Portmeirion Group (LSE:PMP) — Interim Results

0:00 Good afternoon, and welcome to the PORTMEIRION GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the

0:30 meeting itself. However, company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Mike Raybold. Good afternoon to you. Good afternoon, everybody, and welcome to PORTMEIRION GROUP's 2023 interim results presentation. You have myself, chief executive, and Dave's Boston, our group finance director.

1:02 I'd like to start with some headlines, and then I'm gonna pass on to Dave who will talk us through some of our financial summary slides. So in terms of an overview, our sales in the first half were down three points year on year, albeit against a tough record sales last year and against a backdrop of much tougher consumer markets generally around the world. The challenges we faced were centered really in North America, which for us is is The US and Canadian markets where our sales were 13% down, and that really reflected destocking from major customers against the backdrop of tougher consumer sentiment.

1:48 Outside of North America, we were pleased with our performance and saw growth in The UK, our second biggest market, South Korea, our third biggest market, and within our rest of world sales markets, a key part of our long term growth strategy. The reduction in sales has fed through to reduced profit levels, and I'll let Dave later on in these slides talk through the key drivers of the changes in profit during the period.

2:15 Looking forward for a moment to our key second half. We are a second half weighted business generally with a big and strong Christmas program. We're pleased with our second half shipping so far. We have good and healthy order books for Christmas, which are ahead of the same period last year in The US. We'll continue to maintain tight focus on all of our costs, and as a management team, committed to the targets we've put out in the marketplace of growing our operating margin to a medium term target of 10% and then beyond to around 12 and a half percent. I'm delighted we've also maintained our interim dividend for 3.5p. I'm now gonna pass you on to Dave Froston to talk through some of our key financial slides.

3:06 Okay. Thank you, Mike, and good afternoon to everyone on the call. As Mike has just said, we had a 3% sales decline, against a record, 2022 performance, and that was largely contained, within North America, although sales remained 26% ahead, pre COVID levels from 2019. In terms of the the drop through to profitability, we we've got a small bridge in here, which just demonstrates, I think, that in terms of The UK, rest of world, and South Korea, and our home fragrance division actually increased their contribution to profit in the first half of the year, and the reduction was really down to lower sales in North America, but also the impact of peak container rate inflation in terms of inventory, although that rate starts to subside as we go through the second half of this year and into 2024.

4:04 We have maintained our interim dividend at 3.5p. And finally, we have seen an increase in our net debt levels largely due to higher working capital, although we expect to see an improvement by year end to a reduction in net debt over 2022 year end levels.

4:28 So moving on to balance sheet. We continue to maintain a strong balance sheet, maintaining significant headroom within our borrowing facilities. And as I said, although we saw an increase in net debt, we do expect to see about a 30% reduction from the December 22 year end by the time we reach December 2023. What is driving that reduction in net debt? We have talked and presented before about reducing inventory as a priority, and we actually had a 5% reduction like for like in inventory in the first half of the year. We expect to be able to continue and make further progress in the second half of the year to achieve approximately a 10% reduction in inventory by the end of the year, and that should flow through to a reduction in net debt levels.

5:23 And finally, on balance sheet, we continue to maintain a small surplus within our pension scheme.

5:32 In terms of sales by geographical market, the reduction in sales, as we've highlighted in the table, is largely driven by North America, The US, and Canadian markets. Elsewhere, UK sales were actually up 2% despite weakened consumer sentiment. South Korea sales were up 7% due to new product ranges and increased distribution in that market. In terms of rest of the world, a key part of our long term strategy, we had about a 10% growth in ceramic markets driven by China and the Far East.

6:17 And the final slide on financials, sales by brand. We continue to see positive growth in the SPO brand, which increased by eight percent over 2022 and is now 68% ahead at pre COVID levels. PORTMEIRION Botanic Gardens Spo Christmas Tree, our key heritage ranges, continue to perform well and make up approximately 60% of the group's sales. The Namba brand has been most impacted by North American retailer destocking due to the focus on that marketplace. And then finally, in terms of home fragrance, sales were up 9% year on year as we benefit from the Roamworks acquisition that we made in August 2022, and we expect to see further growth in the second half of this year.

