And look, if you want to take a little bit of a step back, take comfort for what we delivered in Q4. We did 6.5% sales growth cycling over tough comps with some volume growth as well, right? And then again, that’s the strength of the portfolio geographically and from a product mix point of view that the categories give us.
David Hayes: Thank you.
Operator: The next question comes from the line of Bruno Monteyne Bernstein. Please go ahead.
Bruno Monteyne: Hi. Good morning. My first question is on innovation and R&D. If I read the slides correctly R&D is down as a percentage of sales. I just wanted to understand is that linked to the our activity see switches that are maybe further delayed or maybe off the table? And if you could say anything about the sexual health product license that you gained a little while ago when will that start impacting organic growth for the business? My second question is coming back to hyperinflation. I’m totally clear how hyperinflation capping will impact the pricing and the organic growth. But my question is on your margin bridges you talked about operating leverage let’s say the plus 50 basis points — 60 basis points this year and then you have the negative effects.
Clearly a big part of the operating leverage and the FX is Argentina and the like. So will your new approach to hyperinflation also reduce the amount of kind of operating leverage you would have quoted for 2023 and therefore the effect? So will that new approach also impact the way you look forward those EBIT margin bridges?
Brian McNamara: Thanks, Bruno and then pass it on to Tobias. So on innovation and R&D we believe in investing in that. What you saw coming through in the numbers was a bit of the efficiencies and effectiveness of the things we’re driving across the business on some structured things and some we exited some TSAs for instance with GSK on pharmacovigilance and kind of took that in. So those — that’s the slight percentage of sales decline that you see. We’re very committed to delivering this year. We had 67 new product launches this year. Very proud of some of the innovation that went and you look at the US market where we launched Sensodyne Active Pronamel Shield, year two of Sensodyne Sensitivity & Gum the two biggest innovations in the US toothpaste market.
Things like emergency crystals which is a new form and be able to take emergency without order. Again off to a really nice start. And in macro in Australia which nature payment relief brand. With clinical claims we think is a new frontier and opportunity we’re working our way into. So we feel good about the innovation. We feel like we can do better and always pushing for more there but we’re going to invest where we need to invest in that space. Your question on the sexual health. [indiscernible] we haven’t given much of an update. We expect to launch that within the next 12 months. And will update the market as we have more clarity and can more perspective on that?
Brian McNamara: Tobias, you want to..
Tobias Hannes: There is one [indiscernible] in R&D there is also small accounting change we made there were some G&A cost that in the old days as we spun out here flavored delivery report in R&D. We simply tried our accounting. So some of that moved in to G&A line to be consistent and that was another reason for you saw a little lesson the R&D line which is shifted over into another line but that’s also now also out of the base going forward. And then on your hyperinflation question, yes, Tobias is absolutely right. I think the Argentina and Turkey because we did not apply hyperinflation accounting in 2023 gave us a bit of a tailwind of — give us a bit of a tailwind on both the sales numbers but also on the operating profit number.
Now of course there’s also transactional losses in that because these markets tend to import. So I think in Turkey we do not have our own manufacturing. So they have to import from — mostly from hard currencies production size. In Argentina we have our own production but they’re still raw materials and the materials that you can’t get in the country that’s offset. So — but look in the mix I’m not concerned about the ability to drive operating margin going forward even with applying hyperinflation accounting going forward.
Bruno Monteyne: Thank you. And anything on the RX-OTC switches and the innovation has any update?
Brian McNamara: No, no update to speak of. I think as we said again two years ago we said we’d expect that in the pipeline we have two switches that come potentially launched in 2025 and 2026. We said those have been delayed based on discussions with the FDA. So really no update on that. And obviously we’ve done the deal on sexual health which is in a way an Rx-OTC switch is a direct to OTC and we’re excited about that opportunity there.
Bruno Monteyne: Thank you.
Operator: The next question comes from the line of Celine Pannuti, JPMorgan. Please go ahead.
Celine Pannuti: Thank you. And good morning everyone. My first question is on the balance sheet or the leverage. So you said you are three times. Do you still have a goal of 2.5 times given that you are going to do that, that’s the share buyback and you announced the dividend, so actually could update us on that? My second question is on pricing. Can you talk about your ability to price and what kind of regions or quantum of pricing we should be looking forward as additional pricing in 2024, if any? And then lastly, can you talk about the volume performance in EMEA, LatAm, which was negative, as negative as in Q3, one in Q3, there were some, I think, one-off issues. So could you shed light on that?
Brian McNamara : Great. Thanks, Celine. First, let me just talk the pricing ability thing. I think as we look at next year, we continue to expect to see pricing. We also expect to have volume growth through for the full year. And as we’ve always said, we try to keep very conscious of how we take pricing because we want to continue to see that volume growth, very proud of 2022 and 2023 and what we’ve been able to deliver. The pricing environment certainly in mass markets, places like U.S. and across Europe is challenging, but we believe that we have still the ability to take price. And certainly, in pharmacies across Europe, it’s much more about the decision we want to make on the pricing we can take and the consumer elasticity because they’re really not a retailer in between us and the ability to take pricing as it’s mostly independent pharmacy.
