Ladies and gentlemen, welcome to the Givaudan 2023 half year results conference call and live webcast. I am Alice, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Gilles Andrier, CEO. Please go ahead. Thank you, Operator. Ladies and gentlemen, welcome to our 2023 half year results conference call. I'll be on this call with Tom Hallam, our CFO, we'll take you through the presentation before answering your questions at the end. The company news on our half year results 2023 was published on our website this morning. This is where you will also find the slides for today's presentation. Along with the media release, you will find our 2023 half year report on our website. I'd like now to start going through the presentation. I invite you to turn to slide number 3 to go through the performance highlights, sorry. I'm pleased to report a solid performance in the first half of 2023, with particularly strong sales growth in 3 areas: fine fragrances, high growth markets, and Europe. In an environment where we are still facing demand challenges in some key markets and business segments, I'm very happy with our continued strong focus on supporting the growth of our customers around the world. With sustained higher input costs in 2023, Givaudan continued to implement price increases in collaboration with our customers to fully compensate for those increases. Finally, I'm happy with our delivery against our profitability improvement initiatives. As always, these results also demonstrate the resilience of our business, supported by our natural hedges, be it across product categories, across types of customers, or thanks to the balanced geographic footprint Givaudan has. I'd like to highlight that the two largest potential growth areas we chose for our current 2025 strategic cycle are delivering to our expectations. Over the last two years, local and regional clients have averaged a growth twice as big as for the globals. They represent now 55% of our sales. In the same way, the second strategic area, which are high growth markets, have averaged a growth four times faster than the mature markets. In the first half of 2023, we reached sales of CHF 3.5 billion, a growth of 2.4% on a like-for-like basis. A decrease of 3.2% in Swiss francs. As I just said, this performance was led by fine fragrances, high growth markets in Europe, against high comparables. Our pricing actions to recover the absolute amount of input cost inflation have been effective. They included two parts in the first half. The first part was the carry-over effect from 2022, as well as the price increases for 2023, which were effective at the start of the year. As a consequence, pricing was the major driver for our like-for-like growth. A little more than 6% average price increases for the group and a 4% decline in volume for the group as well. Decline in volumes was notably strong in North America, driven by a combination of customer restocking and weak consumer demand. We achieved a comparable EBITDA of CHF 803 million. In local currency terms, this comparable EBITDA grew by 4.6% versus the prior half in 2022. It represents an underlying EBITDA margin of 22.7%, compared to 22.5% in the first half of 2022. In January, we presented specific actions to help us recover by 2025 our margin ambition, both at the gross margin level and at the EBITDA margin level, respectively in the range of 42%-44% and 22%-24%. Six months on, I can say that we have made good progress with those performance improvement initiatives, delivering both at the gross profit margin level and the EBITDA level. Finally, our initiative to restore a good cash conversion translated to a significant improvement of our free cash flow, which is reaching CHF 104 million in the first half, which represents 2.9% of our sales. Overall, I'm pleased with the solid performance of our business, demonstrating the resilience of our company, our focus on supporting our customers, and our ability to capture opportunities. Let's now turn to slide 4. On a like-for-like basis, our Fragrance & Beauty division grew 6.4%, and our Taste & Wellbeing division was slightly down at -0.9% versus the same period in 2022. As mentioned earlier, these numbers include a strong pricing element reflecting the ongoing recovery of our input cost inflation. By the end of 2023, we will have fully achieved our pricing objectives for both 2022 and 2023. Part of the difference in growth between the two divisions is explained by the difference of comparables, a record 7.6% for Taste & Wellbeing, and a more normal 4.7% in the first half of 2022 for Fragrance & Beauty. The other reason is the strong exposure of the Fragrance & Beauty division to the very dynamic beauty and luxury sector, which shows in the double-digit growth of our fine fragrance business. Let's turn now to Slide 5. In the first half of 2023, high growth markets delivered 8.9% growth, maintaining a good momentum since the start of 2023. Despite a high comparable in 2022, Latin America kept performing very well. The Middle East contributed with strong growth levels as well. In Asia Pacific, we achieved a strong performance in India, partly offset by a slow recovery in China and a soft growth in Southeast Asia. In mature markets, sales decreased overall by 2.6%, almost entirely driven by the decline in North America, while the strong demand in fine finances fueled the good performance in Europe, particularly in France and Italy. North America has been experiencing a decline in sales due to customer destocking in the context of an improving supply chain, compounded by the shrinkflation and weaker consumer demand overall for both divisions. Our presence in the high growth markets has always been a key driver for our growth and continues to be one of our key strategies for 2025. Structural demographic trends, the ever-growing middle class, and the strong urbanization trends will continue to support the growth of these markets. Our market position and our operations footprint give us a unique exposure to these high growth markets, in which we continue to invest, both with additional talent and new facilities to service the wide diversity of our clients. Please now to turn to Slide 6. I'd like to highlight again the sales development by region for the group. As you can see, EMEA has delivered a very strong growth, followed by Latin America. EMEA grew 8.5% on top of a record 13.7% in the first half of 2022, when it was supported by the strong post-COVID recovery of most product segments. It is also worth mentioning that Middle East is contributing to this performance and has enjoyed continued very high growth within EMEA for both divisions. Sales in Latin America continued to perform