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I would like to welcome you all to this presentation of Royal Unibrew's 2022 half year results. My name is Lars Jensen, and I'm the CEO of Royal Unibrew. With me this morning, as usual, I have CFO, Lars Vestergaard, and we will present the results before taking your questions. Now if you please turn to Slide #3. First, I would like to start thanking everybody in Royal Unibrew. I know a lot of you are listening in, and you have done a fantastic job, and we can be very proud of what we have achieved in 2022 so far. We experienced a very strong top line momentum in the second quarter as COVID-19 finally released its grip on the geographies we are present in. The On-Trade channel was fully open and the event business returned with music festivals, big concerts and sporting events. This led to a solid 5% organic volume growth in Q2 hitting into 2% for the first half of the year. This is very satisfactory development as we were up against relatively tough comparison -- comparable numbers from last year, especially Western Europe, but also International showed strong volume growth. We implemented price increases during Q1 to neutralize the price -- the input price inflation that we faced from 2021. This, together with a better mix, resulted in a solid organic net revenue growth of 15%, both for the quarter and for the first half of the year. The strong price/mix effect driven by Northern Europe and International. The period from where we were hit by input price increases until we can offset this by increasing our sales prices to customers creates pressure on earnings. Russian invasion on Ukraine started a second wave of input price inflation, which has resulted in a 13% organic EBIT decline in both Q2 and the first half of 2022. We had a positive EBIT contribution from M&A activity of almost DKK 60 million in the second quarter, meaning that reported EBIT only decreased by 2% in the quarter. The free cash flow in Q2 amounted to DKK 669 million compared to DKK 785 million last year and was impacted by a negative development in working capital and high CapEx. As we see it, we delivered strong growth in the first half of the year. We are gaining market share in most markets and the integration of Crazy Tiger, Solera and Hansa Borg are progressing as planned. Against that, we have been hit by significant increase in input prices, which we have not been able to pass on to our prices yet. The summer in Northern Europe had been more wet, less sunny than normal. And we have seen some beginning signs of consumers starting to use the discount retail outlets more frequently than traditional supermarkets, which carry a broader assortment. We'll continue to implement price increases where possible throughout the second half of 2022 and thereby regaining our profitability and, therefore, also maintain our full year outlook for the revenue of DKK 10.7 billion to DKK 11.7 billion, equivalent to an EBIT of DKK 1.7 billion to DKK 1.85 billion. Please turn to Slide #4. The first half of 2022 turned out to be a very eventful period. As I already mentioned, the industry was impacted by the reopening. And for us, the On-Trade grew by double-digit percentages across all markets. In Q2, this was supported by the event business with music festival concerts, big sports events that came back after the COVID restrictions was lifted. Clearly, when all people are busy exploring and exploiting the reopened On-Trade, volume will move away from Off-Trade to the On-Trade. We therefore, did see a decline in Off-Trade volumes in all markets, despite in Italy, where our strong organization managed to grow Off-Trade volume by double-digit percentages. Russia's invasion of Ukraine resulted in significantly higher input prices, which created a new mismatch between our cost base and our pricing in the market. We have initiated measures to implement further price increases during Q3 in all markets, if possible, to reduce the cost backlog. In the second quarter, we inaugurated and commissioned a new line of our factory here in Faxe in Denmark. The can capacity in Faxe was expanded by approximately 25% with this new line but it also added new sustainable packaging solution opportunities to our capabilities. This will help us to reduce the use of plastic and thereby our CO2 footprint. We have also built a new PET line in Finland with the aim to support our expected sales growth in the region as well as adding ability to produce larger quantities of smaller packaging formats, which is growing nicely. We are on track with us regarding implementation of our sustainability strategy. Last year, we committed to the Science Based Targets initiative, and we are currently in the process of establishing the full Scope 3 footprint. We believe that the two targets we have set on decarbonization for 2025 and 2030 are aligned with the requirements as agreed in the 2015 Paris Accord. Through collaboration with the suppliers, we are working hard and we are on track to reach the goal of reducing our supply chain emission, Scope 1, 2 and 3, by 50% by 2030. If we can turn to Slide #5, please. Before I turn over to Lars for a detailed review of our financial results, I'll