7:09 Back to you, Mon. Thank you, Dave. I'm now gonna turn to our US market, our largest sales market by revenue. And as we've said so far in this presentation, the market where we saw a reduction and destocking key customers in the first half. So some more background here about what we're seeing going on in The US. First of all, I'll start by highlighting the chart in the top right hand corner of this slide that shows that on the run up to 2023, we've had a good level of growth coming from this market. We've taken market share in both physical department stores and online. However, what we've seen in the first half of twenty twenty three clearly against the backdrop of tougher consumer sentiment is key customers reducing their stock levels.

8:03 We collect sales out data, which is a very good approximation for end consumer demand from about 50 to 60% of our US sales market, and that sales out data that end consumer demand is have been stronger than than our sales in, which is highlighting that key customers such as Macy's and Bloomingdale's and indeed online platforms like Amazon are reducing stock levels across the board. What we are pleased with, as I said, is we've taken market share in recent years within the categories we operate, and we're still securing new incremental sales listings in both physical and online retail. There are some examples that I've listed here on this slide. In the premium Williams Sonoma department store chain, we have a new Spode range for the first time it's gone in that has started well. We have repeat orders in our hand for the second half. We have a new contract with Firmdale Hotels, premium hotel group in New York and London for Spo KitKemp collaboration.

9:09 That's also very exciting, and a large part of that contract will ship in the second half of this year. Our Spode KitKem consumer range is being listed in Macy's and Bloomingdale's from September this month, and our key heritage range in The US holiday range Spode Christmas Tree We've extended into new additional SKUs, and all those SKUs, which are new are going into over 200 Macy's stores for the fourth quarter. On the contemporary side, our long standing successful Sophie Conran range is also gonna be in the new relaunched Macy's bridal program, wedding this program for next year. So lots of positive things going on beneath the numbers, which again reassures us we think that our brand and our products are still in demand by the end consumer.

10:00 And once the markets settle in The US, stock levels settle, we should expect to return to historic levels of of trends and growth for sales. The next area that I wanted to look at was to talk about our home fragrance division, wax lyrical. As I've said in recent presentations, this was a division that was probably most impacted by the COVID pandemic. Many of its customers were closed for a lot of that period, and footfall traffic has been slow to return. Similarly, it was a product category that didn't move online in the same way that our tableware and giftware ranges did.

10:46 In terms of an update for the first half of this year, we're pleased to see the benefits of the Aroma Works brand that we acquired late last year now showing through in this division's performance. Sales are up just under 10% driven by the acquisition of that Aroma Works brand, and we managed to integrate that brand and all of its products and manufacture them in our own existing factory, Waxloor factory in Cumbria with the same level of headcount and resource that we had. So great progress on integration of that brand. New Roomwork sales have now started to ramp up, and we're getting some momentum, which you'd expect to grow through the second half of this year and into 2024.

11:32 And in terms of the core existing wax lyrical business, again, we're pleased and reassured that we're now starting to see some improvements in sell through in some of the large customers and stores that the brand is present in. That includes Dunhill and online platforms like Amazon. Looking forward for our home fragrance division, we've worked hard on new ranges and new listings. I'm pleased to report we have some significant new volume accounts that are about to come online. There's a picture on this slide in the top right of a new range, wax lyrical range, that is going into over 400 as the stores from November onwards to being manufactured in our factory right now.

12:18 We're also hopeful of getting this range extended into other national retailers for 2024. We have a new range on the picture on the bottom of this slide that will be going to Mark's dispensers from late this year. When we put this these new wins together with the Aroma Works acquisition, we're hopeful that this division will return back to profitability in the second half of this year and hopefully give us a foundation which we can build further on in 2024 and 2025. I wanna now turn to our ambition and our forward strategy. We framed in recent presentations two key objectives that we, the management team, are highly focused on. One is how do we grow our top line sales over the next five years?

13:12 And secondly, how do we get our operating margins back up to around 10% and then beyond in the years to follow. So I'm first gonna deal with the top line sales opportunity. Four key buckets of drivers here that we've identified in a brief update on each of those four. In terms of geography, and we've successfully continued to grow our rest of world sales market. So 60 or 70 countries that we have a small foothold in, and we're looking to grow and make some significant progress. In the last six months, we've seen some nice work going on in Asia, including Malaysia and China. We expect that to continue. And as I said, overall, our rest of world division grew by 10% ceramic sales in the first half. We expect that level of growth to continue, I think, in the second half too.

