Good morning, and welcome to the L'Oréal 2024 Half Year Results Conference Call. The conference is about to begin. I now hand over to Eva Quiroga. Ms. Quiroga, please go ahead.

Thank you, Judith. Good morning to all, and thank you for joining us for the presentation of our first half 2024 results. I'm here with our CEO, Nicolas Hieronimus.

Good morning.

Our CFO, Christophe Babule.

Hello, good morning.

And the Global Head of Corporate Finance and Financial Communications, Laurent Schmitt.

Good morning.

As always, Christophe will comment the first half results. Nicolas will then share his takeaways from the first six months and tell you why we remain confident in the outlook for the rest of this year and beyond. After that, we will open up to Q&A. You can already find the slides of both presentations on our website. You will be able to access the replay of this call later today, and the half year report will be available at the beginning of next week. And with that, over to you, Christophe.

Thank you, Eva. So ladies and gentlemen, good morning. L'Oréal delivered another strong performance in the first half in a beauty market that remains dynamic. If I had to summarize the past first half in four key figures, I will highlight, first, the continued strong like-for-like growth of 7.3%. Remember that we were lapping pretty tough comps of plus 13.3%. The gross margin of 74.8%, up 50 basis points and a first half record. The operating margin of 20.8%, up 10 basis points and also first half best. And the net profit of €3.65 billion, an increase of 8.8% versus the first half of last year. So sales increased by 7.5%. Foreign exchange had a negative 2.3% impact as the euro appreciated against most of our key currencies, except the British pound and the Mexican peso. You can find more detail on our invoicing currencies in the appendix of this presentation. The change in scope of consolidation contributed a positive 2.5%. It reflects the acquisition of Aesop last August and the impact of hyperinflation accounting in Argentina and Turkey. On a like-for-like basis, growth came to a strong 7.3%. Adjusted for the phasing related to the implementation of new IT systems in North America, like-for-like growth in the second quarter was above 6%. On this chart, you can see the different components of growth. Units increased by 2.6%, contributing slightly more than one-third of growth. Value grew by 4.7%, of which 3.3% price and 1.4% mix. Increase in volume is all the more remarkable as it follows an increase of nearly 4.9% in the first half of last year, a pretty unique position amongst our peers. Let's take a look at the divisions. They all grew on a like-for-like basis. Professional Products advanced 5.7%. All three key regions contributed. At 8.9%, Consumer Products continued to grow at a high pace. Volume and value were well balanced. Luxe progressed 2.3%. Momentum accelerated in the second quarter. And Dermatological Beauty grew 16.4%, with all regions contributing. Let me remind you that in the third quarter of last year, sales in our LDB division included a €57 million insurance benefit related to the natural disaster that severely disrupted the Vichy plant back in 2022. Momentum remained dynamic in our developed and emerging markets, more than offsetting the ongoing weakness in North Asia. Europe, our largest region, continued to deliver remarkable growth at plus 11.1%. The group strengthened its position in the majority of markets, especially in the DACH and Iberia clusters as well as in many of the midsized countries. In North America, momentum remained strong at plus 7.8%. It was positive in all categories and divisions. In North Asia, sales declined by 1.7%. This was due to the renewed weakness in the Mainland Chinese market, where we gained share in three of our four divisions. Travel Retail still weighed on growth in the first half, but momentum has been improving sequentially. In emerging markets, L'Oréal maintained a very dynamic pace at plus 14.7%. SAPMENA-SSA and Latin America both contributed. Let's now look at the categories. Skincare grew plus 5.4%. All regions advanced, with the exception of North Asia. Makeup continued to rebound at plus 8.8%, with Europe and emerging markets particularly strong. Haircare was the most dynamic category, up plus 14.9%, driven by premiumization in both mass and professional. Growth of perfumes remained remarkable at plus 14%, and hair coloring advanced by 4%. Let's move to the profit and loss account. Gross profit increased by 8.3%, more than €16 billion. Gross margin improved by 50 basis points to 74.8% of sales. The change in scope of consolidation had a negative 40 basis points impact on gross margin. Currency effects from transaction and translation were positive to the tune of 20 basis points. The underlying gross margin improvement, therefore, stood at plus 70 basis points, reflecting a more favorable input cost environment and the continued valorization of our portfolio. Research and innovation expenses increased 7.1% to €667 million. As a percentage of sales, they were stable at 3%. Advertising and promotional expenses increased 6.4%. That's an additional €427 million spent on our brands. As a percentage of sales, A&P came in at 32.1%, 40 basis points below last year, half of which was due to the acquisition of Aesop and the impact of hyperinflation. With the exception of North Asia, we increased our A&P in relative terms across all regions. SG&A expenses increased 12.3% in absolute and 80% points in relative terms. About half of the increase was due to the consolidation of Aesop and another 10 basis points due to the impact from conversion. Part of the remainder was related to the acceleration in our investments in tech and data, aimed at improving our long-term productivity and competitiveness. Operating profit increased by 8% to more than €4.5 billion. The operating profit margin advanced by 10 basis points, reaching a new first half record of 20.8%. As you know, our margin improvement in 2024 will be slightly back-end weighted due to the consolidation of Aesop and the phasing of Travel Retail sales. As I do in my first half presentation every year, let me remind you that L'Oréal is managed on an annual basis. Therefore, the division's profitability in the first half cannot be extrapolated to that in the full year. Three of our divisions reported record first half margins, driven by strong gross margin expansion, which more than offset the increased investments behind our brands. Consumer Products improved their profitability by 100 basis points to 22%. The profitability of Professional Products came in at 22.1%, up 90 basis points. Dermatological Beauty further increased its margin by another 50 basis points to 28.9%. And the margin of L'Oréal Luxe stood at 21.9%, 130 basis points last year. Apart from the weakness in Travel Retail, you should be aware that the consolidation of Aesop had a negative impact of 100 basis points at divisional and 35 basis points at group level. Non-allocated expenses, consisting mainly of corporate and fundamental research, costs were up by 10 basis points at 2.4% of sales. From operating profit to net profit, excluding nonrecurring items. The net financial result came in at a negative €131 million. The increase versus last year was related to two main factors: first, the acquisition of Aesop; and second, the cost of servicing our foreign currency debt in Argentina. For the full year, you should expect net financial expenses to the tune of around €230 million, all other things being equal. Sanofi dividend amounted to €444 million, up 5.6% compared to last year. Income tax amounted to €1.2 billion, representing a tax rate of 23.7%, higher than first semester 2023, which stood at 21.9%. For the full year, you should anticipate a tax rate slightly below 25%, all other things being equal. Net profit, excluding nonrecurring items, amounted to €3.7 billion. We'll now complete the review of the P&L account. Nonrecurring items, net of tax, amounted to a negative €89 million compared to a negative €257 million in the first half of last year. This year, the other income and expenses of €103 million mainly included, first, restructuring costs of €41 million related to reorganization projects in Europe and North America and other nonrecurring costs of €40 million, comprising a number of different items. After taking into account all nonrecurring items, net profit after noncontrolling interest came out at €3.6 billion, an 8.8% increase. Gross cash flow increased by 3.1% to €4.5 billion as, every year, during the first half, the working capital requirement increased this year due to the phasing of our net sales. Capital expenditure of €781 million represented 3.5% of sales. And for the full year, it should reach around 3% -- no, 3.7% of sales. Net operating cash flow exceeded €1.9 billion compared to €2 billion in June 2023. After payment of dividends, acquisitions and redemption of lease debt receivable, cash flow was negative to the tune of €2 billion. The balance sheet remained robust, with shareholders' equity of €29.6 billion or more than half of the total balance sheet. Last, at the end of June, net debt amounted to €6.4 billion and to €4.5 billion, excluding financial lease debt. The gearing ratio stood at 21.8% and the financial leverage at 1.2x. As you can see, the financial situation remains very healthy. I thank you for your attention.

