Good morning, everyone, and thank you for joining our Q1 FY27 sales call. I'm joined today by Mof Kwasa, our EVP Finance and Tech. Unless specified otherwise, all sales call threads are organic. Mof, over to you. Thank you, Joelle. Good morning, everyone. Very happy to be with you this morning. I trust you have all received The press release this morning, so I'm just going to read through it relatively quickly to leave time for the Q&A. So we are reporting net sales of minus 1%, a sequential improvement on Q4 last year despite a mixed environment, which is consistent with our full year expectation and broadly stable organic net sales. Volumes in Q1 are back to growth at plus 6%, with strategic international brand volumes growing plus 2%. Sales in the U.S. declined by minus 10%, and in China by minus 25%, with both markets being impacted by inventory adjustments as expected. The underlying depletion in China are returned to growth, Confirming the cautious trade optimism ahead of the Mid-Autumn Festival as flagged during our food year communication. Excluding the U.S. and China, rest of world sales grew by plus 4%, with strong performance across a number of Asia rest of world markets. India was a particular highlight, with sales up plus 19%. Thank you very much. So let me start with our number one market, the U.S., where sales were down minus 10%. Market trends have slightly improved over the summer. The total spirits market has declined by circa minus 2%, and bottled spirits by circa 4%. As highlighted, the consumer sentiment remains low, with affordability a particular issue for some consumers. Our sell-out in Q1 is at circa minus 6% and our gap to market continues at circa 2 points. The difference between sales down minus 10 and sell-out down minus 6 reflects the impact of inventory adjustments. Looking at our brands, Jameson and Cadua sell-outs are performing ahead of their respective competitive sets. We are also seeing a marked improvement in Scruble and a strong rebound in Malibu benefiting from the success of Malibu Pink. Sales are supported by our Q1 innovations including small formats from Malibu Coconut and Pink as well as Croubeau Peanut Butter and Jelly. Jameson Distiller Batch is also extending the Jameson Irish Whiskey Portfolio. These launches build on the innovation we already introduced last year. Ahead of the important holiday period, we have a strong campaign program across the portfolio. We are particularly excited about the significant initiative of Jameson with the NFL sponsorship, which kicked off in September and will be supported by a full 360 campaign throughout the NFL season with a key activation peak during the OMD period. In India, We report sales growth of plus 19%. The market continues to enjoy dynamic consumer fundamentals and sales are driven by strong consumer demand as well as the continuation of the premiumization trend. Underlying sales grew in the high single-digit range with an additional benefit from the Mahastra comparison base and from pipe fill effect Thank you very much. This is a significant improvement from last year's sharp decline and confirms the cautious trade optimism we mentioned at the start of the summer. For Martel, we have seen a return to growth in our off-trade depletion with a successful mid-autumn festival campaign that has been driving consumer and trade engagement. In BeyondTrade, we are lapping the regulatory crackdown which gives a more favourable base. However, the channel continues to be under pressure, leading to decline there. Underlying trends for the rest of the portfolio remain resilient overall, notably supported by a strong performance of Beglen Nivet, Royal Salutes, and premium brands such as Jameson and Olmeca. If I turn to global travel retails, sales were down minus 4%. Overall, global travel numbers remain strong, but sales have been impacted by the ongoing Middle East conflict, and this has particularly affected some of the Asian travel retail markets. In the meantime, Europe travel retail delivered strong growth. In other markets, we report good growth in Asia and the rest of the world, largely driven by Japan, which continues its dynamism. Korea and Taiwan both returning to solid growth, and Turkey's continued good momentum. Europe had a soft start to the year, reflecting phasing in some markets and continued pressure in the on-trade. In Western Europe, sales declined in France and Spain, with a persisting sharper decline in Germany. Eastern Europe was also soft, with Poland Impacted by ongoing customer negotiation. In the Americas, sales declined in Brazil due to phasing and in Mexico with continued weak consumer demand. In North America, Canada saw also a modest decline. As it relates to our full year and medium term outlook, the full wording is in this morning's press release, but the key message is that we are confirming our guidance including broadly stable sales in a contrasted and volatile environment and we strongly defend organic operating margins supported by strict cost control and the acceleration of our operational efficiency program. In conclusion, Q1 sales were mixed but improved significantly sequentially with encouraging momentum in a number of key markets, notably in Asia. In China, underlying sales have returned to growth. Our broad geographic footprint and diversified portfolio provide clear sources of resilience in this volatile environment. At the same time, we continue to adapt our brands, our activation to the evolving consumer trends and occasions. Thank you for your attention. That concludes my prepared remarks. I will now be happy to take on your questions. Thank you very much, Maud. So, operator, we can open the line for questions. We welcome, please, two questions each, as usual. Thank you.

