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Martin Hug: Ladies and gentlemen, it is our pleasure to welcome you to the Lindt & Sprüngli Half Year Results Conference Call and Webcast. My name is Martin Hug, Group CFO; and with me today is our group CEO, Adalbert Lechner. The presentation and transcript of our prepared comments will be uploaded to our website this morning. The presentation will take approximately 15 minutes. Following the presentation, we'll hand over to the operator who will then manage the question-and-answer session. The agenda points of the presentation can be seen on this chart and include some of this year's highlights to date, a detailed review of the first half, our expectations for the full year and the medium to long term and a chance for you to ask questions. For this call, we do not have any major update on sustainability. I would also like to refer you to the disclaimer at the end of the slide deck. To kick us off, I hand over to our group CEO, Adalbert Lechner, who will take you through some key trends and highlights we saw in the first half of 2025.
Adalbert Lechner: Good morning, ladies and gentlemen. Welcome, everyone, also from my side to the Lindt & Sprüngli Half Year Results Conference Call and Webcast. Let me start by saying that I'm proud of what our teams achieved in the first half of the year. We have shown resilience in a challenging market environment, which demonstrated the loyalty of our consumers. Let's dive into what we dealt with. The development of the global chocolate market in the first half of 2025 was a continuation of what we saw in 2024. With cocoa prices remaining close to record highs, the market was impacted by price increases, and we saw a reduction in volume with an increase in value globally. In this situation, both ends of the market profited, private label on the one side and premium products on the other. Private label products gained market shares with price-sensitive consumers. Lindt's premium positioning and strong presence in seasonal and gifting items also enabled us to defend and grow market share. Martin will get into more detail about the cocoa price later on. As it stands today, from what we see, the new season's crop is looking better and the experts are forecasting a surplus. We are also seeing demand reduction due to the mentioned volume declines, which puts further pressure on the cocoa market. That being said, plant diseases continue to affect cocoa farms in West Africa and the overall situation remains volatile. Looking at global consumer trends, we see that mindful indulgence continues to gain traction as a trend we are uniquely positioned to capture with core products like Lindor, which is designed as a small and high-quality treat. Also, our dark EXCELLENCE chocolate tablets cater to this consumer need. This trend goes hand-in-hand with an ongoing shift towards premiumization, especially when it comes to gifts for loved ones and consumers also like to treat themselves to an exclusive product like our Dubai style chocolate. What started as a social media hype, resulted in one of the most spectacular product launches by Lindt with fans waiting in line to purchase a limited-edition hand-made bar of Lindt's Dubai Chocolate. This is now a standard product that we can make available at scale through our wholesale partners. Starting in December last year, we rolled out our Lindt's Dubai Style Chocolate in all our key markets in Europe and beyond. And in the second half of this year, we will also offer Dubai Style Chocolate products in the U.S., both through our Lindt brand as well as Ghirardelli and Russell Stover. With Dubai Style Chocolate, we managed to reach new and younger consumer groups, which drives brand awareness and will fuel our future growth across our product range. In March, we opened our first U.K. Lindt flagship store at Piccadilly Circus in London with Lindt brand ambassador, Roger Federer, cutting the ribbon. It's a perfect demonstration of our successful retail model. At Piccadilly, in the very heart of London, we secured a prime location with 80 million people passing by our shop windows below the iconic curved Piccadilly Lights every year. In this flagship store, local shoppers and tourists alike can truly experience the Lindt brand and watch our Lindt Master Chocolatiers in action. With similar successful openings and a strong performance in our existing stores, our global retail division experienced strong growth of 22.1% in the first half of this year, supported by lower price elasticity. By the end of June, the store network has reached 590 stores worldwide, 60 stores more than 1 year ago, and we have more exciting plans in the pipeline. With that, I come to one of our most recent highlights. As you may have heard, Lindt was named the world's most valuable chocolate brand in the 2025 Kantar BrandZ ranking for the first time. Kantar is one of the world's leading marketing data and analytics businesses. Among 21,000 brands that were evaluated across 532 categories and 54 markets, Lindt also ranked eighth in the global food and beverages category. This achievement is based on our strong and enhanced brand equity driven by continuous brand support, clear premium positioning and a consistent focus on quality, all of which resonate with consumers and drive long-term growth. Despite the difficult global operating environment with declining volumes in the global chocolate market, sharply rising costs for cocoa and the need to again implement price increases, Lindt & Sprüngli was able to continue its successful sales growth trajectory, surpassing our top line guidance at half year and delivering in line with our guidance on profit. In addition to implementing price increases, we have continued to implement projects in all regions that drive efficiencies and cost savings. Price increases, coupled with those cost savings projects, are the key drivers for the positive operating profit development that we expect for the full year. Overall, we are pleased with our progress and remain optimistic about our future prospects. Before I begin, those of you who are new to Lindt & Sprüngli should consider the seasonal and gift-oriented nature of our premium chocolate business. This seasonality means that our sales are skewed towards the second half of the year with approximately 60% of sales in half year 2. However, it is important to remember that the first half of the year absorbs close to half of our annual fixed costs. As a result, sales, profitability and free cash flow are always lower in the first half than the second. That said, the Lindt & Sprüngli Group has made a solid start to the year. Organic sales in the first 6 months achieved a growth rate of 11.2%, which is above our guidance provided in March 2025 of 7% to 9%. EBIT came in at CHF 259 million, delivering a first half EBIT margin of 11.0%, which is in line with our half year 1 EBIT margin guidance of between 10% to 12%. This margin was impacted by higher cocoa material costs, partially offset through efficiency gains in personnel costs, operating costs and price increases to our consumers. Net income was CHF 189 million with a net income margin of 8.0%. Free cash flow came in negatively with minus CHF 80 million in the first 6 months, a decrease over the first half of 2024. The key reason for this decrease was the increased value of the inventory as of end of June. Higher cocoa bean prices led to this increase in the raw material and finished goods inventory values. This is a one- time effect. I will go into more detail on this later in the presentation. Our net debt position increased from CHF 880 million at the end of 2024 to CHF 1.4 billion. This balance is slightly higher than a year ago when net debt was at CHF 1.3 billion. One driver of this net debt increase alongside our lower free cash flow was our share buyback program, which is well advanced and which we will finish at the latest by mid next year. Excluding the lease liability, which is included in the overall number, our net debt position is approximately CHF 1 billion compared to our EBITDA, which is again expected to come in above CHF 1 billion in 2025. We still have a very strong balance sheet with an equity ratio of 55% compared to 52.8% at the end of 2024. Total sales reached CHF 2.35 billion in half year 1 with growth in Swiss francs of plus 9%. First half sales grew by solid 11.2% organically. Cumulatively, we have grown more than 60% over the last 5 years in the first half, a CAGR of 11.5%. Europe, in particular, posted an excellent result with 17.7% organic growth. With strong price inflation, sales volumes in the global chocolate market have declined by around minus 5%. Despite these market conditions, our brands show strength and resilience, growing value and volume market share in most key markets. Low price elasticity, especially in Europe, led to a volume/mix decline of minus 4.6%, which is better than we had originally anticipated. Price increases of 15.8% were in line with the double-digit increase we communicated in March. Due to significantly higher input costs for cocoa, double-digit pricing actions were required to be taken in all markets over the last 6 months. Please bear in mind that not all price increases in all subsidiaries were implemented on January 1. So in the second half, we will see an even higher effect of the implemented price increases. Volume mix was negative, slightly better than we expected with a decline of minus 4.6%. However, the price elasticity varied region by region. In Europe, we experienced a low price elasticity in the first half across all markets. On the other hand, in North America, a weak consumer sentiment led to a volume decline in the category and to a lesser extent, also in our business. Reported sales in Swiss francs rose by 9%. The currency effect had a negative impact of minus 2%, in particular due to the weakening of the U.S. dollar and the euro, while the discontinuation of a distribution agreement with the confectionery brand in Canada at the end of 2024 had an impact of minus 0.2%. I now hand over to Martin, who will take you through the results in further detail.
