Is being recorded. We're now ready to start the call. Sonya, please go ahead. Thanks very much. Good morning, everyone, and welcome to Diageo's First Half Fiscal 2025 Results Q&A. I'm Sonya Ghobrial, Head of Investor Relations, and I'm joined this morning by Debra Crew, CEO, and Nik Jhangiani, CFO. Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements, including those that refer to our estimates, plans, and expectations. Please refer to this morning's announcement and the company's U.K. and U.S. filing for more details, including factors that could lead to actual results that differ materially from those expressed in or implied by any such forward-looking statements. Hopefully, you've all seen this morning's press release and presentation. For those listening to our webcast who'd like to ask a question, please use the dial-in details included in today's press release. With that, I'll hand the call back to the operator for your questions. Thank you. As a reminder, that star followed by one on your telephone keypad to ask a question today, and our first question comes from Simon Hales from Citi. Simon, please go ahead. Your line is open. Thank you. Morning, Debra, Nik, and Sonya. So two questions for me, really. Firstly, I can just ask a little bit about the organic sales outlook into the second half. Clearly, you're still talking about sequential improvement. How broad-based are your expectations of that sequential improvement at the regional level? And in particular, do you still expect to be able to deliver positive organic sales growth in the U.S. in the second half, even as you begin to lap up against the successful launch of Crown Royal Blackberry? And perhaps associated with that, if you can talk a little bit about any innovation plans that you have specifically for the U.S. market in the second half. And then my second question was just around the H2 organic margin and EBIT growth outlook. You've clearly flagged, and this is Nik, in your presentation remarks, the ongoing investment in digital route to market, higher input costs, etc., are weighing on profitability in the second half. But we are seeing, hopefully, that improvement in organic sales growth coming through, and we should be seeing more productivity savings dropping through in the second half of the year. So I'm just trying to square the circle, really, as to why that H2 profit growth forecast is a little bit lower than we might have expected. Good morning, Simon. This is Debra. Yeah, so I'll take this, and then Nik may want to add in, particularly on the second question. First, on organic kind of sales outlook, look, we're very pleased to be back into growth. And I would say when you look at that at a regional level in four out of the five regions, I think APAC is still an area, and China specifically driving that, where I would say we continue to expect an outlook that is tougher just from a macroeconomic condition. That being said, I would say everywhere else we would expect we're seeing momentum. We're seeing that resilient growth in Europe, and we're expecting that also to continue. I mean, Guinness is really doing very well, even though we are lapping now. This is the eighth consecutive quarter of double-digit growth. We are really seeing some good, strong growth behind Guinness, as well as looking Eastern Europe. We're also seeing Johnnie Walker as well. Then when you tick through Africa, despite the macro economy there, also seeing really good growth. That's one where I would say, once again, momentum, they're navigating a lot, but we are still feeling really good about our ability to deliver there. And things like the asset light strategy really paying off for us when you look at how we're doing. In particular, if you remember, we just did Nigeria. Sales in Nigeria are really quite strong right away off of the back of the improved distribution system that we're now part of there. When you go in then to North America, I mean, North America, we expect to continue to show improvement. Yes, we are launching Blackberry, but of course, Blackberry didn't come in until about halfway through the half last year, it came in under kind of limited edition, where we are looking at making that a permanent SKU. So that will certainly help us, as well as we do have strong innovation pipelines. So we are feeling very good about the positive U.S. momentum. That's putting things like the tariff announcement aside, which, of course, now has been paused for 30 days. So I would say that that's helping us feel better about that outlook as well. This is why before the tariff announcement, we were saying we expected sequential improvement from the first half into the second half, so I would describe that as fairly broad-based. As far as half two profit, yes, we expect those investments to continue. As far as the benefit from those, so things like supply agility, which is one of the main things. So you would have seen our announcement on North America that just came through on Alabama. That's an investment in the second half. That is not going to start seeing benefits really until fiscal 2026. And this is why, once again, pre the tariffs, we were guiding in fiscal 2026 and beyond to start to really see operating leverage with organic operating profit, outgrowing organic net sales. I don't know, Nik, if you want to add something. Yeah, no, I think that's the critical point there, right? I think we truly look at the future from an angle of being able to drive true leverage through the P&L. And that's what Debra said. Pre the tariff announcement, which obviously brings a little bit of uncertainty, but we're going to find ways to navigate through that, and I'm sure we'll talk about that. I think 2025, those investments, and remember, first keep in mind there's the investments that Debra's talked about that will start paying out. But we did also call out clearly now, if you look at the first half, we are lapping this incentive piece that will also come through in the second half. Actually, when you pull that out, which is largely a one-off, half one was slightly ahead. And I would say to you, looking at the puts and takes, if you excluded that and half two as well, that would probably be a similar piece. So right, you've got to keep that in context, which clearly a one-off. And I would say to you, that's not the way we would look at it going forward, right? We would clearly look to offset that in year with efficiencies, with productivity, and/or areas that we might actually pull back a little bit till we get back there. So for us, it's really much more about phasing through what is some of the investments that have been made and those incentives. But clearly looking forward, looking to grow at a higher level than our top line growth. And that's clear, and that will continue on through 2026 and beyond. Oh, by the way, Simon, I just realized I left out Latin America. And Latin America definitely has clearly an easier lap from last year