14:04 Turning to online, getting our products, our brands in front of more potential customers around the world by developing and getting a presence on more online sales channels. Our own ecommerce websites in The US and UK declined year on year pretty much in line with the ecommerce market, but we have seen much improved net profitability levels on our UK ecommerce website in particular as we've managed costs, improved return on ad spend, etcetera, etcetera. Customer lists on our own websites in The US and UK continue to grow up 10% year on year, and we have good levels of repeat purchase. So these customer lists are important for long term business. We've continued to expand ranges online on third party platforms, and that includes South Korea, our third biggest market, where we're expanding the number of ranges that we have in the second half, trialing brands like Nambay, trialing ranges like Spoke Christmas Tree, trialing ranges like PORTMEIRION and Sophie Conrad.

15:11 Thirdly, in terms of new product development, new product launches, we continue to extend our hugely successful heritage ranges. PORTMEIRION Botanic Garden is launching a new mini Marion kids range, and that launches in South Korea on the online Kupang platform in the second half of this year. We continue to extend our Spode Kuchem range and our Spode Blue Italian and Christmas tree ranges as well. We're also targeting contemporary more contemporary parts of the market. We have two big new ranges all ready to launch at the back end of this year, beginning of next year, a contemporary stoneware range, and a new extension of our Spode Blue Italian range.

15:57 Finally, we're looking to leverage our full range of brands and products more effectively around the world. In addition to some examples I've given in South Korea and the rest of world, we're also working on whether we could launch botanic garden into new and different categories. And as David said, we're very pleased that Spode brand, which has been a key part of our focus in the last eighteen months, is growing very, very nicely, plus 80% and and more than 60%, I think, in 2019 levels.

16:32 Turning now to operating margin growth. Our operating margins have been impacted as we've shown on the p and l slides in the first half as our volume and sales have fallen particularly in The US. But in terms of long term initiatives that we're working on, firstly, the investments we're making in our factory efficiency in our main Stoke factory. We've continued to see improvements in productivity and efficiency rates. We have two new large scale automation CapEx schemes that have been built now for the last twelve months that are ready, and we're gonna implement those in the next couple of months. They will yield further benefits to our p and l for next year.

17:17 And we've also just completed a a really successful trial of a new real time data system in our Stoke factory, a system that gives us much quicker awareness of downtime, allowing us to act and react on a much quicker basis. We're now gonna move to a full implementation of that real time data system and expect it to give us, again, a kick in terms of productivity gains and efficiency for next year. The second area that we're working on to drive the improvement in operating margin is to improve the profitability of our home frames division. As I said a few slides ago, we're pleased with the contribution that the acquisition is now making. We're also really pleased to have acquired some new big volume listing wins for the wax lyrical brand. Putting those two together, we can see a good a good possibility that we will return the division to profit in the second half and give ourselves something to build on further for next year.

18:16 So we're pleased with progress on that front. Finally, in terms of top line leveraging, growing the top line, leveraging our overheads and factories, Clearly, in the first half, we've suffered from the reduced sales order flow in North America. We do, however, see that we've made clear market share gains in The US and believe with the new listings that we're getting all the time that when that market stabilizes, when stock levels stabilize, we should expect The US market to return back to to previous levels and grow. And in addition to that, our rest of world sales market has continued to grow this year plus 10% in the first half.

18:58 So as a management team, we're committed to our operating margin ambitions, getting back in the medium term to 10% operating margins, and then working in the years following that to get up to 12 to 12 and a half percent.

19:15 I wanted to turn now to energy and also carbon net zero. We're very aware as a business that manufactures business, sells, and moves products around the world of our responsibilities. We've launched in the first half of this year a major new ambition and document that we called crafting a better future. We have a new energy sustainability committee in place reporting to me, and we set a very clear target of getting to carbon net zero by 2040. In terms of progress in the last six months, we're pleased to have been able to reduce our energy consumption in our key factories by around 6% from a series of schemes and capital investments that we've put in, and we're working on further projects in terms of our kilns in our stove factory and other energy efficiency efficient equipment that we can install that will give us further energy reductions in the future.

20:13 We also have road maps of work underway looking at how we can reduce energy in our warehouses and across all of our offices around the world. The use of sustainable energies, we already use a wind turbine that powers a lot of our home frames factory in Cumbria. What else can we do to get more green energy, self generation of energy? And, of course, we're looking at packaging solutions, removing single use plastics, and the like as well. So a lot of work going on across our global teams on energy and carbon net zero ambitions. Which turns now really to a summary, and then I'd be very glad to take questions. So we've had a challenging first half that really was all about order flow driven by destocking from our major customers in the North American market.

