Good morning, everyone, and thank you for being with us this morning for Rémi Cointreau's 25-26 full-year results. I'm here with Franck Marilly, our CEO, and Luca Marotta, our Deputy CEO and CFO. The both of them will, of course, take you through the detailed results. Before we review the year in more detail, I would like to share a few reflections on where we stand today and how the Board views the future of the group. Firstly, it is with a clear head that we must acknowledge the reality we live in. Over the past three years, Rémy Cointreau has operated in an exceptionally challenging macroeconomic and geopolitical environment. At the same time, our performance has fallen short of our ambitions. Consumer behaviors are evolving, market dynamics are changing, and it is key for us to adapt accordingly. Yet, despite these numerous challenges, we remain absolutely confident in our ability to create value. We own a portfolio of exceptional brands with significant untapped potential. As illustrated by the image introducing this section, we believe our brands are uniquely positioned in a world where experiences rather than ownership increasingly becomes the focus of customers. Our brands are not simply offering products, they embody and deliver experiences by their very nature, creating memorable moments of sharing, celebration and connection. We are also encouraged by the first signs of recovery emerging across several key markets. Beyond Cognac, we see attractive opportunities to accelerate growth and further diversify our sources of value creation. This confidence is reflected in the launch of RC Forward. More than a cost-cutting plan, it is an ambitious transformation program designed to unlock the group's full potential. Its objective is to simplify the way we operate, accelerate decision-making and strengthen execution across the organization. By generating additional resources through efficiencies across everything we do, it will allow us to reinvest behind our brands and growth opportunities while building a company that is less cyclical, more agile and more resilient. Finally, throughout this journey we remain guided by a long-term perspective. We will continue to invest in the strength and desirability of our brands while maintaining disciplined financial stewardship. As a family controlled company with a long-term horizon, we remain focused on creating sustainable value for all our stakeholders and on strengthening the group for future generations. With this in mind, I will now hand over to Franck, who will review our performance and priorities in greater detail.
Thank you, Marie-Amélie. Good morning, everyone, and thank you for joining us today. I will begin with a quick overview of full year 25-26. Luca will detail our financial results and I will conclude by giving you an update on the outlook and of course our transformation plan RC Forward. Let's begin with a review of our full year business performance. I'm now on slide 5. Group sales totaled 935.3 million euros, representing a slight organic growth of plus 0.2% versus last year. COP reached 165.4 million euros, down minus 11.5% on an organic basis, resulting in a margin of 17.7%, down 2.6 points organically. This evolution mainly reflects the decline in gross margin, including the impact of tariff, as well as an unfavorable price mix and higher production cost. This was partially offset by discipline control over overhead costs, while we took the deliberate decision to maintain marketing investment at a high level, with A&P at 19.7% of sales. Despite a challenging context, we have taken important initiatives to protect as much as possible our free cash flow generation. Consequently, it improved from 19.2 million euros last year to 53.8 million euros. In this context, our net debt EBITDA ratio increased slightly, reaching 3.22 times at the end of March. While these results are clearly not sufficient and remain below our ambitions. They are nonetheless consistent with the objectives we had set for the year and represent a first step in the right direction. These financial results have been achieved in a responsible way. Amy Cointreau continued to deploy its sustainable exception, this roadmap and confirmed to get our progress in its transformational journey. Under a stairwell pillar, the group committed in 2022 to aligning its climate trajectory with the Paris Agreement, with targets validated by the Science-Based Targets Initiative. For the second consecutive year, the group's carbon emissions remain ahead of its trajectory, both for direct emissions and across its value chain, with a 17% reduction versus the 2021 baseline. This momentum was supported by concrete initiatives implemented across the group's houses, including the expansion of the solar electricity production. The group also continued its trajectory to reduce water withdrawal, particularly at sites located in water-stressed areas. The objective is to achieve a 20% reduction by 2030, compared with 22-23 levels. Once again this year, performance exceeded the target trajectory, with water withdrawals down minus 36%. This achievement reflects a continued mobilization of production sites around treatment process optimization, loss reduction, and infrastructure improvements. Regarding agricultural sourcing, the group continued supporting suppliers towards sustainable or responsible agriculture certifications, reaching 77% certified strategic agricultural raw materials, compared with 68% last year. In addition, a key milestone was achieved in 2025 by Domaine de Haute-Glas and Telmo, which obtain regenerative organic certified ROC certification for their owned estates, reinforcing their pioneering position in regenerative agriculture. Lastly, under the people pillar, the group confirmed further progress in diversity and equal opportunity, with women now representing 50% of the executive committee, exceeding the permanent target of 40%. Full year 25-26 was clearly a transition year for Rémi Cointreau, a year where we started rebuilding momentum, while remaining fully aware that we are still at the beginning of our journey. Over the past 12 months, our priority was first to stabilize the business before re-accelerating growth. In this environment, we remain fully committed to our long-term value strategy, while also demonstrating greater pricing agility whenever necessary to adapt to local market conditions and protect competitiveness. We also accelerated innovation, with launches aligned with evolving consumer trends and new consumption occasions. In the U.S., we started to regain ground, with Remy Martin gaining plus 0.6% points of market share, including plus 1.1 points on VSOP, an encouraging first step in our ambition to reconquer this key market. At the same time, we continue to leverage our key strengths in China, where our brands further reinforce their leadership position. These are important first steps, even if we are not yet where we want to be. At the same time, we remain extremely focused on defending profitability in what remains a very adverse environment. In this context, protecting our industrial leading gross margin remains a key focus. We also implemented strict discipline on overhead costs without compromising our A&P investment and launched multiple mitigation initiatives to limit the impact of tariff. Finally, protecting cash generation and debt leverage as much as possible remains central to our actions throughout the year. We took decisive actions to protect cash, optimize working capital through a reduction of O2V commitments, and we reduced further our level of capex to essentials. Finally, this year was also about preparing for the future. We started evolving our organization to become more agile, more efficient, and more business-driven. This transformation journey is essential to strengthen our execution capabilities, accelerate decision-making, and support a broader recovery over the coming years. A quick word on some of the year's achievements that helped stabilize top-line performance across our key regions. Starting with the U.S., on slide 8, after two years of underperformance, our brands are regaining momentum and regaining market share, both in Cognac and across our key Liquors and Spirits brands. our total depletions remain negative at the end of march but continue to improve sequentially in what remains a difficult and slowing market environment while our liquor and spirit portfolio volume depletions are still positive there is still work to be done in cognac there are several positive elements to highlight in china which is clearly the markets where we are significantly outperforming. Remy Martin gained an additional three points of market share in volume depletions during calendar year 2025, mainly driven by the strong momentum of club. At the same time, we further strengthened our leadership position in e-commerce, gaining an additional 10 points of market share. Our last key achievement that I would like to highlight on slide 10 Then was also our ability to leverage additional growth opportunities across the portfolio. First, we significantly strengthened our innovation pipeline with launches spanning cognac, liquors and spirits, ready-to-drink formats and new consumer occasions. These innovations are helping us to reinforce brand desirability, recruit new customers and adapt to evolving consumption trends, while remaining fully aligned with our premium positioning. We also accelerated our presence in categories and formats with strong momentum, particularly around convenience, mixology, and accessibility. At the same time, Global Travel Retail delivered a strong rebound with sales up 15% versus last year. This channel is clearly a strategic priority for us over the medium term. Today, we believe our position remains underscaled relative to peers, meaning there is still meaningful upside potential to capture going forward. This gives us confidence in our ability to progressively broaden our growth levers beyond our traditional markets and consumption occasions.
