Earnings Call: Q3 2019

Oct 23, 2019

Good morning, and welcome to the Novozymes Conference Call. Today, we'll review our performance for the 1st 9 month 2019 as well as our outlook and our current priorities. As we hosted a conference call on October 10 following the updated full year outlook, today's presentation will be shorter and should take no more than about 15 minutes. Afterwards, we'll be happy to take your questions. My name is Peter Huddl Nilson, and I'm the CEO of Novozymes. I'm joined here today by the Executive Leadership Team And Investor Relations. Before we jump into the subject matter, I would like to take this opportunity to properly welcome Larsgren to the executive leadership team. He has held various financial positions at Novo Nordisk, both in Denmark and abroad, and has since 2017 been a member of the Novo Nordisk Executive Management team. Last knows Novozymes very well as he has been on the board and been the chairman of the audit committee since 2014. I think he's the perfect match for us, and we're happy to have him on board. Now let's turn to our performance on slide 2. In the 3rd quarter, organic sales grew by 1%. Although this trend is an improvement from performance of our business in the 1st 9 months of 2019. As we communicated in the revised full year outlook on October 9th, Our U. S. Ethanol And Global Agriculturally Exposed Businesses continues to be challenged continues to challenge the 2019 outlook. This impacts Bioenergy. It impacts BioAC and starch processing negatively. We expect to close the year The reported EBIT margin was 27.6 for the 1st 9 months of the year, and we guide 27% to 28% for the full year with biology, we're implementing the structures and the responsibilities that allows us to run our business portfolio units in the appropriate the geographical sales performance. Declined 1% organically, while emerging market sales declined by 3%. As the developed markets declined mainly due to a weak U. S. Ethanol business. The emerging markets were down primarily due to economical constraints in the Middle East. China has also been soft primarily in Starts And Household Care. The 3rd quarter in isolation For the third quarter in isolation, emerging markets grew by 6% organically, driven by Household Care and Bioenergy in Latin America. Developed markets declined 2% as a result of a weak U. S. Bioenergy business. And now I'll hand it over to Anders for a review of the development in Household Care. Anders, please? Thank you, Peter. Please turn to slide number 4. Organic sales for Household Care grew by 5% in the third quarter and was flat for the 1st 9 months of the year. The stronger third quarter performance was expected. It was driven by the freshness rollout and by the negative impact from the Middle East being annualized in the second quarter. Additionally, we experienced a positive timing effect in Q3 at the expense of Q2. Sales in both developed and emerging markets grew in the 3rd quarter. Growth in developed market was mainly driven by Europe, In the emerging market, soft performance in China was more than offset by strong performance in India, Africa and Southeast Asia. Recent years, a trend of solid sales growth to regional customers and declining sales to our global customers continued during the 1st 9 months, but with less of a negative impact global customers compared to last year. I'm excited to see our freshness platform developing well and according to expectations. Not only in terms of our 2019 outlook, but also in relation to reaching the DKK 1,000,000,000 ambition over time. In September, we opened the doors to our brand new Household Care Customer Experience Center in Beijing, China. Part of our effort to increase our presence in the emerging markets, and it adds to the previously announced detergent design center in India. For Household Care, we maintain our full year expectation of low single digit growth. Moving to technical and pharma, technical and pharma sales declined by 3% organically in the 1st 9 months of 2019 and by 14% in the in the third quarter. This was below expectation and mainly driven by lower sales and textiles. And also in Q3, we experienced impact impact of timing in Pharma. We expect mid to low single digit decline in 2019 for technical and pharma. That's all for me. Andy, please. Thanks, Ana. Please turn to Slide 5. In food and beverages, we've had difficult 1st 9 months due to weakness in starch processing and baking, partly counterbalanced by solid performance in beverages and food and nutrition. In Q3, challenges in starch continued, while baking improved in food nutrition and beverage continued to deliver growth. Overall, 3rd quarter sales grew by 1% organically, giving a 1% decline for the 1st 9 months of 2019. For starch, performance was hit early in the year due to harsh weather in the U. S, and it continues to be impacted by high corn prices competing against low global sugar pricing. Further, we've seen some market share loss in low margin starch processing volumes and China remains challenged due to continued adverse commodity prices. Although sales the baking industry remained dynamic, we saw improved performance in Q3. As we expected, we've seen some recovery in the Middle East Africa business through export oriented European customers. Further, annualization of fresh keeping price decreases in North America is progressing meaning the headwinds in that market are stabilizing. Other emerging markets are mixed with strong growth in Asia Pacific continuing, while Latin America is challenged. Food Nutrition delivered growth in both the third quarter 1st 9 months of the year. The solid performance was driven by the increased penetration of our