Hello, and welcome to the Verallia H1 2023 financial results analyst call. My name is Caroline, 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 mode. However, you'll 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 questions. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand over the call to your host, Patrice Lucas, to begin today's conference. Thank you. Good morning, everyone, welcome to our H1 2023 results. As usual, it is a pleasure for Nathalie and myself to have this privileged moment with you for a nice exchange. We will go, as usual, with some key highlights, then Nathalie will present in detail our H1 results. We'll be back to the guidance, then we'll move forward with our Q&A session. Moving to the first chapter with the key highlights, as usual, a reminder of who we are. Verallia is a global leader in glass packaging. We are number one in Europe, number two in Latin America, and number three worldwide. We have strong assets with a diversified customer base, with diversified end- markets. Here you have the snapshot of our sales split at the end of 2022, being present in still- wine, 35%, sparkling- wine, spirits, beer, less than 15%, soft drinks, and food. About who we are, so we do operate in 12 countries with 34 glass plants, 12 cullet recycling centers, five decoration plants. All of that with 10,000 employees, and we are producing more than 17 billion bottles and jars. About our capital structure, here, this is a picture at the end of June, so no major change. BWSA at around 28%, Bpifrance at 7.5%, and the free floating close to 56%. The key highlight of H1 is, again, the success of our eighth employee shareholding offer. We put an amount of 0.5% of share capital with a 20% discount, offering that to our employees. This was eligible to nine countries, including, to be noticed, for the first time, the U.K. Based on that, more than 3,600 employees invested in Verallia, which is about more than 40% of our eligible headcount. The good news is that, thanks to this eighth employee shareholding offer, now we have more than 48% of employees shareholder of Verallia. To be noticed that in France, it is 88%, leading to now 4.2% of Verallia share capitals are owned by employees. This is totally in line with the objective, which was announced to be at 5% by 2025. This is an important topic for us. This is part of our DNA, to make sure that we are sharing values with our employees. Next is an update on ESG. You know that ESG is at the core of our strategy, and we are keep on moving forward, implementing our decarbonization roadmap with some key topics. First one is our new furnace technologies. We have two new technologies that we are developing, which will allow us to reduce, moving forward, our CO2 emissions. First one is the electrical furnace, which will be launched in Cognac, beginning of next year. The pilot is on track. I do remember you that it's gonna be a world premiere in the sector. We are on track to be ready for next year. Second technology is hybrid furnace. Here again, this project is on track. It will be located in Zaragoza, in Spain, and start of production is scheduled as well for 2024. These are the two key new technologies. This is not just about that. Implementing our decarbonization roadmap is about also being creative, being able to look at all the different solutions. Here you have two solutions. Bio- heating oil, which is an alternative to natural gas, which will support the reduction of CO2 emission. Since 2022, we are running in Zaragoza with bio heating, meaning that we are replacing natural gas, 20% of natural gas, with bio heating, which is allowing us to reduce CO2 emission by 10%. This was a first pilot, and this will be implemented as well in other divisions within Verallia. The second project is what we call batch pre-heater, use of fumes. It is about use of fumes energy to heat raw material before introduction in the furnace, which is making melting easier and less energy intensive. We are the first application in Bad Dürkheim in Germany, beginning of 2023. We have two others to come, one in Portugal and one in Italy this year. This is again a nice solution, which makes sense, allowing us to reduce by 12% our CO2, our CO2 emissions. As you know, we are working on some additional capacity to seize market growth. We have right now two ongoing brownfield project, one in Brazil, in Campinas, and the second one in Pescia, in Italy. They are progressing according to planning, and startup is expecting to be done first semester on 2024. Both project, obviously, will be an opportunity as well to reduce CO2 emission with the oxy-combustion technology. Reuse is a strong social trend and will certainly be pushed by regulation. We want to be a front runner on this matter. As a matter of fact, we have taken initiatives in H1. Here you have three initiatives taken in H1. The first one is a partnership with Bout’ à Bout’, which is a French startup, which is having a 220 