Emmanuel Babeau: Look, on Russia, you have to be a bit cautious on the shipment that you see. And that does not necessarily fully reflect the consumer offtake. You can have some movement from the surrounding countries. So I think we have to be cautious. So Russia is a market that has not been — if I look at the past, I’m not sure that one quarter is enabling us to conclude anything. Since the beginning of the war in Ukraine, Russia has been a market that has not shown, unfortunately, any kind of meaningful growth. Today, we have no reason to believe that suddenly Russia is going to become a growth market, because nothing has changed fundamentally. And that’s a country that has been impacted, of course, by currency depreciation that has been impacting the weight in the EPS.
So I think that we were referring to 7% to 8%. I think we’ll have to revise. And I don’t have the number top of mind for 24 on the outlook, but that was the kind — it was around 9, 10. And I think with the currency, it has been losing a bit of weight in the overall performance of the company.
Operator: Thank you. Our final question comes from Callum Elliott with Barclays (sic) [Bernstein]. Your line is now open.
Callum Elliott: So my question is actually following up on Bonnie’s question on dollar growth. In 2013, I think your dollar EPS, Emmanuel, was $5.40 per share. So you’ve compounded dollar EPS growth at about 1.5% percent over the subsequent 10, 11 years. So best-in-class organic growth and probably worst-in-class dollar EPS growth over that 10-year period, which is really striking given that 10 years captures the whole of the creation of this IQOS business that has been quite remarkable. So my question is, you obviously outlined a number of initiatives in answer to Bonnie’s question of how you hope to drive dollar growth. But maybe you could sort of double back on those explanations. Which of those are actually new and haven’t been present over that sort of past 10-year period that could have been helping you over that past 10 years?
Because it struck me in those explanations that it sounded like things like pricing, et cetera. Those have all been around for the past 10 years and haven’t helped you offset the FX. So is there anything you can tell us that’s new that should give investors confidence that if FX headwinds persist, you are able to drive dollar growth for your business?
Emmanuel Babeau: Thank you for your question. Well, first of all, I guess you are assuming that the ForEx headwind will persist in the coming years, which I think nobody can really say. We know that currency can be facing cycles and that it’s true that the last 10 years have been about a strengthening of the dollar. We’ve been knowing other cycles where the dollar was more weakening versus at least other hard currency. So nobody knows what’s going to happen. I think what we are saying and thank you for giving me the opportunity to maybe repeat and clarify that we are today in a position to put together very strong growth before ForEx. And I think you are seeing with the guidance for ’24 that we are obviously coming still with a very dynamic top line, very much accelerating operating income growth.
We are targeting a double-digit before currency impact now in 2024. And on top of that, we are going to price and in an environment that today we see positive for pricing, certainly with the fact that pricing on combustible is something that we can use now very tactically. We know that CC is not our future, so we can certainly use pricing very tactically in order to boost performance. We also are coming with some price increase at the level of HTU. We have some price increase on ZYN as well. So we have globally a pricing environment that looks attractive to us in the future. And then, when it comes to our cost, it is true that we’ve been investing a lot in the past years, and we’ve been reporting on all the action that we were having on investment across the board, in terms of innovation, in terms of science, in terms of R&D, in terms of manufacturing.
Now is the time where, of course, we are reaching critical mass on smoke-free products. There are a number of things that we are doing that we can do more efficiently, a number of things that we’ve been learning and that we’re going to implement in the continuation of our journey. So all that we believe is also giving us some very good ammunition and capacity to generate efficiency at a very high level in the future. So that’s all the — and they are quite important, quite numerous, all the levers that we own to deliver performance in dollar terms in the future.
Callum Elliott: Thanks Emmanuel, that’s helpful. Maybe I can just ask a follow-up. So we have a number of U.S. consumer staples companies reporting this morning, and many of them face similar FX headwinds, sort of incremental FX headwinds over the past two, three months, as PMI does. And it’s striking to me that amongst some of those companies, even a commoditized U.S. toilet paper company has done a better job this quarter of offsetting these incremental emerging market FX headwinds with sort of rapidly responding with incremental price increases to offset those headwinds. So I guess my question here is, you know, is there something structural in your business that’s making it less agile in responding to these changes in FX relative to some of your other consumer staples peers outside of the tobacco space?
Emmanuel Babeau: Well, can I answer you that your question is highly speculative because you asked me to compare with other businesses that are obviously very different in, I guess, the way they invest, their outlook, what they have to do. We are building here a business that has a tremendous growth potential, so we’re not going to, of course, limit all the initiative, all the investment that we must do in order to keep growing the business and extract the full potential that we have with our smoke-free portfolio. Maybe that’s different versus the paper business you were mentioning. I frankly have no clue because I don’t know what you are referring to and the specific situation. But I think it’s difficult to probably compare businesses that are facing different potential, different trajectories. That would be my answer.
Operator: Thank you. This concludes the question-and-answer session. I would now like to turn it back to management for closing remarks.
James Bushnell: Thank you for joining us. That concludes our call today. If you have any follow-up questions, please contact the Investor Relations team. Thank you again and have a nice day.
Emmanuel Babeau: Bye-bye. Speak to you soon.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