Thank you, Frank. Now let's look into financial statements, starting with the full-year income statement. As already mentioned, organic sales were up by 0.2%. Based on this, gross profits decreased by 5% in organic terms, implying 3.7 points of deterioration in gross margin. This full-year gross margin contraction has been driven by incremental tariff custom duties, an unfavorable price mix effect, and some production cost pressure. At the same time, sales and marketing net expenses were down by 2.8% organically. But within this total, we have the AMP expenses line down by 3% organically, representing 19.7% of sales, i.e. an organic decrease of 0.7 points. Despite the continued pressure on sales, we have decided to maintain our investment force behind our brands to protect their desirability and to be prepared for the recovery. However, we did that while keeping a clear focus on efficiency and selectivity. As a consequence, we increased the share of below-the-line spending relative to the above-the-line during the period. As a result, the share of below-the-line investment was higher compared to the above-the-line spend. Above-the-line spend, what it is, as a reminder, is traditional media digital PR, which represented 45% of the AMP, while below the line, more directive-driven to sales and a quicker payback on volumes and values, investment represented 55%. In complement, additionally, digital represents more than 65, two-thirds of a global ATL, so you can say that around 30% of our total E&P spending is digital. Now let's focus on distribution costs, which decreased by 2.5% organically, but also including a one-off related to a compensation indemnity, as you remember, already recorded in HL1. Administrative net expenses were almost flat on an organic basis, reflecting continued discipline on overrides costs following optimization made last year. Overall, current operating profit was down minus 11.5% organically and minus 23.8% on a reported basis, after accounting for a negative currency impact of minus 26.6 million euro. In terms of margin profile, COP margin stood at 17.7%, down 4.4 points as reported, but only 2.6 points organically. Now let's take a look at the group's current operating margin breach. As said, it was down 4.4 points as reported, reaching 17.7. This breaks down into an organic decrease of 2.6 points and a negative currency effect in terms of points 1.8 points. The organic evolution of the current operating margin largely reflects a deterioration of the gross margin. This deterioration was reduced by ongoing discipline in distribution and unstructured cost. In more detail, gross margin, as already said, was down 3.7 points, of which more or less 40% is linked to incremental custom duties alongside tariff U.S. and price undertaking China, alongside an unfurlable price mix, mostly pricing in the current environment, and inflation related to cost of goods, particularly on cognac, ODB, and cost of goods. Second, AMP ratio decreased slightly by 0.7 points, as said, but remained at a high level compared to the turnover delivered. Third, the ratio of distribution and structure cost was down by 0.4 points and decreased by 3.7 million euros in absolute terms. Please remember that this is a key achievement considering the reintegration of around 11 million of last year one-off savings. Let's move on on the remaining items in the income statement in page 14. In the full year 2526 operating profit included 13.9 million euro of other non-current income or expenses. I'll be back on that point. Financial charges slightly decreased from 42.6 to 42.1. As well I will go into more details on during next slides. Reported tax rate was almost stable flat at 28.7. No additional change related to exceptional corporate tax contribution in France has been recorded you remember last year so no additional this year but excluding no recurring items tax rates comparably increased by one point from 27.2 to 28.2 for the next year so already started 26 27 we expect tax rate to land at around 29 percent As a result, net profit group share came in at 78.7 million euro, down 35.1% on a reported basis, i.e. a net margin of 8.4%, down 3.9 points. Earning per share came out at 1.51, down 36% reportedly, but equivalent to 171, 0.2, 20 cents of euro more, excluding non-recurring items. As said, now we need to analyze the non-recurring items. Mainly, inside these 13.9 million, we have to highlight two different elements, notably an impairment on wasteland assets for 9.5 million euro and restructuring costs in Benelux related to the evolution of the distribution network. We are terminating our current distribution agreement and have launched an LFP for this cluster. This was the 13.9 million negative, but we have also a tax shield effect, so 3.4 million of positive no recurring tax items linked to this charge. A few comments on net financial expenses, as promised, which amounted to 42.1 million euro in full year 2526 compared to 42.6 of the previous one. Let's start with net debt servicing costs were almost stable in absolute terms at 33.6 million euro and our cost of debt decreased from 4.07 to 3.86 percent net currency gains stood at 0.8 this year versus a loss of 1.3 million euro last year and finally other financial expenses stood at 9.2 million in full year 2526. For the year 2627, we expect our financial charges globally to land at more than 45 million Nero. Now let's analyze the free cash flow generation and the net debt evolution page 17. As already announced and explained by Frank, free cash flow increased this year from 19.2 million euro to 53.8 million euro in 2526 or if you want from 27.6 million euro to 58.2 million euro excluding non-recurring items but on top excluding 28 million euro tax refund that we had and 24-25 related to prior overpayment, this represents a significant improvement switching from a negative free cash flow on a comparable basis last year to 53.8 million euro this This strong free cash flow improvement reflects a meaningful decrease in EBITDA, but a underlying but, more than offset by two factors. First, significant decrease of other working capital items outflow, i.e., as you can see, a positive variance of effect of 77.8 million euro, mostly driven by some phasing effect in trade payables between last year and this year. This improvement is very important, but not 100% of that can be considered as structural. In the same time, the working cap outflow related to OEDV, the most strategic part, let me say that, and other spirits in the aging process, was also down, as expected, by 14.1 million euro due to the reduction of OEDV purchases as part of the renegotiation of contract in March 2025. Overall, total working capital outflow evolution is significantly favorable and has been reduced by 91.9 million euro. Second element, a decrease of the 14.2 million euro of capex outflow, following the optimization action that we decided on that line to protect even more at the maximum our free cash flow evolution. this was the operational part but there are also other cash flow inflows outflows in that case other cash flows outflows increased so it's a negative one by 23.9 million euro this one mostly driven by the cash dividend paid last year from 41 million to 58.8 as a result at the end of march 2026 our net financial debt stood at 690.4 million up by 15 million for march 25. consequently a ratio is up from 2.4 in march 2025 to 3.22 in march 26. Please pay attention, looking forward our objective is clear, remaining below 3.5 in this kind of A-Ratio, so below clearly our covenant at the end of the full year 26-27. On slide number 18, as a matter of fact of the additional focus we will be