Hello, and welcome to the Ontex Q2 and H1 Results Call. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen-only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero and you will be connected to an operator. I will now hand over to your host, Geoffroy Raskin, Vice President, Investor Relations, to begin today's call. Thank you. Good afternoon, everyone, and thank you for joining us today. Before I pass on to our CEO and CFO, let me remind you of the safe-harbor regarding forward-looking statements. I will not read them out loud, but I assume you will have duly noted them and read them. I would also like to repeat that since 2022, we now present our emerging markets as assets held for sale and discontinued operations following the strategic review end of last year and our subsequent plans to divest these, and as you know, we made progress there. Our P&L going forward will thereby only encompass our core markets as continuing operations, and in the meantime, we will continue to provide you with business information for both continuing and discontinued operations, and we'll make clear throughout this presentation what scope we cover. Now let me pass over to Esther, our CEO. Good afternoon, everyone, and thank you for joining us today. Our turnaround is well underway, and we are delivering on many of the strategic priorities we set last year. I would like to take this opportunity to thank all Ontex employees who are working tirelessly to turn around our group. Thanks to these efforts, Ontex is delivering in the areas where we have control, even if this improvement is not yet visible in our results and our adjusted EBITDA has continued to be severely impacted by the unprecedented cost inflation. The strategy is delivering excellent volume and mix growth driven by new customer contracts, our strategic growth drivers, pants, adult and North America, and a favorable market momentum. Our actions to reduce the group's structural cost base and bring down our break-even point continues to deliver with a further 4% cost reduction in H1. However, inflation continued to rise, impacting our overall cost by 20%. More specifically, raw materials were up 30% with an impact on EBITDA of some EUR 180 million in the first half. Even if we see some signs of stabilization in the index evolution, other costs, such as energy and wages are still increasing. Against this backdrop, we have continued to increase our prices to reach 8% on average in the first half. Pricing actions are continuing as we still need to close the gap compared to the cost increase in our products. On the portfolio side, the divestment of the Mexican business for EUR 285 million represents a major milestone in our strategy to shape the group. The proceeds from the sale will contribute to reducing our net debt and will strengthen our financial structure. I am convinced that Softys, with its 40 years of experience in the personal hygiene market in Latin America, is very well placed to take the business forward, benefiting from the talent and expertise of our team in Mexico. We expect the deal to close by the beginning of 2023. Let us now look in more detail at the results for the first half of 2022. Like-for-like revenues for the total group were up significantly by 15% to EUR 1.2 billion, with our core businesses up 12% to EUR 781 million. Our adjusted EBITDA margin was 4.3% for the total group and 5.1% for our core businesses due to the impact of cost inflation, which I will come back to in a minute. The group's net loss of EUR 177 million is negative, and negative EPS was impacted by two non-cash one-off impairments, totaling EUR 144 million. First, our decision to ring-fence our Russian business as a standalone operation and secondly, the consequences of the divestment of our business in Mexico. Peter will come back on this. Regarding the financial structure of our company, the drop in the adjusted EBITDA and increase in net debt to EUR 826 million results in a higher leverage of 6.8x. On slide six, you can clearly see how we have steadily turned around the top line since the beginning of 2021. H1 2022 is the highest revenue recorded by Ontex in the last 5 years, built on five quarters of sequential growth. The 15% like-for-like growth in total revenues was driven by a 7% increase in volume mix, as well as an additional 8% increase driven by pricing. This trend, in my opinion, is very encouraging. This brings me to slide 7 and a bit more detail on how we are delivering the 7% volume and mix growth for the total group. The overall market is growing, and retail brands are gaining share, particularly in baby pants and in feminine care, as consumers look for more cost-effective alternatives to A-brands. Moreover, Ontex is outperforming the retail brand market in most categories, thanks to customer wins and the momentum of our four strategic growth drivers. Our penetration in the North American market continues to grow, resulting in double-digit volume growth in H1. From now on, we will benefit significantly from the startup of a new production facility in North Carolina. Baby pants grew very strongly double digits based on our renewed product design and a solid growth of retailer brands. Adult care is also delivering significant volume growth with up solid single digits in H1. We also see growing interest for sustainable and natural solutions with double-digit growth in organic, cotton-based baby and femcare products, and we increased the recycled content in our packaging. All these product growth drivers fuel volume growth and improve our mix, as these categories have more added value and higher price points. In parallel to restoring top line growth, bringing down the group's structural cost base is key to the turnaround. We have delivered EUR 36 million of cost savings in the first half, which is consistent with our objective to bring the group's cost base down by 4% each year. Operating cost savings were significant. We continue to reduce scrap rates and improve operational efficiencies while benefiting from the footprint optimization in Europe. We also see growing contribution for Design to Value innovation. This is where we renew the design and composition of our products in collaboration with our suppliers and customers to reduce the