21:08 We do believe that with the market share wins we've been making with the new product listings that we're gaining, that when that market stabilizes, our sales should also stabilize and rebound back to historic levels. Other parts of our business have performed well, particularly against the climate of tough consumer sentiment. Our rest of world sales market, a key part of our long term strategy, is growing double digit. In terms of looking forward, we've made a good start to our second half trading. We have good and healthy Christmas program order books, and those order books are ahead of last year. As Dave has talked about, we're focused as a group on reducing inventory levels back to historic historic levels, and we're seeing the cost inflation that's come through in recent years starting to subside.

22:02 As I've just said, we're very focused as team on the ambition of getting our operating margins up, and we're confident, therefore, about the long term sales and operating margin prospects for the group. I hope this presentation has been interesting, has been useful, and we look forward to taking questions. Thank you very much. Mike, David, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your

22:33 screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A can be accessed via our investor dashboard. Mike, David, as you can see, we have received a number of questions from investors. And if I may now hand back to you and kindly ask you to read out the questions and give responses where appropriate to do so, and I will pick up from you at the end.

22:59 Thank you very much, and thank you very much that submitted submitted a question so far. Please do feel free to continue to add questions while we're talking and answering. So the first question is about, the destocking in, American customers. When do we expect this to finish? That, I'm afraid, is is a very difficult question to answer. We have a significant team in place in The US, and I spend a lot of time over there as well sitting in front of all the key retailers that we deal with. At the moment, those retailers are cautious about trading through the rest of this year, and therefore, we're cautious too. However, you know, we would expect that destocking, reduced startups cannot continue forever. As I've said in the presentation, our sales out, the end consumer demand we're seeing is actually much more healthy.

23:55 The next question is about how we onboard new customers, physical or on channel customers. Well, I mean, onboarding of new customers takes a number of different formats. Clearly, there's an account setup. We would connect EDI systems off often for for order flow. We will also work on sharing digital assets, digital content for our brands and our products so they can be featured on online platforms. So onboarding takes a number of different different parts. The next question is about AromaWorks. Have we lost any important customers? What's the status? Do we still expect turnover to be what we previously stated? So overall, I'm pleased with the progress that we've made with the bolt on acquisition of Aroma Works.

24:46 Although the business had been in administration for a few months, which obviously disrupted customer relationships, I think all the major customers in The UK, that includes Waitrose. It includes Holland and Barrett. It includes Boots. We've managed to retain those customers and are still trading with them today. There are some smaller accounts, particularly in The US, which we haven't maintained, but I don't think that is gonna be detrimental to the long term acquisition case. So overall, we're happy with the status, and now we're looking to leverage our global customer base, existing global customer base with that brand.

25:29 Next question is around making versus buying. So making ourselves, manufacturing ourselves versus sourcing, how do we choose?

25:43 So part of that is about capabilities, and part of it is about factory gate cost price and how important a made in UK product is in certain sales markets or in certain ranges. So our Stoke ceramic factory makes urban wear. So nearly all of our urban wear, all of our urban wear typically we would make in house. However, as I think the question highlights, we also have products that are sometimes fine by China or porcelain, and we don't make those bodies ourselves, and so we would make them into third party factories. And similarly, occasionally, there are ranges that we would make outside The UK where we can hit a a lower price point if that's the most important part. Typically, key markets like a made in UK product, and therefore, manufacturing in our own factory, if we can, is is sensible and good for brand and price point.

26:41 Next question is why are non bay, raw wooster, and PMP produced externally? And I think that's a very similar question to that I've I've just answered, which is that they'll all contain

26:52 materials and and processes that we don't actually have the capability to make. Pimpernel is a placemat, a cool back placemat. Has a lot of wood and metals, and therefore, we make those in in third party factories.

27:08 The next two or three questions are about inventory, and I think I'll let Dave answer those. Okay. So next question is is about do we think reducing inventory to the same volume of 2021, is the right level? I think in terms of the inventory reduction as we showed in the presentation, our aim is to to to get a 10% production this year. We still think getting to the the 2021 level is the is the right level. So I think there's further progress to make in in 2024 in inventory. What initiatives have been taken? I think that the the biggest one is just rebalancing our our sort of output and and buying practices as we've gone through the year. So just reforecasting what we think we're going to sell and then adjusting our our inflow of inventory accordingly to be able to deliver the the right level of of by the end of the year.