putting, and we will be putting even more on free cash flow and conversion of debt into a video in the future, let's talk about these indicators, which is a very peculiar one for our indices, particularly for players heavily exposed to aging inventories. The analysis of its evolution highlights a strong year-on-year volatility, primarily driven by changes in FDA. As you can see, during peak periods, 2021, the free cash flow conversion reached 45%, supported by the initial COVID-driven business boom and the measure level of ODV purchases. In 2021-2022, free cash flow conversion was also high, at 24%, driven by record-high EVDA during the COVID peak, but partially offset by the reinforcement, stronger reinforcement, of our future ADV supply coverage. Structurally, our business model includes some inertia due to the today purchases being made and committed even before they will happen and to support future development and future growth. I've told you last year that a more normalized level, excluding the positive effects of Covid and the current adverse context and also up and down in other working capital items, would be in the range of 15 to 20% range. While achieving a 27% free cash flow conversion rate this year is a very important effect despite the impact of tariff is a very positive outcome I insist it is important to recognize that part of that performance also reflects a favorable phasing effect on trade payables. To conclude in a nutshell this is a great achievement considering all the challenges we had to face it is sustainable too early to say that is definitively our mid-term goal. I'll be back even more clearly on that during November presentation for the midterm plan. Now let's move on the impact of the currency edges. A bit technical but important because EBITDA is also composed for A ratio by forex changes. The group reported a negative translation impact of 51.4 million euro on sales and a negative transaction effect of 26.6 on operating profit in 2526. This mainly reflects the evolution of the US dollar and the Chinese RMB. In last year 2526 we recorded the deterioration of the average euro dollar conversion rate from 107 to 116 which is a huge negative swings more dollar for the same euro and the euro RMB the same scale conversion rates from 7.76 to 8.23 for 10 cents euro in addition our average hedged rate deteriorated from 109 to 115 in terms of dollars in 2526 and deteriorated from 7065 to 821 RMB for 10 cents euro in 2526. This was the past. Let's look at the forecast for the full year 2627. Assuming a conversion rate of 1.19 on your US dollar and 8.30 on Euro Chinese RMB as well as an edge rate of 1.18 US dollar, 8.25 on RMB we anticipate a negative impact between 15 and 20 million on sales with a phasing 50-50 H1, H2 and between minus 5 and minus 8 million so so far less your previous estimation our previous estimation six months ago for the year 2627 on operating profit and this will happen mostly in age two so still negative but more modest and moderate compared to the previous estimation and we discussed together six nine months ago and you can read on the slide what is very important for you the forex sensitivity by currency as the evolution of the euro us dollar exchange rate remain very volatile also that of euro rnb we we will continue to share with you and update every quarter at this stage for the year that just started 2627 we already covered more or less 100 percent of our net us dollar exposure but which around 60 percent so more than the half of option so would be flexible with some reactivity on chinese uh one you know rnb we will already cover 75 percent so a bit less so our net chinese rnb forecast exposure of which 55 percent of option. Now let's move on the balance sheet overview where total assets liabilities stood at 346 billions up 32 million compared 24 25. On the asset side the global inventory increased by 62 million to reach 2.17 billion due to the purchase of the young ODV and increase in our inventory levels given the current context inventories now represent 63% of our total asset up two points from last year it was the left side on the on the on the other part on the on the right side on liabilities the shareholder equity is almost flat versus last year mainly driven by the net income offset by the payment of the dividend related to the fiscal year of 24-25 net gearing the group net debt to equity rate ratio was slightly up over the period from 35 to 36% reflecting the increase of our financial debt now moving on the Roche slide slide number Our ratio came in at 7.7% in 25-26, down 2.6 points on a reported basis and down 1.4 points in organic terms. This includes an organic decrease on 1.4 in Rochi of the group brands and a negative swing in the partner brands Rochi. Roche's evolution is the result of an asymmetry, clearly visible, between an organic increase of 2.1% in employed capital and a strong organic decline, mathematically speaking, of minus 11.5 income. The group continues to invest as part of this in long-term contract, so it's quite normal to have this asymmetry so far. This is particularly the case for the cognac division, its rush decline by 1.7 points organically to 8.1 on the back of an increase, as said, of 3.1% on employed capital and a cop decline of 12.6. In 2526 the group continued to invest in aging inventories as part of this long term contract, less than before but still and to a lesser extent on capex talking about the lacrosse and experience the division roche decreased by 0.3 points so margin decrease to reach organically 10.8 this evolution reflects a decrease of the employee capital as we have more flexibility compared to the cognac or the long-term engagement minus one percent organically and at the same time a decrease of 3.1 in the operating profit let's get a look at the employee capital bridge on the slide 22 the overall amount increased by 32.2 million euro mainly a split between an organic increase of 45 million and the negative currency impact in that case is helpful the negative impact of 12.8 million euros. On the organic side, the 2.1 year-on-year increase in capital employed is mostly driven by a strong increase in hedging inventories, partially offset by a strong optimization of the other working cap items. Next, slide 23, let's talk about the yearly dividend. In light of the current environment and our focus on the leveraging, the board has decided to submit for shareholder approval a temporary calibration of the dividend while maintaining an attractive level of shareholder return. At the AGM on July 21, 2026, shareholders will therefore be asked to approve an ordinary dividend of 0.75 euro per share composed by 0.5 in cash and 0.25 euro with the option to receive the payment in cash or share so there is a script option for one-third of the global amount this proposal mathematically speaking represent a still a 50% payout ratio based on EPS 151 and the yield of 1.66% on the average share price over the fiscal year, which was 45.07. Last year, the yield was 2.22. So 50% payout, even if the dividend is cut by 50% compared to the previous year. It would result in an expected cash outflow of maximum €40 million to be compared to around €59 million this year, last year, 25-26. This measured adjustment reflects our disciplined approach to capital allocation, protecting the balance sheet and supporting the leveraging in the short term, while at the same time remain confident in the group medium-term recovery and value creation potential, and clearly on top, a shareholder return that remains attractive compared to the payout ratio that I showed just before. Thank you for your attention and we will now hand over to Frank.