cost while preserving performance and quality for the end consumer. On the SG&A side, we have been focusing on offsetting the impact of inflation after the restructuring efforts, which led to a solid net reduction last year. In 2021, we set the target to bring down SG&A spend to a maximum of 10% of revenue, and I am very pleased that we have already hit the target in H1, down from more than 13% in 2020. In our core markets, we have achieved even better results, with a 4.6% cost reduction in H1 and SG&A over sales ratio of 9.7%. The cumulative savings since the start of 2021 now stand at EUR 110 million, and we expect the momentum to continue in H2 and in 2023. These cost savings will stick for the long term and will be a significant driver to the group's future profitability and value creation potential. However, in the short term, these are not sufficient to offset the extent of input cost inflation. On slide nine, you see the extent to which the raw material indices have climbed since the beginning of 2021. The increases of the main indices now range from 40% to as much as 80% over the past 12 months. We have seen further increases in 2022, especially for fluff and SAP, which have impacted our costs in Q2 and overall raw material costs, as I said before, were up 30% year-on-year. While we have seen early signs of a stabilization in the indices and even some reduction outside Europe, the increase in energy, transportation, and other costs represent a headwind, impacting our distribution and transformation costs significantly. This is why pricing is so important for Ontex. On slide 10, the chart illustrates the steady ramp-up of our pricing momentum for the group as a whole, from the negative trend in 2020 and the first half of 2021 to +7% in Q1 2022, +10% in Q2, with an exit rate of 12% in June. Obviously, this is not enough as our margins show, so we will continue to roll out further price increases to help offset the raw material costs that remain at an extremely high level. Slide 11 gives us a summary of how our EBITDA evolved since the start of 2021. On the left-hand side, you have the overall picture of how adjusted EBITDA has evolved over the last 18 months. The blue line represents the net impact on EBITDA between the underlying value creation in green and the net cost inflation in red. While clearly the net impact remains very negative, the gap has stabilized, and we expect this gap to continue to reduce as net cost inflation levels off, pricing flows through, and underlying value creation accelerates as we continue to execute our strategic plan. The other two bar charts break out in more detail the moving parts of value creation drivers and cost inflation. The middle bar chart in green illustrates the underlying value creation with a run-rate of around EUR 30 million per quarter in 2022. While cost reduction measures delivered consistently since 2021, the growth in volumes and mix mark a significant change in 2022, as you can see, and we intend to keep this pace going forward. On the right-hand side, you see in the bar chart in red the evolution of pricing against the unprecedented cost inflation. You see that we have steadily increased our prices in the face of higher and higher cost inflation. However, we are still behind, so we will continue to increase prices to catch up. I will now hand over to Peter, who will take us through the Q2 and H1 financial results in more detail. Thank you, Esther. Where Esther primarily focused on the H1 results for the total group, I will focus on the reported P&L numbers of core markets in Q2 and the cash implications on the group Q2. On slide 13, you'll find the key figures. This confirms the double-digit like-for-like revenue growth for total group and core markets and shows a sequential improvement versus Q1. Pressure on EBITDA margins increased slightly in Q2 versus Q1 as a result of further raw material and other input cost increases, only partly offset by the profit gains from pricing, mix, volume, and cost reduction programs. Net debt remains under strict control, and we improved it compared to March with free cash flow generation. With the decrease in operating profits, our leverage has increased to 6.8. When we break out the Q2 revenue in our core markets on slide 14, we see how the 10% like-for-like revenue growth splits half in volume and mix and half in positive pricing. Q2 core revenue grew 3% compared to Q1, and this marks, as Esther said, 5 consecutive quarters of sequential growth. We also benefited from a foreign exchange tailwind of +4%, taking the overall core market growth to 14%. The volume growth was driven by retailer brands gaining traction in a solid underlying market and Ontex outperforming above that with contract gains in Europe and North America. The momentum of pricing is going well, growing month after month with 5% in the quarter, up from 2% in Q1, and with June already marking 7% pricing. Further price increases are planned in the coming months. The momentum is particularly encouraging when you look at the pie chart in the middle of the slide, with baby care and adult care posting solid double-digit rates of revenue growth, and this primarily in pants. As Esther highlighted, these are the growth drivers we invested in through innovation and capabilities. Q2 revenue in North America was in line with Q2 and increased double digits for the half year. Turning to Q2 adjusted EBITDA for core markets on slide 15, we see the very significant and full impact of the unprecedented input cost inflation of EUR 76 million. The total cost base is up about 25% in Q2, driven by higher indices, but also by higher energy and distribution costs as well as wage inflation. Our own distribution and transformation costs went up as well. Costs have further increased versus Q1, mainly in our core markets, actually in Europe, with the impact of the geopolitical events. Against that, we delivered in the quarter almost EUR 50 million of increased profits from areas that we control, from volume, mix, pricing, and cost savings, which together is more than last year’s EBITDA in Q2. We continue to consistently deliver on our cost-savings programs as we did over all previous quarters, and as Esther pointed out, the pace is higher in core