Martin Hug: Thanks, Adalbert. I will now start with the regional sales analysis. On the following slide, I would like to give you an overview of the sales performance by segment. In the first half of '25, the Europe segment, where we generate almost half of the group's sales, saw an increase in organic sales by an outstanding 17.7%. All European Lindt & Sprüngli subsidiaries achieved double-digit growth with the strongest development of more than 20% plus in Nordics, Benelux, Central Eastern Europe, France and Austria. The European region benefited from lower price elasticity and higher brand loyalty from consumers. The North America segment showed organic sales growth of plus 3.6%, behind expectations due to the weak consumer sentiment. All subsidiaries in North America continued to grow with the exception of Russell Stover, which faced a higher price elasticity than the other North American companies. Despite the challenging market environment in the U.S., Lindt & Sprüngli grew overall significantly market share. The North American segment is expected to accelerate growth in the second half of the year compared to the 3.6% in the first half, driven by strong activation plans, promising seasonal sales and innovations. In the Rest of the World segment, we grew by 7.8%. Notably, the subsidiaries in Japan, Brazil, South Africa and China achieved double-digit growth rates. Japan and Brazil, both countries with strong Lindt store networks benefited from lower price elasticities in retail stores. There are many large traditional chocolate markets within the Rest of the World where we see significant premiumization potential for Lindt. As a result, we are convinced that we can maintain double-digit growth in 2025 and over the midterm. Let's move on now to the important topic of costs, category by category. Material costs, which have been adjusted for changes to inventories came in at 33.3% of sales, 170 basis points higher than in 2024 and 330 basis points higher than in 2023. Although the higher cost of cocoa was partially offset through long-term contracts and efficiency gains, a major part of the cost was reflected in price increases and other revenue growth management measures. Strict cost management allows us to mitigate the impact of rising cocoa prices to a certain extent and double-digit price increases of 15.8% were needed to protect the bottom line. Looking forward, we estimate that our total material costs will be slightly higher in 2025 compared to 2024, driven by cocoa. Despite the recent declines in cocoa prices, we still expect cost inflation to continue into 2026 as the lower cocoa prices have an impact on the P&L with a significant delay. At this point in time, it is difficult to give a precise forecast on the cost of goods development in 2026 due to the market volatility and uncertainty. Let's take a quick dive into our most important commodity, cocoa. After seeing a strong rally in the cocoa market in 2024, the market has begun to decline over the first 6 months of 2025. In January, we reached a level of about GBP 8,000 per metric ton for the month relevant to us in 2026. In the meanwhile, the market has dropped to about GBP 5,000 for the March 2026 futures. We believe the main reason for decline is the weakening demand, especially in North America. In addition, based on the expert information we receive, the crop outlook for the coming season is expected to be better than in the last few harvests. However, bear in mind that the market is still more than double of what it was a few years ago. Our experts continue to monitor the market very closely to place ourselves in the best position possible, and we are doing our utmost to put in place the right strategies to provide future flexibility. Many market players expect a potential market correction once there is better visibility on the future crop sizes in Côte d'Ivoire, Ghana and Ecuador. We continue to see a lot of new plantations, especially in Latin America, which gives us confidence in the long term. Of course, it is quite difficult to predict where the cocoa futures market will go from here. It is encouraging to see in the last days that we saw a decline of more than 10% over the last week. The speed of the extent of further market corrections will also depend a lot on the development of the overall volume demand in the chocolate market. We expect a volume decline in the global chocolate market also in the second half of 2025 due to the pricing action in the overall industry. Personnel expenses as a percentage of sales decreased by 60 basis points compared to the same period in 2024. Also, compared to 2021, 2022 and 2023, we can see economies of scale. The increase in absolute terms in the first half of 2025 is mainly driven by wage inflation and our successful expansion in the global retail business, opening new stores in very promising locations such as Piccadilly Circus in London. Operating expenses as a percentage of sales decreased by 50 basis points. This is mainly driven by a continuing leverage in supply chain costs and SG&A. Secondly, in line with our high-growth strategy, we continued to increase advertising investments in our brands across all geographies. At CHF 259 million and 11% of sales, EBIT decreased as expected by 250 basis points compared to the first half of 2024. Bear in mind that we recorded a positive onetime impact on our other income as a result of a resource legal dispute in North America in 2024. In 2023, we also had a positive onetime impact from the revaluation of the inventories in January 2023 and implementing price increases early in 2023. When looking back beyond 2023, we can see that compared to 2021 and 2022, we actually increased EBIT margin by 170 basis points and 330 basis points, respectively. Similar to 2025, we had no onetime impact in 2021 and 2022. Hence, those years are the better benchmark than the last 2 years. EBIT margin in the second half will need to be around 20% compared to roughly 18% in the last years. The key driver for the increase in EBIT margin in the second half is the full year impact of the price increases and the continuation of benefits in our operating expenses. In North America, we continue to make solid progress on the various projects aimed at further leveraging the Russell Stover business and on our overall streamlining for growth initiatives. These areas include production, merchandising, logistics, procurement and IT. Bottom line benefits have already started to materialize over the last years. We expect more benefits to come from these projects in the coming years. Having said that, due to the weaker consumer sentiment in North America, we do not anticipate that we will improve our EBIT margin by 50 to 100 basis points in 2025 as we have done for a number of years. This is also because we benefited from a substantial positive one-off impact in 2024. Net income reached CHF 189 million or 8% of net sales. In the first half of 2025, the tax rate is at 22.2% compared to 24% last year, in line with our midterm guidance of 22% to 24%. I would like to take you through the bridge of the main cash relevant developments of the first half. In the period under review, free cash flow is negative at CHF 80 million. Capital expenditure came in at CHF 170 million in the first half, CHF 9 million lower than last year. This is in line with our revised plans, which postponed certain growth- related investments from the last few years. We continued the share buyback, which started in '24 as planned. And together with regular dividend payments, we returned more than CHF 600 million to our shareholders. At the end of the first half, net debt reached CHF 1.4 billion. When assessing our net debt, please also bear in mind that the ongoing impact of IFRS 16 on our lease liability with a negative impact of around CHF 430 million. On a pure cash basis, net debt would be at around CHF 1 billion and our full year EBITDA is planned at about CHF 1.3 billion. Overall, we still plan for net debt, including lease liability EBITDA ratio of 0.5 to 1 in the midterm. After this update, I'm now handing over back to Adalbert, who will take you through the financial outlook for '25 and beyond.
