Q1 2020 Results Replay
Thank, you good morning welcome, to Unilever its first-quarter trading, update we. Hope you're staying safe and keeping healthy and these uncertain, times. Given. The exceptional circumstances created. By the cove in nineteen outbreak we're presenting, our trading update to you from our respective homes in, line with the physical distancing, protocols, so, please bear with us if things are not quite as smooth as you normally expect. Alan. We'll begin with, an overview of how we're managing the business through the impact of the covert 19 pandemic, before, passing to Graham to cover the results and performance in our divisions and regions Alan. Will then wrap up with some comment on our outlook for 2020. We'll, keep the prepared mark remarked to somewhere around 30 to 40 minutes leaving, plenty of time for Q&A, all. Of today's webcast is, available live transcribed, on the screen as part of our accessibility, program. First. I draw your attention to the disclaimer to forward-looking statements and, non-gaap, measures and. With that let me hand over to you Adam. Thanks. Richard and good, morning everybody. One. Of the unusual features of this crisis, is how it feels like the world is that a complete standstill and yet. Things are changing at extraordinary. Speed, the. Rate of change that we're witnessing is faster, than I think any of us have ever known and it's, in that context. Of rapid, and unpredictable. Change that. We are sharing these results, for a quarter, one and also, our assessment, of how things were likely to play out in the future it's. Also in this context, that we're discovering the. True, responsiveness. Of Unilever, and the. Value, of our closeness, to consumers, and markets. In many. Countries around the world where we do business. Go. To the next slide please first. And foremost this is a human crisis, and we're deeply saddened, by the terrible. Impact, that the pandemic is wreaking on waves, and livelihoods. Everywhere. Msb, come behalf of everyone at Unilever in. Extending. Our deepest, sympathies, to all those who have been affected and, are struggling. Equally. We stand and on express. Our gratitude to, all. Those who are working heroically, at the frontline to slow, down the. Spread of this covered, 19 disease, it's. Also a global crisis. Which, is manifesting. Very, differently, and at a different pace in different countries and that's going to be a theme throughout. This morning's, discussion.
That. The response. To the pandemic cannot, be looked at in some kind of global aggregate in. Particular. The consumer, reaction, in different countries is pairing for, example in a lack of stocking, up in the developing, world to enormous panic, buying in the United, States. Governments. Are taking, unprecedented. Action, to protect lives and economies, with lock, downs and curfews, in most countries and. That's having a knock-on effect on the economy whole. Industries, are facing, crisis. Of survival, and we're. Starting to understand the shifts in consumer behavior that this pandemic will bring. And. Unilever our, priority, has, of course been to safeguard, the welfare of our people, ensure. The resilience, of our supply chain and to. Protect our communities, while. We mean people's essential. Product. Needs for the type of hygiene, and food brands that we make and sell our. Portfolio. Of trusted, brands our. Financial. Strength. And. The quality, of our leadership teams on the ground are the. Things that will see us through this crisis, and into the changing world that will come afterwards. In. Frankly. Very different difficult circumstances, we've seen the best of agility and speed of action they, do Leivers capable, of our, response. Has been structured, around, these five work streams and that. Served as the foundation, for managing, our business through, the crisis, people, supply. Demand. Looking. After the community and guarding. Our cash. We're. Seeing the power agility of the flattened. Unilever organization. Structure with short chains of command tour markets. Through. The 15 performance, managed units the reports emitted and this, proximity, to, our markets, remains, that we as made that we can respond quickly with. The right balance of, good. Execution, of global direction, coupled. With high. Quality decisions. That are being taken by experienced, and qualified people. On the, ground close, to the market.
Looking. At people first of course the health and safety and well-being of our workforce, is our top. And number-one, priority, as. We move quickly to protect lives, and livelihoods, since. The initial outbreak in China we, put in place measures to help minimize the risks our employees and their families from, coronavirus. And the quarantine, disease. We. Acted, quickly to remove uncertainty. For a workforce with a blanket. Mandatory. Indefinite. Work. From home order, for. All of our office based rules and that when I work very early on March 13th. We. Introduced a new potato, standard, operating procedures in our manufacturing, and for our field sales teams we. Also guarantee jobs, and incomes for, April, May, and June and made. A conscious, decision to. Include. The people who work to keep our facility, secure, our premises, maintained, or, run, our cafeterias, and her were so much a part, of the human labor team even if they're not during universe, payroll. We're. Also throwing on our adaptability. By quickly redeploying. Teams from parts of the business with low demand to help in areas that are skiing high demand and this, has been enabled by a digital. Internal. Talent marketplace called, flex that. Matches, employees, who have capacity. With, opportunities. To do interesting, new types of work and so. Far we've redeployed, over 3,000, people for example in, our. Food service, operations, which have been hit hard to, support the foods retail, business. On. Supply. Maintaining. The supply, and distribution of, our essential, food and hygiene products, is of. Course critical both to the consumers, but also to the countries that we work in and has, been recognized, as such by governments. Government. Lockdowns. And. They were in the wrong there a government, long times and the virus bring new challenges for our operations, such as physical. Distancing, and factories, and the, need to wear special protective clothing and equipment, teaming. People's work procedures and very, much increased, hygiene, protocols, and in, many locations even traveling, to work for our factory teams has been difficult it's. Even required special permits to let people to commute, and the, demoness, itself, compounded, by discipline, self isolation, has, meant that we have run our, factories sometimes with reduced, operator, labels, so we've managed to do all this effectively, and at.
