Good morning, everybody. Welcome to the Corbion H1 2023 results call. With us today are Olivier Rigaud, our CEO, and Eddy van Rhede van der Kloot, our CFO. My name is Peter Kazius, Head of Investor Relations. This morning, we published our H1 results. You can find the press release and presentation on our website if you go to www.corbion.com, Investor Relations, Financial Publications. As usual, for our quarter two call, Olivier and Eddy will walk through the presentation, after which we will move into Q&A. With that, I would like to hand it over to Olivier. Please go ahead.
Good morning, everyone. We delivered a solid performance in the first half of 2023, demonstrating the underlying strength and resilience of our business. With organic sales growth for core activities of 7.9%, driven by growth in all business unit, with high growth within algae ingredients. We also delivered a strong organic adjusted EBITDA growth of core activities of 15.7%. We experienced some volume decline in SFS and LAS business units, by compensated by price benefits, successfully passing on cost price increase back in 2022 and early 2023. Our algae ingredient business continues a very high growth trajectory, but also driving a higher profitability for the company. On the PLA front, we believe the business has bottomed in Q1, and we are seeing first signs of recovery.
From a non-core business, the divestment of our emulsifier business is anticipated to conclude within this calendar year. Also, to know that we've been free cash flow positive, positive as from Q2, and we are expecting it to remain positive for the remaining part of the year. On this, our leverage ratio is within covenant threshold, and we expect this ratio to improve by year end. Now, on the operating climate, there is nothing new there. We've been facing severe customer destocking, and as you all know, a softer macroeconomic climate. This came from, of course, you know, the supply chain organization, where we've seen significant customer destocking. That continued across Q2, and we still see some impact in some business for the remaining part of 2023.
The volume decline in food markets is visible across almost all regions and categories, with a lower impact in functional systems and more in the meat and savory market. In our Lactic Acid & Specialties division, we've also seen some slowdown in some biochemical markets, like semiconductor, which is down in the cycle right now, and agrochemicals, I will come back to that later. Obviously, you've also all seen the inflationary pressures around, but our price increase there, implemented in the course of 2022, have compensated for higher input costs. On a positive note, we start to see some relaxation on input prices, primarily chemicals, freight, and energy. On the opposite, we are seeing increased sugar prices, but we are well-hedged for the remaining part of 2023.
On sugar price, the bigger impact we see today, obviously, is coming from Europe, but we have flexibility across our network to maximize our global footprint. Last, on sustainability, we still see that at the forefront in several markets, and one obviously is our omega-3 business in aquaculture, driven by official shortage and increased pricing. We also see that in our biomedical polymer business due to aging population and health focus. These are two strong items I will come back on. Moving to the views dynamic and starting with Sustainable Food Solutions. As I mentioned, we see heavy customer destocking in soft and consumer markets. We see a difference between our functional systems, where it is more about shelf life expansion and lower shelf life products, where then we see lower destocking because of the shorter shelf life.
This is valid for bakery, this is valid for dairy as well. We see more heavy destocking in the meat category and savory category, where next to processed food, there is also a lot of frozen products, you know, that stay longer, obviously, by definition, in freezers. On the other side, our pipeline remains really healthy and the customer innovation activity remains quite strong. On the growth side, we've completed the expansion of our natural mold inhibitors in Peoria, in the U.S., and we started meaning to sell at some major key accounts using our natural solutions, primarily the natural mold inhibitors. We are ramping up that business across the second part of the year.
On the second initiative that we mentioned earlier, being the natural antioxidant, we're also building a pipeline of acerola rosemary-based products and solutions together with our other organic acids, we are also expecting ramping up over the second part of the year on this mix. Last, on efficiency initiatives, we've, across the first part of the year, materialized an acquisition of the vinegar production plant in the U.S., in Montgomery, Alabama. As you know, vinegar is a strategic product for Corbion. It's being used in many of our preservation solutions, so this is about really optimization by insourcing this product that is really strategic for Corbion, we expect already some benefit from H2 as the plant is starting as we speak. Moving now to Lactic Acid & Specialties.
The business environment there, as I mentioned before, we see a temporary slowdown in the semiconductor and the agrochemical market. We've also seen, of course, the impact of the lower intake of the PLA joint venture. On that note, I will come back on PLA in the next slide, I just want to say that we're also expecting a weak Q3 on volume of lactic acid to the JV. Again, a weak volume of lactic acid doesn't mean a weak quarter for the JV itself. The JV is going to continue on its trajectory. Why is that? Basically, there is a one-off element in Q3 related to, on one side, a specific run of a specific lactic grade we call D-lactic, that we are using to produce heat-resistant PLA or coffee cups or teacups.
This is a run we do once every two or three years. That is, I mean, a high-value end product to make high value, high price PLA, but that has a very low, low yield in the plant. Whilst we process this D-lactic acid, we do not, of course, need to use any plain lactic acid. That has an impact on Q3, and that's something we've done in the past and we're gonna still continue to do in the future. Next to that, we take advantage running this D-lactic acid in Q3 to also invest in some efficiency improvement in the plant to increase our yield. I will come back on some initiatives on the PLA in the next slides.
On biomedical polymer, we see a very positive outlook that, you know, started in Q1 and are gonna remain strong for the rest of the year. What you've seen, probably in the press on this biomedical business is a great, actually a breakthrough, where we got the approval through MedinCell, our joint venture, for a new drug delivery technology. They are working closely in association with Teva on schizophrenia treatment for the U.S. Following this first FDA approval in April, they are working on a second launch product, Olanzapine, that is already in phase III clinical. Basically, the promising aspect of this technology is that now we have a solid proof of concept that is in the market, that we can roll out to other molecules and other diseases, going forward. That's, I think, a great news for our biomedical polymer business.
On efficiency initiative, of course, the major, you know, project we have is the completion of our new Circular Lactic Acid Plant in Thailand. We are well on track on that. This will really help us to maximize our plant network utilization. Going to where do we stand in terms of, you know, this new investment? As you know, this is a 125,000 ton plant that we are expecting to complete by the end of 2023, with a startup early 2024. The plant will be really commissioned, you know, as from a January there. Right now, we are busy with utility commissioning, and everything is expected, is as expected.
