Chocoladefabriken Lindt & Spruengli (SIX Swiss: LISN) Q2 2026 Earnings Call

0:00 Ladies and gentlemen, welcome to the Lindt and Sprungli Half Year twenty twenty six Results Conference Call and Live Webcast. I am Matilde, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded.

0:18 The presentation will be followed by a Q and A session. Webcast viewers may submit their questions in writing via the relative field. The

0:38 conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Martin Hoch, Chief Financial Officer. Please go ahead, sir.

0:52 Ladies and gentlemen, it is our pleasure to welcome you to the Lindt and Springer Half Year Results Conference Call and Webcast. My name is Martin Hoog, Group CFO and with me today is our Group CEO, Adolf Berd Lechner. The presentation and a transcript of our prepared comments will be uploaded to our website after the call. The presentation will take approximately thirty minutes. Following our 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 volume growth agenda, 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.

1:40 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, Adolf Berd Lechmann, who will take you through our agenda for volume growth. Good morning, ladies and gentlemen. Welcome, everyone, also from my side. In a challenging environment, we have achieved solid results, and I would like to thank our teams around the world for their effort and dedication. We grew strongly in North America and the rest of the world with a softened demand in Europe. Over the last eighteen months, the global chocolate category has faced one of the most challenging environments in its history. Record cocoa prices required unprecedented price increases across the industry, while geopolitical uncertainty, inflation and weak consumer sentiment weighed on demand.

2:36 The crisis in The Middle East added another headwind with weaker tourism flows from Asia and The Middle East to Europe. As a result, we have seen volume decline over this time across the whole category around the world. It reflects a strong reaction of consumers worldwide to the necessary price increases. These developments were largely in line with our expectations and the scenario we outlined. The majority of our growth in this period was price driven, while volumes came under pressure. This is consistent with our expectation that pricing would dominate in H1 twenty twenty six and that stabilization of volumes would begin in H2. However, we believe we have reached an important turning point.

3:24 The required pricing actions are already in the market. Consumers are becoming accustomed to the new price levels, and pricing pressure across the category has begun to normalize. At the same time, we have a clear action plan focused on restoring volume growth. Our objective is straightforward: stabilize volumes in the second half of twenty twenty six and return to volume growth from 2027 onwards. This recovery is supported by targeted actions on pricing and affordability, increased brand investment, stronger consumer activation, innovation and further expansion of our global footprint. Over the next few slides, I will walk you through the concrete actions we are taking and why we are confident to get back to a volume growth momentum.

4:15 The foundation of our volume recovery plan is not pricing. It is the strength of the Lindt brand, and our brand equity is stronger than ever. For the second year in a row, Lindt was named the world's most valuable chocolate brand in the Kanta ranking, ranking. World's With a brand value of US11.7 billion dollars up 24% year on year, we now rank seventh across the entire food and beverage category. This recognition demonstrates the resilience and strength of the Lindt brand. This strength has been built over many years through a relentless focus on premium quality, continued innovation and consistent investment behind our brands.

5:01 Most importantly, it reflects the deep emotional connection and trust that consumers have in us that makes us confident to regain household penetration, fuel consumer demand and get back to volume growth. Our strong brand equity is built on something very tangible, the high quality of our products. We call it the Lindt difference. The combination of premium ingredients, long standing manufacturing expertise, continuous innovation and unmatched craftsmanship. For more than one hundred and eighty years, we have focused on creating the highest quality chocolate from bean to bar. From carefully selected cocoa beans and ingredients to the Lindt conge invented in 1879 and still at the heart of our chocolate making process today, every step is designed to deliver a superior consumer experience.

5:57 This is what set us apart. And it matters more than ever. Across many markets, consumers are increasingly choosing more mindful and fewer but better indulgences. They are looking for quality, authenticity and products that are worth the price. This premiumization trend plays directly to our strengths. As the category returns to volume growth, we believe Lindt is exceptionally well positioned to capitalize on this trend and continue gaining market share in the premium chocolate segment. As pricing pressure across the industry begins to normalize, we have greater flexibility to take targeted actions where we see opportunities to support volume growth.

6:42 We have already announced selective price decreases in key markets such as Germany and Switzerland, particularly in our Christmas portfolio. These measures will support consumer demand during our most important season and reinforce our leadership in seasonal chocolate. At the same time, we are expanding our portfolio with new formats and price points for some of our most popular brands, including Lindt. By broadening our price architecture, we can attract new consumers, increase purchase frequency and offer more touch points with the Lindt brand without compromising our premium positioning. We are also continuing to invest behind our brands. Strong brand support remains one of the most effective drivers of long term volume growth, and we are increasing our focus on both traditional and social media.

7:37 The extraordinary success of our Dubai style chocolate launch demonstrated the growing power of social media in building awareness, engagement and demand for our brands. We are therefore expanding our social media presence and creating a more seamless consumer journey from inspiration and discovery to purchase. This strategy is helping us reach new audiences and strengthen our relevance with younger consumers. In Germany, for example, a recent YouGov study ranked Lindt as the most popular chocolate brand among Gen Z. Taken together, these actions are designed to improve affordability, strengthen consumer engagement and support a return to sustainable volume growth.

8:27 Throughout our history, innovation has been one of the key drivers of growth for Lindt Sprinkle. It allows us to attract new consumers and increase brand attention. A great example is our Lindt Choco wafer. Following highly successful pilot launches in The United Kingdom, Italy and Bulgaria, consumer response has exceeded our expectations. Based on this success, we are now preparing for a global rollout. To support the demand, we are investing in additional production capacity and are currently building a dedicated Choco wafer production facility at our site in Italy. We expect the new factory to become operational by 2027 and will then gradually expand the distribution of Choco wafer across our global network.

9:22 Innovation, it is impossible not to talk about Lindt Dubai Style. Following extraordinary consumer demand, Dubai Style has evolved from a trend driven launch into a well established product that is now broadly available across retail channels and increasingly becoming part of our core portfolio. While the initial hype has naturally faded, consumer interest remains strong and the platform continues to offer significant growth opportunities. Building on the success of Dubai Style, we are expanding the platform with additional recipes, formats and flavors. Earlier this year, we launched Tokyo style chocolate, a matcha and strawberry based recipe inspired by the Japanese tea culture, and we will continue to introduce further city additions to the portfolio.

10:14 Our ambition is to create a broader family of city inspired chocolate creations that combine global food trends with Lindt's premium chocolate expertise. This approach allows us to continually refresh the platform, attract new consumers and generate excitement around the brand. Our global retail business continues to be one of our most powerful growth drivers. It allows us to showcase our brands in the best possible way and create unique consumer experiences that strengthen brand equity and loyalty. We continue to invest in both established and emerging markets. Earlier this year, we opened a new flagship store in Lucerne, one of Switzerland's most visited tourist destinations.