Speed In fact our. Skill, and reputation in, many countries has. Enabled, our leadership, teams to quickly engage with government to ensure we can keep making. And supplying, our essential, products to customers, at. Times we've, even had to intervene on behalf of our suppliers, so. That they can continue to operate I. Do. Think our teams have done a magnificent. Job keeping, the factories running opening up a new capacity where. Is most needed, there. Have been times where our factories have had to close but none for more than a few, days and as. Of today we're running at an average of around 85, percent, of normal, output. Across. Our. 221. Sites. Now. Despite these challenges many of our factories have actually broken production, records, as they focus on our key s key use and respond. To strong demand for specific, products such, as in our hygiene, and in home cooking food. Counters, prior. To the cope would maintain outbreak hand sanitizer, it was an absolutely tiny part of our business yet over the last two months we. Have opened up more than 30 new production, lines including, many. Third parties, to, make hand, sanitizers. And in the UK we. Converted one of our plans in just three days to support the safe. Our first priority has been to serve frontline, health care facilities, with sanitizers, where we've been making, extensive donations, our. Procurement. Team have. And have had to establish new sourcing, routes to secure the supply of thousands. Of key ingredients and, materials, and where, it's necessary, we've. Secured alternative, supplies for, some materials to ensure resilience. Again. We work closely with our retail partners and an, important, part of managing, supply, has been to prioritize. Production, of PS key use and, that's allowed us to increase output, tonnage, through. One production one's all those key. S key use. Consumer. Behaviour change that driven by : 19, has. Led to changing. Short-term demand patterns, and this slide shows some of the the biggest effects. But. These are global. Macro trends and micro. Trends all clear just as important, people. Are of course by more hiking products, for hands and for household surfaces and this, is one of the changes we expect, to see continued, beyond the, immediate crisis, in. Some, markets particularly, in the USA. But. To much lesser extent in the UK and parts of Europe we've seen some. Household stocking, of food and hygiene products, and of course that's a short-term effect, we've. Seen out, of home food. Channels, effectively. Closed down during walk those restaurants. Canteens. Travel, hubs later sales Tuesday, destinations. And this. Has had a big impact on, us it's a significant, challenge for our ice. Cream business. And our food solutions business though. The amount of in home cooking is obviously increased, as a partial, offset. Also. Being big, changes, in the channel footprint local, stores have become the global define, default.
Point. Of purchase and, e-commerce. Grocery, sales have rocketed. For example, in the, US we've seen our e-commerce sales, doubling, in q1. And. As. A total, company ecommerce sales increased, by 36%, in, the first quarter and this changed, to online, shopping and online media consumption. Another factor, that we thinks going to the lasting, impact as we saw with. SARS, and the, swine flu epidemics. Which really were points, of inflection, for. The consumption, of digital. Digital media, and online shopping in, China. And all and in Hong Kong. You. Know at these times consumers, do seek the reassurance of big familiar. Trusted, brands and high quality products, we. Always see this in the crisis. But. In this case, in the aftermath, we do anticipate some, trading down to more value price back brands, because. We are facing an inevitable, economic, downturn, the only, were generally. Well positioned, for these changes given our strong brands, our strong Category positions. Our strong. Local businesses. And, a portfolio, that does cover the full spectrum of, price, points. Many. Of our hats boots and brands have moved quickly to reply, on their innovation. Some. We've postponed, some we've accelerated, so. That we're just to consumer, buying in different channels and we rework brand communication. To. Make sure that it remains relevant for, example in woman hygiene, we, accelerated, the launch of botanical, hygiene, that you can see here in China is a new brand a combined combines, advanced technology, with the wisdom of nature and. Gives strong reassurance, from German kill in Italy. We, launched, a new professionals. Cleaning, range of the. Life Sephora brand especially. Targeted for professional. Channels and in. Brazil we. Teamed up with Heineken, who, are able to provide the necessary alcohol. Material. To produce, a special, sip. And sanitizer, which was distributed. To. 210. At favela, areas, around Sao Paulo and of. Course our responses, go beyond the hygiene space dove is highlighting, the the beautiful courage, of frontline. Health workers. Importantly. Supporting, with. Much-needed donations. This, is actually more about brand new and not just brands see and the. Lipton, stay, home stay connected messages. Encouraging people to have a virtual. Cuppa, together. Early, in the pandemic, we changed, our monthly, operational. Forecasting, cycle to a weekly basis, so that, we can reflect and respond, to the rapid changes in consumer demand and we've, been using our digital, people data centers, to pick up changing consumer. Sentiment, early when. We tap our unique. Local, depth, of consumer. Insight and. Frankly. A newly discovered organizational. Agility we. Think is the potential, to permanently. Unlock, new sources of growth for, Unilever. We've. Been guided through, these. Early days of the covert, 19 pandemic, by human. Leavers multi-stakeholder. Model that's, included, a commitment, to use our scale as a force for good in the community yes. Our, public, service messaging, is a proven, way of building consumer behavior change and it develops, and grows our markets, and, we make no apology for that because it's what the world needs right now these.
Behavior Change programs, and the substantial. Product donations, that we've been running at scale and in. Partnership, with the World Health Organization. The UK, Department for International Development, and, so. On have been they've been an important part of our community response. And as, they - last month we're also making available 500. Million years of short term cash flow relief to. Support livelihoods across, our extended, value team primarily, through. Early. Payment to. Our most vulnerable small. And medium sized. Suppliers to help them stay. In business of. Course, we can only make these moves because, of the strength of our balance sheet and confidence. In our cash, generation, capability, and it's, enabled us to move quickly to take some of the actions I've just described, for our consumers, for our communities, for our commercial customers. For. Suppliers and also to protect our wider workforce. You. Only are entered, this period with a robust. Balance sheet and a strong liquidity, position. Nevertheless. We've, moved to speak to review all sources, and uses of cash so. That we can continue to invest in our brands and reallocate. Funds toward, the, best opportunities, to protect and grow the business and Graham's, going to describe some of the actions that we're taking to proactively, manage, profits. And cash so. These five work streams they've. Served to. Guide our immediate response to the pandemic, but. Actually, it's our, portfolio. Our. Financial. Strength and above, all the. Quality, of universe people which. Gives us the confidence that we're well positioned not, just to weather this immediate crisis, but. As we're already seeing, hourly signals of to. Come out of it stronger, and with, that let me hand over to Graham to talk in a bit more detail about the division, and regional performance, well. Thanks. Alan morning. Everybody, well, in. Q1 underlying. Sales growth was zero point zero percent, that, was 0.2%. From volume, and negative. 0.2, percent from price the. First point I want to land is that after, the first two months of the year we. Were very much on track with our plans, with the five, growth fundamentals. Starting, to deliver including. Improving brand awareness improving. Household penetration. And improving, market share, now. It's hard to be precise. About, the impact, of covered 19, the. Virus as it spread during march most countries were impacted, and rapid, changes, in consumer, behavior have. Caused quite significant. Volatility, in, each, market. The. Four key factors that. Adversely, impacted. The quarter, we're. First a decline, in our global food solutions business as. Restaurants canteens, and cafes. Were closed, secondly. A decline in out-of-home ice cream as many of our classic, out of home retailers. Like leisure sites travel hubs beaches. And tourist destinations. Were, closed, thirdly. A significant, slowdown in, the Chinese market, during, the lockdown period, there which lasted, for, much of the first quarter, and finally. A total lockdown in India, at the very end of March which, actually, stopped production, and shipping for, a number of days now each of these four factors, individually. Had. An approximate, 1%, drag, to group growth in, the first quarter, and. This was partially offset, by household, stocking, at the end of the courts are mainly across developed, markets as I mentioned, in the USA, where, we saw a pretty dramatic pantry. Looting in the UK and in, Germany with a smaller amount in Latin, America and we estimate that together this contributed, positively about. 2% of growth in the first quarter at group, level now. Given the impact it covered 19 had in different, countries, at different times, rallying. The strength q1. In. A lot of detail we thought it would be more helpful for you to understand, the, ongoing impacts. By, category, by, Channel and by country, for. Example our. Oda form ice cream sale sales are, about. 3, billion euros annually, of, which nearly 70%, is generated, in the second, and third, quarters, with the second quarter the, biggest all. The markets are different but we've typically seen out of home ice cream sales declined. By 50, percent, or more when, a country moves into lockdown and tourist, and leisure, destinations. Are, closed down we also, have a two and a half billion euro, global, food service business which, is also heavily impacted as, cafes. Restaurants and. Canteens. Closed and, we're typically seeing sales declines, of around, two-thirds when, a lockdown happens. In, our food service channels. Looking. At the impacts of the pandemic, on categories, and channels we, see five groups. First. Of all households.