spend a little bit of time giving more color on the development in the 3 business segments. In Northern Europe, which covers our multi-beverage businesses in Finland, Norway, Sweden and the Baltic countries, Denmark and Germany, we grew volume by 5% and net revenue by 41%, while EBIT declined by 1%. The strong top line momentum is a combination of the reopening of the On-Trade and price increases implemented during Q1 2022 as well as M&A effect. The reported EBIT margin in H1 '22 decreased by 5.6 percentage points to 13.3%. And the weaker profitability was due to the higher input costs related to the acquisitions as well as the result of the investments we have done to strengthen the organization. The organic EBIT margin declined by 3.5 percentage points to 15.3% in the first half year. The development in Denmark and Germany was positively impacted by the reopening, whereas Off-Trade contributed negatively as consumption shifted away from at-home consumption and sales shifted back to the border between Denmark and Germany. In Denmark, we were once again voted as the best supplier at head office level in the Danish grocery retail. This was the fourth year in a row and, therefore, a very strong accomplishment. I would like to thank everybody in the Danish organization and congratulate them on this very strong performance. In Finland, the On-Trade reopening also contributed positively, but a decline in Off-Trade resulted in an overall volume decline in the first half of the year. The decline in Off-Trade volume was primarily because we participated in an extraordinary beer campaign in the first quarter last year. Cider RTD continues to perform well and volumes grew by double digit in the first half of 2022. And our iconic RTD brand, Original Long Drink, is turning 70 years old this year, and the brand is stronger than ever in the market. It is, among other things, celebrated by the release of new flavors, whereas the official birthday was celebrated in the weekend that just passed at the Flow Festival in Helsinki. The Baltic countries were missing previous sales to Russia, but adjusted for that, the underlying development was strong. And the focus on high-margin products resulted in double-digit percentage growth in both energy drinks and cider ready-to-drink in the first half. We grew more than the market in these categories, meaning that we were gaining market share in both these important categories. In Norway, the integration of Solera and Hansa is going according to plan. The organization for the combined business has been set and commercial plans for Norway is being built as we speak. Hansa Borg gained market share in beer during the first half of the year. In Sweden, we continued to invest in strengthening and future-proofing the organization. In Western Europe, which consists of our multi-niche businesses in Italy and France, volumes increased by 49% in the first half. Revenue increased by 41% and EBIT by 4% in the same period. Both On-Trade and Off-Trade is up against first half of 2021, but the very high growth has led to tighter cost -- led to higher cost. The reported EBIT margin, therefore, also declined 6 percentage points to 16.9% for the first half. The weaker profitability is due to higher input costs, including transportation costs as well as investments to strengthen the organization in Italy. We continue our very strong performance in all categories and in all channels. We more than doubled our energy drinks volume in the first half of 2022 compared to the same period last year, and we are now #3 in the market with a volume market share of 4% which is a very strong achievement. We continue to be the market leader in the lemon segment in the Italian soft drink market, and we grew both our LemonSoda range and our super premium beer range, Ceres, by double-digit percentages in the first half '22. Our energy drinks business in France, Crazy Tiger, continues to grow, whereas the lemonade business in Lorina declined as consumption moved from retail to On-Trade where Lorina has limited presence and is, of course, on the back of COVID. In International, which comprises the export and license businesses in markets outside of the 2 other segments, the volume increased by 1% and net revenue increased by 15%, whereas EBIT declined by 29% compared to first half last year and was heavily impacted by higher logistic costs. The business segment has continued to be down-prioritized due to capacity constraints in our supply chain. Sales out in the markets continues to be higher than sales in, meaning that inventories has been lowered during the first half of '22. The acceleration in growth rates compared to the previous quarters underlined the potential we see in the international markets. The EBIT margin declined by 7.6 percentage points to 12% and is driven by higher raw material and logistic costs. The International segment is clearly the segment that is the hardest hit by the higher freight cost and supply chain challenges. Our African beer business and malt business continued to grow in the first half of '22. And at the same time, as our Northern American business also grew across all key categories. And with that, I will turn it over to you, Lars.
