Hello, and welcome to the Verallia H1 2022 results call. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen-only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero and you'll be connected to an operator. I will now hand over to your host, Patrice Lucas, CEO, to begin today's call. Thank you. Good morning, everyone. I hope that you are all fine, you and your families. I want to tell you that today it is my pleasure and privilege to present to you our H1 results. To start with, I would like to share some facts with you about Verallia. As you know, we are a global leader in glass packaging. Number one in Europe, number two in Latin America, and number three globally. We are operating in 11 countries with 32 glass plants, with 58 furnaces and having the support of three decoration plants and nine cullet recycling centers, producing on a yearly basis more than 16 billion bottles and jars, and all of that with our 10,000 employees. We have, as well, a diversified and balanced end market portfolio. You have here the split, so obviously, still wine presenting 36% and all the others quite well-balanced in the different segments of food and beverage. Now, I would like to share with you some key highlights about Q2. To start with, so a snapshot of our capital structure. You have that on the left-hand side. With BWSA representing 28%, Bpifrance 7.5%. What is quite interesting is the evolution of our employees' share with Verallia FCPE or direct shareholder, which moved from 3.5% to 4.1% as a result of the success of our 7 employee shareholding offer, which took place in Q2. You remember that this is a clear CSR objective that we have to reach 5% by 2025, and this shareholding offer was again a success. Presented in eight countries, more than 3,200 employees invested in it, meaning 41% of our employees eligible with a strong participation in France with more than 75%. As we speak, we have more than 45% of our employees that are now shareholder. About the dynamic of the glass business in Europe, interesting to share with you the final results of 2021 that we got lately through the FEVE report. Here are two key takeaways. First of all, in 2021, glass packaging sales reached an all-time record in 2021, so representing +6.7% compared to 2020, and +5.4% compared to 2019 pre-COVID, which was a previous record. 2021, we got more than 23.6 million tons of glass, which were sold on the market. And you see the different evolution on the different segments. You see on wine and spirit, +9.7% compared to 2020. On non-alcoholic beverage, +14% versus 2019, 2020, and even in beer, +7.3%. Second key takeaway is that the glass keeps on progressing in the food and beverage market. Analyzing the data, we see that the glass has, again, 1 point of market share versus the other packaging material for food and beverage. We see that we have, again, a positive trend on non-alcoholic beverage and even in beer. We see a stable performance on wine and spirits and food compared to 2020. As a result of that, 2021 has been a strong year for glass packaging, confirming the preference of our consumer for glass versus other packaging material, which is good news that we are confirming and for sure a trend we will keep on seeing in the years to come. As a result of that, it's creating some tension on the glass packaging supply. You know that we have been very clear as well that we are putting ESG at the core of the company, working on many different levels. One of it is the lightweighting we are working on with many customers. This is a trend we see as well on the market. Here you have in front of you two examples. One with a Château Haut-Brion with a 9% lighter bottle compared to the previous model. Contributing to a nice reduction of CO2 and we see many customers coming in that direction. On the right side, you see as well that we are working on our own standard bottle, and this one is seeing a minus 5% weight reduction, which is as well based on the annual production, which is about 230 million bottles, contributing significantly to some CO2 emission savings. Verallia as well is keen on promoting creativity and innovation through the design awards. This is something we are very keen on organizing this design award in many countries. Here you see the results of the winning proposals we got in France, in Italy, in Spain and in Germany. Obviously for us, this is a service that we are providing to our customers. This is a way as well to attract young talent, young designer, and allow them to unleash their creativity, their potential, and then be able to make some proposal to our customers to magnify their food and beverage products. We are very proud of that, and this is something we keep on promoting. Key industrial projects. We want to give you a follow-up on maybe what is at the core of our business. Here we have a follow-up on key projects for capacity increase. We are on track to increase our capacity by 4,400,000 tons per year by 2024. We have three main projects, two in Brazil. First one, Jacutinga II. We are on track according to our plan, and start of production is planned for the end of this year. We have a second capacity increase in Brazil on the way with Campo Bom 2. The furnace design and the technology is finalized. This is gonna be an oxy-combustion furnace, which will allow to reduce by 18% our CO2 emission versus a traditional furnace. Start of production is planned for 2024. We will have the same technology to be launched in Italy, in Pescia II, for a start of production in Q2 2024. At the same time, we are increasing our capacity with these three additional furnaces to come. We are also as well taking the benefit of reducing our CO2 emission. Our second important projects, this is all about our new furnace technologies. You know that we have announced a clear objective to reduce CO2 by 2030. This will go with some new technology. Two technologies we are working on. One, it is a 100% electrical furnace. I'm pleased to announce to you that we are working on the design. We have selected a supplier, and we are