markets, where we expect to deliver more than EUR 60 million in a year. Operating savings focused on manufacturing footprint review, operational efficiency, and Design to Value, and a strong cost containment in SG&A to more than offset inflation, allowing to drop SG&A to 10% of sales. As a result of that, adjusted EBITDA in Q2 dropped to EUR 19 million, with a margin standing at 4.8%. What I want to make clear is that core markets are at a different point of the margin recovery cycle than our emerging markets. Inflation hit earlier in emerging markets in H2 2021, whereas it accelerated in core markets from Q1 to Q2 this year in light of the geopolitical context. Pricing has been initiated earlier also in emerging markets on our branded business there, whereas pricing in core markets takes longer and is still very much ramping up. As Esther said earlier, our cost reduction measures are structurally bringing down the group's cost base by 4% each year. This and mix improvement with a strong volume growth in baby care and adult care will drive value creation further. That underlying value creation, together with more pricing to come, will eventually more than offset the cost inflation. Looking at the bottom half of the P&L for the first half year, Ontex's EPS for total group fell to a negative EUR 0.08 per share. This is explained by four factors. First, adjusted EPS from continuing operations decreased from EUR 0.27 to -EUR 0.14 as a result of the lower EBITDA compared to 2021, positive tax impact, and a minor impact of slightly higher depreciation and financial costs. Second, the non-recurring costs required to optimize the manufacturing footprint in Europe totaled EUR 6 million. Third, our decision to ring-fence our Russian business as a standalone business, serving only local essential products and in full compliance with European sanctions, resulted in an impairment of EUR 84 million. Finally, to add to this, the loss from discontinued operations. While the business result was positive there and is improving sequentially with sales growing quarter over quarter and margin improving also from the low point in Q4 last year, one-time elements resulted in this net loss of EUR 72 million. These one-time elements consist of EUR 9 million, mostly restructuring charges, mainly in Ethiopia, and a non-cash valuation impact from hyperinflation in Turkey. On top of that, we booked a non-cash impairment on the Mexican activities. This was triggered by the reverse carve-out of the Tijuana plant, which remains in core markets to support the growth in North America. Turning to cash, for the total group on slide 17, with free cash flow negative in the period at -EUR 59 mil lion. Starting from EUR 49 million absolute EBITDA for the total group. There is a slight increase in CapEx versus H1 2021 due to continued momentum of investment in our strategic growth drivers. The ramp-up of the new US East Coast plants, efficiency projects throughout the group, and innovation. However, we're still keeping a strong discipline in optimizing also this CapEx with 2.3% of revenue so far, likely to increase in H2. CapEx, including lease payments, still exceeds our depreciation, securing our investments in strategic growth and cost reduction initiatives. Working capital needs increased by EUR 34 million, and this mainly due to two factors. First, revenues were 12% higher in Q2 compared to the last quarter of 2021, and the difference is even more pronounced in the last months of the periods, with volumes up, raw material inflation impacting inventories and accounts payable, and higher pricing affecting the accounts receivable. Secondly, we're still keeping a security margin in our raw material inventories to ensure production momentum and flexibility in a market where there are still supply constraints. Finally, it's important to note that the free cash flow turned positive in Q2 as a result of a working capital inflow. Net debt totaled EUR 826 million at the end of June, up by EUR 100 million on December due to the negative free cash flow, which could not offset the financing expenses. Compared to the end of March, debt came down as we managed to reduce the working capital needs after an accelerated level of demand in March. It will come down significantly after the closing of the Mexican divestments, which will allow us to reduce gross debt with the EUR 220 million term loan as priority. This is the debt that entails the governance for which the next test is foreseen mid-2023. Looking at the remainder of the debt, it is important to note also here that the main component is the EUR 580 million bonds at the 3.5% fixed interest rate and maturing in 2026. On the Mexican divestment, as you are now aware, we reached a milestone agreement with Softys to sell them the Ontex business in Mexico and related exports to regional markets, including the factory in Puebla. The business generated EUR 308 million sales in 2021. The plant in Tijuana, Mexico, remains within the Ontex portfolio as an integral part of Ontex's North American supply chain footprint. We aim to close the transaction by early 2023, but it is of course subject to the customary conditions, including the applicable merger clearance approvals. The Mexican business is being sold at an enterprise value of MXN 5,950 million, or approximately EUR 285 million at current exchange rates. This represents around 10x the EBITDA of the last twelve months. It includes a deferred payment of MXN 500 million spread over a maximum of 5 years, and the aggregate net cash proceeds after the impact of taxes, transaction expenses, and balance sheet adjustments are estimated at approximately EUR 250 million, of which EUR 25 million deferred and EUR 225 million at the closing. As I said, this will be used to reduce debt. On that, I will now hand back to Esther for the outlook. Thank you, Peter. Regarding the outlook now, the uncertain geopolitical and volatile macroeconomic environment means visibility still remains low. Provided that the market momentum persists and inflationary pressure on commodity and energy prices does not increase further, Ontex expects for the full year 2022. The revenue for core markets and for the total group, including discontinued operations, to grow at least 