Hello, and welcome to the Rémy Cointreau H1 sales publication. My name is Natalie, and I'll be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Luca Marotta, CFO, to begin today's conference. Thank you. Good morning, everyone. As you've seen in the press release, H1 sales were down minus 22.2% in organic terms, including a decrease of - 10.8% in the second quarter. Even if Q2 sales have shown a sequential improvement compared to the Q1, this is not enough and below our expectation. This performance has been mostly impacted by the Americas, where the recovery is slower than expected. In parallel, the rest of the world grew at + 13.8% year-on-year in H1. H1 sales decline is split between a volume decrease of minus 18.9% in H1, and a minus 3.3% of price-mix effects impacted by the Americas region as a result of the strong cognacs underperformance compared to the Liqueurs & Spirits division. Overall, H1 sales were up +20.9% in H1 as compared to pre-COVID level, despite and including, clearly, the important U.S. restocking. Looking at the overall sales performance by region. Americas recorded a decline of -49.9% in H1, year-on-year, mostly impacted by the Cognac division on the back of, first, a sharp normalization of consumption. Second, a meaningful destocking in absolute value. And third, tougher market condition, including a persistent promotional environment and the rise in financial cost. Compared to 2019-2020, Americas is down -3.2% at this stage. APAC, Asia Pacific region, was up +16.6% in H1, led by China, Southeast Asia, and the continued recovery of Travel Retail. This represents very important +55.8% growth over four years. EMEA was up +8.9%, showing a relatively good resilience despite a touch softer demand. EMEA is up 19.4% versus four years ago. This was sell-in. Now, let's talk of value depletion at group level of the last six months. In the US, value depletions were down high single digits. Compared to pre-COVID, value depletions up +30, and stripping out the SOP +70%, 70. In China, value depletion were down mid-single digit in H1 against very high comps. On a four-year basis, China value depletions were up +45% in H1, following only +20 in the previous quarter. H1 negative performance reflects Q2 value depletions, high comps, and a touch softer demand during the summer in China. Finally, in EMEA, value depletion were up mid-teens, led by Africa and Middle East, Benelux, and Eastern Europe. This represents an increase of around +30% versus H1 2012. So we can say and see very clearly that overall, at group level, this means that depletion on a four-year basis grew almost two times faster compared to selling, +35% versus around +21%. This is the mathematical and clear demonstration that selling is impacted by some conjuncture, so, short-term effects, while the underlying consumption has clearly accelerated compared to four years ago. To sum up, for this very first slide, an important one. Following our performance, which is unfortunately below our expectation assumption, and take into account our new assumption for the coming months, we have decided to adjust our full-year guidance. We now expect a decline between -15% and -20% on an organic basis, and a contained decrease in operating margin on an organic basis as well. This is also thanks to a deployment of a major cost-cutting plan. I will detail it more in the last slide of this presentation. On pages 3 and 4, we pick up some marketing initiatives that have been undertaken over the last quarter, first in the U.S. and then in China. Let's start with page 3 and the new Rémy Martin campaign with Usher, Life is a Melody for 1738 and XO, as well as a new chapter on Cointreau with Aubrey Plaza for the Cosmopolitan cocktail. Depletions are far from being satisfying in Cognac. However, it is important, it is a key to keep our long-term vision alive. We continue to strengthen our brand equity by growing the long-term awareness and desirability of the brands. Preparing the recovery is key for on Cognac, and we will continue to selectively invest in A&P, advertising and promotion. On Cointreau, the situation is clearly different, as Cointreau benefits from a strong momentum, and the objective is to leverage it and to continue to gain market share. Page four, just a quick word on China and more particularly, on the Mid-Autumn Festival. Sell-in was solid, despite a slower than expected economic recovery in China, but depletions were below expectation. In this market, our main objective has been to support depletion, fostering below-the-line concrete initiatives a little bit more than above-the-line advertising actions. E-commerce and off-trade, talking about channels, are two very important channels for us, and a lot of animation has been done to support our brands, including the launch of a new SKU for XO with a 50 centiliter format on JD.com. In addition, we did several animation to continue to develop off-trade and social gatherings. In the meantime, we continue to work on gaining new distribution listing in on-trade for XO, which will be a strong game changer over the midterm. Here, you can see on the slide an example of the modern on-trade animation to enhance our visibility. Now, let's back to cold figures. Moving to the H1 sales analysis, slide number 5. Sales amounted to EUR 636.7 million, down by EUR 230.4 million year-on-year, or -26.6% on a reported basis. This reflects, first, a very strong organic decline of EUR 192.7 million, which is -22.2% of organic sales decrease. This performance is split between -18.9% on negative volume effects and -3.3, as already said, of price mix linked to the Americas underperformance. Regarding the latter, so the price mix, this is a combination between a positive pure price effect, low to mid-single digit, and the negative mix effect around a high single digit. Second, a negative currency translation impact of EUR 37.8 million, which means a 4.4% loss in H1 2024. Why? This loss was largely driven by the deterioration of the Chinese yuan for around EUR 20.3 million, and U.S. dollar for EUR 12.7 million. In addition, Canadian dollar, Australian dollar, and Japanese yen posted a slight marginal loss of respectively EUR 1.2 million, EUR 0.8 million, and EUR 0.7 million. Slide number 6, and 6, an important slide showing the performance by division versus H1 2019/2020. On the left, the evolution of the group sales at