point of sales collection. They collected 700,000 bottles in 2022, and they are targeting to go up to 16 million bottles as a capacity. We are part of them moving forward, working with them to understand all the business model. Second initiative, you want the partnership we have signed in France with Citeo. Citeo is reporting to the French Ministry of Ecology. This is the organism who is managing in particular all the collection. Here again, we have signed a partnership where we are going to develop reusable standards for large-scale operation by 2025. Last, this is a specific opportunity we see in Germany to develop the reuse in the wine market. We have signed a first agreement with Riegele, a German customer. Here, we plan to fully operate the supply chain, the logistics, the washing, and this will be able to be live first semester next year. For us, it is all about test and learn phase. Again, understanding the business model for something which is going to come, and again, something which is a strong social trend for which we have to cope with. As usual, you know that we are not just delivering bottles. In our mind, we want to create value, supporting our customers. Here, every year, we have what we call the Verallia Design Award. This one took place in France and in Iberia. You see that we are using the creativity of young, talented people. I take just the example of France. One of the 30 schools did participate in this contest, more than 600 students. We are delighted with the different proposal. This is again a creativity we are able to offer to our customers and mainly focusing on premiumization. Last but not least, before leaving the floor to Nathalie, I would like to tell you that I'm very glad and privileged about our excellent half-year results. This is the opportunity for me to warmly thank our teams for the agility and the adaptation they have demonstrated. About our revenues, we see a growth of +30.7%, leading to more than EUR 2.1 billion, which is an organic growth of 28.6%. Our adjusted EBITDA closed at EUR 659 million, +54.9% compared to H1, leading to a margin at 30.8%. About our net debt, we maintain our leverage at 1.3x, and our net income is showing a nice value of EUR 311 million. Again, very glad to this result, very positive for the company and very positive moving forward. I leave the floor to Nathalie for the details. Thank you, Patrice, and good morning to everyone. Let me present to you this, these strong results for the first half. You see here the bridge for the total sales, so for the revenue. We moved from EUR 1,639,000,000 up to EUR 2,143,000,000. That is an organic growth of 28.6%. You see in the bridge, the different elements as usual, so volumes, price mix, foreign exchange and perimeter. As for the volumes, we have seen soft volumes in H1, even if we see a better trend in Q2 than in Q1. In Europe, we have seen a decrease in beer volumes mainly and also to a lesser extent in still wine. Latin America, as we commented already at the end of Q1, we have a lower activity in Chile. Here we start to see some recovery, slight at the end of the quarter, but the full semester was down. Overall, we believe there is — this talking down the chain that is impacting those softer volumes. As for sparkling wines, we see continued growth, so positive volume growth and a good resilience in the alcoholic beverages and food jars. Again, our diversified portfolio allows us to mitigate some stronger decrease, like beer. Price and mix, we have the carryover from last year's selling price increases, we increased, as usual, the prices early 2023. We have now started to do some moderate and selective price reduction in Europe as the inflation of cost is softer than anticipated by us. The contribution from mix is still positive to the top line, you will see as well to the EBITDA, which is a very positive point. The FX is mainly from Argentinian Peso. In the perimeter effect, you see the light glass contribution that will be shown as perimeter the full year until up to November 8th. It is contributing to the growth in sales and also EBITDA of the company, EUR 114.3 million for the top line, and mainly high-premium spirits. Moving to the regions, the geographic segments, we have reported revenues of growing +23.6%. We see here volumes down year-on-year, but the decrease again is slowing down in the second quarter. Mainly beer, as I commented already for the group. We have softer volumes in still wine, but we see a really good resilience in Italy and Iberia. We have a strong positive price impact in this top line. Again, here, the mix is significantly positive, remain positive, and mainly coming from Italy. If we move to Northern Eastern Europe, you have here a combination of in the organic growth and of scope. We have the contribution of Allied Glass, that's now Verallia UK. There is a volume decline, mainly in Germany, that is impacted and by beer. You know, that Germany is more exposed to