10% like-for-like, based on a positive market momentum and continued gradual price increases. The adjusted EBITDA margin for the next quarters to sequentially improve for both core markets and for the total group. As additional pricing is passed through, cost inflation gradually stabilizes, and structural cost reduction measures continue to deliver. The adjusted EBITDA of core markets to be within a EUR 100 million-EUR 110 million range, while total group adjusted EBITDA is expected in a EUR 125 million-EUR 140 million range. Cash flow discipline to remain a focus with leverage to reduce by year-end from the current 6.8x as working capital over sales normalizes and CapEx gradually increases to 4% of revenue in H2. To conclude, we have delivered solid volume growth and favorable mix driven by our focus on our strategic growth categories, turning around the top line trend. We have an excellent momentum in reducing our structural cost base and have made 4% savings this year building on what we achieved last year, and I expect this trend to continue in 2023. On the portfolio side, we have hit a major milestone with the divestment of our Mexican business, and we will now focus on closing this rapidly and moving ahead on the other divestment projects. Our immediate priority is now to accelerate our pricing execution to offset cost inflation and to restore our EBITDA margins. Thank you for your time. Now Peter and I will be pleased to answer your questions. Thank you, Esther. Thank you, Peter. We'll move to the Q&A. Before we start, can I ask all participants to limit themselves to two questions only, please. If you have more, I invite you to rejoin the back of the queue, or in case of time constraints, contact the IR department. It is me. Over to the operator. If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. The first question comes from the line of Karine Elias from Barclays. Please go ahead. Hi. Thanks for taking my questions. I had a couple, if possible. I was just hoping you could actually give us some guidance on working capital. What should we expect in H2? Obviously, sales have been stronger as well. Should we expect a neutral working capital for the full year? Secondly, you've obviously mentioned a leverage reduction. Any particular targets for year-end based on your EBITDA currently? Thank you. Thank you, Karine, for your questions. I'm gonna defer to Peter. Yeah. All right. I'll combine them in one answer, if you don't mind. On leverage, as I said, we've been guiding leverage to go down from where we are right now by the end of the year. We might be somewhat prudent in that statement as we expect the last twelve months EBITDA by the end of this year to be slightly higher than what we have it right now. We are strongly focusing, as Esther said, on improving that EBITDA based on the structural progress that we are making. You know, this top-line turnaround of 50% strong volume momentum that we expect to continue considering the strength of the retailer brand segment and our own strength above that. 7% pricing, if I talk about the core already in place at the end of June and further accelerating over the next months. Core savings on track, seeking to exceed the total savings targets for the year. Finally, as some gradual stabilization of some input costs that we expect in Q4. On the free cash, there's a number of further initiatives we're taking. Admittedly, there's also a level of uncertainty on that, which is why we're a bit less specific on what we guide on that level. It depends on a number of factors. If I go one by one, you know, we control CapEx very carefully. This year to date, we are 2.3% still investing in the growth initiatives and the saving programs that we are delivering. We expect this to go up in the second half of the year, but we will, of course, be managing it very closely in view of our cash situation. Non-recurring cash outs is expected in H2, is expected to be similar as H1, and will be below the plan that we have been putting forward earlier. So also there we're limiting it to what's absolutely needed. Then on the working capital, on your question as well, there's many moving parts in current context. First of all, it depends to some extent, of course, on the revenue growth that we continue to see in the remainder of the year with the volume and certainly the further pricing, which will have its impact on the working capital. It also depends to some extent on the extent to which we can deploy and that we want to deploy all the initiatives in the inventory. As I mentioned, we are taking some caution on the inventory levels given the supply constraints that still exist in certain categories. You know, that allows us to grow to the level that we are growing. We are now deploying initiatives to selectively and steadily more and more deploy the initiatives that we have for the inventories over the rest of the year. Some categories are softening in supply constraints, so we'll be stepping that up. Of course, there's still a level of uncertainty on that level. Finally, maybe, you know, we don't think we're gonna have the same impact on our inventories in terms of inflation as we've seen so far. Some of those indices are starting to soften a bit. If you talk about the debt, of course, the sale of Mexico will have, the moment of closure will have its impact, certainly as well. That's very helpful. Thank you. The next question comes from the line of Bram Vigh from Credit Suisse. Please go ahead. Hi, guys. Thank you very much for the questions. I've got three, but I'm gonna try to link two of them into one question. So could you update us on what the input cost guidance is for the year? I believe you highlighted it was EUR 200 million for the core markets previously, and at the same time, you're highlighting that some of the pressures have increased. I'm sure there is a transactional element to the increase as well. Partly related to that, if your input cost guidance indeed has increased and at the same time you now expect full-year EBITDA to be in the core markets to be higher than what the market was expecting, what are the building blocks that will allow you to get there? I know pricing is one, but is the benefit from the extra US revenues quite material, like EUR 10-15 