constant exchange rate. In H1, we grew at +20.9% on a four-year basis, including a volume effect of 3.9 and huge price mix effect of 17%. Looking into the performance by division on the right part of the slide, you can see that on one slide, the Cognac renewed with growth at +9.4%, thanks to the second quarter, which improved sequentially. Volumes remain significantly negative, but price-mix is still strongly up by 28.9%. On the other side of the slide, liqueurs and spirits was up 55.8%, which is amazing, and show the well-balanced breakdown between price-mix and volume. Now, slide number 7, dig into organic trend by region at the end of H1. Let's start with the APAC, Asia Pacific organic sales, in which sales were up at +16.6% year-on-year in H1, which means +55.8% on a 4-year basis. Looking at volume value equation, the performance year-on-year is equally driven by volume and price mix. Inside this region, clearly, China has a very important weight. China sales were up high single digit in a Q2, benefiting from a solid level of sell-in during March Mid-Autumn Festival, and despite a slower than expected recovery post-COVID. Over the period, in terms of channel, direct channels and off-trade and e-com outperformed and offset the weaker performance displayed by other channel and the on-trade, which for us remains a small part of our business, less than 10% so far, as far as I speak, of total sales for China. Meanwhile, value depletions at group level were down with single digits, i.e., +45% versus 2019-2020. This change in trend reflects softer demand in July and August, exacerbated by some calendar effect. Mid-Autumn Festival was 3 weeks later this year, and very high comps. They are below sell-in, which implies now mathematically, a higher level of inventory in China compared to the end of the Q1. This will have an impact on the expected shipment before Chinese New Year, as we build the stock to ensure a sound level of inventory post-Chinese New Year. The remaining part of Asia reported a mid-teens growth in H1, boosted by stronger rebound of some countries like Japan. End of September 2023, APAC accounted for 40% of our group sales, up 12 points versus last year. Americas. Americas organic sales recorded a decline of more or less 50%, 49.9%, compared to H1 of last year. Mostly impacted by volume, while price-mix was also negative due to the strong underperformance of cognac compared to the liqueur spirits. More specifically, in this region, talking about the U.S., sales were down a very strong double-digit in Q2, showing, however, a sequential improvement versus Q1. This performance reflects continued destocking in absolute value on Cognac, alongside tougher market condition, including promotion and a rise in financial costs, which impacts the capacity of financing for both retailers and wholesaler. In the meantime, liquors and spirit division in the U.S. showed a sharp rebound as expected. Overall, Q2 was slightly above pre-COVID level in the U.S. If we achieve the strongest destocking in absolute value, this is importantly not visible in terms of days of coverage, due to the further deterioration of depletions. Consequently, the level of inventories is still at around five months at the end of the Q2. On a six-month basis, value depletions are still down high single digit year-on-year, down low single digit, excluding VSOP, and approximately up +30% versus H1 2019/2020, and +70% on 4 years basis, excluding VSOP. Talking about Canada, sales showed also very strong decline in Q2, impacted by more or less the same factors and events as in the U.S.. In parallel, Latin America was down low double digit in Q2 as well. End of September, Americas accounted for only 37% group sales, down 19 points year-on-year. So APAC, 40%; Americas, 37%. EMEA organic sales were up +8.9% in H1 and a +19.4%, more or less 20%, versus 4 years ago. This year-on-year performance was only driven by price mix, while volumes were slightly negative. Inside that, by sub-region, Western Europe was up high single-digit in Q2, led by some Southern Europe countries like Spain, Greece and Italy. U.K. was also up high single-digit, but also benefiting from a positive phasing effect linked to the duties increase in August. Remaining part of EMEA, we generated a very strong double-digit growth in Africa, Middle East, while Benelux and France recorded softer trend. H1, value depletions were up mid-teens year-on-year, representing +30% of the growth versus four years ago, so more than the ceiling. At the end of September 2023, EMEA region accounted for 23% of group sales, up +7 points versus last year. Now, let's go to slide number 8 and switch from a regional standpoint to analysis by division, because of footprint, starting with the cognac. Cognac posted an organic decline of -30% in H1 2024, reflecting a significant decline of -39% in volume and a strong price mix gain of 8.9%. End of September 2023, cognac division accounted for 60% of our sales, down 8 points year-on-year. Now, let's begin and start with APAC. In APAC, let's start with China. In China, cognac sales were up high single digit in Q2, on top of a very high base of comparison. Indeed, sales growth represent an increase of more than +100% versus Q2 2019/2020. If sell-in is below our expectation, they remain very solid, represent a good achievement in the current environment. The recovery post-COVID is lower than expected and affected by a softer consumer confidence. Having a good comprehension of the current trend is, relatively complex in the size, and the visibility is currently quite limited. Key takeaways so far are, first, on-trade channel was weaker and is just starting to show some sign of improvement, while, second point, off-trade and direct sales demonstrated a better resilience. Overall, talking about value depletions, value depletions were down mid-single digit in H1. So as a result, in cognac, as already said, for the group level, at the group level, at the end of H1, our level inventory is higher compared to the end of Q1 in China. Our objective is to now destock and ensure a sound level post Chinese New Year. In other regions, Taiwan generated an outstanding performance in Q2. Macau continued to be weak in terms of selling, but value depletion showed a strong acceleration, which bode well for the coming months. Finally, in Hong Kong, we recorded a very strong quarter, supported