beer. This is partly offset by Ukraine, where we restarted the second furnace of Zorya earlier than planned, which is a very good news. If we look at non-alcoholic beverage and food jar contributions, we see indeed a positive contribution. We have a strongly positive price impact, and the negative Forex impact is coming from Ukraine right now. You have, of course, the light impact for the EUR 140 million. Now moving to Latin America. We see here really flat sales volumes. We have growth in Brazil, but again, offset by lower volumes mainly in Chile. We see a continued growth in the Brazilian beer and spirits volumes. Chile is again impacted down, mainly by, of course, wine, where the whole volumes on the market of Chile was down. Distributors de-stocking and lower exports. Again, here, slight improvement at the end of the half year. We have, and this is usual for LATAM, strong increase in selling prices to cover inflation and local hyperinflation in Argentina. To remind you that we successfully launched the second furnace of Jacutinga, so new furnace in Brazil, that started to produce good glass, if you remember, end of last year. The Forex in exchange impact here is negative due to Argentinian peso. Moving now to the EBITDA bridge, to the adjusted EBITDA bridge. We have significantly improved, increased our EBITDA, moving from EUR 425 million up to EUR 659 million. You can see on the top right that it means that our margin moved from 26% up to 30.8%. Looking at the different pillars and the usual pillars that are our strategy, you can see that the activity pillar, operating leverage is slightly negative. This is directly linked to the comment I made on volume, even if partially offset by inventory rebuild. The softer volume in H1 allow us to rebuild inventory that were low. If you remember, one year ago, we were struggling very strongly with our inventory level. The spread, price mix, cost spread is significantly positive, EUR 231.1 million. This is a combination, again, of the carryover of different price increases throughout the year in 2022, and the price increase of 2023. Also, mix contribute positively to this pillar, that is also very important. Good to see that the net productivity is on track, EUR 26.7 million delivered in the half year. We have here a steady performance of our net PAP program, reducing cash production cost by 2%, exactly in line with our target. FX is contributing negatively, again, Argentinian peso mainly, and also, some regional effect. In the other, as usual, you have several plus and minuses, but in the end, if you look at the EUR 21.4 million, it's mainly the contribution of Allied Glass to our EBITDA, after you know, some IFRS 3 impact that is a negative impact in the first quarter that we don't have anymore, and it was EUR 4.6 million. Looking at the adjusted EBITDA by geographies, so in South and West Europe, we have moved from 25.2% margin up to 31.1% adjusted EBITDA margin, and improved the adjusted EBITDA by 52.6%. Thee pillars contributing, as you've just seen in the group one. The positive price cost spread and positive mix from Italy, as I said, and the PAP delivering in line with our cost reduction objective. Moving to North and Eastern Europe here, we have moved our margin from 19.5% to 27.5% and increased the absolute value from EUR 60 million up to EUR 142 million. So here, we have in North and Eastern Europe the contribution of Allied, so we have some perimeter and scope impact here. And we have the spread impact. Also important to note, a strong performance, industrial performance, and cost reduction ahead of objective in the perimeter. Here you have the Ukraine as well, EDITDA, and thanks to very strong and impressive commitment and performance of the local team, we restarted our second furnace, and we increased the adjusted EBITDA from Ukraine from one year to the other, which is of course, very good to see. The negative impact is from Ukraine. Latin America, adjusted EBITDA evolution. Here we have a slight increase in the absolute value of the adjusted EBITDA, EUR 79 million, moving up to EUR 81 million. If you look at, excluding FX, you have, of course, a stronger increase as FX is impacting negatively. When we look at the contribution of the pillars, so we have a strong organic growth on the activity and price cost spread. Again, we reported that we have a lower activity in Chile. So you see on the right, on the top right, that the margin is slightly decreasing, so it was 40.8%, still very strong at 36.3%, so the 40% was really strong. We have the impact of the lower activity in Chile with fixed- cost absorption. Remember, we have also the second furnace of Jacutinga that is ramping up with additional fixed cost. Still the overall margin is strong and a good consensus. Sorry. Let's move to CapEx and free cash flow, sorry. The CapEx evolution that you see here, we are moving from EUR 80 million — EUR 96 million up to EUR 150 million, representing 7% of total