Earnings Call: Q1 2020

Apr 29, 2020

Good morning, everyone, and welcome to this Novozymes conference call. Thank you all for calling in. My name is Tobias Bjork, and I'm the head of Investor Relations. I'm joined here here today by the full management team as well as the rest of the investor relations team. Our CEO, Estebanji. We'll begin today's call by reviewing our performance in the first quarter followed by CFO, Lars Green, who will take who will cover the financials. The presentation should take around 15 minutes. And after that, we will be happy to take your questions. Some of the matters we will discuss in this conference call are forward looking, and I would like to remind you that these forward looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. With that, I will now hand you over to our CEO, Estebashi. Yes, please. Thank you, Tobias. It's a pleasure to be here speaking to you all. I started my role as CEO of Novozymes on the 1st February, and I embrace the responsibility with with a lot of pride. Novozymes, we translate some of the world's most pressing needs into opportunities, and we answer them with science. When I look at Novozymes, I see a healthy company. I see a company with a skilled people, an incubation, an incredible innovation pipeline and very strong financials. I also see a company that holds a great potential for further growth. And to unleash that potential, we simply have to do what we design, what we are set for. Solving global needs with biology. And while doing so, we also commit to deliver higher sales, earnings, and value creation. I am a Spanish national by birth and a chemical engineer by training. I came to Novozymes with 25 years of professional experience from now. Where I worked in a broad range of businesses, functions, and across different regions. I've had the privilege of leading strong teams, making good businesses even better, and advancing from challenging situations. I know for a fact that change rarely comes easy. It takes hard work. It takes dedication. It takes a strong purpose. It takes good leadership, and it takes clear direction. That is why I and the executive leadership team, together with the board of directors, we are determined to deliver. I look forward. I look forward to leading Novozymes on its exact exciting journey, and I can assure you my full commitment towards delivering on our strategy, better business with biology. Now please, if you could turn into slide number 2 for review of our first quarter performance. As you already know, we delivered a very strong first quarter with 10% organic growth coming from all main businesses and geographies. I am impressed with how the organization has been able to fully meet customer specific demands and even in this very difficult diff and truthful on times. However, as we communicated on April 7th, The ongoing COVID pandemic has forced us to suspend the 2020 outlook, and this is still the case. The 1st quarter EBIT margin came, in at 28.9%, which is a significant improvement on the last year. The good development was driven by efficiency gains and higher operational leverage. The cash flow for the quarter was also strong with 825,000,000 a deca k, which is roughly twice the amount we reported on the first quarter of 2019. From an innovation perspective, we launched 2 new products in addition to making a new freshness solutions available to the market. And before we review the business segment, let's look at the geographical sales performance. So please, if you could turn into slide number 3. In the first quarter, organic sales grew by a strong 13% in emerging markets and by a solid 8% in developed markets. The strong performance in emerging markets was mainly driven by bioenergy, household and care, and food and beverages. Sales in the developed market was led by household and care and food and beverages. And the growth on this two segment was partially supported by a higher underlying COVID 19 related consumption and consumer and customer stockpiling. Now please turn into slide 4 for a house volunteer. In house volunteer, we had a strong start of the year with 11 percent organic sales growth in the first quarter. Our growth, good underlying momentum, continued into 2020. Driven in part by our freshness platform where we make a new enzyme for liquid and unit dose the tokens available. This new solution is now on the sales in many European countries. And the sales on the first quarter also benefit from the COVID 19 related demand. Especially in Europe and in North America. As we saw our customers there stockpiling critical materials and when the consumers also load their pantries and did more laundry and more dish washing at home. In the morning markets, we delivered a strong growth in Middle East, in Africa and in Latin America, where the sales in, Asia Pacific were hampered by declining sales in China as consumers experience, COVID 19 restrictions. Looking ahead, the COVID 19 related to stockpiling effects will likely be off set when the pandemic eventually subsides. But we also expect sales to benefit from continued market penetration with existing enzyme technologies and our freshness solutions. The full year sales indication for household and care remains volatile. But roughly impact. And that's based on our current insight and the assumption that both our own and our customers logistics will continue to function relatively normally. You could please turn into slide 5. Our organic sales in food and beverage grew 11 per percent in the first quarter. Strong performance was driven by growth in baking. In beverages and grains, while