well, despite another high comparable in 2022, with a growth of 11.1%, driven mainly by Argentina and Brazil. The growth in Asia Pacific was 3.2%, with flat sales in China, double-digit growth in India, and a more subdued growth in other parts of Southeast Asia, notably Indonesia, Vietnam, and Thailand, and the mature markets of Australia and Japan. North America growth was a negative 10.6% like-for-like sales performance in 2022, with similar trends for both divisions. I have already mentioned the reasons for this volume decline, which affects the two divisions in all parts of the business. Let's turn now to Slide 7. Fragrance & Beauty sales were CHF 1.672 million, an increase of 6.4% like-for-like, an increase of 1.6% in CHF. The good growth was driven by the very strong performance in fine fragrances, with sustained high levels of new business, as well as the positive impact of price increase across all businesses. On a business unit basis, fine fragrances sales increased by 16.2% like-for-like, against a high prior year comparable growth of 17.9%. This strong growth was maintained across prestige, both in Europe and in high growth markets, with regional customers as well as a good traction in travel retail. Consumer product sales increased by 3.7% like-for-like, with some improved momentum in the second quarter, and sales of fragrance ingredients and active beauty increased by 4.4% on a like-for-like basis, against a high comparable of 8%. Let's turn to the next slide, number 8. Taste & Wellbeing sales were CHF 1.863 billion, a decrease of 0.9% on a like-for-like basis, and a decrease of 7.1% in Swiss francs. On a regional basis, sales in Europe increased by 3.6% on the like-for-like basis. In South Asia, Africa, and the Middle East, sales increased by 19.1%. In North America, sales decreased by 11.7%. In Latin America, sales increased by 10.5%. Finally, Asia Pacific sales decreased by 5% on a like-for-like basis, impacted by the weaker performance in Southeast Asia and the strong comparable of the prior year. Within the product segment, there was strong double-digit growth in snacks and good momentum in sweet goods, whilst weaker volumes in other segments resulted in a reduced sales level compared to the same period in 2022. With this, I'd like to hand over now to Tom, who will give you more granularity on our financial results. Tom, over to you. Thank you very much, Gilles. It's also my pleasure to welcome you all to our conference call. As always, Gilles has taken you through the solid business performance of the group, as well as the main aspects of the market and regional development. I would like to focus on the group's financial performance and those of the two divisions in the first six months. Let me start with the performance highlights on Slide 10. Group sales for the first half of 2023 were over CHF 3.5 billion, an increase of 2.4% on a like-for-like basis, which excludes the impact of acquisitions as well as the currency impact. In Swiss francs, sales decreased by 3.2%, all due to the impact of currency. The reported EBITDA decreased to CHF 763 million, compared to CHF 816 million in 2022. The underlying EBITDA margin remained strong and increased to 22.7% in 2023, compared to 22.5% in 2022. Net income was CHF 449 million, an increase of 2% compared to 2022. When measured in local currency, net income increased by an excellent 9%. The free cash flow as a percentage of sales was 2.9% in the first six months of the year, compared to -4% in the first six months of 2022. Absolute free cash flow was CHF 104 million, which is an outstanding improvement of CHF 250 million. Net debt to EBITDA was 3.7 times, compared to 3.1 times at the end of the year, and 3.45 times at the end of June 2022. In the following slides, we will cover the group's performance in further detail, as well as the financial performance of both divisions. Please turn to Slide 11, which shows the exchange rate development. This slide shows the comparison of the exchange rates in the first half of 2023 versus the same period in 2022. In the current year, mainly due to the ongoing geopolitical instability and economic uncertainties, the Swiss franc has continued to strengthen against most of the major currencies in which the group operates, with a corresponding impact on the sales in Swiss francs, as mentioned earlier. Overall, from a profit perspective, the impact has been limited because our operational and geographical spread continues to provide a good natural hedge, and our EBITDA margin remains solid and well protected against currency fluctuations. Please turn to Slide 12, which shows the group operating performance. In 2023, the group's gross margin increased to 41%, compared to 40% in 2022. The gross margin dilution effect of the pricing actions to compensate for higher input costs, as well as the lower cost absorption due to lower volumes, was offset entirely by the first results of the profit performance improvement program announced and initiated at the beginning of the year. The program is aimed for operational excellence and margin improvement through organizational simplification, working capital improvement, as well as footprint optimization. The EBITDA decreased to CHF 763 million in the first six months of 2023. In this period, the group incurred costs of CHF 40 million, mainly related to the group's improvement, performance improvement program. Excluding these costs, the underlying EBITDA margin improved to a solid 22.7% in 2023, compared to 22.5% in 2022, an increase of 5% on a currency neutral basis. On the next two slides, I would like to spend a moment on the performance of our two divisions, starting with Fragrance & Beauty on the next slide. Fragrance & Beauty sales increased by 6.4% on a like-for-like basis, and 1.6% in Swiss francs to CHF 1.7 billion. The sales growth was driven by a continuous strong performance in fine fragrances, as well as the impact of price increases across all businesses to compensate for the higher input costs. The division recorded CHF 383 million of EBITDA in the first six months of the year, compared to CHF 362 million in 2022. The EBITDA margin was 22.9% on a reported basis and an excellent 24.3% on an underlying basis. If you now turn to slide 14, we will continue with the Taste & Wellbeing performance. The Taste & Wellbeing division recorded a great decrease of 0.9% on a like-for-like basis, and 7.1% in CHF due to lower volumes in 2023. Total sales recorded were CHF 1.9 billion. The reported EBITDA decreased to CHF 380 million, from CHF 454 million in 2022. The reported EBITDA margin in 2023 was 20.4%, and on an underlying basis, the EBITDA margin was 21.3%. The margin was impacted by lower