Thank you, Lars, and good morning to everyone. So if we could please turn to Slide #6, please. As Lars already told, we had a very strong top line momentum in the first half of '22. Our volumes increased by 2% in the second quarter and by 5% in the first half. The acceleration is driven by the reopening of On-Trade and strong momentum in Western Europe and International. Our price increase and positive product and channel mix resulted in organic net revenue growth of 15% in both second quarter and first half of '22. M&A contributed by 25% to the reported growth in Q2 and by 23% in the first half. The gross profit was 4 percentage points below first half of '21 and at 45%, whereas the gross profit per liter was 5.2% higher in '22. Gross profit per liter is positively impacted by channel mix as gross profit is higher in On-Trade than Off-Trade. The inflationary pressure on our cost base and the investments in our organization resulted in an EBIT of DKK 720 million, which is 4 percentage below the level of first half of '21, although still above first half of 2019. The EBIT margin declined by 5.8 percent point to 13.4%, driven by input price increases, dilution from acquisitions and investments in the organization. I will give more details on the margin contraction on the next slide as well as on the free cash flow slide that declined, where we had a decline of DKK 370 million. Please turn to Slide #7. On the left, we have shown the -- how the net revenue growth of 38% from DKK 3,905 million last year to DKK 5,373 million this year is split between M&A contribution and organic growth. The organic growth of 15% added more than DKK 550 million to our business and was driven by strong price/mix in all markets and categories. In addition, the acquisition of especially Solera but also Hansa Borg, which contributed by a little more than 1 month, contributed to around DKK 900 million to net revenue, corresponding to 23%. On the right, you can see the main drivers of the EBIT margin development in the first half of the year. M&A diluted the margin by 1.2 percentage points despite contributing by almost DKK 70 million to the result in the first half. This positive contribution to the absolute EBIT development comes primarily from Solera, Crazy Tiger and Hansa Borg. It is clear from the graph that, by far, the biggest impact is from what we call time lag. The unexpected cost increase driven by the war in Ukraine came after the conclusion of the price increases in the beginning of the year. We are not able to pass up cost increase to our customers immediately. We are implementing price increases during Q3. This time lag between cost inflation and price increases explains roughly 4.5 percentage points of the margin contraction and corresponds to around DKK 200 million of cost that have not yet been mitigated by sales price increases. We expect to regain parts of this with price increases that we plan to implement during Q3. In total, our business had been exposed to around DKK 0.8 billion cost inflation on an annual basis. So it is a significant impact that we are carrying in our business. Please turn to Slide #8. On this slide, you can see the development in the free cash flow in the first half of the year compared to the first half of '22. Net profit for the first half amounted to DKK 926 million, which is DKK 332 million higher than in the first half of 2021 and is driven by a noncash tax-free revaluation of our 25% shareholding in Hansa Borg that we had prior taken full ownership of the company. This effect amounts to DKK 360 million. The noncash adjustment to our free cash flow there is also amounting to DKK 17 million this year, which is DKK 318 million less than last year and, again, primarily explained by the revaluation of the 25% shareholding in Hansa Borg. The free cash flow from operating activities amounted to DKK 562 million, which is a decline of DKK 323 million compared to last year, and primarily explained by a negative contribution from working capital of DKK 247 million, or DKK 328 million lower than last year. Tax and financial payments contributed to a negative of DKK 134 million, which is DKK 19 million more than last year. CapEx increased from DKK 202 million last year to DKK 252 million this year, resulted in a free cash flow of DKK 310 million versus 300 -- which is DKK 373 million lower than last year's DKK 683 million. Please turn to Slide #9. And now turning to the outlook for 2022. Russia's invasion of Ukraine towards the end of February ignited another wave of input price increases impacting our cost base by additional DKK 300 million during February, March time. This was on top of the approximately DKK 450 million impact that we experienced during 2021. We did take account of most of this in our initial guidance given in the beginning of March, but especially energy prices have contributed to increases during Q2 and into Q3, having an additional negative impact on our cost base of around DKK 100 million. The majority of our energy cost is unhedged, and some of our suppliers are also exposed to increased energy prices with differences in how much they hedged. So this is putting a substantial pressure on our cost base as well as our suppliers. In total, our input costs have now increased by more than DKK 0.8 billion compared to the beginning of '21, of which approximately DKK 200 million was not covered by price increases by the end of the second quarter. On top of this, the summer weather in the Nordics has been below average, and we are not helped by staycation this summer, which combined had an estimated negative impact on EBIT of around DKK 50 million. At the same time, we have seen signs of consumers starting to address the totality of consumer price inflation by using discount retail outlets more than previously on behalf of the supermarkets. Also taking the high level of macroeconomic uncertainty into consideration, we are taking actions to further reduce our cost base. We do maintain our full year outlook for net revenue of DKK 10.7 billion to DKK 11.7 billion in revenue and DKK 1.7 billion to DKK 1.85 billion in EBIT. This is assuming that we do not see COVID-19 lockdowns in the remainder of 2022. We have not included any contribution from the agreed, but not closed, acquisitions of Aqua d'Or or Amsterdam Brewery. The process with the Danish Competition Authorities is ongoing, and we now expect the deal to close in Q3 this year compared to previous expectation of a decision in Q3. Amsterdam Brewery is expected to close in Q3 this year. Finally, we still expect CapEx to be around 5% of net revenue in 2022 and the tax rate to be around 21% of profit before tax, excluding results from tax -- from investments in associates. And with that, I would like to turn the word back to you, Lars.