protein ingredient in plant extraction solutions. Supporting this business, we maintain our focus on and on developing new products to support higher quality and more sustainable foods. Sales to the beverage industry are performing well, driven by brewing and juice and wine, while sales to the beverage alcohol industry remain a bit soft. Summing up, it's been a disappointing 1st 9 months in food and beverages due to the softness in the starch processing business as well as weaker than expected performance in baking. Structurally, we continue to see opportunities from health awareness among consumers. Further, we continue to promote innovation and grain milling. However, we won't see full recovery from the headwinds early in 2019, and therefore, we expect the business to finish the full year flat compared to last year. Tina, over to you. Thank you, Andy. Let's start by looking at Bioenergy on Slide 6. Our bioenergy sales have been affected by a very challenged U. S. Ethanol industry this year. This was also seen in the third quarter as our sales declined compared to 2018, taking the 9 months performance to minus 4%. Production volumes in the U. S. Ethanol industry declined further in the quarter. High inventory levels and low cross margin has slipped to idle plant and lower capacity utilization. To support profitability and reduce losses, the most flexible producers have optimized capacity utilization. Our customers are producing less than the average industry decline, which according to EIA, should be down by some 4% in the third quarter and by 2% after the 1st 9 months. On a positive note, we continue to see growing demand from Brazil and good penetration for with additional provinces announcing implementation plans to comply with the mandate. The conditions of the ethanol industry have been challenging in 2019 adversely impacting our sales in Bioenergy. We don't see the situation improving in the fourth quarter and thus expect a mid single digit decline in organic sales for the full year. Now please turn to slide 7 for an update on agriculture and feed. Sales in Agriculture and Feed grew 3% organically in the third quarter and declined by 3% after the 1st 9 months. Sales in Agriculture remained below last year following the wet spring weather in the U. S. Midwest. Buyerise our new corn inoculant loans in partnership with Bayer is doing well, while our solutions for other crops are more challenged. And although the third quarter performance was a step in the right direction, it was not as strong as expected. This includes uncertainty through the planting season in Latin America which is also reflected in our full year expectations. Feed sales are developing as expected, supported by the rollout of Bellentures our recently launched solution for improved gut health in poultry. Looking at the remainder of the year, uncertainty persist in agriculture with drought in Latin America adding to the concern. This is also why we expect a mid to low single digit decline in organic sales in agriculture and feed for the full year. So now over to you Thomas. Thank you, Tina. Please turn to Slide 8. In the third quarter, we launched 4 new products, and we took important steps towards implementing the update strategy presented earlier this year. 2 of the new product launched With for the broad market and 2 were exclusive, this brings the total number of launches in 2019 to 'sixteen. One of these: Achieve Advanced is the solution for automatic dish washing in Household Care. This new product offered customers high performance in short wash cycles at low temperature with a lower environmental impact. We also launched Optimize 500 together with Bayer. This new robust soy inoculant brings together selective bacterias and provide the largest possible number of nodules in the main routes to boost the yield potential of each plant. In addition to launching new products, we are in the process in the process of implementing the updated strategy. The new pipeline governance have been outlined to enable better and more structured resource allocation in accordance with a new business portfolio unit framework. In essence, we'll focus our efforts where we can move the bar higher We have reduced the number of R and D projects in our pipeline from some 150 projects in the spring to fewer than 100 projects today. I'm really proud of the diligence. So all our colleagues have shown in this transition. And the fact that it hasn't led to any delays on ongoing projects. The fewer projects in the pipeline, we can allocate more resources to each project keeping a steady flow of new product launches, we are confident that the new setup will allow for more impact from innovation That's all from me. And I'll hand over to Lars. Thank you, Thomas, and thank you, Peter, for the warm welcome. I'm happy to be on board and I look forward to meeting many of you listening in the coming months. Please turn to slide number 9. Organic sales came out at -2 percent for the 1st 9 months, including a 3rd quarter performance on 1% growth. This was softer than expected and due to U. S. Ethanol and agriculturally exposed businesses also impacting agriculture and feed and start processing negatively. Reported 9 month sales in Danish kroner were flat, benefiting from currencies, but reduced by 1 off divestments and less deferred income. The declining top line had a negative impact on the gross margin. At 55.2% after the 1st 9 months, This was roughly 200 basis points lower than last year. Margins in the third quarter were, as expected, also impacted by severance payments from the August restructuring, to the tune of roughly DKK 250,000,000. The severance costs are split roughly even between the