Good morning, everybody. We just had a small technical problem, but I think we are up and running now. My name is Lars Jensen, and I'm the CEO of Royal Unibrew. With me, I have our CFO, Lars Vestergaard. We would like to welcome you all to this webcast, where we will cover the early release of our Q1 trading statement yesterday. The first quarter of the year is a small quarter, and the prepared statement will therefore be short, meaning that we will have to, we'll have plenty of time to answer your questions. Now, please turn to slide number 3. We have had a solid start to the year. Volumes increased organically by 6%, which was driven by a strong rebound in international and normalized Italian on-trade sales, as opposed to last year, and continued solid performance across our Northern European markets.
The growth momentum we created throughout 2023 has unexpectedly continued, as expected, it has continued into 2024, where Northern Europe in Q1 showed good momentum, with a price mix of 5% from strong value management and price increases in especially Norway. Western Europe experienced a strong product mix, whereas the 10% organic net revenue growth in the quarter was negatively impacted by country mix in international. I'm very happy to present the fourth quarter in a row with positive organic EBIT growth, as the growth was 13% in Q1. Efficiency improvements are high on our agenda and delivering more than planned, which is also the reason why we raised our guidance. We have not seen any changes to consumer behavior, and EBIT-wise, acquisitions contribute as expected in the first quarter. Now, please turn to slide number 4.
As I just mentioned, the business and earnings momentum we built through 2023 has continued into 2024. This is witnessed by the solid volume growth, but also good value management across geographies. We are now back to a more normal environment, where we would rather see price mix of, like, 2% to cover for underlying inflation in fixed costs and to improve the makeup of our business. The value creation for us and for our consumers, customers will happen with the well-known tools and a replication of what we did before COVID started. We have identified a long list of potential efficiency improvements, from which we have started to execute to capture the opportunities we see for the coming years.
When we reported full-year result of 2023 and guidance for 2024 back in late February, there were some outstanding uncertainties on input prices, sourcing contracts, and our ability to ramp up production, especially related to Vrumona. The uncertainty from these factors have now been reduced, as we have increased our hedging since, got sourcing contracts in place, and see that the big volume move to Vrumona will materialize according to our thoughts. We have started production in Vrumona for the Danish-German border, and we have started production in San Giorgio faster than originally planned, as the Italian team has been able to staff for extra shifts faster than expected and further has optimized production planning to get more output. This will release production capacity in the Nordics, which will give benefits faster than planned.
These benefits will not necessarily sit in Italy or in the Netherlands, but in Northern Europe or/and in international. I'll now turn the words over to Lars.
Thank you, Lars, and good morning to everyone. Please, turn to slide number five, where I will start by going through the financial highlights for the quarter. I will start to remind you that the first quarter is seasonally a small quarter, and that small changes in activity levels can have a high impact on earnings, more, a higher impact on earnings than during the peak seasons.
Volumes grew by 32% from 2.8 million hectoliters to 3.7 million hectoliters, most of this gained from the acquisition of Vrumona and San Giorgio, resulting in 6% organic volume growth, driven by rebounds in Italy and international, but also from solid development in the Nordics. Net revenue increased by 25% from DKK 2.6 billion to DKK 3.2 billion. Again, the absolute growth is significantly impacted by acquisitions, but net revenue grew organically by satisfactory 10% in the quarter, driven by strong product mix and price increases in most countries, including Norway and Sweden. EBIT increased by 21% from DKK 174 million to DKK 210 million, corresponding to a 13% organic growth. Acquisitions contributed as planned by DKK 15 million.
The reported EBIT margin declined from 6.8% to 6.6%, as it was diluted by acquisitions. Adjusting for this, the organic EBIT margin expanded slightly. Free cash flow amounted to DKK -480 million, which is DKK 76 million lower than last year. Cash generation is always weak in the first quarter of the year, as this is the time of the year where we build inventory for the high season in Q2 and Q3. Compared to last year, free cash flow was negatively impacted by the timing of Easter and slightly different seasonality in Vrumona. Please turn to slide number six. A few comments on the business segments. In Northern Europe, volumes increased by 1% to 2.3 million hectoliters, whereas net revenue increased by 5% to DKK 2.2 billion.
The overall market was flat to slightly declining, and our volume growth was driven by Denmark and Norway, whereas volumes in Finland was flat. Besides price increases, net revenue growth was driven by above-market growth inside RTD and CSD. In Western Europe, volumes grew organically by 8% to 1.1 million hectoliters, and net revenue grew organically by 24% to DKK 730 million. Vrumona and San Giorgio, in combination, contributed 0.7 million hectoliters, net revenue of DKK 398 million, and an EBIT of DKK 15 million in the quarter. The organic development was driven by normalization of the Italian on-trade sales, where we experienced destocking of our products last year. It is important to remember that this will be the last full quarter where we have easy comparable numbers from last year in Italy.