by dynamic value depletions. In Americas, let's start with North America, so U.S. and Canada. North America cognac sales declined meaningfully year-on-year on Q2, impacted by destocking, consumption normalization, and comps. In the meantime, market conditions are getting tougher and tougher. The rise in financial interest is reducing significantly wholesalers and retail financing capacity. Moreover, persistent markets, not by us, but the market overall, promotion adds pressure on renew marketing volumes, as we have decided not to make any compromise on pricing, fostering long-term value creation instead of non-sustainable and quick wins in volumes. As a consequence, U.S. value depletion in cognac have deteriorated sequentially in Q2 versus Q1. They were down -32.8% year-on-year, i.e., -10.6%, more or less -11%, compared to the Q2 1920. In this context, the level of inventory of cognac is now in terms of coverage, above, more or less above 4, 5 months in terms of coverage for the cognac. It will be lower for the liqueurs and spirits division, giving 5 as an average, for the US in terms of value depletion at group level. Price mix effects were positive 7 points year-on-year in the last twelve months, period ending September 2023, led by price increases. On a full year basis, price mix was up + 26 points. Latin America side was up mid-single digit in Q2, led by VSOP. Then talking about the third region, EMEA, cognac sales were up low- to mid-single-digit in Q2, and Africa, Middle East and Western Europe. In parallel, Benelux, France were softer in Q2 in a more promotional market. And finally, travel retail Europe and some Eastern Europe countries were negatively impacted by the global geopolitical context. Now, let's turn to the liqueurs and spirits division, slide 9. Liqueurs and spirits division posted a flat performance on organic basis in H1 2024, including a decline of -6.5 in volume, mainly due to the Americas in Q1, and a positive price-mix effect of 6.6. As a result, we have more or less 0.3 increase. At the end of September, liqueurs and spirits division accounted for around 33% of sales, up 8 points versus last year. Now, let's review the performance of the division by region, starting with the Americas and North America, first of all. North America sales were up a very strong double-digit year-on-year in Q2, as expected, and following some negative phasing momentum in Q1. This represents an increase of around +65% versus Q2 2019/20. This performance reflects a strong momentum, both in sell-in and in value depletions on some brands, like clearly Cointreau, but also Botanist, our gin, and Bruichladdich. More specifically on Cointreau, Q2 U.S. value depletions were up +9.2% year-on-year, which means +75.1 versus Q2 2019/2020. Besides that, price-mix was up by 6 points versus last year in the last twelve months, ending September, and up +30 points on a full year basis. In parallel, liqueurs and spirits division in Latin America, sales were down in Q2 year-on-year, in a market showing softer touring trend for these kind of brands. EMEA sales grew at low- to mid-single-digit in Q2 year-on-year, led by Bruichladdich, whiskey, single malt, Botanist, and Cointreau. U.K. continued to benefit from positive restocking effects just before the duties increase in August, and Western Europe outperformed and generated a strong growth. In the meantime, Benelux, Africa, and Middle East continued to show solid dynamics, led by whiskeys and Cointreau. Finally, as already said, for the cognac, it is also value for travel retail for Europe and some Eastern Europe country, which are still being impacted negatively by geopolitical context and softness. In APAC, China posted a high single-digit sales decline in Q2 year-on-year, but approximately +60% compared to four years ago, the same momentum, and impacted by the continued destocking in whiskey, specifically. The rest of Asia performed well and recorded mid-single sales growth in Q2, led by some countries like Japan, New Zealand, Australia, and Vietnam. Before to conclude, one last word on the performance of the non-group brands, which represent now only 2% of our group sales, stable year-on-year. They were down -1.6% in Q2, mostly affected by the U.K., where Passoã is facing a strong promotional environment and, environment and competition. In conclusion, before switching to the Q&A, as slide number 10, worsening market condition in the second quarter, primarily in the United States, has led us to update our underlying assumption for this fiscal year, 2022-2024, as follows: First, the United States market condition, I repeat, has significantly deteriorated in Q2 on the back of a very strong promotional environment and the rise in interest rates that has caps reduced distributors' financing capacity. As a result, the rebound in sales initially expected for Q3 in the US is now anticipated for the next fiscal year, in 2024-2025. Second, in the APAC region, Asia Pacific, group expects it to generate a positive growth this year, but a piece below initial assumption, given slower than anticipated post-COVID economic recovery in China. Last but not least, in the EMEA region, the group expect more moderate annual growth in a persistently inflationary context. In this context, Rémy Cointreau is determined to protect its profitability for this fiscal year through tight cost controls, while continuing to roll out its medium-term plan. To this end, it will, first of all, maintain a strict and uncompromising pricing policy. Second, protect its gross margin in a persistently inflationary environment. Third, selectively reduce A&P spends, clearly, particularly for the most affected cognac division. Fourth, significantly reduce other operating costs. As a result, Rémy Cointreau has adjusted its full-year 2023-2024 objectives and now expects a decline between -15% and -20% in sales on an organic basis compared to the previous guidance, which was stable. Second, a contained organic decrease in operating margin compared to stable previously, thanks also to the deployment of a major cost-cutting downsizing plan. Lastly, based on the shift in its geographical mix and the RMB decline, the group expect exchange rates to have a negative impact for the full year on sales between EUR 50 million and EUR 60 million, of which two-thirds in H1, no change compared to the previous guidance in operating profit between EUR -10 million and EUR 15 million, mostly on H1, no change compared to the previous guidance. Rémy Cointreau is today ahead, clearly ahead of its strategic ten-year plan and is underpinned by very solid foundation and long-term vision. This makes 2022-2024 a harsh year, but a transitional year, which allow the group to return cognac inventories in the United States to healthier levels, to absorb the effect of post-COVID normalization before adding into a 2024-2025 years in the best possible condition, resuming, regaining the trajectory of growth it set itself for in 2029-2030. Thank you for your attention. Now, after a bit of water, I will be happy to answer to your question. Thank you. Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Thank you. We will now take our first question from Simon Hales, from Citi. Your line is open. Please go ahead. Thank you. Morning, Luca. A couple of questions really from me, please. Firstly, I wonder if you could just talk a little bit more about the scale of the cost-cutting initiatives you're gonna put in place through the end of the year, and how much protection these cost cuttings this year may actually give to your EBIT margins in 2024? And then looking ahead, you know, I assume obviously things like marketing spend cuts this year will only be temporary, and they'll therefore sort of rebound into 2025 and beyond. But how do you think about some of the more permanent cut cuts you're talking about around structural operating costs? You know, how big will they be? Where are they coming from? So that's the first question. And then secondly, can I just sort of come back to the whole level of inventories in your major markets? I just wonder if you could just expand a little bit on the inventory positions in the U.S. and China at the end of the quarter. You know, what level of inventories are now in China at the end of September versus Q1? In the U.S., are liqueurs and spirits inventory levels okay, so is all of the problem just really in the cognac business? And I appreciate it's tough to generalize, but I mean, what do you think the right level of inventories are in key markets like the U.S. and China now in the new higher rates environment that wholesalers are operating in? Thank you. So in the next 30 minutes, I will try to answer. Thank for your very small, nice question. So, I will not detail in a very analytical way today because it's still a sales, a sales call, and will be more precise in November. But we can say already very, very clear things about the cost cutting. We are working on that, to cut it, to offset as much as we can the important sales effect, to protect our profitability. Because I'm sure you notice, the range between 15- 20 is quite large, means between EUR 230 million-EUR 310 million, mathematically speaking, in terms of sales. If you apply back a gross margin normative level, makes a hell of a difference in terms of of profit theoretically missing if you don't operate on cost, if you are - 15 or - 20. So we already set some targets, and when we talk about major cost cutting, we are not talking only about A&P, we are talking about everything. We're talking about industrial costs, we're talking about A&P, we're talking about OpEx. And the magnitude of the overall impact will be between 10%- 15%. So to give you a number, we are looking for EUR 100 million of cost saving. How much will be long lasting? How much will be temporary that will be injected, it's the so second question, if the top line is very analyzing? Clearly, this is part of our future adjustment, but so far, we are running for that kind of magnitude. I repeat, 10-15 reduction point of the reduction of the cost base, considering A&P, OpEx, and part of the non-strategic industrial costs, and a split between long lasting and short-term. If you want to be more precise, I can. It is more, will be more on A&P this year, 15-20, and OpEx, more or less 10%. As a result, I repeat, 10-15, then of magnitude. And what will be the impact of the operating? Contained means, what does it mean in English, more, it's more exact in English than in French. It's more contained that our first intention is to protect the trajectory in terms of market share and growth for the future year. So I don't know, following the depletion journey, what will be the end of the year, -15%, -17%, -14%, -20%. But we have to prepare be prepared also for the worst situation. That is why, and this is quite a very important call for a group like us, we are calling for a major cost-cutting plan right now. And I repeat, some of these measure will be long lasting. It's not only about temporary. I think I've answered to your first, second and third question because it was all was combined. In terms of level inventories, situation in the U.S. in terms of coverage has not improved. It's not because we are not lower than the because what we can do more than being -50, so we are not pushing, so we are not compromising on promotional, we are not compromising on the short-term. It's that the main disappointment was the Q2 in terms of depletion. We expected to have a sequential improvement, and we had a very negative Q2. It's clearly visible, so we don't have to be scared to admit that. There will be an improvement also in the future quarters, but the Q2 makes a miss that needs to be taken into account very clearly. So far, despite the fact that we made a huge sacrifice to reduce the in all trade chain, the level inventory in absolute value, the coverage is still more or less five months, maybe a touch more than before in terms of the coverage, because it's more in Cognac and less in other spirits. Does it mean something? No. No. No, please do not think in terms of months of coverage. Your second question, on the U.S., we cannot modelize a normative level in terms of months, because what is today is five, six, seven months in some states, becomes all of a sudden 35 days if you are experiencing a huge jump that we are prepared to follow. And because we think that is a short-term conjunctural, and the appetite for the Cognac is not lost. It's part of the historical curve of ups and downs in cognac. It's maybe even the most schizophrenic in terms of normalization, as well as schizophrenic, the rise for the last two years. So we remain very calm, despite the fact that I'm talking very passionate, but don't think in terms of