Stocking In, the short term this, is a pool forward and demand due to stockpiling ahead of lock domes for example, of dried, foods and, hygiene. Products this. Is a change in buying patterns rather, than a step-up in consumption. Secondly. Increased. Consumption, from consumer, usage for example, increased. Cooking at home and stepped up demand for hand, washing and hygiene, or cleaning products. Thirdly. Decrease. Consumer, usage in some of the more discretionary, areas such as here washing and styling. A reduction. In skin care occasions. And deodorants. For example, we, know that those working from home under, normal circumstances. Typically. Have eleven, fewer personal. Care occasions, every, week. Fourth. We, see channel switching, with the best example, being shoppers. Moving from offline to online channels. In China. For example ecommerce. Grew by 34 percent in, the quarter but the offline business was, in double-digit, decline and. Finally measures, in place to contain the pandemic have meant that some channels, are mostly, closed which as I said impacted. Both, out of form consumption, of food and refreshment, occasions but, also retail, outlets in the health and beauty channel where, we sell our prestige. Beauty portfolio. Let's. Look now at the impact of the pandemic through, a geography, lens we. Know that the impact from country lock downs is greater, than, the category, and channel shifts that I've just described. Impacts. Various countries go through the cycle from, pre quarantine, to physical. Distancing, to shelter. At home or even curfews, and finally, of course through. To recovery and, it's key to nor that well there are many similarities, in, the impact, of Corbett 19 restrictions, by, country, the duration. And severity of, the cycle differs. Quite significantly. By country, or even, by, state or by city. So. In a first quarter, Africa. In parts of Latin America, were only just beginning to be impacted, by the outbreak of the pandemic, India. Went into a nationwide, shut down in the last week of March although there were some locked domes in some areas from mid-march, which. Fixes in China began to be eased at the end of March and, although some restrictions, have, now been reintroduced, in selected, big cities. Chinese. Consumers, you know are not, yet going back to, how things were before there's. A new normal, emerging, such as the attitude, of consumers, to, return to out of home dining although. The restaurant opening rate continues, to increase and is currently sitting and around about 60 percent the. Capacity, utilization is, capped, at somewhere between 50, and 70, percent to. Sure that physical, distinct distancing. Is maintained, in those restaurant, let. Me turn now to the divisions. Overall. Beauty, and personal care grew, by 0.3%, with. 0.7%. In, volume, negative. Pricing, of 0.5%. Was. Primarily led by India, following, price reductions, in Skin Cleansing in the previous quarter. On. This slide we show on which of the different product categories in, the beauty and personal care division have been impacted, by the short-term, pull forward and demand due, to household, stocking, and also.
The Changes, in consumer, usage, by. This I mean how many times our consumer, is washing, her hair using. The order ins or cleaning their hands, skin. Cleansing saw mid-single, digit, volume lead growth as we, responded, to the critical, need for hygiene. Products, to prevent the spread of corded, 19, from. A channel perspective, travel, restrictions, adversely, impacted, the Carver portfolio, within, skin care similarly. Our overall prestige, portfolio, is being heavily impacted by the closure of, much, as the beauty channel which normally makes up about two-thirds, of our sales. For. The refreshment, underlying sales declined, by 1.7. Percent with. Negative, volumes of 1.8%. And, pricing. Of 0.1 percent, again. We shall hear the key categories, within food and refreshments where. We've seen both household stocking, and changes. In consumer, usage, the. Two major impacts, to collate are, those have previously mentioned the decline in outer form ice cream consumption and in, global food service sales in. The quarter the largest volume decline was an ice cream which was down 8% overall. The. Result of there being little seasonal, sellin Ferrero form ice cream in our key markets across. Europe in Turkey, and in, Mexico. Distributors. Have quite naturally, been reluctant to commit to buying ice cream stock with an uncertain, holiday and tourism, series in the head and as I said earlier the, next six months normally, accounts for around 70%, of, our annual, out of form ice cream sales. Also. As mentioned earlier there was a sharp decline, in foodservice as, restaurants, counties, and cafes were, closed for most of the quarter in China but, also in March in the other large foodservice markets, such as the US Germany. And the UK. Increased. In home consumption, and household stocking in some markets, particularly, in, the USA in Europe contributes. It to volume leg growth in savory, and the dressings, can. Are so low, single-digit. Growth whilst, Hellmann's grew, by double digits, tea. Declined, by low single digits impacted. By India and Oda, formed channel closures the. Strategic review of our tea business is well underway and all, options to maximize value are, being considered. Home. Care underlying sales grew, by 2.4. Percent with. 2.6, percent from volume and negative price of, 0.2, percent our. Home in hygiene brands including, safe surface cleaners and Domestos, bleach products, benefited. From increased demand, for household cleaning with, double-digit underlying. Sales growth as. An example of our brands rapidly. Adapting, communications, to ensure that they are fully. Relevant, in today's changed, world the. Mess dose is teaming up with clean. Floor answers to. Pleat it spread the message about, home, hygiene. In. China, we accelerated, the launch of the new germ killing botanical. Hygiene, range which Alan mentioned addressing. The man for natural cleaning supported. By advanced, and effective technology. In. Laundry, format premium ization in particular. Liquids and capsules, continues. To be a driver of volume led growth in fabric, solutions, clean. And green home care brand seventh-generation. Grew. By double digits and, let me turn now to the regions in Asia. A matte rub underlying sales declined, by 3.7. Percent, led by a volume decline of 3.4, percent and, a price to claim of, 0.3%. Most. Of the emerging markets that we operate in were, only at the early stages of the pandemic by the end of our first quarter China. Was the exception and it suffered a significant, decline as, the lockdown measures, to contain Corbett 19 restricted.
