So we can, by combining the initiatives that we developed over the last few years, increase participation, get our products to penetrate more and have higher participation from low income consumers, while continue to have very good service level, good margins, and performance on our core brands. So this is a little bit of what we were talking in the press releasing how we are increasing participation. Of course, in different places we have different packs that address the same type of occasions, consumer base, but I think that this example from Brazil where you combine returnable package, direct to consumer deliver, and strong core brands is an example that brings to life how we are leading and growing the category. And then Fernando, on the working capital with you.
Fernando Tennenbaum: Hi, Richard. Fernando here. On the working capital, a few topics. So you mentioned receivables, the biggest chunk here is derivative receivables position, which is actually reversed in non-cash. This is like $500 million, $550 million. Then we have another chunk around $250 million, which is higher volume growth and channel mix, mostly in APAC and middle Americas. Then on the payable side is you need to look payables in conjunction with inventories, because what ended up happening is during the pandemic as everyone is very well aware, there were all these supply chain fluctuations, and they ended up having more inventories than you actually needed just to make sure that there was no vision service level.
Now, when you start bringing these inventories to a more healthy level, what happens is that you reduce the inventories, but at the first moment you reduce payables. And then once you start cycling that over, then you are going to have a lower inventory level, and then you’re going to review some of these payables. So no major concern here. And as we cycle over the pandemic, we should start normalizing that, and you should seeing cash coming from lower inventories and the respective benefit on payables.
Richard Withagen: Very clear. Thanks both.
Fernando Tennenbaum: Thank you.
Operator: Thank you. Our next question is coming from the line of Robert Vos with ABN Amro. Please proceed with your question.
Robert Vos: Yes. Hi, good afternoon. Good morning. Thanks for taking the question. When looking at, I think it’s a question for Fernando. When looking at your current bond portfolio and taking into consideration the upcoming debt redemptions, which are quite minimal and possibly also duration of some hatched interest rates for how long do you think you will be able to maintain an average gross debt coupon of 4% and maybe a follow-up on the working capital question. Do you expect some kind of reversal in the second half? So the cash outflow was 4.6 billion in the first half. Will that impart a reverse in the second half? Thank you.
Fernando Tennenbaum: Hello, Robert. Thanks for your question. On the bond portfolio, what is quite interesting is that it’s a fixed rate bond portfolio, and now with interest rates rising what we ended up doing is that as we generate cash, in other words still the leveraging and taking the opportunity to buy back some debt outstanding. We’re actually – you get more return of our cash when you buy the highest coupon debt. Since we don’t have to borrow money in this new interest rate environment and are retiring as we retire debt that actually supportive for our 4% coupon. So we should be continuing to do that. And so no concerns on maintaining the 4% coupon here. On your second question, yes, as we explain it, the moment that you start normalizing your inventory levels and you start having the lower inventories, but building back some of the payables, you could expect to have some of the reverse on debt.
We always remind that most of our cash flow is generating the second half of the year, and the working capital component is very important to that.
Robert Vos: Very clear. Thank you.
Fernando Tennenbaum: Thank you.
Operator: Thank you. Our last question today will come from the line of Simon Hales with Citi. Please proceed with your question.
Simon Hales: Thank you. Hi Michel. Hi Fernando. So just a couple of things from me then. I just want to come back to the U.S. sort of please. One of your major competitors has been highlighting an acceleration in the number of U.S. retailer shelf resets, it’s seeing and is that something you can confirm your experiencing and perhaps how you preparing for a further step up in shelf resets as we move into the fall? And then secondly, I wonder if you could just talk a little bit about the support you’ve been providing to your U.S. wholesaler partners through Q2. And what support we should expect to continue to see with wholesalers in Q3 and beyond?
Michel Doukeris: Hi, Simon. Thank you for the question. I think I got the two questions here. In terms of shelf resets, different in each country and by retailer, but as an average in the U.S. you have two periods of the year, four [ph] spring. Usually during the fall, you see 20% of the retailers, let’s say resetting, while the majority of the resets take place in the spring. We saw some activity now towards the fall, a little bit off cycle, but smaller activities. So third or a fourth of the 20% of the retailers already doing some adjustments. And there is a huge planning on both sides, like retailers and us and wholesalers. We work throughout the year to make sure that the shelves are optimized in the best possible way with the retailers, of course, always making the last call on how they organize shelves and set for their consumer demand and needs.