sales in food and nutrition declined slightly. The sales were particularly strong in baking with growth from both well established fresh keeping and flower correction technologies as well as from consumer health oriented offerings such as acrylamide reduction for biscuit and fried goods. In the first quarter, we launched a new member of the Safira product range, Safira Fiber. Fira Fiber is a solution that converts lactose in milk into soluble dietary fiber. And these new products offers multiple consumer benefits in milk. Including sweeteners without added sugar. It also brings increased dietary fiber content for better digestion and produce lactose for consumers with lactose intolerance. As a peanut fiber grain extraction, it will support the diaries to provide healthier foods to the consumers. The sales in the first quarter were affected by COVID 19 related demand, although it's it's difficult to set its impact It's slightly the stockpiling and the shift to eating at home that lead to extra demand to some of our solutions, for example, in in baking. And this friend will, will assume to be upset when the situation eventually settles. The fewer a year sales indication for food and beverages remains volatile, but roughly impact based on our current insight and assumption, that both our own and our customer logistics will continue to function relatively normal. We could please turn into slide 6. Our Bioenergy business posted a strong performance with 11% organic sales growth. The overall performance was as expected. With growth coming from the continued capacity expansion, of corn based ethanol production in Brazil, the increased penetration of our yeast technology and growing US production volumes. The first quarter sales were not significantly impacted by the southern drop of US ethanol production as it only started in the last week of March. But looking at the full year, however, the social distancing and the people are staying at home, that will have an impact for gasoline demand and ethanol, leading to significant drops of our production volumes. Bioenergy is the segment where we see the most uncertainty for the full year. And it was also the main reason why we had to suspend the outlook. We could please turn into slide 7 for reviewing agricultural unfit. In agricultural unfit, we grew 8% organically in the first quarter. Led by a strong growth in BioAg and a compounded by a solid performance in fit. The growth in BioAg was driven by a strong inoculum sales in North America, but also enabled by the relatively easy comps. The business was transition very well into the new partnership model with buyer. We have also made progress with other buyer partners, including Syngenta, with whom we just launched Tigro in both in Europe and in, Latin America. Tigro is a unique biological fungicide used to combat fungal diseases. And this technology helps farmers to protect their fruit and vegetable crops against frequently occurring diseases. And today, are currently mainly combated with the use of chemical pesticides. Animal feet also benefit from inventory moves across the value chain and continued the commercialization of Balancios. Blentures is an exciting technology for improved gut and health in po in poultry. Which together with our bionocalons will continue to drive sales in 2020 and beyond. We continue to highlight that the full sales in agricultural unfit are subject to market uncertainty related to global farm economics, trade concerns, and potential COVID 19 disruptions. And finally, let me add a few comments on technical and pharma. Organic sales in technical and pharma declined 10% in the first quarter. And this decrease was mainly caused by the timing of farmer as well as the declining sales we saw in in a in textile due COVID, 19 disruptions in China. And with that, I will hand over to Lars for the financials and for the wrap up after you last. Thank you, Esther. Please turn to slide 8 for a review of our financial performance in the first quarter. Sales in the first quarter grew 10 percent organically and 9% in reported Danish kroner. Strong performance was led by double digit growth in Household Care, food and beverages, and bioenergy accompanied accompanied by solid growth in agriculture and feed, while sales in technical and pharma declined. Busmarking for the first quarter ended at 57.1%. This was a 160 basis point improvement on the first quarter of 2019 that was mainly due to productivity gains, lower input costs, and higher operational leverage resulting from the strong sales performance. Strong top line performance also had a positive impact on the EBIT margin, which ended at 28 0.9% for the first quarter. This was a 320 basis point improvement on the EBIT margin compared to the first quarter of 2019. In addition to the higher operational leverage, driving a lower OpEx to sales ratio, the EBIT margin also benefited from the improved gross margin. The return on invested capital, including goodwill, ended at 21.3% after the first quarter of 2020. This was 300 basis points higher than in the first quarter of 2019. Improvement was due to the higher net operating profit after tax, which more than offset the increase in average invested capital. Net investments in the first quarter of 2020 amounted to 138,000,000 Danish kroner, This was on par with the first quarter of 2019. Free cash flow before acquisitions was 825,000,000 Danish kroner in the first quarter of 2020. This was 405,000,000 Danish kroner higher than the free cash flow of 420,000,000 in the first quarter of 2019. The strong developments between the periods was mainly driven