Out Of home eating. Shopping trips for much of the quarter, government. Restrictions were beginning to be eased at the end of the quarter but, it will take some time for consumer, behaviors to, normalize, if and when we do. What. A government measures like only put in place at a national, level, in. The last week of March in India, there, was significant. Disruption, in the early lockdown despite. Our goods being classified as essential. The. Duration and impacts of the crisis in South Asia will, be key. Indonesia. And Vietnam performed. Strongly although. The Philippines declined across divisions, following. The early introduction of restrictive, physical measures and, our factories were in fact closed for a number of days, Thailand. Was also negatively impacted, with, reduced tourism. There. Was limited impact from cope with 19 in the quarter in Africa. Tommy. To Latin America, Latin America grew by 4.9, percent with. 3.1 percent from price and 1.7, percent from. Volume across. The region there was relatively limited impact, in the quarter from Corbett 19 when, a small positive impact from household stocking, in late March and a negative impact from, owner form a scream we. Believe that much of Latin America, is in the early, phase of the curve in nineteen cycle. Conditions. In the region generally, the remain challenging with volatile, currencies, particularly. The devaluation, in, the brazilian reai. Growth. In brazil was helped by continued, strength in the audience and in fabric solutions, in. Argentina, we saw strong positive, volume, across home care and in, beauty and personal care whilst, also managing, price in what continued. Hyperinflationary. Situation. North, america grew by 4.8%. Of. 5.6%. From volume, and a decline of 0.7. Percent from price this. Was driven by the strongest, growth, quarter. In the US since, 2012. With, our mainstream retail, business growing, at 7.2. Percent as, of, supply chain responded, rapidly, to, the dramatic, increase in demand, in March. Household. Stocking, led, to a substantial uplift. Across most categories wealth foodservice ice, cream and our prestige portfolio, were, negatively, impacted. In March as, physical, restrictions. Began. Hygiene. Products, such as salt salt, based products and in-home cooking products under. Canora and Hellmann's brands grew, strongly. Both. Before and during the impact of corded 19 our competitive.
Turnaround, In all three, of our hot spot cells in the US has, continued, in, dressings. We've, now been gaining value, share for, the last three quarters, in. US ice cream all the wonder line landline, sales both declined which is following the, market we, have gained share for, the last two quarters and, in. Our key us here business we, saw mid-single, digit, growth from the quarter with, our market, share performance. Back to flat and a, strong turnaround, from, the shear loss earlier, in twenty nineteen twenty, nine to Europe we delivered online sales growth of 1.4, percent with. Volume growth of 3.1, percent and price, down by 1.7, percent reflecting. A tough pricing environment. Across. Europe ice cream sales declined without the normal retail selling, ahead, of Easter holiday which normally marks, the beginning of the European ice cream season. The. UK and some other countries benefited. From household stocking in March although. This pull forward the man was already beginning, to unwind before the end of the month we. Saw increased, consumer demand for hygiene, products and foods, given, the significant, upswing, in home, heating. Turnover. Phila quarter was twelve point four billion, euros, underlying. Sales growth was flat, acquisitions. And disposals, increased, turnover by, 0.6%. With. Acquisitions contributing. 0.8%. On. The 1st of April understand. Unilever successfully. Completed, the merger with. GlaxoSmithKline. Consumer, Healthcare Limited, in. Early April we also enter, into the agreements, to buy out the 30% minority share of, our subsidiary, in Malaysia. That, currency related, items reduced turnover by, 0.4, percent currencies. Have been very volatile, in recent weeks but based on today's spot, rates we, would expect a negative, currency, translation, impact, of, around 3% on turnover, and a, little more on EPS, in 2020. Turning. To the balance sheet Unilever of course is a very robust balance sheet and a, strong liquidity, position we. Have a smooth profile, of long time term debt maturities, and substantial. Credit lines available, we, do not have any material covenants. In place whether, for bonds or for bank borrowings, at. The end of 2019 of cash and undrawn facilities, totaled. 11, point 2 billion, euros which, is 2.8, times the amount of debt maturing, in 2020. We. Have US and European commercial, paper programs, of, around 2 billion about, standings, at the end of March backed, up by around 7, billion of committed. Facilities. These were renewed, this year for a period of one year with, a one-year extension option. Only. Two weeks ago we secured additional funding and the debt capital markets, this was, a prudent move to take advantage, of relative. Market stability at, that time and to bolster our Headroom, and our financial flexibility. We. Were in the market to raise 1 billion euros, we were very significantly, oversubscribed, and so, we decided in the end to issue 2, billion euros our. Strong balance sheet is reflected, in our credit ratings which are currently a one, or single day for long-term, debt and P. 1 a 1 for short-term debt we. Implement Ain a strong balance sheet which we consider to be the equivalent of credit, ratings of at least a 2 or, singly. Within. This context, we have maintained, our quarterly, dividend. Even. Though our cash position is strong. Uncertainty. Demands, that we put rigorous, focus on, managing, their resources and users of cash and that, we're super, disciplined in controlling. Operational. Costs, first. Of all were, managed and focused, on, managing, our receivables. We're. Also really a ting all spent to ensure it's relevant and appropriate in, this situation, including. Operational. Costs. Cap eggs, and restructuring. Investment. Some. Course of this, decline quite naturally, such as travel, and in. Person market research, we've. Introduced, worldwide. Hiring, freeze we, have a freeze on all non-essential. Spending, such as things, like consultancy.