We are expecting the first positive EBITDA contribution from this plant as from 2024, next to the fact that we will really help get our science-based target and achieve a 19% lower carbon footprint, you know, for any tons of lactic acid we will produce in that plant. Now, moving to PLA. As we said, we see early signs of recovery. First of all, before going into the market dynamic, I'd like to come back on our decision not to pursue the PLA2 plant in Europe, in France. We came to that decision earlier this year, basically based on, of course, what we saw in terms of business development. When looking to, let's say, the current capacity occupation, but also the nameplate capacity we have on the current Thai plant, which is, as you all know, 75,000 tons.
We believe when we look at the current run rate, we can almost quadruple our sales with very minor investment and without any financing need, you know, on the Thai operation, that is, I mean, a very efficient and low-cost plant. This is what has been yielding our decision, as there is no urgency, you know, to build a second PLA plant. Moving to the business environment, we are seeing some early signs of recovery, primarily in Asia, and we believe Q1 was the bottom quarter. When we look to what's happening in the market, back to China, who was, you know, one of the reason with the lockdown, where we saw some decline in sales back, you know, in second part of last year. China, on the regulatory front, is now supporting, you know, some important PLA development.
They are going with what they are calling development legs, with the first leg that comprise bio-based straws, 3D printing and single use, you know, packaging. That's a major initiative they embarked on in 2023, in the first half, that we expect them to show some first signals of, you know, business momentum in the second half and in 2024. Just to give you an example, the only straw market in China, if we would convert it totally to a PLA-based product, would represent over 40,000 tons of potential. Obviously, you never get 100% conversion, but these are quite sizable markets. The second leg, Chinese government is supporting, and that will happen in 2024, is more around tape. Tape for packaging, envelopes, post envelopes, but also rigid and flexible packaging.
That is a leg they will pursue in 2024. To make sure that we are really ahead of the curve there, also, you might have seen we've made some five major partnership announcements over H1 from the GD. I put a few examples on the slides, but amongst these, moving to a more differentiated mix, for instance, working closely with also PHA, PLA compounds. We've announced one with Bluepha China to make collaboration in sustainable solutions, compounds for PLA, PHA in China. We've done also with Danimer in the U.S., a co-development to a fully compostable coffee capsule for the E.U. market, and that are also compliant with E.U. regulation on compostability.
We know this is also a very sizable market, so when we are able to crack it, only coffee capsule in Europe today represents over 250,000 tons of polymers potential. Other very interesting, you know, development, I put also one with the Xiamen Changsu Industrial there. This is with what we call a BOPLA technology, a biaxial technology, to be able to have very thin layers of PLA to accommodate the tape, you know, application I mentioned earlier. These are developments we expect to materialize across 2024 as well. A lot of good stuff happening on the PLA front. Again, I want to remain cautious on the recovery, but as I say, I believe Q1 was the bottom quarter on the PLA. Moving to our Algae Ingredient Business Unit.
There, we are benefiting from a very favorable business environment related to a structural issue around fish oil. Generally speaking, with very, let's say, poor fishing season and structural fish oil scarcity. This is leading to much higher prices, and we believe that this is there to stay. When we look to the current dynamics, obviously, you know, a continued increased demand in aquaculture, in pet food and human nutrition, but also the fact that we are, let's say, quite some now big provision that El Niño will kick in next year, and we'll only get the situation getting really worse for, you know, fish oil, as we go into 2024. This is the wider environment.
Basically what we can see now is that the adoption of our AlgaPrime solution into aquaculture is step by step becoming mainstream, and that's very good signal, and that is also enabling us to do longer term contract. As we told before, we've been working hard to debottleneck the plant in Brazil, in Araucária, to make sure that we can follow market demand. We've also invested in, you know, mixed differentiation. Now, with the first time having the ability to, next to the product for aquaculture, produce a product that is, you know, an extracted oil to serve the pet and the human nutrition market. We've launched this into the wider market in May at Vitafoods in Geneva for human nutrition, and we are expecting the first sales into human nutrition to kick in as from Q4, significantly contributing to EBITDA also next year.
On efficiency, as you know, we have a dedicated R&D organization in San Francisco that is really over-delivering on expectation. Next to the big improvement they made a year and a half ago, you might remember, we've made a further step that we've implemented a few weeks ago to further increase our yield, and that will also positively impact H2 profitability compared to, you know, the one we've had so far. This is also a very promising R&D development that we have implemented early July in the plant in Brazil. When we look to all these dynamic, obviously, we are strategically discussing what's next, and we basically want to come back to you before the end of the year with a strategic roadmap on this specific BU between 25 and 30.
We will share that before the end of the year, and we will share more detail about our plans for this business going forward. On this, now, let me hand over to Eddy. Eddy?
Thank you very much, Olivier. Good day to everybody on the call. Let us let me take you through the financial implications of the first half year. First of all, the profit and loss. As you can see on the top line, the sales level has increased by 7.4% to a level of EUR 738 million for the first half year this year. Within that was a growth of 6.7% organic for the total company, and a 7.9%, so close to 8% organic growth for the core. The EBITDA, adjusted EBITDA increased by 7.7%, to EUR 96.8 million.
Organically, that was growing at a higher pace of 13.3% for the total company and the core, and that's the key focus, of course, for us. We've been growing in the first half year to a level of 15.7% organically. Margin level was pretty much stable of this year versus last year, just over 13%. A bit deeper in the P&L, depreciation more or less stayed put. Adjustments is maybe worth to mention. Last year, you see a positive of EUR 5.5 adjustment. That is related to the book profit that we made on the divestment of one of the unused U.S. warehouses that we had. That was the sale proceeds last year. This year, you see a small negative of minus EUR 2.9. Basically, two key components.
One is some of the costs that we're making in the divestment process of the emulsifier business , had an on-purpose business. Secondly, because of the good development of our algae business, we still have a few years of earn-out payments to be made as a consequence of the acquisition we did of the algae joint venture, some years ago. That is also a component in that. Next line to mention is financial income and expenses. EUR 10 million negative for the first half-year. That is to be referred to, for, to last year. Here you see a +EUR 1.8, but that has been positively influenced last year by revaluation of intercompany loans.
If you take that positive out, the real interest receipt paid last year was close to EUR -7, so the better comparison is EUR -7 last year and EUR -10 this year. That, of course, reflects the higher debt level that we have this year versus last year, and also, of course, the higher interest rates that we all are being confronted with. Then we come to results, joint venture associates. That's really our PLA joint venture stake of 50%, of course. Clear positive last year, this year, a EUR -4. There you have to take into consideration that as a consequence of the decision to stop the further project progress of the second PLA plant, the joint venture had to take an impairment of all the costs that were already being made in the preparation of that investment.