signing a strategic partnership with Fives Group, which is a well-known industrial engineering group. We're gonna work with them. We are as well here on track to start production by the end of 2023. On the hybrid furnace, want to say as well clearly that our project development is on track. Design, supplier and location will be confirmed by the end of Q3, with a clear objective to start production by the end of 2024. All in, we are executing with rigor and professionalism all our projects and key projects for capacity increase, key projects for our CO2 reduction objective. Results of H1. As you have seen from our press release, you can say that we have a very strong first half. On the revenue, we have an H1, which is +23.4%, so up to EUR 1.6 billion. On Q2, +23%, with EUR 889 million. Adjusted EBITDA is at EUR 425 million in H1, so it's +23.4% compared to H1 last year, with a margin at 26%. On net income, so sorry, is at EUR 179 million, +34.9% compared to H1. Earnings per share at EUR 1.49 in H1, so compared to EUR 1.07 in H1 2021. On the net debt side, we keep on deleveraging our net debt ratio with a result at 1.5 times adjusted EBITDA for the last 12 months. To be compared to 1.7 end of March 2022, and to be compared to 1.9 end of June 2021. Now I'm going to hand over to Nathalie Delbreuve, our CFO, who is going to present in detail our H1 results. Thank you, Patrice, and good morning to all of you. This is my pleasure indeed to present to you this strong first half. First, as usual, the growth in the sales. You can see here strong organic growth, fueled both by good volumes and price increases. You see that the price and mix pillar is pretty significant in this first half. For the volumes, we are up around 10% in the first quarter. We should remember, we mentioned already, that the basis comparison for Q2 was higher in 2021. In fact, the main contributor to volume increase is still the first quarter, but still a nice growth. In the price and mix, we have around 20% effect in the first half. We have the results of the two consecutive sales price increases, which we announced, commented already in Europe. One of around 10% in Q1. We commented that we would run for around mid-teens in the second quarter, which we have done and you can see the effect in this graph. Also the mix contributed positively in this first half and also in the second quarter, which is good news. In terms of products, the trends have been really strong in spirits, in jars, and in sparkling wines. Now if we move to the geographies and the regions, you can see in the South and West Europe the strong organic growth as well, +20.5%. This is in all product categories except for beers. In fact, in beers, we see now that we are back to a pre-COVID level and we have seen more flattish volumes. The other categories have been really strong, especially in spirits and the jars volumes very well oriented in France. The sparkling wine remains really dynamic. We have Champagne volumes continuing to grow very nicely as well as Prosecco. If we move to North and Eastern Europe, you see +19.3%. The volume growth is especially in still wine and jars in Germany. The jars have been really dynamic in Germany, which is good news. Occasion to update you on Ukraine. In fact, we are in the same situation as Q1. We have one furnace which we restarted in Q1 as per the request of our customers and the strong support of our employees. This is still running and mostly for jars for local consumption. The other furnace has been stopped and cooled down in order to preserve the assets. In Latin America, very strong growth also and positive significant positive Forex. The strong volume growth continues especially in Brazil and in Chile. In Argentina, we had the plant repair of our furnace in the semester, but it's restarted very nicely, so will contribute more in the second half. We have +2.3% positive foreign exchange impact to the top line. Now let's look at the adjusted EBITDA. Strong performance in this first half year, moving from EUR 344.7 million up to EUR 425.4 million. That is a reported growth of 23.4%. The activity operating leverage is the most contributing. It's mainly coming from Q1, so you've already seen it. The positive volume is contributing significantly. In the stock variation, we have some valuation impact, and also we destocked, in fact, less than in H1 2021. The positive price-mix-cost spread, which is very good news. We succeeded into getting back to green in this pillar that you know is a very important one in our strategy. We succeeded into covering most of the strong inflation because we have seen, of course, strong inflation in cost in H1. We have here the effect of the two rounds of price increases in Europe almost offsetting, and also the positive mix contribution that is helping to turn this pillar green. In the net productivity, we have a bit of a slow start this year, but still at 1.8% per production cash cost reduction. This contributed to EUR 14.2 million to our EBITDA. We keep our objective of delivering a minimum of 2% improvement for the full year. The foreign exchange is green, as you can see. It's positive impact both in North and Eastern Europe, but mainly this is coming from Latin America and the BRL. In the other pillar, we have two main elements to comment. One year ago, I was commenting to you that we had a very positive one-off in Brazil linked to a change in the tax regulation that brought a bit more than EUR 6 million from the ICMS. This year, if you remember, it counts as a bridge, as a negative in the comparison. This year, in Q1, we commented already to you that we had a reimbursement of $5 million, sorry, for the fire we had last year in September in our Argentine furnaces. All in all, these are the big issues explaining the minus EUR 1.5 million that you see in the other column. All of this is leading to an Adjusted EBITDA margin at 26%. If I focus now on the regions, in Southern and Western Europe, you can see on the top right corner the Adjusted EBITDA margin, and you can see that it improved by 20 