sales. We have a better balance this year between H1 and H2, we are on track to be around 10% of sales as CapEx, total CapEx, that you know, is our objective for the full year. We can see that strategic CapEx move up from 1.7% up to 2.6%, totally in line with our strategy. We have a capacity increase, as you very well know. After the second furnace of Jacutinga, we are building another furnace in Brazil, in Campo Bom. We started, as Patrice mentioned also, a Pescia project. In terms of CO₂ reduction CapEx, we have around EUR 90 million CapEx dedicated to CO₂ reduction, including the project, for example, the batch pre-heaters that Patrice mentioned, that are included in this figure. We continue to roll our strategy and deliver our ESG roadmap. Cash flow generation for the group remains strong. We have, of course, the increase in the adjusted EBITDA. We continue to invest, as we've just seen, with higher CapEx. The cash conversion is very much in line with previous year, at 77.2%. We have a significant negative change in operating working capital in this first half. You see that EUR 78 million is due to the CapEx VCR variation. Remember, in Q4, we had, last year, a strong CapEx build, which with payments in the first quarter of this year. We also have an impact in the semester of the inventory rebuild, mainly that is impacting our change in operating working capital. Now, this leads to an operating cash flow in line with last year at EUR 316.3 million. After other operating impact, interest paid, and cash tax, you have a free cash flow, a strong free cash flow of EUR 248 million. If we move to the net debt evolution and the leverage, the net debt is pretty stable compared to end of the year. That's after EUR 164 million, dividend payments to our shareholders and EUR 38 million share buyback. You know, we continue to roll out our open program. We have a leverage that is 1.3x to be compared to 1.6 x at the end of the year. To remind everyone that we have been upgraded by both agencies now to investment grade levels, and the last upgrade was from Standard & Poor's in May 2023. You have the financial structure and liquidity as usual, so not much change here compared to a previous quarter. You know that we have now very well balanced the source of our financing. We have maturities well positioned, and the nominal rates as well, especially for our bonds. We renegotiated the term loan, as we already commented, for Q1. We have now a well-balanced funding source, and a nice available liquidity of EUR 837 million at the enqd of two. All our financing, yes, to remember that they are all now sustainability-linked, even our latest term. Thanks, Nathalie. About our guidance, based on the excellent results of H1, plus the visibility we have for the second semester, and the strong fundamentals of Verallia, I'm very happy to announce that we have decided to upgrade our guidance. On the revenue side, we confirm our growth of more than 20%, and for the adjusted EBITDA, we are now targeting to close the year between EUR 1.1 billion and EUR 1.25 billion. Before moving to the Q&A session, I would like to take the opportunity to share a few facts with you. Strong message is that Verallia is committed to improve its profitability over time, period- after- period. Here you see two graphs, with our track record of last 12 months EBITDA in value and margin from 2017 to H1 2023. I would like to remind few takeaway. The first one is, whatever the situation, thanks to the agility and adaptation of the team, Verallia has delivered consistent results, whatever the context, facing a deflation period or an inflation period. We are walking the talk, delivering year- after- year, a continuous profitable growth. This is the result of our business model. This is the result of the way we operate. Our business model is based on a diversified customer base, with more than 10,000 customer, and the top 10 representing about 17% of our sales. With a product offer in all the key segments, with a clear focus on premiumization and a presence in key profitable geographies. Therefore, our customer base, our product offer, our focus on premiumization, and our geographies are strong assets for resilience and growth. Our business model is also based on the way we operate, and we have three levels we operate on a daily basis for continuous profitable growth: The first one is activity growth, which means additional capacity with new furnaces or debottlenecking actions to seize the market growth we see in our business; Two, this is positive spread, which is a result of a dynamic pricing policy to cover cost inflation and to reflect the value we create for customers with our products and services; Last, lever is our performance action plan, so-called PAP, to generate continuous cash cost reduction of 2% every year, which in an order of magnitude, represents about 1.2 points of EBITDA margin. Second takeaway is that our hedging policy is a competitive advantage for