That was about $30 million at the total joint venture level, at a 100% basis. Our share in the $30 million equates to about EUR 6 million. If you take that effect out, the underlying performance of the joint venture has been positive to close to EUR 2 million in the first half of the year. That brings us in all to a result after tax level of about 46% lower than last year. Let me now take you through the different market segments, business units in the company. We start with Sustainable Food Solutions. They are an organic growth of sales of 4.7% for the first half of the year. Within that, clearly, a positive impact from pricing.
We have been increasing pricing, as you know, in last year, and the carryover of that impact is a positive of 11%. That means the volume and mix, the other component making up our sales development, has been negative, and that is a -6.4. That is basically what we see more or less stable in Q1 and Q2. The main causes of the volume mix, negative developments, is what we already alluded to. It's customer destocking, softening of consumer demand, and some losses of volume in the less specialized part of the portfolio as we are maintaining our pricing discipline.
EBITDA margin is at 11%, so lower clearly than last year, but last, that, that's because of the lower volumes, of course, and also as we are successfully reducing our inventory levels, we have some negative absorption effects. That also plays into the margin profile of this year compared to last year. But this, the, the last, that's maybe nice to see in the picture below, we do see some margin recovery in the last couple of quarters coming from the dip in Q4 last year, where we were closing at just above 8%, and we have now upped that to above 11%. That brings us to Lactics and Specialties division. Sales growth organically, 2.2%. Again, positive price impact of 11.6%.
Volume mix, -9.4%, really driven by the lower volumes that our lactic acid supplies into the joint venture, the PLA joint venture, compared to last year. Last year, this amount of time, PLA was still turning pretty strongly, and the declines more happened in the second half of last year. Also, we do experience some temporary softness in markets like semiconductor and also the agricultural markets. It's good to single out here to point out that the medical polymers business and the biomedical polymer business is really closing very nicely with nice growth rates, so we really see a continued strong development there. Margin profile is on the rise here compared to last year. Again, the medical polymers is really a key component in that, in that development. We come to algae ingredients.
Yeah, clearly a very strong growth rate, under 3% of first half year. If you also look at the dynamics within that first half year, Q2, at close to 137%, so really strong developments. Also, EBITDA delivery, where we were still cruising in negative territory last year, clearly on, on, on the rise and, and positive in, in the first half year, and especially in this, in Q2. I'd like to also point out here, as we are having also negative absorption effects in, in LG, so meaning we're selling more volumes than what we produce at the moment, we had a negative impact of that, especially in, in the second quarter, so that's close to $2 million.
If you would adjust for that, basically, the underlying performance is closer to EUR 3.5 million-EUR 4 million in the Q2 quarter. That gives you some understanding of the underlying margin development already in the algae business. Really very nice development, I would say, for this part of our portfolio. Brings us to the incubator. Now, of course, as a consequence that we have now, as per the start of this year, singled out the algae business in a separate business unit. The sales line in the incubator is currently not there, because this is really about investing in various programs, so that now contributing to about -5% investment level on the EBITDA level.
Within this, really the non-DHA, so the non-omega-3, business of algae, that is just the main component in this, because we're looking also to see what other products we can address with our algae innovation platform. The investment level of -EUR 5 million, so if you compare that to our core sales level, that's about 0.8%, and that is really more or less in the midpoint of the range that we guided for, because we want to see an investment pace, an incubator between 0.5% and 1.5% of our core sales. That's what basically the graph below describes. That brings us then to the joint venture. This is based on a 100% basis. Yes, an organic sales decline of about 37%.
In Q2 and Q1 last year, PLA was still relatively strong, and the weakness really started in the second half of the year. I do want to single out here that we, we do see some early signs of, of PLA development in Q2 of this year versus the pace of sales in Q1 this year and Q4 last year. That's also why you see the revenue base and also EBITDA contribution in Q2 at a higher level than what has happened in Q1 this year. Margins are cruising in the, in the high teens, and also there, the margin delivery over the last three quarters, you see slightly creeping up over, over the quarters. Non-core activities, that's of course, the emulsifier business. EBITDA-wise, sales worldwide, very stable, I would say.
Also there in, in emulsifiers, we see an increase in prices, and that is then being offset by negative volume mix. It's really nice that the business develops pretty, pretty stable under these market conditions. Olivier, I hand it over back to you on the outlook.
Yes, thanks, Eddy. Moving to the outlook. We are guiding for, you know, the remaining part of the year, to an organic sales growth for the core business to mid-single-digit growth. Adjusted EBITDA growth for the core within the 15%-20% range. Obviously, on financial discipline, as I said before, we expect a positive free cash flow from Q2 2023 onwards. On the volume mix, we are anticipating this to improve by year-end, but we also have easier comparables, you know, over the next part, the remaining part of the year. We still see very volatile market conditions in our food, primary preservation business, a lot more stable in our functional systems. Recovery in PLA, as I mentioned, and continuing to work on mix differentiation.
Expect a weak Q3 Lactic Acid & Specialties based on the one-off event I mentioned, happening on this D-lactic acid run, you know, where this is lasting almost a month and a half over Q3. That's also important to take into consideration. Last but not least, a very strong algae ingredient momentum, driven by volume mix, but also pricing. On the EBITDA, the initiative I mentioned, is one side is maximizing our footprint, our lactic acid footprint, by really prioritizing the low-cost plants versus the higher-cost plants, where we have higher, you know, input costs. Obviously, the latest initiative with the vinegar acquisition is to really source our needs, and this will have a nice impact already as from H2. We work very hard on, of course, negotiating our input costs.
This is a very dynamic environment because we see a lot of moves, all in all, whether it is chemical, we've renegotiated our logistics tenders with very nice, you know, as I said, relaxation. This is moving in the right direction for margin recovery as we speak. On financial discipline, working a lot further in also ourself is talking. Yeah. As our customers are doing, we've already reduced massively our inventory levels, and as supply chain pressure is easing, we are continuing over H2. Next to the fact that we've reviewed our CapEx plans, now we expect to be within a 145-160 range by the end of the year. On covenant, basically, we are planning our ratio to be between 2.8 and 3.2 by year-end, excluding the emulsifiers business disposal.
On this, I would open the call to a Q&A. Operator?