Etc. Other. Savings, are readily. Accessible because. Advertising, production has, stopped and media. Rates have declined so, that we can increase our advertising. Reach for, the same level of spend. Nevertheless. We're, still reviewing all discretionary, marketing, spend to ensure it's, both effective, and appropriate, and, above, all we're dynamically, we are allocating, our BMI, in response, to the crisis, for example we're. Shifting BMI, that might have been spent on outdoor, advertising and. Supporting, out-of-home campaigns, and dialing. Up investment, behind, areas, of the highest return on investment, for example in, skin cleansing in home, and hygiene, brands. We're. Moving at great speed, to make sure our brand communications. Are appropriate. For the times that we're in as. Examples, we've switched personals. Positioning, from dirt is good which encourage, children to get out and play to. Whom is good and a. Message, of thank, you for staying indoors. As. You know we have a robust pipeline of savings programs, that, includes our 5s savings initiatives, zbb. Run. Power draw and our change programs. While. These programs continue, we're, modifying them to support our focus on protecting, cash in, terms of uncertainty and, I'll not hand back to Allan to cover our, priorities, for 2020. Ok. Thanks very much grim. Now. You. Have heard us talk a lot about the uncertain. And volatile, conditions that were operating, and there are many known. Unknowns, things that we know we don't know such. As the progression. Of the virus. Including. Second. Waves the. Development pathways, for was antigen. And antibody testing. The treatments, and vaccines. We don't listen duration. Of government, containment, measures. Nor. The mechanisms. To unwind, social, lock times and. Therefore the severity, and duration of, the resulting, economic crisis, and so in, our opinion we've not yet seen a full impact of this virus and places that got less well developed healthcare systems the, favelas, of Brazil the, townships, of Africa, the, slums of India, and. So on but, we, are uniquely. Well-placed to spot and respond, to, changes. In local. Can sometimes, and, we're. Greatly, reassured, by, our inherently, strong cash and liquidity positions. Having. Said that we cannot reliably assess, the extent, and impact of this crisis, on our markets, and businesses. With. Their particular decision, to withdraw our growth margin, outlook for 2020. We're. Managing, the, company, to ensure that essential. Products continue to reach our customers, and consumers, whilst. Being fully focused, on protecting, cash, and maintaining. Our financial, strength. So. What's important, for the business mode well, we've. Talked a lot about how we're organizing to, manage through this pandemic in the short and medium term, but. We're also thinking beyond the virus and setting ourselves up for a future where. We can emerge, from the crisis. In strength. And positions, at. The start of the year we set out our five growth fundamentals. As the key levers for. Driving growth in the, categories. We compete they. Remain, very. Critical, critical to building a strong long term business with, excellent. Execution. Everywhere. And prior. To the pandemic. We. Were seeing, substantial. Progress from. The strategy, of refocusing. The business by these fundamentals. With. Growing, penetration. Of our brands and steadily. Increasing. Competitiveness. In market, share in. Hot spots the degree mentioned, and more generally. These. Fundamentals, are still, very, relevant for the short term and, helpful for keeping our business focused, for, example is no better time to be concentrating. And things like product superiority. Or, physical. Availability, or for, us to be demonstrating. The positive, contributions, that they're making to, society, in. Some instances, the five fundamentals. Have been modified slightly such. As dialing up cash. As, idle focus under our fuel for growth fundamentals. So that we manage both. For the short term but also navigate. Through the crisis, in strong. Condition, to reaccelerating. Conditions. Permit, and drive. The long-term health of Unilever. You. Know humanly. Heard is built, four, times, as many of our countries, have a track, record and an instinct, for managing, through crises, we've. Learned a lot from those, markets, over the years where, we've sure not just our ability to manage the immediate crisis, but, almost always to come out of it with the extend. Competitive. Position, and as, we look forward we're confident, in the long-term prospects, of the business, confident.
That Our portfolio. Our, financial, stability and, the quality of our leadership teams on the ground mean, that we're, going to emerge from this crisis, well positioned, for the future, the. Fundamental, drivers, of growth continue. To be the key principles, that will drive our execution, and we. Remain, completely. Focused, on delivering, superior. Long-term. Financial, performance through. Our unique sustainable. Business, model so, thanks for listening that's the end of the prepared, remarks and Richard, let me a come. Back to you. Thanks. Alan right, we'll now take questions and, we have quite quite a lot of questioners on on the line but we'll do our best to get through as many as possible, as. A reminder if you want to ask a question please press star, 1 if you wish to cancel your question press star 2, if. You're listening to the call on a speakerphone, please. Use the handset, while asking your question and. Finally, please keep your questions to a maximum. Of two. So. Let's. Go to our first question which is Warren Ackerman from Barclays all right Warren, good. Morning everybody good morning. So for me. Hopefully. You can hear me is not the best line in the world. Humor, is just, around the first course I think we've all braised for, a week, you one but this is, still a bit weaker than I think, most people expected. And when, I kind of compare your commentary, say, versus P&G, the supreme, or Down Beat so I'm just trying to understand, your. Competitiveness. You. Did flat in the first quarter, I appreciate it's hard but, is, that below. Market. Growth, I. Mean. If you can give us any clues at all on huge so I'm not expecting a number but there's. So many moving parts I mean would you would you expect the, number overall to be just higher or lower, thank. You, one just trying to understand kind, of competitiveness. As, best as you can you can measure that appreciating. Is difficult, and. Then the second one is, just when the guy does obviously like every other company almost other companies you would throw on your guidance on both top-line and the margin I'm just thinking about the. 20 percent number is that a number there's just no longer relevant, as I was just wondering whether Graham you can maybe talk us through the moving parts a little bit because I can imagine on one side input. Costs, you know with oil you. Know very low. Promotions. Well down but, then you've got mix issues, and. Then you've got kind of brand and marketing considerations. Out of home in home if. You can maybe this'll walk us through what you're told you're. Thinking, I'm asking for a margin number for the full year but just in terms of the moving parts within. Your your kind of big cost buckets that would be would, be super useful thank you. Thanks. Very much Warren, Graham. When you have a crack at the margin. Outlook and, then. I'll come on and talk about the. Competitiveness. Of this performance. As. Well as seeing. Nothing about quarter to. No. Surprise really it, just doesn't, make sense to, to. Focus. On, a. Target that was set well before the global crisis hit but at we'd point out that, we were very much on, track with. The margin, we. Were mostly done to be honest and, you. Know it we know our focus shifts to managing cash just through the period of the short-term impact, of the crisis and in. That margin, is just one part of cash delivery, things, like working capital management. Are. Every, bit as important, and in fact. You. Know no surprise but you, know moving to absolute. Management, of you know absolute, profit and. Because. That translates. Much more directly into cash that's really been one, of our focal points at this time in. Terms of moving parts within, gross margin, you're right there's many, many things moving. And there are give you some examples, I mean there is some on cost from. The way in which we're having to operate within the factories, you. Know physical distancing, all the other measures that we've put in place there's, some cost. Related, to, reconfiguring. Product. Formulation, and sources of supply of raw material, etc a. Little, bit of. Mix. Positive. And negative, but yeah a little, bit of a mixed factor with the you. Know the food service business we've got it's a pretty profitable, business, for, my screamers a pretty profitable business, and really they are the two those.