Adalbert Lechner: Thank you, Martin. As I've already mentioned, we had a solid start to 2025 with excellent growth in Europe. We achieved growth in North America, gaining significant market share in this important region. In the second half, we are expecting accelerated growth in North America and in the Rest of the World segment. At the same time, we expect growth in Europe to continue to be strong, however, slightly lower than in the first half. As already mentioned, due to the fact that price increases were implemented at various points in the first half in all regions, the overall price increase impact will be larger in the second half than the first. Based on continued consumer loyalty and the ongoing trend towards premiumization and the impact of double-digit price increases, Lindt & Sprüngli raises its organic sales growth guidance for the financial year 2025 to 9% to 11% versus previously 7% to 9%. And we confirm an EBIT margin increase at the lower end of 20 to 40 basis points. In the medium to long term of 2026 and beyond, the group remains confident in achieving its goal of an organic sales growth between 6% and 8%. We expect to deliver an average annual increase in EBIT margin of 20 to 40 basis points. Annual CapEx should remain in the region of 6% of sales. Tax rate is expected at about 22% to 24% in the medium term. With this, I hand back to you, Martin.
Martin Hug: Thank you for listening to our presentation. And I will now hand over to the operator, who will manage the question-and-answer session. [Operator Instructions] Please note that written questions asked via the web will be answered by e-mail after the webcast.
Operator: [Operator Instructions] The first question comes from Jörn Iffert from UBS. Maybe we can take another question and come back to Jörn right after. We have a question from Andreas von Arx from Baader- Helvea.
Andreas von Arx: I hope you can hear me?
Martin Hug: Yes.
Andreas von Arx: First question would be on your free cash flow statement as per -- as the way you calculate it. Could you please discuss a bit this difference in variation margin of commodity futures? I'm just trying to understand a bit where that could be end of the year. Obviously, there might be a seasonality impact, there might be a cocoa price impact, and there has been a CHF 0.5 billion shift compared to the free cash flow of second half last year and the first half this year. That would be my first question. And then the second question would be on the U.S. and the volume development. Is it right to assume that the pricing in North America would be similar to what we've seen on group level? So that would mean potentially quite significantly negative volumes for you in the U.S. Could you maybe elaborate a bit on that? And did I understand you correctly? Or would you say that also on volume comparison, you have gained market share in North America in the first half? These are my 2 questions.
Adalbert Lechner: Let me start with the second question concerning the U.S. development. Your first question was, is the pricing similar to the rest of the group? The answer is, no. We have pretty different price increases region by region, depending on the portfolio mix, but also depending on the sourcing strategy. So in fact, the pricing was slightly lower in the U.S. and also implemented a bit later than in Europe. The most significant fact that we have to mention in North America, if we compare our net sales to retailers with the offtakes from retailers to consumers that we track in Nielsen, and I think you will also have the data available, we see a huge discrepancy. So the offtake development is twice as strong as the sell-in development, and that's a reflection of the behavior of the retailers. When you come with significant price increases with a premium brand with relatively low market share like we did in the U.S., the retail partners are a bit nervous if these price increases are accepted by consumers, reduce their orders. And now as we have proven that the consumer pool is healthy and the offtakes are very healthy. And to your second question also, we gained market share, not only in value, but also in volume. This is why we expect significantly stronger orders for the second half. Partly we have them already in our order books. At the same time, we also see that the weak and soft U.S. American chocolate market accelerated already in the last period comparing to a low base of prior year. So we are optimistic for the second half in the U.S. and we will see also for the full year significantly higher sell-in figures and not only sell-out figures and also are confident that we continue to gain market share, volume and value.
Martin Hug: I will try to answer the second question as simply as possible. If there are a couple of effects in the inventory and in the -- with regards to the futures. So first and foremost, we have excluded the impact of the variation margin in the annual calls last year and also now in the free cash flow calculation. You can find that actually in the alternative performance measures, how we have defined it just to take some noise out. The situation at the end of last year was the following: we had a positive impact of CHF 230 million more or less. And now as per end of June, we have a negative impact of CHF 9 million, minus CHF 9 million. We are futures long. So if the market goes up, you have a positive impact from variation margin. If the market goes down, you have a negative impact. Because I don't know where the market will go. Obviously, it's very difficult to give you a forecast for the full year variation margin. But in the free cash flow definition, you have taken it out to -- because otherwise, it becomes very unpredictable. Then there's a second impact. Now that's purely on the free cash flow, right, excluding the variation margin. Our inventories compared to the end of the year went up by CHF 500 million, whilst actually last year, same period, it went up CHF 200 million. So the difference of CHF 300 million is a negative impact on the free cash flow. Why did it go up by CHF 500 million? Because cocoa overall that we bought and we got delivered between January, February and March, has a higher value than it had 1 year ago. And then finished goods inventory. I mean if you can see that with the price increase of almost 16%, you can assume that cost of goods inventory value also went up double digits. So that has had also a negative impact. So it's really driven by -- mainly by finished goods, but then also by cocoa, which went up even more than the finished goods. Okay. I assume silence means it's clear. So let's go to the next question.