basis points from 25% up to 25.2%. Here you have really the comments that I made already overall. Rising sales volumes, positive product mix, and the spread. H1 inflation spread is slightly negative still, but turns positive in Q2. In Southern and Western Europe, net, we are still slightly negative. If we move to North and Eastern Europe, we have an Adjusted EBITDA margin of 19.5%, so down versus last year, but increasing in euro from EUR 58 million up to EUR 60 million. Here we have growth in volume as well, but we have in North and Eastern Europe the Ukraine facility that is running now with only one furnace. You know that we decided, of course, to support fully our Ukrainian subsidiary and people. Everyone is still working, maintaining full salary and associated costs for our employees in Ukraine. In the comparison, of course, we are missing some euros in EBITDA here for North and Eastern Europe. One specific point commented here is that we have initiated the delisting of Verallia Deutschland. Verallia Deutschland is our German company that is the mother company of also Ukraine and Russia, and that is listed on the stock market. This is really historical, but with small share of minority shareholders. We initiated the delisting of this company. Latin America, well, I think data speak for themselves. You can see that adjusted EBITDA margin continued to improve from 38.5% last year up to 40.8%, which is really outstanding and in euro, so converting nicely from EUR 55 million up to EUR 79 million, also supported by some FX this semester. This is really an impressive performance here with the three pillars of our you know performance really delivering fully the sales volume growth, the spread being kept positive in each and every single country of this region. The PAP and the industrial performance is absolutely outstanding again in this region. Now if we move to cash, you have here the CapEx. The CapEx in H1 2022 are pretty low at EUR 96 million, and that is 5.9% of our sales, and this is lower than last year. You can see here that it is mainly coming from recurring CapEx that are EUR 69 million. It's mainly due to timing effects as most of our furnace repairs this year are in S2, which was not the case last year. We have five furnace repairs coming in the second half of the year. It means that we will have a catch-up on this in S2. Important to notice, Patrice presented to you that we are on track with our capacity investment and CO2 investment. You can see that the strategic CapEx is with EUR 27 million even higher than last year. Here it includes EUR 22.5 million for our new furnace in Brazil in Jacutinga. We also have EUR 3.6 million CO2 emissions reductions CapEx as planned in our ESG roadmap. Everything I explained leads to a very strong cash flow generation. In this table, you can see the free cash flow in detail, and you see that it starts with the first line, of course, the Adjusted EBITDA growth. Then the lower CapEx lead to a high level of cash conversion in this semester with 77.4%. The operating working capital is very well under control. We have especially very low overages in this end of June. This is really very much under control, and we also have continued to have quite low inventory. The operating cash flow is very strong. In the other line, specific to mention, you can see that the interest paid is lower than last year, the interest paid and other financing costs at EUR -16.4 million. We have lower interest rates, and we have some exchange rate effect. On the contrary, the cash tax is higher as a result mainly of our higher results. Also last year, we benefited from some specific positive one-offs in Italy. In all, a very high and nice conversion of our Adjusted EBITDA flow into free cash flow. The leverage at the end of June is 1.5 times, as you can see here. We continue to deleverage the company, as we were 1.9 times at the end of December. In fact, this is after the payment of EUR 122 million dividends that were paid in May. Now if you look at here, you can see our financial structure. There is nothing new in this table compared to previous quarters. You know that we are now well-balanced between debt market and bank financing with our two sustainability-linked bonds. We are nicely hedged as well with the fixed rates for, of course, our two SLBs, but also on the rest of our long-term debt. We are 100% with fixed interest rates as we speak today. The available liquidity is close to EUR 1 billion, very close at EUR 999 million. Okay. Thanks, Nathalie. About our guidance, based on the result of this first semester and based on what we see for the second semester and with the assumptions that Verallia will not see a significant gas rationing in Europe, we expect on the revenue side a double-digit growth in annual revenue with markets that remain promising. On the Adjusted EBITDA, we have decided to upgrade our guidance and to target to be between EUR 750 million and EUR 800 million for the full year, to be compared to our previous guidance, which was as a floor of EUR 700 million. This is what we are seeing for this year, and obviously as well on top of that, again, ESG is at the core of the company, and we are on track to pursue our roadmap with many projects to be executed in the second semester. Thanks a lot. This is ending our presentation. I believe that now we can go with the Q&A session. If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. The first question comes from the line of Francisco Ruiz from BNP Paribas Exane. Please go ahead. Hello. Good morning, and congratulations on the current figures. I have three questions, if I may. The first one is in CapEx. I meant to raise there is some delays on this because of the calendar effect. I'm sorry. Can you speak a bit louder? We cannot hear you very well. Thank you. Can you hear me much better? Yeah. Yeah. Thank you. Thank you. Sorry for that. My question was on CapEx. Mainly, despite lower CapEx in the H1, you see that H2 will be full CapEx for the year. Can you give us an idea if there's gonna be some delay