by higher sales and margin expansion. Even with a very good first quarter realized in the books, uncertainty persists for the full year. Our outlook for 2020 remains suspended until we get a better understanding of the implications of the current situation. As we communicated on April 7, the share buyback program totaling up to 1,500,000,000 Danish kroner will continue as planned, and the company's dividend policy and capital structure policy are unchanged. Please turn to slide number 9. Let me summarize the messages here today. We are operating in Triple and times with limited visibility. Like this, it's very encouraging to see that we are able to capture growth opportunities as they arise. Novozymes is geared to deliver even in difficult times when supply chains are under pressure, and access to consumers becomes more difficult. With a strong start to the year in sales, earnings, and cash flows, We are showcasing our company's strengths and what we can achieve together. That said, there is still a lot of uncertainty, especially with respect to the US ethanol market, and stockpiling effects. Thus, our outlook remains suspended. Looking beyond 2020, We are seeing good progress in the implementation of our strategy that our business with biology, and we are working hard to drive sustainable and profitable growth. For obvious reasons, we will not be traveling in the coming days, but we will instead host a series of conference calls. We're looking forward to meeting you in that virtual setting. That concludes today's presentation, and we're now ready to take your questions. Operator, please begin. Thank you very much. So ladies and gentlemen, if you have a question, please press star and then 2 on your phone keypad now in order to enter the queue. And then after I announce you just ask that question. The first question is from the line of Son Samsung of SEB. Please go ahead. Yes. Good morning. Good morning. Regarding Household Care. If you could talk a little bit about, how you see the rest of the year progressing. I was not completely sure how you how you saw it from what you, wrote it in your report also. If you can say something about, what you have seen in April and how quickly you would see from your customers, the the the Turkish, when they react, how how how quick you can normally see that reaction in your numbers? And then for bioethanol, that's what you see currently in April. It's quite different from q 1. I'm, I guess, and also want to see for the for the year in that division. Thank you. Hannah and and Tina go deeper on the on the results, for the other drivers as we're seeing, answering your question in more detail for individual segments. But overall, on the the net effect or that we have seen in q 1, the comp the positive effect and the translation into sales of the increased demand. Of, for the change of, consumer habits from both of them stockpiling in the surgeons, but also the intrinsic increase demand. Of, the surgeons with a higher quality or also the increase, number of these washes or the turgeon, laundry at at home. So the combination of those aspect. That was an increased accelerated sales that we captured in in q 1. The areas that we saw in you know, from a, in bioethanol, we saw that forecasted decline in Q1 area, but not necessary reflected in our, books because it was on a trend or the for projections that we would see from the demand to come as we are for forecasting now. So the overall Annette, a stockpiling effect and increased consumer trends for both the surgeons and a consumer changing dynamics with also the forecasted tendons of a bioethanol linked to the low gasoline demand, that's continued to to prevail as long as the gasoline is not increasing. And with that, I leave it to you, and us and Tina to go in deeper. So, three questions, and thanks for those, Hassan. First on the rest of the year, I think it's fair to say that, there are a lot of uncertainties as we look into the year. We've had a very, very strong start to the year. I think yesterday alluded to, 2 of the factors. One relates to stockpiling. The other one relates to intrinsic demand. We believe that the majority of what we have seen of of the positive momentum above what we had a momentum in the back half of 'nineteen. It relates to stockpiling, but there is also a demand component especially in North America and in Europe. I think some of the uncertainties that we see are caught split between stockpiling and demand, but we don't have fully ability to how that will play out the rest of the year. And then I think the emerging markets in general is a is a place to watch out for in terms of the their supply change and the stability in in the economies that can concern me a little bit. I think we will be more have more stability in North America and in in Europe, for a year. In relation to April, we we have seen continued good momentum in April But if you follow the, which I guess relates to your last question, which you follow the cash reduce the data that comes out of Nelson, you'll also see that it has been going up and down quite dramatically. And, over the last couple of weeks, we've seen demand softening quite a bit and even in some job visits gone down to negative. And that means that, that will hit us back to more normalized levels as we get into Q2. When you talk about customers and the effect on us, I think this is a very special case and I would not use that as a proxy for for the future. But we have seen sort of a delay in our business of around a couple of weeks with these very, very traumatic jumps that we've seen in the consumer off takes. And