Operator: The next question comes from David Roux from Morgan Stanley.
David J. Roux: Just a follow-on question, Martin, from your comments around inventory. I mean, given that you -- where prices are today, should we expect further inventory build in the second half from the first half? And then my second question is just on Choco Wafer. Could you perhaps just give us an update there? Can you maybe talk about the early traction with this product and which markets you're currently in and where you plan to roll out and maybe the timing around that?
Martin Hug: I'll take the first question and Adalbert will take the second one. Inventory build, we are not expecting further inventory build or further build or further negative impact in the second half, actually. So we believe this is kind of a one-off now in the first half. So I'm not expecting any massively negative impact in the second half from this.
Adalbert Lechner: The second question I will take. Chocolate wafer is currently launched and distributed only in 3 pilot markets. It's the U.K., it's Italy and it's Greater Europe. The success is very convincing. So we see continuous growth in these markets. However, we have limited capacity. This is why we decided to invest and in-source the production, but this will take time. We are currently in the phase of building a shell and ordering machinery for wafer production in-house, but this will be up and running only by beginning of '27 and end of '26. And as of then, we can roll out chocolate wafer to other markets who are all very interested.
Operator: The next question comes from Jörn Iffert from UBS.
Jörn Iffert: I tried again. Can you hear me now?
Adalbert Lechner: Yes, perfectly.
Jörn Iffert: I'm sorry for that. I'm not sure what was going wrong. So one of my most important question in North America was answered, but to follow up with incremental price increases for the second half versus the first half, is it fair to assume incremental price increases second half versus first half around low to mid-single digits? This would be the first question, please.
Adalbert Lechner: Absolutely. So it's mainly the full year impact of the price increases that were implemented in a staggered way. So you can imagine you have some discussions with retail partners, the cadence of possible windows for price increases are also varying from customer to customer, from country to country. So only this effect will lead to a higher price increase in second half that we show. It does not necessarily mean that we go out with a second round of price increases, but it's this full year impact. And to be precise, yes, the impact should be low single digit.
Jörn Iffert: All right. And the second question would be, please, on Russell Stover. I know it's not so super important anymore in the group's portfolio. But is there any incremental strategy update, how you want to turn around this brand? Or is it maybe also under strategic review?
Adalbert Lechner: As you can imagine, it is constantly under review strategically and also tactically. But to give you also a clear picture, if we see the sellout data in the Nielsen data in North America, Russell Stover is flattish, a slight decline. So the performance is not as negative as it seems to be. We are working on portfolio optimization. We are working on supply chain optimization. We cannot publish now everything, but be assured that we have a clear plan to improve profitability to sharpen the brand profile and also to get to a clear growth track back for Russell Stover.
Operator: The next question comes from Antoine Prevot from Bank of America.
Antoine Prevot: So 2 for me, please. First one, maybe on inventory revaluation pricing was quite high in H1, thanks to the pricing. But when I look at volume performance, I mean, tablets and [Choco Wafer] very strong, but gifting a bit slower. So is there a risk maybe with high negative revaluation on the pricing for H2 because of discounting or things like that? And second question, maybe around OpEx. So you said the OpEx increase was mainly around the store number increase and openings and also [A&P]. Is it kind of like more structural or more some one-offs due to the store opening? And how do you think about OpEx going forward?
Adalbert Lechner: I will take the first question. I'm not sure if I got it right. So you refer to the [Nielsen] figures, I assume, where we see very strong volume growth and value growth for tablets. And you see a slightly slower growth on gifting. That's true. So we see that the categories, let's say, in general, with lower ex-pocket prices are more dynamic at the moment. But on the other side, when it comes to gifting, we have a relatively clear picture because we have preorders, especially for the seasonal business in our books. And so therefore, we look optimistic to the second half. We have very strong orders for Christmas, but also even for Valentine's Day in the books. We don't see a reason for a slowdown. Of course, one thing is clear, if price increases are even stronger, let's say, the impacts on volume can be slightly higher. But overall, as we have seen, we have increased the guidance for the [sales] performance from 9% to 11%. So we expect a continued strong growth in the second half also.
Martin Hug: And with regards to your cost, I mean, before I start talking of the cost, just maybe one comment about the profit because I read on some sell-side analyst reports that we missed our EBIT margin. I just want to reiterate that this is actually not correct for those who have written it. We actually gave a clear guidance that we will be between 10% and 12% in the first half, and we came in at 11%. So we are right in the middle of the band that we expected. So no surprises for us. And for the full year, we are guiding for 20 to 40 basis points. So we sit now at the lower end. So that's been 16.4% versus a base in 2024 that included actually a one-off, right? So the starting base without the one-off is much lower than the 16.2%. But I just want to make a comment on the EBIT miss comment that some of you made, which I don't completely agree because we are right in the middle of the band. Now with regards to the personnel expenses and the operating expenses, we are actually expecting further leverage on both expense categories, also in the future. In absolute terms, it goes up. Personnel expenses goes up, and that is what I commented and I assume what Antoine, you were referring to. In our retail stores, we have a much higher gross margin because we do not have the retailer margin between us and the consumer. On the other side, we have higher personnel expenses because it's a store that we have to manage and that to give good service, obviously needs people, well trained people. So that is one of the drivers of the higher personnel expenses. But overall, our -- we had operating leverage in personnel expenses and also in operating expenses. In operating expenses, we had higher investments in advertising and other activities that we call consumer promotion. And on the other side, we had a lower cost. So we had real efficiencies in logistics, for example, or in SG&A. So overall, from a P&L perspective, with such a high price increase, we have quite a lot of operating leverage in the P&L. So purely from a P&L perspective, I'm actually not that nervous to achieve the 20 to 40 basis points overall, knowing that we have quite substantial price increases in our books. So I think overall, it looks good.
Operator: The next question comes from Tom Sykes from Deutsche Bank.
Thomas Richard Sykes: Just wanted to follow up and just get some clarification on the comments on North America that you were saying. Sorry, were you intimating there that your volumes were going to accelerate into the second half of the year? And just maybe whether it's U.S. or Europe, where do you think retailer stock levels are? And is there that much that retail can actually do in chocolate inventories anyway? If they are low, where would you put them? And are you getting signs that retailers, therefore, do want to increase a little the level of finished product inventory that they're carrying, please?