as we were destocking. So I wouldn't forget about that. I also, another benefit, speaking of destocking that we would have on the North America front is also there was some retailer destocking, if you remember, from last year too. So there are some of those things in the background as well that just mechanically also help us. But we are feeling good about that, the kind of broader-based momentum ex-China that we are seeing across the various regions. That's very helpful. Thank you to you both. The next question is from Sanjeet Aujla from UBS. Sanjeet, your line is open. Please go ahead. Hi, Debra. Nik, three questions for me, please. Firstly, coming back to the U.S., can you just talk a little bit about what you're seeing across shipments, depletions, and sellouts? It feels like your sellout is running ahead of depletion. So are you still seeing retailer destocking in the first half of the year? Secondly, for you, Nik, can you just help us quantify the annualized impact on profitability, pre-mitigation of the tariff news if it does come through and it's permanent? And thirdly, in your prepared remarks, Nik, you talk quite a bit about stepped-up focus on operating leverage in the business. I think Diageo's margin speaks to around 32%. Is that a reasonable kind of benchmark to think the business can get back to in the fullest supply? Thank you. Yeah, so I'll take the first one on the U.S. So look, we're not seeing so destocking. There was, I think, possibly in the appendix. I think we put in the one chart that showed the Nielsen NABCA data, which remember does only track. It isn't a perfect 40% roughly of the U.S. And then our depletions and NSV, and we kind of brought that back by popular demand. What I would say is that now we're seeing between depletions, NSV and NSV, guys. These are running within a point of each other. So they're very close. And our depletions are generally running pretty close now when you look on a brand-by-brand basis to Nielsen NABCA. The difference there, quite honestly, especially this time of year, is it depends upon how much that retailers bought in kind of prior to the holidays and then how the holidays actually do. And remember also, there's kind of the weird thing in Nielsen NABCA this year where New Year's Eve is not in December. New Year's Eve is actually in January data. So that really makes the difference a bit in sellout. So there's just some moving pieces in there. But I would say, talking to the team on the ground, they would say retailers were a little more cautious in their buy-in, but they wouldn't call it a destock or anything. It was more about just cautiousness going into the holidays. So we really feel like that's behind us. And certainly, I'll just remind, our inventories are at levels. We're very comfortable, very appropriate for the environment that we're in. And then, Nik, if you want to talk a little bit about tariffs. Yeah, so listen, guys. It's a pretty fluid situation, as we all know, just given how the last 48, 72 hours have played out. But if you look at the U.S., about 45% of our net sales of products sold are made in either Canada or Mexico, right, just given the geographic origin requirements. But when you also break that down further, the vast majority of that is tequila. So let me just give you some color on what we see today is kind of the gross exposure on an operating profit level. So if you look forward now, planning from March 1, so four months, we're talking about circa $200 million of gross exposure on operating profit, with 85% of that being largely on tequila, which is an industry-wide issue, right? So keep that in mind. Now, when we look at the fact that this is not something that we were sitting back and waiting on, we were anticipating and scenario planning. And so we feel today we have good line of sight of being able to mitigate approximately 40% of that. But some of that would come in more immediately, and that's inventory management. I'll come back and talk about that in a moment. Some will take a little more time. And that 40% is pre any pricing decisions that we might make, right? And I'll come back on that as well. So on the inventory management piece, building on Debra's point, there is no stock build in our half one numbers. In fact, particularly on tequila, when you look at it, the outflows and the sales have been so strong, I would say, back to Debra's point, I mean, yes, some of the distributors with a three-tier system, knowing that it's such strong growth, would probably be looking at their levels, but nothing unusual when you look at our overall NSV and depletions, right? So all good there. What we did do was make a concerted effort as we went into the beginning of the year to bring in some inventory, and that's going to help us as we look forward. The other pieces that we're looking at is clearly some supply chain optimization with the U.S. team. More to come on that over time. But the other piece also is we've already been looking at our overheads and what might be reallocate in terms of spend across various buckets and/or savings to be able to offset some of this. And then the last piece, as I said, is the pricing dynamic. That's before that 40% mitigation does not include anything on pricing. The last time around, Debra, correct me if I'm right, I think when the tariffs were put in, we actually went all of that on pricing. I was going to say last time when we navigated tariffs, I mean, we actually pushed it through 100% on pricing. But so it's good to see that we've got mitigation this time before we even have to consider that. And I think particularly in this more cautious environment. Right. But that's not to say pricing isn't off the table, but it's just not the first thing that we would go for, given that we already have some mitigations. And we'll look at the consumer environment, what competition's doing. But also, I think, gauge the timelines of which these tariffs might stay or not. Let's look at that too. So I think we're going to come back on that. So hopefully that's clear in terms of the impact. To your last question around what we want to do and what we want to drive in terms of operating profit and leverage and the margin number, I'm not going to comment on a specific margin target other than saying I don't think there's any structural changes in the business that would preclude that. But having said that, I think Debra and I are fully aligned around how do we grow our absolute dollar gross profit and dollar operating margin as opposed to just percentages, right? Because I think there are choices and decisions that are right for the business that we should be looking at that bring us incremental top line and incremental dollars that we're not playing in today. And that's ultimately what we take to the bank. And that's what we're committed to doing as we look forward. So hopefully that's clear, Sanjeet. Great. Thank you both. The next question comes from Andrea Pistacchi from Bank