Hello and welcome to the Coats 2022 Half Year Results Call. My name is Lauren, and I will be coordinating your call today. There'll be an opportunity for questions at the end of the presentation. If you would like to ask a question, please press star followed by one on your telephone keypad. I will now hand you over to your host, Nicholas Kidd, to begin. Nicholas, please go ahead. Good morning, and welcome to the Coats Group PLC half-year 2022 results presentation. My name is Nicholas Kidd and I'm the interim head of investor relations at Coats. I'm here with Rajiv Sharma, CEO, and Jackie Callaway, CFO, who are going to talk you through the results and outlook for the business. With that, I'll pass you over to Rajiv. Good morning, and welcome to the Coats H1 2022 results presentation. Today, I will talk about how we are accelerating profitable sales growth and transforming our business to improve margins. Jackie will present the financials, and I will come back to talk about the outlook. This session will end with Q&A. The backdrop for the period was robust demand, continued supply chain disruptions, and high inflation. We generally thrive in this environment and increase the distance between us and our competition. On the left-hand side of the slide are the outcomes related to accelerating profitable sales growth. In H1, we delivered 19% sales growth. The commercial teams acted quickly with pricing actions and were ably supported by the operational teams. Demand for premium products remained strong, driven by buffer buying and restocking in the supply chain. Our playbook of price plus productivity offsetting inflation was well executed. I firmly believe in self-help actions, and the outcomes during this period were a reflection of that mindset. Our operating margins were up 180 basis points to 15.6%, now well above 2019 levels, which is also reflective of the earnings per share improvement of 30% versus 2021. The business continues to produce strong free cash flow, resulting in net debt of $195 million and a leverage of 0.8 times at the half year. On a pro forma basis, adjusting for the debt-funded Texon acquisition, our leverage remains comfortably within our target range of 1-2 times. I'm also pleased to announce that we remain on track to largely achieve our ambitious 2022 sustainability targets. Revenues from our recycled products were $65 million at the end of the first half. Finally, the board are mindful of the importance of dividends to our shareholders and declared an interim dividend of $0.007 per share, which is an increase of 15% over last year. On the right-hand side of this slide are examples of how we are transforming the business. On March third, we announced the start of strategic projects. I'm glad to report that we have made significant progress, and I will talk more about it later in the presentation. Our business in Brazil and Argentina has been non-strategic and margin dilutive. We sold it to a local Brazilian company in May of this year. We have also closed our operations in Russia and South Africa. Last month, we announced the acquisition of Texon, a market leader in structural footwear components. This joins our already successful footwear threads and yarns business, and I will talk more about Texon in a few minutes. Let me now talk about our underlying business, which has had a standout performance in the first half of 2022. I will begin with Apparel and Footwear and then move on to Performance Materials. We have seen worldwide retail sales get back to 2019 levels this year. After a long time, we are seeing brands and retailers increase retail prices and reduce discounts. This is a welcome development for all participants in the supply chain, including Coats. Supply chain disruptions continued with China COVID lockdowns, freight disruptions, some shortages of materials and labor in a few geographies. After 12 months of buffer buying and inventory rebuild, we see a gradual return to more normalized patterns of demand and supply that are in line with historical trends. Coats was well positioned to take advantage of the strong demand seen in H1. A global scale investment in technology and great teams allowed us to win in spite of high demand and unprecedented volatility. During the past two years, there is a trend towards more casual, versatile, and functional clothing that is more comfortable and sports inspired now that hybrid working arrangements are the norm and casual clothing and footwear becomes accepted in the workplace. Alongside the move towards premiumization, we are also seeing increased interest in health and fitness, which is fueling demand for outdoor Apparel and Footwear. These trends are beneficial to Coats. Sales in Apparel and Footwear increased 21% versus last year, continuing the momentum we have seen over the past 12 months. Our focus on sustainability continues to drive differentiation and competitive advantage as the vast majority of our brands look to deliver on their own sustainability targets. We have seen this in the sale of our recycled products which ended H1 with $65 million of sales. Our target for this year is between $125 million and $150 million of recycled product sales. By putting our customers at the heart of what we do and focusing on quality, agility, sustainability, and technical support, we delivered significant price in this division. Our premium products grew faster than the group average. A combination of price, mix, volume and productivity resulted in the operating margin of this division accelerating to 18.2%. The second half of the year will see demand moderating to more normal levels of growth. We are well-diversified in our product portfolio and geographies. Our relative strength in the core markets of luxury, sports, athleisure and outdoor means that we approach H2 with confidence. The majority of our apparel sales are in the premium end of the market. This segment has higher margins and is more resilient during economic slowdown. As we look at the mid-market, we focus on the most successful brands to win with the winners, and within the mass market