Hello, and welcome to the Intertek November 2023 trading update conference call. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, André Lacroix, to begin today's conference. Thank you. Good morning to you all, and a warm welcome from London. In front of me, I'm just watching the beautiful sunrise. It's a great way to start our trading update today, which is full of good news, as you would have read in our statement this morning. Thanks for making the time. Colm, our CFO, and Denis, our head of Investor Relations, are with me here in the room. Essentially, if you step back from the statement that we just issued a few minutes ago, there are five key points and messages that we are trying to communicate today. First, and importantly, the demand for ATIC solutions is robust. I'm not worried about demand. In the first 10 months of the year, we have delivered the highest like-for-like revenue growth in the last 10 years, something that the organization is tremendously proud of. The second thing is, you know, we are confirming our targets. We are on track to deliver our full-year targets, which you know very well. It's mid-single digit, like-for-like revenue growth at constant currency with margin progression and a strong free cash flow, essentially, given where we are on a year-to-date basis. And as we talk today, we have 10 months of actual, so we are confident in our full-year outlook. Importantly, our margin progression is healthy. We are benefiting from three important drivers. Our pricing initiatives are obviously kicking in, after the price increase we took over the last few years. The faster we grow, the better operating leverage we have, so we've got a really good operating leverage, and as you know, we are very disciplined on cost. Importantly, in this higher interest environment, cash is super king, and we are delivering a strong cash performance, which, combined with our strong balance sheets, enables us to invest in growth and accelerate performance. That's the firepower we have moving forward. And last, but not least, we are laser focused inside the company to execute the AAA strategy we presented to all of you a few months ago to unlock the significant value growth opportunities ahead. While, you know, I'm pleased about the 2023 performance, I'm super excited about 2024 and beyond. I'd like to start our call today answering some of the most frequent questions that Denis and I get in our meetings, because I thought it would give you some color on how we think about the big themes, you know, when it comes to Intertek. The first question we get is: do you see any sign that the inflationary pressure is easing, and how is your pricing approach working? Well, it's good news. The inflationary pressure has peaked in Q2 in North America and Europe, and indeed, we are seeing a gradual reduction of the cost increase in our P&L. We continue, of course, to implement our pricing policy, and you know very well we are absorbing 50% of the wage increase through productivity, and we are passing 50% through the price increases. In the July to October period, two-thirds of our revenue growth was driven by volume and one-third by pricing. The second important question we get is: how is your China business doing? Following a like-for-like revenue growth of 7.1% in H1, our China business delivered a low single digit like-for-like revenue growth in the last four months. This slight slowdown in revenue momentum in like-for-like revenue growth is driven essentially by two factors. First, we have a baseline effect. You would remember that past the serious lockdown that we faced in Q2 last year, we benefit from a rebound of activities in the summer, particularly in the Consumer Products division. And second, I'll come back to that later, retailers in North America and Europe are concerned about demand and are not investing as they have invested in the past, in new product developments to control cost and reduce inventory. Now, if you step back from these short-term trends, right? Let's recap, you know, what the data is telling us, i.e., where is the Chinese export business really compared to 2019. And as you would remember, the Chinese economy didn't see a big impact from COVID in 2020, and benefited from a significant increase in consumer product demand in 2021 and the first half of 2022. While the data shows indeed that the Chinese export is down 11% year-on-year in Q3, the Chinese export is up 32% compared to 2019. China has increased its share of global export since 2019. Now, we are very passionate about China. We have a very strong business, and our consumer business is very resilient, and we did outperform the overall export sector in the July, October period because despite the number I just quoted, we delivered a low single-digit like-for-like revenue growth. Moving forward, we remain super confident about the growth opportunities in China. As I explained at the Capital Markets event, China has got one big USP in the world of manufacturing. It's manufacturing excellence and 24/7 high-quality service. This is something that they offer to all Western brands, existing and new, and this is a big growth opportunities moving forward. And of course, let's not forget the untapped opportunities in the domestic market.... So the third question that we get most of the time is, when do you expect the destocking of retailers to end? Now, what is the data telling us? The level of inventory remains higher than normal within the North American and European fashion retailers indeed, while the general retailers are back on track. And I meet our customers on a regular basis, as you know, and at the moment, most of the retailers that I meet are concerned about a slowdown of demand in discretionary category. That's where the concern is. We will continue to monitor the situation a quarter at a time. We are now starting in our business, the testing for the spring season, which honestly speaking, we expect to be a mix. What do we see and what do we expect? Essentially, the brands have got a good value proposition that, you know, price that people are ready to pay for the quality they get. These brands will continue to benefit from a higher demand, and will continue to invest in new product development. We are seeing it today, and we expect it to continue. The premium brands that have some value issues in the market will have to keep their investment in new products on the review for a little while. But how long could they do that? Well, that's the next point I want to address. What does it mean moving forward? If you look at the last few years, several brands took significant price increases in 2021, 2022, and 2023, and sometimes these price increases were ahead of the inflationary cost in their inflation basket. And these brands now are seeing some issues in terms of volume performance. Now, we know that once a big company has increased prices, it's very difficult to reduce prices because you cannot change your economics by reducing prices. What you need to do, is you need to increase the value proposition in your business to regain market share. And this is why we believe, and certainly I believe, that these brands will have to invest in innovation to increase their value proposition, which obviously will be very beneficial for our consumer testing business. So net-net, while we recognize a slowdown in new product development by retailers, I really believe that this is temporary. The fourth question that I typically get with then is, given the fact that your like-for-like revenue growth pre-COVID, like your peers, was around 3%, what, what makes you confident that you will deliver mid-single digit like-for-like revenue growth moving forward? Well, there are three reasons for our high level of confidence in mid-single digit like-for-like revenue growth moving forward. First, our industry always had and has some very strong structural growth drivers that are now going away, and let's not forget, intrinsic defensive characteristics. Our solutions are mission critical for corporations to operate safely, and regulatory requirements will continue to increase step by step. Second important reason, in a world where real-time information is available to all consumers on social media, stakeholder expectations