million? Are the contract gains quite material? If you can help us understand the building blocks, that'll be super useful. Then my sort of second/third question. I know you've managed to sell Mexico, which arguably was actually a really good business that you had. If I do the math, your leverage doesn't change materially. Maybe with the initial inflow of EUR 225 million, maybe the net debt to EBITDA ratio improves by 0.2-0.3 times. That doesn't really resolve the problem, does it? Thank you. Good morning, Bram. Thank you for your questions. I'm gonna start, and then I'm gonna ask Peter to continue. I'm gonna start addressing your question on the guidance and, you know, how what are the building blocks between H1 and H2. First of all, you know, I expect the revenue momentum to continue. We've stayed above 10%. We want to be slightly cautious. But you know, I do expect you know, the current run-rate to continue going forward. As you know, a big portion of our business is based on contracts. We have visibility of what the contracts are for the remainder of the year. Our net gains and losses continue to be positive, not only for this year, but projected for next year. Then in addition to that, we have a positive market momentum overall. In addition, we have private label gaining market share in that positive market. Of course, you know, being a big portion of our revenue is based on our own retailer brands, this will benefit for that. It's a combination of market growing, private label gaining market share, and us gaining contracts or having a positive net gains. That will continue. The cost will continue. We have a really very good program in place. We do have full visibility of the initiatives that will deliver the 4%+ cost reduction in the second half. Now we are focusing on executing that and filling the pipeline for 2023. The difference between H1 and H2 is more pricing. Because as you saw in the slide, in the complicated slide that I showed at a certain point, the reality is that when we look at the current market context, the inflation is much higher than the pricing that we have been able to execute. This has been driven by two reasons. On the one hand, you know, we have been taken by surprise with a huge spike of inflation that we were not expecting, especially in Q2, with the macro sociopolitical situation. But also, the fact that it takes some time between the moment in which, you know, we start executing pricing and when we see that pricing flowing into the P&L. The reason behind this is that typically what happens is, you know, we need A-brands to increase prices and then retailer brands follow. You know, we are in the process of negotiating additional pricing. We are making very good progress, and we will see the pricing to progressively increase starting from July. Now, then, maybe that is one piece. I'm gonna ask Peter maybe to give you the answer on the cost, the input cost that we expect for the full year. Yes. As I already mentioned that we had a significant increase between Q1 and Q2. We expect some further inflation in Q3 versus Q2. More specifically, energy costs, logistics costs that is reflected in some supplier pricing. But that's the delta Q2, Q3, not to the extent as we've seen in Q2. You know, but it's more than offset by additional pricing, which means that we will start a gradual margin recovery going forward. Moving to Q4, then we'll see some more stabilization expected as some of the indexes are softening. Now on the question on the leverage. It is true. I mean, first of all, your math is, you know, the leverage does improve. The reality is that, you know, as we conclude the sale, we will be able to pay to completely remove the term loan. We will remove the leverage covenants from our debt. Of course, we need the EBITDA to go up to have a bigger impact on the leverage. Maybe just to add to that, today, it does help that the multiple is about 10 on the last 12 months EBITDA, which is higher than the leverage, so we should be beneficial. Now we need to improve the rest of the business, which should be the case by early 2023. Next. The next question comes from the line of Karel Zoete from Kepler Cheuvreux. Please go ahead. Yes. Good morning. Thanks for taking the questions. I have two. The first one is, when we look to 2023, you've been quite clear about the, yeah, financial expectations for this year. When we look to next year, is the old target of the 12.5%–13.5% margin for the core business still feasible given the significant price- driven growth that has been added to the space? The second question is on the term loan. You basically say you want to repay that. If you look to your listed bonds, those trade at 80% to the dollar. Isn't it a consideration to look to buy back those instead of the term loan? Thank you. Thank you, Karel, for your questions. I'm gonna ask Peter to answer the second question, and then I will go back to the first question. Yeah. I can be short on that. We'll use the proceeds from the Mexican divestment to pay back the term loan as a first priority. Okay. In terms of our question on 2023 expectations, of course, you know, as I said during the presentation, I expect the underlying trends to continue on volume, on mix, on cost, and on pricing, because we still need to catch up compared to the massive inflation that we have in the system. I do believe, and I am still convinced, that the targets that we set mid last year for the midterm are achievable. The timing remains a little uncertain because it's gonna be dependent also not only on what we can do within our control, but the external context. Next question comes from the line of Eric Wilmer from ABN AMRO. Please go ahead. Hi. Thanks for taking my questions. Good morning, everyone. I got two questions, one on the Mexican business and one on the US manufacturing footprint. I was wondering if you could give a rough range or a qualitative wording on the current margin of the Mexican business. I think margins have been going up in H1 this year for H2 last year following price increases. I think what you just said implies 9% margin over the past 12 months. Does this mean that it's significantly above 10% at the moment? Also on the deferred payment, the EUR 25 million included in the takeover price, I