and fast fashion, we use discretion to win where it matters. Footwear is a similar story and has higher margins too. It is a more sticky business and is expected to grow ahead of apparel in the medium term. The acquisition of Texon provides a further diversification to our portfolio at the premium end of the market. We are planning a capital market day focused on our footwear business and the Texon acquisition. Moving over to Performance Materials, we saw strong growth with sustainability being a common theme across all segments in Performance Materials. Personal Protection, which makes around 40% of our PM revenues, continues to benefit from increased worker safety standards, the requirement of multi-hazard protection and user demand for more comfortable clothing. Composites for oil and gas and telecommunications were in demand due to increased investments in oil production and the ongoing rollout of fiber optic networks across major markets. We have doubled the manufacturing capacity in our Spanish composites factory. The opening of a new Composite Center of Excellence in Spain will help us in the development of new products for both the telecom and the energy sectors. Performance Threads contains more of our traditional thread products that go into mature end markets like tea bags, feminine hygiene and automotive. Global car production is still below 2019 levels, and the transition to electric vehicles continues. Sales growth was strongest in EMEA and Asia. The U.S. continues to be held back by labor availability challenges in North Carolina. We are addressing the U.S. challenges by moving unutilized machines to a new factory in Mexico. We expect double-digit sales growth across Personal Protection and Composites, and a growth in line with GDP for the Performance Threads business. There were significant customer wins in automotive and military that helped set the tone for the remainder of the year. As a whole, Performance Materials saw sales growth of 16%, driven by strong pricing, growth in EMEA and Asia, and improving trend in our U.S. operations. Operating margins were up 280 basis points to 8.2% despite ongoing labor disruption in the U.S. We find ourselves in extremely unusual economic circumstances with inflation at a 40-year high. I'm proud to report that during H1, we have more than offset inflation through price and productivity actions. Our business model, product portfolio and premium market positioning enables us to get higher price in inflationary times. Our global scale allows us to deliver productivity within our supply chain and cost base. Coats has a well-developed playbook of offsetting inflation through price and productivity. On 3 March 2022, we announced the launch of strategic projects. We said that we will invest $35 million of exceptional cash over two years to deliver an incremental $50 million EBIT in 2024. Majority of this incremental operating profit will benefit our Performance Materials business. We also said that this year we will deliver an incremental $5 million-$10 million of profit from these projects. I am pleased to inform you that we are ahead of our target and now expect to deliver $15 million this year. To demonstrate what we have done so far, let us show you a video of one of our new state-of-the-art factories that is coming up in Mexico. It will go into full production by the end of the year. Let's play the video. For over 250 years, Coats has been the global market leader in thread. Our solutions have evolved to meet the demands of an ever-changing world. Today, we have brought together the best talent from around Coats to create a new advanced manufacturing and distribution facility in Huamantla, Mexico. The Huamantla plant has been designed with key stakeholders in mind. At the heart of the operation, we will have state-of-the-art equipment that delivers the highest levels of quality. We have invested in a warehouse and distribution center that is perfectly placed to service both the local Mexican and U.S.-based customers. The supporting infrastructure has been done with sustainability front and center. A synchronized compressed air system that delivers dry air through corrosion leak-free pipework that over time will result in improved energy efficiency. We are building an engaging modern workspace for all our employees that has access to quality medical and welfare facilities. These are some of the building blocks in developing a great place to work. Complementing our existing operations in the Orizaba plant, there will be a new bonding department. State-of-the-art equipment has been developed that is proprietary to Coats. This equipment will produce product for some of the most demanding end uses in the Performance Materials category. Reduced workflows will deliver measurable upsides towards our sustainability and productivity objectives, whilst also giving maximum levels of flexibility to cater for the changing needs of our customer. Coats continues to grow. The latest investment in Mexico cements our long-standing business relationship with both the country and the customers we service. We continue to transform to meet the ever-emerging demands of our partners. On 20 July, Coats completed the acquisition of Texon, a leader in the highly attractive footwear structural components market. This is a complementary adjacency to Coats' existing premium thread offering to footwear customers. This increases our presence in the highly attractive athleisure and sports footwear segment. This is an opportunity to cross-sell our products with customers where only Coats or Texon is present. With this, both companies can broaden and deepen their customer relationships. As an industry leader in sustainability and innovation, Texon is an ideal fit for Coats. Many of their products have high content of recycled or bio-based materials, for example, cellulosic fibers, vegan leather, et cetera. Texon delivered $132 million of sales in 2021, with an operating margin of 13%. As part of the Coats Group, it can benefit from our global network, customer relationships, and industry experience