in quality, safety, and sustainability are getting higher every day. We just need to look what's happening in the news on social media. We've done some research over the last, you know, few years, and we believe that the attractive structural growth drivers that we all know very well in our industry, will be augmented by five accelerators. First, you should expect increased investment in safer supply from companies, because companies have learned during COVID that they have to make their business more resilient. The supply chain breakdowns cost a lot of money to everyone. Second, the increase in investment in innovations that I just talked about will happen and will make their business stronger. We all know that sustainability is the movement of our time, and there will be increased investments in sustainability assurance, including, of course, ESG reporting. What's happening in the world of energy is significant. I'll come back to that later. The increased investments in renewables to get to net zero are the only solutions to get there. And last but not least, you know, consumers today want more choice. Doesn't matter if they are here in the U.K. or in North America or Asia or Africa or Australia. And we're seeing an increase of new brands, which means new clients for Intertek. The third important reason for our confidence in mid-single digit like for like revenue growth going forward is our portfolio. We've explained at the capital market event, our portfolio is poised for faster growth at the global and local level. Pre-COVID, we had some global business lines facing headwinds. Now, all of our business lines are, you know, gonna benefit from structural growth drivers. And then we've done a lot of work at the local level on our portfolio, and you'll recall what I said in during the capital market event, 55% of our local business is exposed to faster growth. The fifth question before we talk about the trading data is how is the M&A market today and are you seeing more or less opportunities? Well, the reality is the M&A market has been more active in the last 12-18 months, but it's not to the level we saw pre-COVID. We've made, as you know, a few multiple acquisitions and we remain and will always be very selective when it comes to M&A. Our view is we'll have to wait for lower cost of borrowing before we see a higher level of M&A activities. But based on the trend we're seeing, that will happen over time. So now that we've covered what we believe are the five most topical, you know, themes that, you know, are in the market at the moment, let's talk about our trading performance. In the last four months, the group has delivered 5.2% like-for-like revenue growth at constant currency, and this was in line with our guidance and expectations. Our Consumer Products division delivered like-for-like revenue growth of 1%. We saw a very, very commendable performance in Electrical and Connected World with high single digit like-for-like revenue growth. There is real, real, real momentum there. This is all about the electrification of the society, and I'm really, really proud about what's happening globally with our electrical business. However, that was offset by low single-digit negative like-for-like performance in slloftline and allies for the reason I just talked about, i.e., some of our clients are reducing investment in new products. We continue to see double-digit like-for-like negative performance in GTS. As you know, we exited contracts which allowed last year, and it takes time to basically get this off the base. Moving to Corporate Assurance, we preview the performance. The like-for-like revenue growth was 6.6% at constant currency, high single-digit like-for-like revenue growth in business insurance, and negative mid-single-digit performance within Assurance. Assurance, as you know, is a very small business in the scheme of things. It's very consolidative, and we had some exceptional strong projects last year, and we are cycling against very strong comparative, but I'm not worried about the intrinsic demand for Assurance. Our Health and Safety division delivered like-for-like revenue growth of 6.5%, and that was driven by mid-single digit like-for-like performance in food, chemical, and pharma, and agri world. Really, really, really, you know, strong performance across the board. Our Industry and Infrastructure division delivered like-for-like revenue growth of 5.7% constant currency. We saw double-digit like-for-like performance in minerals and industry, and BNC delivered a low single-digit like-for-like performance. Some of you might recall we had a really strong summer last year in North America with BNC, so there is a bit of a baseline effect here. Our World of Energy division delivered like-for-like revenue growth of 8.7% at constant currency. We saw double digit like-for-like performance within Caleb Brett and CEA, and low single digit like-for-like performance within our TT business. So now, if we look at the performance at the group level on a year-to-date basis, revenue for the 10 months is about GBP 2.8 billion, 7.2% up year-on-year at constant, and 5.1% up at actual rate. Like-for-like revenue growth for the first 10 months is broad-based at 6.3%, and as I said earlier, we're benefiting from both volume and pricing. Acquisitions have contributed to GBP 26 million of additional revenue on a year-to-date basis. I have to say that the SAI, GLA, and CA acquisition we made in 2021 and 2022 to scale up our portfolio is attractive. Growth in margin sectors are performing very well. The integration of the recent acquisition we made, Controle Analítico and PlayerLync, are also on track. In terms of year-to-date margin, our margin progression is in line with our expectations. As I said earlier, we're benefiting from our pricing initiatives, good operating leverage linked to faster growth, and disciplined cost control. We've delivered a strong free cash flow enabling us to operate with a very strong balance sheet. We continue to invest in organic and inorganic opportunities. So let's discuss now our guidance for the full year, which, as you know, is unchanged, so I'm gonna go relatively quickly through that. We continue to expect to deliver mid-single digit like-for-like revenue growth at the group level, at constant currency, low single digit like-for-like in consumer products, high single digit like-for-like in Corporate Assurance, industry and infrastructure, and world of energy, and mid-single digit in health and safety. Continue to expect to deliver margin progression and a strong free cash flow. Our net finance charge guidance is unchanged in the range of GBP 40-42 million. Our guidance in terms of tax is slightly better than previously guided, between 25% and 26%. Our minority interest guidance is unchanged, between GBP 20-23 million. Our CapEx guidance is also unchanged in a range of GBP 115-125 million. Currency, however, and I want to make a few points here, have remained very volatile, as you know, and we are updating our currency guidance. The average selling rate since the beginning of the year, applied to the full year results of 2022, would reduce our revenue by 300 basis points and our earnings by 500 basis points. Lastly, our financial net debt guidance, excluding future change in Forex and M&A, is also unchanged between GBP 630 million and GBP 680 million. Before we, you know, address your questions, I would just like to make a few remarks on strategy, if you allow me to. Our good to great journey continues, and all of us at Intertek are super energized about the significant value growth opportunity beyond 2023. If you have time, go through social media, and you will sense and feel the energy in all parts of our business. With our You'll Be Amazed campaign, which is basically dramatizing our competitive advantage to our clients, existing and future clients, to basically accelerate growth. We are laser focused internally in terms of execution, and everything is in place to execute the strategy we talked about in London a few months ago. The important point is that our clients understand the need to increase their investment in risk-based quality assurance, because they have to operate with high quality, higher safety, and higher sustainability standards. This