the benefit of Verallia and its customer, and it is absolutely non-speculative. This competitive advantage is fact-based, whatever the context. The visibility and the volatility absorption, thanks to this policy, are paramount to deliver consistent and growing results over time, and this will be the case for the semesters and years to come. Third takeaway is that 2023 is as well supported by our newly Verallia UK acquisition, delivering what we were expected. As we have always said, M&A opportunity will be seized whenever it will make sense for value creation and if align, obviously, with our purpose and values. Finally, I would like to remind you that at the same time we are delivering robust profitability, we want to be the front runner on the industry on ESG, especially with the full implementation of our decarbonization roadmap. All of that is key to understand clearly who we are; how we do business; and why we are delivering profitable growth period- after- period. Thanks a lot for your attention, I think it's time to move to Q&A. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from the line, Lars Kjellberg from Credit Suisse. The line is open now, please go ahead. Good morning, thanks for all the details. I just wanna get straight back to guidance. Of course, you have a track record of being on the cautious side. I just wanted to hear you out a bit on how you think about the lower end of the guidance range, which essentially would be completely flat year-on-year profitability in H2, given what you said about good visibility, and the, you know, good base on the cost base, solid fundamentals, near term and longer term in your business. Just wanna hear out a bit what that lower end of the guidance or could potentially drive that. When you're talking about moderate price declines, I appreciate that you need to share cost benefits with your customer base, can you share with us how those prices are reflected in the cost base? Are you still on a positive spread, or are you reducing prices more with the backdrop of soft demand? The final question then, is where you talked about improving trends. Q1 was weak in volume terms, Q2 is somewhat better. Can you please quantify that, and if you also want to talk what you're seeing heading into Q3. Thank you. Okay. Thanks a lot for this question. First of all, about our guidance, I would like just to say that we are very confident that we will meet this guidance. If I'm quite bold, I would say that the low part of the guidance, the 1.1, I would say it's a given, for sure. What I can tell you is that based on the visibility we have, H2 EBITDA results will be greater than last year. I guess with this, this comment, I think you can guess where we want to be. This is the ambition we have, I'm very confident that we are going to deliver it. Regarding your question, Lars, thank you for about prices, reduction. Again, we have been running moderate and specific prices, reduction to our customers. It's exactly what you said. It's, in fact, the inflation of our cost base is lower than we anticipated, when we planned the price, campaign, price evolution campaign for 2023. In fact, we moderate our prices as inflation is lower, so it means it's a sequential decrease in prices. It's, it's still. The spread remains positive, and as you can see in those figures, it remains strongly positive. It's really adjusting because we have lower costs. Again, no impact on the, on the spread there. In terms of the volume trajectory, Q1- Q2, and what you're seeing into Q3, please? About the volumes, as it has been commented by Nathalie, we have seen a strong decrease in beer, and to some extent, still one positively caused by the stocking transition. This is what we strongly believe now. We had a start this year below our expectation, especially a slow start, which is visible in Germany and France, and a specific one in Chile, in Latin America. The good news is that we have a better trend in Q2 compared to Q1, certainly because we are less impacted in beer, in our totals of sales compared to others. Moving forward, in H2, we see some recovery. Let's say that we see a slight increase compared to last year, which at the end of the day, will lead us to a flattish volume for the year. When I'm saying that, it's excluding U.K., it's a pure comparison with last year perimeter. What is key here, to be clear, is that, regardless of the specific trends we see for H2. Mm-hmm. We continue to see very strong fundamentals for the industry going forward. For us, it's not just a question of how it's gonna go in the next month. Obviously, this is important, and we are taking that into account to be agile, to adapt, and to be flexible. What is much more important for you guys and for us, is what is the trend of our business. We see strong fundamentals moving forward, as it has been demonstrated for the past 10 years. Gotcha. Just to calibrate, could you share with us what your volumes were in H1, in terms of