11:04 Later in the year, we will further enhance this location with a chocolate experience exhibition. Later this year as well, we will open a new retail store in a prime location in Oslo. Looking ahead, one of our most exciting projects is the opening of a 1,200 square meter Lindt flagship store at Marienbladz in Munich, planned for next year, which will become one of the largest Lindt stores worldwide. At the same time, retail is an important spearhead for our expansion into new markets. Earlier this year, we opened our first lean store in China, in Shanghai, marking an important milestone. In India, where we recently established our own subsidiary, we expect to open our first stores in the third quarter.

11:54 By the end of the year, we will open stores in Saudi Arabia and Malaysia. These investments are much more than additional points of sale. They increase brand visibility, strengthen consumer engagement and help us attract new consumers in some of the world's most attractive growth markets. Taken together, our retail expansion strategy provides another important growth factor in the second half of this year and beyond. Let me close by underpinning how these trends and our actions will translate into positive volume development. Long term consumer trends continue to play to our strengths. We have already discussed the ongoing trend of premiumization.

12:39 Consumers are looking for quality and mindful indulgence, which continues to support premium brands and premium chocolate. At the same time, the global middle class continues to expand, particularly in emerging markets, while aging populations in many developed markets increasingly prioritize quality and enjoyment over quantity. Through innovations such as our city inspired product range of ChocoWafer and ChocoWafer, we are attracting new consumers and keeping our portfolio relevant for evolving consumer preferences. With our Lindt Metre Chocoladier, we will continue our communication on our heritage, craftsmanship and high quality.

13:25 Our accelerating expansion in both established and emerging markets allows us to reach consumers wherever they choose to shop. We are expanding the reach of the Lindt brand offering the ultimate shopping experience in our stores.

13:40 Based on the strength of our brand, the quality of our products, the actions we are taking today and the favorable consumer trends, we are confident to return to sustainable volume growth in 2027. We have the right strategy and are well positioned in the market to confirm our mid- to long term growth ambitions. With this, I now hand over to Martin, who will take you through the half year results.

14:08 Thank you, Adalberk. Despite a 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 and Sprinklr was able to continue its sales growth trajectory. In addition to price increases, we have continued to implement projects across 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. The Lindt and Springer Group has made a solid start to the year. Sales in the first six months achieved an organic growth rate of 4.3%, which is within the range of the guidance we provided in March 2026 of 4% to 6%.

15:07 EBIT margin came in at 11.2%, ahead of the guidance we provided earlier in the year. Net income margin reached 8.2. Free cash flow came in at 2.6% of sales, a significant improvement on the minus 3.4% of H1 twenty twenty five, and we will go into more detail on this later in the presentation. Our net debt position increased from CHF1.1 billion at the end of twenty twenty five to CHF1.6 billion. This balance is slightly higher than a year ago when net debt was at CHF1.4 billion. The main driver of this net debt increase in the first half versus our year end position was the shareholder return through dividend payments of CHF414 million and CHF100 million in share buyback programs.

16:00 Total sales reached CHF2.33 billion in H1 with a decline in Swiss francs of minus 0.99% due to the strengthening of the Swiss franc. First half sales grew by 4.3% organically. Of note, we saw particularly strong growth in North America. Cumulatively, we have grown 45% over the last five years in the first half, representing a CAGR of plus 8.8%. Price increases of 11.8% were in line with the double digit increase we communicated in March. Due to higher input costs for cocoa, double digit pricing actions were still required.

16:45 The majority of the increases were pricing increases initiated during 2025, which partially carried over into 2026. The exception was Easter, where we took price increases in the 2026 season. Looking ahead into the second half, we'll see pricing impact tail off and will therefore see a considerably lower price impact in H2 twenty twenty six. Volume mix was negative, in line with our expectations, with a decline of minus 7.5%. However, the price elasticity varied region by region. Higher elasticity was mainly observed in Europe, while North America and rest of the world were better than the group average.

17:38 The currency effect had a negative impact of minus 5.2%, in particular due to the weakening of the U. S. Dollar, euro and the British pound. On the following slide, I would like to give you an overview of the sales performance by segment. In the first half of twenty twenty six, we experienced a challenging environment in the Europe segment, where we generate almost half of the group's sales. We saw a decline in organic sales of minus 2.1% in the first half. I would, however, like to remind you that we had an extraordinary result in 2025 of plus 17.7%. And over a three year period, our growth CAGR is a healthy 8%.

18:29 It is also important to note that we experienced double digit growth in our less mature markets, such as in The Nordics, Benelux, Iberia as well as Central And Eastern Europe. The North America segment showed a strong organic sales growth of plus 12.7%. All subsidiaries in The U. S. And Canada continued to grow, and Lindt and Sprinkly continued to grow market share in The U. S. In the Rest of the World segment, we grew by 10.2%. Notably, the subsidiaries in Japan, China, South Africa and our international distributors achieved double digit growth rates. Our global Travel Retail business was negatively impacted by the conflict in The Middle East.

19:18 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 2026 and over the medium term. 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 35.5% of sales, two twenty basis points higher than in 2025. This reflects higher prices for cocoa in our products, which could be absorbed by efficiency gains in other lines of our P and L, price increases and other revenue growth management measures.

20:12 Looking forward, we expect that our total material cost ratio for full year 2026 should be in line with 2025 as we see some easing in our cocoa prices in H2. For 2027, we will have a positive impact from lower cocoa prices. Market volatility and uncertainty remained very high, which is illustrated in the next chart. The cocoa futures market has been highly volatile with a sharp decline earlier in the year, followed by a strong rebound in recent weeks. This recent increase is largely driven by weather related concerns, particularly the potential impact of El Nino and ongoing uncertainty around crop developments in key producing regions such as West Africa.

21:07 Over the medium to long term, continued investment in new plantations, especially in Latin America, supports a more balanced supply outlook, although future market developments will also remain closely linked to global demand trends in the chocolate market. Personnel expenses continued to see a positive evolution. As a percentage of sales, we saw an improvement of 100 basis points compared to the same period in 2025.

21:40 Compared to 2022, we have shown strong economies of scale of 100 basis points. Operating expenses as a percentage of sales decreased by 130 basis points. This is driven by continued cost discipline across our business. However, let me assure you that we continue to maintain high brand support across all geographies. At CHF260 million and eleven 0.2% of sales, EBIT increased 20 basis points compared to the first half of twenty twenty five. Bear in mind that we recorded a positive onetime impact in 2024 and in 2023. When looking back to 2022, which is a better benchmark, we have increased EBIT margin by 190 basis points.

22:33 Net income reached CHF192 million or 8.2% of net sales. In the first half of twenty twenty six, the tax rate is at 19.8% compared to 22.2% last year. The decrease is mainly driven by a lower share of profit in regions with a high tax rate. We maintain our midterm guidance of a tax rate between 22% to 24%.