Thank you, Lars. And before we go to Q&A, I would like to take you through our agenda for the coming months. We do believe that our business model is strong and that our growth algorithm is intact but temporarily also interrupted because of the abnormal circumstances we see at the moment with the cost increases from raw and pack in particular. We have a strong momentum in the business. We are gaining market share in most categories and markets. Our premium product portfolio is growing, especially in our focused categories. On top of that, the integration of the companies that we have acquired over the past 18 months are progressing as planned. We have, as well as the rest of the industry, been hit by an unprecedented input price inflation. We are approximately DKK 200 million behind the input price inflation experienced in Q1 '22. And there are more to come in the second half of the year until we can pass on the cost increases to consumers. One of our main priorities right now is, therefore, to secure an average price increase for our own products to reach an unchanged gross profit per hectoliter through direct price increases value management which is a lot of price pack work. It's about price elasticities and, in particular, in circumstances where consumers are changing some of their behaviors and a lot of work as well on the assortment. We will be on our toes in monitoring the market development following the price increases already done as well as the ones to come. And on the back of that, manage our costs accordingly.
We clearly need to continue relentlessly on the integrations and execution of our business plans for the businesses that we have acquired to secure future growth for the entities and to achieve the synergies that are laid out in the acquisition plans. We're still working with some capacity constraints in our production facilities. And even though that some of our acquisitions eventually will help us to ease this, we need to, in the short term to medium term, manage our CapEx to ensure the necessary capacity across the group. Our ambitions on the ESG strategy is more in focus than ever. The energy crisis and other supply chain issues have increased the need to move away from fossil-based fuel as well as improving the balance between production and consumption. Lastly, we need to be very alert and manage our commercial spending to exploit the growth opportunity that will continue to pop up in the market but also be ready to adapt to changes in consumer behaviors. With these words, I would like to send it back to the operator, and we are ready to take the questions.
[Operator Instructions] The first question is from Søren Samsøe with SEB.
Søren from SEB. A couple of questions from me. If you could maybe -- you have very strong growth, obviously, in Q2. Maybe you can give a bit more color or split on what is coming from the On-Trade recovery and what is more sort of underlying structural growth. Maybe you could give a little bit more what is the growth in the individual segments, for example, energy drinks, RTD and so on. So we sort of see what points more into 2023 and what is more like a, say, one-off growth from the On-Trade recovery, that would be really helpful.
If I go a little bit maybe market by market or area by area and giving a little bit of a sentiment, I think, overall, I think beer is still the category where we are not getting back to 2019 levels yet. Whereas categories like no low sugar, no low alcohol within beer, within ciders, et cetera, energy drinks and enhanced waters is still gaining momentum as categories. And in these categories, we are performing generally better than the market across. There's differences between North and South, I would say, so the northern countries, so Denmark, the multi-beverage markets, I think the dynamics are a little bit less than what we see in Southern Europe. So the growth rates in energy drinks is higher in Southern Europe than it is in Northern Europe as an example. But there's not, I would say, large changes to the trends. There might be some recalibration in terms of getting back to a more normal situation on the back of COVID, but it's the same trends that we experience now as we experienced before.
Okay. Second question was -- is on the margin. In your slides, you point out the 450 bps margin impact from the time lag effect. Does that correspond to the additional DKK 200 million in costs you're talking about? And does that number also include a negative effect in the second half? And what would that number be just isolated for the second half?
If I just start, so what happened -- so what happens here is that if you just take it at -- the sequence in terms of how things are happening here. So the price increases that we already signaled relatively early in '21, those have been implemented as price increases to cover up during the first quarter. There's differences between the different markets in terms of when it's possible to change the different pricing. And that means that there is a time lag, which we knew in advance because that's the same every year. . So that's the first one. Then the price increases that came on the back of the war or the war was initiated, that increase, we started to discuss with the trade after a couple of months. And that means that the price increases that we are passing on as we speak here during the third quarter, those relates to what we knew a couple of months after the war started. So that's the knowledge back from kind of like April-ish.