Thank you, Luca. Before moving into the detailed guidance, let me first highlight the broader context in which this guidance has been built. Several variables remain uncertain, including the level of U.S. tariffs and the potential reimbursement of tariffs already paid. geopolitical developments in the Middle East, the global macro-economic environment and consumer trends, as well as ongoing regulatory restrictions on consumption in China. Some of these factors could potentially provide upside, such as the reimbursement of tariffs paid last year. However, while these external variables may still shape the year, our determination is very clear. We intend to perform, transform, and remain resilient amid persistent volatility. To achieve this, we will leverage innovation and greater pricing agility, accelerate our non-Cognac brands while capturing all available opportunities in Cognac and turn the disruption in U.S. distribution into a growth opportunity. At the same time, we will not compromise on brand-building investment, but we will refocus A&P spending on fewer brands and regions to maximize impact. Finally, we will place a strong emphasis on execution, efficiency, early wins from RC forward and a more agile organization to support delivery throughout the year. As you understood, top line recovery is my number one priority. The recovery will be gradual, but the progress achieved in 2526 clearly needs to continue and further materialize in 2627. A number of initiatives already underway across our key regions and brands, and I would like to highlight some of the key actions supporting our return to growth. Let me start with the U.S. on page 26, where our ambition is very clear to continue outperforming the market and regain market shares. First, we want to continue leveraging the rapidly evolving distribution landscape in the U.S. to optimize our road to market and capture new opportunities. The ongoing reshaping of the industry creates opportunities for us to be more agile, more targeted, and ultimately more effective commercially. At the same time, we would accelerate in small-sized format and further strengthen our revenue growth management capabilities. Innovation will also remain a key growth contributor. On Cognac, the priority is clearly to rebuild momentum. We are launching a new global brand platform for Rémy Martin to reinforce desirability, while revitalizing VSOP through range extensions, increase ANP support and stronger RGM execution. We also want to recruit new consumers and broaden consumption occasions, notably by capturing more spirit drinkers and developing new occasions with our Remy V national rollout. Beyond Cognac, we see significant opportunities to accelerate our non-cognac categories through our key growth platforms, Cointreau and The Botanist. Moving to China on slide 27, our objective is to continue to gain market share while leveraging the solid momentum of Remy Martin Club as a key growth engine. In Cognac, the priority is first to sustain the strong performance of RM Club. This year, we will notably further leverage collaborations and culturally relevant activations. We also see some upside in VSOP, notably through stronger on-trade presence aimed at broadening occasions and recruiting younger consumers. At the same time, we will continue to leverage dinner and banquet occasions to revitalize high-end segments. Beyond Cognac, we also intend to accelerate the non-Cognac development to further diversify our growth profile in China. For Cointreau, the ambition is to maintain our leadership position within Lakers while accelerating growth through new opportunities linked to cocktail culture, younger consumers, and more casual on-trade occasions. For Brookladdy, the strategy is to evolve from a niche prestige positioning toward a more scalable super premium brand, benefiting from the steadily growing Chinese whiskey consumer base and changing consumption behaviors, increasingly focused on personal pleasure and experiential engagement. Finally, we also want to unlock additional channel opportunities across China. We will continue to leverage banquet occasions while adopting an increasingly client-centric approach and delivering a more seamless omni-channel experience. At the same time, we will support the growth of our non-Cognac portfolio by expanding our presence in convenience stores and developing new on-trade opportunities. To accelerate these ambitions, we are also implementing a new commercial organization designed to strengthen execution and support our new phase of growth beyond the Guangdong province. Beyond the U.S. and China, we also have several sizable growth opportunities across the rest of the portfolio and geographies that can meaningfully enhance the group's growth profile. I'm now on page 28. Starting with global travel retail, a new organization will be implemented shortly to accelerate execution and sharpen focus on airports. We also want to accelerate our Louis XIII while leveraging the strong momentum currently seen on club exception. Innovation will remain an important contributor alongside greater pricing agility on Brooklady. Moving to emerging markets, which represent an important long-term growth opportunity for the group and a key pillar of our diversification strategy. To fully capture this potential, we will establish a dedicated business unit in second half, providing greater focus and allowing us to prepare these markets for faster future growth. In India, we are accelerating through a new road-to-market model that has been implemented since April and which should strengthen our commercial reach and execution capabilities. In Africa, we will continue to leverage the strong momentum generated by the successful launch of Remy Martin V.S. in South Africa. and further build on this encouraging start and in latin america we see additional opportunities to accelerate growth particularly in brazil together all these initiatives will help establish emerging markets as a meaningful new growth platform for the group over the coming years Let me now turn to our guidance for 26-27 on slide 29. As discussed earlier, the environment remains volatile and visibility is still limited on several external parameters. Nevertheless, based on what we see today, we expect a return to organic sales growth for the year. On profitability, we expect crop margin to remain resilient despite the impact of tariff and to improve slightly organically. The total impact on tariff is currently estimated at around 20 million euros, including approximately 15 million in the US and 5 million in China, based on the current assumptions. this represents an increase of 5 million versus last year. Tariff developments in the U.S. continue to evolve rapidly. Based on the information available today, we have assumed a cautious 15% tariff rate on European imports. On foreign exchange, we expect a negative impact of around $15 million to $20 million on sales and around $5 million to $8 million on COP. At the same time, disciplined capital allocation will remain a key priority, notably through tight management of inventories and CAPEX. Finally, maintaining our debt ratio below 3.5 at the end of the year is a key focus for the group. Beyond the short-term guidance, we are also taking decisive actions to strengthen the group structurally through RC Forward. This transformation plan is designed as a strong enabler to support our medium-term strategy and progressively reduce the group's dependency on macroeconomic cycles. The ambition is threefold. First, strengthen our foundation and better prepare the group for the future. Second, unlock additional top-line growth through sharper and more effective execution across markets, brands, and channels. And third, generate value across all levels of the organization in order to fuel top-line