volumes, which could not be fully compensated with other savings. Please turn to slide 15, which shows the net income of the group. Income before tax increased to CHF 516 million, from CHF 512 million in 2022, as a result of lower non-operating expenses compared to the prior year. Although interest costs increased due to higher borrowing costs, the group incurred significantly lower realized and unrealized losses on FX derivatives. The net income was CHF 449 million, or 12.7% of sales. The group's effective tax rate decreased to 13% in 2023, compared to 14% in June 2022. Basic earnings per share was CHF 48.69 in 2023, compared to CHF 47.74 in the first semester of 2022. Please turn to slide 16 for the cash flow performance of the group. During the first 6 months of 2023, Givaudan demonstrated an outstanding free cash flow when compared to the same period last year. The group recorded a solid free cash flow of CHF 104 million, or 2.9% of sales, compared to -CHF 147 million, or -4% of sales, in 2022. The operating cash flow for the first six months of the year was CHF 340 million, compared to CHF 131 million in 2022. The increase is partly explained due to the improvement in working capital cash flows, which is one of the aims of the performance improvement program. The group also continued its investment to support the growth in all markets. As such, total net investments were CHF 128 million in the first six months of the year, and as a percentage of sales, net investments was 3.6% in 2023, compared to 4.5% in 2022. Working capital increased to 31.2%, compared to 29.6% in June 2022, with the increase mostly due to the negative currency effects of the reported sales in CHF. When measured in local currency, net working capital was 29.3% of sales, therefore, an improvement compared to the prior year. Please turn to slide 17 to look at the amortization of intangible assets. This slide simply gives you a projection of the perspective of the future expected amortization as we stand at the end of June 2023. Please turn to slide 18 to look at the debt profile of the group. The group continues to have a well-balanced debt profile, with a weighted average effective interest rate of 1.83%, compared to 1.74% at the year-end. Furthermore, this slide shows you the maturities of our debt profile. In 2023, the group exercised its first option to extend its multi-bank committee credit facility for an amount of CHF 1.25 billion, with 1 additional year until June 2028. If you turn to the next slide 19, you will see that the net debt to EBITDA was 3.68 times, compared to 3.07 times in December 2022, and 3.45 times in June 2022. With this, I would like to conclude my part of the presentation and hand back to Gilles. Thank you, Tom. As a reminder, the company's 2025 ambition is to deliver sustainable value creation for all stakeholders. Givaudan's 2025 strategy is fully in line with its purpose and places customers at the heart of our business, supporting them to grow and creating products that are loved by consumers. Let me remind you, the main foundations of our current strategic cycle. The 25 strategies focus around three growth drivers: expand the portfolio of products, extend the customer reach, and focus market strategies. It is supported by four growth enablers, which are aligned with the company's purpose domains, namely creations, nature, people, and communities. These three growth drivers and the four enablers are all underpinned by a commitment to excellence, innovation, and simplicity in everything we do. Let's turn now to slide 22, that reminds you of the performance commitments of the 25 strategy. We are actually at the midpoint of our five-year strategic cycle. As I mentioned earlier, so far, business trends, customer needs, and consumer behavior are confirming and reinforcing our strategic choices. Ambitious targets are an integral part of Givaudan's 2025 strategy, with the company aiming to achieve an organic sales growth of 4%-5% on a like-for-like basis, and a free cash flow of at least 12%, both measured as an average of the five-year period strategic cycle. In addition, the company aims to deliver on key non-financial targets around sustainability, diversity, and safety, linked to our Givaudan's purpose. I am confident we are on the right path to deliver these ambitions. Let's turn now to slide 23. Our company purpose is about creation in the first place, the cornerstone of which is innovation. The core of our innovation is about working on the more than 300,000 briefs a year. Winning more than our fair share is the only way to compensate for more than the average 10% erosion of our business, so that we can deliver our average sales growth, meeting the 4%-5% long-term targets. We continually seek new ways to anticipate consumer needs and help solve our customers' challenges and create value for them, while developing creations that contribute to happier and healthier lives, and reduce the impact on the environment. In 2022, we invested CHF 522 million in R&D, among the highest in our industry. Let me give you a selection of on our most recent innovations. In Taste & Wellbeing, it is about shaping the future of food and creating food experiences that consumers love. The first one, Cereboost, an American ginseng extract, delivering scientifically substantiated cognitive health benefits with 3 published clinical trials. Cereboost impacts the gut-brain axis, activates the brain during cognitive tasks, and have shown improved mood and cognitive performance. The second one, SenseIt, helps bridge the gap between what consumers perceive and what they are actually able to express. Consumers know if they like or do not like a product, but have difficulty explaining the why. A strength of the SenseIt language is that it allows usage in virtual environments when alternatives to in-person consumer testing are needed. In Fragrance and Beauty, sustainability is a key driver for creativity and innovation. The first one, Geogāya, features Phytogaia, capturing the wellbeing benefits of molecules emitted by forest trees, and Thalassogaia, mimicking the composition of the marine environment, developed according to our Naturality Guide principles and fully biodegradable. Myrissi, actually, a company we had acquired, is a new way of translating scents into color patterns, with the unveiling of its consumer-centric artificial intelligence technology. As e-commerce remains the privileged channel for customers, we must answer their need of an olfactive digital experience, something impossible to address until now. We allow, therefore, consumers to smell visuals and colors that elicit the same emotions as the perfumes they are facing. Customer