That is what you see now. Then that creates another time lag, so we catch up on the first one, right? Because we get the price increases -- the full effect from the price increases that we did. But then we are losing out on the second part. And that will continue until that we have been able to regain it all and the inflation will start to fade out. So that is kind of like the sequence in terms of how it happened. So when prices are going up very fast, as an industry, we will always be behind the curve. And that is what we are talking about in terms of the numbers. And I don't know if you want to comment on the specific numbers, Lars?
Yes. So the DKK 200 million we mentioned in the report that explains the 4.5% is in the first half. And as Lars mentioned, there is more costs that have occurred in June, July of roughly DKK 100 million that is on top of that. But we are trying to get the prices moved on to consumers. So the 4.5% is primarily in the first half of the year, and that's the DKK 200 million that we mentioned.
Okay. And then just a final one. So how should we then think about at the current prices that you will still have a headwind in Q3, but then starting -- that is starting to sort of fade out and be maybe a flattish to slightly positive effect in Q4? Or how does it look?
At the magnitude of what we are experiencing then, last year, we saw a dramatic increase, and that's more than DKK 400 million that we needed to pass on in the beginning of the year. Then we got another DKK 350 million in Q2 -- sorry, in February and March related to the Ukraine thing. And what we're talking -- if we just look at it today, there's roughly DKK 100 million more that we need to offset. So it's the size of what we are carrying is maybe, what you say, reducing a little bit. So we do expect some improvements in the second half because now we have passed on the vast majority of the cost inflation. But I would also say the -- some of the prices are extremely volatile at this point in time. If you look at the gas prices, which is a big impact in our industry, whereas oil prices are coming down. So we do see a little bit of some mixed effects this year. So I would say, if you look at the improvements that we see in our margins, a lot of it is going to come in quarter 4, where we have implemented all the price increases and where our comparison numbers from last year was heavily impacted by the COVID lockdowns. So we will have a big positive impact versus last year in our Q4 numbers.
The next question is from André Thormann with Danske Bank.
So first is actually a bit on what you just elaborated on, Lars. So just to be sure, I mean, looking at your midpoint EBIT guidance, then you imply that you need to have quite significant growth in the second half. Can you maybe help us build what exactly will help you to generate such significant growth in the second half considering the decline in the first half? That's the first question. And the second is in terms of price increases. I wonder if you can elaborate whether it's equally, paraphrasing, easy to get price increases through in all markets, meaning do you have problems increasing prices in some markets? I remember you have mentioned France, and whether you can give a status about price increases in Norway? That's my questions.
Yes. So if we take the big positive impacts in H2 versus -- sorry, that is going to help us deliver more than we did last year in the second half. Clearly, as I mentioned before, not having a lockdown in On-Trade in quarter 4 is going to give a big lift in our business. Another one is that the price increases that we are expecting to impact our business here in the beginning of the third quarter, that will help us a lot where we have been carrying quite a lot of costs during the second quarter that have not been mitigated by cost inflation. We are also going to look at our cost base. So probably less commercial spending then will also help us in our business. I do think that there's also one thing that is that the volatility in energy prices is very, very substantial at this point in time. And if you look at the gas prices since mid-June, it has been absolutely all over the place. And at the same time, you see oil prices come down. So for some of our cost categories that are very important for us, the volatility is very high. So it could, of course, mean both a plus and a minus in the rest of the year compared to what we're looking into. But the big drivers are COVID, price increases and less commercial spending.