So it's me now. Good morning, everyone. We delivered a strong first half, and I would like to thank, first, all our employees around the world for their dedication and hard work. In the next 15 minutes, I will show you my takeaways from this first six months and tell you why I'm confident in the outlook for the rest of this year and beyond. Our sales increased by 7.3% on a like-for-like basis. We estimate that the global beauty market grew between 5% and 6% in the first half, which means that we outperformed once again, and that is after three consecutive years of exceptionally strong share gains. One of the things that I'm very pleased with is that our growth is balanced between value and volume, not just in this first half but since the beginning of the inflationary crisis in 2021. When we look at the last 12 quarters, we see, on average, an almost perfect mix of volume at plus 3.4%, price at plus 4.1% and mix at 3.3%. In terms of channels, online at plus 7.8% has grown a little faster than off-line, plus 7.2%. One region that really stood out to me is the emerging markets, where online has been a real game changer and is growing 3x faster than off-line. When I look at our divisions, all of which have been growing, I'm really pleased about the ongoing dynamism of Consumer Products, the sequential acceleration in Luxe and the continued share gain in Dermatological Beauty and Professional Products. Consumer Products grew 9% and continued to slightly outperform the dynamic mass market. The strategy to democratize and premiumize mass beauty is clearly working. Growth was a healthy combination of volume at plus 2% and value at plus 7%, with a strong dose of mix. And all of the major brands progressed strongly, with a special shout-out to L'Oréal Paris. In spite of having been around for over 100 years and owing more than €7 billion of, the brand grew plus 13% in the first half. L'Oréal Luxe was up over 2%, accelerating in the second quarter of the year. Fragrances were once again the fastest-growing category, and we gained share in what remains a very dynamic market. Couture brands and men's fragrances were particularly strong. I'm also pleased that our work on our luxury makeup brands has been paying off. The category is seeing a real rebound, driven in particular Yves Saint Laurent, Armani and Urban Decay. Dermatological Beauty was once again the fastest-growing division, outperforming the global dermocosmetics market. We grew 16% despite the second quarter being impacted by a lower suncare season, I think you all saw the weather, and the slowdown in the U.S. market. What most impressed me was how broad-based the growth was. Every region was up in double digits, whether developed markets, emerging markets or North Asia, including Mainland China, and every brand grew, with the two billionaire brands being the most dynamic. Professional Products grew 6%, cruising ahead of the market at 4%. Most remarkable to me was the strong performance of each the top three brands, especially Kérastase, as their innovations really resonated with consumers. The division grew in all regions. It continued to pursue its omnichannel strategy in developed markets and to expand its footprint in emerging markets and North Asia. Our performance by region is a clear illustration that our multipolar model is working. In spite of the continuous weakness in North Asia, to which I will come back shortly, we delivered a strong first half as each and every one of the other regions advanced strongly. In fact, the top three contributors to group's growth each represented a different region: Number one the U.S.; number one two, our incredible Mexican business; and 3, the DACH cluster, Germany, Austria, Switzerland. So let's start our world tour right here in Europe, which had another very strong performance with growth of plus 11%, more than two points ahead of a market that has remained very dynamic. Momentum continued to be broad-based, with the majority of countries up in double digits. Our emerging markets grew in the mid-teens, well ahead of the market. SAPMENA was slightly ahead of Latin America, which was impacted by the situation in Argentina. In the first half, emerging markets accounted for 16% of our sales and 30% of our growth. In North America, we grew 8%, well ahead of the market, thanks to the Dermatological Beauty, Luxe and professional businesses. Adjusted for the impact of phasing, momentum was broadly the same in each of the two quarters. Now let's go to North Asia, which declined minus 1.7%. So let me help you unpack that number. And let's start with Mainland China, which accounts for 2/3 of sales in the region. After a very slight recovery at the start of the year, market growth turned negative in the second quarter as the comparison base was very high and we are not seeing any pickup in consumer confidence, which is critical to growth in beauty. Overall, we estimate that the market was down between 2% and 3% in the first half. Within that, there was a huge divergence in trends. Mass was up slightly, while luxury was down in high single digits. In that context, we grew plus 0.8% and continued to outperform the market. We gained share in three of our divisions, especially Luxe, where we outpaced the market by 6 points. I'm very impressed by the performance of Dermatological Beauty, thanks to the triple engine of SkinCeuticals, La Roche-Posay and, increasingly, CeraVe. The division has grown threefold in size and now accounts for 11% of sales. That's Mainland China. Let's now move to Hainan. The market was down minus 30% in the first half. We are seeing a steady increase in the rival numbers, but the conversion rates remain soft. We slightly outperformed the market in sell-out and continued to gain share. I told you in April that our inventory levels were broadly at the right level, and as a result, our sell-in is progressively improving quarter after quarter. In the rest of North Asia, growth was up in the mid-teens, driven by the dynamic trends in Travel Retail and robust growth in markets like Japan, which saw a surge in tourism. That concludes our global tour. Christophe already showed you that we had a strong financial performance, and I'd like to also highlight our extra financial achievements. Moody's recognized L'Oréal for its sustainability performance, with an advanced ESG assessment well above sector average. The new objectives for our 2030 and 2050 decarbonization trajectory were validated by the Science Based Targets initiative in April. To me, both are a great reflection of our sustainability transformation. Let us now turn to the future and why we are confident that we will continue to grow and outperform the global beauty market. As you know, we expect the global beauty market to remain dynamic and grow by about 4.5% this year, slightly above the 4% long-term average. In North Asia, we don't see really much change in the second half. We expect growth in Mainland China to remain slightly negative and Travel Retail sell-in to gradually improve. Outside North Asia, emerging markets should maintain the double-digit rhythm. Growth in Europe should continue to