“With a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net revenue growth for the year.”

In context

“ilable, with higher margin markets over-indexed to cannibalization. We expect this dynamic to be less impactful in 2024 than last year. Now let's focus on the mechanics behind our H1 margin delivery. Gross margin increased organically by 140 basis points and by 80 basis points in dollar terms. This was driven by our higher margin smoke-free business, pricing and ongoing productivity saving across the value chain. As expected, SG&A cost growth stepped-up in Q2, increasing 9.8% organically after a very modest increment in Q1 due to planned phasing of commercial spend. The resulting 5.8% organic increase in H1 was below the rate of top-line growth, driving plus 1 percentage point of margin expansion with our successful back-office cost program able to mitigate some of the investment step up. With a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net revenue growth for the year. I’m pleased to report we delivered over $300 million in H1 growth cost efficiencies across both COGS and SG&A, as we pro-actively drive bottom-line growth. We expect an acceleration in H2 savings, notably from manufacturing, as we progress towards our $2 billion target for '24, '26 period. The combination of these factors drove a plus 230 basis point expansion in our organic operating income margin. Despite a significant H1-skewed currency headwind, adjusted OI margin were stable on a dollar basis. Moving to our smoke-free business. We estimate there were 36.5 million adult users of PMI smoke-free product as of June 30th, reflecting an addition of 3.2 million during H1. This includes an estimated 30.8 million IQOS users, 5.2 million oral users and 0.8 million VEEV users. The increase in b”