Foresight. As an important part of its 2025 digital strategy, today, Givaudan has launched last May, the Customer Foresight. This exclusive proprietary futurescaping platform, built in-house at Digital's digital factory in Paris, leverages Givaudan's human expertise, big data and AI, to anticipate tomorrow's challenges, foresee consumer expectations, and create winning food experiences. Finally, the B-Biome Score, a microbiome-friendly and scientifically demonstrated method, allowing beauty brands to quickly understand the impact of active ingredients on the skin microbiome. Let's turn now to slide 24. A new Climate and Innovation Act was passed on June 18th, 2023 in Switzerland. All Swiss companies, whether listed or not, should develop a decarbonization roadmap or potentially review and strengthen their existing plans. Our decarbonization roadmap has been in place since 2010. It's an integral part of our purpose commitments, being climate positive before 2050, with interim milestones that you can see on this slide, as well as meeting stakeholder expectations and increasing customer requirements. Finally, it has been part of our long-term incentive plan for 2 years now. Our KPIs on carbon reduction are disclosed on an annual basis. Looking at our 2022 achievements, we are on track with our ambitions and reductions shown in this slide, which highlights our progress compared to our 2015 baseline, both on Scope 1 and 2. More importantly, we are progressing very well with Scope 3 reductions based on the robust raw material model and collaboration with the CDP supply chain to engage our suppliers in this climate journey. -35% on Scope 1 + 2, and -1% on Scope 3, we are now at 90% renewable electricity. We confirm that input costs should. Sorry, let's turn now to slide 25. Let me now give you some thoughts about the coming months. We remain very well positioned for delivering on our 2025 strategy. Our brief pipeline to support the growth of our customers is currently very strong. We confirm that input costs should increase around 5% for the full year 2023, and as you heard through this presentation, we are delivering on the pricing actions to compensate for higher input costs. In terms of our performance improvement program, we are maintaining a strong focus on operational excellence, reviewing the manufacturing footprint, and reducing inventory levels as supply chain pre-pressures ease out. Our organization simplification will be completed by 2023. As indicated in January, restructuring costs of up to CHF 60 million are expected for the full year 2023, with CHF 40 million in cash and CHF 20 million non-cash. With this, ladies and gentlemen, many thanks for your attention in this presentation. Tom and I are looking now forward to your questions. We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only hands for asking a question. Anyone who has a question or a comment may press star and one at this time. Our first question comes from the line of Daniel Bürki, with Zürcher Kantonalbank. Please go ahead. Yeah. Good afternoon, everyone. I have two questions. First, on the volume decline, I cannot remember if it's something we have ever seen before. Is there something special, especially in the U.S., with the consumer weakness at the moment? My second question would be on the optimization of your factory footprint. Is this part of the existing program or a new cornerstone? Does it fit in the existing financial framework for it, or will you get additional savings out of this footprint optimization? Thank you. Okay. Thank you, Daniel. I can answer for the volume decline. Overall, we are talking, yes, minus 4% around the world. I don't know if I can remember ever being there, maybe in the course of the financial crisis, maybe not, because we were actually up 2%. In the US, it's a very significant volume decline, as agreed. At the same time, the sequence we have left, obviously, COVID, rebound inflation, this sequence, plus the war between Russia and Ukraine, is obviously unprecedented. I would say that overall it's creating a rippling effect. You know, when looking at obviously, the volume decline, it's a combination of different factors which are difficult because the first people we ask is our clients, obviously, but difficult to sort of isolate between the different reasons. The first one has to do with destocking, because clearly we saw, with the, let's say, the difficulties that our clients had, especially in the US, to source materials from all over the world in 2021 and then early 2022, a very significant uptake on inventories level to make sure that they would not lose sales. Now they are obviously more in the phase of destocking. The second thing that we can say is that it's obviously a partial view because the only clients who publish their figures are obviously the public clients, and usually the large ones, and they usually differentiate volume from pricing. What we can say is that the volume decline is clearly reflected in their figures, especially in Q1 and then in Q2. What we can say is that a bit by analyzing those figures and ours, as well as by history, there's a time lag usually between what they experience and what we experience. We always come after. The volumes evolution of those key clients can be a leading indicator on us. At the same time, we have to be careful because global clients only represent, as I said, 40%-45% of our sales, and actually local and regional clients representing the other, the other half, and they don't publish their numbers. Those local and regional clients are actually, doing, we are doing well, even though the volumes are slightly down. Destocking, consumer intakes, consumer spend, the inflation is certainly playing a role in the ability for consumers to, to, to buy products. Then the difference maybe between, what we obviously, I put Fine Fragrances on the side. Fine Fragrances is obviously, quite stellar. If you cumulate the growth over three years, we are 60% bigger. That part I've never seen as well. If we compare Taste & Wellbeing, consumer staples with consumer products, consumer staples, they follow actually exactly the same trend. They correspond to day-to-day consumptions. Again, many of those products have seen price increase by our clients. The correlation between the two is actually quite perfect if you look at the different let's say the last two to three years. You know, essentially that's what we can say. The consumer staples arena is, whether on the food side or the fragrance side, is following a bit the same trend. The only last thing I would say, the only difference between CP and taste, which I've seen, in China, I came back from China two weeks ago, is that you