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Philip Morris International (PM)

Participants
Nick Rolli VP, IR and Financial Communications
André Calantzopoulos CEO
Martin King CFO
Pamela Kaufman Morgan Stanley
Adam Spielman Citi
Vivien Azer Cowen
Gaurav Jain Barclays
Chris Growe Stifel
Michael Lavery Piper Sandler
Robert Rampton UBS
Bonnie Herzog Goldman Sachs
Call transcript
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Operator

Good day and welcome to the Philip Morris International First Quarter 2020 Earnings Conference Call. Today’s call is scheduled to last about one hour including remarks by Philip Morris International management and the question-and-answer session. [Operator Instructions] Media representatives on the call will also be invited to ask questions at the conclusion of questions from the investment community.

I will now turn the call over to Mr. Nick Rolli, Vice President of Investor Relations and Financial Communications. sir. ahead, go Please

Nick Rolli

you release us. our containing quarter thank issued XXXX today, a results. press detailed for And Earlier joining we first Welcome. information on

Relations www.pmi.com access the release may on You PMI the Investor app. or

on A glossary for or most and as RRPs, tobacco directly calculations the comparable as other measures, to reduced-risk unit additional adjustments, heated products, well reconciliations slides, our terms, metrics of including are definition the Unless at end U.S. which our GAAP market are references and webcast posted products. all to business transformation stated, data are our website. heat-not-burn of otherwise the IQOS today’s to IQOS

Comparisons are Hedges, March XX, for reflecting adjusted the forma presented deconsolidation XXXX. of Inc., XXXX effective subsidiary, basis & pro results, our which Benson been a on have Canadian like-for-like Rothmans,

and remarks a also results of cautionary and or Please press that projections cause the now related disclosure forward-looking note Today’s forward-looking cautionary to I forward-looking to statements. could attention statements direct the release future statements of and COVID-XX. and projections from presentation forward-looking differ include contain materially your factors we for in today’s statements various additional review to results. actual

pleasure our will the Executive our André introduce and Martin André? of Officer session. question-and-answer King, my Calantzopoulos, be now Chief It’s both to Officer, for Financial Chief whom available

André Calantzopoulos

pandemic. I social safe COVID-XX during well. us, efforts of all you, life-saving hope Nick, and frontline Thank deep and and also everyone families, welcome, appreciation other workers These express are and our I of are the and ladies times for like gentlemen. medical, the unprecedented for and listening, to their would

the operate. their our communities and main in which focus families on health wellbeing and of at employees, Our time this the we is

and policies have for to offices. in and facilities our those who We risks continue to work stringent minimize implemented measures

to stability; employees, special of We guiding job also our commitment new guidance reassure the including principles to employees support recognition. announced three home, providing recently period areas: global the from and of those pandemic essential. stability; and Company’s all in working financial security a throughout For is set Employment

in The and a me for this real spirit the by like Morris people thank team, opportunity management to our shown to strength times to and and take their outstanding these that the International organization I’d up make Philip is inspiration challenging efforts. them

institutions our to providing PMI they and care support financial in ideas equipment the wider and purchase protective contribute effort. to continue and to XX to trade countries Indeed, organizations against people working include to Ongoing generate this on items and end how COVID-XX, support support partners, resources can more and to planned to communities, procurement to non-government societal fight our skills essential initiatives than crisis.

hand low-income, in communities. elderly, of In local and producing are addition, and countries our many sanitizer and factories volunteering employees their are help other at-risk some our for masks populations, to

but importantly, supply we to have Lastly, and taken challenging of very through to customers times. to steps and also our support these continuity ensure suppliers our the consumers,

and our detail. the Let the me I in of before the impact cover on to business hand Martin, on and will performance overall more COVID-XX now comment impact over this who outlook in quarter

with We a to very structural momentum. continued started first quarter, year performance business the with and minimal disruption growth strong

inventories additional pay and debt where required, had our healthy cash at manufacturing liquidity plans, business, ensure contingency investing temporary have balance we consumer continue number different facilities sheet our some we a of route-to-market, to While activated Allied to dividends. shutdowns and to in position, have allow to maturing ability will complexities and and in retire our to access a products. our generate us sufficient

on operating population, environment. challenging makes life than placing much social on for world’s of In in performance, more user most global Indonesia. XXXX likely uncertainty IQOS this picture enforcement effect temporarily acquisition Duty-Free and rate forecasting the further Turning exchange in to regulatory is to much with day-to-day The with due recent hold a price impacts isolation direct the delayed our reduced impact travel, on to currency-neutral total, drag. the movements outlook. is from With The our impacts usual. inherent economic have additional sales a measures negative this

on felt. parts, EPS and of Martin when guidance, the visibility for the As annual most we relatively the is guidance better. visibility key be second to with extent is our measures duration across quarterly will world through withdrawing and the the where and lockdown it limited, our is are moving forecast quarter, impact likely extremely talk replacing

start acquisition costs. existing IQOS adult shown confident user circumstances, the will the our to as conversion and to digital consumers, momentum adult commercial are as engine restrictions required the meantime, us our quarters in the resume under maximize our prevailing smokers optimize recent strong of to serve tailor investments and We on allows In ease.

considerable and shape uncertainty also situation on of impacts the recovery, as to the and the and speed unemployment. is disposable the There of of economic current the incomes the including magnitude consequences

it have there down-trading, market assume While consumption will too fully assess we to terms and early some potential be is on of in effects to dynamics impact.

certain We some countries, continuity difficulties also ensuring in smaller business general to may out-of-stocks. trade which for sense, developing localized lead players, in

Martin? turbulence, challenges. However, through performance economic show expect times these as to we in social previous of and resilient

Martin King

Thank you, André.

earnings any adjusted XXX movements, effects, our terms first growth inventory like-for-like with net was share strong very of quarter and trade We growth, revenue income of growth. distributor impact. performance, points accounted adjusted primarily of in a for X headline of start and points estimate I’ll pandemic basis points margin before ex-currency per operating summary diluted which of COVID-XX X.X