operational cost lines. The EBIT margin for the 1st 9 months of the year is slightly below last year. The 2nd quarter recognition of BioAg deferred income and the divestment of the remaining pharma related royalty contributed positively, while the Q3 severance payments impacted negatively. The EBIT margin, excluding 1 offs, for the 9 months period, was roughly 26% and for the 3rd quarter, close to 30%. The effective tax rate for the third quarter 1st 9 months is on par with last year. Net profit contracted 7%, including hedging losses on the U. S. Dollar. Free cash flow before acquisitions of DKK2.1 billion after the 1st 9 months of 2019 was slightly higher than last year. Cash flow has benefited from lower net investments as construction of the Innovation Campus in Denmark and of the new production facilities in India and the U. S. Has been completed. However, the positive cash flow effect of a lower investment level was partly offset by lower operating cash flow. Now please turn to slide number 10 for the 2019 outlook. The full year outlook is reconfirmed as per the October 9 revision. Organic sales for 2019 is expected to come in at -2 percent to flat and sales growth in Danish kroner is expected to be a half to one percentage point higher. The EBIT margin is expected to be between 27% 28% in 2019. The underlying EBIT margin is expected to end the as well as the positive second quarter 1 offs. Given the lowered sales and EBIT margin outlook, we expect the development in net profit to be at minus 5 percent to flat. We maintain our guidance for free cash flow before acquisitions at DKK 1,900,000,000 to DKK 2,300,000,000 This is explained by lower operating cash flows and lower net investments as we are well invested in our production capacity And finally, we expect ROIC excluding goodwill to be around 21% for the full year. With that walk through of the financials and our full year outlook, I'll pass the word back to Peter We're delivering on our own expectations for new product launches and commercialization of new innovation. This has unfortunately not been enough to mitigate the bad developments in agricultural exposed businesses with floodings in the Midwest, weakness in starch, the reductions in U. S. Ethanol volumes and sanctions in the Middle East. We confirmed the full year outlook as we announced on October 9. We're moving ahead with our strategy, better business with biology. The strategic direction is set and the implementation of the strategy is well underway. We're confident that the changes will allow us to meet the midterm targets. As announced on October 15th, I'll leave Novozymes by early 2020 after presenting the full year results. I have together with the board agreed that this is the right time, both for Novozymes and for myself. I'm confident we are in a good position to deliver on the midterm targets. That concludes today's presentation. And we're now ready to take your questions. Thank First question is from Yona Skulbar from Danske Bank. Please go ahead. Your line is now open. Okay. It looks like you on the squamous sign has disconnected. So we'll go to the next question from Michael Novod from Nordea Markets. It's Michael over from Nordea, Copenhagen. Just two questions, 2 technical and to the planning season in Latin America on the technical end times and the lower sales in TxTag? Can you try to elaborate more, say, precisely, also adding through your comments on the October 10 call to what is really driving more specifically the the weakness in the takes parts? And whether it's something that you see as being more persistent or whether say it's more of one off character in the textile end times and whether you've also seen a sort of stabilization since the October 10 announcement or whether it's continuing? And the second thing on the same goes for the planting season and the concerns in Latin America, Have you seen any sort of stabilization in your view since the October 10, 2 weeks ago or do you see this continuing And should we be more concerned now than we were, say, 2 weeks ago? On the first part on textiles, we have, if you look back the last year's textiles has been a little bit volatile, but we have built that into our expectations for the full year guidance, what's happening is that production output seems to be challenged in the textile industry and especially on cotton. And volumes are additionally moving to geographies that lose useless enzymes and where we also have lower market share. So we are also affected more negatively than the market in general. And that speaks for the majority of the issues that we experienced right now in textile. We've also seen that things can come back rather fast in the textile industries. So it is a little bit unpredictable, but we have not seen any changes since where we gave the last guidance that's built in. And on Latin America and the situation there in BioAg, we have seen some weak start to the planting season there and that's why we have lowered the expectation to low to mid single digit decline, but nothing changed compared to for 2 weeks ago. So in conclusion, we don't see any changes compared to October 9th. Take the next question please. And the next question is now from Jonas Sculpo from Danske Bank. Please go ahead. Your line is open. Hey. Good morning, Al. Can you hear me now? Yes. Good. A couple of questions also on Bioenergy for me. If you take the minus 5% in Q3, Could you try and split that between the U. S. Market development and then yeast and the impact from growth in Brazil? And then also if you could elaborate a bit on what it is that you see in China and E10, right now And then on food and beverage, if we can you say anything about this the development