Sales in versus sales out has been calibrated since May last year, which means that, April will be the last month with easy comparisons in Italy. In international, volumes increased by 47% to 0.3 million hectoliters, whereas net revenue increased by 37% to DKK 308 million. This very strong rebound was expected, and a result of weak development last year, caused by political unrest in some African markets. The slower growth in net revenue stems from a negative impact from country mix. Before I give the word back to Lars, I will run you through the upgraded outlook for 2024. Please turn to slide number 7.
As you have all seen, we upgraded our outlook for 2024 yesterday, and we now expect organic EBIT growth of 9%-19%, which is raised from previously 5%-15%. The impact from acquisitions is unchanged at around DKK 80 million, and it equals a reported EBIT in the range of DKK 1.875 million-DKK 2.025 million Danish. After years of inflation, focus on price increases and focus on price increases, we have increased the focus on efficiency, and the key drivers of improvement areas are: integration of the businesses we have acquired are going well. We have started the sourcing from the Netherlands to the border business between Denmark and Germany.
Italy has started to produce, Royal Unibrew products, for the rest of the group, or are just starting, and we have been able to add extra shifts in Italy. So this goes faster than expected, and we have managed to replan production towards a higher output. We're making good progress in procurement and have a higher level of hedging, which takes risks out of the rest of the year. We have not detected any changes to consumer behavior, so the overall macro outlook is the same as when we gave the full year guidance. And the new organic EBIT growth guidance is therefore still based on an expected net revenue of around DKK 15 billion for the full year. We have not changed our financial assumptions on financial expenses, the tax rates, or CapEx.
And with that, I'll give the word back to you, Lars, for closing remarks.
Thank you, Lars. And now please turn to slide number 8. Our agenda has not changed since we last presented, it's less than 2 months ago. We are still very focused on execution of integrations, and as the first quarter has shown, these integrations have positive effect in other parts of the business, and we are satisfied with the current development. But we, of course, need to keep our eyes on the ball and continue to work hard on these integrations. As I mentioned earlier, efficiency improvements are high on our agenda, and with a more strengthened and structured process around discovering, prioritizing, executing, and monitoring efficiency improvements, we expect to accelerate and optimize the efficiency agenda.
As we have talked a lot about in previous quarters, we will continue to expand our production capacity going forward, which means that we eventually will have better circumstances to optimize our production footprint and service the market even better. We'll continue to monitor possible changes to consumer behaviors as macroeconomic uncertainty remains, because we need to react fast to these changes, should they occur. We'll also continue to invest in the future top line growth, not only in new capacity, as already mentioned, but also in innovations and people, as the right products and talented people will be very important for future earnings growth. And finally, our ambitions in the ESG area has not decreased, so we will continue to pursue and execute on our ambitious targets within this area. Now please turn to slide number 9.
Before I hand over to the operator, I'll just make sure that you're all aware that you're very welcome to attend our Capital Markets Day in Vrumona, in Holland, on May 13. We have planned so that you will be able to fly in and out at the same day from most places in Europe. So if you're not already registered for this event, please do so by sending an email either to Stine or to Jonas, and on the email that you see. And with that, I will hand over to the operator, and we are ready to take the questions.
Thank you. To ask a question, you will need to press star one and one slowly on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one and one again.
If you wish to ask a question, please press star one and one on your keypad. We will now go to your first question. One moment, please. And your first question comes from the line of Thomas Lind Petersen from Nordea. Please go ahead.
Hi, good morning, Lars and Lars. Thank you for taking my questions here. So, two questions, especially regarding the guidance. The first one is the revenue guidance of DKK 15 billion for 2024, which assumes a flat volume growth. And I asked you the same question one and a half month ago, and now you deliver a 6% organic volume growth Q1. You have very easy comparables, I would say in Q2 and Q3. So just wondering here if there's something that's holding you back in terms of volume? You said the market is slightly down here in Q1. But can you see, yeah, just elaborate a little bit on that.
And then the second one is also if you could elaborate a bit on these efficiency improvements. Where exactly are you seeing it? Is it on freight costs? Is it on production costs? And then it also sounds a bit as if some of these efficiency improvements, they're being moved forward from sort of taking some of the benefits from 2025 and putting them into 2024. Is that correct? Or yeah, if you could say anything about that. Thank you.
Yes. If we look at the net revenue, first, it's, as Lars mentioned, we do not see a reason to change the overall assumption of what we expect in the market. It's still pretty early days. It's Q1 is a relatively small quarter. There's an effect of, you know, from a revenue point of view, we know that there might be a small effect because of Easter, where, you know, there's a slight change in terms of sell in. Last year that was more in April, and this year a little bit more in March, and so on.