to grow faster. We have announced $5 million of cost synergies coming from procurement, manufacturing productivity, and back office consolidation. With that, let me hand over to Jackie who will present the financials. Thanks, Rajiv, and hello to everyone on the call. Let me start by summarizing the key highlights of our financial performance for the first half of 2022. We've seen further accelerated sales growth with 19% constant currency growth versus last year. Approximately two-thirds of this growth is due to our pricing actions and better mix, and the other one-third is volume related. Coats is a company that operates well in an inflationary market and has a well-defined and tested playbook. During 2022, we've continued to see heightened inflationary pressures in the areas of raw material, labor, energy, and freight. As with previous years, we've moved quickly to mitigate these inflationary challenges by successfully implementing pricing actions and self-help programs. Our adjusted operating profit of $125 million and margins of 15.6% were both well up on last year and well ahead of pre-COVID levels. This adjusted operating profit result is largely driven by the volumes we've seen in the period, as well as ongoing tight cost management and the initial delivery of our strategic projects. On cash, we delivered a robust free cash flow of $30 million, which maintained a strong balance sheet position with leverage at the period end of 0.8 times. This strong balance sheet has allowed us to fully debt fund our recent acquisition of Texon whilst keeping our leverage comfortably within our 1-2 times target range on a pro forma basis. We've seen strong momentum on our strategic projects during the period, and we're ahead of schedule in terms of delivering the benefits. We now expect to deliver $15 million incremental adjusted operating profits during 2022. Slide 16 sets out the financial summary and our key financial metrics, which show a significant improvement year-on-year. Let's now take a deep dive on these key financial metrics, starting with revenues. Overall, the year-on-year increase in group revenues in the first half was 19% on a constant currency basis, and this strong performance was driven across both A&F and Performance Materials, as Rajiv mentioned earlier in his market commentary. Group operating profits were up 35% on a constant currency basis to $125 million as the volume benefits that we've seen delivered upside margin benefits alongside the initial impacts from our strategic project initiatives. As a result, margins increased by 180 basis points to a healthy 15.6%. I will cover the key profit lever movements in more detail shortly. On a reported basis, growth rates of both sales and operating profits were slightly lower than the constant currency basis, primarily as a result of translation effects headwinds due to the U.S. dollar strengthening against some of our key local currencies, for example, the euro and the Indian rupee. In addition, the constant currency sales and operating growth was impacted to a small extent by the adoption of hyperinflation accounting in Turkey. Adjusted EPS of $0.043 per share was up 30% year-on-year, primarily due to the profit increase we have seen. Finally, on this slide, cash generation was a robust performance, albeit lower than 2021, which benefited from some specific timing impacts. I'll give some more details on these items later. Now moving on to operating profits, and the next slide provides an overview of the movements in our group operating profits and margins during the year. Operating profits benefited from the volume upside we saw in the first half, both directly through sales but also through more efficient utilization of our plants. We continue to offset inflationary pressures such as raw materials, freight, labor, and energy through price and productivity initiatives. While we expect inflationary pressures to continue in the second half, our early actions on price and productivity initiatives leave us well placed to continue to mitigate these as we have successfully done in the past. At an SD&A level, these costs remained well controlled, and we also saw the initial $5 million of benefits from our strategic projects coming through in the half. The above impacts led to a healthy increase in operating margin in the period, which was up 180 basis points to 15.6%, driven by both segments. Let us now look at segmental margins on slide 18. Both segments saw significant improvements in margins year-over-year. A&F margins have increased by 130 basis points to 18.2%. This was as a result of excellent commercial and operational delivery, increased volumes and improved factory utilization, pricing actions and procurement self-help initiatives, offsetting heightened inflationary pressures. PM margins are up 280 basis points year-over-year to 8.2%. Margins in this segment continue to trend upwardly, and while still impacted in the U.S. by labor availability issues and labor inflation, U.S. margins have improved significantly due to the positive impact of both pricing actions and the strategic project actions that have started to take effect in the period. Excluding the U.S. Business, PM margins remain double digit, albeit slightly lower than 2021 as a result of specific temporary supply chain disruption issues within EMEA, which have now been resolved. On slide 19, we show the bottom half of the profit and loss account, and there are five areas I'd like to cover off on this slide. Firstly, exceptional and acquisition-related items of $13 million, which include $10 million spent in relation to the commencement of our strategic project initiatives, the majority of which are cash severance costs regarding actions in relation to our cost base. In addition, there are $2 million of costs in relation to our acquisition of Texon, which was completed in July. Secondly, you will see that the net finance costs were $5 million higher than in 2021. This relates in part to rising interest rates, but also in relation to large mark-to-market losses in relation to hedging instruments, mainly