Thank you. This is the conference. Operator, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one under touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Andrea Pistacchi, Bank of America.

Good morning, Mauve and Joelle. The first question is on China, please. You confirmed the cautious optimism in the trade ahead of Mid-Autumn Festival and your positive depletions. This is clearly very encouraging, but it is in contrast to what other companies, particularly in luxury, are saying and what they've reported so far in the quarter. So what do you think is underpinning this more positive sentiment? Is it the comps, the lapping the crackdown, or maybe something else? And I don't know whether you have much visibility yet on mid-autumn festival sellout, but how do you feel, therefore, about China as we head towards CNY and for the full year? The second question, please, is on the strong performance, the very strong performance in Asia, rest of the world, when you exclude both China and India. I calculate that China and India, the region was up probably something like mid to high teens, which is a material acceleration from last year. I know there's many different countries there, and I think you called out good performance in a few, Japan, Korea, Taiwan. Could you provide a bit more colour on this strong performance and whether you're confident that this positive momentum, I mean, not quite at this level, but the positive momentum in the region can continue? Thank you.

Thank you for the question. So I will start with China. So indeed, we are very glad to see our depletion return to growth, marking a significant improvement. It's very fair to say that the macroeconomic environment Thank you very much. The anti-alcohol ban. So I think it's also confirmation that the consumers are there and are adapting their way of consumption. So I think it's also testament that we are now seeing the consumer shifting to different type of occasion, more private occasion, and we have been also Thank you very much. As it relates then to your second question, which I think was more on the underlying trends, so that's true that on the quarter we have a lot of technical effects, and mainly in India we had some phasing and tight-fill effects. We still believe that the underlying trend is around the high single digits. We once restated from both the Mahashra Impact and the pipe fill effect. On the rest of the region, we have been seeing very positive momentum, lapping as well the favorable trend. But on the other side, we also see significant turnaround in our key markets and very significant markets. So overall, if we restate on all these trends Technical effects, I would say, on both US, China and India. So the negative impact of the inventory, the positive impact of the pipe fill effect in India. We are in a slight growth, which I think is also in line with the true sell-out. And when we look at our sell-out in the last three months, we are also in this vein. So confirming that we are seeing some resilient consumption while remaining fragile.

Okay, thank you.

The next question is from Oliver Nicolai, Goldman Sachs.

Hi, good morning, Merve and Joël. First of all, on Europe, could you give us more details on the underlying trend and what was the impact from phasing or even the customer negotiation that you mentioned and how should we think about Q2? and then if you could give us, go back to the comments about China, Cognac, if you have any color that you could give us in terms of the channel, the growth in different channels and what kind of actions you've taken for Martel to actually have a much better off-track performance. Thank you.