23:05 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 positive at CHF61 million, improving by CHF141 million when comparing to 2025. Capital expenditure came in at CHF154 million in the first half, million lower than 2025. This is in line with our revised plan, which postponed certain investments. At the end of the first half, net debt reached €1,600,000,000 slightly higher than previous year.

23:45 Overall, we still plan for net debt to EBITDA ratio of 0.5:one in the medium term. After this update, I'm now handing back to Adelberg, who will take you through the financial outlook for 2026 and beyond. Thank you, Martin. As we have already mentioned, we had a solid first half year with double digit growth in North America and Rest of the World. In the second half, we are expecting a more even spread of growth across the regions.

24:18 As I shared with you at the beginning of this presentation, we have strong plans for our markets to support volume development. That is why we are confident to meet our guidance for the full year. Accordingly, sales are expected to grow organically in the range of 4% to 6%, with an improvement of the EBIT margin of 20 to 40 basis points compared to the previous year.

24:41 For the future, we expect the trend of premiumization in chocolates to continue. This supports our long term strategy and market position as a global leader in this category. This gives us the confidence in achieving our mid- to long term goal of an organic sales growth between 68% on average per year, and we expect to deliver an average annual increase in EBIT margin of 20 to 40 basis points. Thank you very much for your attention. Back to you, Martin. Thank you for listening to our presentation. I will now hand over to the operator, who will manage the question and answer session. We ask you to limit yourself to a maximum of two questions, so everyone can participate.

25:28 Please note that written questions asked via the web will be answered by e mail after the webcast.

25:37 We will now begin the question and answer session. Session.

26:16 The first question comes from the line of John Cox from Kepler Cheuvreux. Please go ahead. Yes. Good morning, Thanks for this presentation and for taking the questions. A couple of questions then. Just the first one on Europe. How confident are you that European organic sales growth will swing positive in the second half of the year? And as you're talking about a better balance in between the rest of the world, North America and Europe in the second half,

26:47 would you expect volumes then to go positive in Europe in the second half of the year? And also, you talk about an improvement in volumes for the group in the second half of the year. Are you talking about flat volume? Or are you still talking about potentially a decline in volume?

27:07 That's the first question. I know it's a bit of a broad one. Second one, there's been some discussion in the market about your medium term guidance of 6% to 8%. You've expressed confidence today that you would get there. Just wondering any thoughts on that medium term target. If you look back historically, you have cut it previously to 5% to 7%. Just wondering how confident you are on that six to 8% going forward.

27:36 Thank you, John. To your first question, so for the second half, we currently expect flat volumes for the total group. For Europe,

27:49 we have experienced quite a difficult first half with a surprising also for us, surprising negative NTS development. You have probably also read that we reacted, I would say, pretty agile and addressed price points where we saw the biggest elasticity, so especially for the Christmas business after, I would say, relatively bad breast coverage on pricing for the Easter business.

28:20 But also for other products, we went out with price pack architecture, so more affordable, smaller pack sizes on Lindt which were launched for the second half, but also recalibrating our promotion prices. So with all this package, we are confident that also in Europe, the volume should improve substantially and be positive for the second half.

28:49 So this is Martin, you want to add? Tom, bear in mind as well that in Europe last year, we had kind of certain issues, certain customers, which was also mentioned in the press, etcetera, like Leuklaire in France, we were completely out on the Christmas business. And there were also some there was a time where we had some negotiations in Switzerland is one of the big retailers, as you may be aware. So those two have been resolved actually last year at the end of last year, beginning of this year. And that would be a positive for Europe, specifically because those are two important markets for us, France and Switzerland. Then to your second question, how confident are we about the medium term guidance, 6% to 8%. Given the strength of our brand, I mean, we have invested in the last years, despite the pressure from the cocoa price, more than ever behind our brands and also across geographies.

29:46 Given all the activities in extending our geographical footprint, extending the footprint of our retail stores, the field pipeline with innovations, we are confident to get back to this growth trajectory. The caveat that we have to make is 27%. We it's too early to give a guidance for '27 You can imagine there are too many

30:12 variables at the moment in the market. It's what let's say, what will we sticker shock, how fast is the volume reacting with new pricing. So for 2027, it's too early to give this guidance. But for the mid- long term and as an average for the mid- to long term period, we are confident to achieve the 6% to 8%, like Martin mentioned. Also for the past years,

30:49 we had an 8.8% CAGR for the last five years despite the fact in the first half, despite the fact that we only had a 4.3% growth in this year. But given the double digit growth of the last years, altogether, it was an average of 8.8%. And I would see a similar pattern and a similar picture for the years to come. And when you look at the last ten years or so, in normalized years before the cocoa crisis, if want to call it cocoa crisis,

31:19 when we achieved the 6% to 8%, typically, we didn't have a huge price impact, let's say. It was probably in the 1% to 2% area. And volume, we have proven that we can grow volume mid single digit, right? I mean, you have done that in all the years prior to 2020. We have still low market shares. I mean, typically, in the six to 8% algorithm, North America will outperform Europe because in North America, we still have low market shares compared to some of European markets.

31:46 And rest of the world, we are we should be able to grow double digit because there's still a lot of markets where we actually have very low market shares and where we are now planting the seeds to harvest them later on. Thank you. The next question comes from the line of Johan Effert from UBS. The first, I would be pleased, I mean, you can also use your own retail shops a little bit as try and fail or try and succeed. I mean the things you want to change at the retailer to stimulate volumes in the second half, have you tried this already in your own retail shops? And what was the consumer response

32:35 to a little better crap evidence and conviction level for the second half volume recovery here?

32:42 And the second question would be, please, on North America. Year to date, looks like a pretty good performance also versus the market. Can you give us a feeling which product lines exactly are behind this? Is this mainly driven by Dubai style? Or is it more broad based, also linked to dark chocolate and Lindtdor? So some more color here would also appreciate it.

33:06 Thank you, To your first question, of course, you can imagine, if you experience volume declines that everyone is alerted here. And we did not only two tests in our retail stores, but we did broad scale tests in wholesale. So

33:25 when we before we initiate measures and when you launch additional smaller packaging, it's always a risk because, first, you have a lower NPS per SKU, and you need to have confidence that the volume uplift compensates for this negative effect. And all of this, of course, is properly tested, and this is why we are confident when reaching the market. Then finally, in autumn, we will see the results.

33:56 To your second question, North America. So the year to date performance is mainly driven by dark chocolate, as you have mentioned, where we see globally a very strong trend. So our excellence range is growing in strong double digit NTS across all markets, including North America. And then yes, Dubai Style is incremental in the first half year in North America as we have launched it in Europe first half and only second half in North America. So this will also have a, let's say, slightly softening effect for the second half in North America. But then also Ghirardelli, next to its range of dark chocolate, we have a very strong range in baking, where we also saw in 2025 very strong growth, and this continues now also in the first half of twenty twenty six.