28:09 Next question is, can we provide a breakdown of inventory by brand? And that is not a figure that we we we publish externally, so I don't have that that that breakdown to hand. Is there a part next question. Is there a part of inventory obsolete or difficult to sell? We're not a fashion led business. I mean, a lot of our, you know, brands have been around for for well over two hundred years. Certainly, a lot of our our patents and ranges have been around for themselves, you know, forty, fifty years for Botanic Garden. So there is not an element of inventory that that that effectively, you know, almost goes out of fashion or or gets the end of its shelf life. So so, no, we don't have a significant amount of of obsolete inventory.

29:00 Do you wanna take the next question, Dave? Yep. So it's a balance sheet. Goodwill is because of our own works. The intangibles increase, we have been doing an upgrade to our accounting sales order processing ERP system in The United States, which is to enable us to amalgamate all of our businesses, all of our inventory onto the same systems. So that has required An investment in software in North America, particularly the The US, so that is the the background to the increase in tangibles.

29:33 Thank you, Dave. I'll take the next few. So next question is, what can Jeremy Wilson add to the board? So for everyone's benefit, Jeremy Wilson joined as a nonexecutive director in recent months. Look. Jeremy comes with a huge amount of experience as a exec director of a number of different consumer goods businesses that were present in The UK, but also had a lot of international business. And therefore, I think he will add to our board in terms of his international experience. Key part of our strategy is to diversify our sales markets and grow outside, but also give us plenty of experience in terms of the commercials for consumer good businesses around the world.

30:21 Next question is what exciting strategic projects or customers are on the road for this year? Well, we've got a lot going on. Hopefully, some of that came across during the main part of this presentation. We have a strong two year rolling road map for new product, and that covers PORTMEIRION and SPORE and some of our other other brands. We're also winning new customers and new listings. A high to some of those in terms of in South Korea, highlighted some of those in terms of new listings in The US, and highlighted some of those in terms of our home frames business as well. We also continue to work on capital projects, particularly in our factories where we're automating, making our factory efficient, future proofing our factory for generations to come, we hope.

31:10 Next question is about Capital Markets Day. We held one in 2022. When's the next one? We don't have another one scheduled right now, but it is something we will do going forward. And if there's particularly demand for that and people wanna come and see us, then we'll get one scouted in within the next twelve months. Next question is about operating margin targets, and I think we've already dealt with that on the presentation. Yes. We're still committed to operating margin targets. I think that the consensus expectations that analysts have put in the market have us increasing operating margins nicely next year, getting to 10%, I think, in 2025 and then growing beyond that in the out years. What is the interest rate on borrowing? Dave, I'll I'll let you pick that one up.

31:58 Probably averaging about seven and a half percent at the moment. We do have a cap on some of the borrowings, but, obviously, as a lot of businesses, we've seen an increase in in in underlying interest rates. Next question is around having a dividend versus reinvesting in the business, paying down debt. Look. I mean, I think we, across many, many years, have had a progressive dividend policy where we balance the need to invest in business with giving a return to shareholders. And I think that is our you know, we're not looking to change that strategy in in the short term. How do we value our brands is the next question. Well, short answer is enormously.

32:44 I think in terms of financial valuation, then, Dave, as intangible assets, they sit on the Yeah. And and any any acquired acquired assets will be valued. Effectively. You split the purchase price over the and and and put an an acquired value on on any intangible assets that you then amortize over there at useful economic life. So it'll be at acquired value effectively in terms of assets allocated. Thank you. Question about global synergies cost base in the next year. Well, look, I'm not gonna go into to to detail on this for for obvious reasons, but, you know, we are focused on how do we, a, leverage our cost base, how do we get more synergies, and we're constantly working on projects in that in that area.

33:34 What is the plan for the home frames division is a question. So I spoke about this a little bit during the presentation. You know, our key our key focus is getting that division back to profitability. We think that should happen in the second half if everything that we expect to come in terms of orders and sales and unites happens. We are interested in getting more volume through our factories. Part of that will be a benefit from having the Remworks brand, and part of it will be win about winning new business in in high volume and and large store format chains like, you know, the grocery channel. Next question is how do we measure market share taken in The US? We we look at a number of different things.