that's a very unusual situation. And I think in all of the years I've been in business. I've never seen week by week variations as we have seen over the last 6 to 8 weeks. So again, I would not use it proxy, but that's the development we've seen over the last couple of months. I hope that answers the questions. And then over to the bioenergy part, So already when we started the year, we talked about that q 1 would have, a wider range compared to company average, and that has indeed been the case. As you have seen, we had a very strong Q1 driven, especially by capacity getting online as well as some of our innovations, especially in the yeast space, as I said, already has alluded to and then it was also supported by if you look at the IEA data, some increased production volumes. However, as you also are so right, sir, when you look at the year to date numbers, there in a in a on in EIA. And if you follow the weekly numbers, they are in in significant negative territories, which is, the reason or one of the reasons, one of the key reasons for why it is we suspend our guidance. We also see that in our numbers, However, I think it's important to remember that when miles gets back up, when it is, we get a a margins ethanol producer margins into more positive territory, then Novozantin is very well positioned given our broad product offerings as well as the closeness we have to the customers in order to take advantage of, when we get back up and and and and get fixed, get sales back on track. But you are right. What we see in April is very different from what we saw in Q1. Our next question is over to the line of Lawrence Alexander at Jefferies. I I guess a quick question on how do you think about node designs, operating a rhythm compared to what you're used to in terms of how as the system is responding. And secondly, can you give us a sense for with, bio bioenergy Is the mapping from the EIA data going to be linear, or do you have some offsets that will reduce the volatility in your segment? The the the way I see Novozymes, it's been a a little bit more than a 2 months, in a in this incredible company. And, I'm amaze on the strength of the company. The it's it's well fit and positioned for the long term growth and also our commitment in, in long term share shareholder creation. If anything, you can say on the rhythm, of the of the poles of the corporation. I think that q 1 results clearly speak for that. 10% growth and nothing else than the sum of a collective efforts across many areas. It was, yes, a good momentum from Q Four. It was, also the effective implementation of our strategy. It was moving ahead with implementation of of commercialization of innovation, but it was also swiftly and effectively reacting to unpredictance on the man. So we first, absorbed the volatility in Asia that we saw the decline, and we reacted to that, resiliency. We have kept all our plant running with and despite the the the headwinds, And then we translated the increased demand that we saw at the year end, at the at the quarter end, from stockpiling and chains on in food and in detergents into sales. So that pretty much to me speaks about the good rhythm, a good pulse, a good resilience, And, yes, it's a journey. We have done good progress on the prioritization of our innovation pipeline, ensuring we're putting the right focus. Good momentum, and you have my commitment to continue on that direction. On your question on Bioenergy, I will let Tina go go deeper on that one. What I can tell you is that we are not immune what is happening in North America. 50% up to 50% drop demand in some of the states. That's a big number. But at the same time, we broader than North America, and we broader than enzymes. So we have a global portfolio. We have a a strong pipeline and efforts on a penetration of yeast. We we were capitalizing, in Q1, and we're gonna continue on the momentum of, the growth in a in Asia. And, those are areas that we're backing up, and Tina's team is fully committed if on, mitigating the downsides that we're seeing in North America. Yeah. So, elaborating on on what is the set. We are influenced by the decline in miles driven as well as the low, as the low margin environment, which there in the U. S, but the biggest, the way biggest impact is the decline in miles driven. When gasoline is not consumed in the U. S, there's no need for ethanol either. In that miles which are not driven. So you should not expect you should not expect us to be in you. But as is also alluded to, we are, is still seeing, in Q1 growth coming from, especially Latin America, but also other emerging markets and then our innovations in the yeast platform. And we are well positioned, when, mild come back up. Hope that answers the question. Thank you. Thank you. Okay. The next question is from the line of Gunther Zechmann at Bernstein. Please go ahead. Your line is open. Hi. Good morning. Thanks for taking my questions. 