growth while reinforcing co-profitability. As part of RC Forward, our ambition is to generate significant gross value creation of $100 million over the next three years. All things alike and at a constant foreign action versus 25-26. The objective is to progressively deliver these gains by 28-29 through a combination of top-line acceleration, stronger commercial execution and procurement optimization. Three main levers will drive this plan. First, driving sizable top-line projects that will help shape our medium-term growth trajectory. Second, improving sales execution across regions and channels. And third, unlocking procurement efficiencies with greater centralization and tighter discipline. At the same time, we're conducting an ongoing in-depth analysis across our current brand portfolio with no sacred cows. Of all, the gross efficiency gains would be equivalent to a three-year cupcake of 17%, all things alike. Let me now briefly illustrate the three major battles at the core of RC Forward on slide 32. The first battle is to drive sizable top-line projects that can shape our medium-term growth trajectory. This includes launching a breakthrough cognac innovation in Q1 of 27-28 in the U.S. aimed at recruiting new consumers and creating new occasions, unlocking the full potential of Rémy Martin EXO starting with Asia as a key market and fully capturing the potential of our prestige division at the same time we intend to scale up emerging markets and accelerate the expansion of global travel retail both of which represent important growth platforms for the future that we expect to double by 2829. The second battle is to improve sales execution. This starts with a full reassessment of our go-to-market models in the US, targeted route to market in Europe, and adapting sales forces to better capture white spaces opportunities in China. We also want to further strengthen revenue growth management and maximize returns on ANP investment by refocusing allocations on key brands and regions, optimizing media mix and improving ROI measurement capabilities. The third battle is procurement efficiency through greater centralization. The objectives to unlock synergies across markets and brands, notably in ANP purchasing, optimize the operating model, improve spend visibility and discipline centrally, and challenge specifications through packaging, respecification, and supplier negotiations. Finally, all of this will be supported by a clearer and more agile organization, notably through a clarification of a marketing operating model and a simplification of internal processes within support functions to ensure greater commercial focus and faster decision making. Thank you very much. We are now very happy to take your questions.
Operator
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. You are kindly asked to limit yourself to two questions only. We now have our first question from Edward Mundy from Jefferies. Your line is open. Please go ahead.
Morning, everyone. Thanks for taking the question. My first question is around this 100 million gross crop up list by fiscal 29. I appreciate we might need to wait until November for a bit more detail, but as you think about the three main levers, Frank, of these three big buckets, are you able to ride a rough split between what falls in which bucket? I think the market's really trying to understand how much of the 100 million comes from top line and as part of that same question you know do you have a sense of you know what level of reinvestment there might be i.e what portion of the growth might equal net that's a question um and then my second question is you know coming back to slide 32 you know you allude to a cognac innovation launch you know within the us would love to get a little bit more color around you know both the timing you know of that you know why not actually earlier and also you know where you think within the hierarchy that innovation might sit hello that's lucas speaking um i will
answer to the first one and frank please feel free to complete so the aim of the slide in which we highlight and objectives in three years all things equals to an improvement of profitability of 70 percent in CAGAR the next three years to be equal to 100 million is to give you the magnitude of the engagement the commitment we are putting at the end of this journey frank highlighted in a clear way four elements three of them more linked to the top line one efficiency so meaning the The first part of the message is part of that, a very important part, will be based on improving sales globally, the conversion of additional volumes in sales in terms of additional value for the same volume, so GTM and RGM, on top, efficiency to be converted in sales faster and quicker and deeper in AMP and procurement. How much is the split of each layers? We will not disclose that now, because these need to be embedded in the strategic journey we'll analyze all together in a longer period in November. But the first part of the message is that top line increase, top line execution and return of the same volume compared to today to be increased and AMP procurement will deliver a big part of this 100 million everything equals. The fourth one is that more agility, simplification of roles, accountability, with an increase of direct responsabilization under the umbrella of a greater centralization on some topics to be more focused on over all objectives to be conquered. but in the slide it was on the fifth line as well don't forget about the one so this fifth element with that no cycle cows anymore inside our current brand portfolio so it means that also think proactive thinking in terms of asset rotation is not out of this footprint to be back your question in a very concrete way so we will not disclose today by substream the detail of the 100 the CAGR it is 70% but maybe will not be a straight line also because at this stage no final location has been made between us because RC forward is an enabler is the flame and then during the summer we will use this flame to feed the prepare all the work that need to be done and to be officialized to you our board of directors before you do in november to put that all together in a global service of the mid-term plan in which also the strategic part will be clearly combined to show you what this 100 million and maybe more can be put into the service of what by brands by region by objectives what does it mean and then i will stop no final location we are on purpose preserving our own intellectual flexibility depending also the market condition because we are clearly starting with some new rule of the games. We are much more aggressive on some topics. We are not denying our DNN, but we are changing a bit gears, improving speed, improving simplicity, improving what is the boldness in the long term. But market is part of the game. So if market also is a little bit more positive than today, this 100 million, I tell you what, maybe can be bigger but in the top line and top line means also additional cost investment to fit that it is more complicated can be more in the option three and four and five so more cost-cutting but this is not a cost cutting plan this is the enabler for a greater growth because at the end is the free cash flow conversion is to be improved, ABDA and reduction working capital is the name of the game. To do that, you have to have at the end of the game more operating profit and less debt, less negative cash. So we will be adjusting that. What does it mean for you? Did 100 million at risk? No. Is the profit and loss profile in the future is less important as a target than what it was five years ago. It's more the absolute value, what we deliver, and what is the final exit in terms of financial. Less sentimental, more to financial basics under the shield of a huge, quicker, strong strategy.