Thank you, sir. If any participant would like to ask a question, please press star one one on your telephone. Once again, please press star one and one on your telephone if you have any questions or comments. There will be a short pause while participants register for questions. Once again, please, to register for question, please press star one and one on your telephone. Thank you. We are now going to proceed with our first question. The questions come from the line of Robert Vos from ABN AMRO - ODDO BHF. Please ask your question.
Yes. Hi, good morning, all. I have a couple of questions. First, on the destocking. Why are these effects so persistent, taking into consideration that your exposure is mainly to fast-moving consumer goods companies? Related to this, do you still expect this to be the case in the second half? My second question, you have lowered your CapEx plans for 2023. It appears as if you're doing that to stay within your financial covenants. Can you please comment on this, and what's, what is the delta between what you initially planned to spend on CapEx and your new guidance? The question, a question on guidance.
If I read the guidance on the core organic sales growth and also volume mix contribution, take into consideration that pricing in core was 12.2% in the first half, the guidance implies that pricing will really drop off in the second half to a level of really low single digits. Is that a fair assumption? Finally, I was triggered by the comment on quadrupling sales in PLA is possible with low-cost investments. Can you elaborate on that? On what level of sales is that? Is that last year's sales, or is that run rate sales as we currently see it? Some clarification would really help here. Thank you.
Okay, Robert, thank you. I, I would say the first question is talking in the last one on PLA and the, the two others. Obviously, yeah, the destocking, persistence, yeah, is a, is a key question. I have to say, when we, we check with our customers, and again, it's very different from a market to another and a region to another, and from a category to another. What we've been facing is that, again, starting with food, as you know, we have two major legs, the functional systems and preservation. In preservation, basically, we, we look at primarily meat and savory. What we've seen basically happening, over the first part was primarily destocking, and then over Q2, a combination of destocking and really softening consumer demand because of the hyperinflation.
Our major customers in the meat industry basically had massive amount of stock coming from, you know, slaughtering a lot of animals already on the back of 22, that were frozen meat, you know, that were kept aside. You had already, within the supply chain, not just, you know, the finished goods inventory that they were holding, but also quite a lot being frozen. That we've seen has been impacting the meat and our business severely. The other thing that we didn't expect, maybe to that extent, was the softening of consumer demand.
What we see actually, in many countries, if you look at the U.S., Mexico, but also Brazil recently, government was giving support. In the U.S., it was $90 a month to support, you know, poor people for affordable food. We stopped in the course of Q1, Q2 in some important countries for us, primarily, Latin America and the U.S. We've seen, I mean, a strong impact on the level of purchase, so and demand from consumers. Basically, we can see the similar pattern as we've done ourselves with our working capital management and inventory, you know, to the same order of magnitude. Now, is that gonna be persistent? This is a big question.
When we check with the big accounts and the big customers, back to Q1, a lot of people were saying, "Yeah, we expect some slight recovery across H2 in the food chain." Now, people are more on the 2024 and remain extremely cautious on the remaining part of 2022. This is again, what, what we get from, from the major account. There is a second item I, I, I'd like to say that is also, maybe not always visible, but if you know, in the food ingredient business, roughly 25%-30% of your sales are being done through distributors, that do serve the small end of market, you know, the smaller customers. This is a quite sizable business for all companies, for our, our peers in solar. These people are holding also big amount of inventory to restock lead time.
You see that where we see severe, I mean, the stocking is also on this 20%-30% of the market that is being served through distributors. When we look to the major variances, this is where we see a more severe impact of the stocking happening now and going forward when we look to their projection for the second part of the year. I, I want to remain cautious on H2, although we're gonna have an easier comparable, as you know, but on food, I want to remain cautious. On, on the LAS, obviously, a lot is being related to the lactic acid, to the joint venture. As you remember, we started really to see slowdown in the joint venture as from Q3 last year, and Q4 was also pretty bad.
Do not expect to see, you, you know, and/or us benefiting from better comparable in Q3 because of what I just mentioned before. Q3 going to be weak in LAS, yeah. The rest, I don't need to come back on, on, on Algi. Just jumping to your question on PLA, like, 4x. Basically, this is based on our outlook of sales for this year. Now, if I look to our best estimate, where are we gonna end 2023? If I look to the current installment rate capacity of the plant being, yeah, 75,000 tons, as you know, we, we are, I mean, we have options whenever we're gonna need it, with really minor financial impact to get this plant to much higher capacity.
This is why, you know, when we look to the current business recovery pace outlook, we have ample room to almost quadruple that business without big, big, big investment there. This is explaining my comments there. Hence, no urgency to build a second PLA2 plant. Maybe, maybe you want to take the CapEx and the guidance once.
Yeah. Your question on the CapEx program. Let's first start with your final ask there. What was the delta between your original plan and the new plan for the CapEx for this year? The former guidance was EUR 160 million-EUR 190 million, and we have now reduced that to EUR 145 million-EUR 160 million. If you take the delta between those two, that is a reduction between EUR 15 million and EUR 30 million. Somewhere in that zone is basically what we reduced. Did we do that only for reasons to get an improvement in the ratio? I think that's a too narrow interpretation.
I clearly want to highlight here, we maintain all of our production plans in good order to reliably produce, because we are not going to short any essential maintenance CapEx, of course, anything to do with compliance and safety investments, we will not shorten that. Also on the expansion side, think about a multi-year investment in China for the new lactic acid plant. Of course, it will be very, yeah, unwise to stop those kinds of investments. We fully continue those investments. Same thing for the algae expansion possibilities and flexibility investments we're making in Brazil. We continue. Also the investments in metro formats in the U.S. Basically, all those programs are not changed. What I'd also shared earlier occasion, we have quite a portfolio of different expansion projects.
There, of course, the phasing, when you turn on certain investments, of course, you will always align a fine tune with the development of, of, of, of the markets. For example, if we now experience, which we do, a temporary, cyclical downturn, I would say, in the semiconductor industry, the other investments for the next expansion, for those markets, of course, they can be postponed a bit. That's exactly what we continuously do. We manage our total CapEx program in a very disciplined way to, to get the right allocation, in place. That's on the CapEx. Your next question was on pricing. Yeah, absolutely. Absolutely well, Regina. If you look at that, we had a, a pricing for total core business. This is Q1 of, 16% up in Q2, 8.9% up.