Two Factors combined, with India all three things being frankly. Short term and relatively. Binary you, know there are the things that you're seeing in. The, results of the first quarter and that you will see in the second quarter, some. Positives in. Gross. Margin I guess you know we're looking at a very low commodity, environment. We've got some, hedges. Still in place with regard to the oil price but an overall deflated. Commodity, environment, goes. In the other direction for, us of course and, I think the pricing, environment will remain very, muted but as, I said you. Know focusing, less on percentages, through this period focusing. More on absolutes. In particular, the, drop, through from absolute, profit through working capital and into, cash that sir short term focus. Thanks. Graham, so. On the question, of, are. We competitive. How's it looking for a q2. We silent downbeat. Well. I think it's. Quite hard to read. Unilever portfolio. In this moment, Warren the. The, geographical. Dispersion and, the, category. Diversity. You have, my sympathy, and that's why we've. Given an unusually. Let the granular, level, of decomposition. Of the. Performance. That Graham. Showed and, I. Do want to highlight that this is a difficult time for our food, solutions business and in, particularly, out. At home ice cream business as, we go into the summer, so. I. Think, it's. Likely that for. Those two businesses, in particular things. Will get more difficult before. They get better, on the, other hand as to competitiveness, and growth versus, market, actually, also. Ins our green our. Brand. Penetration. Marketeers, were, improving, through. February actually. A, three-year, record high. And. In, China, where, we're starting to see a, Ritter, a significant. Recovery. There. Is pretty strong data that shows we, are weathering. In fact we've come, out of the situation. In China. Competitively. Advantaged, and. Obviously. India's, a big deal for us right now where. The. Country grown to a complete standstill as. Krim said in the last week of March and, we're. Very confident. That we're, back up selling, and manufacturing in, India a. Lot of full strength but, at. Some good strength in a context. Where many are still unable. To operate business, so. This is I know, we keep saying this over and over again but we, are unusually. Capable. In. Managing. Through. Crises, in, the emerging, markets, and i, profoundly. Believe that, we will come out with, an enhanced. Competitiveness. But. I also believe that q2. Things, are going to get more difficult for, the easier. Okay. Thanks, Warren. Next, question - Celine, Venuti JP, Morgan Jones, Lane. Yes. All. Right good morning everyone and my. Two questions, so first of all an emerging, market and I would like I mean obviously we. Are starting to see the impact of London in March and then now. In q2. What. Kind of emerging. Market are you preparing, for once. We go out of the long down ie in the second half of the year, in. Terms of as, well your ability, to pass on prices, I think there is a very low commodity. Cycle at the moment a strong, US dollar so. You, know you have a good, experience on, crisis. What, kind of. Setup. Are you expecting. Any amps because, you. Know whether that weakness we see in q1 through to, whether. We, mean, still a very challenging environment in, Ian's for you the. Second, point I am coming back on the margin and, all the moving parts that you have, mentioned. So just to clarify so, h1. You, mentioned tree- the, extra, costs, the. Mix and India. Would. That, means that we should expect quite a substantial margin. Decline, in the first half and then, if, I look into h2. Probably. India, will, not be there but it depends what you found my question, one and factory. Cost but what about steal. The negative mix, of other form and food and thank, you for that. Okay. Let. Me at least order answer, your questions, in, the order that you ask them I'll, take the first question, and, then.
I Think where. You can stand on the second point so. Celine. I think, as. Unhelpful that maybe. It's. Not good to think of emerging, markets as one homogeneous, group there's an enormous, variation. In what, we expect, so. China's, and market, and seems to be coming. Back quite. Quickly. And. It. Will depend on, government, response. Actually. I'm surprised, how fast we're starting to see a recovery in India. And. After. A complete. Standstill. In. Here. You know we're not usually talking. In weeks in these, calls but. In the last week of March really there was nothing happening in India, seem, in the first week of April already, we're starting to see that. Come back, and. In Latin America, our. Business. There has. Continued, to do quite. Well so. I, believe. That in. As. I said to, warn in. Q2 we'll, see a substantial, effect. From. Out of home ice cream and restaurants. Remaining, closed and not an impact on food solutions. But. To your direct, question Celine, I'm, quite optimistic about, emerging, markets for the. Second half. As. A group but we have to decompose, it a little bit final. Point is, it's. Kind of a biological point. Which is we. Just don't know what's gonna happen on. This. This virus, and the, second. Bonus impact. If. You take example, it looks very bad. But. If you take other, parts of East Asia, particularly. China it looks like the managed to avoid a second. Round so far so. Speculating. Too far into the future is, a risky. Business at this time which is why we found with drawing guidance, but. I would say probably. Q2, quite tough in the emerging markets each, -. Good. Chance of a strong recovery. Grip. I. Salad. Hi Celine. On. The, margin point, obviously. You. Know we've got less visibility than we. Had you. Know a month, or two ago there's. Many many moving parts and there as I said. In response to to, Warren's question. But. Let's, just reflect that we've, been on a very. Successful. Margin. Journey and we've spent a lot of time talking about it haven't we but you know we built our margin, up very. Strategically, in a very healthy way over. Several. Quarters, and years, now we've done that by building our gross margin higher by, reducing, our overheads and, putting more money back behind our brands, building.