of America. Your line is now open. Please go ahead. Thank you. Good morning, Debra, Nik, and Sonya. So two questions, please. Probably a bit more for Nik than Debra here. So in the prepared remarks, you spoke about how you intend to improve the performance by applying more rigor in revenue management, in cost savings, in how you're assessing the returns on marketing spend, working capital. So basically sharper, I think, execution in a lot of areas. How are you going to ensure that this really filters down through the organization? Do you need to change any processes, incentive schemes, appraisal process? And when do you expect to start to see some of these benefits? And then definitely for Nik here, if we dig a little bit deeper on what you'd like to do on working capital or cost savings, can you talk about where you see the main opportunities here for extracting efficiencies? The point here is that Diageo has had some strong CFOs over the years, going back to Deirdre, Kathryn Mikells, and they've already done a lot on cost savings and working capital. So where's the incremental opportunity? Yeah, so actually, Andrea, I'm going to answer the first one on their operating margins. So look, I think there are so many opportunities. And I think, I've said this many times to several investors who've asked me. I think one of the reasons I was excited when I met Nik is I felt like he would be perfect for Diageo in this moment. And as he's gone out and looked at the business independently at times and then has come back, we've been super aligned on where we see opportunities. Because to your point, look, we've had a lot of programs, but I will also say that there is so much more opportunity here. So I mean, revenue growth management is a good place to start. It's the top of the P&L. Beyond pricing, we've got so many opportunities in pack price. Our pack architecture, I mean, one of the things driving our great momentum in the U.S. are things like small sizes. So the 375 sizes that we've launched in Don Julio and Reposado in 1942, these have incredible momentum. And that is helping us with that consumer that is cash-strapped right now be able to afford our premium brands for the amount from their wallet that they want to spend on alcohol. And so I think things like pack- price architecture, quite honestly, in this industry, it's just kind of nascent compared to what it could be. Promo optimization, we've got a lot of opportunities across the world there, as well as even in trade terms in certain markets. When we look at COGS, our COGS are still higher than pre-COVID levels. And so we do see our supply team has a big productivity agenda, and many of those things are starting to see, particularly around, remember, we've made investments in supply agility. Those benefits really start hitting the P&L and fiscal 2026 and beyond. So that'll be a big part of that productivity agenda. We also have made investments in digital, things like the Scotch Intelligence Platform that's helping us optimize inventory. When you look at the amount of digital investments that we've made into marketing, and we already see everywhere we're putting these systems in, it's helping us. Everything from AI helping us do biddable media, helping us. We have CreativeX that's helping us now reduce our non-working costs as we create. We create thousands of creatives around the world. And so to be able to test these, in some cases, before you even put them on the digital platforms. So a lot of opportunity in our creative development process and reducing non-working. I think Nik mentioned that in his script. We actually have restructured. You ask about what do you need to do and incentives and structure, etc. Our marketing team has actually moved into more of these agile brand communities. We're calling them Conscious Create teams, helping us to more effectively produce creative that will be customized and appropriate for various markets, but we can do it faster. We can do it cheaper. And we've already started that. Certainly, the team is very well incented around not only investing for growth, but also to increase the resilience of both our financial P&L as well as our balance sheet. And I think, look, Nik's helped us in really taking a look and stepping back on you mentioned working capital, but also just in our choices and pacing of some of our other investments in CapEx. And so the team is really behind that as well, which will also help us with just agility and resilience during this uncertain time, making sure we make the right investments for the long term, but also paying careful attention to what we're seeing in the P&L. Nik. Absolutely. Well, I'm just going to build on a few of Debra's points. The great thing is, I think, firstly, I would echo what Debra said. When I came in, I started going out, and every time I would say something to her, she's like, "Yes, yes, that's what we need to do." Margin percentage was a perfect example of when I said to her, literally after four weeks of being here, I said, "Great margin business, but it's almost in some way a margin percent of set business." And Debra immediately was like, "Yes." And I said, "I want to focus on cash and cash margins, right, and absolute dollars." And she's like, "That's the way we got to go." So there's a lot of alignment as we've gone through this, right? So RGM is a great example, right? Debra's talked about it. But I think what we're trying to do is now bring it together in a more, for lack of a better word, codified and structured way with sharing of these best practices that we can move on quickly, right, and build more central capabilities, marrying up with the local capabilities, right? So I think that's one of the things that we've kicked off right away. I think when you look at it from an angle of commercial excellence, right, we both come from a consumer goods environment where I think we have a lot of opportunity to look at what we're doing in store, but also on-premise, right? I was looking at some data points. We've got now data for on-premise in 40% of our markets based on NSV. And clearly, with just that data and the focus in seven of those 10 markets, we've actually been able to drive much better metrics in terms of displays on menus, back bars, cocktails, etc. So it comes back to when you have the data and you've got the focus, you go do it, right? And there's going to be a lot more that we're doing in that space. I'll actually look at our A&P spend. I think Debra's talked a lot about the A side and everything that we're doing on media, the Conscious Create teams, which are really bringing global and local teams together. That gets a lot more buy-in, right, right at the top, efficiencies, AI, etc. But I actually think we have a big opportunity as we also look at the promotional spend piece. And are we getting truly the best returns on those dollars? Are we investing them in the areas that are going to give us the best returns in a shorter