was wondering if you could share some details on the underlying agreements, including which KPIs, which minimum levels, and what milestone dates. Finally, on the U.S. manufacturing footprint, you recently opened a plant in North Carolina, which is about 30 kilometers away from another plant you bought 2 years ago, and you will also keep your Tijuana plant. I was wondering, what's the strategy there and will you combine these two North Carolina plants? Thanks. Good morning, Eric. I'm gonna start with the US manufacturing, and then I will ask Peter to comment on the question on the Mexican business and the building blocks of the proceedings. As you say, you know, we are having, and we have been enjoying, a really strong growth in the North American market for several years. That growth is accelerating and it's a combination of, you know, continue to gain new customers, continue to expand our business with current customers. We decided that considering our customer footprint, you know, the Tijuana plant that has been serving mostly entirely since many years the U.S. market, it was not enough. We will continue to leverage Tijuana, but you know, we have to build the capacity and we decided to do that in the East Coast because that will help us to improving the logistics and to efficiencies. That's it. We'll have, you know, the two plants. Then, yes, we have a very small plant in also in North Carolina in Stokesdale, which was an acquisition that we did a couple of years ago. This plant is producing skincare products. I am not in a position today to comment on the plants, but we are looking at the possibility and how to make the overall footprint more efficient. I can confirm that we have already started production and shipments from the North Carolina plant, and we are in the process of expanding the capacity in the plant. It will take probably a couple of years before we get the plant to full capacity, you know, as we continue to install new lines to support the growth that we are having in that market. Yes, hi, Eric. On the Mexican margin has been improved as one of the leading drivers of the emerging market turnaround over the last months, and it's north of 5% EBITDA margin that we have in our business right now. The question is on the deferred payment. The EUR 25 million savings. Oh, yeah. There's EUR 25 million basically of the total amount that we communicated that's going to be paid in the course maximum next five years as per agreement that we have closed with Softys. Could you maybe share which KPIs and which minimum levels and milestone dates or at least some more color on that? No, I can't comment on that at this point, Eric. It is. There is no KPIs. There is a certain payment. Oh, no. Sorry. Yeah. It's just the first. Sorry. Sorry. Yes. It's a certainty, so it's not dependent on KPIs. It's just timing. Understood. Thanks very much. The next question comes from the line of Reginald Watson from ING. Please go ahead. Oh, hi, Peter. Sorry, could you clarify something for me, please? I'm a little confused. I think I heard you say that the Mexican business had been sold to Softys for 10x last twelve months' EBITDA multiple. But if I look at the last twelve months EBITDA for the entire emerging markets discontinued business, it comes to EUR 9.3 million. I don't understand quite how we get to 10x. Yeah. I was waiting for a second question, but, all right. Yes, I started partly answering that question already. Mexican business has already recovered substantially from the drop that we've seen across the emerging markets, and thereby has been the driver of the rapid recovery of those emerging markets. You need to be aware in your calculation that these numbers do not reflect the full group cost allocation, and therefore the EBITDA you calculate by making the difference as you've done for the remaining activities is not fully representative. Now having said that, we do have more catch-up to do on the Brazilian and the Middle East activities. Keep in mind that especially in Middle East, it's always been a very good region also in terms of profitability. Of course, we're facing the hyperinflation, which takes, like in Europe actually, it's time to recover because the level of inflation is really huge there. There's some catch-up to do there. Don't just compare the numbers naked because they're not exactly comparable. Okay. Thank you. No, that makes sense. A question for Esther. Esther, could you give us an update, please, on the discussions with AIP? Yeah. Unfortunately, I cannot comment. You know, there's nothing that I can say at this point. Okay. They're still ongoing. They haven't closed at this point. Nothing to comment, to be honest. Yeah. Okay. Sorry, given the no comment, I hope you don't mind if I sneak a third question in then. This is for both of you. Given the success you've had with the sale of the Mexican assets, should we expect other asset sales to be at similar multiples? I mean, as we communicated, the objective was to basically execute the portfolio strategy within two years, so 2022 and 2023. I am really pleased with the speed with which we have executed the first step, and we are progressing very well with the other files. We have received binding offers for the different businesses. Excuse me, non-binding offers. We are in the process of due diligence. You know, I hope, you know, more to come in the next quarters. Things are progressing well, and we will communicate as we make progress. Now, regarding the multiples, you know, it's too early to say whether we will be able to execute the divestments with the same multiples. Of course, our focus is to create value for the company and we will make sure that is the case in each of the files. Okay, good. Thank you very much. Thank you. The next question comes from the line of Fernand de Boer from Degroof Petercam. Please go ahead. Yes, good morning. Thank you for taking my questions. I also had a few. First of all, if you give guidance for 10% or more than 10% like-for-like sales growth and pricing already now at more than 7% in June for the core group, then do you assume volumes to slow down, and what is causing then that slowdown? Is that simply the higher comparison rate? You sounded quite positive on the market. Then the