Digital Capability, so all of its being constructed, in a very very healthy way and you. Know as I said you know we were. We were doing well on. On, our original margin trajectory. Now it. Is difficult. To. To, see what we'll you. Know come through in the first half and I think in many ways, it's. Important, to recognize that we will run this business to. Optimize the. Long term value of the company and the, health of the company and that means that the margin, I'm, afraid to see is going to be as much an output, of the, actions. That we take not. A specific you. Know input, that we're looking for as I said we've got to manage to make sure that our people are healthy, and safe and that our products, are finding. Their way to the. Consumers, and we'll do whatever it takes to, make sure we do that healthily I don't, think the Saline that, naturally, leads to a. Strongly. Negative margin. Pacific position for the for, the first half though you're sort of hostage to to, fortune here obviously but I, don't. Think that's the case the fact that we've got such strong, businesses. On the front line, in. Our emerging markets and then undeveloped markets the fact that we're organised as Alan said with. Very short communication. Lines means that our strong. Leadership in each market is absolutely. Empowered. And able to, to. Take all of the necessary decisions they need to take in, order to maximise the health of the business and I don't think, that, that necessarily means. That that. There's, you. Know substantial. Margin stress in the first half but as, I said it's difficult to have the visibility that, we would normally have given all the moving parts of the moment. Okay. Thanks thanks for the questions, next, question to Richard, Taylor at morgan stanley go ahead Richard, hi. Good morning guys, thanks, thanks, for the question, the. First one if I may, obviously. Previously. You've talked about portfolio. Optimization and. Asset. Sales I know we're in a different environment and, a different, world now but, maybe he'd give us a little bit of color on what we should be thinking on, global. Tea, whether. Or not it is even the, right thing to do to still perhaps. Divest. That business, given the. Castro it gives you to in these times so that's the first question and secondly, I'm. Afraid I also want to press you on margins. I know. That, the. 20%, by 2020. Was a pre, crisis, guidance, and I've heard your answers to the last three questions, but. For. The full year should we be expecting margins flat up or down. Okay. I'm. Not sure how we're going to answer a second, the second question, with much, more new, information, so agree and I'll give you a few minutes or, a few seconds, to think about. How. To weave in something, to, respond. To Richards. Provocation. On. On. Tee, and. Portfolio. Well. This is simple answer we're carrying on with a strategic, review, the. Long-term, trends, on the black tea that make up two-thirds of the business. Are. Likely. To remain. Edwin's. At. A strategic level. Independent. Of this this crisis, and. So the the work that we needed. To do, carries. On I, don't. Want to fall. Into the trap that it's a preconceived. Notion that will sell that business there's. Lots of potential things. We could do is outcome, to a strategic, review, and. It, will carry on with. No, change to the strategy, on that. Grim. Yeah. I. Didn't. Spend my time being. Able to to. Improve my shot on the quake margin, look Richard we're simply not going to gate on margin it's as simple as that we're. Not going to see whether it's going to be flat up or down because we hadn't gotten that visibility right now I think, we've been really clear though in. Response, to, savea's. Question that I think the conclusion that it's, that. It's naturally. Down. It's. You. Know it's it's just hard to it's just hard to say there's so many moving. Parts in that equation and, as I've said you know we're not going to manage this business would be the wrong thing to manage, this business in the short term to, a process, of this nature by. Focusing, on the, percentage. Margin we're going to do the right thing, for the health of the company and another note from one yeah.
Underscore. Terry and, he'd already made one is, margins. And outcome on doing the right things for a long term of the business. Number. One but also number, two we've got tons of cost, levers. That we can. Deploy. At. This time and, whilst. There might be some increased, costs. From. The. Factory. Standard operating procedures, as we have talked about, you. Know media rates are plummeting and so we can get our, reach, and frequency. Goals. On the media front at. Significantly, lower cost so, things are swinging. Around wildly, on. The cost lanes and we have many. Many areas of flexibility. But. All those decisions, will be driven by the right long-term thinking, and not, as you then on particular, short term margit of margin target which, by and large by the way we had already more, or less it I, mean. Can I just can I just like one other point for, everybody, and. Just a reminder really, that the. Impact. Of. Commodity. Pricing, within any of our markets, is a, combination. Both of the absolute, commodity, price quoted. In dollars and the movement in currency. So. You. Know that pricing equation, we've spoken, a lot about it is about, making sure that your brands are competitive, and sometimes. You can say price and other times you have to defer on price but, I think everybody is very clear, I hope, practiced. And effective. We are in. Managing. That and you see that in the, margin progress, that we've steadily made over. The last few years so you, know we know what we're doing when it comes to managing, situations. Of, volatile, commodities, and volatile foreign exchange and, we do the right thing for the consumers do the right thing to, make sure that our businesses are strong for the long term you. Know not necessarily, as we said you, know managing, things on a pinhead with a with a specific target. Okay. Thanks, thanks, Richard that we're coming up to the hour but we still have quite a lot of questions, we're not going to get through them all but let's keep going for a bit let it run on that a bit I suggest, we press, on a bit there's, an important time to be in conversation with our, investors, a rich, Restless yeah, right agree some capacity, to answer as many questions as, possible, yeah. So let's, go to John Ennis at Goldman Sachs next, go John. Hello. Everyone thank, you for taking questions and hope you can all hear me, the. First is on price positioning, I guess. Do you think you have an adequate, value. Range and some of the more problematic, markets, like India or, even. Latin, America where it's still early. Days for the covert impact and where there's a risk of down trading, or, do you need to make any new brand launches, or price adjustments, your existing portfolios we've effectively, enter a likely weaker macro period and in those markets and then. The second, question is on the. Longer duration changes you touched upon Allen earlier in your presentation can. You harder where you see the greatest structural. Change from this both positive, but but also negative for Unilever I mean, does this change your your, view on certain channels, longer term like foodservice or relative home ice cream etc Thanks. Okay. Grim and. One even cracker the the first question. There around our, value, ranges, and all I talked a little bit of our long-term, perspective. On the business sure. Thing folks in a question John you know I really, do believe that. Unni. Was just about the best in the business of managing value. This. Is absolutely.
A No DNA and it's what we do in every one of our markets day to day in, most parts of the world you know, where we've got the strongest, there's. And, they tend to be the strongest business in, each of those markets they've. Already been through a, period. Of crisis, I'm thinking about, Indonesia. And thinking about Thailand years ago and thinking of parts of Latin America, Brazil, and Argentina just. In the course of the last few years and, a critical, part of that is understanding, what. We call the full price piano another, way of putting it John, is we. Understand, very very, deeply the. Attractiveness. Of making brands affordable. To, consumers, and I don't mean just you. Know, value. Brands themselves I also mean premium brands that are available at, affordable, price, points, to. Allow people to still buy a. More. Premium brand but do it at. An, attractive price point, pack size etc that's, what we're very very good, at around, Unilever, and you, know and you know it's a fair bet that you know the global economy is going to be many going, to be you know deeply challenged, in the years ahead they'll, be recession, and. I, think we're well equipped as, a business to deal with that I'll just give you one example. Take. Brazil, which. Has been through it's its own crisis, of the over. The last, three. Years or so, our. Business there moves, very quickly to. Reposition, the brand portfolio and, introduce, new brands, at, the tier 3 and tier 4 as we call it bar repositioning, an example, was the introduction of Brienne, shell which, was a. Value. Laundry. Brand below. A, powerhouse. Brand in Brazil of formal. Similarly. Channel shift the, consumer. Shop in different channels when they're looking for value and in the case of much, of Latin America, the discounter channel effectively. Ward's cash-and-carry and, we, moved, their entire business system, to. Make sure that we had you. Know more than fair share strength in that channel, so I've. Got absolutely no. I've. Been nothing but confidence, really about, the business's ability to, compete, and.