in the starch market? How should we look at the dynamics here going into next year? Thank you. We'll let Tina take the bioenergy questions, Tina, please? Yes. So, we report minus 5 for for Q3 in Bioenergy. And you're right, Jonas, that we see improvements from both yeast and Latin America. That's probably a couple of percentage each. On the E10 in China, in January 2020, HEBio will be fully implemented to cover the full province, which is an expansion from the southern cities. And we also development in 2 other provinces, Shandong and Jiangxi, we also, on the production side, see a couple of plants one plant has been built and another one is in the making. So we see some progress on the each end, but it is still early days there. Yes. And on the start side, we're in the middle of actually preparing our budgets for next year. And so we're kind of deeply evaluating how we see the underlying market drivers in the different geographies and how we think that that will project into the situation for next year. So I'm not really ready to guide on that yet, but we're doing the deep dive and we'll be able to talk about that more in January. And just to get back to the strategy update, then start processing is not one of the businesses where we expect growth going forward, we invest in other areas of our business. Next question is from Gunther Zechmann from Bernstein. Please go ahead. Your line is now open. First one is on cash flow on the second one, more on the BioX side of the business. On cash flow, you've done SEK 2,100,000,000 year to date, midpoint of the full year guidance. And last time you had a negative free cash flow 4th quarter was in 2014. So is there anything that we should expect in cash outflows other than quite high Danish Texas, I think that payable in Q4, is anything on the working capital side or other taxes? That we should consider. That's the first question. And the second one on BioAg. Thanks, Tina, for the comments on how the season starts In North America, I think in the press release also, you highlight by Arise as doing very well. Can you share an acreage number there with us, please? So Lars on cash flow, please? Yes. So as you point out, it is very rare that we see of cash flow for the quarter. And also, I think, if anything, it is more likely that we would land in the higher end of the interval than in the lower end. When that is set, 4th quarter is typically a low cash flow quarter. And we do have the significant tax payments in Denmark. And then I'll also point out that the severance cost that we have incurred in our profit and loss in the third quarter, a lot of that will be paid out as cash during the fourth quarter when those periods expire. So therefore, there is an unusual cash payment waiting for us in the fourth quarter therefore, we maintain our guidance for the full year at 1,900,000,000 to 2,300,000,000. Thank you, Lars. And then Tina and BioRise, the U. S. And on bio rise and in the U. S. So last year, we have been reporting that we sold into around 16,000,000 acres And we also said that we were looking at doubling the or up to 20,000,000, 25,000,000 acres the coming years. But please remember, Guinda, that Q4 is not done yet. So therefore, we would like to wait with establishing the full number until, our January accounts. Okay. Thanks both. Next question is from last Haphon from Carnegie. Please go ahead. Your line is open. Yes, a couple of questions in Household Care. Rolling out your new technology. Can you take me through what will happen in Q4? Maybe also which market you're going to hit in 2020. And then last client, welcome to you, one question for you. So when neuroscience comments, it's always focused on year to date, especially on your written statement. I don't think a single person on this call really cares about year to date. We care about the quarter. Can you, as new CFO, make sure you comment on the quarter and maybe also give us a full quarterly cash flow statement like most other companies do And then an additional question on net working capital, what initiatives do you see you can make to to optimize networking capital, which has been a headwind for the past 6, 7 quarters. Thank you. So on the Freshness platform, we are on track on the rollout and it's ramping up according to plan, both 9 months into the year and also the outlook for 2019 and the coming years. However, we've also agreed with our partner not to give more detailed guidance on regions and formats before they launch. And I hope you can appreciate that. Once it's out in the public domain, of course, we'll speak more about it and be very precise on what has happened. Will it hit any of the major detergent markets in 2020? Yes. What's the status on the U. S, for example? I think the answer is yes. And I'll give you guidance once they come out and they are launching in their markets. So Lars, thank you for the welcome. I'm looking forward to discuss these matters with you and everybody else going forward. So on your comments about the quarter versus year to date, obviously, when we release accounts, we are speaking to what has happened since we last spoke. But I think you also have to recognize that Novozymes is a long term business. So wherever we have to find the right balance between speaking to what are the long term value creation of the company, and then the short term sort of financial measures. But I will take note of your comment and look forward to discuss that with you. On net working capital? If you look at the section in the report called income statement, there's not a single reference to the quarter. Everything is year to date. Is that really good enough? So as I said, I will take note of your comments and