than we had expected, and this could impact the capacity increases that you were expecting? The second question, and I know probably it's the more difficult one, is on 2023. I know that it's quite early to think about it, but with all non-hedged players suffering and also with the energy prices where they are, could it be this year a similar situation than the one we saw last year with Verallia having a better situation than the majority of its peers and probably an advantage on pricing and how you see the capacity of the industry to absorb a higher price increases in the future? Last question is on new furnaces technologies, because now you are dealing with several ones, with the oxy one, with the electric and hybrid. Could you give us an idea if there is a future technology that you are more interested in, or you are testing all of these, and you will have a mix of these technologies in the future. Thank you. Okay. Thanks a lot, Franco, for these three questions. I will, yes. Nathalie is gonna take the first one. Yes, of course. I will take the two last ones. Yes, exactly. Hi Franco, thank you for your questions. In terms of CapEx, we have, this is really due to the timing, you know, of our projects. As Patrice presented our new capacity projects, so far, no impact. You have the dates, you know, in the presentation. For Jacutinga too, we plan to start end of the year. We do not see. I mean, we see some delay, but nothing that would threaten so much this start. That is why we included the dates in the presentation. You can count on that. We do not see so much delay. Of course our teams are working very closely on that, but that should not impact our capacity. Okay. For your second question, Franco. For 2023, obviously as you have mentioned, it's quite early to be definitive on that. What we see and with a lot of uncertainty obviously, so this is why we have time to put definitive and to make definitive stance on that, is that for sure, energy price is going to keep on increasing, and this is one of the major factor. You know that we have a clear hedging policy that we are applying. We have a clear strategy as well to be spread positive on a yearly basis. Obviously when it comes to a selling price increase for next year, we will have to do something. We are quite clear with the customers about that. This is something we're gonna start to work after the summer break, obviously. Having a better understanding and better robustness on the assumptions to come for 2023. We will go for a selling price increase. What I can tell right now is this is something which could be around, in order of magnitude, around what we have been doing in 2022. All of that obviously to be confirmed, all of that to be dealt on a case by case, country by country, and all of that being dealt with a good balance with our long-term relationships and strategic partnership with our key customers. For your third question about new furnaces, what I could say is that the two furnaces we are launching in Brazil and in Italy, sorry, one in Brazil and one in Italy, comparable to in Pescia too. Here we are using, we're gonna use some oxygen in a traditional technology, and this will allow us to to push the CO2 reduction around 18%. As I have mentioned. We have our new technology with the future, which will push much more down the CO2 reduction up to be neutral for the electrical furnaces if we are using, obviously, green energies. We're gonna have the electrical furnaces for Flint and Extra Flint, and then we'll use hybrid technology, which will switch from 80% gas, 20% electricity to 80% electricity, 20% gas. This will allow us to address all the other products colors than the one in which will be dedicated to electrical furnaces. Obviously, one launch at the end of 2023, the other launch at the end of 2024. The objective of that will be to have a strong validation, and then we'll be able to enter in a deployment plan for the years to come and cope with our decarbonization plan and CO2 reduction objective. Can I make a follow-up? When Patrice, when you mentioned similar price increases than in 2022, are you referring to the initial 10% or the 25% that we have right now? Too early to answer on that. Again, I think this is something we'll be able to have a better view at the end of the year, let's say in Q4 for sure, with a better understanding on all the current situation, macroeconomic situation and energy prices. Thank you. The next question comes from the line of Michele Filippi from Jefferies. Please go ahead. Good morning, and congratulations on your quality results. I have three questions on gas exposure, balance sheet, and midterm guidance. On concerns on cut-off of natural gas supply and consequent shortage, especially in Germany, my understanding is that you have some flexibility to switch back from a natural gas to fuel if necessary. Can you attach some figure on roughly how much it is doable, and does it require significant CapEx? Do you have other contingency plans or gas storages? Secondly, one question on your balance sheet. Following continuous deleveraging and current macro, your current balance sheet will be ideal for counter-cyclical M&A. In the past you said that internal growth has priority for you over external growth and capital allocation. Do you still take that stance? Final question on midterm guidance. Aware that at the moment uncertainty is the only certainty, how do you see your margins in 2023 and 2024? You gave a guidance of 28%-30% in 2024, but this was before the inflationary rates really materialized as we see it now. Thank you. Thanks a lot, Michele. So for the gas, the gas exposure on the gas situation, obviously this is a big question and this is continuing on the agenda of the executive committee on not to say daily, but weekly basis, obviously. So what is clear is that we are preparing ourselves for a gas shortage to ensure business continuity. We don't know if it's gonna be the case, maybe we could be in a kind of exemption mode due to our industry being part of a food value chain. We are