normalize with less value as it already has in the U.S. By the way, and to put things in perspective, if the global beauty market grew 4.5% every year, that would add an extra €100 billion by 2030, which we would be more than happy to take an even more significant share of. As you know, we have a long history of outperforming the global beauty market. At the heart of everything we do lies the consumer, and an important part of our growth story is the recruitment of new consumers to our roster, and there is still plenty to do. We estimate that our total addressable market currently consists of approximately 4 billion consumers or around half of the world's population. Of those, we currently touch only around 30%. It will not surprise you that this number is a lot higher in developed markets at close to 60% than in emerging market at around 25% and even more so North Asia at less than 15%. I believe we can reach two billion consumers in the next decade. Key to recruiting new consumers are emerging markets, where our share is below average and when we are only at the beginning of our conquest. One of our engines will be the introduction of new brands in new geographies. Take the example of India. For years, we focused exclusively on Professional Products and Consumer Products. It was not until last year that we launched CeraVe as our first LDB brand, and we are only just introducing some of our Luxe brands. I could make similar observations about many other countries in SAPMENA. Our market share gains in China, which continues to be a penetration opportunity, are driven by the introduction of new luxury brands such as Aesop or Prada, but also the acceleration of CeraVe and the opening of new doors in lower-tier cities. In North America, our market share of 14% is well below that of Europe at 20% in a market in which growth will be driven by a strong economy and by an increasingly multiethnic population that is obsessed with beauty, and we are already seeing this with Gen Z and Gen Alpha. Take the example of Valentino. In only a few years, Born in Roma has moved into the top three in both the men's and women's fragrances driven by exactly that consumer. And even in Europe, our historical home, we see opportunities for expansion. As consumers' purchasing power and beauty sophistication increases in Central and Eastern Europe, these countries are becoming an attractive growth engine. In Poland, where our market share is around half that of France, we expect our business to double in the next four to five years. Another recruitment opportunity lies within different consumer clusters. By 2030, there will be an additional 200 million boomers. Already today, they make up 21% of the population in North America and 18% in Europe, and they are great consumers for us. They use beauty products regularly, they tend to spend more on them as they grow older, and they don't like indie brands. There will be 100 million more Gen Z consumers by the end of the decade. They are notoriously keen to splurge on beauty products and will account for around 12% of global beauty spending by 2030. Interestingly, one-third of our global Gen Z beauty spending will be in SAPMENA–, once again, highlighting the region's key role. Men are another interesting opportunity, especially in areas like dermocosmetics, the most unified category of products. In the U.S., 50% of all CeraVe consumers are men. In fragrances, they account for one-third of total sales, and we have a portfolio that is well positioned. In mass, L'Oréal Men Expert has been growing in double digits in Europe for the first half of this year. So how do we actually recruit and, importantly, loyalize these consumers? First of all, thanks to our wide price piano. We offer superior products to all purchasing power levels around the world, and that is true even within our Consumer Products division. In an offer-driven market, innovation allows us to bring consumer better products and continuously valorize our brands. Many of the products we launched in the last 18 months have been consolidating their position. Elvive Bond Repair and Glycolic Gloss contribute to around 10% of the total brand sales. And we have more to come in the second half, especially in mass makeup. The recently launched Sunkisser blush and Fireworks mascara for Maybelline are off to a great start. We also continue to strengthen our device lineup with the introduction of coloration from Colorsonic and the much anticipated AirLight Pro. Our innovation is supported by best-in-class R&I where we spend more than our next three competitors combined. This allows us to regularly disrupt the market with new molecules. And what makes this particularly powerful is our ability to cascade them across several of our 37 global brands. Take Melasyl, the revolutionary anti-pigmentation molecule. We initially launched it under La Roche-Posay, our most scientific brand, at the beginning of this year, and we are progressively rolling it out to other brands such as L'Oréal Paris with Glycolic Bright serum, and there will be more to come. Our innovation is also underpinned by our continued brand support and unique creativity. Providing fuel to our brands is a nonnegotiable. The help is crucial to securing our long-term growth model. Last year, we spent over €13 billion, almost one-third of our sales, on A&P. That said, BETiq, our AI-powered internal tool to measure and improve the return on our investment, is yielding productivity increases to 10% to 15%. Over time, this will enable us to continue growing A&P at an absolute, not relative basis. We also use AI to boost our team's creativity with the launch of our CREAITECH beauty content lab. Both are a clear illustration of our leadership in beauty tech and digital, which I won't elaborate on today. So to conclude, I have shared with you the reasons why I'm convinced that we will continue to strive in the global beauty market this year and, more importantly, beyond. The market will remain dynamic in the long term powered by demographics and beauty routine sophistication. We are the global number one player in beauty. We are 1.6x bigger than our nearest competitor, and size matters in beauty. Barriers to entry may be coming down, but barriers to scale are only going up. We are a truly multipolar company, and once again, the robustness of our model has been proven. Our 37 global brands cover all categories, channels, price points and region, and our agility allows us to constantly offset any pockets of weakness with areas of strength. And we are becoming a more balanced company. In the first half, the size of our business in emerging markets equaled that of Mainland China, which means that they now have a real impact. Just think about Mexico being the second contributor to growth at group level. We will pursue a selective M&A strategy to cover our consumer targets and categories and see the selling trends. All these things make me confident that L'Oréal has what it takes to win in beauty for another 115 years and reach two billion consumers in the next decade. I thank you very much for your attention, and we will now open up for questions.