have an alternative to buying packaged food, which is cooking at home. You don't have an alternative vis-à-vis fabric care, home care, and personal care. The bathroom is not competing with those products. It's true that you see some, especially in some of the high growth markets, people coming, going back to the countryside and cooking at home. That, obviously, has a headwind on the volumes for Taste & Wellbeing. All those elements are difficult to measure, destocking, consumer spend, and all of those things. At some point, obviously, the destocking part makes us stop. On the optimization of the footprint, I'll pass on to Tom. Yeah. Thanks, Gilles, and Daniel, thanks for the question. You know, this is a program that we had talked about now 3, 4 years ago. You know, we, as you, as you know well, we've made a number of acquisitions, and the objective, once we'd completed these acquisitions, was to look at the total footprint of Givaudan. So not just the acquired companies, but also our own footprint, and to see how we could serve our clients in the most efficient way. During COVID, clearly all of this was put on hold because it was all about supplying products to our customers. Now this is a program that we've reinitiated. So it's not a new program, it's something that we clearly communicated over the last 3 or 4 years. You know, we talked about potentially $20 million this year of non-cash, which would really be if we decide to reduce the number of sites that we have in our footprint. In terms of how you should think about it into our forecast and into our performance in outer years I think we've been very clear in terms of where we want to be from a gross margin perspective. You know, Gilles mentioned the 42%-44% as our, let's say our ambition on gross margin and EBITDA margins, getting back to 22%-24%. This program is clearly one of the levers that we have. Not a new program, simply now we have the ability to act on it. Thank you. The next question comes from the line of Celine Pannuti with JP Morgan. Please go ahead. Thank you. Good afternoon, everyone. Maybe my first question, I wanted to come back on what you said, Gilles, around the U.S. I understand destocking and the weak consumer demand. Nonetheless, we've seen that this is accelerating or, let's say, worsening sequentially. I was wondering whether you'd been looking into where your customers are in terms of their own inventory destock, or let's say, safety stock, cleanup? How are we, how much are they done? Then how... You know, you are the first one to report, how should we think about your market share? Do you feel that you are competitive, or have there been areas where you've been maybe losing out versus the market? That's my first question. My second question, which would be, maybe a corollary on that, is you were expecting volume to bounce back in the second half of the year. What is your outlook on volume? I see, for instance, some regions like Asia, Europe, have sequentially weakened, at least in TNN, whether you would expect that to drag on in the second half. Maybe lastly, pricing came in stronger than expected. Why was that? How should we think about the fading impact does it change the way we should think about the fading into the second half? Thank you. Okay. About the U.S., celine it, I mean, the deceleration in the U.S. is not incrementally worse. It's a question of comparable. Actually, it goes from, I think, 9.9 to 10.9, something like this. I don't think that the trend is accelerating in terms of this decline, this volume decline. I would say that some of the clients not only talk about their own destocking, but the destocking in the retail distribution channel, so that can play a role. the, we are from what we measure essentially, it's both the performance of the U.S. for us is measured against what our clients are doing in the U.S. Also from what we gather in terms of competitive reporting from competition. I would say that we are not losing market share at all. You know, there are only two things that, especially in 22, affected, I guess, a little more than others, is the exposure we have on plant-based proteins, where we are clearly the leader there, which declined quite significantly in the U.S. For sure, that was something incrementally worse than maybe competitors. The second thing has to do with seltzer, alcohol seltzers, which actually had showed the growth the year before and basically declined. That's the two things which are not extremely material, but still they have weighed a bit on the volumes decline in the U.S. To figure out when all this will stop, difficult. I would say that the only thing we can say about the U.S. is that as fast as things can decline, things can pick up, but I really don't know when. That's the real thing that we don't control. The only thing we can control on volumes, whether in the U.S. or elsewhere, is the amount of new wins. It's about being briefed, it's about winning business. there we are in very good shape across the different businesses. You said that on the volumes sorry, the price, the price increase. The price increase essentially has two components for 2023. As you remember, we said that we had fully recovered the 10% increase of raw mats in 2022. I would say one third of that was spilling over in a way in 2022, in 2023, given the fact that there is always a timeline between raw mats increase and the time when we can negotiate price increase effectively with our clients. Here you have a significant, let's say, contribution of the price increase from 2022 to 2023. Given the fact that we had already anticipated a 5% increase in 2023, everything was negotiated already end of 2022. 1st of January, we were able to benefit from the price increase corresponding to this 5% increase, we had no essentially time lag, that also helped. I would say that your question about when does this go away? well basically, by the full year of 2023, I don't think that we, maybe we have CHF 10 or CHF 20 million spilling over from 2023 to 2024, that's it. We'll get the full impact in 2023 for those two components. Yeah, that's about it. Thank you. Just wanted to. If you could comment on Europe and Asia, which we saw was sequentially weaker. I mean, obviously we have seen as well that, especially in Europe, the strength that you've seen over the past couple of years. Just wanted to know whether we could be in a normalization as you have seen in the U.S. Wait a second. I mean, Europe, we are 5.7% against a comparable of 13.5% selling. To the question of Daniel, have I ever seen that? No, I have never seen a cumulative growth of 20% in Europe, ever. I think, I don't see exactly the sequential decline in Europe. The second thing on Asia Pacific, that's different because the comparable on Asia Pacific is 1.7%. What we can clearly say is that we are not back where we should be in Asia Pacific. outside essentially, China is flat, Southeast Asia is really soft. There we can only expect and hope things get better quickly in China and Southeast Asia. Thank you. The next question comes from the line of Charles Eden with UBS. Please go ahead. Hi, good afternoon, and thanks for taking my questions. 