preparing ourselves. Since the war, we have checked and prepared our furnaces to an eventual return switch back to fuel in our energy mix. As a result of that, we can say that we are ready to absorb about a 20% gas shortage without any impact in our production level, meaning that we'll use fuel to compensate for that shortage. Obviously all of that will require fuel availability and supply chain logistics that we are already working on securing some fuel supply for the end of the year and for beginning of 2023. This is our plan. I would say that, again, with the caveat that fuel will be available, if we have to reduce our gas consumption, we have a clear and robust plan. Even in Germany, we have increased our storage capacity by renting some temporary tanks. I must say that we are doing what we can to face and cope with this tough potential situation. On the balance sheet, for your second question, I mean, again, we are clear with our strategy here and as it has already been said, first priority for us is organic growth and to make our clear investment on capacity, but as well on all the decarbonation solutions that we will need to move toward CO2 net zero. Second is all about M&A and we said clearly that any opportunity will be taken. Further, it's all about shareholder return through dividends. You remember that we have as well here a clear view, which is to increase our dividends by 10% year- after- year. Which is, by the way, when you see the current share price, is a good deal if you put the dividends versus the investments you can do. Share buyback could be as well an option and a way to return to shareholder. We are keep on having this strategy, and this is what we are planning on in our business. About the midterm, on your last question about the midterm guidance, obviously when this guidance was presented at the capital market day last October, the overall context was a little bit different. We do not see any major issue on all the parameters, and we are quite confident that we will meet this objective. The one which is obviously a challenge is the margin, this 28%-30%. Again, we believe it is too early to say something about that. Mainly, what is at stake here is the dilutive effect of the inflation and price increase. What is sure is that be it margin or, we're gonna see, so we keep it. What is much more important is that on the absolute value which this objective was representing, we are on and we are getting to be there for sure. It will come to a point where we see, but it's too early to say that, and we are on track. That is still our objective. Thank you, Patrice, for all the color and the reassuring comments on gas. The next question comes from the line of Jean-François Granjon from Oddo BHF. Please go ahead. Yes, good morning. A few questions from me, please. Could you give us what you expect in terms of volume for the H2 after a strong growth for the first quarter, a slight decline for the second quarter. What do you expect in terms of volume for the second part of this year? My second question concerns the pricing. Could you come back on what you expect in terms of growth expected after the two growth increases during the first half? Do you expect double-digit growth for the pricing? My third question concerns the margin. You mentioned the dilutive impact on the growth, the price, but I was positively surprised by the high level of margin in first half, stable at 26%. We don't see in fact the dilutive impact. What do you expect a stable or increased margin for the H2? Also, do you expect a positive spread impact in H2 compared to H1? Thank you. Hello, Jean-François. I'll answer your question. What do we see as for volumes for H2? In fact, as we commented in H1, we had a strong contribution from the first quarter with quite a low comparison basis also. In fact, in terms of demand, to be clear, we still see really a strong demand. We are in the position today still where we cannot serve all our customers. We do not see signs today of any change there. For H2, we do not see the same growth in volumes as for H1. Mainly, for two reasons, for comparison basis reason, and also for our ability as well to serve this demand. You know, we have continued to operate with quite low inventories. We have five furnace repairs planned for this second half. That is why we know that volumes will contribute much less and should be more in the flattish area in the second half. As for pricing in the second half, we will continue to benefit from the current price increases. We expect further inflation in the second half as a continuation of inflation that we have seen on raw material, mainly like soda ash and cullet. Our target as always will be to keep and maintain a positive spread and achieve a positive spread for the year. That was your third question as well. Yes, we target a positive spread for the year. Also, you asked for margin and dilutive impact. You are right. In fact, in here, we have a contribution of a stronger contribution of the activity pillar, including the stock impact in H1. We have also a good contribution of mix that we are always a bit cautious about in our forecast. This is also our position for H2. We believe that even if volumes will keep strong, we should see maybe a lower mix here. Yes, we have, of course, a very positive, nice mix contribution, because when you see the increase in Latin America with 40% EBITDA margin percentage, of course, this is also supporting the overall EBITDA margin of the group. Those are the positive contributors to our EBITDA margin in this first half. Thank you. Running with this last point, do you consider that the margin, the high margin in LatAm is sustainable with more than 40%? Do you think this is sustainable for the coming quarters, the coming years? Well, this is a very good challenge for the teams in Latin America. Yeah. I'm quite sure that they're going to fight for that. What we must say, obviously, is that the level they have reached is quite amazing. I think the key strategy for Latin America for the quarters to come is to