period of time, right? So I think there's opportunity there as we look forward. I think to your point around, yeah, clearly, listen, I'm not coming in and seeing that we've got a huge amount of space in overheads. When you look at overheads as a percentage of NSV, actually, Diageo is in a great place. But that doesn't necessarily mean we're doing things as effectively and efficiently and leveraging what we have, for instance, in terms of all our integrated shared service centers that are out there in Bangalore, in Delhi, in Manila, in Budapest, in an integrated way to really leverage on where we want to have best-in-class capabilities that differentiate us and how we might think, for instance, around things that are normal to the business, but do we really need to have in-house? But how do we automate that quickly before we start thinking about the ability to potentially think about what we do in-house versus outsource and actually use the capabilities that we have to have something to build out more differentiated capabilities over time? I do think on working capital, there are some opportunities. I think Debra touched a little bit on inventory. I think as we look at our investments in maturing liquid, as we look forward, we have to leverage what we have. We have the best-aged liquid for sure, right? And we've got to look at that from a positive in terms of what we can do on pricing to differentiate ourselves, right? We've got to bring broader pricing discipline into how we think about what we do each year. But also on the elements of how we think about the investments of laying down further and how we deplete and how we bottle, etc., and what we're holding in terms of what was, let's be honest, built on much higher growth forecasts, we have an opportunity to look at that. I think AR is an opportunity we need to look at. I think the procurement teams have done a phenomenal job on AP, right? But I do think we have an opportunity on AR that I'm working with the commercial team on in terms of how do we actually build that in. So there's going to be pockets of stuff in each of these areas that we're going to go after hard because ultimately, it's about what are the things that we can do that are self-help with urgency and speed to help us build operating leverage, build more resilience into our P&L, and ultimately drive stronger cash flows to help us deleverage and get a more flexible balance sheet. Okay. Thanks for all this color. The next question comes from Mitch Collett from Deutsche Bank. Mitch, your line is open. Please go ahead. Thanks. Morning, Debra. Morning, Nik. Morning, Sonya. Morning. I guess, hi, the U.S. consumer appears pretty healthy in some other categories. So I'd love to get your perspectives on why spirits overall remain soft. And I appreciate you've done better than the market in recent months, but what do you think is holding spirits back? Is this still a post-COVID unwind, or is there something else happening, which I guess leads on to my second question, which is I'd love to get your latest thoughts on some of the perceived structural headwinds for the category. So ready- to- drink, GLP-1, Gen Z, and cannabis, and I guess what seems to be a growing narrative around alcohol moderation due to health. Do you think those are real risks? And if so, what are your plans to offset those potential challenges? Thank you. Perfect. Thanks, Mitch. Look, I think. So let's talk a little bit about because you're absolutely right. Coming out of, if you look at North America and particularly the headline macro numbers, they are certainly improving, and I think give us a lot of, I guess, cautious optimism on wages are growing faster than inflation and have been for some time now. You're seeing jobs, and I know in the latest jobs report, actually, restaurants and hospitality were the ones where the most jobs were gained. So that's certainly good. We are continuing to see and have continued to see for a while now, and just gradual improvements on sentiment. We've gotten beyond the election with a clear result. So all of these things are quite positive at a headline level. I will say what's holding us back. I do think you have to take down to the household level, and that's really where and it's not just us. We're seeing this broadly across the consumer kind of industry in the sense that, remember, we're still looking at if you're a household, you're still looking at grocery basket prices that are at 30-year highs. Consumer prices, if you look across kind of all consumer goods, they're about 25% higher than what it was in 2019. Credit card debt levels are increasing and have increased really since 2022. I think they're up something like 30%. You've got borrowing costs because we're not seeing rates come down, interest rates come down. So that means these are highest interest rates in 20 years. It's just taking a while for consumers to dig out of that. I think it's less about post-COVID at this point, but more about that, call it the inflationary. As inflation has dug in for and has persisted over a good amount of time here, people have acquired debt that now it's just going to take a while to come out of. So I will say, though, from an industry standpoint, we are seeing improvements. So you're seeing across consumer goods, you're seeing volumes start to improve a little bit. Certainly, they're not as negative as what they were. When you look at the industry, I know I was saying six months ago when I reported on our fiscal 2024, I said the industry was growing in low single digits. Volumes were down 2%. Actually, in the last half, volumes now are starting to recover. They're down like a 0.5 point versus being down 2%. Volumes are starting to recover. Now, the total industry value has suffered because price mix has come down to kind of and help buttress up that volume recovery. This is where we cut differently. We are outperforming here. We're doing something different. Our volumes are also recovering. You can see in Nielsen NABCA on a 12-month basis, our volumes were down 2% in the last three months. They've been down about 1%. However, at the same time, our price mix is holding. Our price mix across this time period has helped us to grow. That's because of the strong mix and premiumization of what we're selling. So, I think that's kind of when you take a look at what we're seeing in the industry. We still look at this and say, "This is really largely more cyclical than it really is structural." The other thing I'll point out is the success of the small sizes because I think this really points to. I keep coming back to this because it just shows you if you look at the category, once again, what's recovering in volumes right now in total industry is at the higher end, and it's because of these small sizes. So it is the 375 ml and the 50 ml of 1942, which is quite an interesting phenomenon, really, because you're still spending a fair amount of money for that bottle, but it just shows you