[Operator Instructions] The first question is from Iain Simpson, Barclays. Please go ahead. Iain, your line is open.

Thank you very much. Good morning. Two questions from me, please. Firstly, you're guiding for 4.5% market growth this year after 5% to 6% growth in H1, which I guess, implies 3% to 4% market growth in H2. But I'm also conscious that you're lapping all the Asia travel restock -- destock in H2. So given that, would it be reasonable to assume that L'Oréal's growth will be fairly evenly balanced between H1 and H2 this year? And then secondly, I wondered if we could talk a little bit about the sustainability of haircare and fragrance premiumization. They've clearly been pretty big growth drivers to you in recent quarters. I'm just wondering how much runway we should expect with that and whether that's something that's showing any signs of slowing down. Thank you very much.

Okay. So well, first of all, on the yearly growth, I was -- we highlighted the fact that we saw that this year would be around 4.5%, which, again, as a reminder, is above the growth rhythm we had pre-COVID. So I would call that after the post-COVID euphoria and the inflation boom kind of normalization of the beauty market growth. And as I said, it remains a pretty strong growth rhythm on a market that has gained size in the meantime. And from €280 billion in 2023, as I said, this growth rhythm will take us to €380 billion in 2030. So overall, it's a very nice, good growth rhythm. As far as the second part of the year is concerned, you're right in your assumption. In our own calculation, we see like around 4% growth with all the uncertainties on the second half. And for me, it's a minimum. And then, of course, we want to continue to beat that market. So I will not give specific guidance on first and second half, but you have to assume that we will want to continue to have decent multipliers on the market growth itself. As far as the hair and fragrance growth, I'm pretty confident and bullish about the development of these two categories because they are driven by very structural factors. Of course, is the fact that you have, on the one hand, younger consumers plus new parts of the world that are indulging in fragrances. So young consumers use fragrances sooner. And more importantly, they use more fragrances than before, than their parents, and they change fragrance from one occasion to another. We see China also growing, entering the fragrance market. And as you said, the premiumization of and sophistication of this market is a natural phenomenon that we've observed in many, I would say, luxury categories that when you have a large number of people that are wearing a blockbuster fragrance, the most sophisticated consumers want to smell different, so they are going for the very unique collection, private and more expensive fragrances, which is why, by the way, in the second half of this year, we are launching or relaunching several of our brands' fragrance collections, be it Valentino, Lancôme and a few others that have not been presented yet. Saint Laurent is also relaunching that part of their business. So I think it will continue to grow. And there's another factor that is also impacting haircare as well as fragrance is the increase in the population's diversity. We see that emerging market consumers, Black consumers, Latino consumers are more fragrance lovers and users than the traditional European consumers. They wear more of them and more often. They also like different type of notes, which is why it's important to have several brands and to be able to satisfy them. And that is the part of this population in the world's population and particularly in the U.S. population is increasing. I think this is a strong driving force, both for fragrance but also for haircare because very clearly, this population has longer and more demanding hair, and we see the rise and strength of all the modules that are addressed to curly hair, that are nourishing Black hair. They are very -- they have very strong dynamism. So all in all, I think there are people that just wash their hair, but there are more and more people that need to care for their hair. And we see it in the growth of Kérastase as well as the most expensive Elsève brand. And just to finish, because it's true everywhere, we are very proud that Elvive -- or Elsève became, after many years of fight, the number one haircare brand in Brazil. And that's typically, for me, Brazil, the most demanding haircare market in the world because this is where you have the most diverse hair. And so we see that they want greater quality, not just thing that cleanses and leave their hair in bad state.

Thank you very much.

You're welcome, Iain.

The next question is from Celine Pannuti, JPMorgan. Please go ahead.

Good morning, Nicolas, Christophe, and Eva. So my first question is on China. So if I understand correctly, you do expect Mainland China to be slightly up for the year or at least slightly up in the second half. Maybe that's what I understood. And I want -- you can hear me?

Yes, yes. I'll let you follow up your questions, but I said that I think that the Chinese market, Mainland China would remain slightly negative in the second half. So then we have to improve performance, but no...

All right. So anyway, my question was more about maybe your -- first of all, your assessment of the -- what's going on in the Chinese market, obviously, about consumer confidence but as well the shift from -- maybe in price point, shift to maybe more mass price point than luxury price point. But more importantly, how you see the market -- or whether you have changed your view on market opportunity for China as you look into -- more in the midterm. I think other companies have been -- have taken a bit more of a bleaker view on this market. So wanted to hear about your thoughts on this as we look into '25 probably because I presume that will have an impact on the global market expectation. And then my second question is on derma. So I think you did say because of the lower big number, it's going to be harder to sustain the growth rate. And you mentioned €1 billion additional per annum for that division. Is that still the case? And can you flesh out what's going on in terms of the slowdown in derm market, which, I think, you referred to be in the U.S.? Thank you.