grow. With the additional capacity we are going to put there. I think what is at stake is to grow with this additional capacity and keep on delivering this outstanding manufacturing performance. I think this is what is at stake, to manage the growth and maintain the excellent manufacturing performance, which we know is not always a walk in the park. This is the next ambition for Latin America, and we count on them to deliver based on that. They are quite motivated about that. Yeah. Okay, thank you very much. The next question comes from the line of Philippe Lorrain from Société Générale. Please go ahead. Good morning, all. Three follow-up questions on the one asked before for me. The first one, so on volumes, two sub parts here. The first one is that, when we look at some beer brewers' first half results, we see that some of them are already starting to feel the pain from inflation in demand. I don't know if you can give us perhaps a bit more color on any potential sign of customer demand slowdown during the second half, per category. Also on volumes, could you perhaps also elaborate a bit on the inventory or the change of inventories during the first half? Do you expect to rebuild inventories during the second one? That's for the volumes. For the gas shortage risk, a follow-up as well, how much do the most exposed regions to Russian gas weigh into your revenues, namely, for instance, Germany and Poland? The last question will be on ESG. Here again, two sub-parts for ESG. The first one is a follow-up on the electrical furnaces. Do you plan to aggregate renewable production capacity to the plants where these furnaces will be built through PPAs, for instance? Last one on ESG as well, could we have an update on your workforce, and particularly after the strong success from your employee shareholding offer last month? Many thanks. Thanks a lot, Lorrain, for this, all these good questions. On the first one about volumes and the demand. What we see today is any signal or even weak signal of a reduction of the demand when we are discussing with our customers and what they are asking to us through the scheduling. We do not see any reduction to come globally. Maybe if one segment to be over, we could see some variations, but I think we have some as well good tailwinds, which is the euro compared to the dollar, which is obviously pushing exports of some of our big customers, especially on champagne, spirits and all these premium beverages. To be clear, no reduction at this stage. We do not see any reduction in the demand. Obviously, we are cautious about that because we know that the world could change and could from one day to the next. We are very cautious, but no signal of that. On the inventory, Nathalie, if you want to mention. Yes, I can comment. Of course, this is a good question. In fact, today, we are at exactly the same level of inventory of one year ago, in terms of volumes of inventory, I mean, and this is low as we comment every quarter. To answer your question, Philippe, yes, we intend to rebuild inventories in the second half, and this will be clearly challenging with the furnace repairs as we have. We'll try to rebuild some inventories and also the right inventories. It's also all about the quality of the inventories. About the electrical furnace and the renewable energy. Obviously, this is what we are, and we are starting to work with some providers and to sign some PPA. We have some to come. Obviously this is again part of our ESG, and this is something we'll have to do from now till for the rest of the decade, in order to secure some green electricity especially. We are on that, paying attention to all the projects which are to be launched, which are available and taking part of this contract. On the gas shortage risk, I'm not sure I have understood your question, or if I have understood it's quite difficult to answer based on the fact that we can do many scenarios. Well, again, what I can repeat is that we have defined what I do consider as a robust plan to mitigate a potential shortage. We could cope with up to 20% without any impact on our production. Obviously, if it goes further, we could have to reduce production to adapt and to reduce some sections on the IS machine, so to pull a little bit less from the furnaces. From what we see, we do not see that today as a likely scenario. Be able to resist already to a -20% compared to what we do today. I do consider that we have here a robust plant. Let's see. Then on your last question on the workforce, what is again your question on that? Perhaps just to follow up on the shortage risk. So the 20% that you can absorb, is it at the group level or is it, I mean, 'cause I get that in some countries we're already seeing that governments might ask for a bit more than 15%-20% reductions. I don't know if to industrial players. That's for the shortage follow-up. Then for the workforce, if we can have an update on the workforce in terms of turnover, in terms of salary inflation, in terms of engagement or satisfaction level, particularly as I said, after the successful employee shareholder shareholding offer from last month. The 20% I'm referring to is at Europe level. It is at Europe level, so we may have some. It is at Europe level and it is considering that we will be allowed to allocate the restriction from one site to the other. This is our plan. If on some factory it could be stronger than that to allocate at national level, we will have to adapt a little bit. For the workforce, what we can say again is that this shareholder offer to our employees has been a real success. You have seen the number. It has been oversubscribed, and we have been obliged to shorten a little bit the participation that each of our employee wanted to put in it. It has been a real success and a key demonstration of the confidence of our employees within the company. As well for me, as a reward of their commitment and engagement towards our strategy. Good success and this is something we are going to keep on to keep on proposing to our workforce. Thank you. Next