is the only way they will make their business stronger, gain market share, and deliver value. That's why we're experiencing a faster growth for IT solutions, and we expect that to continue. Geographically, as we talked about, you know, the business is extremely well diversified from an earnings standpoint, and we have the right exposure to the right growth opportunities in the global economy. When it comes to our targets in the medium to long term, let me remind our targets. We are targeting mid-single digit like-for-like revenue growth at constant currency with the following guidance by divisions: low to mid-single digit in Consumer Products, high single to double digit in Corporate Assurance, mid to high single digit in Health and Safety, mid to high single digit in Industry and Infrastructure, and low to mid-single digit in the World of Energy. Let's talk about margin. Margin accretive revenue growth is central to the way we deliver value. You've seen it in the pre-COVID-19 period. We've increased our margins significantly, and you've seen it in our recent announcement, where we are outperforming the industry. I'm talking about H1. Our target is that all the time we will return to a peak margin of 17.5% and then go beyond from there. We can see the path, and we'll get there step by step. That's what the Intertek leadership team is committed to, and it's what we're working on, starting with 2023, making progress on margin. To continue to deliver sustainable growth and value for our shareholders, we'll be very focused on what we call our virtuous economics. And the virtuous economics is simply the compounding effect, year after year, of mid-single digit LFL revenue growth, margin accretion, strong free cash flow, and importantly, disciplined capital investments in high growth and high margin sector to accelerate growth in the right margin segments. Last but not least, let's talk about capital allocation. We believe in the value of accretive, disciplined capital allocations. If we invest capital, it's gonna make difference in terms of return on investment over time. So we pursue the following priorities. First, we support organic growth through capital expenditure and investment in working capital, as you would expect. Second, we deliver sustainable returns for our shareholders with a permanent progressive dividend, and we target, as you know, a payout ratio of circa 50%. Third, we pursue M&A activities that strengthen our portfolio in attractive growth and margin areas, provided of course, we can deliver a good return on investment. Fourth, we try to maintain an efficient balance sheet with the flexibility to invest in growth, targeting, you know, a 1.3-1.8 net debt to EBITDA range. So let me summarize the highlights of our trading statements today before we take your questions. First, the demand for ATIC solutions is robust, and we are delivering the best LFL revenue growth in the last 10 years. We are converting our robust revenue growth into healthy margin progression and strong cash performance. We are on track to deliver our 2023 targets, and we are laser focused to implement our strategy, which we presented to you a few months ago, to unlock the significant value growth opportunity ahead. Thank you very much for your time, and we'll now take any questions you might have. Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll now take our first question from Harry Martin at Bernstein. Your line is open. Please go ahead. Hi, morning, everyone. I'll ask three questions. Morning. The first one, I wondered if you could give a little bit more perspective on performance by region. Yeah, thanks for the China update, but in the first half, APAC was almost 10% growth variation and driving a lot of that growth. So is there any change around in that part of the growth in the second half of the year? A second one, on the return to the 17.5% margin, do we realistically need a reversal of some of the currency moves in the last year to get there? Or is, you know, is there still a good runway, even if the currencies stay where they are today? And then a final one on consumer products. We kind of outlined that there's another period of, you know, waiting for the volumes to return in soft line and Hardlines. You know, I understand that you have been disciplined within that market, but I wondered if you could comment on the, you know, the discipline among competitors on pricing and chasing volumes, you know, as the recovery takes a little bit longer than expected. Thanks very much. Yeah. Thanks, Harry. Hope you're well. Look, we didn't give the regional performance in our trading statement. We'll do that at the half year and full year results, so we'll do that in March for 2023. The reality is that our performance from a regional standpoint is very, very broad-based. We're really pleased with APAC, including or excluding China. Europe, Middle East, Africa is having a really, really, really, really good momentum, and it's the same in North America and Latam. So there is nothing really to worry there. It's broad-based. I mean, that's the beauty of our, you know, earnings model. We are diversified from an industry standpoint, we are diversified from a solution, ATIC, and we are diversified from a regional standpoint, so there is nothing to worry about, and you will see the numbers when we announce our full year results in March. Look, I think your question on the margin is important, Harry, becUause, you know, you were not there at the time, but if you talk to colleagues who were there, I mean, when we achieved our 17.5%, the view was that, "That's it, right? These guys are not gonna go beyond 17.5%." And we always believed, you know, in a different path moving ahead. Of course, COVID stopped the margin progression. And we had the opportunity then to go beyond 17.5%, and we have the opportunity today to go to 17.5% and beyond, no matter what happened to currency. You know, the margin opportunity for us is of course very complex from the outside to truly comprehend. But when you run the company, you start at the local site level, right? And I always, you know, use the example of a law firm, right? If you're a law firm in New York City and you got 100 high quality lawyers, and you only do rental contracts for one-bedroom apartments that students or youngsters basically hire, you're gonna make X margin. If you basically do M&A and, and, and bigger transaction, you're gonna be much more profitable. And that's one thing that, you know, we believe in. We have the opportunity in every single site to make sure that the way we allocate our available time, engineers, scientists, scientists, PhDs, can be beneficial at the volume price mix level. And that's where it starts, Harry, right? And of course, it's not only that, it's also the volume growth versus the fixed cost management, it's also pricing, but there is a significant mix opportunity. And then if you go above the local site, Harry, you've got the span of performance, which is, you know, take electrical in North America, we have 15 sites, and our best sites will have a very, very strong margin. But the worst sites will have a margin that is very, very, very, you know, low compared to that. And it's normal, right? It's called operational delivery and variability in terms of excellence, based on skills and process discipline. And we have a process in place that we basically call, you know, best in class, where we basically, you know, help our colleagues to basically measure themselves, not against budget or last year, best in class. And then finally, of course, it's about how we allocate capital and the decision that we make in terms of growth moving forward. So look, there is plenty, plenty to go for. Of course, FX currency swing also, but, the path to 17.5 and beyond is not dependent on currencies. As you know, we don't run the company for translation, we run on constant currency. Then in terms of Consumer Products, Softlines and Hardlines, look, I typically don't talk about what my competitors do from a pricing standpoint in the local market. We are the market leader in hard line and Softlines. We are the best in terms of quality. We are very confident in our own business, and you know, we don't compromise on price. And if our competitors