Yes. So in China, I will take the several sub-questions of your question, Celine. First of all, do we see China as a -- still as a midterm or mid- to long-term opportunity? Yes, absolutely. There's no other market that has the size of this population, the size of this middle class that is growing, with consumers that are aging, yes, but the consumers that are aging are consumers that started using our brands a few -- 25 years ago. And we have new Gen Z, both men and women, who are very much into beauty. So I think we have a market that is going to grow. We only touch 25% of our target in China, 100 million Chinese, above 400 million. So we believe in the future. We are investing. We just opened a new distribution center, and we are opening doors. We're opening Prada doors or Aesop doors, but also, we are accelerating with CeraVe because there's a strong health demand in China and the fact that CeraVe is both affordable and recommended by derms is a strong asset. And we also opened doors in Tier 2, 3 and 4 cities on our brands, including L'Oréal Paris, which remains, by the way, the -- by far, the number one beauty brand in mass in China despite the success of some of the Chinese brands. So all in all, midterm, and I'm still very ambitious on China. Short term, the answer to your question is that I do not see much change. And that's why I said I think the market will remain slightly negative in the second half because everything is driven by the Chinese consumers' confidence. I have, in front of my eyes, the curves from OECD from June '24, which showed the confidence level of different parts of the world. And you see Europe going back up, you see emerging markets very positive, and the only part of the world where consumer confidence remains very low is China because there are obvious reasons to that: a job market that is not healthy and many of the Chinese have put their savings into real estate, which has lost a lot of its value. So the pattern we see in Chinese consumers right now is that they are indeed buying less and buying more -- looking more for value for money, which doesn't mean that we can't sell luxury products. Our Saint Laurent is double digit in China. Why? Because we have great innovation and the brand is super aspirational, and so is the Helena Rubinstein in terms of growth. But overall, the -- I would say, the average Chinese consumer today is more into value for money, which gives us, I think, a lot of opportunities to recruit new consumers with L'Oréal Paris. So that's why short term, I'm not betting for this year on China, but the good thing is that we've seen and the fact that emerging markets are not the same size as Mainland China tells me that we love to have us grow in China, but we are not dependent upon a growing China. As far as derma is -- I hope that answers your question on China. And as far as derma is concerned, first of all, I must say that I'm very happy to be growing at plus 16%. La Roche-Posay is -- both brands, by the way, CeraVe and La Roche-Posay are growing in double digit. And La Roche-Posay would probably be, this year, the number three skincare brand globally, all channels included. So this channel remains very dynamic, and it's true, it's very strong. For us, it's been double digit in every part of the world. So we continue to be extremely both confident and ambitious for this division. What is true is that our growth in the second quarter has been lower, and it's been impacted by two different factors. One, which is nonnegligible, is that -- is really the suncare season. Whether in North America or in Western Europe, the sun season has been very bad. And for those who, like me, have attended the opening ceremony of the Olympic game, we know what rain means in July. And it has had an impact on our quarter balance because last year, we had a bigger part of our invoicing in the second quarter because we had availability issues. And this year, we had a big sell-in in Q1, which, of course, made our Q1 bigger. And the replenishment in Q2 was very significantly below expectations. So that's part of the explanation, but that's not all. The other part, as I think several people mentioned, is the slowdown of the U.S. market, which is -- I think, can be -- first of all, it has to be confirmed over several periods, but can be linked to a couple of factors. One is poor sun, too. Second, it's true that the drug channels, and I'm not going to name retailers, but the drug retailers in America are suffering, whether -- versus e-commerce or selective retailing. And that is clearly something that -- I mean, the hard part of -- an important part of the Dermatological Beauty brands distribution. And probably a third phenomenon is that there is more competition outside the derm beauty. Everybody's observed and learned from Dermatological Beauty and started launching products that are inspired, and we've done it ourselves. I often mentioned that Kiehl's was struggling for a while because of the rise of derm beauty brands, and Kiehl's, like a few other brands, has started launching a skin better -- a better sunscreen product, the auto-tone, anti-pigmentation. And if I look at the numbers of Kiehl's in July, they're up double digits. So I guess there must be some transfers from the derm market to other channels. And what's important for me is that my other brands get that part of the consumer transfer. All in all, first of all, Dermatological Beauty in the U.S., even though we had this slowdown of the market, has very significantly increased this market share, and we also have a few initiatives that are coming. Another part of the market was slower was prescribing doctors -- sorry, retailing doctors with SkinCeuticals, and we have a big launch coming in the second part of the year. It's probably our biggest launch in the last two years. So overall, in derm, we continue to see this as a fantastic opportunity. In emerging, a very slow part of CeraVe's business. It's around 15%. North Asia is 6% of CeraVe. So all in all, we continue to be very ambitious about the Dermatological Beauty. Regarding the €1 billion, I guess, it's been a bit less sunny than we wanted. So we might be below that this year, but it continues to be, I think, a good growth rhythm in the midterm, and we have a number of big initiatives, including, by the way, big launch of anti-dandruff in CeraVe at the end of the year, which is a big foray into haircare, once again, a dynamic channel. So yes, it's been a bit lower than we wanted, but we are ready to continue to fight and accelerate.

The next question is from Bruno Monteyne, Bernstein. Please go ahead.

Hi. Good morning. My question is on the emerging market, ex China. A few quarters ago, you were sort of growing at about 23% or 22%. Today, more around 13%, a sizable slowdown. Could you just be able to comment what's happening there and maybe highlight if there's any impact from some of the boycotts you might have seen in Indonesia and other places? How much of that is the effect in Argentina devaluation? And any other kind of structural or short-term impact on that level of growth. Thank you.

Okay. So on emerging markets overall, there are clearly a few external factors that are impacting our growth. You mentioned two. On Latin America, it's true that Argentina has an impact. I will hand over to Christophe on that. But when we publish a growth of -- on Latin America, of 14%, if you take out Argentina, it's plus 19%. So as you can see, it has a significant impact, and we've been very cautious. Christophe, on the way we handle Argentina?

Yes, because the country is suffering from the issues of inflation, and therefore, we try to keep our business there healthy. And therefore, we've been delaying some invoicing. Difficult sometimes to import goods there. So that's why we have a country that's negative. And important for us is to get back the cash at home. And therefore, we are managing the country, for the time being, more on the financial way than on the consumer way.

And on SAPMENA, the market remains quite dynamic with fluctuations here and there. We continue to gain market share almost everywhere and most region and division and categories, which remains a strong growth engine. The only specific elements that I can mention, and which you mentioned, are the impact of boycotts call, which are not huge, but they still have an impact. We estimate, and on the first half, it has costed the regions around 2 points of growth. So you see 4 points of growth on Argentina for Lat Am and 2 points of growth on SAPMENA–, which are, more or less, explains some of the differences you saw. Overall, we continue to have a very strong progress, not only on our Consumer Products. But what's interesting is that we see the rise of LDB and Luxe, which is beginning to have significant shares, and we see the fragrance market, again, developing in these parts of the world. So yes, a few geopolitical bumps, but an overall global trend of recruitment. And as I said, first of all, units are growing in that region. And as I said, we have an e-commerce growth that is 3x the growth of brick and mortar, which is, for us, a very strong sign of recruitment and of potential growth for the future.

The next question is from Guillaume Delmas, UBS. Please go ahead.

Thank you very much. Good morning. I have a couple of questions. The first one is on Europe because the reason it keeps on posting absolutely remarkable performances. Now Nicolas, you mentioned, and this is not the first time, some price normalization happening going forward. So maybe to help us understand the magnitude of this potential deceleration in the coming quarters, could you shed some light on how much pricing contributed in Europe in the first half and also whether you took some incremental pricing actions at the start of the year? And still in Europe, bigger picture, what do you think is a sustainable run rate for Europe? Because if I look at the past decade, for L'Oréal, Europe was a 2% to 3% like-for-like sales growth region. It seems now that the market is more dynamic. Your level of outperformance has structurally increased. So what would be your expectations for the medium term for Europe? And then the second question, much shorter, going back to Asia Travel Retail. What was the impact of that business on your Q2 like-for-like? Because I think in Q1, it was around 230 basis points. So what was the impact on Q2? And what was the exit rate? Because am I right to assume that June, you were going against a clean normalized base of comparison, so what you saw in June could be a good indication of what's to come over the coming quarters? Thank you very much.