you can actually derive the quarterly numbers in there. But as I said, I'll take note of your comment and look forward to discuss that with you as we move forward. So specifically on networking capital, and you asked what initiatives are we going to take? First and foremost, my focus is together with the rest of the leadership team to execute on the strategy and return the company to growth on the line. So that's my 1st and foremost priority as I come in. Part of that strategy, as you will remember from our release back in June was also that we will improve our cash flow. And therefore, we will also get to look at net working capital And I think we will take the typical measures of looking at how we can optimize our inventories and make sure that we balance our commercial terms with, with our customers and also make sure that we, work with other elements of our balance sheet, the capacity and so on, so that we take care of the cash and increase that to a level of approximately 20% to sales as we said was our target in the 3 year horizon. Thank you very much for answering my questions. The next question is from Sebastian Bray from Berenberg. Please go ahead. Your line is now open. Good morning, everybody. Welcome from my side, Lars. The pricing or mix impact in Q3. I take it from the first page of the release for the adjusted EBIT margin the quarter was 30, which by the standards of recent years is quite high. And I'm wondering what are the drivers for how sustainable are they? Is this household care has had quite a strong impact in the mix and what are I imagine a number of lower margin textile enzymes have dropped out or is there any other reason or mix effect or your preliminary efforts in raising price that have started to make a difference to the margin? Thank you. When you adjust the reported operating margin of 23 percent for the, for the extraordinary severance cost CHF 250,000,000 or so. You arrive at this underlying margin of approximately 30%. I think that it is on the high side compared to what is sustainable, because I think, as we announced, restructurings were coming, there has been an element in the company of holding back. And now we are ready to start investing some of that money again, and we see the activity level pick up So I don't think that you should expect that underlying margin to be sustainable, plus we are now starting to invest some of that money released late August in emerging market commercially and also behind some of our innovation. So I think you should keep that in mind as we move forward, on the gross margin. I think the good news is that we saw growth return in the third quarter. And obviously, growth means leverage on the margin. So that is supporting us. And so I think it is more the growth returning to growth than it is necessarily new mixes of our business that is improving our margin. All right. Thank you very much. And next question is from Sam Samser from SEB. Please go ahead. Your line is open. Yes, it was just a question for you, ethanol business. I understand that the yield is still going well, but maybe not as well as you expected. We've seen a lot more players going into use the last 18 months. So I know there's an effect of your customers maybe scaling more down more in production than the market as a whole. But are you sure that there's not a more situation now happening in yeast that can maybe affect your business in the next 3 years? The next 3 years, that's a good question, Sam. The reason what we see here in Q3, the 12 months can take 12 months if you prefer? No, here in Q3, it is due to that our customers is scaling more back and it is the volume based, that's what we believe and that's what we experienced in the dialogue with customers. But you are right, yeast is a competitive market, and there is a number of of his players out there. But for now, we see that in our solutions, affected a bit by the pullback and by the pullback by our customers. Overall, it is a matter of securing that you have the most attractive and innovative solutions, what gives most value to the players And so far, we believe we have that, but for sure, we are not expecting to, you could say, not do anything more still have an active development pipeline of yeast because we see that as a future area for where it is, we can develop new solutions And we are very pleased with the new solution, which we just launched in June, which is expressing more than one enzyme, and we believe that there's way more we can do in this field. And maybe just to add, we are we're grabbing market share in yeast and we continue to do so. And next question is from Rirendra Chandra from Alfa Value. Please go ahead. Your line is open. Yes. I have a couple of questions. Firstly, on, on the recent, announcement with respect to U. S. And China that China issued a commitment to buy up to $50,000,000,000 of U. S. Agricultural products. So and like so far, do you see any positive impact on your end customers from that announcement? Is there any on the ground do see it pick up in the activity on the ground? If I take that question, I don't think we see anything yet we see a lot of uncertainty. And I just, we're not seeing anything yet. But I think you should expect that a resolution that would enable trade of agriculture all commodities between China and the U. S. Would favor our business, but we're not seeing any of that yet. Okay, sure. And, just one more question for you, Peter. So, what exactly was your thought process and deciding that now is the right time to leave because to me, it looks like Novozymes is in a pretty tough period So like given that you've been at the phone for fairly long while, wouldn't you be the best person to see them through? And secondly, like on October 9th, in one of the interviews, I also read that there was you have committed to staying on for 2 more years at least, but then something changed in that 1 week to October 15. So what exactly was the thought process behind deciding that now was the time to leave? I can try to at least, I think I've consistently said that my current contract runs when I turn 65, that I've also added that that could be shorter or could be longer for that sake. Personally, I've never had a big appetite for a countdown towards my 65th birthday. So there's been a process running for the last several months. Where we've been looking at a transition. 