want to undermine their future ability to grow margin and become a bit of a commodity, let them do so. But you know, we are very, very disciplined. We are the best in terms of quality, and there is a pricing power that we want to maintain. So I'm not saying there is none of this, Harry, right? But I would rather not talk about it because that's their responsibility if they want to damage their earnings model, right? Thanks very much. Thank you. And we'll now take our next question from Himanshu at Bank of America. Your line is open, please go ahead. Hi, thank you for taking my questions. Yeah, Himanshu from Bank of America. I just wanted to ask about the exit rates. It sounds like as the 4 months period progressed, July to October, the exit rates might have improved, because we're expecting a slightly weaker number on the organic growth in Q3. And also, if I am doing my math right, based on the 6% consensus for full year and the year-to-date 6.3%, I think it implies around 5% organic growth for the last 2 months, which should also benefit from the easy comps because the previous year was only 3.6%. Yeah, look, I think nothing has escaped you in this exit rate analysis. So you're right, you know, we had a weak November, December last year, given what happened to COVID in China. I'm not worried about, you know, revenue momentum, as I said, you know, during my remarks. July, October is a long period, right? It's four months. I can tell you that the month of October was quite good. So we are pleased about that. So we are getting into the final quarter with confidence and I'm not worried about, you know, revenue momentum. And as you know, for us, to go back to the previous point, revenue is volume, price, mix, right? We don't change, you know, volume at the expense of price, right? Thank you. We'll now take our next question from Will kirkness at Société Générale. Your line is open, please go ahead. Morning, thanks. Just two questions, please. Firstly, just on the margins question. Obviously, you've had FX go against you. Mix has been unhelpful within divisions, you know, thinking about products. So I just wonder if you could talk a bit about, a bit more, quantify any of the improvements you've seen from the initiatives discussed at the CMD, perhaps, because obviously some things have gone, have gone forward, gone in the right direction. Linked to that, I guess, I think D&A was a small tailwind to margins in the first half, and maybe you could talk about how that develops in the second half. And then the second question was just a bit on Assurance and whether you could just talk a bit more about the underlying picture there. So obviously, the slight slowing, is that related to comps? Is it a fact that you can't just grow double-digit forever, or, or are you seeing, clients hold back, spend a little bit on some Assurance projects? Thank you. Hmm. Yeah, I mean, look, it's a trading statement, right? So I try to be as helpful as I can in terms of, guidance and what, you know, we are seeing in terms of, the key, you know, lines in our P&L. I mean, I cannot give you a detailed breakdown of the margin, you know, at this stage. Of course, I have it, but this is not what the trading statement is all about. I mean, you saw the H1 results, and I think it's a good proxy for what could happen, you know, for the full year. I mean, there's no question that you talk about Forex, which is obvious in terms of, you know, dilution at the actual level. From a mix standpoint, yeah, our concern, understandably so, is Consumer Products, because until, you know, you see a revenue growth that is ahead of your cost growth, you have a bit of margin pressure. And look, we've had such a great ride with Consumer Products over the years. You know, you cannot have it all, and sometimes you have to accept that there will be some change in the market, and your margin will be adjusted. But it doesn't change the fundamentals that, you know, we can get margin accretion on Consumer Products moving forward once the top line is more attractive. As I said to Harry, the drivers of the margin progression, putting these two items that are basically negative, right? In terms of offset, the positive points. Look, and then sometimes it gets overlooked because this industry has not been a very exciting industry in terms of growth pre-COVID. But in a well-controlled business with a significant, you know, fixed cost, every 100 basis points of revenue acceleration is having a significant impact on your operating leverage, provided that you're good at fixed cost management and variable cost management, right? And for us, you know, P&L, you know, to grow at 3% and deliver margin is one thing, but to grow at, you know, what we're doing at the moment and deliver margin, it's much easier, right? Because you've got to operate. So that is a very important fact. We are very focused on the, the local, you know, span of performance, as we talked about side by side. And then in terms of costs, you know, we, we are, very disciplined in cost. As you know, we've taken some, some cost reductions that, you know, are gonna help us. And, and, I talked about it at, at the H1, but you remember what we said is the cost initiatives of 2022 and first half of H1 should deliver an annual saving of GBP 19 million, and this year, will contribute to GBP 7-8 million. So that's obviously adding to the operating leverage and to the, the side-by-side, you know, performance, and of course, notwithstanding the mix and FOREX effect we just talked about. Look, I'm not saying that's easy, because if it was easy, our competitors would do a better job in margin, but, you know, we are very, very focused on that and, and, and, and it's working for us, right? As far as assurance is concerned, look, I get your point. I talked about assurance. We had a very strong acceleration, you know, last year in the second half in business assurance. And you know, I know that we talked about double-digit, but in that case, last year, it was not 10.1% or 10.5%. It was much more than that, right? So look, the structural drivers for assurance remain very, very strong, right? The ISO standards continue to be, you know, paramount for companies to manage risks. We are seeing a lot of development in supply chain assurance, as we talked about. Of course, sustainability is playing a big role. And we also have our, you know, people assurance business. So I recognize the point, but I wouldn't worry about the demand for assurance. Okay, clear. Thanks very much. We'll move on to our next question from Rory Mackenzie at UBS. Your line is open. Please go ahead. Morning, André, Rory here. Rory. Two questions, please. So firstly, on Consumer Products, you know, really appreciate your insight on the destocking cycle. But if you think the overall picture is gonna stay mixed until the spring season, should we expect Softlines and hard line revenues to remain in low declines until then? Or are you gonna challenge your teams to get back to growth by pivoting to, you know, serving things like the value segments? And then also, sorry if I missed it, but I wasn't clear why electrical and connected world revenues accelerated so much in the four months. So more detail there would be great. And then secondly, just following up on the comments on Corporate Assurance, we haven't had visibility over this business for very long externally. So can you just talk about how contract phasing works here? Yeah. Also talk about any new contract discussions you're having with clients today ahead of, you know, CSRD kicking in next year. Okay. Sure. Look, on the consumer product question, Softlines and Hardlines, maybe I misexplained that. We are the market leader globally in Softlines and Hardlines. So in our portfolio, we work with luxury brands, premium brands, and value brands. So when I say, you know, I expect the spring season, which we're starting to test now, to be mixed, because I'm seeing, of course, certain type of brands investing in new product and seeing new momentum. I mean, it's very difficult for me to talk about these companies, but, you know, just take a very well-known example here in our home market. I mean, the M&S turnaround that we all have applauded is, you know, pitch perfect on many, many, many