2, if I may. First of all, you mentioned in the press release a negative mix on gross margin. Can you just describe what's driving that negative mix? And then the second one for under Can you just talk us through, what what you're planning for the rest of the year for the European rollouts of the freshness platform? And the exclusivity with Procter, how long long that will continue. If I can sneak in a follow-up on that, when you're planning to launch the product in North America. Thank you. Thank you, Gunther. And as if you could answer, the the an agent related, and then I pass it afterwards to Lars on the margin. Yes. And thanks for the question, Gunza. The European rollout is moving according then we're now in the as we have also said, we're coming into the liquid segment and the unit dose segment, and we are sort of progressing throughout the most of Europe and and, several countries have been rolled off, onto the with the technology, essentially just as we had planned a couple of years ago, And when we talk about exclusivity, yes, we have exclusivity. And then the the good thing about that is that as long as our partner committed to the volumes that we have agreed. We will remain having that exclusivity. It looks very much as if that's the case. And that does not mean that we will not have, freshness technology for the bulk market, but it's not the same technology. And we have, all along plan that that will be launched sometimes in, in 21. That's still our expectation for the for the broad market. For North America, we don't give specific guidance. Of course, we have plans together with our development partner, but we don't give specific guidance on timing in simply because of the agreement that we've made with the hard development partner. I hope that answers the questions. And when it comes to the gross margin, then I think, 1st of all, I'd like to sort of to reiterate that we actually had a 160 basis points expansion of the gross margin. And then we are sort of trying to explain in our in our note, how is that composed? Compared to history, we actually have a less negative impact from product mix and price in this first quarter. So, so actually a a bit better than what we have seen in the past. And then I remind you also that in the first quarter of last year, we had deferred deferred income, in our in our sales, a little bit of that. That did not carry any, production costs. So that also is a small negative, on the gross margin, when you compare it, the quarter to quarter, So underlying improvement is actually stronger than the 160 basis points that, that we have, as the reported number. That's really helpful. Thank you both. Okay. The next question is from the line of Michael Nobad at Nordea Markets. Please go ahead, Michael. Your line is open. Very much. Just two, bi energy questions. One is to, the the emerging markets and and and and Brazil. We've seen, Brazil going out saying that they're cutting growth forecast by approximately 50%. So so, how how are you planning for, for for for this? And Is that something that you also see sort of continuing into quarters beyond the the second and third quarter? And, then secondly, on on US buy energy, we saw ADM, cutting around 1 third of that capacity a bit more than 1 third of that capacity. And furloughing employees for next 4 months. So it's always just to get a feeling on how you are sort of, planning for this because that's into August that they are furloughing employees. So just to get a a sense of, how long you see that this is pressure in in the ethanol market, of course, driven by by by by a few MRs, but just in your planning processes, how you see the the sort of the stretch of this going on. Thank you, Michael. I mean, I will let Tina, for follow-up and give you further details. In general, we saw strong We we saw healthy growth in Q1 on Bioenergy, and that was, the good momentum in, in North America, the new capacity ads in a in Latin American Brazil and also the penetration of our use technology. It is to that the industry is facing, headwinds, across many different areas being probably North America, the the region was exposed. Before we go deeper in, in bioenergy, it's only wanna remind that diversity of our portfolio and, and that's the beauty that Novozymes bring in. On, on how we're playing globally and also the diversification of our niche on how to overcome what is a fantastic market over the cycle and that, we we have a strength in other areas for the next of the year. Yep. Thanks, Michael. So first one, on the emerging margin, especially on the Latin American set up as I as I know, you know, uh-uh, most of the ethanol in in Latin America is coming from sugarcane. So you'll have to take into You'll have to think about the profitability of sugarcane ethanol versus corn based ethanol and and corn based ethanol is more profitable there. However, that doesn't mean we are immune to, the decline in, in miles driven in in in that segment either. I think that what you should should look at is a healthy growth in Q1 in emerging markets and especially in Latin America. And then, think about that in general, the volatility we have in the bioenergy markets, but especially in the U. S. But also in other geographies, this is one of the key reasons for why it is we are suspending guidance So it is difficult for me to predict predict on on how it's gonna, how it's gonna end. And more specifically on ADM and the US set up and, them cutting their capacity into August. You'll have to to to to look at that we need to get the miles back up. But when we have got the miles back up, we also have seen, you've heard me talk a number of times about increased inventories in the bioenergy space, and that has not become smaller in this period where in fact, inventories have got up higher. So, so there's also some inventory to be burned off. So that means that there are uncertainty. The way we operate with it is that we have some different scenarios, which we are trying to navigate And in all cases, we are preparing in order to be ready to to to be there, work with our customers, even in these times, We have our guys out, working closely with customers in order to be able to deliver, the products and the solutions which they need when for those who operate, but also