Guillaume, I'm not going to give you my June sales invoice on Travel Retail. But I see the overall meaning of the question. First, on Europe. I think that's -- of course, there is price, and there has been price increases in Europe over the last year and the first part of this year. We've been in mid-teens for price -- for value in mid-single digits, sorry, for the value in Europe for the first half of this year. And it's going to slow down progressively in the second half because last year, our -- most of our price increases were on the first part of this year and last part of last year. So we have little price increases coming in the second part of the year. So there will be less value, and I think it will be the case for the whole market. So what would be the impact on the market growth? I don't know exactly because there's so much category mix effect. I don't know if somebody wants to help me on that around the table.

What we can say is that while we see, in fact, a slowdown in the pure value driven by prices, at the same time, in Q2, we had volumes that were increasing because, of course, we are still supporting a lot with investments. And therefore, that's why we keep a very healthy and strong growth in Europe. So we are compensating with our investment and higher volumes.

Yes. I think that's an interesting element because even if we lose a couple of points in value, we've seen volume increasing in Europe for the second quarter. And I think what's striking, there are a few things that I want to highlight about the performance of Europe. First of all, again, I was referring to consumer confidence. Consumer confidence in the big European country, as strange as it may seem when you look at some of the political situation, consumer confidence is picking up because they have been really hit hard with both the impact of energy prices, the Ukraine war. And now as the situation is somehow normalizing, the consumer confidence is really picking up, and that's always good for consumption and for beauty consumption. Second, Europe is where we are the strongest. So we make the markets, if I may say so. Our -- and we are strong in all categories. We have very strong launch plans. And by the way, all our divisions have been growing very strongly in the first half. So we believe we can continue to have growth levels in Europe, which will not be double digit, but which will be significantly above the historical numbers you were referring to. All the more, as I mentioned, we see a consumer sophistication. I was in Poland a couple of weeks ago, where we have -- it's one of our lowest market shares in Europe. And I hadn't gone to Poland, I must admit, for half a decade and have seen incredible consumer sophistication, retail sophistication, the impact of social networks, which have educated consumers to all sorts of small segments of beauty such as primers and liners and the multiplication of beauty products. We see consumption increase. And so we think we can, in this type of countries, significantly accelerate. And by the way, Poland is doing a great year this year. So yes, so I think that Europe will not remain at double digit for L'Oréal, but we don't want to go back to the two and three historical numbers. And we have, I think, both the means because we've reorganized quite a bit in Europe with the creation of country clusters that limits our SG&A and generates more fuel for our P&L. So we are -- yes, we remain ambitious for Europe. And as far as Travel Retail is concerned, you're right to say that the first quarter was very negative. The second quarter was just a bit negative, and we are going to enter into positive territories in sell-in in -- from Q3 onwards. And I don't have, anyway, the June number on top of my mind, but -- so -- and even if I had, I probably wouldn't tell you. But we see the trend. There's no -- the only point that I highlighted on Travel Retail is that right now, the sellout run rate in Hainan are lower than what everybody would like. So it's still very good for our sell-in because of comp basis. But today in sellout, we see more traction in Japan or Korea, and Japan, in particular, with the yen price than in Hainan where consumers travel but jobless.

Thank you very much.

The next question is from Charles Scotti, Kepler. Please go ahead.

Hello, good morning. Thank you for taking my questions. I have two. The first one is on your gross margin development, which was up 50 basis points in H1. Should we consider it as a good indication of your full year margin trajectory? Or are there some elements we should be aware of in H2 that could limit gross margin expansion? Also on the EBIT margin, which improved 10 basis points in H1, do you stick to your guidance for more visible operating leverage in the second half of the year? And my second question is on your A&P spendings that have been consistently rising as a percentage of sales in recent shares but declined 40 basis points in H1. Do you see room to lower your A&P intensity going forward? Or have you simply lower A&P spending because, I don't know, maybe clients were a little bit less responsive, notably in China, and I guess also the consolidation of Aesop, which is D2C oriented, is also impacting this ratio to a smaller extent as well? Thank you.

Okay. So I will go one by one. I'll start with the gross margin. As I said, in the underlying gross margin was at plus 70 basis points. It's true that we were helped with the input costs that have been decreasing and also with the strong valorization. Now when I look at the second half, we saw already this decrease of input costs in the second half. So the favorable impact will be less. And also probably, as Nicolas was saying, the valorization will, little by little, be decreasing. And therefore, the impact also will be less strong in the second half. But overall, in the year, we are very confident about the fact that our gross margin will still be increasing compared to last year. And regarding the EBITDA, yes, I confirm the second half will be improving. The main factor is, of course, because of Travel Retail. Definitely, the comps will help a lot. And also, as you know, we consolidated the Aesop last year in August. And therefore, the -- in Turkish terms, the comps would be also in our favor. Maybe for the A&P?

Well, see, Aesop will have a dilution effect of 26 basis points on the full year basis, which we'll have to take into account. On the A&P, I think the strategy is very clear is that we want to continuously increase our A&P spending. Our advertising spend, our reach to consumers, I mean, I want to reach two billion consumers in the next decade. It means recruitment. It means promoting the quality of our products towards consumers. So in absolute value, the number is bound to continue to increase as it did this year. And where you're right, it probably would have increased even more hadn't we taken, I think, the wise decision not to overinvest in China. I mean China is our -- is the probably -- it was the country of the world where we have the highest proportion of A&P because of the purchases outside the market in Travel Retail. And considering the consumption mood in China, we've lowered our investment towards -- versus the initial plant. It has increased in percentage points everywhere else. This being said, as I said numerous times, including in my opening speech, we believe that now we are the size and an amount of A&P where we can leverage our investment into AI-powered optimization tool, BETiq, to gain productivity. And therefore, we -- I'm absolutely not stuck to the idea that NPEs will increase in percentage points. I'm stuck with the idea and the determination that A&P will increase in absolute value. So you may see a stabilization in percentage but an increase in absolute value. And anyway, we always adapt. That's everything about the agility I was talking about. And when we see an area where we feel we have to -- we need to add fuel to accelerate, we'll do it. And when we see an area like we did with China just before summer where the market is not responding enough, we keep our ammunitions for more productive areas. So that's the spirit. In the end, it's a growth model, as you said, high gross margins. So it's all about growth, and A&P is one of the elements that fuel the growth. And to finish, you're right to say that Aesop has an impact on the structure of our P&L as it's a business model that is with little media and high SG&A because its store staff in over 400 stores around the world.

Thank you very much.

The next question is from Olivier Nicolai, Goldman Sachs. Please go ahead.

Hi, good morning, Nicolas, Christophe, Laurent, Eva. Got two questions, please. First, it's been almost a year since you've bought Aesop. What are the key changes you've made since the acquisition? And what is the current growth run rate for the brand? And secondly, I know you're going to give us a bit more details about India at the end of the year, but I can't resist asking since you launched CeraVe last year in India. Can you give us a bit more details on the progress you've made? And how do you manage to compete against a much more established competitor which has bigger scale and a better route to market in India? Thank you.