around sterling weakness at the period end. The third item is the continued reduction in our underlying tax rate to 30% and in line with the guidance we have issued previously for the full year. Fourthly, the loss on discontinued operations relates to the exit of our Brazil and Argentina business. This consists of $49 million of net assets disposed, $19 million of buyer payments and fees, and $15 million of historic recycled FX losses that previously went through reserves. The final item to flag is the interim dividend of $0.007 per share, which is 15% above the 2021 levels, and reflects the excellent first half performance and ongoing confidence that the board has in our strategy. Moving now to slide 20, where we see the robust cash generation for the period. As a reminder, due to our normal working capital cycles, our cash generation is typically weighted to the second half, and that remains the case this year. At an adjusted free cash flow level, we delivered $30 million compared to $40 million last year. This was a robust performance compared to historical delivery, albeit behind last year due to some specific timing impacts in 2021. For example, we paid no staff bonuses in March 2021 as a result of the performance of the business in 2020, which was heavily impacted by COVID. Our working capital has continued to be well-controlled while allowing for some ongoing increase in inventories to support customer service as well as the inflationary pressures due to increases in our raw material costs. CapEx remained at broadly similar levels to last year, and we continue to selectively invest in the most value-add initiatives to support future growth in the group strategy. Our closing net debt of $195 million, excluding leases, was higher than at the end of 2021, due largely to our normal working capital outflows in the first half, as well as continued payments to our pension scheme, shareholder dividends, exceptional costs, and the cash paid to the buyer of our Brazil-Argentina business. This level of net debt equates to leverage of 0.8x, which is slightly below the target range of between one and two. On a pro forma basis, if this were to be adjusted for the debt-funded Texon acquisition, our leverage remains comfortably within our one to two target range. On slide 21, we set out a reminder of the specific financial guidance in relation to the strategic projects that we're undertaking, as well as the latest update on 2022 progress, which Rajiv has also mentioned earlier. For the overall project, we anticipate some $50 million of bottom-line EBIT benefit to be delivered in 2024. The footprint aspects of this program will largely be focused on PM markets, with a resulting material improvement in PM margins. The total exceptional cash costs to achieve these savings will be around $35 million, with the majority of that occurring in 2022, and with the remaining actions planned to occur in 2023. We are very pleased to say that the projects have made significant progress during the first half, and we are now on track to deliver $15 million of incremental adjusted operating profits this year, which is ahead of the original guidance for the year of $5 million-$10 million. Lastly from me, as with previous announcements, we've provided future modeling guidance, the latest of which is set out on slide 22. I'm not planning to go through this in detail, but we'll be very happy to arrange follow-up calls if you have any questions on this or the strategic project financials I just covered on the previous slide. I'd like to conclude by reiterating the excellent performance of the group in the period, the accelerating sales growth, the pricing and self-help programs that continue to offset inflationary pressures, the resulting $125 million of adjusted operating profit at increased margins, and the positive start to the delivery of our strategic projects. Now I'd like to hand back to Rajiv. Thank you, Jackie. The first half of 2022 has got off to a stellar start with high sales and margin growth. We continue to accelerate profitable sales growth and transform the business to improve margins. We are deploying our financial horsepower to acquire high-quality companies in line with our strict strategy. Our strategic projects are progressing well, and we should deliver $15 million incremental EBIT this year. We will continue with our focus on sales growth, margin growth, and cash generation. Now for the outlook for the second half. We expect to see normalized growth in the second half of the year as inventory build in the first half gives way to more typical demand patterns. We will continue to use timely pricing actions to offset inflationary pressures, leveraging our unparalleled global footprint and critical position in the industry supply chain to serve our diversified customers. We are also delivering ahead of expectations on our strategic projects to transform the business. Our focus on the premium and athleisure markets in Apparel and Footwear and our diversified end markets in Performance Materials position Coats well in the current macroeconomic environment. As a result of these factors, we now anticipate the group's full year 2022 performance to be moderately ahead of previous expectations. This concludes our presentation. Thank you very much for your time. I now hand back to Nick. Thank you, Rajiv. Thank you, Jackie. We now have some time for Q&A. The session will begin shortly. If you'd like to ask a question, please dial into the conference call using the details provided on the screen in front of you. Otherwise, stay connected to listen to the Q&A. We will pause for a few minutes to allow time for people to dial in. Once you're on the line, please follow the operator's instructions. We will now go on hold for one minute to allow participants to dial in and register a question. Thank you for your patience. We will now begin the Q&A session. If you would like to ask a question, please dial into the conference call and press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure that your phone is unmuted locally. Our first question