second question is on the raw material cost. Let's say the spillover for next year. Are you able to quantify that, and would you like to share that with us? Thank you for your questions. On the like-for-like growth, you know, do I expect the volumes to slow down? No, I don't. I think the reason why we have guided above 10% is because, you know, the comparables you saw in one of the slides that you know basically the revenues have continued to go up in a sequential way. Of course, the comparables in the second half are more difficult than in the first half. But I do expect the volume momentum to continue, and I do expect more pricing to progressively hit the P&L month after month starting in July. On the raw material cost, Peter? Yes. Raw material cost, and you ask about spillover. First of all, we will be pricing significantly more also in the next months. We'll be pricing for the inflation that we are facing right now by then, which means that at that time we'll be already at better levels. You heard me say that before, that we expect a small increase up to of current input costs by Q3 and then a bit of a softening in Q4. Overall, the one thing that I think next year we'll be facing still is energy. If I look across the different input costs, you know, it's clearly still quite bullish on the energy side, and that's where we will be facing. If needed, we will be pricing further. Now, of course, we also have significant cost-savings programs that will equally help next year. We'll have to look at the balance of all of that, of course, as we go into next year. Okay. Maybe one last question, if I may. You mentioned in your prepared remarks that you want to pay down first the term loan because there are the covenants on. Does that actually mean that you say that you are probably not going to reach the covenants next year in midsummer? I'm happy you asked the question, Fernand, because that's not what I mean. It's what we agreed, and that's our plan that we have set up for ourselves. When we extrapolate, work on the year outlook, and do the math, you know, a bit more specifically than I just did with your previous question. With our operational plan standalone, without proceeds from divestments, we should be fine. That's where we're heading. It's not nothing to do with that. Okay, very well. Thank you very much. The next question comes from the line of Nick Ruis from Barings. Please go ahead. Hey, guys. Thanks for taking the questions. First one from me is, does the total at group expectations of EBITDA of EUR 125–EUR 140 include Mexico? Yes. Okay. Second one, in the interest of being straightforward, where I'm going with this is I can't work out whether you've actually sold Mexico for a really, really high multiple, or whether the rest of the emerging markets business is basically generating no EBITDA is, are you able to give some just like-for-like numbers that add up to what your reported numbers are historically for what Mexico, Brazil, and the other relevant divisions do for the LTM period EBIT for EBITDA? Does that make sense? I'm not sure I completely got that, Nick. If I take your expectations ranges or the reported numbers, you get to a range of somewhere between 10 and 25 for the LTM divisions or the forward-looking for what the non-core business generates EBITDA. Are you able to just give us what Mexico, Brazil and the other divisions do for EBITDA? I don't know which numbers you have to hand, but just that would actually add up to that rather than us trying to back solve it with what the multiple was, what you sold Mexico for, that type of thing, so we can actually do it on a like-for-like basis. I'm not going to be able to answer that full question right now. Again, what I said about Mexico, this is the 10x multiple on the last twelve months' EBITDA. That's what I said. If you look at the outlook for the year, we have been guiding two numbers. One is the EUR 125–EUR 140, which is a total group, including Mexico, including all the emerging markets. We've been guiding EUR 100–EUR 110 on the core. The difference, obviously, is the sum of Mexico, Brazil, and the Middle East region. Okay. Understood. Sorry to ask a third, but it's a follow-up. It doesn't. If I take roughly the midpoint of 130 and roughly the midpoint of core, which is 105, so call it 25, and you're saying you sold Mexico for 10x call it 250, which again implies 25 for Mexico. Does that not imply that non-core generates EUR 25 million, i.e., taking out Mexico zero? Yeah. Yeah. There is a difference. The multiple is calculated on the last twelve months' EBITDA margins that go from June last year to June this year, where the guidance is for full year 2022, so it's a different period, so it's not a like-for-like comparison. It's a little bit back to the question that Reginald asked. You know, we do have some work. Again, we're not comparing exactly apples to apples with that question, but we do have some work to do still on Turkey and on Brazil because of the hyperinflation, and we know we have some struggles there. They're more in the recovery curve as we have in other businesses. Mexico has been leading that pack. It's back to that question, and at the end of the day, that's also why we've decided to refocus on the group and on the core. Yeah, yeah. I mean, is the answer not just yes, or am I missing something? If you can't answer the question, I understand. Unless Mexico is going backwards, is that not? Am I missing something, or it's fine if you can't answer the question, but I'm just. I'm basically thinking of future disposal proceeds and what you'd be able to sell those businesses for. The other thing that obviously maybe is wrong is that the multiple you sold Mexico for is in reality much higher, in which case, fair enough. I'm just curious, kind of which bit of the puzzle is maybe not quite right. No, I mean, the multiple that Peter mentioned, we said is the right multiple, so there is no. We are advancing, so we are not going to answer the detailed EBITDA by. We haven't done that in the past, and we are not going to do it now. I can assure you that, on the one hand, as we have these businesses in our portfolio, we continue to work in every single business to improve the KPIs and especially the profitability feature