Heated reflecting of by HTUs, higher benefiting our in combined income revenues revenue a cost effects modest pricing XX.X a on volume mix basis-point scale positive HTU of decreased currency-neutral Total tobacco variance X.X% continued adjusted billion shipment to from growth, like-for-like volume grew by gains. geographic growth strong and shipment and units, tobacco combined Currency-neutral movements. the basis, drove This XXX margin cost share a operating to addition XX%, net a XX% reflecting positive margin, a and efficiencies volumes, in increase broad-based of inventory volume mix, unit grew X.X%. with combustible phasing robust

in XX.X% diluted adjusted currency-neutral EPS. growth

This reduced-risk the encouraging both product and excellent important we with impact of particularly pandemic. as COVID-XX to the businesses, is progress in start the our year, consider combustible

core our to existing expect three the of which well, environment, temporary we continue back movements, changes operating come in our currency performing expected While to. from I’ll operations of impact impact there areas addition to are to main

likely is sales, global and duration, in to severely first, on due The travel. Duty-Free curtailed longest

PMI and relative of For such a to with of offtake exited also trends global net trends given X% revenues. XX%, almost travel XXXX contributed the HEETS. similar starts skew the March brands Duty-Free, Marlboro continue our context, expect and average, enjoys over It share we market as to premium unit margins until declines XX%, to of Consumer with to higher recover.

volume our own we of in to assume lower a margins. the usually by premium sales, our of only Due the be brand portfolio Duty-Free that portion will recovered skew local markets, at

user The smokers. on Lockdown to rate our restrictions of hamper other and IQOS second is measures acquisition. impact adult the ability engage

Our where significantly retail in IQOS open, currently number even markets, of and a retail down. footfall is closed touch-points are

further capabilities digital commercial their into quarters investments Our reallocating and over coming are we own, in where are required. spend now to digital recent

engagement, to conduct terms limited coaches, although their number experts guided very consumer Our commercial virtual trials. and physical of disposal in a have of sales at tools

and acquisition be previously were measures average lower XX% for continue. we trends up lost introduced, this to also growth our to ease. expect Variations delayed of on we pick as based rate clear, make we expect witnessed since to momentum on restrictions However, as quarters underlying as believe around project. widespread difficult anticipated, by country rather is in the lockdown mix than long To the restrictions strong be user than recent

rates be capabilities, retention affected. or we expect conversion Importantly, our to not given digital customer do

sales generate purposes, market illustrative tobacco over million average and million and, contribution. each an X annualized billion net around in $XXX of and acquired consumption including X have mix cannibalization effects, would revenues $XXX over For pre-COVID incremental million on units in using users heated device

for KT&G We this and be products of initiatives, VEEV, flex on commercial depending could our later to the improved year and our events are timing accordingly product, unfold. able licensed the how also e-vapor plans delayed IQOS

in last Indonesia. area impact of The is main

tax explained new tax due segment percentage of positive retail on excise A selling on the was mid-to-low into As the of new market, with pricing. price at XXXX to year excise larger increase previously, effect element the already of catch-up a minimum was structural a come Xst. and a April

unfavorable enforcement the timing June, The However, risk delayed of the the has market is for COVID-XX prolonging said gaps our for is an restrictions. price price price of government added the increases now down-trading, of due and share. of new the minimum to until headwind

impact economic tangible, crisis. there of pandemic-related on as measures during travel such behavior the on effects purchasing uncertainty our social the operating as greater and to is are While consumer the environment, restrictions,

observed tend region There restrictions. like In to markets a support we have strong so of which of developed EU social markets, instances introduction far limited around have programs, only certain pantry-loading been in the the impact. Japan, or have

performance, these been trade minimal inventory nature distributor However, QX influence. and generally with bigger have on being had short-lived impact and a movements in the

stick workers, create countries. some added daily Philippines, latter developing certain We us are the support the which the daily and wage markets, some a for more of being most and has In resources high vulnerability. reduced of prevalence of market. Indonesia lower consumption initial fragility and of observe down-trading incomes signs greater significant thus dynamic The for social in the of

to have assume pandemic-driven these restrictions last. trends We while continue temporarily will

localized sense certain general to which André temporary for As route-to-market infrastructure, mentioned, we out-of-stocks. may some difficulties less emerging in trade potential outlets, markets given developed smaller lead also

inventories well a three Our remain incredible and market by months own a two distributors. for for average, function our over regard On one on This our despite contingency supply. is half efforts units, heated with months of with products of distribution continue and who challenges. customer and over possible tobacco months including over cigarettes, and chain supply production to have number implemented IQOS measures manufacturing of to current teams, operations healthy, and made devices the

late XX% shutdowns. factories sufficient HTU is are currently our week After capacity of March, production HTU of cigarette Around our with one in by currently operating our at production all the Bologna temporary affected suspension facility capacity.

do we reopen is not out-of-stocks currently factory soon. any income the out-of-stocks not markets. does foresee One we watch-out operating major However, if where be will in facing Argentina,

want robust focus companies of Given in highlight the to I investor our position. the current liquidity on environment, listed

our liquidity access ample the sources generation have and on to continue to commercial of ongoing cash paper. through cash business, We hand

billion $X.X revolving credit undrawn. facility Our remains

well-laddered shareholders EBITDA dividends XXXX. in with $X.X sheet adjusted a January maturing in balance billion Our bonds the quarter bond $X.X billion strong debt of during of first X.X net of XX, portfolio a to total April. times as March repaid of and remains and and distributed We

will strong including to remain funding cash flows exceed committed. We that cash we requirements, dividends, the which also fully expect of

debt retire fully and Our business intact. is ability appropriately to invest in our

balance delayed further our be versus However, previous rates, expectations. our somewhat may prevailing deleveraging of exchange sheet, at

worth It’s this, and capital also Related to on programs $X mentioning remain by billion activities in programs we billion RRP that reduction to These investments. events reprioritizing to $X.X to reduce as that efficiency the we flexible, year, cost we efficiencies are for to unrelated and also XXXX. deliver approximately with continue, are expect expenditures our over unfold. track well the

We turn to now guidance.