normative. If you want, absolutely modelize that, 3 months-4 months sometimes means having missing products and being out of stock in some points of sale. Being back to your question on inventory levels, we have to talk about China. China is a bit more in terms of stock coverage compared to the Q1. Why? Because Mid-Autumn Festival on the heels, a very strong Mid-Autumn Festival last year was a very good one in terms of placement of selling. The depletion and final sell-out was a little bit disappointing, a little bit, but disappointing compared to our expectation. So as a fact, we don't want to overstock in Chinese New Year, so we have to get rid of part of this stock in Chinese New Year, and to give all the chances to continue to serve the very strong year for the following one. Even after reducing the guidance for China per se, we will perform a positive year, both on sell-in and on depletion. So on a temporary basis, if you want, also, the first sign of September, first sign of October, are quite encouraging. So I agree with some of my of our peers; they're saying there is some signs of positive development in China. It's the fact that we want to be cautious because this success in mass in term of selling compared to depletion, and we don't want to overpromise for the Chinese New Year to be able to normalize the level. Rest of the world, overall, remain very sound, but slightly increasing. Why? Because in some European and also Asian countries, the summer was slightly disappointing. So last point, which is very important I think for everybody. Let's try to put some figures behind the difference between the initial guidance, flat on top line, and the new one, which is -15 to -20. On purpose, I want to highlight that very clearly, to be clear for everybody. So we are talking about a magnitude of, say, difference compared to Q1, I repeat, between EUR 232 million, to be precise, and EUR 310 million. If you apply -15% to -20% to the previous top line of the last year at organic basis. How we can split the effect by region? 60%-65%, so we can say a small two-thirds of this is linked to the Americas and U.S.. 25% China, but it still remain a positive year, both in depletions and sell-in, and the remaining 15% to the rest of the world. Now, let's dig into the biggest part, two-thirds, Americas. Why two-thirds? One-third of this two-thirds is linked to the difference between the H1 expectation for that we had, and the H1 sales mix. So it is what we have today, end of September, compared to our initial assumption and forecast. Deterioration in depletions, Q2, has impacted the sell-in expected selling. But this is only one-third of 60%. Why we have a multiplicative effect on the remaining part of the year? Because we are expected to have a V shape, now it's more a U shape, with a little bit more lasting of the neutral part of the U. So two-thirds of the 60% are related to H2. On top of the deterioration of depletion forecast, that implies less selling, we have to consider that the restocking effect, that it is clearly a consequence of these realignments, will not be strong as expected and will be probably delayed to the next fiscal year. I repeat, this difference in terms of previous and extra guidance is split in terms of magnitude. Two-thirds for the Americas, 25% China, 30% of the rest of the world. We thought it was very important for us to disclose this kind of element, to help you modelize also next year, even if nobody has a clear visibility, nor do I, nor do I, nor we have. This is important to try to set some scenarios. Last but not least, despite that, it will be a growing year for the group out of the U.S. A growing year, with performance in many countries, at least equal, if not better, on our peers. Thank you. Well, that's truly helpful, Luca. So, just pulling my final comments all together, I appreciate all the comments around what's driving the organic sales guidance range. If I link that into what you said around your cost reduction plans, is it broadly fair to say that your organic cost reduction this year will probably be running at about 500 basis points worse than whatever your organic sales decline ends up being? How much you said? Because I'm not clear. 5%. Five? 5%, yeah. So we're seeing, saying that it is -15 in the top line, it implies -20 in operating profit. This is your question? Correct. Correct, yes. It's too early to answer. If we are in the smallest part of the range, 15, I have some good expectation to be able to contain a little bit more. So less than 5. So I don't know. I don't want to commit, but less than 5. If you are in the highest part of the range, top line at 1 point, as usual, I cannot cut, I can cut noise, and I cannot cut my fingers. So it is a 20, it will be 5, maybe 6. But compared to the actual consensus, we are clearly missing the consensus top line, hmm? But you were collectively a bit too pessimistic in terms of our ability to cope facing this strong wind. In operating profits, when we say contained, we will contain. Very helpful. If it is, I repeat, I repeat. 5, if it is 15, I want to be able to to reduce operating profit less than 5 points gap. If it is 20%, maybe 5, maybe 6, because at 1 point, there is a mathematical. I cannot cut costs forever. I cannot be more clear than that. Thank you, Luca. Thank you. We will now move to our next question from Trevor Stirling from Bernstein. Your line is open. Please go ahead. Morning, Luca. Well, I hope you have some fingers left at the end of all of this. Just one question from my side, Luca, and it's probably a tough one to answer. But focusing in on the -30% value depletions in Q2 U.S. I appreciate there's a lot of moving parts here, but can you estimate at all how much of that is retailer destocking, how much of it is the fallout from the competitor promotions, and how much of it is real underlying demand? I appreciate that's a really tough one. I think it will be something straight for you. It's my first time in 10 years. I don't know. I'm not able to answer. Really. Any answer would be a wrong one. I don't have a clue. Oh, there's two of us. This means that we are counting what happens on the field, on the battles. And clear, it means that the visibility for the future is not ideal. I can say that. I agree with that. So it's a consequence, knowing that we are not able to decompose, to split it up in a casual track, very