34:57 Lindt also had in the everyday business a very good performance. And also worthwhile mentioning, Russell Stover grew nearly double digit in the first half. They also launched two by Style Chocolate, but they also are successful with their sugar free range, where they did a new price back architecture last year already and could harvest the fruits in this year. And also worthwhile to mention Canada is gaining substantially market share and is also growing double digit in the first half.

35:30 So I think I hope this answers your question. Thank you. Thank you. We now have a question from the line of Warren Ackerman from Barclays. Please go ahead.

35:45 Yes. Good morning, Ed, Albert, Martin. It's Warren here from Barclays. I've also got two. The first one, could you dig a bit more into your pricing interventions and your price pack architecture capability. I mean, said that pricing will fade fast

36:03 from here. How fast do you think it will fade in H2 and into 2027? I heard, for example, you've taken pricing down in Germany below critical price thresholds like twenty euros for Lindt or but do you see any scenario where pricing will actually be positive in 2027 because I guess you're going to have much lower cocoa COGS. And I suppose the risk must be that your pricing drops faster than your volumes increase. I'd love your perspective on that topic of pricing and price pack architecture. And the second one maybe

36:49 marketing spend you said is up, but then you also had a VAT benefit, which boosted the margin in the first half. How should we be thinking about the margin moving parts for the second half? Thank you, Warren. Let me take the first one, pricing. So I start with the second part of your question. No, we don't see a likability of increasing prices in 2027. So the opposite, we expect

37:21 that we will do some price adjustments where needed and where possible. On the other side, we are fully with you that we have to be very cautious with, let's say, passing on potential tailwinds that we see from cocoa price in 2027, knowing that with our hedging policy and with the current terminal market price of cocoa,

37:49 we are in a situation that we might be under pressure again in 2028 to increase prices. And of course, this we want to avoid like a roller coaster going down now and having to increase prices again. So it might be a slight price adjustment in 2027, but which will be, for sure, helpful to regain momentum in volume. To your question, what exactly are we planning? I'll give you some examples. Price back so first of all, we have a double digit growth in two out of our three regions. So we did not see any need and urgency to address price points in some of the price corrections already this year, and this was in Germany and Switzerland mainly.

38:34 And example is in Germany, we reduced prices at the Christmas range because Easter, the sell through was weak. Easter, we were in the breast that our Gold Bunny is now went now from $4.95 to $5.95 So there was a big outcry from consumers. And we were agile enough to say we correct this. So in Christmas, you will see lower prices. And of course, we try with our customers, with joint business plans to mitigate this impact by higher volumes, etcetera. But we will, let's say, also we will probably see in these markets, Germany, Switzerland, Austria, we will see softer Christmas orders, while we see North America and Rest of the World very solid Christmas orders with strong or good volume development.

39:28 An example for price bag architecture. Key SKU in Germany for Lindor is 137 gram Lindor bag. It went up with the cocoa price increase. And I must mention that Lindt is especially affected as Lindt has a very high content of cocoa butter. And cocoa butter, as you know, with the ratio increased twice as much as or has a bigger impact in calculation than cocoa. So the prices increased up to €799,000,000 We will change now the bag from 137 gram to 100 gram with the same 100 gram price, but it brings us back to 4.9% of sales. And of course, we had to be sure that the uplift in volume compensates for this. So we did test, and we saw a dramatic uplift in volume. And we are confident that with this changing in pack format, with this price pack architecture, we will overcompensate the impact of the lower volume.

40:31 Other examples are XLRs. Also on XLRs, we had to increase prices, understandably with the high cocoa content. We sell chocolate here 70%, 85%, 99% cocoa. And here, we changed simply our promotional policy because there's a relatively high volume on deal. And as we go out with a more attractive promotion price, we have also seen significant uplift in volume, and we agreed already promotions with our retailers. And they are also somehow relieved because also something I mentioned today in the morning with the press agencies, also the retailers are not happy if their margin provider number one, Lindt, is losing volume.

41:16 So together, we come up with plans that we reverse this trend. And yes, these are some examples. Then I would hand over to the second part for Matthew. I mean in summary, I mean, the price increase net effect will still be positive in H2, right, because there's still a carryover from last year. And I think that's important to bear in mind. For H2, they still have slightly positive pricing. Now from a margin perspective, I think if you look at the big picture and look at it by segment, it's clear that as in the last years, it is North America that is the key driver of the EBIT margin improvements because North America is traditionally still below our group average. I mean, also now at half year, North America is at 7.7%, massive improvement compared to the first half in 2025, where we were at 3.2% in North America.

42:09 And the same picture, not exactly in sense of the growth, the picture that North America is the key driver of our EBIT margin improvement will be also true for the full year. I think that's number one. Number two, as you have seen in the in our let's say, in our report, half year report, half of the profit improvement versus our original forecast of 10%, we believe that we are roughly 10%, now we are at 11.2%. Half of this improvement more or comes from the tariff reimbursement in The U. S. That's about 60 basis points. And the other 60 basis points are true efficiency gains, cost savings in areas such as personnel and operating expenses. We continue to have a high investment in marketing. So it was really our good work, let's say, in many areas of the business, such as logistics, supply chain, also maintenance and repair in the factory, where we have been able to drive efficiencies.

43:07 In H2, we'll have an additional benefit, which is the lower cocoa bean price compared to the second half last year. You remember that last year, had still high cocoa bean prices, especially because we buy forward. So there we will have benefits. And we have continued tailwinds in the same areas where we have tailwinds in H1 such as operating expenses, for example, logistics, for example, maintenance and also in the area of personnel expenses. So I'm pretty confident with the 20 to 40 basis points that we will be able to improve our EBIT margin also in 2026. Thanks, Martin. Just quick clarification. The VAT reversal, will that continue into the second half of the year? Will there still be a margin benefit in the second half? Or is that a one timer in the first half?

43:57 VAT? You mean the tariffs, right? Sorry, the VAT, sorry, the tariffs, I mean the tariffs. The tariff reversal, sorry. A lot of uncertainty, I would say, in this area. I mean, I don't want to promise anything. There may be still a little bit more, but we have to see. We are once we get the cash, we know that we have it. There may be still a bit of a benefit, but I'll confirm. All right. Thanks. The next question comes from the line of Samantha Derbyshire from Goldman Sachs. Please go ahead. Good morning. Thank you for taking my questions. I may have missed some of this, but just on your margin expectations for H2. Could you maybe just explain from the H1 movements, I mean, the absolute personnel and operating expenses came down quite a bit year on year.