percent change? No, we don't communicate the actual split of volume. you know, we give — That's okay. — you the bridge already is very — Very detailed. — is very detailed. Right. Again, you can take the comments from Patrice, for the full year volumes being flattish. Very good. Thank you. Thank you. We will take the next question from line, Francisco Ruiz, from BNPP Exane. The line is open now, please go ahead. Hello. Good morning, thank you for taking my questions. I have three questions. The first one is mainly now that we have talked about pricing, it's about cost, because cost has been significantly reduced from Q1- Q2, from 23% increase in Q1 to 11% in Q2. Could you give us, or could you guide us on what should be the functions that we should take for the following H2 and next year, given the hedging you have? The second question is on Russia, which some company like Danone has made a big write down of its Russian business. Could you give us an indication of what's the current book value that you have in Russia, and if you are thinking on similar movement than this one? I know that the situation is totally different. The third question is a recurring one, which is on the use of cash. You know, with the current level of leverage of 1.3, you are far away from your midterm guidance of 2x- 3x EBITDA. What are the alternatives, and could we see something in the short term, because I think you haven't announced anything yet? Thank you. Okay. Hello, it's a little difficult for me. The cost, indeed, we have seen a softening in inflation in the second quarter. Let's remember last year's pattern as well, with inflation moving up steadily over the years, so the comparison base is important there, of course. We see softer inflation, but we still see inflation in the second quarter. For the full year, we still see inflation, even if again softening. We estimate that it will go below 20%. Again, with a very, there is no deflation here that we see on any component of our costs. We have, remember, an increase in the cullet that is in our raw material. Here we are above our assumptions of last year. Again, overall, softer inflation, but inflation. For 2024, we were mentioning hedging, let's be very clear here, as Patrice said, our hedging policy is non-speculative. Remember, it's over a three-year period. As we speak today, for 2024, we don't see any negative impact versus current market level of energy prices, even the opposite. We are well positioned here so far, and we continue to roll out our hedging policy as usual, and so benefiting now from the softer energy costs, of course. Regarding Russia, we are exactly in the same situation as before. You know, Russia is around 3% of our total sales. We continue to operate, and the profitability is absolutely nine. Russia has the cash to operate its business in a normal basis, so really nothing specific to say here. Nathalie, could you give us an indication on how much could be the book- value of your Russian assets, just in case? In fact, I said it's around 3%, so it's even less in our net book value, backup. It's really a limited impact. Okay. Again, today, there is no sign of anything for us, and it's a profitable business. It's very local. You never know, for it don't depend on you, no? You never know what tomorrow is for everything. Yeah. Okay. What's an answer? Limited impact. Very limited impact. We have only two sites there, and let's not forget about the size of Verallia. Regarding the cash, we will continue, as always, to deliver to roll out our strategy there. You've seen in the first half that in a way we are reinvesting part of the EBITDA in the CapEx and in the strategy CapEx. The first cash allocation is rolling out our capacity increase and CO2 decarbonization roadmap, so internal growth and strategy. It's exactly what you see in the free cash flow generation and allocation. The second target, and we have done that last year, would be M&A. We are still looking very actively, and we will take opportunities that make sense for the group whenever it comes. The third allocation is, of course, returned to our shareholders. You've seen that we increased significantly the dividend this year. We are rolling out share buyback, our program. We are, again, rolling out our strategy here. Regarding cost and hedging, you will find in the presentation, in the appendix, a specific page that maybe we can, we can show, where we have illustrated exactly the — what our strategy means for 2024, in terms of percentage, just to help you see how we have the impact. Now you see this page on the — Page 29. It's the page 29 of the presentation that you will soon see. Here is just really the putting figures behind the usual, you know, page that we always say, that is, we aim at hedging 85% of our needs over three-year period. On this slide on the left, just to remind everyone about the market, and you see the TTF natural gas put price over the period, so it's really the market and 