Yes, the pricing contribution in our sales line development is, will become less. That is especially because last year, we, of course, per quarter, in a number of pricing rounds, we've increased prices. Basically, the comparable with every quarter that we progress through the year becomes stronger to be. In that sense, the, the, the price contribution will be less. That's not to say that by and large, we are very aggressively now reducing prices from, from, from where we ended up from the high levels of last year. We take a very selective, differentiated approach, and only, we reduce prices actively where we think that it's needed to, to defend certain parts of our portfolio.
That's very helpful. Thank you very much.
We are now going to proceed with our next question. The question comes from the line of Sebastian Bray from Berenberg. Please ask your question.
Hello, and thank you for taking my questions. Could I start on inventory write-offs, please? I, I didn't catch this earlier in the call, but how big was the impact of inventory write-downs on the food business at Corbion? Why did the company write down inventory in food and algae? My second question is just on the timing of the Thailand plant ramp-up for lactic acid. Is this delayed versus expectations to six-nine months ago, that the plant would come online late Q4, or was it always foreseen that the first sales would be at the start of 2024? My last question is on PLA. Have, have I understood you correctly, Olivier? The statement from the company is that a 75 kt plant can be quadrupled in size without much incremental investment, or the quadrupling refers to from the sales run rate currently? Thank you.
Well, thank you, Sebastian. Let me take the, the Thai and the PLA, and maybe we'll speak about the inventory. First of all, on Thailand, there, there is no delay. Actually, when you said we expect the startup at a time, by Q4, actually, the ramp up, what we've done actually, we didn't communicate about it, but we, we already start commissioning utilities. Some utilities already in May this year. There, there is a, a ramp-up plan, and basically, the, the way this works is you, you start with easier utility, and you move to the more complex one in terms of recycling. We've, we've done, you know, steam and water filtration, you name it, all these things, to make sure that all the surroundings of the plant are up and running and ready and reliable.
This is being done as we speak, and, and quite a lot behind us. The critical moment comes when you put the first sugar in the fermenters, and then you have to wait for the fermentation cycle to get the first lactic. What is the plan there is indeed that we're going to have the first sugar in Q4, you know, and obviously the first run you, you test and run and, and, and check the quality. We expect to be, what I would call commercially running early next year. As we speak, yeah, the costs are very minimal because the plant is not started up. There is no major use of chemicals, processing aids, or carbohydrates, whatsoever. That is expected to kick in, in terms of indeed, throughput and cost, but also margin early next year.
Hope that, that clarifies, but we are well on track with our timeline. Actually, which I have to say, we, we, we never took pride of it, but in the COVID and supply disruption, you know, that was one of the highest risk we had at that time to get the long lead items and the equipment in place to comply with the startup. That, that's a great achievement from the, the operations within Corbion. On your second question, I think it's a misunderstanding. It's not 4x, 75, 80. It's 4x versus the current sales rhythm we are expecting by year-end. When we look to, yeah, what, what we are selling right now, we can, we can really multiply that, but not, not the 75, 80, that's ... Eddy do you want to take the inventory?
Yeah. Thank you for your question. It is not that we had an inventory write down, because an inventory write down means you have a physical stock that you cannot sell anymore, and that is what you are causing a write down. What I am talking about is an accounting impact, and we call it absorption effect or inventory movement, is also how we sometimes manage. This is purely an accounting consequence that if you are selling more than what you produce, then your inventory volumes go down, that means that on a net basis, you have less production costs that you can capitalize in your inventory positions, and those production costs end up in your P&L. In periods where you are building up stock, you get a positive impact, so your EBITDA is higher.
That's basically what we have faced a bit last year, because then we were really in a mode where inventories in terms of volumes went up, because of all the turbulence in the global supply chains and what have you. Now successfully in Q1 and especially in Q2, we are reducing our inventory levels because we are selling more than what we produce. Now you get the offsetting effect, where you have negative inventory movement impacts and this slightly negative impacts on EBITDA. These are more timing differences, but again, it's not an inventory write down.
That's helpful. Thank you. Can I just follow up on the EBITDA guidance? It's related to some of the questions that Olivier, you helped me with on the new lactic acid plant in Thailand. It is quite a large plant relative even to the market cap of Corbion. Is the existing 15%-20% EBITDA guidance range for the core business, net of any ramp-up costs that might be incurred for this plant? Just as in the second one on CapEx, in algae, is there any spare capacity? If it's purely based upon demand, one would assume that this business continues to grow quite healthily through 2024. I have the niggling feeling that some of the fermenters might be full, and building new ones or debottlenecking could take the best part of the year.
Could you give any visibility on that? Thank you.
Well, sure, sure, Sebastian. On algae, basically, as we said, last time, and during Capital Markets Day, we already had, basically, two initiatives to make sure we can sustain growth this year, but also next 18 months, so next 24 and, and part of 25. Beyond that, this is what I said before, we're going to come back to you before the end of the year with a, a very detailed roadmap. What we've done so far to make sure we can accommodate the upcoming growth is, basically on, on three things. On one side, as I said already, last year, we implemented a new strain that provides a much better yield. For the same ton of sugar in the same plant, you get a much higher throughput of omega-3.
This is what we implemented, you know, mid last year that is giving all the benefit we are seeing now. We were working on the third generation to do exactly the same to... that is something we just implemented in the plant early July, very successfully. Of course, there is an end to this yield optimization, but, you know, this is a new to the world, new to Corbion, let's say, technology, and we learn every day. I have to say that the team in San Francisco, never miss, doing an outstanding job, and the plant is able to scale up these developed strains. That's what we benefit. Then capacity for the same ton of sugar for omega-3 is much bigger. That, that's one element that is helping both volume and profitability.
The second is we have invested, as I said, in some oil extraction. This is not big CapEx, and this is just behind us. We are able, with this, to target higher-end market, yielding not necessarily to more volume, but much higher revenue. When you go to pet nutrition and human nutrition, this is a way that's going to help us to enhance revenue as from Q4 this year, but primarily, next year. That's the second initiative we've put in place already, and that we're gonna create value going forward. The third is that, yeah, we've had also small bottlenecks here and there in the plant on our, you know, filtration, whatever capacity. That also is giving us a few other 1,000s of tons.
We've put really this plan in place the last, the last month, and, and so we are feeling okay to have a secured, let's say, a room to generate further growth in 2024 and part of 2025 on this. On, on, on the outlook, 2030, we, we're gonna come back to you before the end of the year. On the mentor, on the, the other question?