clear, means the visibility. It depends on factual basis. I agree with that. I admit that it is a very important point, but I would be a liar if I answer to that. Then maybe just one follow-up then, Luca. Clearly, given that lack of uncertainty, that informs, I guess, a lot of the uncertainty about where you're going to end up in terms of sales depletions, also sales for the year, is your assumption that value depletions are stable by the end of fiscal year 2024? You're talking about the U.S.? U.S. Comet, yes. Are still negative. Mm-hmm. Will be a sequential improvement, but the mix... So, volume Q2 was a strong double-digit negative. And once again, we expected something much less negative and more strong in sequential improvement, and it played a role in terms of the impact on the future quarter. So the restocking and the increase of depletion of final retail sales has been capped. Because every time a company, a mixed company, has a guidance, which is in this shape, we are clearly a risk of missing that if the building blocks for the more difficult parts are not showing the intended result. So what we had lost in the Q2 is very strong compared to the short-term, for the short-term and also for the future quarter. So it will be still negative, improving in the H2, but at yearly level, value depletion will not be positive. But in China, it will be positive, as in that case. Yeah. So it is clearly only about U.S. in this moment. Understood. Thank you very much, Luca. We will now move to our next question from Mitch Collett from Deutsche Bank. Your line is open. Please go ahead. I'd like to ask a couple of questions on, on the U.S. as well, if that's okay. So I, I think during, you know, the peak in terms of growth in the sort of pandemic and post-pandemic period, we, we talked about a new paradigm for the category. I, I guess as of today, that, that doesn't look like it's the case. And I, I suppose I wondered what your thoughts are... were, on why that's changed. And I, I think there's been lots of industry participants around that time thought that the step forward was something that could be retained. So I'd, I'd love your thoughts on, on why that hasn't happened. And then, I guess linked to that, in the data you give on slide 8 for your U.S. volume depletions, I just wondered if you could help explain... Why your company estimated depletions, which is minus, I think, 37.4 in the last three months, was quite a lot worse than what you would imply from the NABCA, Kantar, IRI data you give, and also Nielsen. I know you said it was very hard to understand what's going on in terms of retailer destocking, but I guess are there channels outside of NABCA, Kantar, and IRI that are underperforming, the channels that we can track? Thank you. Thank you. I will start the second one because the panel you have, they are covering more or less 50%, 54% would be the—so the remaining, the remaining part is very important. This time, you have this kind of search and this kind of statement, but many times we were the opposite. We were highlighting the figures that were the other way around, so better than... So the fact that the remaining missing part is make things very, very difficult. Once again, to remind that we are trying to combine that. We are underrepresented in Nielsen because of some change and also the lack of stores. So it's very complicated to try to, in the moment in time, to comment the difference between one and the other. Like I said, are very important for us, and they are not tracked at that. What's important is that, in my opinion, in our opinion, is not to compare to the momentum, to the, the distance, you know, but to follow the same logic, you'd be able to compare to the previous. At least we are comparable. The first question is clearly another very, very, very easy one. Let's try to differentiate the short-term or medium term, if you want, the one-year performance, compared to the overall desirability of the market and what would be the future of the cognac market, in our opinion, in the U.S. At least for a company like us, that is clearly fit with the long-term views of drink less but better. So actual U.S. performance for us and indirectly for the market, is going to, first of all, a strong, a sharp consumption normalization, no doubt of that, even stronger than we thought. But it is, enhanced, increased by the destocking in absolute value for cognac, linked to the fact that when we are in this kind of momentum, if you are a wholesaler in financial interest rise, you give short-term, priority to a more fast-moving brands that plays on promotions and times of price decrease, because you have the rotation of your employed capital that go faster. So in the short-term, we have a, a weak point compared to our peers in terms of financial, but we think this is not our strategy, so we keep, we can keep on going with our, with our idea, and we are a very solid company. I will be back on this point at the end of the presentation. Intensive promotion for our competitor, it is not stopping, it's destroying value, destroying part, also the perception in terms of the consumer. So it is something short-term that is implying the strength of the promotion, and the length of the promotion is implying that could be something more lasting. Once again, a rise on financial costs reduce financial capacity of wholesaler, retailers. If you compare what they are carrying today in absolute value to 10 years ago, it's ridiculous. Even they are much more in DIM today than the inventory management as a consequence than it was largely before COVID. Underlying consumption is softer, but once again, we think that is influenced by this kind of different element, in which we are a bit alone because we play a different strategy. Does it means... So go to the hard part now. The cognac category lost its desirability, partially or totally, or, or not? For us, in our opinion, not at all. I repeat, not at all. All perception surveys and brand health tracker and other are showing the contrary for the category and even more for us. We are clearly spot on in what the desire of the consumer is showing. Also, in this very complicated moment, Rémy Martin now is the number two in term of desirability in the U.S., the one in China, it's public. The issue comes from the fact that we are personally facing all the headwinds at the same time, as I, as we