Adalbert Lechner: Thank you for this question, Tom. Well, as mentioned, first of all, we see that the offtakes, consumer offtakes are significantly higher in North America for all 3 brands than what we see as the sell-in. So this has at one point in time to lead to higher reorders and replenishment of our retailers. To give you an example, Ghirardelli shows a strong double-digit growth in offtakes. Lindt is close to double-digit growth. And as mentioned, Russell Stover is flattish. We don't see this in our sell-in figures. And we -- at the same time, we also see the preorders and activation plan. So we are very confident that the inventory level will go up and also the orders from retailers will be strong in second half. At the same time, there is also one specific issue that differentiates Europe and North America. While we have rolled out the launch of Dubai Style Chocolate in Europe in first half, we had regulatory issues in the U.S. that we had to solve so that we are only able to roll out the Dubai Style Chocolate in second half. And we saw -- we got first results from Lindt Dubai Style Chocolate at Walmart, which are more than exciting. But we also launched under Russell Stover, Dubai Style Pralines, and we will launch under Ghirardelli Dubai Style Pralines. So I think this also makes us confident that we will see a clear acceleration in the North American market in second half.
Operator: The next question comes from Warren Ackerman from Barclays.
Warren Lester Ackerman: It's Warren here at Barclays. I just wanted to dive into Rest of World region in the first half. It was, I think, 8% organic sales growth. And you talked about double-digit growth in 4 geographies. Can you maybe sort of outline what is dragging it down? I imagine it's Australia, but can you maybe sort of identify what's happening in some of the more developed markets within Rest of World? And you said that your confidence is for double-digit growth in the second half. Is that because you expect some of these mature markets to improve? Or are you expecting some of the kind of growth engines to accelerate? I mean have you had any delistings in some of the mature markets like Australia from the pricing actions that you've taken? I just want to get a bit more confidence about that Rest of World number, which was a bit below consensus in H1.
Adalbert Lechner: Yes. Thank you, Warren. In fact, the Rest of the World figures are also below our expectations. To be honest, it was not Australia. Australia showed a good performance, nearly double-digit growth, and that's the projection also to continue for the remainder of the year. We had one area that really dragged us down. This was our international distributor business. What we realized what I mentioned before, and again, as mentioned, we had different price increases per region. And in the distributor business, we had significantly higher price increases than the group price increase. So some of the distributors were really hesitant to pass on these price increases. We had discussions. We had to prove that the consumers accept these price increases. And I would say we have overcome all the frictions that were connected to the price increases in the last months so that we also will see a strong swing in the distributor business. So we really had some critical issues in some of our bigger distributor countries. And with this swing, we will achieve double-digit growth for the full year in the distributor business, and we will then be more in line with our expectations than we are in the first half.
Warren Lester Ackerman: Can I maybe just follow up very quickly, that distributor business, are you able to kind of scope it for us roughly how big it is within Rest of World, just ballpark?
Adalbert Lechner: It is -- we don't disclose precisely, but I would say it is the biggest part of the rest of the world business.
Operator: The next question comes from Bingqing Zhu from Rothschild & Co Redburn.
Bingqing Zhu: My first question is about your full year operating margin or EBIT margin expansion guidance. So slight change from previously saying the range of 20 to 40 basis points now to the lower end because it sounds like your H1 margin was in line with expectation in H2, you expect accelerating in the U.S., Rest of Reward and also the full year impact of the price increase. I was wondering kind of what's driving this slightly down of the full year margin expansion guidance? Is that mainly the U.S. margin expansion you said not expecting 50 to 100 basis points? Is that the main reason? That's my first question. Then I have a follow-up, please.
Martin Hug: There's so much uncertainty -- there's so much uncertainty, especially in North America, currently with regards to the margin, right? I mean just to give an example, I mean, importing duties, we are not sure yet exactly where it will end up, as an example, from Europe or for cocoa butter from Brazil and things like that. So that's why we felt like it was more prudent to call the lower end of 20 to 40 basis points, but we are confident to be in this range. So we felt in this world of uncertainty, it was just more prudent to -- yes, to call it, including those risks basically.
Adalbert Lechner: If I may add to your question, please don't forget we had a onetime impact last year, which was significant. So even if we would end the year with a 20 basis points improvement, you should see that the organic improvement is significantly stronger because we had to compensate a onetime impact that we don't have in '25. So I think it's also more meaningful to analyze the combined progress that we made in '24 and in '25, and this should be then in the area of 80 basis points. So this is a 40 basis point improvement year-over-year. I think it is more meaningful to see it like this.
Bingqing Zhu: Okay. I have a follow-up question on the working capital because you mentioned inventory was one of the big driver for working capital movement. Then it seems like the other one is accrued the liability, which you had a similar situation last year. It's quite a big negative accrued liability movement. Can you remind us what's driving that? And how do we think about that for the full year?
Martin Hug: That's mainly driven by the variation margin. Okay. By the way, for those of you who have asked two questions, if you have follow- up questions, please just come back, right? No problem. We don't have a lot of pressure right now from a timing perspective.
Operator: The next question comes from Callum Elliott from Bernstein.
Callum Elliott: I wanted to start with a follow-up on the owned retail business. Martin, you sort of gave some helpful color around some of the profitability drivers and Adalbert had obviously shared in the presentation some very impressive growth numbers. Actually just wanted to drill down a little bit further into the profitability because this growth is obviously very impressive. It seems like it's been going on for some time now. And with this ongoing shift towards direct-to-consumer, as you said, there are obviously the unit revenue gross margin uplift sort of to some extent, offset by the uptick in personnel costs. I wonder if you can talk a little bit about the sort of the net impact of those sort of opposing drivers, gross margin uplift, uptick in OpEx. What does it mean for unit margins and sort of percentage margins? And can this be a driver of margin expansion over the longer term as this channel continues to grow?
Martin Hug: Look, I think over the last 3 to 5 years, we have made a lot of progress on global retail, not only on the top line, but also on the bottom line. And our overall profitability of that division is more or less at the same level as the group average now. Having said that, we also measure profitability at store level, so the direct store profit, excluding the fixed costs that are then allocated to each store from the head office costs, let's say, in each country. And typically, when you open a store, implicitly, the divisional profitability as group average, it means that each store is quite above the group average. So basically, it means we only open stores that actually are accretive to our overall EBIT margin, excluding the fixed costs from the head office, which then don't typically go up. So it's fair to say that it's not a drag, but it's rather an enhancement to our profitability pattern actually in the group. So also from a profitability perspective, we are very happy about global retail.
