Michel Doukeris: Hi, Sanjeet. Michel here. We had a little bit of a breakup on the line, but I think that I got your question. So as Fernando was saying before, we see at the backend of this year commodities coming back a little bit in price, and the visibility we have now with six, seven months under the belt is that this strand extends towards 2024. And we saw that different regions we said this before, they got the impacts of this commodities differently, right? So lockdown, for example, is already getting out while some other regions like Europe and Africa is still a little bit in the middle of the headwind in commodities. And in terms of pricing, I think that long term, as we always say, we expect the price to move with inflation.
We discussed this before because of the high impact of commodities and high inflation is being playing a little bit of catch up over the last two years. Margins are not back. But as commodities start to go back, we should see some margin rebuild. And of course, the investments that we are making in our brands and the long-term strategy, we continue to be a priority, while we expect prices to move long term with inflation, margins to rebuild to pre COVID. And if this tailwinds get confirmed for the second half of next year, we should see some of these materializing next year.
Sanjeet Aujla: Got it. Thank you. And just a word on China, now we’ve seen some reopening come through in the Q2 numbers. How do you assess the steady state of the Chinese consumer at the moment?
Michel Doukeris: Well, that’s interesting. I’ve been couple of times to Asia this year already and spent a good time with consumers, and we see like a steady recovery after the COVID. And remember that we discussed this last year, couple of times that we were disproportionately impacted by the lockdowns because there was a lot of the lockdowns in the Eastern China, but also a lot of channel impact on our nightlife Chinese restaurants. We saw traffic rebuilding so good level of consumer coming back to the channels. We see this impacting in a disproportional way down our premium business and our presence in the more premium channels like nightlife and restaurants, consumers as everywhere else, they came back from the COVID experiences likely different.
So they are more demanding for their brands. They want to see more value for the money that they’re spending is a common topic in China now is show me the value so you can get my money. It’s kind of how you translate what people are saying. Premiumization trends in beer remain very healthy. Consumption is moving well in our category. I know that in some other categories there is some slow down, but beer continues to be moving well after the reopening and summer now is an important season for the core business and the premium business. And so far we’ve been seeing a good rate of sales and distribution is growing as we expand the business. And our portfolio continues to perform very well in the premium and in the super premium business, which is very interesting.
And long term we know that the prospects of China is continued premiumization and we are very well positioned with our portfolio to continue to benefit from that.
Sanjeet Aujla: Great. Thank you very much.
Operator: Thank you. Our next question is coming from the line of Richard Withagen with Kepler. Please proceed with your question.
Richard Withagen: Yes, good morning, Michel. Good morning, Fernando. I’ve got two questions, please. First of all in the press release, you mentioned that you attracted more lower income groups in Latin America and in Africa through brands and back innovations. So can you give some more details about this? And is this a response to a more difficult circumstances for consumers, for example, as a result of the inflation that we see? And then the second question, probably for Fernando on the working capital especially your receivables and your payables were big drag on free cash flow in the first half of 2023. So can you talk a bit what is behind the adverse effect here and what your expectations are for the second half of the year?
Michel Doukeris: Hey, Richard, Michel here. I’ll take the first question and then hand over to Fernando. So we’ve been talking through the last few quarters and since our market capital day in 2021, about growing the category and implementing solutions that we know that work across the globe that we tested in the last few years, and we are scaling up. So let me give you one example to quickly address that. So in Brazil, we are combining three things that are very important for us to increase participation and more occasions in the category. So a very strong core portfolio with the Burma skull [ph] Antarctica brands, returnable packaging that we know that makes the product more affordable for consumers and the convenience of Ze Delivery with the home delivery of cold beer in 30 minutes.