said. This is also demonstrated that depletions on a four-year basis are clearly beating the sell-in performance on a four-year. On a four-year, you have all things are, are linearized, are comparable. There is no more short-term or long-term elements. Depletions were growing two times faster than sell-in. It's a fact, even today. Even today, they were at bottom of our performance in terms of depletion. We are only -10% compared to pre-COVID, and there is a clear acceleration coming. Will be not enough to confirm the guidance, but we feel very strong compared to where we stand. So... It's important, this context to continue to feed the brands and to be able to jump on the growth that will happen. Historically, Cognac, last 50, 60 years, has been growing at the category 3% in volume, will be maybe a little bit less in the future because drink has got better. But as you see our price-mix effect on sell-in even more on sell-out, we'll be there to support that. So the cycle could be more schizophrenic, like the temperature in this moment, like the weather this evening. But the long-term trajectory, we believe, is there, and the desirability is very, very strong. Also, in term of demographics, is less of the topics in our opinion. It's more, U&A, user and habits game. In the short-term, we are obliged to cut costs, cost. We will do it. We will try to be smart, and as I said it to Barclays, to Citigroup, Simon, we will jump on that as soon as the sales will be recovering. In the short-term, so we'll be cutting, but nothing will imply, in our opinion, a loss of visibility of the cognac in the medium to long-term. We are very, very opinionated in a positive way on that point. That's very comprehensive. Thank you, Luca. If I can ask one quick follow-up, the trend related to China. I know you said that the on-trade channel was weaker than the off-trade. I just wondered if you had any thoughts on why the on-trade was weaker, and I know you also said there's very limited visibility, but what gives you confidence that on-trade weakness doesn't spill over into weakness in other channels? Thank you. Thank you for the question. We prefer to elaborate a bit more on China because it's very important. So as we start with the on-trade, on-trade overall, which is not so important for us, I'm awake, but for the profession, for the category, yes, it is, was particularly weak during Mid-Autumn Festival. Also because of the 100 days campaign did not help. The spend per capita was lowering, clearly. But since October, there are clearly early signs of improvement. I agree with one of our major competitors in China, that things are going better in China in terms of the on-trade. For us, it's not so important, but it is a clear sign. But it's a little bit more complex situation, in part in China. I can say that for us, to try to give some color, the current trading is that we are obliged to cut our initial guidance, even if we will be increasing turnover compared to the previous year, for four negatives and two positive factors. Let's start with the four negatives. The context is clearly negative. The crisis in real estate, finance sector, soaring youth employment, cash tension in trade, anti-corruption, anticipation. So expectation overall that can lower the temperature and the enthusiasm on China. The second one, a clear softer demand during summer, July, August, September was better, with retailers waiting for the last minute to deplete with the low confidence and cash constraints they have. Third point, the on-trade, as we just said, and then fourth point, that the visibility as a consequence, is, also limited, more limited by some, and blurred by some calendar effects, because was three weeks later, and high base accounts. Then we have two very important positive elements that gives confidence to us, also to other companies. First one applies to everybody and even more to us. Our channel split is the, very good one in this moment, because, every time we are in touch with the client, the customer, the direct channel, we overperform big time. We are much more dynamic than direct channel, and e-commerce is clearly booming, even more on the B2C, B2C part than the B2B. So very good, performance. Second point, September and early sign of October, depletions are showing a strong pickup, which did not offset deteriorations in July and August, but it is a positive sign. That's the reason why we are lowering the guidance towards a double-digit growth, both in top line and depletions, to a solid growth in low to mid-single digit, both in top line and in depletions for the whole year. In this context, we'll be growing, I repeat, in China as a group, despite the global four negative factors in China for the fiscal year 2022-2024. I think it's very important to highlight, reducing the guidance, but still positive top line and, direct sales and depletions in China for Rémy Cointreau group and clearly Rémy Martin. Thank you, Luca. We will now move to our next question from Olivier Nicolai, from GS. Your line is open. Please go ahead. Hi, good morning, Luca. Just a couple of follow-ups, if I may. You might have covered this in previous questions, but just wanted to go back to slide 6. When you look at the cognac in the U.S. here, you have price mix 28.9% growth during that period. Do you have any rough estimate of how much is mix versus price for you? And if you consider that maybe if it's like more than half of it is mixed, for instance. I'm just trying to compare this to your main competitor. The second question is on essentially the guidance you gave, partly for the U.S. You flagged obviously the high promotional activity and the rising interest rates, making the distributor a bit more cautious of having inventories. And you flagged what is going to be, you know, better next year, but what makes you, what gives you confidence that those two elements will not still be there next year as well? Thank you. I didn't catch clearly the second one. So can you be more, if you can be more direct? Sure. Sure. If you look at the slide 10, I mean, the first, first line of your, of your outlook, you do flag in the U.S., but obviously market conditions have deteriorated, fierce promotional environments and rising interest rates. But those two elements could still be there in 2024, 2025. So what makes you confident that actually you will see a, a rebound in sales