Adalbert Lechner: And in addition, if I may add, we know it's a strong contributor to build brand equity. And we can clearly see connection with a strong retail business or direct-to-consumer business and our progress in brand equity. A market like Brazil, where the main business is deriving from retail. We have a strong brand awareness without having above-the-line advertising. So it shows us that the retail business creates awareness and also a strong brand equity.
Callum Elliott: Just a quick follow-up. Are you able to frame for us how big the direct-to-consumer business, the own retail business has become today as a percentage of the total company?
Adalbert Lechner: It's in the area of 15% of total sales.
Callum Elliott: Okay. And then look, my second question is more on the first half, second half margin delivery. So as you highlighted, Martin, H1 at 11% right in the middle of your 10% to 12% guidance. It kind of strikes me that a lot of things went in your favor in the first half of the year relative to your expectations as you had set them out in March. So like organic growth much better than guidance, which presumably has a nice margin impact, very nice geographic mix, given how strong Europe was versus the rest of the business that has a very nice margin impact. Cocoa prices also trailed off, moderated as you discussed. So a lot of positives that went in your favor from this margin perspective. And yet despite those positives, you were still sort of only, so to speak, in the middle of that 10% to 12% range. So I guess my question is, were there any unexpected negatives that explain why despite all the positives you were only in the middle of the range?
Martin Hug: I mean there's a managed number, to say like that, that was negative, which is to the pure P&L, but positive to the business. I mean, because we did price increases early on, we wanted to heavy up our advertising in H1. So we have overproportionately spent advertising. It grew actually even more than the sales. So the percent of sales went up in advertising. We feel that's important, right, when you do a substantial price increase, especially in the first weeks and months of this price increase, we actually invest behind the brand to limit the impact on the volumes. And as we stated also in our comments, actually, even if the 4.6% may not be a great number from your viewpoint, actually, it's better than our own plans. And as we also said, this actually does not show the full picture because in reality, in the North American point- of-sale data sellout, we are significantly better than the 3.7%. So the implied volume decline in the U.S. is actually worse than what we see in the market. And then for the second half, why are we confident about the second half? Because as Adalbert said at various times, we did not implement all the price increases on January 1. So the impact in the second half is higher, and therefore, that will also help our P&L. So we are right on track. We're actually right on track. So we are not nervous about our profit. We were exactly where we wanted to be. No negative surprises. I mean it was, as I said, a conscious decision to heavy up advertising in H1.
Operator: The next question comes from Mikheil Omanadze from BNP Paribas Exane.
Mikheil Omanadze: I have 2, please. First one would be on the Dubai Style Chocolate. Could you please maybe quantify how much of a contributor it was to your H1 organic sales growth? And how much do you expect it to be for the full year broadly? And the second question is on the next year. And I understand it's still early, but as things are shaping up now, do you expect FY '26 to be another year of above-average pricing? And I don't know if you can point to any end of the range for 6 to 8 and 20 to 40 basis points for FY '26?
Adalbert Lechner: Thank you for the question. So Dubai Style Chocolate, in general, we do not disclose the sales by brand. But as it was also a question in the past time from analysts, we confirm that it is in the area of 1% to 2% of total company sales, and this is exactly where it was in the first half. The second half is in general is stronger. So also Dubai Style Chocolate sales will be stronger, especially as the U.S. is kicking in. On the other side, we expect a slight slowdown in Europe because in Europe, we really saw a hype in the first half of the year, and I think this will normalize. So at the end, I think this corridor, 1% to 2% should be also a realistic corridor for the full year. Pricing for '26, it is too early to give a clear indication. One thing is clear that the dimension of price increases that we were forced to increase this year, we will not see again in '26. But of course, we will see a carryover also of the price increases that were implemented in a staggered way in this year. So you will see price increases, but on a significantly lower range than published in this year.
Operator: We now have a question from the webcast from Fiona Xu, AKO Capital. The question is, receivables are relatively high given that global retail outpaced wholesale. What drives this? Any particular with partner payment or phasing of sales?
Martin Hug: Look, for us, it's not an unusual pattern at this point of the year. So as I said in the beginning, we are managing net working capital. You see the majority of opportunities in the inventory. We had now a higher inventory in H1 because of the value of the inventory. We have a lot of projects ongoing to improve net working capital management, accounts payable, accounts receivable. So we do not see anything that is out of the norm. As I said before, if someone has a follow-up question on the phone as well, please feel free to come back with follow-up questions because we seem to be almost done with all the questions if you're asking now webcast questions. So if somebody on the phone has more questions, please come back.
Operator: We actually have a follow-up question from Tom Sykes from Deutsche Bank.
Thomas Richard Sykes: It was just a follow-up on the comment on Dubai Chocolate. I was just -- I know you said it'd be in the 1% to 2% corridor. But is that something you still expect to be contributing to growth, therefore, in H2? Obviously, you've spoken about the rollout in the U.S. And would you expect -- and I know you have other innovations, and this is just one product there. Would you expect in H1, therefore, if you're up against tougher comps in H1 next year, it might be difficult to grow Dubai Chocolate in aggregate? Or do you think you have enough new rollouts to still see year-on-year growth for a while yet, please?
Adalbert Lechner: So for this year, every sales on Dubai Chocolate is incremental first half and second half. Second half, there was a very low base last year where we sold some handmade Dubai Style Chocolate. So this year, of course, also in the second half, Dubai will contribute to the growth in all regions. If you ask me about next year, of course, we have plans and are working that this Dubai Style chocolate is not a 1-day wonder, but we have innovations in the pipeline. We are extending this recipe into different seasons. So we will come with a Christmas assortment, with an Easter assortment. We will also come with new recipes. So we have a plan that Dubai Style Chocolate will also grow in '26. If this answers your question?
Thomas Richard Sykes: Yes, it does. And I guess a follow-up from that is it's obviously at a higher price point, it's perhaps opened up the possibility of R&D and innovations at a higher price point. Do you -- is that something we should also expect that the follow-on from this is the brand equity benefit from Dubai is something that you feel confident that other innovations can follow on at higher price points, too?