I think it's too early for us to conclude that the slight upturn that we see in the first quarter will also materialize into the remainder of the year. And again, to repeat on the organic side of our business, Italy, we had destocking last year, and we have normal sales this year. And also on the African volume, we are helped in the sense that we have unrest and thereby low sales in last year in Q1, whereas it's easy comparison this year.
But it is, of course, one of the areas where if you can keep the momentum, and that the macro doesn't turn more sour, that there is an upside and an opportunity for Royal Unibrew to over time to perform even better. So this is our view on the net revenue side of it. And then, Lars, will you comment on the efficiencies?
Yeah. So if you look at the efficiencies, we've been saying for quite a while that we've had too high utilizations of our production in Denmark in particular.
Now that the integration of Holland and Italy are ahead of schedule, that means that we will start to take the pressure off the Danish supply chain by moving products to these two new sites in the family. When that goes a little bit faster, it takes pressure off in particular in Denmark, where utilization have been too high, and that enables us to produce more efficiently in Denmark when we go back to more normal production patterns. The second thing is that the integrations are in general going faster than planned, which means that we, as an example, put the Dutch business on our IT systems at the end of Q1.
That, of course, means that we can start to use less resources on the integrations and be more efficient on that. Then, if you look at the efficiency at the end, that we have dialed that up. We're seeing that the operational leverage is starting to work. We have slightly lower cost on energy, and then we have increased quite a number of hedges during the first quarter. So our hedge level are higher than they would normally be at this point in time, so we have more certainty of delivery, and we have locked prices in at attractive levels. So there is improvement in, let me say, the procurement area as well.
So it also has the benefit that our uncertainty for the rest of the year goes down, because we take the pressure off the supply chain, and there is less volatility coming from, from procurement in the remainder of the year, which increases our, certainty of delivery. And on your last question, if an upgrade of 2024 has any consequences on the 6%-8%, long-term guidance, the answer is no. The way that we see it is that the, the base, the baseline goes up, and we still expect to be able to deliver 6%-8% on an average, from 2025 and onwards.
Perfect. Thank you very much.
Thank you. We will now go to the next question. Your next question comes from the line of Søren Samsøe from SEB. Please go ahead.
Yes, good morning. Søren here from SEB. Just elaborating a little bit more on the hedging, if you could go into detail with which inputs you are hedged, and how much are hedged for the year? So far, we see aluminum prices or care prices going up, and yeah, there are some different movements. So which ones are hedged and how long into the year? That's the first question.
The second question is, regarding this, when you use the capacity cross-border, I should say you do, just how do, whereas, for example, for the one that you produce in Vrumona, where is the income actually booked and, or where's the revenue booked and where is the cost booked, and how do you, how do you actually do that justification? Clarify on that. Thank you.
... So what we have tried to do is to link the hedges we have a little bit more to the trading windows we have, meaning that we try to match so that when we have agreed prices with customers, that we try to hedge a higher proportion of that than what we normally have. So where we have increased hedge levels is on aluminum, where we have covered a very high share of the remainder of the year. We have hedged gas prices as we still see uncertainty in that area compared to where we have been historically, a very high degree of hedging on sugar on malt and so on.
So, you can say, the exposure we have is a lot less than what it normally is. We have also looked at our Norwegian and Swedish business, where we have a transactional exposure in terms of euro versus Norway and Sweden, and there we have hedged the transactional exposure in the same periods as we have fixed prices with the monopolies in these two countries. So that's where we have increased the hedge levels. And then the second question, what was that?
The way that we book, basically, so when, as an example, the Dutch business is producing for Northern Europe in the case of the border trade, the income of that, of course, sits in Northern Europe. And also the, call it, the related costs to service the market, which sit in that area. But at the end of the day, that's more profitability. So when we free up capacity in Denmark, then it will be the one that generates the revenue that will get the benefit of having access to that extra capacity. So that is how it works.
Okay, thanks. And, and then, just, two final questions from me. One is, just if you could talk a little bit about international. You've had quite a lot of headwinds, last couple of years, but sort of how should we see, the run rate for the full year? Anything specific we should think about here? And then second question is more on the revaluation of the inventories. If you could just quantify, what, how big the swing was year-over-year, on the P&L. Thank you.
I think we have in international a few focus points. First of all, I would say servicing the market with what the market needs. We have had a relatively long period of time where we have had capacity constraints because of the growth. And we will of course need to see if somebody else has taken the space away while we have not been servicing the market. I think we will have to be a little bit patient on that one. The other one is of course on the cost side, as we have seen container prices go down.