2 from me, please. First one, Gilles, I just wanted to come back on your comment around the staples customers typically being a leading indicator for Givaudan's volumes. I appreciate the destocking will come to an end at some point in the next couple of quarters, and I think everyone sort of understands that. If anything, staples volumes, which have so far been surprisingly resilient from an elasticity perspective, are expected to sequentially deteriorate in the coming quarters. Don't want to extrapolate 1 data point, but if you just look at General Mills, who obviously reported already, that appears to be the case. Is there a risk that volumes may not have even troughed yet? Just be interested in your thoughts there. Changing tact a little bit, my second question on the pricing contribution from Latin America, because if I look at the stacks on the like-for-like sales, they're trending about 80+% above 2019 levels in Taste & Wellbeing, about 70% at the group level, and yet the absolute sales in Latam is sort of 25%-30% higher. I guess my question is: How are you accounting for FX pricing in these markets? Maybe what was the FX pricing contribution of the overall pricing in the quarter or the half? Thank you. O kay, maybe Tom starts with the Latin America question. Thanks, Julian, thanks, Charles, for the question. In Latin america it depends very much on the market and sometimes even on the, on what we can do from a legal framework. If I look at, let's say, Brazil, as an example, primarily, we are pricing in $, because in the end, most of our markets are priced in $, our raw materials are priced in $, and many of our customers are doing exactly the same thing. Ultimately, we are invoicing in BRL. If you look at a market like Argentina, in this, it's a bit of a mixed bag. In some customers, we are invoicing in ARS, and in other cases, we're actually invoicing in USD. Of course, we're protecting ourselves all the way through on the ARS side to make sure that we are not exposed on any devaluation. In mexico it's primarily a USD market. You know, that's how we're trying to grow the business, protect the business. You know, I think if you look overall at Latin America, it's been a very, very solid growth. You know, you more or less have mentioned the CHF and the like-for-like numbers. you know, there is a component of FX pricing in the top line, but ultimately, we've been growing in the market over the last 10 years, very consistently. you know, it's a market with a huge amount of dynamism. On the fragrance side, a very dynamic market in Brazil. In some markets on the taste side, such as beverage it's really a great market on the beverage side. you know, great underlying performance, we protect the business on in hard currencies. Yeah, just your question on volumes, because obviously, okay, you can look at it from various different angles, trying to get the truth out of it. you know, in the first place, I think we need to stay humble in terms of where do the volumes go from now. Yes, the destocking can be an indicator, but for that, we would not have to know what level of stocks do have our clients, our distributors, and so on. For sure, it will come to a stop at some point. The second thing I'd like to say is that actually, that's what I mentioned in my presentation, maybe one of the best two indicators. One is what I said about the fact that when we look at the one who publish their figures, and you mentioned one, what's true is that there is a time lag, which is for sure, 3-4 months. That's what I said, it's a leading indicator, but again, for only 40-45% of the full market. That can be a leading indicator in terms of where the growth goes from now on. Being mindful that there's the other 55%, which are local and regions, which are usually doing better. That's why actually over time, and I think one or two of you analysts actually did that in your report, if you look at over a three to four years period, the volume, average volume growth of all clients which publish their figures is lower than the industry of ingredients. Because local and regions are growing faster than the global, that's a fact. That's helping us going forward. And the other thing I wanted to say is that you also have, essentially, a certainly, an effect of down trading from global to locals. Again, the exposure of Givaudan is the widest. We actually represent 25%, 30% of the market in consumer staples, whether taste consumer products. That has no effect on the volumes. The shrink of the volumes is industry-wide across all types of clients, and I mean, has no consequence on the mix of clients due to Givaudan. Basically, that's what we can say about the clients. The last thing I'd like to say is that if you average the volume growth of Givaudan, I would say consumer staples, again, Taste & Wellbeing and consumer products, the first fact is that they follow the same trend over two, three, four years. The second thing, when I said to Daniel Bürki, we've never had a sequential of COVID and so forth, rebound and everything, actually, the growth over the last 3-4 years in volume is more or less ballpark, positive around 2%-3%. We had a huge surge in 2020. Remember, there was a +15% on all the consumer staples. If you take this base going onwards, you basically have a CAGR, which is more or less 2%-3% on consumer staples. It shows that overall, over time, the consumption has not been dented. It's really the ripple effect of all the things which happened. That's the best answer I can give you on the volume, but we feel confident. We are really part of things which are consumed every day, whether on the food and beverage side, whether on the consumer product side. We don't see any radical changes in the way consumers consume. We have the best sort of exposure with those natural hedges I talked about across clients and categories. No, I really appreciate the insights. Can I just ask one very quick follow-up, Tom? Are you able to quantify the impact of that FX pricing in the half, or is that not something you've got to hand? Thank you. I don't know about Charles, I can follow up with you afterwards, so. Most appreciated. Thank you. The next question comes from the line of Nicola Tang with BNP Paribas