previous As well our to least diluted our withdrawn covered in was COVID-XX, of on our business at forecast XXXX which earnings full-year $X.XX, EPS release, have absent we track deliver. reported

is estimate. we their duration wider extent provide reliable a earnings and measures, consequences, the social to sufficiently isolation visibility as and full-year on stand or simply there lockdown not today, of However, enough

introducing its comparatively short-term we guidance, in one Given therefore are better quarter visibility, place. quarterly forward,

quarter, we due market As expected phasing. flagged, dynamics year Indonesia, to an second unfavorable comparison, a prior cost notably and weak previously already in

impact on the COVID-XX the period, we expect the pandemic quarterly additionally of in our business also occur We factor to in. which biggest

daily be no our devaluation to and the net $X.XX notably Consequently, rates, assuming the $X.XX range diluted X% domestic sales, impacts down-trading the the in EPS U.S. in reflect and prevailing of COVID-XX device Russian vis-à-vis of of Indonesian we inventory $X net $X.XX $X.XX. in currency, expect This primarily recapture, to for XXXX price sales. minimum quarter; Duty-Free operating for certain and $X.XX impacts, for related on decline the Mexican from assumptions approximately developing markets. currencies the including travel and other QX delay lost movements, sales COVID-XX to reductions Indonesia reported expected factors, first $X.XX rupiah of XX%, revenue period; of peso; assumes enforcement related These wholly many forecast recovery including global including in consumption the dollar, ruble, in being of with also to attributable declines for to unfavorable in at a temporary ex-currency reflecting reversals

Let international run the some declined elements X.X% quarter now total period. me performance. through estimate industry of our of in first We main the the

X.X%, declines like-for-like of of region, we units, by shipment heated decline and contributions a offset X.X%, with only volume tobacco of the growth largely EU impressive However, Russia. notable recorded from total XX.X% Japan the cigarette with

favorable Excluding the XXXX impact net declined in-market reflect by estimated in year related sales; total in-market QX, and risk mitigate the the distributor factors: shipment were main to volume two build-up Firstly, secondly, COVID-XX of where sales XXXX X.X%. inventory below QX net in distributor disruption. movements, Inventory our prior volumes inventory movements of comparison

as XX% HTU means lowest total sequentially to reaching almost the in of and volume make our quarter heated that over compared typically nothing XXXX, versus strong units our XXXX. year. volume what volume, quarter, Importantly, in-market XX X.X% units tobacco up in in fourth shipment by nearly the sales increased This now of performance X% the is billion

grow our RRPs positive as continues. on this momentum We to expect proportion further

our currency, estimate and, combustibles, to to by XXXX versus increased XX% COVID-XX by of effect lesser the trade growth contributed in Net and the higher tobacco income pricing operating results. driven consumer QX EPS. around net favorable one-fifth a of heated a and Turning revenues comparison financial units. extent, growth We pantry-loading revenues, inventories excluding in in

We with Germany, notable COVID-XX contributions of X.X%, and tobacco strong no impact recorded variance GCC, combustible significant the and Mexico, from Russia of Philippines, the Turkey. a pricing

RRP income and margin was XXX scale XX.X% while This operating ex-currency, favorable by for currency-neutral margin Adjusted income effects points. by adjusted geographic expansion an by excellent operating driven HTUs. mix strong grew basis increased

the Additional pricing phasing and include of cost drivers impact combustibles, cost underlying in initiatives.

unfavorable denominated in occurred primarily by the of currency sharp devaluation. we dollar EPS $X.XX impact such regard Adjusted XX.X% March, quarter of the growing certain impact local of future Russia, or if where further to should in effects With has first strongly, euro as increased in diluted a place. took currency. quarters seen revaluation in would excluding transactional recur out $X.XX the markets, includes currency, the significant point Such from payables only that devaluations

revenues RRP for devices with of IQOS reached total net approximately XX% XX% of close revenues. net $X.X to net accounting RRP billion, PMI’s revenues, or

share. now market Turning to

declined heated slightly to tobacco reached X.X by lower with The which lower points Our by was of total portfolio international for share units, cigarette for share reflecting X.X%, XX.X%, cigarettes. higher share share offset our gaps and local notably in out-switching unfavorable tax-advantaged Turkey. due movements smoker and competitors, Indonesia, and trade adult lower IQOS continued to inventory an Pakistan share comparison in prior Argentina price to with in year

XX% first Indonesia, since brands, effects, where the declined X.X% due October representing volumes Let’s increase. in loading was turn all industry likely to price approximately by Pricing weighted-average excise main only increases and second with the on quarter. are taken trade in reverse premium the mid-price of the which to XXXX quarter of pass-on XXXX of to PMI

low-priced share tax our to to super-low smaller smaller share Our directly due declined, manufacturers mid were are A by recovery Mild gains advantaged and outweighed despite premium who to due These price with which scale. brands, brands. competitive price a in gaps lost

delay wage this the headwind. prevalence of to temporary daily in minimum selling of some of in social introduces consumption. on Indonesia The share extends workers that the restrictions the as also follows uncertainty the It daily effects enforcement price

we than previous market of decline the such, X% higher our estimate total X%. have As will to assume to be

total geographies, to have million of EU. stopped million than including IQOS the more widespread key and XXst, since performance. XX.X adult year. total conversion. and This RRP that further the or were the various across million last the March addition representing of of Japan, growth reflects same estimate We users to estimate all this there time We XX.X now users that in switched Turning as with stages IQOS XX% momentum IQOS, IQOS user Russia balance smoking of X users

X.X% progress. overall X.X% the not achieved quarter This HTUs continues despite Indeed, from QX markets. share, markets with XXXX. again of number IQOS excellent been international HTUs brand where first full performance having commercialized, third-largest The was IQOS in in of increasing distribution IQOS a share to has in the national were see in tobacco

in-market HEETS also X.X% share increasing total very volume, X.X by On share first-quarter In the reached pantry-loading. of region, estimated sequential to strong, where a typically despite industry points with also with an XXXX, points, EU volume appendix basis, key QX quarter. compared consumer due was by X.X to we cities. to show refer EU for growth a higher key I XX% sales the lower you shares global and market

to by increased increased With up restrictions period, the minimal X.X sales in sequential On strong XXXX, share its there limited HEETS a in Russia was points while estimated in pantry-loading. share HEETS performance X.X%. IQOS basis impact quarter X%. in-market X.X by the continued Russia, versus by fourth points, reach social of with of

our to first IQOS in our and the share heated Japan, the of In reach by Marlboro launch points X.X for in units and DUO reported supported total by HEETS quarter, XX.X% line-ups. tobacco extensions increased X HeatSticks line

increased On tobacco movements, X.X to trade an the year adjusted points cigarillos of inventory the our and prior view share XX.X%. by adjusted and sequentially, X.X HTU total brands including points for versus by quarter,