Yeah, on your question on the pre-operating expenses for the new lactic acid plant in Thailand. Let me give us a bit more granularity there. If you look at the cash costs to run that plant, so that is really two key components, and that is personnel for us and maintenance. I'm not talking about depreciation, because that is a non-cash component, as you understand, but from a cash component that ends up in our EBITDA, it's about personnel and maintenance. Personnel, order of magnitude to run such a plant, about 100 people. You know, more or less importantly, what the European cost basis for that. In Thailand, of course, that's at a lower level of cost per, per person than, than it is in Europe.
We are and have been already recruiting people, already in, in starting last year, because this is not a plant that you recruit people and the next week they are fully operational. This takes time to run such a plant, to build experience, to be trained. So that is what we have already been investing a bit last year. As per quarter, we cruise through and we're getting closer to the plant being fully operational by the end of this year. Of course, the, the people count will step up. Basically, that part will gradually phase in as a cost component for this year. Maintenance, that's the other cost component. That is, you have some benchmark figures there, order of magnitude, 2%-3% of your, of your new build investment level. You know more or less than where we are.
That's a normal level for such kind of plants. That, of course, is not happening this year because there's no maintenance taking place, because we are now still building the plant and investing in it, and it goes through the final stages of that. That's not going to hit us this year. Yes, all these pre-operating expenses are included in our guidance of 15%-20% organic EBITDA growth for this year.
That's helpful. Thank you for taking my questions.
We are now going to proceed with our next question. The question comes from the line of Fernand de Boer from DeGroof Petercam. Please ask your question.
Yes, good morning, forward, and thank you. Thanks for my questions. First of all, on your remarks on the lactic acid footprint, what does that mean? Are we going to see a kind of restructuring of multiple part of your production in the U.S. in favor of the entire plant? Are there then any impairments of restructuring costs involved? That's the first q uestion. I had a question on your organic EBITDA growth. If you look at the bridge in the annexes of the presentation, you see that it's around EUR 5 million-EUR 6 million in the first quarter, and then a EUR couple current million in this quarter. On Forex, where does that comes from? If you only take the translation effect, then it is much less. Could you elaborate a little bit on that one?
Those were my questions for the time being.
Thank you, Fernand. On the lactic acid footprint, as you know, if you think about lactic acid, we have obviously the biggest plant in Thailand, we have a Netherlands, Spain, U.S., and Brazil. We have this 5x network. Obviously, when you look to the less competitive area to produce lactic acid today is Europe. You all know that sugar price more than double the year from EUR 500 to EUR 1,000, so that makes you up uncompetitive for most of the fermenters. Yeah, not just Corbion and not just lactic acid, but most of the fermenters. Europe is an island today, you know, with this sugar price and this energy.
What we embarked on at Corbion already years ago, and which is the strategy we are pursuing, is that we are specializing our European network into high-end derivatives. Our Spanish plant is, for instance, you know, where we produce most of the pharma products. We've recently also announced that we're going to invest in encapsulated organic acids for high-end application within confectionery, as an example. In Gorinchem, in the Netherlands, we do the same. This is where we do the green solvent, the biomedical polymers, quite high-end products. When we were really tight on capacity, we've been reopening, running this plant on plain lactic. Now that, you know, the plant in Thailand is coming up, it's easy to just, you know, mothball or, or produce something else.
The flexibility we've built over the years is, is a nice one, because just taking the Spanish example, we've been producing a large amount of lactic acid in our plant, when we had a shortage 18, 20 months ago. Right now, it's a plant that can accommodate our natural mold inhibitor capacity. We do properly fermentation and ferment, so there will not be any impairment. On the opposite, I think it's a way for us to have CapEx avoidance on the next phase of growth from derivatives.
Obviously, we will not, of course, look at the U.S. in that context, because U.S. is very competitive. I know a lot of people do speak about increased sugar price for 2024, but the U.S. is running on corn. Prospect on corn in 2024 is that again, we have to see with the, with the crop and the plantings. The prospect is that corn price is gonna relax heavily for next year. I expect U.S. to become also quite competitive. Today, this is the largest electric plant in the U.S. The optimization we have is, first of all, within Europe, and then in Thailand itself, you know, we might want to fill as soon as we can, the new plant, you know, and use the former plant as the buffer capacity. These are the things we are considering, calculating.
That, that, I mean, to answer your first question, and we did that with that in the.
Your question.
Sorry, sorry?
Where is this D-lactic acid going to be produced? Is that in Thailand or it's?
No.
Sorry?
It was produced, for now in Spain, in our Spanish plant, because it's a high specialized product. It's one of the things that, you know, only this type of plant can produce, but it's a run that is produced, as I said, only every two or three years in one campaign.
Okay.
Yeah.
Yeah. Then the impact on volumes on group level is quite big, while the Spanish production is actually very relatively small.
Well, it, it is because when you run that in, in the PLA plants, basically the yield is very different, and it's highly painful grader.
Okay.
To be efficient, you better do it in one shot and stock it for two or three years, and then you do another run. On Q3, this will impact our sales of LA to PLA2.
Yeah.
Again, it will not impact PLA performance, because we prepared for that, as you can imagine, and that will have zero impact on PLA sales.
Okay.
On your question of, of CapEx, basically, what, what is going to be headwinds for us and is headwinds is, is available for the force that are coming out for the strong latter part of last year, is, which is depreciating, now it's closer to, what is it? One-nine, on ten. The Yen is another one. The Yen is also depreciated, quite a bit. Basically, so yes, we are not hedging at all our translational exposure. That is also what we have before. We are investing in Portland, we're investing in a, in a long position on, on the Dollar, if you will. And there's also some, transactional exposure because we never fully hedge for our transactional exposures. That is basically what, what is causing the, the headwinds on the, on currency level.
Yeah, and going forward, that depends where the currencies will develop from, from here on.
Even then, if you look at the transactional exposure, then it looks quite big if you look at the bridge of your EBITDA, it's, it's - $5.2 million in the first half. That looks in minus $5.8 million in the second quarter, if I'm right. That looks quite a big impact for me, if you, if you look at the transactional impact on the U.S. dollar exchange rate. If then the rest is transactional impact, and if you have that based on the current spot rates, could you then give an indication what that means for the full year? Because there is, I think, quite a big difference in your 15% EBITDA growth versus the actual reported EBITDA growth.
If we are also going to see that, let's say, for the full year, then probably at the end of the year, you say, "Okay, we are coming in with 50% organic EBITDA growth," but you land at 8%, and the market is actually expecting you to do 15% organic growth if I look at consensus figures, and that's not organic, what the consensus figures are.