Exane. Please go ahead. Hi, everyone, thanks for taking the questions. Thinking about the volume drivers other than just destocking, I think you mentioned, Gilles, shrinkflation and also weaker consumer demand at the CP. I was wondering, what does that mean for Givaudan? You know, does it just mean lower volumes, or does it actually trigger new innovation with customers? I was wondering if there's been any change in willingness to innovate. The second question, just on the fine fragrance side you mentioned the stellar growth and the market being 60% bigger than it was 3 years ago. I think if I look at Q2, it looks like the growth rate has slowed a bit sequentially, albeit still double digits. Can you talk a little bit about your expectations for the second half of the year in fine fragrance? Thanks. Well, yeah, I already, I think, dived into many ways on the volume decline. Yes, I can just pick the shrinkflation, but that's very, very difficult to measure because shrinkflation, what does it mean? It means basically that if potentially a part of dairy weighs 100 grams instead of 125 grams, those that X% of flavors, for sure, we're going to sell less flavors. That part, we have absolutely no way to measure in any way, the way our clients apply fragrances or flavors, but clearly it can play a role in the shrink shrinkflation. In terms of pipeline, we see a whole diversity of briefs. You know, we still see a very good and solid sort of share of briefs, which deal at innovating, at creating superior products and so forth. Yes, you can have briefs which are there actually to optimize costs to the cost of whether a flavor or fragrance, but also the sort of indirect cost impact of the food, what we call the food stuff, the base of food, where you sometimes need to compensate with better flavors when you change the formulation. All those briefs, which are, as you, as I mentioned, extremely numerous, we see a huge diversity, and Givaudan, we are extremely active to respond to this brief, but also to seize opportunities in the market, which is obviously changing also from a competitor standpoint. The thing on fine fragrances, I really don't get it. I mean I'm still extremely happy when the sales go from 16% to 14%. This is absolutely stellar, and obviously, you almost have arithmetics. The further we go with double digit growth, by definition, the comparables become tougher and tougher, and the relative growth becomes weaker. Overall, I think we have increased our business since 2019 by 60% or 70%. Very happy with this. All right. Thank you. The next question comes from the line of Lisa De Neve with Morgan Stanley. Please go ahead. Hi, good afternoon, and thank you for taking my questions, Gilles and Tom. I have 3. One, I would come back to the pricing, maybe think a little bit further out. We have seen some raw materials deflating year to date, and I understand very well that you may not see this, given your inventory levels and contracts in place and so forth. I would like to understand whether actually some customers may already have approached you to maybe ask for some pricing back in specific ingredients. If not, I mean, how do you think about pricing when deflation becomes more evident in the future? That's the first question. The second one is on your EBITDA. Congratulations on your EBITDA margin delivery in the first half of the year, but would you mind helping us understand the key moving parts that we should consider in the second half, maybe in the absence of significant volume growth, just depending on the comms and so forth? Last one, a little bit more of a high-level question. So you shared some of the R&D highlights year to date, but you also mentioned innovation that has been developed via AI technology. Can you sort of share how you personally will believe that AI will drive your innovation and your top-line growth, over the midterm? Just would be very good to get your thoughts on this. Thank you. Okay. maybe on the EBITDA, you want to take it, Tom? Yeah, I'll take it first, Lisa, thanks for the question. You know, just on the next, say, let's say, 6 months of ebitda clearly the number that we can give you is the one that's coming from what we call the profit improvement programs. You remember that we talked about around CHF 40 million of savings this year. We had about CHF 10-15 million of benefit in the first 6 months of the year, with the remainder to come in the second half of the year, so around CHF 25 million. And then we will have another CHF 20 million in the first 6 months of 2024. You know, that's probably the easiest number for you to plug in. You know, then, as we've mentioned of course, we will have the corresponding price increases to the raw materials. You know, 5% inflation on raw materials, and then the price increase. Of course, as Gilles mentioned, in the first 6 months of this year, we had the two elements of pricing, so the rollover from 2022, and the start of the price increase for 2023. Of course that's something that will slow in the second half of the year. I think maybe, Lisa, what's important is just to look at where we position ourselves. We have a very clear ambition to get back to historical margins of somewhere between 22%-24%. The question on raw mat and pricing, as I said, we absolutely confirm the 5% increase of raw mats overall. Again, as a reminder, we buy more than 16,000 different ingredients. Yes, you might see 1 or 2 commodities going down and so on. Again, all of those ingredients, whether... and for the most part, they are naturals, are highly specific. Actually, you would not find any indication on any website or any Bloomberg. Essentially, I can confirm that those input costs are growing in the total amount of 5%, and we don't see any indication. Actually, as an indication, if you look at the evolution of raw mats overall for Givaudan over a 10, 20 years period, you will have had, let's say in summary, 2 or, yeah, I would say 3 big increases. One was in 2012, the other one 2017, the other one is 2022, 2023. Actually, the market never really went down significantly. The index, if you take an index of 100, 15 or 20 years ago it has substantially increased to today. We are not, again, in the chemical sector. We are not in the commodity market. We are not in any of that. That's why you don't find, it's not a cyclical evolution of prices as you might think. The last question on AI, interesting question. We started investing on AI quite significantly with our both internal resources, but also outside resources, with 2 digital factories, 1 in Paris, 1 in China, which I visited actually a couple of weeks ago. To your question, AI for us applies on 2 different, let's say, types of applications. 