when they're ready to ramp back up. So it is one of the key reasons why we have suspended our guidance. So I, unfortunately, cannot give you more inside into how long and how deep is this crisis gonna be. Thank you very much. Okay. Before going on to the next question, which is the line of Silke Cook from JP Morgan. If anyone has a question again, can you please press star and then 2 on your phone keypad now? And, Zoko, we're over to you. Please go ahead. Thanks very much. Good morning. Like, my nutritionist has been going into the quarter before the COVID 19 pandemic. Like, it looked like expectations were maybe for, like, you know, mid single digit growth, like, across the various businesses. And so, asbestos, you can, estimate. Do you think the benefit from the pandemic and pre buying was maybe about, half of the organic growth in the first quarter, or do you think it was, you think it was less than that? My my second question has to do with the, because I said the trends in, in detergent enzymes, and the, you know, we we all have to do look at the Nielsen data, and it doesn't look like that. You know, many things continued personal care items were in demand in in April as well, but but detergent and done specifically, what were the, you know, detergent marketed church and sales dropped off. And so I was wondering whether you, you know, can't discuss what happened to your the church and, enzyme sales in April, whether they're in fact were positive or up slightly or what do you think your April results were, negative? And lastly, I have a question on on your cost structure. And and that is, you know, give them the volatility, in demand. What do you think the levers are that you can, that you can pull up or whatever things that you can do? And do you have a general idea over short or over longer term, what the right level of, you know, SG and A expense and R and D expense should be for Novozymes. Thanks very much. Thank you. That was a a broad, a quest and I'll I'll I'll I'll I'll give it to Lars to go in detail in a, overall scope. We are here for the long run. We are a long term growth company, and we consistently and continually investing for the long run for the long term. Having said that, We're very conscious on the situation that we're living today, and we also aligning to the reality. And we we're taking a precise measurements to ensure we maximize the use of our cash. Anna, we align to the situation that we're living today, but not at the expenses of compromises for the long term. That is the future after coronavirus, and we con continually investing for that future because our solutions are going to be part of that future. Then to your question on what is the split of the of the growth between organic growth and, and stockpiling. Maybe I will I will take that, from another angle and that, yes, we captured both, the good momentum that we saw for Q Four, but also the increase of or the change of dynamics of the, from consumers and then the stockpiling effect. But what it's important is that we did capture and import, unprotected or unpredicted demand. And that speaks for the resilience of the organization. The strength of our supply chain the the, reliability of our operations. And, yes, the good relationship of our sellers with the customers that whether to translate that unpredicted opportunity in into sales. Yeah. Thanks, Est. So so just adding a little more flavor to it. Then as I as we also said, in our in our call, early April, we came into 2020 with a good momentum, from second half of last year. But we also did see our sales accelerate through the first quarter. And therefore, I think it is fair to assume that the part of the the extra or accelerating sales in the latter half of the quarter has been related to, you know, stronger demand in some areas, but also a level of, of stockpiling. And the reason we suspended guidance is that we really cannot say exactly how much is what, and also for how long this situation will last. Maybe just one more, comment to it. The first quarter of last year in 'nineteen was a relatively weak quarter. And so, therefore, the comparison was also relatively easy, but we are, somewhat ahead of our plans in the first quarter. So you should see, the performance and the 10% in that light. And on the cost structure, we did in the third quarter of last year implement a a a a restructuring of, of some of our functions. And we did release a a a a certain level of of resources that we are planning as part of our, strategy to reinvest, to support, our pipeline and support, our commercial exhibitors to accelerate our growth So we are committed to to do that. Although in these circumstances, it is a bit difficult to execute completely on the plan. But we are trying to then be smart about how we do it and, for instance, accelerate some of our digital investments, that allows us to interact with our customers in a smarter way. So so that's how we that's how we look go about it, but we are committed for the long term to implement the investments as we planned in our strategy. On If you want to answer the question on April on Household Care specifically, as also said before, we see solid momentum continue my analysis of the situation is that the disruptions we've seen in the supply chain, driven by very, very strong consumer demand in in March and parts of April is now being, replenished in the entire supply chain, and that's the effects that we see continuing into April. Again, as I said before, we see around a 2 week delay in this period where, when when disruptions happen, we we see that translate into our numbers