2022 levels, and look at this case. It's really to remember everyone, to remember the levels that we are in, and to see that at the end of the graph, you see today, we are still at higher level. On the right side of this slide, you have a pie that is just explaining for a year, we take any year, how much percentage of your energy cost is coming from which year. You have the illustration at the right with the 2024. When you put yourself in 2024 for Verallia, we will have 15% of our energy cost coming from 2024. This is the portion that we don't hedge, right? For the hedging, it's the years before, and it's stemming from three years. It means in 2024, 43% of our energy costs will come from 2023, so we'll benefit from the lower and softer energy costs. 21% is coming from 2022, also 21% is coming from 2021. Look again at the graph on the left. Again, in 2022, remember, we take portions every quarter, we didn't take portions at the peaks. Again, the strategy allows us to average and to alleviate and mitigate the volatility, to allow us never to have to take on peak sites, which is very, very favorable. In the end, coming back to the overall cost inflation for Verallia, energy is 22% of the cost. For the other portions, we will be very much in line with the market inflation. I hope — Thank you very much. This is very, very helpful, yeah. This is again, just to illustrate what I was saying at the end of the presentation, how strong and competitive is this hedging policy. Here you have a clear demonstration. Thanks. Thank you. We will take the next question from line, Ephrem Ravi from Citigroup. The line is open now, please go ahead. Thanks. Just two questions. Firstly, on the cash flow, the working capital increase, in terms of requirement was pretty strong at around EUR 190 million+, and eight into all your EBITDA increase. Can you call out any particular reasons for that working capital increase? I noticed that inventories were higher, but also, the payables were lower. In a downturn on EBITDA, should you expect all the working capital to get completely released, or some of this is going to be sticky going forward? Secondly, just in terms of the way you're thinking about pricing, for next year, I know, you know, 2024 - 2025 is a little bit further out, but are you, in principle, planning to maintain your price cost spread, a flat on a per bottle basis, or are you looking to increase it, or will you have to kind of give something back given, you know, general market competition? Thank you for your question. Regarding WCR variation, yes, indeed, we had. As I explained, in the first half, we have, so the CapEx WCR, you have seen as far as - EUR 78 million, we are paying part of our last year's CapEx in the first half. If we focus on the operating working capital, we have mainly the inventory increase. As we said, the half year softer volumes led us and allow us to rebuild inventories. That is a very strong impact, negative impact in our working capital variation. It's - EUR 111 million. What we target for the second half is basically to stay very close to this inventory levels. In the year, we have some timing with Sonex repairs, where we had one in the first half year, and we have five in the second half. We have some timing here as well. You have also another effect that is linked to our spread, I would say. We have still high receivables, and we see some lower payables. This is due to the inflation softening that we commented. To come back to your second part, the second part of your question, in the second half of the year, we should not see the same strong negative impact of inventory in the variation for the second half. For pricing? For pricing, for 2024, you exactly said it. Our target is really, again and again, to reach a positive spread. We will continue to benefit from the three levers to improve EBITDA. The activity pillar, and here, if you project yourself in 2024, after a year of 2023 with softer volumes, should and could be better. The second pillar is the spread, and here our strategy is to have it positive. It's very significantly positive in H1, but if we move to 25, it's too early, but anyway, our strategy will be to deliver a positive spread. The third lever, as always, net PAP, net productivity, delivering at least 2% net production cash cost reduction. To be clear, to say it in another word, we do expect to keep growing our EBITDA next year. This is the way we want to operate. The profile and the contribution of the different levels compared to 2023 should be different, maybe different. We still aim at delivering our 2% cash cost reduction. We do expect to confirm and maintain a positive spread, and have a better contribution from the activity level compared to this year. The good news is that even with the market being lower than our expectations, we are showing strong resilience in 2023. Mm-hmm. This is gonna be an upside for next year. Maybe moving before moving to another question, I just