Yeah. But again, these are the exposures we have. We don't hedge. On top of that, we also have some, what we call... When we invoice, it is at a certain currency, but we then collect, let's say, two, three months later. If you are in an environment where the dollar depreciates in the in between period, then you're collecting lower value dollars, if you will, compared to what you have invoiced. That element is also components in the FX elements that we are experiencing in that bridge.
Normally speaking, you should expect that, that these invoices are hedged if you, if you have a three months later payment. Is there any reason why you don't do that?
We don't do that for all the, the positions.
Okay. Thank you very much.
We are now going to proceed with our next question. The question comes from Setu Sharda, from Barclays. Please ask your question.
Yeah, hi. I have two questions. The first is, what is the net input cost inflation outlook for 2024 at this point? Like, will deflation in corn or energy and other commodities more than offset pressure from higher sugar costs? My second question is about your EBITDA growth guidance for 2023. You increased at Q1, but decreased at Q2. How much visibility do you have currently on the business? Like, what is the risk you have not been conservative enough on H2 volume expectation?
... Eddy, do you want to take the, the cost inflation for...
Yeah, the input cost inflation with the current visibility, so yes, our outlook is that the reductions on all these input categories in, in size is bigger than the increases that we are seeing on the sugar side. On a net basis, we will see, a significant reduction in input costs as an absolute for next year.
On the, on the second question, I heard it well. Basically, on, on, of course, what happened between the increased guidance and now back in the 15%-20%, basically, as I explained before, looking at the current visibility we have on the market, but also the dynamic, this is, I mean, again, when we revise our forecast and we check with our top customers, our distributors, we see that basically the severity of this stocking that we were expecting to, to soften in Q2, I mean, was still very high and still very high, and, and we see a much bigger impact than what we at that time had in mind on consumer demand. That's, that's one observing.
On the rest, when you look at the current macroeconomic environment, everybody's expecting a China recovery. Well, we see that a bit happening in PLA. We do not see that necessarily in the other food or biochemical markets yet to the extent that we had in mind in Q1. I don't know if it answers your question, Andrew.
Yeah. Thanks. Thanks.
We are going to proceed with our next question. The question comes from the line of Patrick Roquas from Kepler Cheuvreux. Please ask your question.
Yes, good afternoon, gentlemen. Thank you for taking my questions. I have got a couple on Algae. Q2 saw a very good doubling of sales and a EUR 5 million-EUR 7 million increase year-on-year on EBITDA. Is that something that we should also expect for Q3 and Q4, given, let's say, the contracts that you have in place, the shortage of fish oil, et cetera? Secondly, on Algae, Olivier indicated that the oil extraction capacity allows for more revenue in pet and human. I also assume that these segments are more profitable than fish feed. Is there any indication for the difference? A question on the disposal of non-core.
Yeah, it would be great if you can provide a bit more color behind, let's say, your confidence here, also given the relevance for the leverage ratio. Then a final question on PLA. Yeah, much discussed already about the early signs of recovery, but does this also take into account for the, let's say, sustained high sugar prices? Thank you very much.
Well, thank you, Patrick. I will answer the PLA and the algae oil extraction question, and Eddy, the other two. Just starting with the PLA. As you know, we are, we have our hedging policy, and we are, of course, fully hedged for this year and already for part of next year. Obviously, when you look at 2024, and that's important to note, we see some volatility in sugar, and you know, it has increased quite a lot, but it also came back recently quite a lot. If you look at the May or June future, this morning, it's down to $0.21 for Sugar No. 11.
There are some big crops to be completed in between, you name it, India, that is in progress. There is also still be some arbitration in Brazil. What we are doing now is that we are cautiously covering already part of 2024. Yeah, these are at increased prices, but not the one you see, or you have seen on the spot market by far. I want to put some balance there because, you know, don't think when you see a price of $0.28 per pound, that we bought at $0.28. We are really far from this level.
At the same time, what we expect in the balance of PLA cost, although we're going to have some sugar cost increases, we see big drops in sulfuric acid, in other components, you know, that are part of important pieces of cost of our lactic acid production. And we see also freight, and, you know, we ship from all over the world back to pre-COVID level. So, I mean, you know, when you look to sea freight shipment out of our fiber ratio. So there are many things that are going in the right direction. The only thing so far not going into the right direction is the sugar price.
Again, you know, there is still a lot of things are going to happen before we need to book the vast majority of the 24 sugar plant related to what's happening in the entire balance around sugar. I include ethanol in there, and dynamic on ethanol and bioethanol as well, which is a big part of the speculation around sugar. On Algi and oil extraction, this is a great question. Obviously, you look at current fish oil price today, which are above $5,000, you know, and you remember maybe a couple of years ago, we were pricing AlgaPrime at $2,500. We've been following the fish oil trajectory, but we also do not want to be only opportunistic because we want to convert customers for the long term.
I think one of the advantage of our algae value proposition and pricing is that we have a stable, you know, throughput that is not a, a volatile, you know, product. We are not necessarily looking to just max out price so to be at official parity anymore, but we want to contract longer term and, you know, value added and disconnect as much as we can from the cyclicity of official. That's one. When you think about price around $4,000-$5,000 for our product to aquaculture, which is we have a kind of official market. When you go to a basically pet nutrition, you can easily double to triple these, these type of things, these type of price.
Human nutrition is probably quadruple, at least quadruple the level, the current level to. It doesn't mean you get there from day one, don't get me wrong, but there is a very high margin ladder as you specialize, and as you move up the, indeed, the application category, margin. We, we are starting with a current capacity, again, small. Basically, there is more to come when we present a roadmap before the end of the year on what are, is the intent in terms of development in that field. Because indeed, the, the, the good thing about our business model is that we can trade up quite a lot, you know, so these are about strategic choices.
I still believe, you know, we need to continue supplying the aquaculture business because this is the great foundation to further build, you know, new categories, but also new adjacencies. If you're just in aquaculture, it's a nice platform to, of course, sell DHA today, but tomorrow, maybe other fatty acids, maybe proteins, maybe antioxidants out of algae. When you move to nutrition, then it's also a great platform that we can build around DHA to maybe sell acerola extract and rosemary extract that are key building blocks in our preservation business, but that could have nice synergy in, in the future algae nutrition business. This is the way we look at it, as well. Again, more to come before the end of the year. I think, Eddy, maybe we want to take algae?