Then Create value very effectively, in, a world where value positioning, and brand. Pricing, dynamics, and affordability, are. Recently important. I. Can't. Resist, worrying. That message, the strength of our value propositions, in Latin. America, in, actually. North America, and Europe and, the. Incredible. Low price the variable to offer products that in places like India is a gigantic, strength, of human liver in terms of the longer duration. Changes hair, John let, me break it up into three areas consumer, channel and categories. From. A consumer perspective I think there's absolutely no doubt that there's going to be lasting, changes, on the. Importance, of value. I think we are going to go into tough. Economic times, for an extended, period, but. We we. Know that this. Has a strong, impact on people's hygiene, behavior we know that from things. Like SARS and swine, flu in China. We. Know that it will be a permanent, shift to online shopping, and we. Know that and. Online. Media consumption, that's one way traffic again learning, from China and. We're. Pretty confident, that anything. Lives in this piece of wellness health, and well-being is, going, to enjoy a sustained, strength so, those. Are some of the consumer bets there are others that I don't really want to mention because we think are a bit proprietary. Those insights from. Our extremely, good proximity, to consumers, there's. Also in, many cases sometimes, local, from. A channel, perspective. I've, already kind of mentioned one which is this. Is one-way traffic towards online grocery, shopping and online shopping in, general and it, will be an accelerator, of the trend towards proximity, shopping which, we had already been seeing and are seeing a scale, right now, in. Terms of categories and business, models. It's. Not changed our thinking so, far, ice-creams, a wonderful business and. We. Think that the impact on ice cream will be deep but, short-lived. We, think that food, service, is very attractive, channel where we have super strong positions. It'll. Be too longer for people's. Turn to restaurants, to happen but it will come again learning, from from. History so I. Would, say we're being quite, agile. On real, orientating, our innovation, programs, around changing. Consumer patterns we're.
Moving Quite quickly of rethinking, our channel programs but. We're not changing our point of view on category, and business model attractiveness. Richard. Right. Thanks, John, next, question - Jonathan, Feeney from Kissimmee Ridge. Good. Morning thank you and thanks, for your leadership and all this um two. Questions first is uh. Grammar. You said a lot, of useful stuff faster than I could take notes the, prestige. Beauty portfolio. Globally. Could, you give, us a sense of how big that was, expected. To be in 2012. The growth was but was if someone exponential, you know characterize. More than just sharply, if you could how, down. That and how down that is like it's my first question, and. It's. For the quarter and secondly. You. Know being, P&G, mentioned, and even I saw in your takeaway, in North America, for example you'll through mainstream retail. It looked like it was somewhat better the takeaway, was than 7%, I think I have 13, through the measured channels that I look at is. There, any impact, in the US and Western Europe going into q2 where you know you were behind as, far as you. Know as far as take away and you have a little bit of catch-up to do that's helping you early. In the second quarter thank you. Groom. The first question was directly. Saying. Your ways to please please. Handle it and I'll comment on the second one. -. Morning, yeah. Just dimensional, and, the prestige business. For you so, our. Intention. And our, remaining. Intention, is. To build that business to beyond 1 billion euros through a combination of organic, growth and acquisitions. At what's going very quickly as. You said in fact in 2019. We continue, to have double-digit. Growth for the prestige business the footprint, of the this is. It's. Largely you know it's the biggest part of it is in is in the USA two-thirds, of this in the US and about a third of it is outside, the US and that is distinct, to some of our competitors. In, the prestige beauty space who are more, focused on Asia this is a portfolio, which is still 2/3, in the u.s. it. Was about six hundred million euros, in 2019. And I'm, sure in ordinary circumstances. We would have gone through 700. Million euros or so in in. 2020. But, you. Know it's been impacted. Declined. By all those single digits in the, first quarter. Because. Principally. The health and beauty channels, in which, it operates are. Closed you know particularly, in the US and mid-march Sephora. Ulta. And Nordstrom. Closed all of their doors and that was about 25, percent, of the global prestige business, turnover. What. We do see is a pickup in the, direct-to-consumer. Aspect. Of of, the, prestige business that has quite, a big eco, opportunity. About 20%, of the, business today it's, sold any comment and all that sunny and basilic e and the, team are. Very very focused on how we make that switch, across more. Into DTC, more, into, e-commerce. And. Getting. Our plans together for. For. Doing more in China, in particular with, that portfolio so you, know more, effort goes behind that now with. The with. The effective closure of the of many of the channels. That that it's in today in the short term and we use it as an opportunity to drive that business which, were very excited about even. Harder. Thanks. Korea on United, States. I'm. In. Abled in answering your question, by the fact that we publish our North American. Numbers. And for, a quarter to one we're, showing 4.8%. Growth, in North America. Which. Is unprecedented, versus. Recent, history and you. Can imagine what sort of numbers we. Saw in March. To be able to generate that kind of number for the quarter. Are, all, evidence, we have is that in. Our Catholic region in North America, we, are. Fully.
Competitive, And. I. Would. Share with you that we're seeing. Considerable. Strength. In our April, sales in in. The, u.s. in particular as. Some of that heavy, buying, carries. On I really. Do want to try, and speculate, much beyond that because. Some. Of the. Behavior. In North America, is definitely increased, to assumption people, are washing their hands more people are cooking, more at home, versus. Going, out to restaurants but. Some is also definitely stockpiling. We've got a point of view on what splits and that is today, at. The moment is just appointed you but yeah I think you know the US is, enjoying. A boom time and we're, participating, as, best we can tell, with. Our fair share. Richard. Okay. Thanks Jonathan, let's go straight to David Hayes at stock gen David. Thanks. Richard thanks guys thanks for carrying on the cool so. Two for me one on sales one on cash. Flow so on the sales front I guess just just, to check the logic that you talked about before gram. Minus. Four percentage point seems to be the the Co bit impact negatively, two percentage points, is. The estimated, stockpiling, effect so so underlying, is around, two percent it. Is your kind of calculations right sure that was the right. Math I guess within that number the question really and then about the mix and price, can. You break out mix and price within the negative, note point two versus, last. Year's one point six I think it was just to give us a feel how much of it is that, price and you mentioned India and how much of it is the mix dilution. Effects of what people are buying and the, second question on cash, flow you talk about is 500 million of supplier. Facility, and. Then you guys like, many companies and a lot of supply chain, financing. Over the last few years is. That something which is capable. Of staying in place the, uncertainties, and with. The financial, system changes, is that something that I have to ease off and therefore there's going to be a cash outflows, as you do do that supply chain financing.
Through The year thanks, so much. Graham, why don't you take the second, one, and. I'll, reiterate to. David some, of the points around. Seals. So. David just, two people want your calculation. Is is right on the mone