Thank you for the question. So if I start with Europe, indeed we have been seeing some soft start of the year in Europe. This has been mainly driven by Germany and Poland where we see the underlying trends being in the higher range of the single-digit decline. Similarly, we saw softer decline in Spain and France In France in particular, our net sales have been probably more impacted by phasing where the underlying trends are better and we see that we are also gaining share in France. We see some overall also improvements in the UK. So the UK trend is improving. So we do see underlying trends being soft over the summer. That has definitely not been helped as well by the Jérôme Cottin-Bizonne Resuming in Q2. Then in China, as I said, indeed, the connect consumption is evolving. So we definitely saw that the depletion of Martel significantly improved in the off-trade. The on-trade remains challenged and under pressure because we see some further changes Transcription by CastingWords and we see as well that the pricing has not been that significantly impacted and we are back into a much stronger ground but remaining very cautious at this point.

Thank you very much.

The next question is from Sanjit Aujla, UBS.

Good morning, Mauve and Joelle. Two from me, please. Firstly, on the U.S., Can you just give us a sense if the stocking is now done or is there more to happen over the next three quarters? And my second question is just coming back to China. Can you just give us a sense of how your channel mix has evolved over the last few years? I think in your earlier remarks, you'd highlighted quite a big shift in occasions and in particular, How significant is the on-trade in your business today versus a few years ago? Thank you.

So in the US, we have been guiding on the fact that the inventory adjustment will have some effects over the full year, even if it's fair to say that Q1 was particularly impacted. So we will and we are constantly monitoring The situation that we are not guiding on the quarter by quarter, but some further adjustments is to be expected on the full year. Then on China, so indeed we have seen, as mentioned, a shift and the on-trade being more impacted because of the crackdown. The next question is from Laurence Wyatt Barclays.

Mr. Wyatt, your line is open.

Thanks very much. Morning, Joël. In terms of the US, you've had a distribution change for over a year now, where you split your portfolio into three parts and put it through a number of distributors. Given you've had that for about a year, could you give us an update on the impact you think it's had, whether you think it's been a success? and whether there are any sort of teething issues in doing that over the past 12 months and similarly when you shifted a lot of the business away from R&DC towards the end of the year how has that how the new distributors picked up those lines and whether there are any teething issues and getting that underway over the past sort of I suppose just nine months now since that shift has taken place. Secondly, on India and the potential IPO, could you give us any more information as to what are the key decisions that you need to be making? What are the factors that are going to influence the decision whether to list the Indian business? Once the board takes that decision, how long after that decision would listing take place potentially? Thank you very much.

Thank you, Laurence, for this question. So if I start with the U.S., so indeed we have been shifting in some key markets. The transition is now fully done and has been relatively smoothly. We have not been and we do not believe that there was material impact from a sell-out standpoint. Now, I think the key focus is indeed to make sure that we are all locked and loaded for the ONV period. That is the key period for the markets. So all the program activations are well in place and we will now focus on execution, which is key in this market. So I would say on this one, the focus is now ONV. This is the key period that will allow us also to demonstrate that We are now focusing on execution, execution and solely execution. If I now go into your second question on India, so indeed no decision has been taken at this point, so the board has been asking us to continue on the preparatory steps for a potential IPO. That being said, so it's really for us to start Thank you very much. There is still a process that will be ongoing and discussion that will be ongoing with the board. So be sure that when the decision will be made, you will be the first one to know.

The next question is from Celine Panotti, JP Morgan.

Thank you. Good morning, everyone. My first question is on North America. So I think sequentially the market seems to have improved, seen decline, but slightly improving. Thank you very much. More promotion or are you expecting that relative improvement sequentially to hold? My second question is on China. There has been a big gap it seems on selling and sell-out. Are we expecting more of that or rather Thank you for your questions. I will start with North America. Indeed, the latest sellouts were promising and showing some progressive improvements and slight improvements.