QX drive first-quarter share volumes by for market total overall XXXX a X%. declined adjusted HTU our to heated total tobacco tobacco brands XX%. tobacco of the compared an category which sales grew in-market of adjusted over X.X% growth helped This around to

our the applications commercial the the continue heating this IQOS PMTA to efforts U.S. X supplemental to smoke. Tobacco application, which separate Company’s FDA’s is to Product for of would the system, PMTA from tobacco otherwise adult review convert consumers Risk who Lastly, of continues. Modified the arrangement for in support March, in submitted U.S. IQOS following to device launch IQOS XXXX the with the FDA through we a further Altria,

to closing Let André? me now for hand remarks. André back

André Calantzopoulos

you, Thank Martin.

reduced-risk first in especially quarter underlying continued the impressive momentum in is growth results. again the strong our our products, evident of business, summary, In

operating considerable our development and changed, of pandemic consequences, the clearly with social which its The economic including and now consumers. as world to uncertainty our and has those and the impact duration environment

remarkably has we a solid performance historically and the current under can proven business resilient, circumstances. deliver challenging Our believe we

confident and growth growth to resume when targets per X% net ex-currency growth. growth of revenue least to remain growth X% structural at consistent least annual mid-term compound share headwinds adjusted expect prospects these earnings we in our and, Importantly, passed, have our XXXX with at XXXX

Crucially, are strong. our organization, liquidity balance and sheet

includes and reward continue will which clearly serve to strong our our and to our protect We our our commitment shareholders, dividend. support employees, consumers

We a from that and this stronger future remain emerge resolute smoke-free crisis. our are in convinced we’ll for strategy

Martin you. happy now are answer I Thank and to questions. your

Operator

[Operator from comes first you. Morgan Thank of Stanley. Instructions] question Our Kaufman line the Pamela of

Pamela Kaufman

Hi. for question, and the are Thank hope well. all you I you doing

André Calantzopoulos

Pam. Hi,

Pamela Kaufman

you you’re any I where most are hoping And markets IQOS on among of you there was to the get of surprising existing the a terms update growth impact resilience significant And IQOS separately, negative XXXX. user in are on is seeing usage on IQOS Hi. users? performance seeing current an the in impact new then, backdrop? in that

André Calantzopoulos

Okay.

Let to here me a what call. the discuss take context during we’re minute going on give to some

is as any slowdowns, The do of thing mentioned, you business more we duration delays, that problem. It’s of acquisition, see pandemic. first the kind structural Okay? during and one-offs fundamentals not in the the

June, the vast we continues. can lockdowns thing, part with May where April this the it quarter, gradual month second some The continuing end of and and that see, we’ll have because the that’s essentially during of then recovery have in of through assumed we

context. remember when the to important that’s discuss So, we Okay?

Duty-Free because So, worldwide. traveling no impact with a of is there’s what we observe essentially certainty that degree high

stricter market some and The much we’ve market restrictions second acquisition to IQOS. is That others because less. varies the Pam, your slowdown seen thing have of in point, to obviously a

would with stores Japan, big people where differences our cannot operating coaches more slowdown closed almost our some slowdown with and say are physically Europe, normality we with as today. we engage are have have between So, I and who

higher. I’m sometimes that’s we saying why on are So, average around XX%,

and said, at Okay? cannot that’s since resilient are So, be and home to the stores closed confined very the given I coaches this, circumstances people, do. that the are find thing interact right with physically actually, as people the are especially I to

channels. digital channels more obviously increase we’re resources a see sales from as for We our other more and acquisition. a That’s high Martin much the to through And said, bigger -- gearing those.

retention For see retention, certain some we daily markets, of see rate use period. don’t and during dual in increasing and average problem. Actually being any reduced this consumption we people

that issue an heat from there So, unit And the have also no IQOS, we market. sales is regarding perspective. tobacco to issue in don’t the of

if know your don’t question. I answer So, I

Pamela Kaufman

you. Thank Yes.

Martin King

just strong. not any to also seeing Conversion fact, that. I’d add conversion we’re rates. drop-off in rates, quite Pam, in looking they’re

the down, So, face have is more and consumers your bit conversion has great. to going but retaining we’re to and as interaction Obviously, switching little to we the fast ability channels. underlying as slowed face consumer business digital can

Pamela Kaufman

the should in for to Are balance how we then, changes And that you savings business there realization and you’re cost thinking plans? behind? your how your between And drive about the making planned the and I delays think savings investing cost year about Thanks. investments of your guess, what this you’re investments IQOS adoption? in are timing in

Martin King

impacts of maybe prioritize also our that of first a focus as some projects the In of retimed which which the bigger The clearly, around programs more have some move new had from into back we’re now the projects that principle need year. in ones be are by add and as and the impact see putting need some to us around will investment we’ve to spending is return we’ve situation. momentum our what and we seeing Hence COVID-related. next the as to operate to our even well looked But good to further not and gone ends. the are, later. and growth as if will hampered on or And recover aspects the where we at later again right those which the anything, year lockdown money to we’ve mitigate a can into help to words, the get digital ones soon the undertaken of in try align our other investments that inability through list

will we are savings If our to then, biggest buck. also some part our for lining investments bang the situation as up the overall, And on our track. can. we giving cost is new and accelerate us anything, So,

momentum So, and towards we that we looking can as growth attain we are of this. looking come the long out term

Pamela Kaufman

you. Thank

Operator

Our the of line next question comes Citi. Adam from Spielman,

Adam Spielman

much. very you Thank Hello.

three may. I So, if I have questions,

illicit The first one and is cross about border.

it. am the on would also and reduced cross I rephrase in bit be that I expected impact have little it. in border. have thought or clampdown I to borders and illicit So, a and haven’t a And transport surprised QX mentioned quite legal adds -- result positive would much figure would QX. But, you

guess, So, that should That’s positive I question. am think I or a How we about the that? impact? is wrong first

André Calantzopoulos

Adam, of Again, And try some Okay. we on lay observations. you’re based these are right. things to out

reasons report illicit some the markets reduction mentioned. Our trade for in you

Now, we to going and appear market. European is and the say illicit all trade the XX% in disappear has cannot Union cautiously take this domestic

a essentially April. see may in not month but three taken because But, the weeks But to I are and cautious. you we we just of in this reasonably some, -- number right. the So, I’m And remain so. sure bit have all are we prefer

We observing should we this see are impact. some and

Adam Spielman

Okay. That’s helpful. very

Next question Indonesia. on is

the going on to imposed obviously, Xst. be You was price -- minimum April

about You’ve see in -- delayed a delayed noticed specific do likely possible it but how that a further give is Is we or it if didn’t -- I date. Indonesia? it’s till if recession think that really nasty you quite now talked being you June,

André Calantzopoulos

they they and send have in delay out inspect COVID, is because they cannot any a That’s the to because ask I’ll That June. physically inspectors said not is -- gave government to that June. Well, date we firm of generally, what outlets know date. the

situation longer. if earlier. continues, get we a uncertainty it this as So, out assume a do principle. or earlier, of a have If That’s it may restrictions matter in it continue whole they they of bit I will why

Now, Martin if know, to want you I don’t something? add

Martin King

purely exactly not get their It’s It’s not they start matter there to and can a matter It’s a out their for inspecting. wanting inspectors. with It’s do of right. issue when of it.