that people are still a little cash strapped. And so that's what's helping kind of buttress up that margin. That's a great example of RGM, right, at work. Absolutely. And then, look, you wanted me to comment on the structural versus cyclical, some of those structural arguments that are out there. I mean, Gen Z, and we've talked about this before a little bit, there is a state of preference for moderation. That being said, we are still seeing household penetration for that generation plus 3%. They're coming into spirits faster than what millennials did. By the way, that household penetration number I'm talking about is household penetration for spirits. So this comes back to the offset for us in particular, even if their per caps are down, so to speak, they're coming into spirits faster. And so that ultimately is helping us. And look, every new generation, there's different preferences and things that they do. We see some of this kind of zebra striping behavior as opportunity for us, actually, particularly in several markets. I would say Europe is really where we're seeing the most growth in non-alcohol spirits and beer. We're taking advantage of that. That's actually part of our growth as well. You have to think about the opportunities non-alc presents us. I think things like cannabis. Look, cannabis, particularly in some states now, has been legal almost 10 years. We've been able to look a lot at, I would call, the legalized cannabis market. We really don't see a material impact outside of the fact that that does take a percentage of their wallet. It's just like any other consumer good. We're not really seeing a big impact, particularly on spirits. There is this hemp-derived THC that, I would say, that category has exploded in some areas. What I would say about it, it's quite early. It's in this regulatory kind of gray area. Some of that's being bought in the mail and other things. Once again, it's gaining distribution, and the trial, anecdotally, retailers are telling us that it's probably impacting RTD sales more than anything else just because of the format more than anything else, and there's a bit of a maybe a wellness angle to it. Like I said, it's early days on it. We're watching it, but that's what I would say about that one, and then GLP-1, that's another one. Early days. We're monitoring it, but I think it's something like 40 million Americans, so certainly, you would expect to be seeing this in the data in a greater way if it were having huge impact. What I would say is it's hard to see a distinct impact from just overall moderation trends that we've been seeing and kind of following for decades, which is people want to drink better, not more. There are some limited studies out there. They're showing not really a material impact, particularly for premium spirits. If they have an impact, it's more on volume kind of base, which is certainly not something that we promote within our industry. Thank you. I think I covered all. Yeah. Thank you. The next question comes from Gen Cross at BNP Paribas. Gen, your line is open. Please go ahead. Good morning. Thank you for the questions. Hi, Debra, Nik, and Sonya. A couple from me. Just reading some of the presentation slides, it seems that you're pointing to more of a focus on cash generation, returns, and operating leverage, things like more rigorous review of CapEx plans and investments in maturing liquids, and when I compare that to the messaging before, would it be fair to say this reflects a lower midterm sales growth opportunity in some of your categories? Linked to this, I know you talked about some of the structural versus cyclical arguments a second ago to the last question, but could you just say if your confidence in the U.S. spirits market returning to its historical 4%-5% value growth algorithm has changed at all? Finally, if I could just ask a quick one on the dividend. Consensus estimates are pointing to dividend cover being below your 1.8x-2.2 x target range for the foreseeable future, and this is obviously before any potential impact from tariffs, so I guess my question is, to what extent does a dividend target cover really matter at Diageo? Thank you. Yeah. I'll take the first couple of questions, and then, Nik, you can talk about the dividend. I think, look, on maturing liquids, remember that there's a couple of things that have happened within that that we've had to invest incremental money, if you remember. First is coming out of the COVID supercycle, we had depleted a lot of, call it the reserves, kind of within that. And so I think, particularly on the Scotch side, there was a bit of a catch-up. There was also we had shut down some distilleries at the early part of COVID as well. But also, there was a bit of a recovery of that Scotch maturing liquid that is, call it a bit of a one-timer in the sense of it's making up for that supercycle. There was also, at that same moment, there has also been the acceleration of tequila and particularly the acceleration of aged liquids. So, guys, I mean, within tequila, things like Reposado is now 30% of the category. So, of course, these things aren't aged as long, but certainly, it goes into our maturing stock numbers. And that build-up, particularly as we were bringing in-house a lot of the distilling and building up our capabilities down in Jalisco, that also had a massive impact on that maturing liquid growth. And then, of course, also even things like rum were aging rum as well. So it's not just Scotch. And then also bringing in and up the distilleries in bourbon for Bulleit. So there was quite a bit going on in the maturing inventory space. I think what Nik is talking about is he's really brought a nice kind of scenario planning around some of this because not all of this liquid is 10-year plus Scotch. Some of this is, of course, and in fact, a lot of these other categories, none of them are really that as long. And so there is a bit more flexibility around that. And also, with the softness in volume over the last, call it, 18 months or so, it does present opportunities. So that's the type of thing we're looking at. It doesn't necessarily point to lower growth. What it points to, though, is just optimizing that for the right time. And what hopefully this assures you on is that we continue to look at that and make sure that we've got the optimal investment in that area. Onto your question about NAM and kind of North America and kind of getting back to a mid-single-digit growth for spirits, what I would say is remember the things that underpin, historically, that mid-single-digit growth. So first, on volumes, it's really about total beverage alcohol and the LDA- plus population that ages into that. That's a pretty steady trend for decades. And there's nothing that has changed in that. We're actually not seeing Gen Z is a big generation. It's not a smaller generation. So we're actually seeing, from a population growth coming in, there's nothing that would undermine that. Spirits