would like to come back to Russia, because it's obvious, but better to say it, is that about Russia, we are respecting the sanctions. Mm-hmm. We are compliant to the sanctions both way. Mm-hmm. We have organized ourselves to do so, and this is why it's important, that in Russia, we are local — for local, with local management, and they are doing quite a good job, delivering what we are expecting. Better to say it, sanctions obviously is paramount and is a basic for us. Thank you. Okay, no more questions? I think we have one question from the internet. There is no more question, right? No more questions. Okay. We have a question from Inigo on the web. The first question is: can you explain the dilution in LATAM margins versus H1 2022? The second question was on pricing for 2024, I think that Nathalie covered it already. Mm-hmm, mm-hmm. The third one is on volumes. Just to be sure that Inigo understood, he just asked, when you say flattish, it's for Europe volumes or for the company, including LATAM? Thank you. We have other time so. Okay. For volume, when I say flattish, this is for the company, and this is excluding Ukraine. Hmm. Um- For the margin in Latin America, it's really coming from less absorption of fixed costs, as I mentioned. We have significant decrease in volumes in Chile, as we commented in Q1. We have the same in Q2, even if the end of the quarter looks better, but we'll see. Also, remember, we have a second furnace in Jacutinga. There is a ramp- up phase always in order to absorb fully the volume. It's the main comment I can make. Let's remember that it's, more than 36% of margin is still above our group average, and the 40.8% was very strong, and the year was very strong last year. Mainly fixed- cost absorption. Thank you, Nathalie. We have a last question from Quentin. I'm not sure we will be able to answer it, but we're gonna answer. Can you please share your outlook on the spread going forward in H2 and 2024? I think 2024 has been covered. Is a scenario of negative spread, even short term, such as one quarter, is something you can envisage? Thank you. I'm not commenting. But- Thank you. About spread, again, for 24, I think we have already said it. Okay. It's gonna be positive. Again, this is one of the labor which is driving our profitability. For the outlook, in H2, I mean, we are not managing the spread quarter- by- quarter. Mm-hmm. What we are managing is on a yearly basis. You see where we are at the end of H1. Mm-hmm. Obviously, in 2023, spread will be highly contributing. Thank you. I think we have a last question, but on the call, right? Anyone? Yes, we do have one question from Alessandro Secchi. The line is open now, please go ahead. Hello, everybody, and thank you for taking my question. I have just one question for the next year, 2024. What is your current view regarding the balance between, I will say, the capacity, manufacturing capacity in the market, and the market volume? Just to have your view about what is coming in term of capacity and if this, in your view, is matching, I mean, the regular growth of the market in Europe. Thank you very much. Thank you for your question. First, you know, when you speak about capacity, you don't have to be a short viewer. I mean, we need to look at the middle. What is fact-based is that our business is very resilient and has shown regular growth year after year. If you take the 10 last years, the market is growing for about 2% per year. Maybe one semester, maybe one year, you're gonna have a reduction on the growth or a decrease, but the trend is there. If you remind, even during the COVID period, the market was just down -1.1%, 1.8%, less than 2%. What we take to manage capacity is what we believe is quite a secure growth, which is about 2% growth over time. If you take your 2% growth in Europe, it is about 4-5 additional furnaces every year. This is why we have announced that we are going to implement additional capacity at this pace in Europe for the years to come. We do not see, to be specific, for next year, any overcapacity compared to the market. This is not what we see. If it would be the case, I mean, we'll be able to flex, to adjust and to adapt. What is much more important when you are making a decision about capacity is the medium and long-term view you have. Again, we see based on the data we have, based on the growth, we estimate a 2% growth year-over-year. Okay. Many thanks for this. Thank you. You're welcome. Thank you very much. There's no further question at this time. I'll hand it back over to your host for closing remarks. Okay. Thanks a lot, thanks a lot for this session. Thanks a lot for your, for the Q&A. Again, very proud of what we have been, of what we have achieved, for the first semester. Very confident, for the second semester, and much more for 2024 and the years to come. W ith all the action plans, we have, we have in our pocket. Thanks a lot. Have a good day, and see you soon. Bye-bye. Thank you. Bye-bye!