Yeah. Oliver let me take your question on the algae profitability development into from your perspective, maybe the best thing is, is to look at Q2 performance as the most recent quarter, of course, where we had close to 5% EBITDA margin. Within that, we had this negative absorption effect. That's also why we highlighted that. If you would correct for that, underlying business is performing already close to 10% EBITDA margin. I think it's safe to use that as an assumption for the second half of the year, apart from any absorption effects in the second half, being positive or negative, because that's always a bit dependent on exactly the production levels versus sales goals. Maybe second command, don't apply Q2 sales level x 4, because Q2 has been very strong.
That, that should be not, not your base assumption there for the full year. All in all, a very clear run-up, I would say, with the, the profit delivery of, of this year also purchasing the level of last year. On your, emulsifier question, yeah, again, I'd like to stress that the ratio, the net EBITDA ratio, outlook that we've given for the full year, by the end of this year, 2.8-3.2, is excluding any potential proceeds from the divestment of emulsifiers business. We did that on, on purpose because it's never exactly possible to plan out, when such time takes place.
On the process itself, I really want to stick to, to what we have shared in the press release, so that we anticipate to conclude the transaction still in this calendar year. We will really not disclose any further information as not to interfere with the divestment process research, and I want to leave it the past.
All clear, Eddy. Thank you.
Once again, as a reminder, if you do have any questions, please press star 1 and 1 on your telephone and wait for your name to be announced. Once again, it's star 1 and 1 on your telephone. We are now going to take our next question. The question comes from the line of Reg Watson from ING. Please ask your question.
Good afternoon, all. I just have a few questions. Olivier, I'm struggling a little bit to reconcile your bullishness on the PLA market with the decision to counsel Grand Prix. If I understand correctly, you're running at about 50% capacity in Thailand, so if there's enough demand to quadruple, you'd actually need a second PLA plant the size, the size of the current one in Thailand. If you could help us with that, that'd be really useful. My second question relates to the guidance. If I rewind to the start of this year, your adjusted EBITDA core growth guidance was 15%-20%. Since then, you've downgraded your volume mix assumptions quite significantly.
You've also downgraded your revenue assumptions, and yet the adjusted EBITDA guidance remains the same, having been upgraded in the meantime and now cut again. I'd, I'd like to understand the moving parts behind that, why we don't see the EBITDA guidance range dropped from 15-20 to perhaps a lower range? And then finally, I noticed that your Chief Technology Officer has resigned from the company, Marcel Wubbolts. What's how far are you in terms of making progress of replacing him? Because obviously, he was a member of the executive board. Clearly quite an important individual, and I was surprised that we didn't see notification of his departure.
No, thank you, Rich. I will mention on the CSSO and the PLA question. In CSSO, we did Marcel Wubbolts left us earlier this year, we are as you can imagine, active in the recruitment, filling that position. It doesn't mean that it is not being run. We have an acting person, you know, that sits on EXCO, that is taking care of that portion. Indeed, that's something that happened earlier this year as part of any dynamics of any senior management team, as you can imagine.
On PLA, basically, my statement is when we look to the current runway for the full year 2023. As you see, if you look to, of course, the last quarter's history, we ran much lower than what we've been running across 2022 or the first part of 2022. There is big spare cap, you know, to reach the current nameplate capacity of 75,000 tons. Basically, without giving you all the detail number, but, we can, we did already double there. With very minor investment, we can further, you know, double on the current run rate. This is my statement. It's very, very simple.
I mean, I know you, you can do the math, because if you just look to the, you know, export stats from Thailand to see our numbers or from the U.S. to see our competitive numbers, you, you know, the product very price, you know?
Okay. Can I clarify something? Yeah, if, if we're, if, if we, if we take it as read that the current run rate is around 50% capacity, if you've got 4x the demand, as you say yourself, if you double, then you fill the capacity. If you double again, you need another 75 kt of capacity. Is my reading of that correct?
No. Yeah, I think the utilization at the moment is slightly lower than what you're actually doing.
It's a, it's a little bit lower than 50, okay.
Yeah.
But even then, if we're quadrupling from a bit lower than 50, it's still well in excess of 100.
Yeah, correct. Yeah. Again, there is no decision being made. I just said we have the potential to get there. The market would turn up, yeah?
Okay.
Just maybe to clarify that, you know, when, when we went to the PLA plant discussion, you know, we had multi-years, as you can imagine, the strategic roadmap for PLA. Step three would have been that one. Yeah. We would have stayed on the growth trajectory we experienced in 2020, 2021. You know, for strategic reasons, step two was this plant in Grand Prix. Step three was exactly the one I explained now. It was already in the, in the, in the card box. I mean, Now, now not doing the French investment, yeah, you, you, you better do that one on, on installed capacity.
Okay. Okay, understood. Thank you.
No formal decision has been made, just to be clear on this, yet by the joint venture.
Yeah.
The other question on the EBITDA growth guidance versus the downward adjustment in the volume mix, guidance. Yeah, there are other, other levers, of course, impacting EBITDA. First of all, EBITDA, we have reduced it from the upper end within the range. That is indeed, like you rightly said, a, a adjustment in the guidance. Apart from the top line development, of course, yeah, what, what we also see happening is, the, the input cost inflation, that, that is getting more positive as a picture, if you will, compared to earlier indications. That is a plus in that sense to, which is offsetting bit the downwards top line development. Secondly, also our fixed expenses, that's also something we can, are controlling.
really have a very disciplined approach in all the fixed cost component that we have in the company. That is offsetting a bit the, the, the downward, adjustments from the top line.
Okay, now that, that's very helpful. Thanks, Eddy. Just to come out in support of Fernand, I also find the FX waterfall quite excessive, because if I look at the yen and the dollar moves in the half, half on half, it roughly amounts to sort of 3.5%. And yet you're posting an EBITDA hit of a translation impact of close to 7%. It does seem a lot higher, but let's, let's leave it for now and maybe come back with perhaps-
Well, I think we can go there, but we spent some time on that.
Yeah. Yeah, indeed. Indeed. Thank you very much.
You're welcome.
Thank you, Rich.
Mr. Rigaud, there are no more questions. Please continue with any point that you wish to raise. Thank you.
I just want to thank you all who participated in the call today, and surely we listen again to each other in Q3 results. On this, having a good rest of the summer to everyone, and have a good day. Bye-bye, everyone.