areas, but they also get the value proposition right, right? There are many examples like this around the world, where these retailers get the value proposition right and are seeing growth in investing. So of course, you know, we are working with value brands. And when it comes to how we manage our teams, what's really important is that we keep or improve market share within every single brand we have a nomination with. That's the priority, of course, that we get our price increases as we should. And then, of course, lastly, that, you know, we upsell and drive, obviously, you know, the acquisition of new contracts. So that's the way, you know, the sales teams operate inside Intertek. And when I say we're gonna take it a quarter at a time, is because-... You know, until I see a change of trend, I don't want to call it, right? It would be silly to say, you know, I think, I think the industry is turning around. I think we'll wait till we see, because there are lots of moving parts. But my view, it's temporary. And certainly, the brands that are not investing in innovation will have to invest in innovation because they will lose market share, and they will lose value, right? As far as electrical is concerned, look, this is a business that we don't talk a lot because we typically talk about top line and Hardlines, and you saw the presentation from Sunny at the capital market event. Essentially, we are the market leader in electrical, you know, total quality assurance outside the United States. We are number 2 in the United States. Where is the growth coming from? Number one, SKUs continue to increase, so we have not seen a reduction of, you know, product development within the electrical world because, you know, these are essential, you know, SKUs or appliances at home. There is a huge, you know, replacement of what you try to, you know, move from, you know, let's just say, you know, lights that are basically not LED to LED and energy efficiency measurement in terms of appliances, we all know that. So the product side of electrical is very, very positive, and it's about testing and certification, SKUs and number of tests we do per SKUs. We also are investing in new segments. So we are, you know, really, really, really strong in medical devices. I talked about some of our center of excellences there. We have a center of excellence in Boxborough, on the east coast of the U.S., and this is, you know, a very, very, very positive segment in the U.S., in Europe, and, and also in Asia. There, there is no question that, when it comes to, air conditioning and air quality, there is a lot of investment there. Regulation is also, also helping. And, you know, last but not least, and I'm keeping the, the, the biggest opportunity for, for, for, for the last point in your, in your question, is what I call energy storage, right? If you think about the electrification of society, the higher mix of renewable, it's gonna make the grid management, doesn't matter if it's London or New York or Frankfurt, very, very complicated, right? And energy storage has to play a big role. So we are seeing significant, you know, significant development in energy storage, you know, capacity within operations of factories. We are seeing a significant development of energy storage units at home. I mean, you've seen what, you know, Tesla has done. And, essentially, what it's all about, right, it's testing small, medium, and very large batteries. It's public information, we just opened a center of excellence in the south of Italy, near Venice, and we had a customer event, and I can tell you that, you know, all the book is full for quite a long period, right? Because every single company that has to invest in energy storage need independent testing, because battery technology is, you know, very impressive technology, but it's not always, you know, very, very safe. So more to come on electrical and we are investing in the right segments. As far as assurance is concerned, look, the beauty about assurance is that typically, you know, the ISO contracts or the audit contracts are for a three-year period. So you've got a very good visibility on where your clients want you to do the work. And, you know, the opportunity is not only ISO, but ISO is growing, right? This is a very important part of our business. The standards that ISO obviously ask companies to certify against are really, really important. But companies are investing in supply chain assurance, which is essentially the end-to-end risk assessment with better data and independently verified data on what's happening in your supply chain. And you heard me talk about a product called Inlight, which is a SaaS model that basically map out end-to-end, tier one, tier two, tier three, suppliers' data and the risk inside your supply chain. And this is one of the hottest, you know, product that we have at the moment. You know, really, really, really good. When it comes to CSRD and the independent audit of non-financial metrics, look, companies have to get ready. I mean, CSRD is happening in 2025. Companies in Europe have to report on the non-financial metrics, and these will have to be independently audited. And we are right in the swing of it. As you know, I chair the, you know, the working group at the industry level for that, and I'm very, very involved in the discussion with the parliament in Brussels. And, you know, we are seeing essentially three opportunities, right? One is training. Believe it or not, CSRD is not only a walk in the park, I mean, if you have the time, I can send you the file. I've got the EFRAG Standards. It's quite a long list of standards a company are gonna have to comply with. So we need to train our clients. Then they need to start doing some benchmarking. Where are they? And of course, they need to do the independent, you know, certification. So this is happening, but just not only in Europe, right? The U.S. is working on a similar approach. You know, market, the U.K. will come to grip with an approach at one point of time. We are seeing some, you know, similar development in India, in Hong Kong, in Singapore. I mean, I was in Australia the other day, and I was talking to our teams and-... Well, the regulator in Australia is still, you know, deciding which, you know, where they will go, because everybody wants companies to report on non-financial metrics to make sure that sustainability is for real, right? So the opportunities are, are very, very, very significant here. Very helpful. Thanks very much, André. Thank you. We'll now take our next question from Carl Raynsford at Berenberg. Your line is open, please go ahead. Good morning, André. Hope you're well. Just a couple from me, please. The first, just digging into a couple of segments in a bit more detail. On food, you reported through testing, you reported mid-single-digit growth. I was just wondering if you could give us any further color by region, if there's sort of some stronger, some weaker areas. And the second is, obviously, World of Energy reported a good quarter. Clearly, Caleb has suffered with its margin, it seems to be the main problem there. So I mean, with growth being so high in Caleb, could margin progress more quickly than perhaps you expected, initially? And, you know, furthermore, clearly, minerals is another area where growth is happening quite strongly. So, you know, is that benefiting from scale and volume? I'll leave it there. Thank you. Yeah, thanks. Everything is well, thank you. So as you know, in the food business, we are not a very big global player, right? We tend to focus on niche segments, which are high value, high growth, high margin, where we are number one in the local market, right? So yes, I mean, you're right, the 5.6% was lower than what we had in H1. We had a really good second half last year, right? Our like-for-like in July-October last year was 7.1%. So look, sometimes you have to look at two-year, you know, like-for-like to get a sense of the real trend. So there is nothing really to worry about here. You know, our business in Germany, where we are very strong in honey testing, is doing very well. You know, we are very strong in the US in vitamin testing, it's doing very well. We've got a good business also in India. And so, look, there is nothing