44:51 Was that mainly driven by FX? Or was there other initiatives? I'm particularly thinking about the personnel side of things. Can you quantify how material that will be year on year? Or is it really that most of the tailwind is coming through from H1 twenty twenty seven? And then my second question is just could you talk to us a little bit more about your marketing investments? I've seen quite a few of your peers seemingly putting a lot of money behind big events like the World Cup, F1, the Olympics. Just want to understand how you're thinking about your own marketing investments for Lindt, which has historically probably been a bigger spender relative to sales in some of these peers, how you're making sure that you stay relevant when everyone else is competing harder and harder for that share of voice? Thank you.

45:51 I mean, I can start with the cost question and Arthur Birkin then take over with the marketing expenses. Personnel expenses, I mean, yes, partially driven by ForEx. At the same time, we also make improvements in many areas of the business. So it's a combination. But yes, you are right. We also had benefits here from a ForEx perspective. Cocoa tailwind, we can't share it here, let's say, how much of the tailwind will be in H2 and how much will be in H1. But yes, we already have a certain amount of tailwind in H2 twenty twenty six. But of course, the bigger part of the tailwind we'll see in 2027. And yes, with that, you had a good question about the marketing expense. Yes.

46:41 So one thing which I would like to emphasize. When we increased prices throughout the last years, and you know there was a significant price increase, we had in mind, on the one side, to protect our gross margins On the other side, not to overdo it with price increases. As Martin has explained, our gross margin slightly came down, but still we were able with efficiency measures and cost consciousness to protect the bottom line. But what we, for sure, were always protecting was the brand support in ratio, not in absolute money. So in absolute money, in the last three years, we had a significant higher spend in A and P than we had in the years before. And this is also for me the explanation why in this Kanta ranking, we have seen an increase of our brand value, which was unprecedented only in last year by 24% and ranking now within really the top food and beverage brands ahead of all global chocolate brands with content of our marketing.

47:51 I think one of our strengths is that we have a very consistent and also coherent marketing strategy centered around the craftsmanship of our Maitre Chocoladier, insinuating this high premium quality and focus on product and indulgence and not focused on consumer occasions, which is, let's say, what most of our competitors are doing. So I think this campaign is ownable. It is consistent throughout the throughout decades. So people immediately recognize it and that we have a strong brand linkage whenever shots which are very indulgent and enjoyable to see. So this is why we focus on showing these ownable key distinctive assets in our advertising.

48:52 And we don't believe that events or Olympics or World Championship in soccer would strengthen, let's say, the perception of the premiumness of our brand. It would probably strengthen the awareness of our brand, but that's not the key issue that we want to address with our communication because we have very good awareness levels. But the key challenge at the moment is to justify our premium. And to justify the premium, it's important to load the brand with value. And we believe that we can only do this with a lot from linear TV to connected TV but also to social media. So this is the key challenge for us in our media mix.

49:37 And sponsoring and events are not on our agenda. Thank you. Thank you. We now have a question from the line of Antoine Trevaux from Bank of America. Please go ahead. Thank you. Hi, Albert. Hi, Martin. So two for me, please, which I guess would imply U. S. And Rest of the World negative. But the trends here in H1 were clearly improving volume, maybe not in Rest of the World, but at least in The U. S. So just trying to understand if there is anything you want to flag there for 2H volume in U. S. And rest of the world? And second question on global retail. I mean, continue to have a good improvement in the above stores and I guess you would cross the €1,000,000,000 revenue mark this year.

50:26 I mean, do you continue to target like 40 to 50 stores in the coming years? Like do you see like a good pipeline of where you of with new locations? And yes, maybe like what kind of like level of growth it could contribute in the coming years as the price fade? Thank you. Thank you. So for the volume in second half, I think important to mention is that in the first half, we cycled against a period with very strong development and also volume development in Europe. If you remember, we grew nearly 18% last year in the first half in Europe. Now we why? Because the price increases were not yet fully implemented.

51:11 Plus, in addition, we had this big launch of Dubai style chocolate. So we cycled now against the period with higher prices in first half twenty twenty six plus, of course, a slight fade of this type of Dubai style chocolate. Now we cycle in the second half against the period where volumes started already to correct. And Dubai style chocolate will be on the same level. So this makes us confident that volumes will increase in Europe. And in the other markets, yes, I mean, we have anyhow seen a good development also in the first half, and we don't expect things yes, might be a slight softening there in the second half.

51:57 Global retail, yes, as you have probably observed, we are really using global retail as a spearhead to enter those regions where we are still weak. And in a nutshell, we are strong in Europe and North America. We are weak outside of these two regions. So Latin America, we started to expand aggressively outside of Brazil. We only opened in two years 14 outlets in Chile. We enter now Colombia. We have other markets there earmarked and on our list, which we cannot publish yet. We signed a joint venture in Saudi Arabia where we will see the fruits end of this year, where we opened the first two stores in Saudi Arabia.

52:46 We opened the first stores in India. We have a retail operator for Malaysia, Singapore, Thailand, Indonesia. So we will see then China, I mentioned, we opened the first store. And of course, we have a plan to scale and to roll out. But it's also worthwhile mentioning that the biggest share of our retail business is still coming from Europe and North America. And while we were decreasing our footprint in North America, that's the clear plan for the years to come. And in Europe, anyhow, we have a certain number of store openings every year. Especially, as I've mentioned before, we go now in a more qualitative expansion also, increasing the visibility, increasing the footprint, 1,200 square meters in Munich on the main place next to the on Marine Blazs, next to the Rathaus of Munich. That's a statement like we did last year in Vienna with 500 square meter in Kernstrasse.

54:01 So we have more or less flagged all European capitals for new retail stores. And these retail stores will have a different impact than the one that we had in the past time because we saw that we can make decent money on a bigger footprint, 500 to 800 square meters, and there is more to come. So I think retail will be, like it used to be in the past time, a strong contributor not only of profitable growth but also of enhancing our brand equity and also the awareness of the brand, especially in the emerging markets. Maybe just a couple of things to add to the first part of your question. Europe, North America and Rest of the World, where we saw a very strong growth in North America and slightly decline in Europe in H1.

54:48 I think in H2, the picture, but we cannot give you the exact volumes. The picture will change a little bit in the sense that we will see an acceleration in Europe, not only but also driven by the additional listings we have in Le Clair and also in Switzerland and Mikro, where we kind of had some period of time where we are in negotiations. Also relatively weak comps in November, December in Europe, right, where the volumes were down quite substantially. So in Europe, at full year, we believe the numbers will be improved versus the minus 2.1% in H1. Whilst in North America and rest of the world, we may see a slight softening, not because our business is not healthy more because we had such a strong growth now in North America also because last year, we were low at 3.3, right? So the comps were obviously also a bit easier.