It's fair to say that most of the categories remain in decline but that the pace and the rate of decline is easing so we are expecting this trend to continue but it's very slight. We still expect RTD to gain share in the spirits evolution and spirits category. That being said, we are not counting on the material bounce back of the U.S. at this point. We do see that the consumer sentiments remain historically low, so we are more indeed focusing on execution for the R&D. We do believe that indeed consumers are adapting and adjusting their consumption, so we see them because of affordability towards smaller formats as an example. The promotional activities are not significantly increasing. So in Q1, we are seeing relatively stable pricing and we see now that we start seeing also a positive mix. So all in all, I would say we expect these slight improvements but we are not counting on the material bounce back. Ben, the second question, sorry, I was losing on China in the inventory adjustment. So here as well, we have been guiding on the fact that we would have an inventory adjustment effect throughout the full year in both U.S. and China. That being said, Q1 was particularly impacted. The confirmation of the return to growth in the underlying trend is also promising in our ability to go there as well. The material impact in Q1 will most likely ease on a full year basis.

Thank you. The next question is from Richard Wittegen, Kepler-Chevreux.

Yeah, good morning, Mo. Good morning, Joëlle. Two questions for me. First one on the U.S. I mean, you mentioned a slight improvement in your sellout gap versus the U.S. bottled spirits market, now around two percentage points higher. So what explains the remaining underperformance and what initiatives do you have to improve the underperforming brands? And then the second question is, I think you report volumes growing 6%, organic sales down around 1%. So we have this negative price mix over the quarter. Can you talk about the product mix and how should we think about the implications of this for gross margins?

Thank you. So in the US, indeed, the gap to market was held around the two points, which is roughly what we had last year, but an improvement versus Q4. So we see that it's back to a narrowing. Here, I think, you know, we are really counting one on the execution, as I mentioned. So we are now fully locked and loaded with a very Good initiative plan for the key OND period. I mentioned the Jameson NFL activation. And this will be really supported by activation involved in the on-trade, in the off-trade. So it offers a very great platform for the brand that is our biggest brand in the U.S. But we are not limiting that to Jameson. We are absolute in Caloua. Anne-Marie Poliquin, Florence Tresarrieu, Alexandre Ricard, Cédric Ramat, Eric Benoist, Maria Pia De Caro Delivering and supporting the rebound for the franchise and more to come. So that's for the US. Then your second question was on the mix. So indeed, we had the positive volume that was offset by the mix effect. It is mainly and solely because pricing was broadly stable. So it's really solely linked with the mix. As you Thank you very much. The next question is from Edouard Mundy Jeffries.

Morning, Mo. Morning, Joelle. So two questions, please. So the first is around the weight of destocking in the first quarter. Clearly, there's a lot sort of going on in terms of timing issues and phasing and what have you. But do you think that the weight of destocking that impacted the first quarter, does that start to ease as you go through the balance of the year? That's my first question. And then secondly, The second question is just a more broader question around guidance. You've had a pretty okay first quarter. Some very early green shoots start to be visible in markets like China. Does that give you more confidence in delivery of the broadly stable sales guidance for the year? And what are the main things that you're looking at both on the upside and also on the downside?

So thank you for your question, Ed. So on the weight of destocking, it's fair to say that Q1 has been mostly and particularly impacted, so we do expect that to ease in the remaining part of the year while sticking and keeping some inventory adjustment. It's also a question of, you know, the base that you are looking at, a quarter, is always creating some disproportionate weight effect to some extent because of the timing considered. Then as it relates to your second question, so as we have been indicating, we are confirming our confidence in our broadly stable net sales outlook and continuing and sticking to what we mentioned during the full year communication so that we still expect declines in the US and China We do expect and we see a positive momentum in the rest of the world. The next question is from Mitch Collette, Deutsche Bank.

Thanks, good morning. I appreciate you've been asked a lot of questions on China, but the one I really want to ask is, and I appreciate it's difficult, do you think that the consumer offtake has improved? Do you think consumer offtake has gone to positive, given that you're seeing positive growth in depletions? And then, I know Richard already asked about the So the first question

So it's on China, you know, the consumer overall. Consumer in China, no? Sorry, we have debate on that. We didn't hear well the question. So on the consumer in China, so yes, the underlying depletion and the positive trends and the confirmation of the cautious trade sentiment ahead of Middle East Thank you very much. Thank you very much. On your second question, which is on the mix, so indeed very driven by the geographic mix, this is an effect that we saw. As we mentioned and as we have been guiding, we see that we would expect some continued decline in the U.S. and China with the inventory adjustments, but Q1 was particularly impacted.