André Calantzopoulos

Martin in they work these myself to And obviously of in a daily on many to have can’t is we we Indonesia, category markets. -- developing clearly have Now, has lot his in essentially. mentioned Indonesia a consumption and these, adjust if work, in or remarks situation. casual their people salary of the the -- that and

have we impacted; that we COVID. Other assume Southeast coming well. to markets some have consumption Africa may also impact as So, on Asian can from here be

So, numbers what that had be. observe we a make in of to And going impact to we forecast this is phenomenon. our

is it rather appreciate difficult. all You

And well, take, stick if like it’s a know the stick also, some market for consumption. run broad clearly a Also, with I a Philippines, impact in sometimes out-of-stock. this daily very small we they confinement example, the And an trade go also if players, of very you sales if XX% or on day, has markets X have with an we take we impact average to temporarily that’s consumption -- per market. sale average XX%, of sticks X very

stage. we broad bake this? going not are we this And gave to to it’s assume to it’s If happen. be better, these to better. some people range it areas; at how on some The in. immune I don��t why I try reasonable Now, it’s why in That’s That’s the a know. precise confine. will think be numbers I think to

Third question?

Adam Spielman

just André. on you following that -- Do up

not is So, which of individual have lockdown? more. consumption saying will at would And more possibly you sort Do more, other of with smoke in view up I because hear developed people anxious, talking the do? hear people are I they’re what this for obviously traveling less about markets I home on impact catching disease. about the they more they’re thinking they concerned than a I’m people hear EMs now not much some -- you. end Europe, people bored, smoke that people I’m they’re profitable -- saying, smoking

André Calantzopoulos

impact Well, in the developed consumption. markets, we don’t any on see

have you home and research. appreciate outlined don’t countries, in people certain are data But have granular opportunities for forget -- we on should You staying the family are Technically, children. they the are correct. not work days people all with it, the of more these when elements you But, offices than and early you consumer in don’t offices. that in

guys bit more in a and appreciate people respectful, out so to need at the So, stage. confined why faced. have that many But, the been pattern and crisis may That’s this we’ve change we going have home I other. not difficulties. to through see ever compensate be But having think a at not also situation we you any we is all don’t one

else. some daily experience I consumption. And structure crisis, very anything that happen surgically that precise. don’t the recover cigarettes but have this know think may I adjustments be in after no to markets or We

developing mean, some is I market correct. people described children countries, IQOS okay, and I And families on. at we respectful of But said, we everything more as you also -- more market, and if home, so because to saw go are developed used in

where that’s we today are markets, said. in as developing So, I the

Okay.

some compensated need know, more. opportunities by in may also women less to more be cultures, to of fully and some -- some consume. reluctant obviously, you smoking That’s front We parents in as say,

all-in-all, as the on best know this be that’s transparent make as what we stage. estimate to So, And at trying today. I’m can possible we

Adam Spielman

should to just for two -- and see guided mean, the spirit impact you’re the the should but EPS the we for that we $X.XX? transparency, I very quarters Final you you full maybe $X.XX not put another FX EPS? how would be? year, know much. then quickly. QX the about I guidance just for can Thank year QX should $X.XX of of Is what on very in giving you’ve In and think question, full FX say

Martin King

estimate to rates, QX QX QX exchange $X.XX. prevailing something like to at close roughly $X.XX will that Adam of that’s $X.XX be and that. It pretty in

Operator

comes line from question Vivien Our Azer the Cowen. of of next

Vivien Azer

last by a than Asian it double of the back this market happened SARS in faster an you’ve pretty you’ve of is you that say market apparently. some curious, Thank all on Has But, commentary. market commentary. a seen if trading. comments where it get crisis kind market just like it detailed I’m or any disruption Obviously, I seen? just other relative your to the financial down for wanted André any was Thanks. to to or market

André Calantzopoulos

all, only the happening seen say of Indonesia what’s of is gaps. to continuation first we’ve the we can in Well, price the due down-trading

that happen. some assumption Here Okay? in may my

trade have of countries, disposable still to they a less say they income you for side, developing period referring one for a time, on down may if people, of Now, time. and some period I’m

side, the one, current brands. from the to brands in trust trusted sources and they people the know for uncertainty, go safe periods known of On tend other we especially

trusted. need said that balance. no contradicting to the in that’s availability That’s there is you right trust is it. only illicit there about and trade is this tendency trade. I and buy the So, Because not also sources may of what thing reduce to is same illicit essential previously is find illicit what trade, what the of It’s

not some assume seen I it. I’ve saying down-trading. So, I’m

Okay?

Vivien Azer

Can Martin, appropriately That’s helpful. around consumption. capita an embedded think going kind seems around that taking the as EPS you. conservative it you guys assumptions and your quarter-to-quarter And like about per in the you’re Thank be in approach changes implicit all of XQ guidance? underlying at you guidance, are you Thanks. comment price there offering, in volumes to elasticity around

Martin King

pretty timing how the being headwind. previous had trade the the weak since then. periods we you had a dynamics Yes. the looking way market we’ve pretty on and we at already the working a different against that where before the big I wrapping XX% price with pricing expected example on comparable increase for second in increase mean, were due in for gains a inventory at a Turkey to the price Mexico second quarter when were We quarter were we big out there example, look you had

had big already that So, QX. looked Indonesia. impact in We we the knew at coming was

EPS it, is giving would We after you we’re actually it’s COVID have we actually without before guidance if the had up unpick end right expected being thought what it’s QX our year we COVID-related. up the in we for had full X.X%, ended the year. right So, purely track and with growth, half XX% would first what the hitting with full numbers on

given is timings fine and to piece that recoveries to So, it’s adjust very predict coming thought more for new or this going the impacts news rest are so to do around of we quarter COVID-related forth. prudent, to when and forward COVID-related we you that’s trying is going how was what in one business thought. what out. difficult you And the underlying the lockdown year? what are consumers be basically and giving what shape doing from quarter the go and But we each say to exactly We’re ahead,

you ahead but really So, we we each latest right we best give what news can’t look have. give we the given quarter as can you full-year predict will the now, that happen