Adalbert Lechner: Yes. Okay. I mean, in fact, we are exploring how to extend -- in which direction to extend this success of Dubai Style Chocolate because, in fact, what you say, it is a very premium recipe, complicated also to produce, short shelf life. Therefore, with a special mechanism to market it, it means we do not -- normally, we do not go for shelf placement in wholesale, but we go for in out on displays. So -- but this opens also for other innovations with a short shelf life and with complex recipes to enter into the market. And so in this respect, you're absolutely right. This is what we are exploring right now. At the same time, we are also exploring products with a shorter shelf life, high-end recipes for our retail channel where we can handle short shelf life products much better. So also Dubai Style Chocolate, for example, in our own retail stores is available year-round because here, we make sure that first in, first out, also products with a 4-month shelf life are not overaging or expiring. So in this respect, yes, our R&D has seen now that we can strive for more complex, more premium recipes that will also enable us to charge higher consumer prices.
Operator: We now have a follow-up question from Callum Elliott from Bernstein.
Callum Elliott: I have 2 actually. So just a follow-on on this Dubai Chocolate. You obviously spoke about the North America launch in the second half of the year. I think there have been some photos floating around recently of the product already in Walmart over the past week or so at a $15 price point. So I guess my question is, as you've been thinking about this launch and obviously planning for the North America launch for some time, how do you balance the sort of like the super premium price point that you were just discussing. Like how and why is Walmart the right channel for that? Is there a brand equity risk of putting it in such a mainstream channel? Is this about sort of sales maximization? Obviously, you can get a lot of sell-through in a Walmart, but does it risk diminishing some of the brand halo impact that you might otherwise see if you chose to be a bit more selective with distribution. Wonder if you can just talk about the thought process behind that.
Adalbert Lechner: That's a very interesting question. Of course, as you know, we are very selective when it comes to the distribution strategy. We are not the only big chocolate manufacturer that is not selling to hard discounters. But Walmart is our biggest customer in the U.S., and it is certainly a customer where consumers would expect our brand, and we have a very strong and good cooperation with Walmart. So just to tell you the success of the Dubai Style Chocolate in the first weeks, I can really say is overwhelming. We got feedback how strong the offtakes at this price point. And this shows us also that the consumers in Walmart are prepared to buy a tablet for $15. And at the end, we are premium mass market player. So without an impactful and meaningful distribution, we can also not support our brands. And therefore, Lindor as well as Excellence as well as our seasonal products, our premium gift products, but also Dubai Style Chocolate are distributed successfully in Walmart. And we will, of course, also be in all the other wholesale partners that we cooperate in North America. So it's not an exclusive launch in Walmart, but it is just the first step to start distribution in the U.S. and the rest is to follow.
Callum Elliott: Okay. Very clear. And then my second one is just drilling down into the revised full year organic growth guidance. So obviously, you were at 11.2% in the first half of the year. You guided the new guidance, 9% to 11% for the full year. So you're quite explicitly suggesting that growth is going to slow in the second half. But then just beating everything that you've said about this on the call so far, you said you expect more contribution from pricing in the second half of the year, which seems to be a global thing, that acceleration in pricing. And you also expect the U.S. and the Rest of the World to accelerate from a volume perspective in the second half of the year. So you seem to be implying that Europe is going to decelerate quite a lot in the second half of the year despite the fact that we're going to get more pricing. But you've also spoken about how the elasticities have been very limited in Europe in the first half of the year. So I guess what I'm trying to understand is, are you just being conservative because of all of the uncertainty that you've spoken about, et cetera? Or is there actually some work that you've done that drive this expectation that for some reason, elasticities are going to get worse in Europe in the second half of the year?
Adalbert Lechner: I think, first of all, we have, at any given time, a very precise forecast where we see our business developing. Of course, with all the insecurities that you have always in the business. But this forecast is an aggregation of all the activities that we do of all the influencing factors. Europe, why do we expect Europe to decelerate? As mentioned, the price increases were implemented in Europe earlier than in the U.S. and also in rest of the world. It was more frictionless. It was earlier. So this impact of higher price increases will come more from the U.S. and from rest of the world than from Europe. Then we have had a very early rollout of Dubai Style Chocolate with tremendous volumes in the first wave. We expect that this will not repeat in the same amount in the second half. So this is why we see that the deceleration in Europe, our biggest segment will compensate partly the acceleration of North America and rest of the world, but altogether should lead to the same dynamics that we have experienced in the first half.
Operator: We have a follow-up question from David Roux from Morgan Stanley.
David J. Roux: Martin, I had a follow-up question on inventory and particular the bean volumes on the balance sheet. I mean, Lindt, the sourcing of bean cocoa beans and equivalents was down sort of 11% year-on-year in 2024. And I guess in 1H, it was also down. At what point do you expect the business and perhaps the market to kind of go through a restock and accelerate bean purchases? And are you not a bit worried that maybe there's potentially a bit of dash -- kind of a bit of a scurry for beans that could lead prices higher?
Martin Hug: I mean from a purchasing point of view, I think there are 2 parts to the question. From a purchasing point of view, we have to buy the beans when they are available. And in Ghana and Ivory Coast, the beans basically available to buy between January and March to simplify because then is when the main harvest happens, starts somewhere around November. So those inventories flow to our warehouses mainly January, February, March, right? And then from West Africa, there's not so much additional beans flowing to our warehouses. From a pricing perspective, that's the 100 million question, right, where will the cocoa bean prices go from here. As we tried to kind of point out, we are getting good news in general about the pod counts in the countries. So it seems like the harvest in West Africa should be good. We do know that a lot of additional trees have been planted, especially in Latin America. So that gives us a lot of confidence about the midterm. So we are not nervous about the overall supply situation on cocoa. We believe at some point in time, there will be a turnaround from a market perspective and more cocoa is available and we will have surpluses. All experts actually expect a surplus in this coming crop '25, '26. All the experts we talk to, all the numbers we get everybody expects a surplus. I think that's the reason why we have also seen a decline in the market. I'm not sure if the market has completely understood the volumes that are negative, right? I mean we are now down 4.6%. We are gaining market shares, volume and price. So I assume -- but obviously, the overall market is also quite significantly down. So I'm not sure if the cocoa market entirely understood that. And that may lead to further declines in the cocoa markets. But look, the market is so volatile that it's difficult to understand exactly what will happen to give you a forecast. That's why we also do hedge and make sure that we don't take the full risk obviously.
Operator: We now have a follow-up question from Warren Ackerman, Barclays.