1 can always debate the exact timing of transitions. I think this is a fine one. And I'm excited to move on And I think the company is, as you point out, not in the best state. I think we are suffering from a lot of incidents the top line that we have reviewed with you over the last quarters here. On the other hand, I think the implementation of strategy, including the momentum we see in, from our innovation, is in a very good place. So I guess what I'm saying is that there's always there's always been a transition to happen at some point in time. And now it's going to happen at the beginning of next year. Okay. So, thank you. That answers my question. So all the best feedback that you move on. And I think last welcome. Look forward to talking to you in the next call. And next question is from Andrew Saad from UBS. Please go ahead. Your line is now open. Yes, good morning. We've got a couple of questions actually. First of all, can you provide the same underlying compassion for the gross margin as you have for the EBIT margin? And then secondly, just coming back to Household Care on the plus 5%. How do you think about that as you go into next year? I get the fact that you've got the freshness contribution. I also get, in fact, the Middle East comparisons have dropped out. But is 5% something you sort of feel is sustainable or is that actually a tough ish ask as you move forward into 2020? So thank you for that question. First, on the gross margin. So we saw a significant line in the underlying gross margin in the first half of the year, lastly due to the lower sales, because simply there are cost So the underlying gross margin was under pressure with the lower volumes and the lower sales in the first half year. 3rd quarter If you adjust for the, for the 1 offs or nonrecurring cost, both this year, but also the benefit of deferred income and, pharma related royalties last year. 3rd quarter gross margin isolation and adjusted for currencies were actually more or less in line with last year. So will the company returning to growth in the third quarter? We also returned to being able to leverage our footprint and deliver gross margin in line with history. So I think that's the key, the key message really that adjusted for one offs and currencies, the gross margin is back to a comparable level for the quarter. And on Household Care? Just to confirm, So, so a little lower than that when you also adjust for currencies. So, so depending on which currency you use as of last year, this year, but I think the key messages is it's in line with last year. So on Household Care, we to see an improvement in the 2020 for 2 primary reasons. 1 is the annualization that goes away in 20 on the Middle East. And the other one is continued growth in freshness. We haven't done the exact numbers yet, so I would not bank on 5% definitely see an improvement over 2019. And next question is from Klaus Cade from Nikolis County. Please go ahead. Your line is open. Yes, hello. Also a question related to the cash flow and, well, maybe not on a quarterly basis, but if I look at the full year cash flow guidance, then it seems a bit low to me. And just to, yes, check on that, is there any major changes in provisions, networking capital, or anything else? And, and secondly, could you tell us whether you use factoring in order to, yeah, affect your net working capital? That would be my questions. So, thank you. So, on the cash flow, You are right that at the end of Q3, we have actually achieved the midpoint of our full year guidance. So So assumption there is a flattish 4th quarter. So the unusual thing in the fourth quarter of this year is the cash effects of the severance costs that we have incurred in our P and L in the third quarter. And a large part of that sort of turning into cash as notice periods expire. So that's the unusual thing. There are no other unusual things in the balance sheet, in the net working capital or anything. And no, we don't use factoring to impact the networking capital levels in Novozymes. Okay. And just to be sure that there's no major changes in provisions or Anywhere else in the balance sheet? No, we provide like we should at the end of each quarter. We did that at the end of Q3. And of course, we expect to do that also at the end of Q4. Now on cash, it's difficult to provide a Cash is really what cash is. So we'll see what that turns into at the end of the year. But given the unusual Cash related to the severance in Q4. We have maintained the full year guidance at the level we also saw a couple of months ago. Okay, excellent. Thank you very much. Thank you, Lars. I understand this is the this was the last question. So We'll close this conference. We look forward to meeting many of you on the road over the next few days. And then, as I said, in my outro, I expect to communicate the 4th quarter results at the end of January. So I'll also come around and say hello at the end of January when we have the full year results. Thanks a lot for your interest and thanks for calling in. Bye.