gaining share from beer and wine. What I would say is, most recently, it's probably been a bit more wine versus beer. It's not surging quite as fast. Some of this is just the law of large numbers. Household penetration now for spirits is about 70% versus beer at 77%. There's still an opportunity, but it is, I would say, we're still gaining from beer and wine, albeit it's a little bit slower. But once again, that's only ever accounted for about 0.5 point - 1 point, so you have kind of on volumes, I would say, there's nothing structurally there going on that would prevent you from getting there, and then you're already seeing even look at our price mix for the half at 3%. I mean, that's a pretty good price mix for history, and I would expect that for the rest of the industry, as the volumes start to recover, you will also see that price mix comes back. Anytime people are buying more whiskey and tequila like they are in our portfolio, it does help overall price mix in the category. I will also point out things for us like Ketel One Vodka is doing well. And that's certainly a super-premium vodka. So there's nothing there that I'm seeing that says it can't get back there. I do think the caution is just in the broader consumer kind of macro environment. It's a tough environment. And I think, look, I think there's a lot of things that are going to improve there, but it's just a matter of time. And then you want to take dividends? Yeah. I'm just going to, well, in some ways, I think it builds a lot from what you said, right? I don't think, personally, anything that we're doing to drive better cash generation means that we don't see growth, right? So just to be very clear, we would expect to see growth, and we would expect to see growth coming back. To Debra's point, it's more just about the shorter-term visibility issue that we're focused in then on and what can we do. And the big things that we should be doing are focused on cash generation, improving our leverage, making choices and decisions on where we allocate and spend money, being a lot more focused on returns. I mean, those are all great things from a financial discipline perspective, which doesn't in any way mean that even as growth comes back, we wouldn't keep that focus, right? So I actually want to make sure that that's clearly understood. I think it's a highly cash-generative business, but we can do more. And that's some of the things that we're focused in on. We reviewed at length and then made that active decision to keep that dividend flat. I think it's a prudent thing to do in this current environment. But having said that, over time, we want to remain committed to growing our dividend in a sustainable manner. And we'll also look to maximize total shareholder returns, which I think is a key priority for us, right? I think you asked about the dividend cover. It's a fair point in terms of what it looks like. But I think for us, it's much more around how do we grow that over time sustainably but get the balance right as well with total focus on maximizing shareholder returns. So I think that's all I would say for now on that piece. Thank you. All clear. Thank you very much. The next question comes from Edward Mundy from Jefferies. Edward, your line is open. Please go ahead. Morning, everyone. Thanks for taking the question. I've got three, please. When you read the presentation, it's pretty clear that you're seeing broad-based recovery. And there's an awful lot of cooking below the surface to drive consistency, operating leverage, improving cash, improving returns. But your hands are slightly tied given this tariff overhang that's something very, very dynamic. I guess if tariffs were to disappear, how do you think about a reasonable framework in the very broadest of terms, perhaps relative to CPG? I mean, do you think you can grow at that sort of top quartile end of CPG is the first question with operating leverage. The second is on RGM. It's quite clear that people don't really want to compromise and trade down, but they're buying a smaller pack given it's quite a big out-of-pocket. If people are buying a little bit less volume, how do you ensure you get that volume throughput that's so important for operating leverage for the model to work? And then finally, on the U.S., clearly, you're outperforming the industry, but the growth is quite concentrated in two brands. Can you talk about some of the plans into next year about diversifying your growth streams, having more winners, maybe cutting some of the losers? How do you think about diversifying your growth streams into the second half and beyond? Yeah. Perfect. I mean, I think so, yeah, look, I mean, the tariff, certainly, the announcement over the weekend did create a little bit of uncertainty about what that is. And we certainly welcome the pause that then was announced in the last 24 hours on that. That being said, ex the tariff, and I think we said this quite clearly in the presentation, we would, if that goes away altogether, we were very prepared to talk about sequential improvement in the second half with strong market share. We were prepared to talk about fiscal 2026 and outperforming TBA with a modest sequential improvement versus fiscal 2025 with operating profit ahead of organic sales growth. So that is what we were very much prepared to do and so have talked about it in that sense. We have committed, and I think this is important, and maybe people have forgotten this or lost it in the presentation because I know we put out a lot of information. But in the interim, until we can come back and give you more definitive medium-term guidance, we are committed to coming back to you with more frequent updates to make sure that in this uncertain environment, we're giving you as much help and transparency as we can to help kind of bridge this gap of uncertainty. I think that's all I can really say about that. On the RGM point and small sizes, actually, we're not overly dependent upon volume. We feel very good about these small sizes. These are great margins for us. They're great cash for us. I mean, a 375 bottle of 1942 is still $100. This is a good business for us, and we feel good about it. I think in the U.S., and look, I'm very pleased in that aside from Crown, I mean, first of all, Crown, our largest brand being back into growth, is tremendous. And we're gaining share of both the category and spirits. Blackberry has certainly more runway to go as well as, look, it is really stabilizing the rest of Crown as well. It's been quite incremental. It's one in every five kind of buyers. It's actually new to whiskey in this. So this is done great things for Crown. Also, I would say that Don Julio and Casamigos, we're not done with those. I mean, Don Julio, it only has a household penetration of 5%. So there's a lot of runway for growth there. Household penetration of tequila is 33%. So lots of opportunity to build. Reposado has doubled 1942. It's done incredibly well. But