Warren Lester Ackerman: Warren again at Barclays. I've got 2 follow-ups. Firstly, you mentioned cost savings quite a few times in your presentation. I know you don't normally give a number for what the kind of gross or net savings are. But are you able to maybe kind of scope out for us what you're doing? What are the big projects that you had in the first half? Do those cost savings step up sequentially in the second half versus the first half? Any kind of like qualification, if you can't quantify the savings would be useful. And then the second one, you mentioned this trend around private label gaining share and premium chocolate gaining share. So by definition, the middle being squeezed, and you're certainly seeing that in mass market chocolate volumes. Do you think that trend will continue as cocoa prices come down, this bifurcation that we're seeing? And are you able to say anything specifically in maybe which markets or which kind of SKUs you're seeing -- not you're seeing, but the market is seeing private label gaining? Any countries or any specifics you'd call out where those gains are being experienced?
Martin Hug: I mean I quickly start with the cost savings questions. We are basically looking or have started to look 1 year ago or 1.5 years ago, even more intensively at all the areas of the company. I mean, to give you a few examples. Logistics is a super important area where we are continuously improving and getting more and more efficient, especially in North America, but also in Europe, supply chain in general. And a super important area is procurement. We are basically tendering. We are looking at all the big spends, and we are tendering those businesses from media to any bigger categories you can imagine. We have a big SAP project that we are working on actually, which will also drive savings in the future because we will get more efficient. We have already gone live in 3 countries now in July, and we will roll this out in the entire company over the next 3 to 5 years. So that will also drive savings going forward. And last but not least, bear in mind that our volumes are slightly down. So we do not need to hire additional headcount in the factory, like temporary workers that we typically hire for the season, we do not need exactly the same amount. And on a fixed headcount level, we are really trying not to increase that because our volumes are not going up. So then we get really a substantial leverage on our bottom line if you can do that, that's what we are doing at the end of the day. We are not touching the recipes, and we are -- also as a rule, we are not doing any shrinkflation, right? We are not downsizing packaging sizes and we are not changing recipes to buy cheaper ingredients. Those 2 things are really kind of for us, untouchable.
Adalbert Lechner: Okay. To your first question, Warren, how do we see the future of this trend, private label gaining -- premium brands gaining, especially your question was when prices are coming down? I mean this is hard to predict. We can only observe what's going on now. And what we see now is the private label and premium is gaining share globally. So it's not a specific region where we see this. It has also some practical reasons. Private label operates with significantly lower margins on lower price points. So when raw material prices increase, they are forced to increase prices significantly higher. And as they are still perceived as the cheapest option in the market, we see that they simply grow by the very strong price increases in value. And at the same time, when consumer sentiment is weak, people skew towards the cheapest brands in the market, and that's private label. And at the same time, we see that the affluent consumers with a low consumer sentiment and this consumer sentiment is also observed across the globe. They cut back on bigger tickets and then the premium chocolate become this small affordable luxury. And this is, I think, the reason why people then go for a small treat with a chocolate instead of going out or reduce their out-of-home consumption, vacation spendings, et cetera, et cetera. So I cannot give a clear projection what will happen when prices come down. We are confident when prices come down that premium will stay on trend because this is a long-term trend. This positive trend of private label is a short-term trend observed mainly in the last years. So my projection would be that this could, let's say, go away, but the premiumization globally should stay.
Operator: We have a follow-up question from Antoine Prevot from Bank of America.
Antoine Prevot: So 2 from me. So on the store network, you said it's margin accretive. Any information maybe on the retail store margin right now? Because I mean, raw material inflation is less of an issue in that part of the business, while the level of pricing is quite high. And as you said, there is a lower elasticity level. So any indication here would be super helpful. And second, also on stores, I mean, you have clearly accelerated the store openings. When you open a new store, what is generally the payback period you are looking for regarding your investments?
Martin Hug: I'll start with the payback. I mean, one important key figure for us is the payback, yes, but another important one is, of course, the IRR that we actually above our target, which is typically above 20%. We are looking at the net present value. We are looking at the direct store profit, the number I mentioned before because the direct store profit, so the profit of that store without the head office fixed costs was below the, let's say, 16.4%. That is our target for this year. This would obviously not be accretive. So we want the direct store profit to be substantially above the 16.4%. I'm not disclosing numbers here. So -- and then payback, typically, I would say, around roughly -- I mean, this is now a very -- it depends store by store, right? But I would say somewhere in the neighborhood of 3 years.
Adalbert Lechner: To your first -- the first part of your question, as Martin has mentioned before, we have improved the profitability of our retail division significantly across the last years. And this also led to the fact that we say we can now accelerate the expansion, we can scale our retail footprint because we have an accretive business and it used to be dilutive before. When you see 60 new stores versus prior year, this also means that we have no more necessity to close stores. In the past time, this figure of expansion was always impacted by a silo of new openings and at the same time, closings of stores that were not profitable. In the recent years, I think we have really cleaned the portfolio of our retail stores. We had more or less no closings anymore. And so the expansion is also more visible because the silo or the net figure of openings and closings are more on the side of the openings. To the retail margin in general, I think we have very healthy margins, and we have also very healthy comp store growth, which further drives the profitability of our store network, plus we are entering new geographies. You have read in our full year report, we go into completely new countries with retail store expansion. So we can also expect in the years to come a significant number of new retail stores year after year.
Operator: We now have a question from the webcast from Essie Young LGT Capital Partners. The question is, will growth in EU decelerate in second half given that growth in North America and rest of the world will accelerate in second half? And if so, why? Do you see price elasticity in EU pick up?
Martin Hug: This question has already been answered before because somebody asked the same question. Any other questions?
Operator: We now have one more question from the webcast from Paula Doenecke from Bloomberg News. Can you please go into more detail why you still expect cocoa price inflation into 2026?
Martin Hug: Yes. I mean this is driven by the fact, as I mentioned before, that we have a relatively long supply chain. The cocoa supply chain is a long one. You buy the beans basically well in advance because the beans do not flow 12 months during the year, but you have a harvest, which takes normally 3 to 4 months. So if you want to buy West African beans of higher quality, you need to receive those ones in January, February, March. At the moment that you receive the beans, you have obviously locked in the price. And those beans, they will also actually, to some extent, at least be used in the year -- in the following year, right? So the beans that we have now in the warehouse in the different countries, we are not only using them in '25, but to some extent also in '26. That's why you have kind of a lag with regards to the go down. I hope that's explained in a simple enough way. Any other questions?
Operator: That was the last question. Back to you for any closing remarks.
Adalbert Lechner: From our side, thank you for the questions and for the interest, and wishing you a good day.
Martin Hug: Thank you very much.