comes from Charles Hall from Peel Hunt. Charles, please go ahead. Morning, Rajiv. Morning, Jackie. Morning, Charles. Well done on excellent set of results. Could you start just by talking a little bit about the end markets and what you mean by a normal level of demand for H2? Okay, absolutely. If you look at the H1 sales growth, it was 19%, and that 19% can be broken down into roughly 2/3 price and mix and 1/3 volume. In a normal year, typically, you know, we get about 5% sales growth, and that 5% can be broken roughly into 3% of that coming from volume and market share gains, and the balance 2% coming from price and mix. What we are seeing here is, after the significant demand surge that we saw starting in Q4 last year, ending in the second quarter of this year, it's gonna start trending towards more of a normalized growth rate. Having said that, it starts to vary within sort of, you know, within the various end markets. If you look at apparel, for example. Apparel, we will continue to see pretty good momentum in the sporting goods, athleisure, casual wear, and even in the luxury segment. I think these, you know, categories should see a continued, you know, better than average growth rate in the second half of the year. The fast fashion, the mid-market, and the mass market segments are down, and we expect them to be down in the second half as they correct for the, you know, as they sort of try to balance the, you know, demand and supply situation here. Now, our exposure in the mass market and the mid-market is not that high, so we are largely a premium player. In the apparel, what we are gonna see in the second half is, you know, reasonably strong growth. It's not gonna be as high as in the first half, but it'll still be strong there. Performance Materials, sorry, footwear. Footwear will continue to see strong growth, so it was pretty good in the first half. It should continue to see the same level of growth rates in the second half. As you know, we had acquired Texon, which is a market leader in the footwear structural component sector. Now, that sector, broadly, I would say, is gonna grow between 7% and 9% into the medium term. That's sort of, you know, one of the attractiveness of that segment. The whole athleisure sporting goods segment is looking pretty attractive over the next few years. Performance Materials was largely a supply constraint situation. You know, demand was very strong. If I look at our U.S. operations, the order book is pretty much sold out till the end of the year. The issue is labor availability, and in some cases, raw materials. It's essentially supply which is constraining the Performance Materials sector. Within Performance Materials, the end markets where we are seeing pretty good growth is in Personal Protection. We are seeing that also in the Composites area, where it's products going into oil and gas or into the telecom sector. We do have a Performance Threads business, which is essentially a thread going into mature end markets like, you know, bedding, upholstery, you know, feminine healthcare, tea bags, et cetera. That's gonna be soft in the second half, and that'll pretty much grow in line with GDP. Broadly, it's kind of a mixed bag, I would say, Charles. Overall, if you kind of bring everything together, I would expect the second half growth to be more than our historical growth that we've seen. It's gonna be less than the first half. That makes sense. Thanks, Rajiv. That's really helpful. Could you just comment on China? Obviously, that's a key end market for a number of your customers. Obviously, a manufacturing base for you as well. How have you experienced lockdowns in China? How are your customers faring, and what's the thoughts about H2 and going into next year? Yeah. Let's start with the supply side in China. We had our Shanghai factory shut down for two months in the first half. A lot of our customers' factories which are in the northeast part of China were also shut in the first half for, you know, anywhere between two or three months. There were significant delays in shipping out of China. You know, the Shanghai port had something like three weeks of waiting time for ships to berth into the port. Those have started to ease now. As we got into June, July, we are starting to see those sort of delays coming down. That, that's sort of on the supply side. I think the second half is gonna be better than the first half, but again, if it's gonna be COVID-related shutdowns, that's sort of hard to predict. Generally, the news from the ground is that things are looking slightly more normal in the second half as far as supply side is concerned. On the demand side, you know, a lot of our large customers have got, you know, a reasonable amount of their sales coming in China. It is looking soft right now, so consumer sales in China were, you know, down a bit in the first half. They are being impacted a bit by that, but they are making up by more sales in South Asia, Southeast Asia, the U.S. and Europe. it's a mixed bag, but, you know, I think China will start to look better after October, November this year. Great. Last question. You've had a number of new business wins in the period. Are there any you'd particularly highlight? We got, you know, a pretty interesting win from General Motors, which is essentially the battery tray there. It's a composite one, so that, you know, that was a good win. We also had a Mercedes electric vehicle. You know, the seats of the electric vehicle of a Mercedes-Benz electric car. You know, that was an interesting win here. Apart from that, we have had significant wins in the luxury sector in the first half of this year. You know, PVH, you know, Ralph Lauren. We are seeing Europe. You know, Europe has been a strong market for us in the first half of this year, and it's largely because of the apparel and the footwear sector in the luxury area. That's great. Thanks very much, Rajiv. Thank you, Charles. Thank you. Our next question comes from Mark Fielding from RBC Capital Markets. Mark, please go ahead. Yeah. Morning. Thank you for taking my questions. Three