So, I'm smiling because Luca has been much broader than 100 million on the scope and the reason why I asked it forward. Let me bring some substance, first of all, on what is happening. A company turnaround doesn't happen because markets do not depend on market recovery, but the turnaround happens when a company takes back control. This is the first step, I see forward, to fix the fundamentals in our company. Then on the second step, we accelerate. But as Luca illustrated, there are many points in this RC Forward. Opportunities, it's not a cost-cutting exercise indeed. It's all about optimizing our resources and putting the right resources in the right place. It is discipline. Is it making sure we get a good return on investment in our ANP? We have a good focus. we have good working ways you know ways of working clear aces we leverage every opportunity we can in go to market in RGM in ANP as I said in execution which is very key taking control for me is very meaningful we need to decorrelate ourselves from the negative markets even though We're increasing gradually, step by step, but surely it is about clear strategic focus, one being on the core brands. We need a clear focus on the core brands, on the key geographies, the key markets, even the key cities in some instances. It is about RTM excellence, getting better at execution at store level and what are the expectations behind our distributors engagement, Whether it's a direct model or JV partner model or through a distributor, we need to accelerate the in-store execution, be more visible. We obviously need to work on the desirability of our brands, which is very key. We know about the stock issues in the different markets, but we need to operate in a different way. We need to have discipline with inventories. we need to have stronger execution as i said to deplete faster but we also need to rebuild the fundamentally important equation about consumer pool and that's what we are working on so basically rc forward is sequential as i said we first fix and then we accelerate we clean the base will restore control and credibility in a house. On your second question, very key question, I won't say too much, unfortunately, because it's too early for me to say, but I can say to you it's a more affordable version. A beautiful cognac, very enticing, calling on our heritage, on our savoir-faire. Remy Martin is an amazing house with 300 years of history who else can say that you know we have an amazing heritage our heritage should be our gravity we need to build desirability and this is part of it we need to create new occasions because the consumer's tastes are evolving the ways we consume are evolving not only in China also in America so this is going to be really a beautiful innovation that is going to make a difference for us, even though we need to continue to build a fundamental, you know, around the VSOP, 1738, which is our singular product in the U.S., and the rest of the portfolio. But I think I get more questions about the rest of the portfolio, even than cognac. Let me be clear. It's the number one priority because this is the biggest proportion of our portfolio.
More questions, please. our next question comes from richard with again from kepler your light is open please go ahead yes good morning y'all good morning all thanks thanks for the question i have two as well please uh yeah first on fiscal 27 on the yeah on the margin which you expect uh organic either growth ahead of top line growth can you talk a bit about the moving parts behind that uh are you looking to include the gross margin or should we expect some contributions on overheads as well and then the second question is on the us i mean on the market share gains you mentioned vsop but can you give some more details where you are gaining market share by channel how is the higher end segment doing and can you also talk about you know the sustainability of those market check-ins too.
Hello, this is Luca speaking. We'll take the first one. So, you are asking where do we stand compared to the consensus and right we have some guidelines. So, actually, sales company consensus is a plus three. is plus actually I'm not sure you yeah there was a technical problem so let's start with where do we stand compared to the consensus the sales company consensus so your opinion is that we will deliver plus 3 top line 2% and plus 5.4 in operating profit I will say that I need to confirm I want to confirm the guidance is too improved to grow top line and bottom line it's too early to comment to be more precise because we just started the year many elements remain vague unknown as i said during the conference call top line covers called at the end of april we have some positive some negative the geopolitical context still question mark on tariffs you have seen the news of yesterday today so a lot of combining moving pieces that makes us to be very conservative and cautious at this stage but the guidance in here what is certain i can tell you that whether the company consensus is currently factoring if you consider plus 3 plus 5.4 around the four bips if i'm not wrong, organic operating profit margin improvement, which does not align with what I consider a slight improvement. So I will not be more precise defining the mathematical expectation compared to the consensus. I will stick to that. Some hints in terms of profit and loss profile, whatever it is, clearly you have seen that the pricing power and the need to acceleration improve the go to market also a new kind of market makes compared to the previous year with a low COGS increase but still a stability slash low COGS increase the gross margin less to be a tool to improve the profitability so where the profitability come through by the overheads leverage effect because we need to grow top line faster than the previous year clearly and AAP efficiency meaning not reducing them in terms of support but trying to have additional euro saving to be invested in additional program to speed up the first line which counts for every thing, which is final sell-out, final depletion, and reinforcing the cycle of shipment. So a bit less of tonic of gross margin in increase between overheads and AMP as an effect of the leverage.
I suppose you finish answering the question, Luca?