Vivien Azer

that Understood. a on follow-up And just then, drop into queue. and then back I’ll

unemployment the As rate? degradation you headwinds elasticity think are you about just given potential assuming given the in consumer, related COVID some price XQ, the to specific to of a impacts

Martin King

some we point it’s down-trading a have mentioned, price really of -- view. No, André watch-outs markets. elasticity consumption, around daily in average around certain in as not we there, some have But,

we take in that As far -- the certain the it be in be goes some of wise price pricing plan. and timing, pricing same timing to periods, the in may of exactly had lockdowns as at to the have case not we original cognizant

In will we of look pricing. to certain planned timing need have will at to some So, in the markets. markets, likely delay pricing we some

we do year On see compensate what to look to forward for we that. will the can try the hand, and other out into

So, it’s to what due out as -- originally year And just timing that because you will lockdowns, be the the lower during you may more to around some et have increases and than be rescheduled. there pricing total run rephased of the had we be give runway, windows planned price of of up likely some cetera.

over to you make the able of couple run up of that next, take some say because not weeks, of You be runway of out to lockdown. will for months pricing the

André Calantzopoulos

this view that and consumer not allow middle governments assumptions don’t one of do is a price stage, the will but point I increase you to in I crisis, you a take relating view. at of restating two in mean, places right all they’re It’s think or in psychologically to go, they thing. a price from are my elasticity, a

are the of majority the in elasticity these price don’t couple the places, a any month delay. a vast we short-term. But So, in of see or months

COVID Now, need economy. going elasticities, you world on revise for know that of be except what very the run, very the big you a it we revise rare substantially cigarettes, elasticities. may down in is time, GDP of period longer as to need But I comes to in know, in is impact don’t to long the But, increase. price if world the

Operator

line question the comes next from Gaurav Our of Barclays. of Jain

Gaurav Jain

of questions. couple a have I So,

So, supply you think on and those long your the inventory just think way Do levels. one the chain term? on current is your factory -- footprint crisis the you issues changes

André Calantzopoulos

question good very only to apply but a That’s us. doesn’t

bit said God, and we thank redundancy the inventories I’ve build plans arrive system everybody. in it in a would had had and general. with and we just materials little it obviously and Not so Okay? the that so, think we action And Resilience to the equals crisis in saw times. many make trying everything learning of that’s sure necessary deliveries for to -- be I time happen. a every to here for case inventory, business

inventories flexibility know, I as by sufficient business, fairly of as we capability operate the tobacco, and our Now, and you to nature said, the business, the in we with large have of inventory. build the

blocks footprint, think we fact that that the also our and by duties. are given don’t input revise at cigarettes, should anything see we I in on I stage this limited trade

scale we not how as come disappear have-to-have repeated COVID it flexibility caution own our humanity the optimal. ready But absolutely build So, think have that. one will afternoon, take back, in may principle even cautionary more But repeated as at for we it was a think because that we to were because the will this time of system. this it’s we be conclusions I in the rather don’t

done the behind well. what far, on you everything keeping I think pretty And scenes flowing. don’t is So see we’ve

I have been miracles, the in circumstances. the think, guys the given Company

Gaurav Jain

IQOS Sure. upfront My recessionary you the pricing a become Do next acquire device will is an pricing. in on to consumers new question just think issue environment?

André Calantzopoulos

obviously as many is, pricing in people convincing view plays times, Well, I I to My also think, the a we acquisition. But a pricing necessary. lot said step. can adjust make the about IQOS it’s when role the

And sometimes pricing excuse. is the

terms certain we the at once If competitor. system certain pricing. IQOS this of But consumer. the business. of reaching adjust need a with can our limits only And place they stage in the we’re you is being always premium expensive remarks X.X we we in a and of rapidly flexibility maintain we plus we the the And are of end cities remember as really can have made consumables in although both pretty more doing at February, Russia to terms bottom we said, recover device tiered where in see, really any than other range, this we of

issue. our Just now that’s not

contact have sale. the of limited to more is issue the point the ability Our the with and consumers

Gaurav Jain

can if one. Sure. I in one just And sneak last

in in EPS impact enforcement of So, the including price $X.XX you given have cost Indonesia this $X.XX delay range to COVID-related from and minimum down-trading.

because from have cost that range because issues So, around visibility should minimum that you is it visibility on the of -- impact enforcement $X.XX down-trading range of COVID the I read have don’t extra and the price $X.XX because and you is other those?

André Calantzopoulos

I trying in look exact Well, as we have should to dissecting it because than cap rather super don’t I at think piece the one science this this.

safety we’ve in the countries, at that back. an we of paid take other course estimate. even of I inventories in if look the we assumed buildup invest inventories, March, month said, done stocks as of in the if be it’s in I fully certain will So But, numbers even there, the

a we the countries may in we got quarter. certain reduction have not in retailers will Duty-Free recover it we’ve because and also situation, not Now, during little that and a them bit about seen happen, inventories worried the

the are So, the But, can’t to there on I we’ll probably them scenario put in worst in predict flexible these side. fixes. time. all be safe

only because wrong. venturing any I So, I I the day, given we’re trying, as And uncertainty. be possible stay there this would as to me number, as repeat, be can transparent particular I said, in

Operator

Stifel. line the Chris comes next Our from question Growe of of

Chris Growe

I and you are of just I you’re hear all. I glad Guys, to had well hope question safe a and healthy. could, first if

social and a second change seeing consumption isolation, how in the place? you seasonality XQ that daily kind that QX isolation forward, social much would and in not moves these just in mentioned change quarter. and see I of are going in those of guess, rates. seasonal you’re And if Could that sort I’m normally curious your you seen distancing between lift affect shipments You’ve some XQ. things of

André Calantzopoulos

the of quarter in consumption year the product. tobacco first lowest every the notoriously, mean, I quarter is Well,

in if context Okay? IQOS, this look even we we by put the definition. in-market sales to So, have them at for

Okay?

Chris Growe

Yes.

André Calantzopoulos

view And than even absolute in my in terms. numbers they’re the that’s better are why somehow

Okay?

Chris Growe

Sure.