And on the question on the price increases, it's not easy to pass on price increases, and it has never been. And I think as the consumer sentiment starts to change a bit because the energy bill privately is getting up and you start to count yours in a different way and you look at how you're going to consume, it will be more difficult to get prices up in our opinion and to hit the right price points that are considered attractive for the consumers. And that is also the reason why that we have, from the beginning, indicated that we should follow the overall inflation in the market as a beverage industry, and we are not there. We will do whatever we can to get there. But I think as time goes, it will be more and more difficult to get further price increases up. So the window that we have or the price increases that we are doing right now are very important. And then the next step that will come as soon as possible will also be important. And I think beyond that, I would think it would probably be more challenging to get, I would say, positive out of it. And that's also why we are talking a lot about cost. We're talking a lot about keeping our facilities intact, efficient and with as low consumption as possible. So it's some of the same tools that we had to find from the tool box as when the financial crisis was up, it's about the same. So in terms of geographies, I think it's still the markets where competition is the toughest and the concentration on retailers are the least, I would say, where the retailers are extremely strong, those are the markets where price increases are more difficult to get through and at the speed that is needed. And yes, France is one of these markets as you mentioned it. Norway is a market similar to Denmark and Norway (sic) [ Finland ], where you have your windows during the year where you adjust assortments campaigns, promotions and also pricing. So that follows, I would say, a normal pattern as it does in the other major markets in our business.
Okay. I'll just come with one follow-up. It's just because Norway is undergoing a quite significant normalization. I mean does this give any difficulty in terms of increasing prices?
Those are two, I would say, independent topics that you touched upon. So the increase during COVID for the alcohol beverages, in particular, in what is sold in Norway, that went up by about 25%. Now that because of traveling is -- yes, fully -- almost fully up to speed and that the border trade between Sweden and Norway is again up and running, that is just getting back to normal. But when we acquired both businesses, that was adjusted in the normalized EBITDA. So when we are -- what we are looking at is an expected decline in sales and profitability, and we did not pay for it.
No, no. And I was just wondering whether it gave any difficulties when volumes are coming down so dramatically, for example, [indiscernible] to further increase prices.
But it's not a surprise for them either, I would say. So those -- in our opinion, those two things are not connected.
The next question is from Richard Withagen with Kepler Cheuvreux.
I've got 3 questions, please. First of all, Lars you talked about some declines in the rate that you're seeing. What are the kind of declines and how -- maybe you can share how the Off-Trade compares to 2019 levels? Second question is on -- maybe you can give a bit of an update on the Solera, Hansa Borg integration. I would be especially interested to hear if you're planning any possible restructuring initiatives at Hansa Borg over the next few quarters. And then the last question is on your price position. How does your price position look now after Q3 price increases have been implemented? I think in the last few quarters, you've been a bit concerned about your price position versus the competition. So how does that look now after the Q3 price increases?
If we start with the Off-Trade, I think what we're seeing in our business is that we continue to gain market shares. And the market shares we have gained in Off-Trade during COVID, we're holding on to most of them. So our portfolio is in good health. And in total, we are higher than 2019. So I would say, I think what we're seeing is a normalization of Off-Trade between on and off. But still, we are at a substantially higher level than we are in 2019 in terms of revenue and volumes in Off-Trade.
And the market itself is also bigger than it was in 2019. So we're not back to the same level. It's in between '19 and the top. And if you look at the different markets, the decline is between 3 and 7, 8. If you take our 5 biggest markets and look at the last 3, 4 months, so that is where we have seen the full opening of On-Trade. So those are the accounts. Following up on that, on the price position, maybe first, before we go to the integration question. I think if we look at the pricing that we see on shelf right now, and it's a little bit too early to evaluate the price increases that is passing through in Q3 because most of them are done here -- have been done on the 1st of August, a few on the 1st of September. But I think the picture is still that we are -- we have, from a consumer pricing point of view, not knowing what happens to trade margins and so on and so forth, the consumer price in the outlets is higher relative to competition as we speak. So the question is when we get the Nielsen numbers or IRI numbers and so on for the next couple of months, if some of that will change. So I would say that compared -- if I look at it overall, our top 4 markets, overall, we have done -- if the trade has not changed their margins, it indicates that we have taken average higher price increases than competition. That is what it indicates. If it's a fact, we don't know. Moving to the Solera, Hansa...
Maybe we start with the Solera, Hansa integration. So as we said when we did the Solera, Hansa acquisition, these -- we bought the 2 businesses. They are complementing each other in a very strong way. So Solera is very, very strong in wine and also in RTD, whereas Hansa is very strong in beer and cider. So we have very strong positions in different segments. What we also know is that they have parallel logistics operations. So over the coming years, we need to look into what is the most efficient logistics setup in Norway. Both systems are working well today. So it's about improving something that is already strong. So the next steps in our Solera, Hansa business is that we have merged the management teams. We're trying to make certain that we offer a strong portfolio to our customers. And then implementing the growth framework that we have in Royal Unibrew, where we focus on all the categories that we know are growing structurally in the market. So to be very specific on your question, have we planned any restructurings? No, because they are good businesses. And for us, this is all about creating a strong player in the Norwegian market for the long run. So this is not a cost case. This is the case where we need to win commercially by having a very strong offering to our customers and using the growth framework that works, in particular, in Denmark and Finland and implementing that in Norway. IT integration between the 2 businesses is expected to happen during next year. So this year, it's all about implementing growth initiatives and getting the organization up and running.