Thank you for your question. The U.S. is an amazing market. It is our number one market. Personally, I live three times in my life in the U.S., so I feel very close to this market, as you can imagine. There is a lot at stake. You know, a lot of people are concerned about the reshuffle of distribution. I actually see that as a massive opportunity. Ray, yes, coming into place, with all due respect to the amazing work that RNDC did, the super team at rndc there is going to be a new dynamic in a market needless to say we want to reconquer this market we want to get stronger rebuild our fundamentals first of all we put a place in a new leadership in in the u.s secondly we're going to be targeting new distribution channels which haven't been explored so far like convenience stores for that you need to be sure you have the right formats you may need some pricing agility from time to time even though let me reassure you we're staying a premium premium company you know luxury brand with luxury brands with a strong maintaining and protecting the strong equity because that makes a difference in even in a turmoil and the difficult marketplace convenience stores on trade is very key experiential liquids to leap is very key today we have to let the world know our consumer know we have the best products in the world the best quality of the world i don't hesitate in saying that we need to let people know we have to make more storytelling about that we're working on it on trade e-com we are under penetrated we are around 15 to 16 percent share today in china for different reasons because we have a different ecosystem as you know we are the 30 share one one should not prevent from having higher ambitions to get a higher proportion it is feasible i'm thinking also about a high network individual we should work harder on the d2c thanks to louis the 13th undeniably the best cognac in the world the most amazing brand with the highest equity uh uh and luxury in in the world there's much to regain on louis 13 which has been a little bit understated in the last two years lastly i want to insist is not just cognac as i said we have three key priorities in the u.s one of them being obviously the cognac first but then the quinto quinto is an amazing brand gaining share incredible share in texas for instance But more to come in getting shares and more execution, you know, on reaching more higher targets in Cointreau. And the botanist. The botanist, we feel, has a super potential in the U.S. that we need to exploit. So U.S. represents, there is a lot at stake in the U.S. As I said, the SOP 1738 and now the new cognac coming soon will make definitely a difference. and backed by Louis XIII where we feel we have a lot of work with XIII where we have a lot of work to do. But there is a new mindset in the U.S. I want to stress that. New leadership, people very engaged, loss of capacities, loss of awareness of where are the challenges. We need in the U.S. we have 50 states where you cannot be focusing on all the states. Five of the states represent the 80 percent that's where we need to be even stronger focus our energies challenge our distributors i said i see a great opportunity with the family at reyes who is very committed to grow our business to be behind the business to increase the uh the backup you know in having more people on the field and increasing the number of point of sales and better committed to better in-store visibility. That's why I think the U.S. is a super mega opportunity for us going forward.
Operator
Next question is coming from Trevor Turling from Bernstein. Your line is open. Please go ahead.
Good morning, Marie-Amelie, Franck and Luca. Two questions from my side. First one about the U.S. consumer probably one for you and particularly about the African-American consumer. I mean, Chrissy, that has always been a huge part of cognac consumption. We have been seeing a drift away towards tequila, away from cognac. Where do you think that stands in that context and in the health of the African-American consumer? And then second question more for Luca, as I'm thinking about cash flow in FY27, Luca, if you hit your organic top-line growth and your margin expansion, then a bit of FX head. We're looking at EBITDA flat to maybe up a little bit. O2V down, dividend cuts, tax up a little bit, interest up. But I guess critically, the other working capital item. How should we think about that in FY27? I think that's really critical to what the final cash flow is.
So thank you, Trevor, for your great question. As you say, that African community you mentioned remains very strong. However, they're not buying the same levels, you know, of basically creating the same value as other pockets of consumers. We need to go in every direction, capture, you know, a greater amount of consumer base through also the digital transformation we're operating through having a better CRM, targeting better. AI is going to play a big role in this, in identifying and helping us to support, you know better marketing targeting and commercial efficiencies so we need to grow bigger and we need to adapt to the evolving consumer in in the u.s it's very different from china i think the u.s consumer is there has been a very strong post-covid consumption as you know premiumization has been very important trading up has been important now we're more in a crisis even though it's a very resilient market. There's less uncertainty maybe compared to China, but there is a more selective spending. There's a bigger desire for value and experience. That's where we need to focus. This goes well beyond the communities. Of course, we can also target the Asian community. For instance, we know the highest pockets of Asian communities outside of China are in the US. We know exactly where they are. We need to pinpoint the potential where it that's why i mentioned the key cities early on so we have to have the right format the right pricing agility in different states it doesn't mean having same pricing agility everywhere we need to maintain our value our gross margin as much as we can however let me be clear i'd rather have a bit more volume to offset our cost and rebuild you know capabilities to reinvest in ANP overall. So the world is changing. We have to adapt as well. So answering to your question, African community, yes, will continue to be important, but we need to go much beyond that. Creating value and creating desirability in our brand, creating new moments. That's why we need innovation. To that extent, talking about innovation, I created an innovation lab headed by Douglas, part of our executive committee, to generate more innovation but more impactful i'm always saying less is more you know it takes time to create innovation but we need to create value at the same time we need to be very consumer centric much more than we have ever been that's why we put in place many workshops between the brands between the regions which did not really happen before i really wanted people to be in tune on the potential and answer the needs of the consumers. So the African community is very important, but many other communities are very key. All consumers are appealing to us. You know, we need to re-engage the consumers. I think you mentioned CSR is very key as well. You know, it's a matter of rebuilding the trust as much as we can in this world. We need to, CSR is creating a competitive advantage. It's creating value creation and a commitment to our consumers. So I hope I answered your question, but it goes much beyond targeting one single community. You know, it's building a strong desirability, answering the different ways of consumption, whether it is in the U.S. or in China, because in China it is fundamentally changing as well. It is a very key market as well. So we have to be very opportunistic in every way we can, but still protect our brand equity because it's a very differentiating point from all our key competitors.