we still have opportunities in the rest of the portfolio and kind of more to come there. Casamigos, this is one that we brought. If you remember, at the end of the year, we announced we're bringing it into our dedicated division. In In stores, this is a turnaround. So this is a process. But in stores where we've actually implemented the right pricing strategy, we are seeing improvements. We also have distributed the 375 ml and 1.75 sizes. Those SKUs are growing as well and helping us stem some of the losses on Casamigos. So we are feeling good. We're launching a new campaign, I would say, on Casamigos. So this is one also that gives us, if we can turn the tide on that, would be an opportunity. I mentioned Ketel One is doing really well. Certainly, Smirnoff in the second half, we've got some incremental innovation coming in. We are gaining share of Scotch, even though Scotch is a category that's challenged right now. But most of that challenge is actually in the single malt area versus Johnnie Walker is actually gaining share and doing well, particularly in Black and Red. So this comes back to the brilliance of kind of Johnnie Walker is that we do span a very broad price across various price tiers. And Black, in particular, is doing very well for us. We are also gaining share of gin category. And we're also gaining share in liqueurs with Baileys. So we are seeing, from a share standpoint, very broad-based. But what you are, of course, seeing is still an industry that's under some pressure. And so versus spirits, that tequila growth has to come somewhere. But we do look at how we're doing versus categories, Ed, and we're feeling good that we are diversifying. And the team certainly has strong plans across our key trademarks. I'm just going to build on a couple of comments that Debra made. So I think you asked a question specifically around, can we be in the top quartile of CPG growth? And I would say categorically and absolutely yes. All right? So there is clearly focus on getting back there. And I think what I would read today's announcement back to withdrawing the medium-term guidance is more just around what Debra said. It's just the pace of recovery. And this was just exacerbated by the tariff announcements, which clearly is very fluid, as we've talked about, right? But do we see favorable long-term trends in the U.S. and beyond? Do we see anything structural? No. It's just a question of timing. And to build on Debra's point then, what did we think was best now was to be focused more on the near term, particularly on things that we can manage and control, right? And that goes back a little bit to stuff that we've talked about on driving better operating leverage and focus there, what we're doing in terms of cash generation, etc., and more frequent communication, as Debra said as well, right? So we'll be putting out a Q3 trading update on May 19th in advance of that mini-investor event that we're doing in Dublin to showcase Guinness, which is actually where I'm going to be trying my first Guinness with you guys. So I'm excited about that. Full year, we're going to be out with you August 5th. And then we're already planning for a Q1 trading update probably in early November. So there's going to be several touch points where you might actually get sick of seeing Debra, me, and Sonya, but you're going to have to deal with us, right? We're going to be telling you more, so I just think we have the ability to help shape the narrative as we go along and hopefully continue to provide you good proof points of what we're doing to be able to take and manage what we can control. Great. Thank you. Next question comes from Celine Pannuti from JP Morgan. Celine, your line is open. Please go ahead. Thank you. And good morning, everyone. My first question is on tequila. Barring the discussion on tariff, I mean, clearly, you have what I would call an explosive growth on Don Julio, and you mentioned the smaller pack as a help. How do you look at the sustainability of that growth? And why is it that maybe Casamigos has not done as well? And then, as it pertains to tequila still, given the high, well, the low price of agave and the high inventory of tequila, how do you see the pricing environment across different price tiers evolving in the U.S.? And sorry, just on that point too, what you mentioned earlier, Nik, on tariff, given that the Mexican peso has weakened, do you need at all to raise prices at this stage if tariff were to be implemented? So that's my first question. My second question, could you talk a bit about Europe, excluding Guinness? It seems that it has decelerated. And yeah, I would like to hear your thoughts on what's going on in terms of pricing and volume in that region? Thank you. Yeah. So I'll start with your tequila question. So yeah, we really have seen explosive growth on Don Julio. That being said, there is huge opportunity. So fiscal year to date, if you look at the category, it's growing about 6%. Don Julio within that, and I'm going to just use the Nielsen NABCA, so that way you have even comparison there, growing 48%. Vast majority of that, 80% of our portfolio now with Don Julio is in aged variants. So really, where we're seeing a lot of the promotional aspects, some of the things that you mentioned about promotional intensity, a lot of the promotion is actually happening at Blanco. And that's what I would say is that we've got quite a different now portfolio than a lot of other competition, and particularly within Don Julio, the aged variants now is like 80% of the portfolio. You can look at that on Nielsen and see that. So look, I think we've got a lot of room to grow. I mentioned the household penetration is only at 5%. If you actually dig into Don Julio state by state, which is what we start to look at, and there's opportunities where we're still not number one in certain states and big tequila drinking states. So we still feel like we've got a lot of room to grow there, even though it has been quite a good run for Don Julio. Look, Casamigos, I will say a couple of years ago, we were extolling the amazing things about Casamigos. It was growing at a 70% CAGR, I think, between fiscal 2019 and fiscal 2023. And one of the fastest growing spirits, not just in tequila, but one of the fastest growing spirits kind of brands ever. So absolutely also exploded. What I would say that within Casamigos, it was more of a Blanco. It was more of a 50/50 between aged variants and Blanco. And I would also say because of its success, I think competitors targeted it. It's a newer brand. And then also, we did not have the pricing strategy because of various out-of-stocks and other things that happened during COVID. Those out-of-stocks meant that a lot of retailers were taking margin, and frankly, our pricing strategy at shelf for consumer got quite out of whack from where it needed to be, particularly on certain sizes. And certainly, we felt the impact of that. It was also one that we had