34:19 One of the things we look at is is the share of space that we have within key department stores, and that's often something that we will quote if we take space from a competitor or we take more space on the floor than, you know, we believe we're taking market share. Do we see any m and a activity? I think the short answer is, you know, we'll always look for strategic investments. But right now, we think we have a lot to do, a lot to deliver still with the portfolio of brands and businesses in the group that we already have. Next question is about energy prices. Do you have plans to do any other hedges? Dave, that's definitely one for for you. Yeah. We're we're bought out to March 2024 at the moment, and we're sort of in the latter stages of of entering into a forward contract purchase at least in the twelve months of of energy at the moment.

35:15 Great. Thank you. There's a question about working capital and facility headroom. As I think Dave said in the presentation, we have a significant headroom on facilities. Our working capital cycle peaks around sort of October each year. Yeah. But we're very comfortable with the the facilities that we have. Next question is around our brand's pricing power and what happens if input prices go up. It looks like gross margins have had it well. Yeah. Gross margins have had it well. I mean, look. We've managed to pass on price rises typically last year and this year. Cost inflation is definitely subsiding, and, you know, the biggest area of cost inflation that we faced in the last twelve months was container freight moving 40 foot high cube containers around the world where the rates went from sort of 3,000, a 40 foot up to, you know, a maximum 20,000.

36:13 They're now back at sort of three to four thousand. So I think that gives a a good example of how costs went up, but have also returned back to more historic levels. Dave, pension. There's a question on pension. Yeah. We're still waiting for the initial results. So the triennial valuation is at April 2023, So we should, in the next couple of months, have the have have the initial results from from from that valuation, and and then we'll then could could assess what the correct contribution levels are going forward. Okay. Next question's around rest of world sales markets and the progress that we're making in China and Malaysia. What's the potential in those markets and so on? Well, I think that what we see as a trend is that Asian markets typically are increasingly developing a middle class consumer base to respect and like Western brands.

37:17 Our brand, PORTMEIRION, and particularly Botanic Garden, is very, very well respected in Korea. It's one of the leading ranges, leading brands in terms of awareness in Korea. And so it makes sense for us to seek growth and new markets, you know, in surrounding areas, China, Malaysia, maybe Taiwan, where, again, I think that the made in The UK, the history, the heritage, the design that we have, I think, gives us a point of difference in in those markets. Again, China is not gonna go from zero to twenty, thirty million overnight. It's a huge market, but also there's a lot of competition from local and western brands. And so we will build at the right pace for us, in Malaysia, similarly in Taiwan.

38:10 Full year dividend payments. Again, I think we set our our dividends based on cash flow, free cash flow, and we're happy that the statement we've made about maintaining interim dividend reflects the confidence we have about free cash flow generation. Gross margin percentages in our results. Well, we don't declare too much detail on that because, you know, I think that we don't wanna explain to our customers, retail partners, or to our competitors, you know, how we make gross margin on our different brands. And I think the final question that I have is back on inventory. Dave, do wanna pick that up?

38:58 Yes. So so in terms of inventory days, what can we do to get this to a more a more reasonable level? I think we've already touched on an earlier question in terms of, you know, rebalancing our our our our purchasing and outputs. I think we're working more closely with suppliers to try and reduce the the lead times. Obviously, what happened during COVID is is supply chain disruption lead times went out very significantly. Obviously, those lead times and uncertainty of of shipping has greatly improved. So I think it's it's it's about rebalancing our inventory levels, which we are we are doing over the course of the course of this year, particularly over the the second half of of of the year. That's great, Mike. David, thank you for being so generous with your time and addressing those questions for investors today.

39:51 And, of course, the company can review all questions submitted today, and we will publish those responses on the Investor Meet company platform. But before redirecting investors to provide you with their feedback, which has particular importance to the company, Mike, could I please ask you for a few closing comments? Thank you. Yes. Firstly, again, we appreciate everyone's involvement in the call today, and thank you for your questions. I hope the the presentation, which will be on our investor website shortly as well as on the investor meets company portal. I hope it's been useful. We certainly enjoyed it. And, look, in terms of where we're going as a company, hopefully, you can see that as a team. We're still very excited about the potential that our brands have. We have some fantastic brands across the categories that we operate in. We have a strong program of new product coming through, and we're well diversified across across many, many markets. A lot for us to work on. We're excited to to get on and deliver the things that we're working on, and we'll come back in due course and update on that. So thank you very much for attending, and we'll see you on the next brochure presentation.

40:59 Mike, David, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of PORTMEIRION GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you.