questions if you don't mind. Firstly, in terms of the strategic initiatives, which obviously are progressing faster than expected, I mean, obviously the target is still, you know, $50 million of benefits, but, you know, are there incremental opportunities coming through, or is it just that you're able to get things done faster than you were initially thinking? Secondly, just could you give us an update around, obviously, recycled thread going really well, just, you know, where you're at with some of the other products, like the all-natural product and where that is progressing in the development curve. And then thirdly, can we just get a little bit more detail on the Performance Materials EMEA supply chain disruption that you talked about? Obviously, Jackie said that's all behind us moving into the second half. Does that mean that, you know, ex the U.S. Performance Materials is back to mid-teen margins in the second half? Thank you. Let me start with the first one, strategic projects. We are not changing the total quantum of $50 million in 2024. I think it's a case of getting it done faster, Mark. So the $15 million, which is ahead of the $5 million-$10 million that we had mentioned in March, is essentially us realizing the benefits faster. That's the answer to your first question. On the recycled thread, again, you know, continue to see demand pretty strong, $65 million of sales in the first half. We are looking at ending the year with recycled sales of anywhere between $125 million and $150 million for the year. Customers continue to buy recycled polyester thread. I think it's becoming even more important and especially in the mid-market. Where we have fast fashion brands like, you know, Inditex, H&M, et cetera, they are one of the bigger, sort of, you know, buyers of our recycled products. That's actually good because that's all market share gains, and it's at a price premium. Again, this is a good example of a product that is good for the planet, but it's also good for the business in terms of profits here. With respect to the Performance Materials EMEA, as you would remember in the first half of the year, we had this Russia-Ukraine prices. Energy prices went up. There was a lot of disruption in Europe, you know, starting February 24th till you know, maybe about middle of May when things started to settle down. We lost some time during that disruption there. The energy prices went up significantly during that time. Customers were distracted in terms of, you know, engaging with suppliers like us, so we lost some time. What has happened since mid-May till, you know, let's say end of June, things have normalized. We are back on track. The expectation is that EMEA in second half is gonna be back to where it should be. This was just a momentary disruption for about three months caused by the Russia-Ukraine, you know, issue. Great. Thank you. Sorry, could I just clarify in terms of the recycled thread? I mean, actually two little clarifications. Firstly, I think before you've indicated around two-thirds is sort of substitution of existing sales and one-third was new business. Is that still the sort of ratio? And the second thing I was asking was actually beyond the recycled thread, you know, are you making progress with things like, you know, the all-natural thread, you know, the as in the non-plastic thread, et cetera? The 2/3, 1/3 was actually last year's ratio in terms of recycled threads. This year it's gonna trend more towards the 60/40, and I think eventually it's gonna be 50/50. We'll start to see more and more of the recycled thread going into market share gains where we get price and a price premium. With respect to the other bio-based threads that we have, those are still in the testing phase. They have been launched. They are going through customer trials. I don't expect any material sales to happen this half, but we should start to see traction in the first half of next year. Great. Thank you very much. Thanks, Mark. As a reminder to ask any further questions, please press star followed by one on your telephone keypads. Our next question comes from David Farrell from Jefferies. David, please go ahead. Hi, good morning. I've got a couple of questions, please. Just wanted to follow on from the previous question on the recycled thread, EcoVerde. The bottom end of your range suggests that you're only going to deliver sales in line with the first half. I'm just kind of wondering what the constraint there is for further half-on-half growth. My second question was with regards to the expansion of the composites capacity in Spain. Can you just put that in context? Is Spain the only facility you have for composites manufacturing or how much overall do they increase your kind of composite capacity by? My third question relates to what's going on in Europe and Germany in particular with regards to potential gas rationing. How could that impact your business, both negatively in terms of your own productions, but I think some of your competitors are perhaps more heavily skewed towards Europe, than you are. Those are my three questions, please. Okay. I'll start with the last one, in terms of gas, you know, gas rationing here. We have not experienced any gas rationing. The most likely place is gonna be Germany if it happens. We have plans in place to actually use diesel gensets in case that happens. For us, you know, we would not experience any material production shortfalls as a result of energy rationing. Outside of Germany, you know, there might be some sort of rationing in Italy. There might be some rationing in France. We don't have any factories in France. You know, we have a small factory in Italy. Broadly, I would say our impact is limited to Germany at this stage here. With respect to Gotex, I'll take your second question here. The Composites factory is largely the Gotex acquisition that we've done in 2016. We have moved to a new site. We have more than doubled the capacity. The sales of this business have more than doubled in the last five years, and profits have tripled. We are seeing significant demand coming from