So Aesop, everything is going well according to plan. I must say that the first, as Christophe reminding there, we've onboarded them from September last year. So the first part is to integrate everybody, to know the teams, to see who's great and not so great. So it's about knowing and protecting a model that we acquired because it was and still is working very well. Nevertheless, we have started working on a few things. First of all, we've continued -- they have continued to open doors. And since the acquisition, 38 doors have been opened for Aesop, some of them in China where we -- when we made the acquisition, there were four or five stores -- four stores and now we have -- we are at 10. So we continue to increase. And there are plans to go to 15 with good response by the way, from the Chinese consumers, which shows that when you have a differentiated offer, you have -- you are very attractive even in the context and the environment. And as far as the -- what we've changed or what we will be changing for the brand, the first product that would be developed by L'Oréal or with L'Oréal will be launched on the market by summer '25, and we have a number of initiatives in face care because as you know Aesop is very strong in body, in washes. But their skincare -- face skincare offer is not as competitive as what the market requires, and that's clearly an area where we can bring some technology. And I remember, I visited the regional manager in Canada a couple of weeks ago, and I asked her what she expected from L'Oréal. It's actually like -- exactly what she answered is that we want like more competitive ingredient power and more efficacious skincare for our Aesop consumers. So that's what you're going to see coming in the market next summer. On CeraVe in India, I would say it's both very exciting and, frankly, too soon to have an impact because as you know, our model on Dermatological Beauty, and that's the winning model. That's what allows us whatever the copycats that appear here and there to continue to significantly outperform the market, including in North America, is that we have to build the roots with the medical community before anything else. So right now, we have a strategy that's focused on a couple of cities where our teams are visiting derms, presenting the test results and the clinical test of CeraVe, leaving samples. So we're building the credibility of CeraVe. It's working well. The first results of sell-out in this city is very positive, of course. So right now, the plan is to continue to do that job to expand to a few other big cities as there are many in India. And the true impact in terms of actual sales number will be probably materializing back end of '25 and '26, but it's -- first, the importance is not to hurry. It will do the things well but that we establish a brand, that precisely to your question about how do you work facing other competitors, the endorsement of the Indian medical community is very important. And the fact that, for example, we test our products on Indian skin and have localized test results is a very powerful engine, but not immediate short term. We will not go on TV for CeraVe immediately in India. Christophe, you wanted to add something apparently.

No, in fact, it's pretty linked to the model of the divisions. So it will take some time. It's work with dermatologists for attending in off-line. We are just in Mumbai, really bring it to a few cities, but the first result seems to be pretty good.

Thank you very much.

The next question is from Rogerio Fujimori, Stifel. Please go ahead.

Hi, good morning, everyone. I have two questions. One is a follow-up on the Luxe division in China. I was hoping if you could elaborate on how you're thinking about the balance between growing share and stimulating the market as the market leader in luxe in H2 and defend your profitability? Do you have enough P&L flexibility to keep growing share and protect your best-in-class margin? Put differently, should we see better margin momentum in H2 for Luxe? And the second question is about -- Nicolas, about your confidence level on the group's ability to drive the same pace of premiumization given the environment where perhaps the upper middle class is feeling the impact from inflation and perhaps not in the mutual spend as they were in '21, '23 in key markets like the U.S.? Thank you.

Okay. So as far as share in China, first of all, it's true that one of the highlights of our first half in China despite the lackluster market is the capacity of our teams to continue to gain share. We've again increased our share in Luxe in China, which has reached 34% market share, which is huge despite some brands struggling more than others. And so in the end, stimulating the market is about -- is really about innovation. And it's about justifying why consumers would pay that price. And it's not by magic. When I look at the brands and the products that do overperform and increase, including having very strong growth in China, there are brands that have products that are truly unique and different. When I look at Yves Saint Laurent, there is, of course, the aspiration of the couture brand like we have in Prada and Valentino, but there are products that are very unique in makeup. YSL Loveshine is a fantastic success. The same -- and we have the same type of things in Prada makeup. Fragrances are beginning to grow. So -- and if I take Helena Rubinstein, which is impacted in sell-in by the Travel Retail destocking but in sellout in China, it continues to perform very well. And again, for those amongst you who -- if you ever want to try a very unique night cream with Replasty night, these are incredible textures. So what this tells us is that we need to come into the Chinese market with ever more innovative product. That is what will stimulate consumption. Typically, on Lancôme, we are launching now for the second part of the year. The renovation and extension of what has been our most successful franchise in China, which is Génifique, which hasn't had a real big innovation for years. So we have to come up with innovations and to do it at every price point, which will be a link to the second part of your question, which is not just -- it's a global phenomenon is that you have, in times of uncertainty, a certain part of the consumer roster who is paying more attention to price. It has happened many times over history. And right now, well, we are protected somehow by the fact that the L'Oréal consumer in general is more on the higher end of the spectrum than the lower end of the spectrum, those who are shifting sometimes to private labels and also much the L'Oréal consumers. But where you're right is right now, probably more than in the last two years where inflation was for everybody. We have to put every product at the right price and use our price piano even more than we've been doing in the last couple of years. And that's what we are doing. We are -- we have invested in revenue growth management tools, which help us position products at the best price. We are, in some instances, when some products have a high price line, investing in smaller formats or recharges, which are both good for the planet and good for the wallet. In fragrance or in skincare, we see that -- we see, for example, in China, that our recharges, refills of skincare are successful because they're great product people know, but they can make a saving on it. So we have to be astute there. And as I said, use the price piano, and I think the examples I showed in my presentation, the fact that even at CPD, which is our mass market, we're able to launch, at the same time, a hair color device at around $125 plus a few cartridges, which is the high-tech version and the upper-end version of hair color. And at the same time, a hair color sachet at €3 on Garnier, which doesn't deliver the same exact same performance and quality but will speak to the people who want to spend $3 -- or €3 on hair color. So we have to be -- we'll continue to valorize through innovation whilst making sure we protect -- we keep entry prices in all our ranges including in makeup, where we see that some young consumers want entry products. So we have valorized innovations and protected catalog in terms of price.

Just to complement, I want to reassure you that we have all what it takes in terms of means to support our shares in China. And when I look at the profit at the end of June, we have a very healthy situation there. And as you know, this is a market where we can react immediately. So we don't want to go into battles of pricing or overinvesting just because of one promotion. This is long-term management, and we and the teams have been very good at protecting the shares and even gaining shares and not at the expense of the P&L.