theft and lockup issues, and we didn't have great visibility at shelf through as that was managed. So this is the opportunity as we brought it in-house and have really been able to get when you're in the general division of some of these distributors. They're distributing hundreds of tequilas. Now, in our dedicated division, it's getting the loving care along with Don Julio and our other three tequilas. So it is definitely getting a lot more focus and attention. We're seeing more execution, getting back on the menus again. And so early days, but I would say we're feeling good about that. And then look, on the Mexican peso, I mean, this is one of the reasons why I think Nik gave you the mitigation strategy before pricing. Clearly, pricing is something you would want to do, and we do quite strategically. And so there's a lot of factors that we would look at and really trying to understand what exactly we need to mitigate, particularly in this consumer environment. But that being said, we do feel like we have invested heavily on the brand as well. We do think it's a strong brand, and it is a brand that can take pricing if it needed to. Look, moving on to Europe. On Europe, what I would say is a couple of things. So Guinness is really the driver, along with actually Eastern Europe and Johnnie Walker. We are seeing a premiumization kind of slow down, particularly in Northern Europe and in Southern Europe. Remember, our portfolio in Europe is quite a standard price portfolio. Actually, our long-term opportunity is still to get more premiumization into Europe. But actually, in this environment, it stands up quite well. That being said, we have taken some pricing that we needed to take in Northern Europe in particular that has held us back. I mentioned non-alcohol earlier. Our non-alcoholic portfolio in Europe is + 56%. So we've launched in GB and in Northern Europe, we've got a Captain Morgan 0.0. We've got Tanqueray 0.0 that's broadly across Europe. Of course, our Guinness 0.0 in GB playing into these numbers as well. But we are absolutely the leader in non-alc, and that's been a huge driver for us for Europe. Yeah, and I would just add to that because it's anecdotal, but when I came into Diageo, it actually did surprise me around the fact that we didn't have a stronger premium business, as Debra just called out, in Europe, right? Yeah. Ours is more premium in Latin America than it is in Europe. Than it is in Europe, and that really surprised me, right? And I think, as Debra said, that's going to be a strong focus on the two vectors of premiumization as well as the non-alc trend that are continuing to grow, but I honestly think when you look at the spirits category here, that will normalize, and I think, to Debra's point around Southern Europe, remember, we're also just going into France now. You've seen the announcement around the fact that we've come out of that JV. We've just set up an IMC there. I think with the dedicated focus, I was in Italy and the team of what they're doing there. I think we're going to see a much different trajectory as we look forward for Europe and that premiumization play in spirits in particular. Yeah. France is a great whiskey market, and we're well underdeveloped at where we should be. So big opportunity there. Thank you. Thank you. Our final question today comes from James Ed Jones from RBC. James, please go ahead. Your line is open. Thank you. A couple of quick ones, please. You've told us, Nik, that 45% of your U.S. business is tequila and Canadian whiskey. Just to round things off, can you tell us how much the U.S. business is Scotch as well? And secondly, I don't know if you already said this and I missed it, but you talked about working capital. What about capital expenditure? What do you think is the steady state level of capital expenditure that Diageo requires? I'm sorry. Can you repeat the second question? CapEx steady state. What's a slightly CapEx steady state? CapEx steady state. Okay. What's on it? Yeah. So on your first question, you asked about sort of Scotch. So yeah, so 45% of the portfolio, we talked about this tequila and Canadian whiskey. We'll break this out in actually more of just a Europe because I'm assuming your question is really around tariffs and sort of if tariffs were to come to Europe and/or U.K., remembering those. Yes. Exactly. Just to be helpful to know, if 45% tequila and Canadian whiskey, just how much is Scotch? I would say, just looking at the numbers broadly, to Debra's point, I mean, we're looking at Scotch and single malts as a percentage of U.S. business being another 9%, right? So the bulk really of where we would see the hit or the impact is on tequila. Yeah. So Mexico was our biggest hit, quite honestly. So yeah, so Scotch. Then you do have, look, we have things like Tanqueray. We've got Ketel One and other things that come from Europe and Baileys. So there's other kind of things going on. We've scenario planned around all of them, though. I think just reassuring everyone, we're also talking to people on all sides of this. Hopefully, that answers that question. Then CapEx steady state. Yeah. Just to give that point on Debra, as she's talked about the broader piece, when we've talked about that 45% being tequila and Canadian whiskey, you're talking about roughly 60%-65% in total when you think about non-US. So you're not talking about a big piece. And off that, remember, as I just said, Scotch and single malts is roughly half of that total, right? On steady state CapEx, I mean, I'm ready to take this down, right? Yeah. Sure. I think we're looking at this with the team. But as we get through this hump and leverage and sweat the assets more, I would like to see us more in that 5.5 -ish round number type of range of NSV going forward. So call it a 5-6 type of range. But we will continue to hone that and come back with clearer outlooks as we look to reposition and reprioritize our spend. That's great. Thank you both. Perfect. Thanks. We'll now hand the call back to Debra for some closing remarks. So thanks, everyone, for joining today. Our performance reported today demonstrates that we're making meaningful progress, even though the environment remains challenging and will likely continue to be volatile given the recent tariff announcements. As I said in the webcast this morning, we're firmly focused on what we can control. We remain confident in favorable long-term industry fundamentals and, more importantly, in our ability to outperform the market. And we've shared today some of the actions we are taking to drive sustainable performance. This is an exciting time for Diageo, and we look forward to updating you in our more frequent communication as we move through the year. And I also look forward to meeting with many of you over the coming weeks and at CAGNY at the end of the month. If you have any other questions, do let Sonya and the IR team know. Thank you. This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.