry, the second one is just on H1, H2 splits. As we stand today, do you expect the year to play out similarly to long-run average levels?
No, thanks. Competition in the U.S. Listen, the tariff causes quite a bit of noise. Political tweeting causes a bit of noise. 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. You're not seeing a great change in the shape of anybody's results coming through, other than, of course, the top line. There isn't a dramatic change. I think everybody needs to continue to work hard at that. We're not seeing a significant shift in the competitive market.
I would assume on shape of the numbers, I wouldn't expect the shape to be particularly different.
You're talking profit now.
Yeah. I think in terms of seasonality of the business, there's no reason why that mix should change.
Thank you.
Paul, operator, I think that we have got a couple more questions on the line. I think on the basis that we've probably covered quite a lot of ground, we'll probably leave it there, if that's okay. We're happy 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. You know 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