of the business. In the meantime, our main focus is to continue with the divestment program. As I said, we have. Each of the businesses is gathering good interest. We have already non-binding offers and we will continue with the process and we'll come back as we make progress. Okay. Understood. Thanks for taking all those questions. Appreciate it. Thank you. The next question comes from the line of Wim Hoste from KBC Securities. Please go ahead. Yes. Good morning. I also have a couple of questions. Maybe first on the deal on Mexico. Is there any antitrust risk on this deal execution? Any thoughts you can share about potential penalties that would have to be paid if the buyer breaks off? That's the first question. The second question I would like to ask is on the contract terms you are currently negotiating with retail chains, supermarket chains, is there- How are they looking at this inflation cycle? When you pass through price increases, is there limitations on durations or are they more on the country looking to lock in the volumes? Any thoughts about on that would also be helpful. Okay. Th ank you, Wim, for your question. I'm gonna start with the first one on the contract terms. You know, I need to say that as the situation has evolved and I've been personally engaging with some of our key customers. I mean, our customers understand the situation. You know, they are fully aware of you know, the stress that there is in the entire supply chain. We've been collaborating with them to find the right solutions. Of course, you know, for them, especially with the Retailer Brands, I mean, typically there is a price difference that needs to be there between the A-brands and retailer brands. Of course, and that's why there is a time lag between when we see the pricing going up with A-brands to when the prices go up with the retailer brands. I am encouraged and confident that we will continue to price. We will see progressive impact in our P&L. It is not a one-off because there are so many factors that are impacting. I am very confident that we will continue to price until we will be able to offset inflation. Now, talking about the limitations, of course, the limitation is the market. You know, we need to remain competitive in the market. depending on what happens also with industries in the future, we need to stay competitive. That's why, you know, we've had a very strong focus for the last quarters on structurally improving our cost competitiveness. This cost program that I've been talking about since I arrived, it's very critical because, you know, the raw materials and the pricing, there will be cycles up and down. I think what is important is that we structurally lower our costs, that we continue to invest in innovation and in mix so that we continue to drive structural profit improvement. Right now the issue that we have is that is working, but at the same time, we haven't been able to fully offset the raw material impact with the pricing. We will continue to price until we get there. On the question of Mexico, I see, you know, you were asking about antitrust. I mean, this is a typical process. It's difficult to say. I mean, the current competitive environment doesn't show significant challenges. Of course, I mean, it is very difficult to predict and we need to go through the process to really understand whether there will be any remedies requested. We foresee this process to last around 5–7 months. That's why, you know, we have communicated that we are expecting to close the deal at the very beginning of next year. Okay. Difficult to say at this point. However, we don't foresee significant risks. Again, you know, very cautious because it is difficult to predict. Okay. Understood. Thank you very much. Thank you. The next question comes from the line of Osman Brice from Bank of America. Please go ahead. Good morning. Thanks for taking my questions. First, could you remind us how much do group costs represent in percentage of sales in both core markets and emerging markets? Just asking about the allocation of group costs. Peter, do you want to analyze it? We said that you are talking about SG&A or specific group costs? No, headquarters costs. Yeah. We cannot disclose, you know, I mean, the headquarters costs is spread, you know, across the different businesses based on revenues and based on the support that headquarters gives to the businesses. So I– Again, the important thing is that we target and will deliver below 10% of SG&A in total of net sales, so. Yes. Going forward, even following divestments. That target of below 10% stays. Okay. My second question, I think you mentioned that the exit rate of price increases in June was 12%. Could you maybe comment on what was the price increases exit rate for June in core markets versus emerging markets? Could you repeat the question? I didn't get. In June, what did he say? Please, The exit rate of price increases in June. 12%. Yes. Okay. Peter, the split between core and emerging and- The total group was 12% in exit rate in June. The core, it was +7% in June. +7% in core. Okay. Thank you very much. In emerging market was about 20%. Thank you. Thank you. The next question comes from the line of Beatrice Lount from Wellington. Please go ahead. Hi. Thanks for taking my question. Just one remaining, from my side. Can you remind me what is, energy and gas as a percentage of your costs and whether you have any hedging policies there? I'm gonna ask Peter to answer this. I cannot give you the percentage right now immediately, honestly. We are locking in our contracts for our own contracts for quite a longer time. We're pretty covered for full year on that one. We are covered there. Okay. Okay. Thanks a lot for the questions. I think everybody had the opportunity to do so. I'll give the word to Esther for final words. Thank you. As you have seen, we are delivering on our strategic priorities. I am really pleased with the Mexico deal. We will continue to advance the other files to refocus on Europe and North America. I am confident that pricing will continue to grow, and we will generate improving margins in H2. Thank you so much for your time this morning, and I wish you all a good summer. Thank you for joining today's call. You may now disconnect your lines.