Okay, and sorry to follow up, but do you think that the negative price mix, given it's driven by country mix, is helpful or harmful for gross profit? I mean, I appreciate it's a sales call, but how do you think that's likely to play out?

So here we have been experiencing this mix effect that we are mitigating and the mix should improve On the overall full year, we are also making and taking action to offset that and protect our margin. We are confirming that we will be strongly defending our margin overall.

Thank you.

The next question is from Chris Pitcher, Ross Child and Col Redburn.

Good morning. A couple of follow-ups, please, China and India. Firstly, on China, can you confirm, did depletions return to growth for the whole quarter or just over mid-autumn festival? And given the destocking, are your inventory levels below what you would regard as a normal level? And then on India, it sounds like the trade loading should unwind once the name change and relabeling is done. You're saying that Thank you for the question. So I will take the second question on India.

First, so as we say, indeed, the underlying trend for Q1 was closer to the low double digit. So we do believe that it was supported by the easy comp, as you mentioned. But that being said, the consumer demand and the underlying trends remain overall on the high single digit trend, which is in line with our expectation. We do believe that we still see very strong fundamentals and see the market continuing on this trend. We will be also on our side impacted by the UK-India FTA which will help also the affordability of our Scotch brands so overall still very confident on our India underlying trends and fundamentals. On your first question, I'm sorry, I forgot the one. Ah, yes, it was on the China inventory. So we have been seeing indeed correction for this Q1. We are actively monitoring it. We will be and we have been guiding on the fact that we will have an impact throughout the year. We will definitely end the year in a much healthier situation compared to the starting point of this year.

When you say you're back into depletion growth, was that for the whole of the quarter or just over mid-autumn festival? I'm just trying to understand what we should compare the minus 25 with.

It's for the whole of the quarter.

Thank you very much.

The weight of the season and festivals are significant in China.

Thank you very much.

Next question is from Trevor Sterling Bernstein.

Good morning, Maureen Van Joelle. Two follow-ups, please. Returning to the US and the future inventory adjustments, is that because You're starting OND with a bit more stock in your distributors than you think is necessary, or is that because you're lapping tough comps and in the prior year you were shipping a bit more than you were depleting? And the second question concerning the Indian IPO, I appreciate that the board has to make the decision first, but after the board says yes, can you tell us broadly what the timing would be from that decision to a potential IPO?

Okay, thank you. I thought you had answered the question and you wanted to cheat. So on the U.S. inventory, you're right. On inventory, it's a combination effect of the absolute amount of inventory and what is the base you are cycling in order to have the impact on your net sales. For Q1, we are definitely and we have been seeing a decrease in our inventory with the gap between the sell-in and the sell-out really highlighting these adjustments and we do expect on the rest of the year that we will be continuing our efforts to reduce the absolute amount of inventory which is our focus to make sure that we will get to the appropriate level of inventory that we still are actively monitoring and working with our partners and wholesalers but we should end the year with a much healthier base in absolute terms and not only lapping the comparable. On the IPO, so indeed we are still under discussion and we didn't get any approval. We are taking the steps in order, as you mentioned, for the time after the approval and the decision would be made to not be that long. So here, when the decision will be made, you can assess and appreciate that it's a long process and an iterative process where we will be checking. Ultimately, the timing will take still a few months, but not that long and that many more. And it will really always depend on the market conditions.

Fully understood. Thank you, Molf.

Thank you very much everyone for joining us today. I think we're going to close now the call and I wish you a very good rest of the day.

Ladies and gentlemen, thank you for joining the conference. It's now over and you may disconnect your telephones.