André Calantzopoulos

second the the the any to Now, other don’t what the most see happen that for markets have change things specific -- except developing than can’t explained, quarter, I average I of in daily what I is going consumption, say, that mentioned. I in markets in we

very if I it’s market have difficult, measured We it. pick like not And Philippines. a

retailers And temporary It’s possible some with a had is recombines cash and is that until people money. stick of is wholesalers daily Yes, possible sales there lot less buy. we of a consumption out-of-stocks It just because part market, economy it’s sales the it’s to working some takes time. in going Okay? now. it areas, and average that decrease to also a because some system the some whole starts properly, have

stick of period time. have don’t sales I if okay, eight, go But, a for sales, cannot will attribute and buy I wouldn’t cigarettes on average the and daily consumption. salary, that if less So, the have to you lower job average month a to daily wish weeks. to, they assume they people for a the have I nine is a for daily consumption it’s difference a for or And you in of said, my big example, period in time

it. see I how That’s Okay?

the assume we we gradually out as coming June, we if the situation see crisis of Now, should come of back.

the usual, economy the it. casual business move that recover assume, and of in that as will -- it limitation economy just I this because faster can to recover once resumes, probably we’ll And Okay? people do

temporary handle ease an can another to is starts slowdown worldwide is But God the of cases. we don’t a system point, they an because may question as I have not government the health knows. getting said. how see number we unlikely we’ll that six now It’s know temporary, Now, temporary. increase by months. in And

reviews. forthcoming, have any we we’re if we advance, give give we we speak. quarterly the as Okay? we well, That’s meeting as as data shareholders for an why is better update learning we’ll that And said, you

Chris Growe

Sure.

André Calantzopoulos

I’m any what see don’t I That’s saying. But, effect. structural

Chris Growe

thing have for You second IQOS expect Yes. was Thank users ask down users sales get a quarter. or be Is incremental was do trying lot many the outlook good. -- very devices your very I less that as don’t device understand well? of device to function to you to returns color. It about cause accumulate quarter, your Did to you second being what about quickly that. in that that the a sales year-over-year? I just going want any I users But there kind for more talk of as as on are well, or would down. you

André Calantzopoulos

Well, it’s the acquisition during primarily due to lesser period.

life been, do delivery Okay? we increases is replacement. service device period, with the we said, consumers. focus has have repurpose less part I and as time, Also, this people sales over there to as and But experts, if to the expectancy the of repurpose a our our we clearly, during a problem device,

pretty job an have don’t I side. we that doing good from that a we’re point think from of So, And view. issue

as I if it happens. lower think we have assumed related acquisition is it essentially to

Chris Growe

lower well. lower SG&A quick just your that Okay. maybe of guidance lower to changed as as are just presumably within here to QX, which of be cost, your travel there as the And as IQOS well well, and follow-up, upcoming plans -- whether for would you’ve investment less understand, kind it be wanted quarter I costs embedded obviously thing, for kind

factors savings lot a in that framed those you are earnings is sort top coming the got coming of on QX of So, frame and Could negative -- have support that incorporated through? the that that as well? through helping effects you’ve you guidance you cost of

Martin King

range the more we and additional estimate be the in help gave retool and we for QX all the other invest focus areas some where of basing recover able best the to includes our of including and can spending, now and mean, digital you us cost is number I Yes. on to quickly.

cost spending So that it working because things is people includes like, yes, that differently. in just happening Yes. other because aren’t It’s all are lower all categories number there. in travel,

Operator

from Sandler. comes from Michael question Piper of Lavery line Our next the

André Calantzopoulos

Hello?

Michael Lavery

think, on IQOS. [Technical touched you demonstrations… even on digital Difficulty] And I

André Calantzopoulos

beginning at stop, the just of you broke you because Can the question?

Martin King

up question, the were beginning your breaking of Could You you repeat your question. Michael? at

Michael Lavery

Yes.

Sorry.

IQOS. case or it someone just about I I And understand for interaction there. I that on more mentioned you You touched be? try where home loan love And a how you guess, flexible creative robust would device even a be it online, using think watching the you you and how do just demonstrations. Do or to can we to digital maybe digital mean should to consumer is how digital think, or can deliver at your

André Calantzopoulos

coaches the have And with accrued We the home from sanitary are teaching are trial sales time. loan Currently, by or do the guided and bit devices, consumers. we Yes. devices do operating obviously new. the means. The the measures digital experts super consumers for more a then, may

crisis side And I by So, normal move remote learning times high operating from blessing It was than we and one that’s it’s in would think, to in operate. on our easier digital I you surprised I consumers can it to things well. level. from do more well a maintained everybody, organization home do much lot of a such helps that And that how may as say by because be and learn more we that the into and as this way.

case. just way, I any would time And that’s in allow the a direction a further And would good going we we’ve maybe we’re gotten optimize the boost say over thing. which have. that to us costs So, in this infrastructure sales a increase can we

Michael Lavery

helpful. great. just Okay, And That’s on IQOS. more one

describe past actions taken price that Can EU and there had lower what rests? already in Russia in you’ve or prices you those temporary mentioned are quarter. permanent you You and device just the

André Calantzopoulos

price, some I’m sure device changed had not we we promotion… sorry. our I’m

Martin King

comparison some I to when we’re those second had now year we year-over-year, and adjustments think into more because second I the stable But, come on adjustments of occurred. quarter prior comparing of first pricing hadn’t versus the the it’s more of half, lapping find When half year. just device you’ll in last the the much a prices device you year. last think

Michael Lavery

you Thank very much. great. Okay,

Operator

the comes UBS. question next Robert line from Our of of Rampton

Robert Rampton

for Thank you questions. I two much very have Hello. taking my questions.

was let think, ex-COVID, -- you before? is, mentioned assumption the that XXXX I X% would which looking you XQ implied X% I correct? Is have us revenue at that what the have revenue for XQ. know guess would XH your assumption. thinking been Thanks. The first Can to

Martin King

already Yes. I flat, of events comparison, would pretty have a the impacts Turkey like these Indonesia, COVID net been volume QX, that little other just flat. revenue combined impacts, not positive, revenues net Mexico mentioned, much X%. going little have comparison, we’re impact bit to or almost a And would down, bit. volumes little But absent the bit a our so,, therefore, of pull positive, minus but been much, X.X%

on So, what fairly to to a well. that going it’s first we CAGNY layered back and flagged the you’re already pace seeing That’s had impacts call in the now weak with already quarter. built quarter year-end as is COVID-related

the So, track take our That’s comment a two the average them. two frankly, look if even impacts, to the made you you I have and we the in right absent bit at COVID the why context guidance, that first with quarters, little ahead. on were

Robert Rampton

I mean, guess, I XXXX, term, longer XXXX, then, expect maybe to and government’s the increases revenue? the closing clear. about very to as gaps look Got And should it. think start That’s excise tax they we tax raise

André Calantzopoulos

seen Look, those we obviously. things of any haven’t today,

will way if tax they but think I cover to at will the think, an is even world it. increases packages, deploy, cigarettes know maximize I don’t best look to infinite for frankly look fraction the revenue. that also pledging of are governments money, the speaking, regular And we

This Now, nature. what this I today it’s clear. of at something is this pretty of anything can watch. no to we signs That’s see have stage. But,

Robert Rampton

much. very you Thank Great.