the telecom sector and also from the energy sector. There's you know a pretty good view internally that we might have to expand and maybe move some of the Gotex production to the U.S. in the near future. That's how it's looking like. You know, the entire Composites area is looking very attractive. In the first half, sales in Composites grew 28%. It was largely, you know, Europe, and it was mostly coming out of the Gotex factory here. We do have another Composites factory in India, which is essentially an extension of the Gotex factory. The plan is to maybe have one more identical one in the U.S. sometime next year. Your first question, David, just so, you know, remind me. Sorry. Yeah, my first initial question was just on EcoVerde sales. Yes. I think kind of you're talking about $125 million-$150 million. At the bottom end of that range, that's simply kind of replicating what you did in the first half, if my math is correct. I'm just wondering why isn't that gonna grow in the second half? I think it's our view. You know, we have line of sight of the brands and their productions in the second half. Essentially what we're seeing is that, you know, the EcoVerde sales will be around, you know, H2 equals H1. For those particular categories at this stage. Okay, great. Thank you. I think, David, if I was not clear, I do apologize. But generally what I'm saying is in the second half, we will see the volumes and the demand moderating. Okay. Yep. Thanks. Thank you. Our final question comes from Maggie Schooley from Stifel. Maggie, please go ahead. Good morning. Good morning, Rajiv. Good morning, Jackie. How are you? Good morning, Maggie. Good morning. I have a couple, if you would indulge me. The first two, given your comments on how Coats is well-placed in the current environment, given retail, the retail climate is getting slightly more challenging on some ends of the market. Could you remind us what the relative skew of A&F is to those various end markets, possibly by percentage, so athletic, athleisure or premium versus mid-market and et cetera, if you could do that. Secondly, on that same note, given the strategic projects and programs that you've put into place over the last couple of years, as retailers manage their inventory more closely, is this a relative advantage for you, do you believe, because of your speed and agility? If you could expand on any thoughts on that, even if we do get into a more challenging climate for retailers on inventory management, do you think that given your footprint and agility, you think you can win market share on that basis? Two smaller ones. Sorry. On telecoms, I know Composites have been doing very well, but there has been some press reports that maybe supply chain issues are starting to be encountered on the core fiber optics, due to some of the supply chain issues in Russia or materials coming from Russia. You don't seem to have seen this, but any insight into if there's been any change on that in terms of telecoms, forward-looking would be helpful. Lastly, on ESG, I see, you know, very good traction on your metrics. I was hoping you could delve a little bit more, given the current climate, on your highlighting that you've reduced your energy intensity by 3% over the last six months, and if there's more that you can do there in a sensitive energy environment and what we should be looking for there. Sorry, I know that was a lot. Okay. Excellent, Maggie. I'll try to remember all of them. If I don't, please, you know, help me out there. I'll come back to them. Yeah. Your first question was around the various categories that our apparel sales are. Let me just talk about apparel only at this stage. I'm not including footwear in this stage. Apparel only, sporting goods, athleisure, luxury, premium segment is about, you know, between 50% and 55% of our total sales. Mid-market is around, you know, 25%, and the mass market is between 15% and 20%. That's how it basically splits up. Okay. We do have a couple of large domestic thread sales. In India, we have you know a reasonably sized legacy thread business which is kind of you know mass market. But broadly I would say majority of our sales in apparel are skewed towards the premium end of the market. Even within the mid-market where you've got fast fashion playing there we are exposed largely to the EcoVerde sales and that's how we are playing in that market. Within footwear it's 90% premium and performance. That's all of the high end of the market there. Your second question Maggie was? Just on your ability to manage to be quick and agile if retailers are managing inventory, but they find something is selling very quickly, you know, do you think during this environment you'll actually be able to gain market share 'cause of what you've done over the last couple of years? Yeah, absolutely. As a matter of fact, you know, we have been seeing over the last decade, Maggie, that you know, inventories have been squeezed in the supply chain. The overall Apparel and Footwear supply chain has become far more efficient and far more, you know, speedier in the last decade. This is just a continuation of the same trend. Yeah. We have deployed technology at global scale and, you know, very strong commercial relationships, to actually help us react quickly. It's just gonna be more of the same as far as we are concerned. Yeah. In a normal year, we take between 50 and 70 basis points of market share in any given normal year, and most of that is because of our ability to react and respond to customer needs very quickly. We have capacity in the near shore market, so in Eastern Europe, North Africa, that feed into Europe. We have seen our capacity utilization go up in the last 12 months. We're seeing the same thing in Mexico, Central America, which feeds into the U.S. market. Brands are starting to bring some of their production closer to market, and that actually benefits us going forward. Okay. The last two are just, are you seeing any slowdown in some of the telecoms projects because there has been reports that fiber optic cable is slightly hard to come by given the