1 is really to do what we do in both an even more effective, but also efficient way. When I say effective, meaning creating better fragrances, better flavors, helping our perfumers, our flavorists, seeing what they don't see, but also leveraging on what they understand. It's really an expanded capability of our creation development, let's say, resources. That is some of the things you've seen already. Carto, AI around creating fragrances, out of the knowledge around thousands and thousands. There's a lot going on around how can we create better fragrances, flavors, products, also apply to active beauty, by the way. Also in the way we work, meaning, the interactions with our clients, be it at the front stage of marketing, finding consumer trends that's what we find around leads, around the foresight, some of the things I mentioned. Also helping our clients market their products the bridge to colors, the bridge to, with Myrissi, for example. All of those things help us being more efficient and effective. I didn't mention, for example, all the bots AI bots, which are robots in the supply chain that we have in GBS. All of the things are making the Givaudan, let's say, capabilities even more effective and efficient. The second range of applications has to do with expanding. How can we expand with what we call the tail end of local, smaller and smaller clients that we see? We are in a world of still very buoyant buoyant, let's say, creation of startups around food, beverage cosmetics, skincare, fine fragrances. But we cannot afford creating full-fledged perfumes, flavors, and so forth for those, what we call tail end clients, mobilizing all the resources. We really have AI tools where we go end-to-end, not only finding those and discovering those clients, but serving them with what we call smart submissions picking from thousands and thousands of references in a very smart way. That's using very advanced AI digital tools, and that's a way to expand the sales. You could put basically in front of that, expand the sales. Actually, to put a number behind all of what I said is difficult, but we are doesn't prevent us from investing, trying, piloting, implementing, and we are making very good progress on those two fronts. ... very interesting. Thank you so much. Thank you. The next question comes from the line of Isha Sharma with Stifel Europe. Please go ahead. Hi, good afternoon. Apologies for going back to pricing, if I just look at what we've had in the first half of the year, it's around CHF 230 million. Are you still guiding for CHF 260 million for the full year, like you did with the last quarter? Does that mean that we only have CHF 30 million more to come in the second half? On the working capital, I had another question. Despite the volume declines, we did not see a significant unwind. Is it mainly driven by pricing, and can we expect this swing to still come in the second half? Isha, if you want, I can take both. Firstly, on the pricing we had, as we've said, we had 9% raw material inflation last year, fully compensated, but with the timing difference into the first 6 months, and then this year we have 5% of inflation, which we fully compensated this year. You know the raw materials, and I think you can make the calculation from there. On the working capital I'm really happy with actually the progress that we're making on the working capital. I mean, if you look at our raw materials this year, up 5%, which means that our inventories on a pricing basis have gone up by 5%. We are able to still see the benefits of some of the actions we've started to reduce the volume of our inventory as the supply chain gets better. You know, that's, you don't see the full impact in the first six months of the year. You know, we've got the building blocks in place. You know, we also have sometimes the seasonality of the crops during the first six months of the year. If you look historically what we've done inventories have tended to peak around, let's say, June, July time, and then from there, we've reduced inventories. The performance of the free cash flow, I think, overall in the first six months is excellent, given the raw material inflation that we have in our inventories. If you look at our expectations for free cash flow over the next couple of years we have a strong commitment to a more than 12% free cash flow, clearly, inventory is the single biggest component of that on the working capital side. Okay. I think we take the last question, Operator. Okay. Today, this last question comes from line of Matthew Yates with Bank of America. Please go ahead. Hi. Thanks so much. I think it's mostly been covered. I was just gonna go back on the performance improvement program and whether you're able to disaggregate that a bit more by division. Obviously, we can see the magnitude of the charges you took in the first half. Is it reasonable to assume that the price or the payback is equally spread between the two divisions, if it's primarily around historical M&A actions, which I think have been fairly evenly distributed across the company? Is there one division you accept to benefit more than another in the second half? Matthew, I think we have two elements. The first is the reduction in the workforce of around 600 people. You know, that's evenly split across the two divisions, and the support functions that support those two divisions. You know, one point maybe just to be absolutely clear on is that there is no impact on R&D. There is no impact on the commercial side of things. You know, what we've seen over the last 12 months is an improvement in the supply chain. We've seen the environment in which we operate in our factories becoming much simpler, as a result of many of the restrictions being lifted on COVID. You know, we would expect to see most of the benefit actually in the gross margin. You know, very evenly split between the two divisions. On the footprint clearly we see more opportunity on the taste side. You know, the, many of the companies that we acquired had a very, very fragmented footprint, and we see more opportunity on the taste side, actually, than we do on the fragrance side. Thanks, Tom. That was our last question, and I'd like to thank you all for your questions. This ends now our call. I'd like to remind you that we are holding on the 30th of August in Zurich, in the Widder Hotel, our traditional half year conference, and I will welcome everyone to join, whether physically or online. It will be focused, the theme will be about local and regional clients, local and regional customers, an exciting topic for both divisions. I look forward to seeing you there at this event, and I thank you again for your time.