Operator

gentlemen, for one ladies time we And have and more question.

line of from of Goldman Our come final question Herzog the Bonnie will Sachs.

Bonnie Herzog

Thank you. Hi, everyone.

Martin King

Bonnie. Hi,

André Calantzopoulos

everything Bonnie. okay. is Hi, Hope

Bonnie Herzog

you okay the that for clarify in with me, I Yes, a to said too. call. lot just something everything’s you hope wanted earlier guys

users them from able of new any this. I seeing wanted that them, IQOS touch in environment. You in this clarify you’re But, recruiting IQOS to you’re for with and to if touched converse to to convert terms on virtually reluctance consumers not

trying your of So, impact to see remains users understand this then, recruitment first pressured And you QX, that’s just the assuming core your how business. efforts rest for cigarette discussed, new the as of you IQOS in clarification. for

André Calantzopoulos

to that stores our Well, a people rates, is convinced. to any call a are we the are or the frankly the contacted, digital question, first come your person in often the because we haven’t of now And channels assets funnel. think, purchase very adoption what have very that are aware people high digital the heard come obviously, I Once ones to convinced. most that typically I and the difference

be I which So, we’re we come have to on actually to used don’t maybe we normal. than average is you, numbers, higher, the can before,

on momentum I’m bit is once resume Now, momentum. we there. track. see cigarettes change very predict. switching actually more the to a I for to difficult in the back the direct during new consumers Because impressed people, see in any that we are can IQOS. we And Clearly, we’ll contacts is period I also are terms the where don’t of IQOS, to get

be of if any IQOS. the that If two. cannibalization But obviously, see lasts I don’t of you rates, will it couple look at there less if dent a less that cannibalization is of would months, acquisition

And to reductions obviously in world all going in will recession temporary during places. end impact. any is is micro But cigarettes recessionary call, in you is very the side term if depends discussed to longer rest crisis, this That where thing daily are the Okay? see resistant consumption as the then it general. we on the know, average there some

very today for it’s of speaking, any a which evaluate. for to long-term difficult question So, frankly us, more is perspective, a

don’t we But in see Okay? dynamics. changes any the

Bonnie Herzog

then, you we IQOS your but XXXX? I billion sticks that is I but by there’s leaving you there? do volume billion lot this, reasonable -- missed HTU still target know, to That’s I And Okay. should of a may still assume XXX uncertainty, that have XX still guess target are of helpful. out

André Calantzopoulos

a If okay. the I year, certain whole to for we by for think last they of period obviously, thing the restrictions If delay still time. a we’re need quarter, the last

underlying trajectory there. is I think, the

moment, So, see think that’s I for how I the it.

Bonnie Herzog

one quick final a just for then, And me. Okay.

get in going mentioned terms XXXX. investing in In buck, total the guys biggest where are you think and I’m digital. dollars that to you you areas curious spend, the will, call marketing the probably adjusting But, you’re of spent dollar on you about more if

you this curious incremental, $XXX that given $XXX And amount targeted just had I’m to all, changed it million at if think was million year. has everything? I

André Calantzopoulos

quarterly flexibility because in don’t the And investment available. now, basis Well, is just obviously, obviously, slowed it down, bit a have we this because we all opportunities have is variable.

we a order and if point up of in stage, this at Now, resources we for see to to the crisis out time need investment period makes if we to need and double that of QX the sense view. when from come catch of an

So, to we how have flexibility I not obviously, opportunity, all money. If spend That’s see. there. is it will next we move And no this there year. will

is in obviously. now, it a the incremental despite Just digital investment is slower spending, money. that difference reallocating is The

Bonnie Herzog

you Thank Okay. much. so

André Calantzopoulos

Bonnie. you, Thank

Operator

remarks. now question. to was the final our turn any floor over management for back And closing I’ll additional that or

André Calantzopoulos

actually uncertainty. these all and as circumstances any would as see business Okay. call. Thank give the be all for much temporary for understand can. We to joining of believe you I problem us. possible in don’t is things but tried all fundamentals, the as there we I as we granularity are of strong. I our very are exceptional temporary, say they like the to remain transparent you that

of And operations stronger -- business there, make we’ve term, for very as think, the of when But the are out make are operations PMI outlook business. I we overall, overall, our the our are will that committed think as well positive. that we longer I And is safe. I concerned, come move the me I think good in given we’re the so crisis remains as because hope sure our as we resume far as very crisis. the fairly done what short And circumstances. out that’s term shape, same employees continue, to the we soon on possible,

we’ll you up So, to keep date.

we said, If I meeting. we’ll of news, this uncertainty. And the with have As us period shareholders bear you any in there’s let know.

Nick Rolli

Financial have me Officer. earnings as if everyone you one I call last I final know comment, want to. is Martin’s permit Chief to André, let this

know, the America. PMI a new he I be think will of As taking of on most as CEO you role

also Emmanuel everyone with the speak May organization we that certainly and basis in him think, commitment, for We’ll his calls day But, sense at PMI, works service, day finance him on and his I to as the the to us look as So, organization, for a I to his welcoming on Babeau that. miss of forward CFO humor. good these of Xst future. our new joining thank

So, congratulations, you. luck Martin and to best of

Martin King

Thank much, you Nick. very

Nick Rolli

today. So, Thank that concludes you our call very for much.

any well, Thank Investor If reach healthy. team. you Stay out Relations you. the follow-up to questions, have please stay

Operator

conclude you. Thank and does Ladies today’s conference this call. gentlemen,

You may disconnect. now