in a in in a couple of weeks' time. Does that answer your question? Yeah. I'll get back into queue. Thank you. Thank you. In that case, I believe the next question is from the line of Eunas Hansen at Danske Bank. Please go ahead, Johan. Your line is Eunas. Your line is open. Thank you. And then good morning, all. A couple of questions from my side. First of all, could you talk about how the, lower oil price is affecting your business, besides in in bioenergy, of course? In in general terms, both positives and negatives, and then specifically within the household care, where you're also talking about a continue the penetration story of enzymes into detergents, but how is that affected by, by the lower oil price? And then secondly, on, bioenergy then, and and yeast, how how is the sales in yeast, being affected by the sharp decline in in ethanol production. I guess it must be much more tough to to to to sell and and and push the the penetration story here. And then as a follow-up, how much of revenue and bioenergy is, coming from yeast today? Thank you, Jonas. The in the the oil price, relationship to our to our sales or the dependence. It's a I would call it more like an indirect effect. So if you would, see oil as a indication of the consumer demand. Because typically, historically, they have been related, then that is a very strong correlation. I mean, there is in some areas that we have a high exposure and, like, for Ohio linkage to oil prices on the excess demand of bioethanol beyond the 10%. Which is, required by regulatory. And there is also some elasticity on a replacement of enzymes from a from a other alternatives, oil based. But in general, the the amount of our products, it depends more of consumer. Needs and demand and acquisition power than all prices itself. It's the value and the differentiation that we bring in and the willingness to pay for those attributes. And historically, typically, that it has been related to oil prices. So, there is correlation, but maybe oil price, it's the effect or the symptom, not necessarily the driver or the area that triggers the demand of our products. With that, I will, also, I will pass it to to Anders and Tatina. If you could maybe further level out on the trans specific trends that we see in the Persian and also the implementation of yeast? Yeah. So, thanks for the question. Short term, this there's little effect on developments in oil price on the Household Care business. It is not triggered sort of on weekly developments, longer term, as you can also see, if you make sort of a correlation analysis, there is a certain correlation, but it's not a sort of a 100% correlation. I think the way that I look at this is that, the best for neuroscience is long term, sustain high oil prices with some stability in price. That is what creates the least disruption in the chain. And it's also a way you sort of have the longest motivation for our customers to make the reformulations. So, the opposite to that is, of course, a long term low oil price And I think we have to accept that that makes, some of our reformulations positioning, more more challenging and more difficult. And on the bioenergy on the yeast side, so you are right that it's more difficult for us to push the continued penetration of yeast simply given that we cannot travel out to customers and and and and and and run the them and and support them in doing that, We are using a number of digital means, but it's, and that is helping us part of the way. But it is slowing down the general, penetrations also because he's sales you could say when you have implemented the yeast also follows, the production of, of ethanol. So, so from that perspective, it's true that it is In general, with new solutions, it is more difficult to try them in in in these circumstances. In terms of how much how much yeast is out of our bio energy, sales it is getting to to, I would say, a significant part. I think where you should look at it is mostly that it's growing, very nicely given we have, got a number of new plans online. And and therefore, when you compare to Q1 for last year, it is a a a key growth driver. From competitive reasons, I would like to refrain from giving you the exact number on how much yeast is, but it is, getting a significant part, but in Science are still the vast majority of what we sell in Bioenergy. The next question is from the line of Sam Perry at Credit Suisse. Please go ahead, Sam. Your line is now open. Hi. You talked about the pull forward impact of COVID in household care and food and beverage. Is there any aspect of that within the feed business within Ag And Feed. Thank you. And I'm going to pass this last question, to Tina. Formal and override on that one. Yep. And, on the Agan feed side, we have seen less, I would say less of an influence directly. We do see some, moves in the supply chain, And part of that will be, you could say, normal supply chain moves. Part of it may be, COVID 19 related It is also if you, and that is not COVID 19 related, but think back of our January announcement. We were also calling out that we expected more volatility in the ag and feed segment, and that has not become less after a outbreak of the COVID 19. So some moves in the in the supply chain, we do see, especially on the feed side, but, also someone hacked, but mostly on feed. Thank you. For your for your time, ma'am, for for the dialogue, and I'm looking forward for continuing the conversations with many of you. And, for the queue session in in. Thank you. This now concludes today's call. Thank you all very much for attending. You can now disconnect.