to worry about. As far as the World of Energy and Caleb, look, you're right. I mean, there is some catch up to do on margin with Caleb, and the team is on it. And the team is on it. So, you know, we are seeing some good margin progression there, and we're not gonna stop there, right? There is lots of opportunities we talk about. As we test, you know, greener fuels with a higher percentage in our mix, this is also gonna be beneficial to our margin because it's high value testing, right? And minerals, look, it's like food, right? We are not everywhere. We are in the markets that, from our perspective, provide the best growth and margin opportunities. And there is no question that we are having a gangbuster year after a very strong year last year. You might have seen some of the marketing in our center of excellence in Perth. If you've not, I'll suggest you look into it. I was there a few weeks ago, and this is really that center of excellence in the minerals industry in Australia, you know, doing extremely well, and it's both volume, price, and mix. You know, we, we've not talked too much about it, but something that, you know, we'll talk moving forward. There is also a, a shift, in the mix in minerals to green minerals, essentially minerals that are used for battery. And we all know, just talked about the importance of battery technology, energy storage. This is a, a very attractive market, too. Thank you very much. Very helpful. Thank you. If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll now move on to our next question from Shahar Sinai at Goldman Sachs. Your line is open. Please go ahead. Hi. Good morning, André. How are you? Good. Great. I have two questions, please. Is it possible to talk about price versus volume mix for the, for this quarter? I appreciate it was probably a third to third, previously, but that was off, maybe a seven-ish number, so has the mix changed in favor of pricing as a result at this point in time? And the second one is on the Corporate Assurance business, please. The drag effect from Assurance, is that something that, was just for third quarter? Should we expect the drag effect to continue into the next few quarters? Thank you. Yeah, I think the Assurance point is a small point, but important in the scheme of things. So, I mean, last year, you know, we had two massive consultative assignments from you know a couple of big companies in Europe, to help them get started with their sustainability strategy and footprint. And that's what's happening. I think it will have an impact a bit in the first quarter, but I think as we go into the second half next year, I think we'll be okay. I mean, Assurance is a very strong business. It's a high quality, regulatory assurance company that works with lots of great clients, so I'm not too worried about it. But when you have these big consultative contracts, it's a bit, it's a bit lumpy, as you just noted. Look, on the volume price, we're not seeing a big change in terms of what's going from volume, what's going from price. So, you know, I don't think I have much more to say than that. As you know, you know, we believe that you need to get the right balance between, you know, volume and price. We have a high fixed cost as a business, and we need volume growth to continue to drive, you know, margin accretion and increase in returns. So. We are very, very meticulous on how we go about volume and price and mix management, but we are in a good place, and frankly speaking, this is in line with our expectations. Appreciate that. Thank you very much. We'll now take our next question from Arthur at Citi. Your line is open, please go ahead. Thank you very much. Just a few from me, if I may. The first one was just on the Consumer Products business. Obviously, you've been quite candid about the reasons why your margin has suffered. I just wondered whether in the sort of midterm, you do think the business can get back to 2019 levels of margin there, and what needs to happen for that to happen? Second question, I know it's sort of been touched on a little bit, but are you able to just talk a little bit more about which segments have easy comps as a result of Chinese challenges in November and December last year? If you can give any color on, you know, how easy those comps actually are within, you know, how significant the declines were in those business lines, in those couple of months last year. Then the final question, which is on the transport technology business, if I'm not wrong, that looks like it's slowed. You know, it has been sort of pretty, pretty slow, if I remember, low single digit. Obviously, that was something you pushed quite hard at the CMD, and I just wondered, you know, what you were expecting there. Thank you. Yeah, thanks. Let me just take these questions one by one. Starting with TT, well spotted. The summer was a bit soft. Essentially, we were impacted, I wouldn't say the summer, I should say the August, September, October period, because July was okay. We were impacted by the strikes in North America, which basically did freeze a lot of projects because companies were focusing on the short term. I'm not too worried about it because, you know, I know what the backlog is all about, and companies have to invest in EV or hybrid technology, but you're right, there was a bit of a slowdown. I think in terms of the easier comp for November, December, linked to the Chinese lockdown, I mean, think of consumer product. I mean, if you look at our performance, you know, last year in November, December, where we saw the biggest slowdown was Consumer Products, right? That's the way to think about it. As far as the margin trajectory for the future in Consumer Products, look, we've not given any target by division, so I will refrain from doing so, otherwise, I'm not doing a good job when I set up targets for the medium to long term. But the one thing that, you know, you should know is that, being ever better at Intertek, right? Always trying to find a way to drive the better volume price mix, you know, finding a way to be more inventive in terms of process reengineering or cost management is the way we run the company. So I can assure you that the internal pride from every single leader, doesn't matter if it's the local or regional or global business line level, is to make progress on volume-price mix. Of course, revenue, margin, and cash, and ultimately to drive good return investments. Doing all of these with, of course, all the important aspects of what leadership is all about, is customer service, quality, health and safety, engagement, and of course, you know, sustainability. So I'm not gonna give a precise answer because I can't, but we're always gonna go for more. That's what I would say. Thank you. Thank you. We'll now take our next question from Karl Green at RBC. Your line is open, please go ahead. Yeah, thank you very much. Good morning. Just two questions from me. Firstly, André, just to clarify your comments about the M&A pipeline. I think you made the comment that either yourselves or the market will have to wait for a lower cost of borrowing to see more M&A. But basically, just to elaborate on what exactly you meant there in terms of the hurdles that you're seeing to- Yeah ... to execute yourselves. And then the second question, just completely unrelated, the headline in the FT this morning is talking about Trump, you know, if he gets into power, potentially gutting the IRA, climate laws. I mean, just kind of from a general perspective, I mean, we are seeing, you know, significant delays in pushback to net zero. Do you think, given the diversity of your portfolio, that if we do get a big reduction in the level of kind of green tech evolution, that that's gonna make much or any difference to Intertek's medium-term organic growth opportunity? So in terms of M&A, what I was trying to say is that, if you have a high-quality business, right? And you're the owner of this business, and you want to maximize value as you exit this business, if you do your process in an environment where borrowing is expensive and difficult for certain players, you're not gonna get the same value out of the process, right? And our view is that there've been a lot of assets coming into the market. We've made a few