The next question is from Thomas Lind Petersen with Nordea.
I have a few questions. One question is regarding the energy prices, Lars, that you also talked briefly upon. You write in your statement that at current levels, then the energy prices will lead to further sales price increases in Q4. Can you maybe elaborate a bit on these further sales price increases in Q4? It's not something I feel that you have guided for previously. And then another question is on the guidance and COVID lockdown. How much is that going to impact your ability to reach the guidance? And then finally, if you can elaborate a bit on the reason for not initiating a new share buyback program. Gearing would still have been below your target of 2.5. If you could just put a few words on that.
Yes. I'll take the first one, which was kind of like two different things -- two things that you talk about in the price. We are not guiding on price increases. So we look at -- every day, every month, every week, we look at what are the -- what the prices in the market, how are we pricing ourselves correctly and doing price elasticity analysis and so on and so forth. I think what we see here is that if the inflation continues, and that is where we have, I would say, in particular, seen negative changes on the energy side, then there will be -- so there's a direct impact for us immediately, but there's also a spillover effect to our suppliers that will eventually hit us at one moment of time if it keeps staying at the same level. And that is why that it is realistic that we will need another round of price increases towards Q4, beginning of next year. So that is what we are indicating here.
And in terms of the guidance, in our estimation of how the rest of the year is going, we've looked at how much On-Trade business did we lose in the fourth quarter in November and December, and that's what we've put into our models of COVID lockdowns. Of course, if you look at what really happened last year in December, lots of Christmas parties were canceled. So of course, there was big impact both on On-Trade and Off-Trade. So it's not an exact number, but it is a very substantial number that we have put into our model, and we're not giving you the exact details, but almost all On-Trade were out of our books in December last year. So it's a fairly substantial step up from COVID alone. In terms of share buyback, we've done a number of acquisitions. We have 2 that are not closed yet. So for us, we think it's prudent to not do more share buybacks at this point in time because, as I think, we have been steering our business to, over the last couple of years, we target a net debt to EBITDA of 1.5 plus/minus. So when we are getting to the top of the range, we have unclosed acquisitions. We do not see a need to do further share buybacks. So that's why we are not planning any of those.
The next question is a follow-up from Søren Samsøe with SEB.
Yes, can you comment a little bit about your market share development in Denmark, Finland and also Italy?
Yes, I can do that. So if we start north, we have gained a little bit of share in the Finnish market. When you take out the extraordinary beer campaign that we did not have this year, which is what we always comment on, that would always be without that specific one, we are gaining a bit of share. And we are doing it in, I would say, in categories where we have put priorities, no low sugar, ready-to-drink enhanced waters categories where we are performing very well and all categories that, in principle, carries an above average also profitability. So that's good. In Norway, the Hansa business is gaining share in the beer area, which they have actually done consistently for quite some time. They have been very strong on the innovation and, in particular, on the Mango IPA, which was launched a couple of years ago is performing really well. And it's again one of the propositions which is above average in terms of its profitability compared to a standard lager. We are keeping our shares in the wine business with all the dynamics that we see that we talked about early on with the sales moving back to the border trade in Sweden. So I would say, a solid delivery commercially by the Norwegian teams, both in Solera and Hansa Borg. In Denmark, we have been gaining a better share throughout. We have lost a little bit of share because we have not been able to deliver what was needed in the beer category. So we have prioritized to deliver glass bottles to other markets because we have -- we could swap to cans instead. So there's markets where we would have not had the ability to do that. And that's, of course, on the export side. So beer -- in the beer area, we are losing a little bit of share in retail. We're gaining a little bit in On-Trade, so relatively flat overall. And then we are gaining share again in the categories that we prioritize, and with above-average profitability is also a solid performance. And when I'm commenting on Denmark, it includes the border trade because it tailors the Danish consumers. So a nice performance. In France. We are still growing our business, but we have not been able to follow the market. And one of the reasons, as we also commented on, is that the COVID opening -- or the reopening has caused a slight decline in retail and an increase in convenience and On-Trade. And we are not -- we do not have a presence in -- or a big presence in On-Trade and in convenience. So France is the, I would say, the only country where we are not following the market overall because of our channel presence. If we look at Italy, that's the market where we have absolutely the most speed and compared to the market. So our beer business is up. Our strong ale business is up 10 percentage points kind of -- and the market is slightly negative overall when it comes to beer. Our soft drink business is up by 40%, 50%. So extremely strong performance. And we are taking, I would say, new -- making new records almost every month in terms of our market shares in the market. So that is one of the areas where we have done a lot of work to secure that we had enough supply because of the speed of growth that we see. And it's also one of the countries, I would say, or the country where we relatively seen have invested most money in expanding our organization capabilities and investing in marketing, both for LemonSoda and for Ceres. So underlying a strong performance. And then if you look at the International business, it's always difficult because of the niche market nature of the business that we have. But if you look at our sales in-monitoring, the sales out-monitoring that we have from our wholesalers, the net impression is that we are gaining share in all of our top, say, 8 markets and that is what really matters in International. So overall, a solid, I would say, market development for us overall.