55:37 So I think at the end of the year, we look different to the minus 2%, plus 12.7% and plus 10 So acceleration in Europe and North America and rest of the world, slightly less growth than we see right now year to date. Very clear. Thank you both. The next question comes from the line of Matthew Abraham from Berenberg. Please go ahead. Good morning all. Thank you for taking my questions. First query just relates to device style chocolate. Just wondering if you can actually quantify the percentage that De Beiers style chocolate accounts for within the group as a percentage of sales. And just confirm if that rollout in North America for distribution has been completed or if there's a further tailwind to come as that distribution expands in the second half of the year. And then second query is just a high level query with respect to organic sales growth guidance for the full year. Just wondering if you can provide some further background to the reiteration of that guidance today, given the shift from expecting H2 volume growth, which you've previously said today, talking about stable volume expectations in the second half and also the newly announced pricing resets, which will result in a less positive impact of pricing in the second half of the year. Just wondering if there's anything else to factor in that's fed into the reiteration of OSG guidance for the full year. Thank you, Matthew.

57:05 Please understand that we do not disclose individual product ranges or brands. But Dubai Styles is, let's say, one of our bigger brands in the meantime. And to your question, rollout in The U. S, we have launched under Lindt the Dubai style Chocoladet last year in the second half. We have rolled we rolled out the distribution first half with Lindt and Russell Stover. And in the second half, we will still see, let's say, an extended distribution, especially on Russell Stover. Of course, with Lindt, we cycle against a very strong period of Dubai style chocolate because in America, the hype was also year, but Russell Stover is incremental and Ghirardelli is also out with the product. So altogether, I would say, see we a positive contribution to growth from Duval Style Chocolate in the second half in The U. S.

58:22 To the volumes, H2. Just also on volume H2, I mean, as we already said, volumes will be flattish in H2 overall in the group, which implicitly means when we say our guidance is four to six we confirm the guidance. It means that pricing will be in the mid single digits, right, in H2, so rolling tailing off afterwards in 2027. But in H2, despite the fact that we have some price decreases in certain markets, the net net still a positive price impact overall in the group. Okay, understood. Thank you. We now have a question from the line of David Roux from Morgan Stanley. Two questions from my side. The first one is just on your product price points.

59:14 Where do you see the affordability of your product portfolio now versus the chocolate markets and in particular those premium segment peers? And could you just tell us if you believe the portfolio is now more or less affordable compared to prior to the inflationary cycle that we've just gone through back in the day when you guys were growing volumes at the sort of mid single digit rate that you mentioned? And then my second question is a very brief one on Global Retail. Could you tell us what same store sales were for the first half? I may have missed it. I know that you had disclosed this number at FY twenty twenty five results. Thank Thank you.

1:00:02 So the question, are we less affordable? I would say the whole category increased prices substantially. And if you want to, of course, it's less affordable. And the whole category has suffered in volumes throughout the last years. If I take the example of Easter business, we have in Germany, that was not a Lindt issue, that was a category issue. The whole category suffered in volumes. But we shouldn't forget that we cycle now against these volumes. And when we speak about volume growth, of course, this is the comparable base. We normally see when prices go up, that there is an initial reaction of consumers, the so called sticker shock.

1:00:51 And our experience is that it takes six to twelve months that consumers adjust to the new price points. Our premium did not improve substantially because the whole market went up with, let's say, some exceptions. If we take products that had a lower core content, like take one of our key competitors, Ferrero Rocher, that's a product that contains a wafer that didn't see an increase in raw material and a lot of palm oil. So if and then there is a coating of chocolate. Of course, if I compare this product to our Lindt or Ball, they had a lower pressure to increase prices than us.

1:01:39 But other than that, like if you take the portfolio of other competitors, they are in the same position as us. In percentage, the highest price increases, by the way, we have seen from private label because they operate with lower margins and with a very high amount of raw material in their calculation. So if you want, the price premium of our products versus private label has even come down. And so I would say, within the category, we are not less affordable. What we have also learned during the course of these price increases that in some packaging formats, we simply crossed price thresholds where consumers were no longer prepared to pay this for a confectionery or for a small treat. So this is why I said before, we will launch in mostly all markets smaller formats but also with lower prices to avoid any inflation suspicion here.

1:02:40 So if we bring a packaging, let's say, 100 instead of 137 gram, the 100 gram price will be parity or slightly lower, which makes us more affordable from in terms of the ex pocket price. So also when you ask now where is our positioning in comparison to the premium peers, I mean, first of all, we have to mention we don't have too many premium peers out there, at least no global premium peer. Mostly, we compete with local brands. We compete also with retail only brands. For example, if you take leather wrapped, they still sell their products for minimum twice the price, yes? So they charge CHF 13 for 100 gram of praline, while we charge between CHF 5 and CHF 6 per 100 gram.

1:03:32 So I think that our price positioning is where it has always been. We are a premium mass market player. There are brands above us, and there are many brands below us, but I don't see an issue in affordability. The last question or second question, same store growth in retail. We saw negative same store growth in Europe, and that was driven mainly by a steep decline in tourism that we have experienced or Asian tourists that were traveling across the Gulf state hubs, Dubai, Qatar, whatever, we saw a steep decline there. We suffered in global travel retail, but we also suffered in our retail stores. And also tourists from The Gulf States themselves didn't show up in the same amount. So then in general, traffic issues in the inner cities because the consumer sentiment is, especially in Europe, extremely weak with the high inflation, the geopolitical and securities plus also high fuel prices, which were biting immediately.

1:04:43 So for the first time, we saw negative comp store growth in Europe. In the rest of the world, The U. S. And rest of the world, it is fine. And here, we also expect to get back to positive comp store growth in the second half. That's very helpful. And just one follow-up question, if I may. The fall in profit in Rest of World, obviously, we've had the Middle East issues, etcetera. Are there any other contributing factors to this? Just be good to get some understanding if there's anything else driving this. I mean, number one, have new markets in there, like one example is Saudi Arabia, right? We told always in the beginning, there is not that or India as well, there are costs, but not to invest over proportionally in this segment. And therefore, you can also see the let's say, you look at the last five or even last ten years, the profitability in that segment has come down.

1:05:38 It is a strategic choice. We want to make North America more profitable. I mean, that has been our promise, let's say, the investors in the last six or seven years, and we have delivered. I mean, if you look at the numbers, our guidance is 50 to 100 basis points per year in North America improvements, and we have delivered against that. At the same time, we were able to invest some of that money in growth markets in rest of the world. Thank you. The next question comes from the line of Tom Sykes from Deutsche Bank. Please go ahead. Yes, morning. Thank you. Three quick questions, please. Firstly, just on North America. In the scanner data, the baking products have increased far more quickly than in growth in the retail product.

1:06:32 So that also has a higher level of price increase in it and presumably a higher raw material component. So in H2, if you're talking about lower cocoa costs in North America, would you expect the profitability on the baking product to disproportionately benefit from that? Then just in your retail stores, could you maybe just confirm what same store like for like volumes have been like and where you are sort of as a run rate now versus maybe where you were when you were at the height of conflict and travel retail impacts? And perhaps just related to that, is the reduction in personnel costs disproportionately retail store driven as well, please? So would that have to go back up essentially if volumes through retail stores start improving? Thanks.