question comes from the line of Mengxian Sun from Deutsche Bank. Please go ahead. Yes. Good morning, ladies and Patrice. Firstly, on pricing, you said you're kind of happy with the price increases. I just wanted to point out some other companies that launch price increases for three factors, which is basically the cost inflation, the margin and availability. That is in sectors where it's not as tight as in yours at the moment. I'm reading about severe glass bottle shortages in Austria and probably many other markets. On the other hand, you are having a lower hedging coverage next year, so you're moving more and more towards spot energy prices. Why don't you raise prices more? I mean, you could be launching 10% every quarter in the next several quarters, and especially towards the medium-term target, 2027, 2028. If you're facing the weaker hedging next year, I mean, how would you get there in 2024 without doing additional price increases? That's the first one. I have a couple of more. Thanks, Mengxian. I mean, again, we have a clear policy on that, clear strategy. Spread positive. This is the end of the game. We are at the same time not looking for one shot effect. This is why the hedging policy we have is really protecting our company, but as well protecting our customers. We are sharing this hedging policy with our customers, giving us some time to make selling price increase, and as well to the customer to adapt and to make the appropriate decisions. It's a kind of flattening processes. As far as we are committing on spread being positive, I mean, this is what we're gonna do. Selling price increase leading to positive spread, and at the same time, looking for long-lasting relationships with our customers, which we have to recognize, have to face as well their own inflation. We are really looking on a long-term basis here. Yeah. Okay. You did them already a big favor by just passing on the hedged cost. Next year you're potentially facing a scenario where demand is gonna be weakening and your cost increases will still be there, so the energy costs will go up because the hedging rates are lower versus right now where you're completely sold out, where there's shortages and it's the time to raise prices. That's maybe just my thinking. I mean, I don't think so. I think this is again our clear policy, clear strategy. The customer starts to understand that next year we're gonna have, and maybe before the end of the year, depending on how it moves, but next year for sure they will have to face the selling price increase. I do not expect our competitors to be in a different situation, to be honest, compared to what I'm able to read through the public information. This is what we are going to keep on executing. Again, in that, taking into account the relationships and the long-term relationships and contract we want to benefit with our customers. Okay. The second one of you would be on the furnace repairs now. In the tightest period, is it really essential you do these five furnace repairs, or could you shift some of those into next year when we're facing a recession and potentially weaker demand? Good question, Mengxian. What is important is that we want to maintain our assets. Our priority for us, again, looking for long-term, and structural and robust results, we don't want to play with maintenance and put in danger our assets. This is point number one. Point number two, through our technical expertise, and our expertise, we are able to evaluate, to make audits, technical audits of our furnaces and understand if we can delay or not for a few weeks, for few months, the repair. We have this opportunity. From what we are planning right now, we are going to execute as it is planned. Again, long-term view, preserving the maintenance for high quality products and not playing with our assets. This is clear. Okay. The last one would be on share buyback. Now, it's kind of a side priority for you. On the other hand, you're trading on a three-notch discount to your best peer, and you've just taken margin leadership from them. Why is this not higher on the priority list? I mean, in the current volatility, how likely is it you're gonna pull off a large M&A deal, and organic is very much covered by the operating cash flow. Why is this not a higher priority? I mean, you're trading on five times. That's the valuation of a super cycle. You're FMCG derivative with very resilient top line and margins. Hello, Mengxian, Nathalie speaking. I'll answer this one. No, we are considering, we are of course looking at the share price and considering share buyback. As Patrice said, our strategic priorities didn't change. This is first internal, then if we have opportunity of M&A and the share buyback are on the list. They are just not on top of the list. We'll be very optimistic on this one, but we are not saying no for S2. We'll be opportunistic. Okay, thanks. The next question comes from the line of Jean-François Granjon from Oddo BHF. Please go ahead. Yes. Our last question, please, regarding the green energy you mentioned, the green electricity for your business. Today there is more and more industry and heavy industry who invest for the medium or long term with the hydrogen energy to produce with hydrogen. Do you have some project for the coming years to develop some hydrogen production for your industry? This is something we are looking at obviously, but so far we do not have any concrete projects. As we have mentioned several times, I guess, we are open to look at and analyze all the different options and not to be cornered in one single energy source or one single technology. Right now we don't have anything concrete in that. Okay, thank you. The next question comes from the line of Lars Kjellberg from Credit Suisse. Please go ahead. Thank you. I just wanna come back to your guidance. Of course, you had an exceptionally strong first half activity. Appreciate that contributed quite a bit. If you were to look into your guidance, that implies a unseasonal soft H2 in the range of, I guess, EUR 325-EUR 375, i.e. big drop. Could