moves, but some of the high-quality assets have not come to the market, certainly not the one of scale, because of that. And we're gonna need to wait a little bit for these to come to the market. I mean, the only reason for a high-quality asset to monetize their, the business now will be that they are obviously in a situation where they need to change... you know, on a sheet board, they've got liquidity issues. So that, that's what I mean, right? But I'm, you know, that's the way we think about it. That's really helpful. So it's basically vendor stubbornness in the face of- Yeah. Yeah, the no reset in valuations. Okay, that's clear. Thank you very much. I mean, look, I, I'll give you a, I'll give you a, an example, which is, I cannot put to you a name. But, you know, Juliana, she's the, the head of M&A, here at Intertek and Innovation. So we met a, a very good company in, in the, in the winter. They were in insurance, you know, even people insurance. Everything was, was, was really, really attractive. They were, you know, testing the market, but they had a certain valuation in mind. And of course, we didn't give them the valuation that they wanted. Maybe we would never have gotten the, the, the business, but they couldn't find any buyer, right? So there is a, a supply side to, to, the problem, right. Okay. So as far as the World of Energy, look, I’m glad you’re asking the questions. I saw the article this morning, like you did. Let me just step back and explain what’s happening here, because we didn’t do it at the capital market event; we didn’t have the time. But essentially, in terms of the World of Energy, right, we are involved in the upstream, downstreams, oil and gas, and of course, we’re involved in renewables, right? We’ve got the full portfolio of activities to basically continue to help the world to operate with traditional oil and gas, you know, greener fuels and renewables. Now, you know, this business is essentially calibrated. It’s Moody, it’s of course CA, and let’s not forget Assurance, ’cause Assurance plays a role in this World of Energy opportunity, too. And the COP, you know, event will take place in any month, anytime soon in the Middle East, right? What is essentially the situation, right? We have an energy model that we've built; it's proprietary. We've never disclosed it externally, which is very different than most energy model, which is essentially supply base. Because it's one thing to say, you know, people are gonna want to drive electric cars or buy, you know, whatever it is, solar panels, but if the supply is not there, how are they gonna do that? And in our view, the current World of Energy, you know, situation is that we will not get to Net Zero on time, unless significant investments are made to accelerate the mix towards renewable. As you know, renewables are less than 10% of, you know, supply today, and this is gonna take some time to scale these to a much higher level. So what does it, what does it mean? It means that, you know, we have a few scenarios here, right? Scenario one, we know we're not seeing an acceleration of renewables, and maybe what Trump is saying this morning, they will even change some of these, uh, incentives. Which means the traditional oil and gas activities will, you know, grow faster than we expect them to grow. We expect them to grow because it's gonna take some time for renewable to be scalable. Scenario two, there is a wake-up call, in, in society and governments and companies are serious about investing more in renewables. And we'll see, you know, you know, a faster growth in these segments for, for us. Now, the good news for us is that, you know, both are growing sectors for, for many years to come because demand for energy will continue to grow and investments are gonna be needed. If you ask me, what I think is that you're gonna have different trends by region. I don't know who is gonna be elected as the next president of the United States, but the level of investments that are happening in the U.S. to number one, make sure they continue to be a very strong oil and gas producer and exporter. And number two, accelerate the transition to greener electricity, I think is significant. I mean, we talked about, you know, some of the numbers, and we are seeing a lot of investments going there in terms of battery plants and power plants and EVs and electric cars. You're gonna see an acceleration in Europe, although it's not clear yet how fast it's gonna be, but there will be a tipping point where people in Europe will say: You know what? Enough is enough. We need to basically walk the talk here. And you're gonna have a very different mix in emerging economies, Africa, Middle East, Asia, because, you know, the access they have to funds is very, very different. So it's a long answer to a simple question. For us, it doesn't matter where the, where the growth come from, traditional or renewable, because we are strong in both. If you ask me, I would like to see renewables to grow faster because it's gonna be better for, for the planet. But I'm concerned that, you know, we don't have a plan to get to net zero, and we'll not get net zero. There is one area that will make a big difference, is carbon storage and carbon capture. We are very involved there, with our operations. The carbon capture technology is working, but not at scale yet. Where we're also very involved is carbon storage, i.e., you need to build reservoirs where you're gonna store the CO2 and making sure that, you know, the CO2 stays there. So look, the World of Energy is a growth opportunity, and then we'll have to take it a step at a time, region by region, to watch how the supply and demand, you know, equation works. But if I had one message is that, you know, companies will have to invest, I mean, companies, governments and companies, will have to invest much more to accelerate the diversification in renewables. ... That's helpful. Thank you. Thank you. We'll now take our next question from Tom Burlton at BNP Paribas. Your line is open, please go ahead. Thank you very much. Yeah, morning, André. I think we've covered a lot already. I just have a slightly more philosophical question, if I can, sort of around pricing. You covered a lot through the call, I guess, around your pricing power, talks about the value of your service, you know, the mission critical, your premium offering. Just trying to square that, I guess, philosophically with why is it that we're only able to see sort of half of the cost inflation being passed on to customers? Maybe just a reminder of that pricing model. And you called out in particular, sort of disciplined and sort of rational pricing from yourselves in, on Consumer Products, in Softlines and Hardlines. Appreciate you probably don't want to go into too much detail across the end markets, but, you know, we talk about pricing at a group average level, are there other areas that are maybe more dilutive to pricing? And then just very finally, you have a section, the innovation section in your statement where you call out, I think, four different sort of new innovations in there. I just wondered if any of those have the potential to be, you know, particularly meaningful in terms of sort of group growth and being accretive and to the group growth rates, or are they just sort of, you know, nice to have, but maybe don't move the needle at the group level? Thank you. Yeah, I mean, look, I have no problem with a philosophical question. I think it's important to go back to principles. When you run a business and you provide a certain level of customer service to your clients, customer service retention is very, very important in the measure of how you define, you know, success. It is our conviction at Intertek, but also my view as a CEO, that when there is inflation in a given market, right, and today we're talking inflation at a global level, but we've seen inflation in lots of local jurisdictions over the years, it is the responsibility of the company to find a way to manage some of these cost increase through productivity managements, and ask customers for help, but be reasonable on how you do so. Because at the end of the day, right, if you don't have a balanced approach, you take the easy route. I mean, just take here our home market