1:07:33 I can maybe take the last one first. So personnel expenses, no, I'm not worried if the volumes go up, I'm not worried if that will have a negative impact rather have a positive impact on our personal expense. If you have higher volumes in retail, it was other contributing factors that led to these lower personnel expenses, such as efficiencies, such as ForEx, as we discussed before. So nowhere is there. Retail like for like, I'm sorry, we do not disclose. And North America baking products, if we see a profit improvement to the lower cocoa prices. So I would say, in line with the rest of the assortments of the baking products are not specifically burdened by cocoa products. The highest burden, of course, we have with the very high cocoa content, dark eczema, also Ghirardelli has products with 78% cocoa, etcetera. And Lindt, as mentioned, there we would see a bigger impact, but not on baking products.

1:08:40 I mean bear in mind, when the market went from £2,000 to £10,000 we never increased our prices to offset the £10,000 if it had stayed at £10,000 right? So baking has had the biggest impact on the cost of goods. So in theory, yes, you're right. And when the market comes down, there's also benefit. But it always depends how much we have really increased the prices in relation to our hedging. And we don't disclose that, but I think it really depends on that. So you cannot automatically say if the market comes down, we'll have the biggest benefit there because it depends by how much we had originally increased the prices by and what we'll do in the future with regards And can the time sorry, can the timing on hedging differ between baking and non baking in North America? No, we do not.

1:09:26 We do not hedge for the we really hedge the entire business, not specifically baking. Okay, sure. Thank you. We now have a question from the line of Colm Eliot from Bernstein. Please go ahead. Hi, thank you both. Just wanted to come back to volumes please. Your confidence in the long term I think was very clear. But I wanted to ask specifically on the sort of phasing of the recovery over the next twelve, eighteen, twenty four months. And I guess the maintenance of this question is what we've seen quite consistently in the rest of Staples over the past couple of years is that volumes have remained stubbornly quite weak for a couple of years after the pricing cycle.

1:10:20 So my question is, do you guys have good reasons to believe that the chocolate category is going to behave differently from what we've seen in the rest of Staples with this persistent volume headwind over the past couple of years and to drive some kind of faster recovery in volume for chocolate? And I guess the second part of the question, how much of this speed and phasing of the recovery over the next year or two do you think is going to be driven by your actions specifically rather than just how the category behaves? So thank you for the question. So the answer is no.

1:11:09 We don't have any reasons to believe that the Chocoladefabriken will see, let's say, a faster recovery than other fast moving consumer goods categories. But we have reasons to believe that we will get back to the momentum to outperform the category, which we did in all these years in the past time. We could also argue that we have seen now also a stronger volume decline, and we have learned from in which products, which price points, which promotions led to these declines. And as we are able to address specifically those areas with high elasticity, we are confident that we can correct this trend and get back to an over proportional growth within the category.

1:12:05 So it's not that we give a prediction how the category behaves. It's just a prediction how we, as Lindt, will recover volume and will gain volume. And I think we have enough data points to be confident that with the means in hand, meaning with the relief of cocoa price in 27%, we can invest, especially in those areas that give us volume growth, again, being the right promotion prices, being the right price points, being also a brand support cooperations with retailers, revenue growth management, etcetera. So that's this would be my answer to the first question.

1:12:55 How much of the recovery of the category would be driven by our actions, you asked? I mean, honestly, in as a this is one of our promises also to retailers that we are a growth driver for the category. So if we are able to get back to a significant volume growth, yes, we can be a contributor to the development of the category, but according to our market share. So it needs also, in general, of course, better consumer sentiment and also activities from our competitors to drive the category. The next question comes from the line of Bingking Tsu from Rothschild and Co. Redburn. Please go ahead.

1:13:52 Hi, good morning. Thanks for taking my question. I have two. My first one is a general question relating to the premiumization trend. I guess, can you share like how you've seen the premium chocolate trend developing in the current macro environment? How resilient are those against the environment? And have you seen any signs of the consumer trading out of premium maybe up at the today's price point? Then my second question is, would you be able to quantify H1 drag from the reduced tourist flows and decline in travel retail? And given the renewed instability in Middle East, have you embedded a continued headwind into second half Or are you assuming some level of recovery? Thank Thank you. Let me start with the last question.

1:14:41 Of course, I think like everyone, we were more optimistic about the length of this conflict in Middle East. And yes, we have baked in a recovery of tourism and travel activities and passenger figures, traffic figures, etcetera, for the second half. So we still are confident that this conflict will not last until end of the year despite the fact that the recent days only indicate, unfortunately, a new escalation. But yes, I'd say also the key season for the tourists from the Gulf States starts only now, yes, mid of July.

1:15:32 Normally, we see tourists from the Gulf States escaping the heat down there. So yes, we are, for sure, also a bit dependent that the situation doesn't stay like it is. Premiumization, I mean, that's an ongoing megatrend, which we observe now for decades, I would say, especially also driven by an increasing middle class and an aging population. We see consumers who have who are more affluent and who also we call them also are empty nesters, like they are no longer providing for the family, but they are they can use the money for themselves. They become more hedonistic, and they invest more in their quality of life. And this is one driver for striving for premium products, premium travels, premium hotels, etcetera. So this megatrend is intact and hasn't changed.

1:16:35 Of course, there can be setbacks like now when consumers are, yes, burdened by inflation or insecure due to the geopolitical situation. But in general, we see this trend going on. Did I answer your question? Or is there anything opened? Thank you. Thank you. The next question comes from the line of Ed Hakon from JPMorgan. Please go ahead. Hi, Thank you very much for taking my questions. My first one is on pricing. So I think you say mid single digit pricing still in the second half of the year.

1:17:24 I think this is and it's a bit expected already. So I'm keen to understand on these targeted price investments being made, what magnitude of price give back are we talking about at the group level? And what magnitude of volume improvement you're expecting from that in the second half? And then I think on 2027, the comment was that pricing would not be positive. What do you see as the range of possible outcomes on pricing in 2027? Should we think that it could be in the range of flat to negative mid single digit pricing at the group level? And on margin, should we still should we have as an expectation that 2027 is a 20 to 40 basis points improvement in margin year aligned with your midterm ambitions?

1:18:19 Thank Thank you. You, Ed. Again, for '27, we it's too early to give an outlook. So we I mean, we gave this indication that it's unlikely that prices will increase because this was a concrete question. I think to the margin, we can also say that given windfall from raw materials, we don't see pressure on margins next year, the opposite. But to determine now pricing volume or top line, it's too early, and we don't give guidance. I mean bear in mind also, if you look at the cocoa market, how volatile it is. I mean it came from 10,000 straight down to 2,000. And now it's back up to 4,200.