you walk us through how you think about, you know, the bridge from H1 to H2? Is the activity in the furnace rebuilds the big factor, or how should we think about that? Also I guess your guidance historically has been on CapEx to revenues. Of course, with revenues extremely elevated given the costs, how should we think about absolute CapEx, which is getting the more potentially relevant number now as we again elevate the revenue base. I guess the final point, coming back to the tightness of the market, you are expanding your capacity by about 400,000 tons. Could you remind me what your base is? How much would that give you in incremental capacity? Thank you. Hello, Lars. Thank you for your question. To answer your first two questions. On the guidance, in fact, as you well understood, yes, there is a shift in the activity contribution that was really strong in the first half. If we move to the other pillars, we are aiming for a positive spread. But we know. So we factored in our outlook that mix would be less contributing, as with inflation, maybe people need to turn to lower end products. That is embedded into our forecast. As I said already, we know that there will be additional inflation as well on at least on raw material that we see already, and also a bit on the other factors, which will be the spread, even if again we will and we target a positive spread. In fact, we have the ramp up as well, and start-up costs of Jacutinga 2 facility that will start in the fourth quarter 2022 in the second half of the year. That's a combination of these mitigating factors I would say, compared to our H1 performance. In terms of CapEx, yes, we have inflation on the top line. We also have some inflation in the CapEx. There is a bit more delay, but we also have inflation in the CapEx. I mean, we want to continue, as Patrice said, with our plan of furnace repair investment. We have the cash, so we expect to move close again to the 10% of our sales for the full year. That would be CapEx in the range of EUR 340 million, if you want. Okay. For your last question, so about the 400,000 additional capacity, it will represent the 6%-7% additional capacity compared to today. Very well. Thank you. Your next question comes from the line of Fraser Donlon from Berenberg. Please go ahead. Hi, Patrice and Nathalie. Thanks for the presentation. Just two questions from my side. It sounds like you're obviously preparing for the difficult scenario vis-à-vis gas availability, but I'd just be interested to know like what the municipalities in Germany, Italy are actually saying to you outside of what your worst case scenario is. And then secondly, I just wanted to understand if there would be any impact on your hedging if you were to use more fuel oil. So if you went from using 80% gas in your energy mix to, you know, 65 or 70, for example, at the group level, how that would impact your energy costs and the robustness of your hedge. Thank you very much. Thanks a lot. Quite difficult to answer to your first question, again, because from one country to another country, many different situations. Obviously, we are following closely, on a daily basis, the evolution of the situation. You may have seen that now we are speaking about the solidarity principle between European countries. This is where we are, with some flexibility. Again, the opportunity to be classified as essential and as being exempted from the gas shortage. We follow up what will enter into force in each of the countries. With our plan, again, I think we have a strong resilient capacity to absorb what we'll have to face. On the hedging, so you know our policy. Again, it is quite clear. We are looking to be hedged at 85% by October for our need of 2023. We are moving toward this number. In order to be prepared as well and to have a clear and robust plan B, we are starting to take some position of buying some fuel to complete, at least for the first part of 2023, and we will see how the situation is evolving. Okay, perfect. If in the event you have to use more fuel oil, there would be no issues with like hedges breaking effectively or that kind of risk in Germany, which we heard about, maybe a month or six weeks ago. Just to clarify. Thank you. I think you are referring last maybe to the level and to the fact that hedging prices could be modified. To tell you in terms of hedging, first thing today, even if we had to not choose hedging, partly it is could be very positive and we have a very positive financial impact. On some of our hedges, this I mean this is the price that is hedged and not fully volumes with the suppliers. Today we do not expect any significant impact. Of course, as we all know and see, governments are continuing to discuss on local decisions. We'll be very monitoring that very closely. Okay. Thank you. There are no further questions in the queue, so I will hand the call back to your host for some closing remarks. Thank you very much. I think we have some questions on the Internet, but most of them have been covered through the Q&A session, the live one. I think probably the only one that has not been covered is one from Emmanuel. What are the total announced capacity expansions by the industry in Europe for 2022, 2023 and 2024? For the industry. I think we can do that. I think for that, we can refer to the capital market day presentation, where we have a specific slide that is exactly answering this question and listing all the additional announced capacity increase. There was not much change since that. This slide was showing that it was, I mean, in line or even a bit lower than the demand evolution. Okay. I believe that we are ending this Q&A session. First of all, I would like to thank you for your time. I know how valuable it is. Thanks a lot for that, and as well for the quality of your questions. I hope that you will have a good summer break. Please take care and we'll meet you back from this summer break for sure. Thanks a lot. Thank you very much. Bye-bye. Thanks. Thank you for joining today's call. You may now disconnect your line.