About cash flow for the full year 26, 27 estimation, I will do the opposite to what I do normally. I will not do the bottom up. I will do the top down, and then I will try to explain. So this year, the conversion rate has been at 27%. It's an important indicator, always been there, but will be even more important in the future. It contains a part of other working capital, not recurring, but a bit extraordinary effect, debt, one of them being the huge swing in the Chinese New Year investment. If you swan old investment well done and paid this year, the delay of debt and the increase of the spend makes a huge swing of the debt that was not paid at the closing, but overall also some more lasting effect like to give you an example a strong decrease which a positive effect of 20 through 23 million euro in stock of other element out out of odv and aged bulk so it means that overall all the brands or the teams supply chain makes a hell of a work to reduce the non necessary stock engagement and the realization for the last year. Part of that won't be replied. So 27 can't be so far before the new plan being adopted and RC4WAD bearing its fruit being a normative element. The normative one for the next one or two years out of the transitional year 26-27 should be more around 15-20. Specifically, in a nutshell, for the full year 26-27, I can confirm that will be positive, out on recurring eventual events clearly, positive one, and more in the range of between 10 12 13 percent so without going through the all the hypothetical let me say free cash flow three some elements factorize that you have understood yet top line bottom line will be growing with a slight improvement in marginality and then taxes we said that 29 per 28 as an increase in financial expenses in term of book doesn't mean being equal in term of cash out on financial effect and the capex still standing around the same level maybe lower around 30 million so some savings ODEV working capital variation, the aim to be around $9,100 if we can to improve even more compared to this year's savings. Other non-working capital items, again, to deliver positive inflow, but a lower span compared to this fiscal year. And on top, forex is negative, but less than this year. So, the organic element will be having a bigger wave. So, in a nutshell, 27, not possible in a percent conversion in 26, 27. We are more between 10, 12, 8, 9, 11. More than out of no recurring positive or negative potential events. I hope it's clear. Super.
Operator
Thank you very much for the detailed answer. i will now take a last question question is coming from olivier nicolai from gs your line is open please go ahead hi good morning everyone just in short time i speak to one question on china already if you could give us a bit more of an update on the underlying demand and what you expect for this year and what specific actions you're taking to unlock the vfp potential there thank you thank you very much for your question china is equally important you know as much as
as the us even though nobody asked me question about emerging and gtr which are going to be fueling big way big way our growth going forward in china we have to expand our territories for of all beyond guandong as i said we're resetting the organization commercial organization to have the means to go further we need to also grow our other brands not just be you know dependent so reliant on club we need to grow exo we have a big workshop going on with the chinese team ongoing exo of course and with has where we need to regain our energy even though that will be done in two steps so the chinese consumer is evolving you know i mentioned the the american uh consumer you have to understand you have to be consumer centric to understand the trends to adapt to those trends when it comes to innovation but also the way you market your products the chinese consumer today there is a crisis you know real estate crisis um not so much trust in the in the government policies today they're saving money however they're ready to spend in the right places right occasions and are definitely looking for value in the products you know trading up but also are looking for experience so we need to hear our strategy towards that the chinese consumer now wants more discretion is more rational cautious spending less visibility less ostentation a lot of drinking happens at home nowadays So it's not as, you know, extravagant as it has been at one stage, if I may say this world, but there are new policies, new scrutinies from the government. The macroeconomic pressure is there. So you need to diversify the occasions to have more local relevance, to be less reliant on gifting, for instance. So there are many ways to look at it. But we're geared towards, you know, we have high ambition. We have a super team in China. Every time I come back from China, where I go quite often together with the U.S., I can feel the energy of the team, the determination. I don't know if this is my last question, by the way, but I want to finish on a specific touch. You know, it's important for me to say we're a smaller company. We don't pretend to become the number one company. That's not the case. However, we have an amazing portfolio, amazing selective portfolio with 300 years of history. We have amazing people in this company who are highly determined. RC Forward is also generating new energies, new ways of looking at the business, creating accountability, responsibility at all levels, killing the silos, which we don't have time for. We have, as I said, this new energy of going forward, new ambitions, the emerging market. We're creating a new area for emerging, a new leadership for emerging markets. The GTR, this is going to create, you know, a new dynamic within the company. And because we're smaller, by definition, I just want to say we have higher possibilities, capabilities untapped territories when it comes to untapped um distribution channels as i mentioned convenience stores for the u.s but it also applies to china for instance territories where we're not go beyond guandong in china but emerging market has not really been worked you know like africa we need to go further. With VSOP, not only VS, obviously. Middle East is a key market for us. Southeast Asia, we need to go further, you know, and Latin America. That's why I detached Latin America from U.S. domestic to give it the right focus, because we know there is a great potential. I mentioned Brazil, but we also have Mexico, for instance. Mercosur, as you know, may help in some ways to lower the barriers in terms of pricing barriers. So we have many opportunities. The US is another, the new distribution model is another one. GTR emerging, expanding distribution, conquering, you know, India is another one where we're very small today, but we can definitely only get bigger. New channel distribution, e-commerce is important going forward. D2C, i did not mention b2b is another exceptional opportunity for us which we never really explored and last but not least it's showcasing our exceptional sites we were so happy within the company yesterday because we received a second star of the mishla guide for cognac being a sexual site which i invite you to visit experience is what money cannot buy you know believe me i went through this and it's amazing and that's why we need to bring more traffic to let the world know about those exceptional sites that we have i hope i summarize well all the opportunities going forward i tend to look at the uh the the the glass you know full of opportunities and thank you for your commitment thank you for listening to to what we had to say and look forward to the next meetings we have together.
Olivier, clearly a very strategic point of the situation done by Frank, so he understood we have a huge ambition, despite a huge headwind. And to complete on the financial, not financial, but mathematical part of your question, what are the expectations in China, despite an environment which remains low The market is pretty tough and very promotional. We are very humbly gaining market share. We expect to be positive in the full year 26-27 in China and even more in APAC, capitalizing on the acceleration travel retail, Asian travel retail and, as Frank said very clearly, on other Asian countries. so up in sales and in depletion more in volume but less in value but depletion and sales positive as a target in APAC and in China for the full year the SOP is less important there than XO and Club here as you know what is the current trading so what's happening right now 618 the the 18th of June, which is very important, started very strongly. So first sign that even if the two months of the year, the first two months are not so important in terms of weight, the sign that situation is complicated, but we are fighting in a more than a decent way and we are getting more than our previous shares. Thank you.