1:19:05 So in this environment, it's difficult even to give now already a concrete outlook on every single example of pricing action, etcetera. So it's just really to fall right now in this volatile environment, as Otto Verd said. Yes. The first question was pricing again, what we can expect for the I second think it's important to understand that we mainly see a spillover of pricing activities that were implemented in North America in the first half. And your question was the targeted price activities, they take place mainly in Europe because, as you have seen from the results here, we saw issues with price elasticity.

1:19:52 And here, we will correct in those areas where we saw the biggest price elasticity. And this reduces a bit the impact of the spillover, but the result will still be a low to mid single digit price increase across the group. Okay. Thank you. Thank you. We now have a question from the line of Feng Zhang from Jefferies. Please go ahead. Hi, thanks for taking my question. Just got one question. What's the volume run rate in Germany and Switzerland after the price action you've taken? Trying to figure out how much visibility is out there. Could you remind us on the pricing negotiation timing in the second half for the key Christmas season, particularly in Europe?

1:20:43 Thank you. So if you ask about the corrective actions that we take, for example, for Christmas, we speak about a low double digit price decrease across the Christmas season. And on everyday business, it's, as I mentioned, more different promotion pricing, price back architecture. So we are not in the position for the everyday business to lower prices. There are some small exceptions in Switzerland with some minor ranges. But on a broad scale, we speak about the correction in the Christmas business as the sell through was weak in the Easter business, and everyday business is more RGM activities, yes. Talking about Germany right now, but Germany specifically on Christmas. That's Germany Christmas. That's Germany Christmas. Yes, I understood this question, yes. I speak only for Germany.

1:21:47 Germany represents 17% of the total group. So and Christmas is a part of the second half. So it has an impact, but I would not overestimate the impact on the total group. You. If those who have asked questions have more questions, please just come in because we still have some time in case you have some more questions. Ladies and gentlemen, there are no more We have a last minute registration coming from the line of Johan Evertz from UBS.

1:22:38 Please go ahead. Thanks for taking the follow-up question. It's a quick one. It wasn't the media. I think there's this one large retailer in Germany. You have not yet agreed for the Christmas orders. Is there any update from your side you can share? And the second question is, please, the average selling price negotiations for Easter twenty seven, have they kicked off already? And what you observe among your key accounts, your key retailers, is this meeting your expectations more or less on pricing currently? Thank you, Jorn. So yes, the issue with the big retailer in Germany is solved.

1:23:27 It was a tough negotiation because they were not happy about the sell through of Easter and had some demands for the Christmas business. We found, I would say, a reasonable compromise. And so now all the Christmas orders are coming in, and we are in constructive cooperation with the customer again. Average selling prices Easter for 27, that's nothing we can comment on, if you understand, please. Because that's but I don't expect any disruptions there because we do not go out with further price increases. And normally, the friction starts with price increases.

1:24:15 Thank you. Thank you. We have a follow-up question from the line of Jon Cox from Kepler Cheuvreux. Please go ahead. Yes. Thanks for taking the follow-up. I'm really coming back to this medium term growth guidance, and you've mentioned you don't know what's going to happen in 2027. Aldabriken and Martin, how can you give us reassurance then that what we're seeing now is different to that period ten, fifteen years ago when you did cut your goal from 6% to 8% to five to 7%? And I think at the time, there was pretty much zero pricing and maybe you weren't as developed in some of the emerging markets. How can you give us comfort that you can maintain this 6% to 8% based on what you can see today? And what is different today compared to what it was ten or fifteen years ago? Thank you. John, I would say what is different.

1:25:13 First of all, we always have earmarked The U. S. With a very low share as our growth driver number one, and The U. S. Has grown in the meantime to a 35%, 37% share of our group. The second thing is we have reached out more aggressive to the all the other markets outside of Europe and North America than we did before. We will see an impact there. And retail has been a very small we only started in 2009. It has been a very small contributor to the growth, but it has always been in percent and over proportional growth contributor with the numerical expansion, but also, let's say, with the perfect execution in our own stores. So we always had a substantial like for like growth. And this retail division, in the meantime, is a significant part of our group and will have a stronger absolute impact to our growth story.

1:26:20 So this is why we hold on to the 6% to 8%. And all our midterm plans and all our bottom up plans, which are discussed with the countries, confirm this. And this is why we don't have a reason to to step away from it. And in addition, I think also there's still a certain inflation in next years that we should expect, right? I mean, can see it now with certain food ingredients, for example, in next years also driven by El Nino, right? If it happens, especially with strong El Nino, we will see a lot of food inflation outside of cocoa. And just in general, I think the inflation is likely to be around still in next years.

1:27:05 So it may well be that our pricing in the next five years on average is still, let's say, percent to 2% as it was in this period that you're mentioning where we had six to 8%. It doesn't mean that pricing net pricing, including all revenue growth activities will be zero, right? It will most likely rather be in the neighborhood of 1% to 2% as well. I'm not talking about 27% necessarily specifically, right? I'm talking about 28% and beyond next five years or so. So I think that's also one change. And as Albert said, I mean, rest of the world in this period is very small and now we are planting the seeds to really make rest of the world much bigger in the future. And if we grow double digit in global retail and in rest of the world, it will have a more positive impact than it had fifteen years ago.

1:27:56 Because D2C is now 10% of our business more or less, global travel retail plus online. So it's a significant part of our business. So that if we can continue to grow at the speed that we grow now, this will add probably one percentage point to our growth each year. Great. Thank you very much and good luck. Thank you. We have a follow-up question from the line of Samantha Darbyshire from Goldman Sachs. Please go ahead. Hi, thank you. I just wanted to come back to you mentioned the Choco wafer expansion next year and that the capacity would be online by 2027. Can you just confirm that by the beginning of twenty twenty seven? And then also what kind of magnitude do you think that could support sales growth next year? Could it be a similar size to Dubai style?

1:28:51 And how would you expect that to kind of phase? So we can confirm that the capacity should be available beginning of twenty twenty seven. So our internal plans are even end of twenty twenty six, the line should be installed. But normally, you have also a couple of months until the line has the full output. We don't confirm as you we don't disclose individual product ranges. But let's say, to give a comparison to Dubai Style, of course, let's say, it should be in the area of a Dubai Style chocolate. Thanks. I appreciate that. Yes. Thank you. Ladies and gentlemen, there are no more questions at this time.

1:29:40 I would now like to turn the conference back over to the speakers for any closing remarks. From my side, first of all, I would really like to thank you for your interest, demonstrating how detailed you are informed about our performance. Yes. And as John said already, wished us good luck. We also hope that some things are getting better in the months especially all these geopolitical conflict. And let's say, also the heat wave is already here in Zurich. It seems to be over, yes? We enjoy now a nice 25 degrees and no longer a nice 35 degrees.

1:30:28 So we also hope for some tailwind. And we assure, as we say, at the end of the tunnel, there is always a light, and we are seeing it already. Thank you very much. Thanks, everybody. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.