But it's a very important point because everybody is looking at the events or the promotional events, the 618 or the Double 11, and rankings and everything. And our policy is that we're happy to gain share, but we don't want to gain share at any cost. So when the conditions of the market or a platform or some of the competitors are overkilling, we make the decisions. We have limitation, threshold, ceilings, and we tell the team, okay. We don't play that game. So we -- it's a market share but not market share -- market share through superior product quality, not through crazy discounts.

Profitable growth.

The next question is from Tom Sykes, Deutsche Bank. Please go ahead.

Thank you. Good morning. Just a few smaller ones to tidy things up, please. I wondered if you could give or maybe send around afterwards, just the underlying depreciation -- or D&A to sales because it's not clear from the note in the cash flow, please. Then just on the interest charge, could you just repeat what you said there? And is H2 the correct run rate for the implied -- for the interest charge? Just what the breakup of that is, please? And then just finally, I mean, on Mexico and perhaps other EMs, when -- you obviously hedge forward quite a lot your exposures. And when you get big changes in FX like you've had in Mexico, do you get some moves in the market when that happens? And is that something that in the EM businesses ex China has been a factor in Q2 at all, please?

Okay. So one by one. I'll come back first on the financial chart. So what I said before is that we expect, everything being equal, an amount of €230 million for the full year. That's one thing. And regarding that H1, it was linked to the situation of Argentina. So the local entity had to borrow money to bring back the cash here at home. And that's what is impacting the financial charges. Regarding Mexico, and it's true for all emerging markets, we hedge the transactions for the full year. So at the end of last year, we had fully hedged at least at 80% of the transaction for each of our countries. And this is to give security for the local management. They are not impacted by the ups and downs in each of those, sometimes, very volatile countries. So there is no impact on the P&L, at least for the current year, neither for those countries where the currency is appreciating or depreciating. And the first question, I think, was more linked to the cash flow. As I said before, cash flow situation at the end of first semester is quite volatile because it depends on some situation, mainly the phasing of our net sales. And also, I have to say, the level of our inventories. So we are still confident for our target for the full year. And what I said in my speech before is that many impact on the working capital was mainly due to the phasing of the net sales this year.

The next question is from Ashley Wallace, Bank of America. Please go ahead.

Good morning. Thank you for taking my question. I have two and then one just clarification follow-up. The first one is just -- the first one is on Amazon in the U.S. If I remember correctly, initially, there was a view that working directly with Amazon was a little bit of a growth accelerator in helping you to recruit new customers and take a little bit of share. I was wondering if a few quarters on, that's still the case? Or do you see it more as a channel shift? And if you could remind us if there are any other brands to join the platform soon. My second question is on Asia Travel Retail. As you all know, last year, both Korea and Hainan put more restrictive measures in place to restrict daigou activity. But I was wondering if you think that product availability through daigou in China has actually shrunk. Or do you think that perhaps now they're sourcing product from other markets like Japan, for example, where the currency situation is quite attractive? And then my follow-up was just on the sun business, which, you've mentioned quite a few times, impacted derma revenues in Q2. I was wondering if maybe you could help us understand the impact of that. So like what is the derma growth ex sun in Q2?

I don't have the number of -- on the last question. As I said, sun has had an impact, but it's not the sole explanation. It has an impact of phasing. It had an impact of phasing. It had an impact of a little drop in sales. But overall, it's a phasing because last year, it was much more a Q2 based, and this year, much more Q1 based. The rest of the slowdown in Q2 on derma was, as we said, a slowdown in the U.S. market, which, again, we overperformed very strongly. And by the way, La Roche-Posay was plus 20% something in the U.S. in Q2. On Amazon -- to go back to your first question on Amazon, it is clearly a share gain. And it also -- it's both a share gain in a healthier market because many of the brands that we do list on Amazon with, I would say, now excellent relationship and a really great work on the expression of our brands. But most of these brands were already sold on Amazon on gray markets, so price cuts and everything. So it's not only creating a good business, recruiting new consumers, and typically a brand like Lancôme has really benefited from it with the opening of Amazon. But it's also, I mean, I would say, cleaning the market from things that can undermine the long-term value of brands. And it's also, I would say, an environment where big brands like Lancôme can express themselves probably better than in a very cluttered Sephora environment, for example, which is more the home of indie brands. So we are still very happy with the performance. The growth is there. It's a model where we do really control the image and we manage our own sites. And as far as new brands, we've just opened Kiehl's in North America, and it's off to a great start. So we are moving progressively, and every time, making sure that the KPIs we've set and the objectives we've set ourselves are met before going to the next one. So the new kid on the Amazon block is Kiehl's, and so far, so good. As far as Asia Travel Retail and its impact on the Chinese domestic market, I think the best guesstimate we can say is that the quantities of products available on the local market coming from daigou may have shrunk a little bit, but I don't think it has had yet a major impact. First of all, because as you said, the daigous haven't disappeared. They've moved, Hong Kong, Japan, Korea, and we are monitoring this very closely. So in the end, it's the same story. It's about -- it will be different by brand and by group. It's all about controlling the pricing activity and discounts between the two territories to avoid to create unnecessary opportunities that can undermine the equity of our brands in the local market. And I'm tempted to say that part of the reasons why we are constantly gaining share on the Chinese market is that we've done, I would say, a decent job. It's never perfect, but a decent job at protecting the local market versus the impact of Travel Retail daigous, at least that's what our retail partners in China tell me, and I'm happy to hear it.

Can I actually just ask -- sorry, a very small follow-up on this? And I guess like Japan, because this is a market where currencies have meant that the price gap has become quite big. Is this now a market that you've been progressively taking pricing to make sure that incentive for daigous to source in that region is not as big anymore? Or maybe the pricing situation is still something to come?

Well, there's no -- I mean it's true that the yen is lower, but we don't have any specific measures to take because there are no big discounts played in Japan. There's only one huge Travel Retail operator. So there might be individual daigous and consumers that use the opportunity. But I don't see this as a huge pocket of, I would say, gray market opportunity. So...

Anyway, it's controlled, some of it.

And as everything, we are controlling it. And it's easier to control in Japan.

Okay, perfect. Thank you so much for the follow-up.

Great. That was our last question. Thank you very much for all your questions, and we all wish you a happy summer and speak to you in October. End of Q&A:

Thank you very much. Thank you.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation, and you may now disconnect.