here in London. I mean, some of the price points that, you know, the high street food service retailers have put on us over the last, you know, few years are just right, are just not right. I mean, there was a big, you know, article in the FT taking one of the big chain here and making fun of the fact that, you know, the price increase they've given to our customers is not linked to their cost increase. And what I try to do is use inflation to basically offset some of the issues in their business model, right? So you've got to be fair, you've got to be fair. And especially, especially when you work in a B2B environment, right? Because our relationships are long lasting, right? They are sticky. And you are in a real partnership, and what you do with pricing in these difficult times for everyone, will get noted, right? So it has always been our view, and it was there before I arrived, and then I took it, you know, fully on because I believe in it, that when there is wage increase, and we had some in certain local jurisdictions, the right approach over time is to pass 50% of these to your customers and fund 50% through productivity savings. And our approach is the right one, and you're seeing it today. Lots of FMCG brands on global stage have announced double-digit price increase and finally sought to, you know, report their numbers. And these brands are now seeing volume decrease. I've been in consumer goods for a long time before Intertek, and we are back in the 1990s, where President's Choice in Canada was taking market share away from the big brands, because the big brands had increased prices too much. So you gotta be fair, you gotta offer value on a sustainable basis, and you've got to be mindful that in a B2B environment, pricing is very, very important. In a B2C environment, if you've upset consumers with too high price for your cappuccino, you can run another campaign and sell tea at a lower price, and maybe you get other customers. I've got 400,000 customers working with me every single day. If I do the wrong move on pricing, it's not gonna be good for the long term, right? So it's a huge responsibility. I know I've heard, you know, lots of, you know, discussions during our roadshow, "Well, your industry is not good at taking price." I think our industry is fair at taking price and putting, you know, the interest of all parties, you know, in consideration when you think about price, right? So that's basically how we think about it. It works, and my view will be proven right, that, you know, not only we'll get pricing over time to fund the additional costs we just talked about, but we'll not compromise volume and we'll continue to grow and deliver good, good earnings. As far as your question on innovation, look, we try to give you a sense when we report of some of the ideas that are basically being developed around the world, so you get a bit of color on what we're doing to continue to develop our relationship with our clients and increase our ATIC, you know, share of wallet, if I could say it like this. Look, if I, you know, were to talk about one, is global market access. We don't talk too much about global market access. But this is a, this is an opportunity that is quite significant because most companies have centralized their regulatory and technical departments in their global headquarters, no matter where it is. Regulation is increasing at the speed of light because regulators in the state of California or Australia are basically, you know, imposing higher regulatory standards at the local level to protect their, their own citizens. And there is a gap today in companies. And that's why, you know, when we made the acquisition for SAI, I was very interested, not only in the SAI assurance business, but the SAI standards, which is essentially helping companies to go to market by knowing exactly what the regulatory standards are in every single market. And I know it sounds talking, when I say that, but I can tell you that there is such a level of catch-up to happen in corporate, you know, U.K., corporate Europe, corporate America, corporate China, where, you know, companies don't have extremely well-maintained database. Not only on where are all the SKUs in the ecosystems and who does what, which is what I was talking about in Inlight, not only about, you know, what is the formulation and the latest, you know, IP in each of these, you know, SKUs around the world, but what is the gap versus the change of regulation, you know, happening in the next few months. And this is very stressful for companies, by the way, because the regulatory change is gonna continue to happen at the local level as well, at the regional level, in the case of Europe. And companies need some help on go-to-market. So just to pick one, but I could have taken some of the others, too. Okay? That's helpful. Thank you. We'll now take our next question from analyst, Annelies Vermeulen, at Morgan Stanley. Your line is open. Please go ahead. Hi. Good morning, André. Morning. Two quick ones, lastly. So firstly, you talked earlier in the year about the opportunity from the larger scale buildings and infrastructure projects in the US. I'm just wondering if you're seeing any slowdown there. I appreciate you've spoken a little bit about renewable projects already, but if we think about the broader, you know, large construction projects in the US, are you seeing any delays or downsizing of any of those projects? And then secondly, you know, you talked earlier in the year, I think at the CMD, about staff turnover declining. Has that continued to be the case through 2023? And how does employee churn look year to date relative to 2022? On a related note, you've talked about cost inflation having peaked in the second quarter. I assume that includes wage inflation as well. If you could comment on that. Thank you. Yeah, I mean, look, on the first point, no. We are not seeing any delay or slowdown on investments in large project in the United States, because the bills that Biden has passed are significant. I mean, the Infrastructure Investment and Jobs Act, you know, added $500 billion in November, and then we have the Inflation Reduction Act that adds $400 billion, right? These are significant incentives, and, you know, we had a, you know, board meeting overseas in October, and we always take a different location, and we took the board to Austin. And we had a, you know, very fascinating, you know, meeting with the head of transport infrastructure for Texas, right? Which is the fastest growing state in North America and one of the fastest, you know, growing region in the world. I mean, I'm not gonna quote the numbers because she will be upset with me, but they're not reducing their budget, and their budget are very meaty. I mean, they're investing, they're investing in infrastructure. I mean, we all have seen, you know, the way the infrastructure has aged in the United States. It's nothing new, and that's why we bought VNC because, or PSI, sorry, is because we knew that one day the president will have to make the hard decisions to improve the infrastructure in the United States. So no, I mean, there is nothing to worry about there. As far as the staff turnover, look, we are in a good place. We are in a very, very good place. We're not seeing any change. It's very, very stable. If anything, it's feel better than we saw in the past, but we'll see for the end of the year. So no, we are in a good place. I mean, the energy level, the engagement level inside the company is really, really strong. We have a very, very unique culture and it's, you know, it's good to see it like this. As far as, you know, inflation peaking, of course, this is including, you know, wage increases. I mean, as you know, on, you know, people is our number one cost, so we wouldn't see a reduction of the cost increase if we wouldn't see a reduction in wage increase. Absolutely. Perfect. Thank you. Thank you. That was our last question for today. I will now hand it back to André for closing remarks. Thank you. Well, thank you very much for your time today. I appreciate, you know, you taking the time to ask some very important questions. So, it was great to connect, and have a good day. Thank you. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.