there? Thank you. It's clear. So in terms of the price-mix, over four years is more price than mix. I will say two-thirds, one-third. Two-thirds on the short-term, as you've seen, price is positive, and mix is on the short-term negative. But clearly over the long-term, because of the underperformance of the VSOP compared to the main part of the range is two-thirds, one-third. Probably in the short-term, we have also a mix issue that is very short-term. So which gives us the confidence is that the sacrifice what we are doing today, not to increase the short-term volumes with promotion and short-term operation gives more speed to the pace of normalization compared to the end demand. So sell-in will be mathematically increasing if we are able to normalize the depletions to stabilize them. The first important and very important indicator will be depletions in value in the U.S., for the cognac period, first of all. Once the depletions will be running better than the previous period, the previous year, you have an automatic normalization of stock. There will be an evaporation of the stock coverage in terms of days. The strong sacrifice in terms of absolute value will be clearly visible, and you will have what this year will be delayed, the restocking effect. Because at that point, the calculation of stock coverage will be clearly there. The important thing is not to give up, and to continue to be coherent with our long-term strategy, and to support with a mix of the right long-term initiatives and short-term, more, point of sales animation, the, this kind of, mathematical alignment. So even if it will be in a strong, fierce, promotional environment, the normalization of the stock level will give automatic positive element. Then the question, the second question will be, "Okay, but what will be your underlying for the 2024, 2025, in the U.S.? Will be a mid-single digit, high single digit, or double digit, considering the mix of this year? To this question, I cannot answer because the visibility today doesn't allow me to give this answer. I will be more precise all along the year, also with Éric Vallat in H1 and even more in June, because this is very important. It will be an underlying growth. How much it is? It is 2, it is 8, it is 15, in the U.S.? I don't know. Today, I don't know. Thank you. To answer to this question, I need to be able to answer something to the question of Trevor, because the current track of what's happening today. Thank you. In a very candid way, I don't want to invent things to be a liar on this point. I don't have this answer today. We will now move to our next question from Rashad Kawan, from Morgan Stanley. Your line is open. Please go ahead. Thank you, and good morning, Luca. Just one for me, also on the U.S. When you talk about reducing marketing spend in Cognac, quite a significant reduction, you talked about. What gives you the confidence that that's the right approach, given, you know, the weak sellout data and the promotional activity you're seeing across peers? And is there any scenario where you'd look to engage in some level of promotional activity in the short-term? We will not compromise on our strategy. The tactical part of our operation will be all in terms of activation, point of sales, try to dynamize the acceleration of the consumer habits, not playing on prices. Doesn't make sense to hold your breath 8 minutes, and then when the missing only 30 seconds to start to do something that is wrong for your strategy. We will not do that. So we play might maybe some tactically, but on the BTL and not on the price. So in terms of exposure, on the share of disposal, not in terms of structural prices and structural promotion, we do not enter in the price war and the price scheme. We think that our brands are very strong and desirable, and the group, I will be back on this point at the end, is very solid, prepared, calm, and all the weapons to pursue its long-term journey. It's harsh today, it hurts. We are not happy, but we need to continue to fight for the sake and for the well-being of our long-term journey. It would be a disaster to compromise on this. Got it. Thank you. That's all the time we have for Q&A, so I'll hand it back over to Luca Marotta to conclude today's conference. We will meet again end of November, along with Éric Vallat, Marie-Amélie de Leusse, to talk about H1 result, detailed by profit and loss, free cash flow, balance sheet, and so on, all the global set of figures. I'd like to remind two or three things that we need to think about. Year 2023-2024, it's very negative. It's a very harsh one for us. It's a harsh year transition, no doubt at all. Please remember five important things. First of all, we have a very strong and solid strategy. No short-term compromises that would be incoherent and destroying act, and would be weakening and destroy client perception and network, wholesaler and distributor partners for our brands, mainly cognac, but not all. Second point, we are materially ahead of our 10-year plan, so a harsh year transition will not change, I repeat, will not change our medium- to long-term goals. Third point, we have a very solid balance sheet with the longevity of strategic financial resources that have been increased. Clear example, the last EUR 380 private bond placement that we concluded some weeks ago, at around 10 years, officialized in a very competitive interest rate. So we are much better positioned as a group versus previous difficult situation the group experienced 10, 20, 30 years ago. We have a DNA to fight this kind of situation, and now we are much more solid, financially speaking, strategic speaking, compared to the past. Four, U.S. normalization, harsh normalization. Tough, tougher than expected normalization, pulled down overall group performance. But stripping out U.S., remember, solid growth compared to the previous year on all remaining parts of the world, and for some key countries, the performance at least, if not better, than our big peers. Fifth point, strong increase, improvement over the group size on all KPIs, starting, not only including, starting with sales versus pre-pandemic 2019-2020, in terms of performance. So the group is still playing, and we playing in another league. On this word, I wish you all a very nice day. Thank you so much. This concludes today's call. Thank you for your participation. You may now disconnect.