That was helpful. Just a follow-up. In the Nordics -- if you just concentrate on the Nordics, one of your big competitors reported about increasing volumes. You report about decreasing volumes, but still gaining market share. Is that because maybe you talk about different segments, so you are maybe more seeing these market share gains in, you can say, other categories than beer and competitors are more talking about beer? Or how should we interpret this?
I think there's probably a little bit of market overlap, but there's also some markets that are not important for us. Sweden is a relatively small market, and we do not have a lot of beer and soft drink. It's mostly a wine and spirits business as an example. When we look at the Nordics, we always include the border trade. I don't think -- I'm not sure if others do the same. We look at the consumers and not where we sell the products, that might make a difference. And then we are commenting on this extraordinary beer campaign which we carve out. We count -- if they count it in as a growth and we don't count it in as a loss, because this is something that comes and goes, then you maybe get something that is not calibrated. And then I think one factor that we have seen, at least until May, June, is that the low end of the market was still relatively soft. So private label discount and so on and so forth did not really gain in the market that is more recent development. So within the last 6 weeks that we have seen that consumers shift more towards discount stores instead of traditional supermarkets, and thereby, because of the nature, discount products, low end will gain a higher market share. So there's also the thing about comment -- the comments that relates to the half year and then the comments that relates to until now.
The next question is a follow-up from André Thormann with Danske Bank.
Just 2 follow-ups. The first one in terms of the first sign of downtrading that you mentioned, I mean can you maybe elaborate on which categories you see should be affected by this? And why you don't, as I understand, expect an impact in second half? That's my first question. And the second is in terms of the profitability in Crazy Tiger. When I look at the contribution on EBIT and revenue, it looks like there is a quite high EBIT margin in Crazy Tiger. I calculate around 36% in the first half. I mean can you elaborate a bit on why this is and whether I'm completely wrong here?
So on your question on downtrading, it's still too early, and it's not something that we see a dramatic change. But we are highlighting that we do start to see that the discount channel is gaining more traction. We see that they gain share in the overall markets. And now we're not talking about beverage. We're talking about traffic. We're talking about their revenue, so to speak. And we, of course, in that respect, follow the food categories and so on and so forth. And some other categories, they see this before that we see it. And remember that the brand loyalty is still very high in the categories where we work compared to categories that are more genuine and where you do not really care about which kind of brand that you pick, you go for something else that decides on what you buy. So we are highlighting it. We are -- and telling you that we are extremely alert about it so that we make sure that we do whatever we can to secure that the consumers stick with our brands. Yes, so I'll say that's the situation. On Crazy Tiger, it's correct that this is an above-average business in terms of profitability. And that is what we have also -- we have said since we acquired the business, and that's without commenting on the specific number, but it is an above-average EBIT margin that we generate.
Final comment. So our French business had been merged so that, you can say, if you look at the 2 brands we have down there, Lorina and Crazy Tiger, both are premium brands. They have joint supply chain. They have joint sales force. They have joint administration. So I would say they complement each other very well. And a lot of the costs are now shared between the two. So there is, of course, synergies in that business by combining the 2 businesses.
[Operator Instructions]
It seems like there is no questions on the list here. So I would like to thank everybody for participating and asking good questions, and please enjoy the day.