supply chain issues in Russia? We use fiberglass for the telecom market in Europe. There were three to four weeks of delay slash disruption in the fiberglass availability in Europe, but that sort of normalized, and we don't use any of the raw materials coming out of Russia. Okay. The last one was on the ESG. What else you can do on energy intensity given the current climate? Yeah. We are investing in new modern machines. If you look at the new Gotex facility in Spain, it's got machines that run at faster speed, consume about 30% less, you know, energy. That's sort of helping us. In Germany and in Turkey, we're using heat recovery to make sure that we are recycling a lot of the energy that comes in. That's helping us reduce the energy intensity. By the way, the same things are also being deployed in Asia, where we have a majority of our, you know, manufacturing capacity. Okay. Thank you. That's very helpful. I appreciate it. Thank you, Maggie. Thank you. We now have a follow-up question from Mark Fielding from RBC Capital Markets. Mark, please go ahead. Hi. Thanks again. Just a couple of follow-ups. One actually around the pricing side of things and just I suppose do you have now all the price rises you feel are in place? Maybe linked with that, specifically obviously a lot of discussion of raw material inflation, et cetera, but where are you in terms of labor inflation this year, and how do we think about next year, where I assume some of it will have, you know, rolled over from this year, so to speak, and can you offset labor inflation by pricing? Maybe take that one first, and then I've got one other little question. Yeah. If you just look at inflation in the first half, we had $65 million of inflation, and it was spread in four broad categories. It was raw materials, energy, freight, and labor. These four comprise the $65 million of inflation. What we're starting to see in the last few weeks, Mark, is that in certain categories of raw materials, we're starting to see softening of pricing happening. That's actually a good thing there. In terms of freight, we are starting to see softening of freight inflation also happening. I think that trend is gonna move downwards in the second half. Labor inflation continues to be high and we don't expect that to abate in the second half of this year. As far as energy is concerned, I think energy largely is a Europe phenomenon. We haven't seen that much of inflation in Asia, where we have majority of our manufacturing. The U.S., as you probably know, U.S. has got probably one of the lowest, you know, energy prices in the world. From our standpoint on the energy side, it's largely Europe exposure, as far as, you know, energy is concerned. That's broadly how we see it. Labor in general, the customers expect us to offset labor inflation through our internal sort of, you know, self-help and productivity programs, and that's what we typically do. The first half of this year has been a bit unusual, where the entire $65 million has been offset through our pricing and you know, mix actions that we have taken. We started very early. We had anticipated a very strong first half, almost 12 months back. We started acting on the pricing in third quarter, fourth quarter last year. After the Russian invasion of Ukraine, we actually went back again and you know, readjusted the prices. Where we are today, we don't feel the need to go back and readjust prices, so it'll just sort of flow through into the second half naturally. Can I just ask on that? As you mentioned a couple of areas where some of the headwinds are actually softening. Obviously labor is still going up. Obviously, you're not wanting to put prices up, but do your customers expect prices to come down as some of those headwinds soften? You know, basically how much can the pricing stick versus how much do you have to give back with labor being an added complication? Yeah. Again, that's an excellent question. If you look at the last 10 years of history in Coats, we are first off the blocks when, you know, inflation happens. We kind of, you know, raise our prices, and we're really good at holding onto the prices when, you know, inflation starts to come down. Within the Apparel and Footwear segment, the pricing is much more stickier. Within Performance Materials, especially on the Personal Protection side and the Composites sides, the contracts are written in such a way where it's a passthrough. So as the inflation goes up, it's sort of an automatic passthrough, and the prices go up. We start to see the same thing come down at the other end. Now we generally try to defend our prices through, you know, innovation within the Performance Materials sector, but that's one area where we do give up on some price on the way down. Thank you. A really small side question, which is just in the past, Zips has been a slightly volatile area, just obviously not getting any real commentary in the wider world, probably in the last year or two. Just where are we in terms of the Zip business specifically? Yep. We had adjusted our strategy, I think pre-pandemic, 2019, where we said, "Look here, Zips is a business that we need to hold on for cash. It's gonna be run for cash. It's non-strategic." That's how it's being run. Brazil had a decent sized Zips business and that got sold. Now our Zips presence is largely in Europe and China. The good news is in the first half, the Zips business was reasonably profitable, and the second half is looking, you know, equally good too. The plan is that we will continue to run it for cash and it's gonna be under review. Thank you very much. Thank you. We have no further questions, so I'll now hand back over to Nicholas Kidd for closing remarks. Thank you. Thank you everyone for joining the call today. Thank you for your questions. Obviously we're still available if you do need to further clarifications on anything. Thank you very much to Rajiv and Jacqui for their time today. Have a good day, everybody. Bye-bye. Thank you. Thank you, everyone. This concludes today's call. Thank you for joining. You may now disconnect your lines.