It's important that we monitor that closely and get the money sort of back to our profitability, because we couldn't compensate on pricing, because most of our competition is local. And then, finally, I would highlight that we should get and start to see the benefits of having outsourced production to our brewery in Canada. And also having outsourced our cider production into China, which we have done a few months ago. So for us, 2024 for international is a much higher focus on reestablishing profitability than it's about top line growth. If it's going to be, you know, one percentage point higher or lower, that's not the most crucial thing for us.
It is to reestablish the profitability in this segment. So the question around the revaluations, which is something we do every quarter, so the stock level is reevaluated to the procurement prices that we see in the market at that point in time. And of course, in periods where you have a lot of volatility on the procurement side, these numbers have a meaningful size. So if you look at the impact it has on earnings, without giving you the full details of that, it had a double-digit positive impact in 2023.
In 2024, it has a negative impact of a low double-digit number in Q1 of 2024.
But if you see, if you do it every quarter, will you then see a similar negative effect in Q2 and Q3?
Only if procurement prices varies a lot, which they will not do because we have hedged quite a lot of the costs. So, you normally see the biggest impact of this at year-ends, where annual contracts are repriced, which it impacts the first quarter thereafter. But I think the days of these big revaluations is hopefully behind us, because we do see more stability in a lot of the cost elements. And a lot of the big movements we had was really related to the big energy cost movements we saw as part of when the war in Ukraine broke out. So I would expect it to be a lot lower and not a meaningful number going forward.
Which is also why I think it's the first time we have really commented on it, is because it becomes a big number when you have the level of volatility you have had in the last couple of years on the energy front in particular.
... Okay, thank you very much.
Thank you. Once again, if you would like to ask a question, please press star one and one slowly on your telephone keypad. That is star one and one, if you would like to ask a question. We will now go to your next question. Your next question comes from the line of Andrei Andon from Jefferies. Please go ahead.
Hi, good morning, Lars and Lars. Two questions from me, please. Number one, we saw the acquisitions contributing in line with expectations from a profitability standpoint. Could you just tell us more about the rough timeline for margin improvements stemming from these acquisitions? Second question, please, is there any update on the potential dividend payout corresponding to fiscal 2023? Thank you.
Yeah. So I think on the acquisition side, I think, I think it's important that we do not focus too much on the margin improvement on the newly acquired businesses, so Vrumona and, and San Giorgio. So, it's an integration year, it's a ramp-up year, and then we will- we would expect, of course, throughout 2025, that we would start to build momentum. And this is also where we get access to some of the price pack tools that the business, in particular in Holland, is missing. So, so I would say that it's, it's not, it's not before 2025 or somehow during 2025, that we would start to see some effects on the margin from a percentage point of view.
But we do have an ambition to continuously grow the profitability of the business. And when it comes to San Giorgio, we remember that this is a private label business, and that I think when we look at this overall, it's a matter of continuing to do that private label business, but also to take the effects from the branded business and ultimately supply more to the group and in particular, of course, to the Italian market. And a part of that would go or would start to materialize after we have increased the capacities. And we expect to have been through that step around Easter time next year. And that means that towards the summer season, we will start to see some gains.
On the short term, it's more about how fast we can move volume to Italy, because then that would move margins up for the total Italian business. And in terms of the dividend, we have at the AGM that comes up in a week's time, we have asked for a mandate to the board to pay out up to 14.5 DKK per share in dividend. As our debt is higher in the beginning of the year than where we like to see it, we expect to make the decision on the dividend towards or around the end of Q3, maybe in the beginning of Q4. And it is our intention that we do pay out that dividend.
But of course, we need to go through the high season, where we expect to generate quite, quite strong cash flows. So that decision will be made in the autumn. but I think the intention is that it will be paid out.
Understood. Thank you very much.
Thank you. We will now go to the next question. Your next question comes from the line of Peter Sehested from ABG Sundal Collier. Please go ahead.
Yes, thank you for taking my questions. I have a couple. Mainly pertaining to the P&L and your OpEx line items. So in terms of the sales and marketing distribution costs, what should we expect of the incremental expense going forward in 2025 and 2026? And the same goes for the admin line. Thank you.
I'll comment on the sales, markets, marketing, distribution costs. So our core plan is that we're going to spend more money on sales and marketing, and we're going to spend less on transportation and logistic costs. We will be running a bit more efficient, given the production footprint that we talked about. We do also expect that we will continue to see benefits on the international transportation that will take the costs down. Also remember that the in-sourcing of volume to Canada takes out logistic costs, as well as the move of production in China takes out logistic costs as it's totally localized in its matter.
So those are some of the synergies that you will see materializing on that line. If you look at the admin line, it's the increase is driven by two elements. One is we get the Vrumona business in which drives quite a big part of the increase. The other element is that we have a long agenda of IT projects that are materializing, a lot where we are executing as we speak. So in the first quarter, we rolled out ERP in... Sorry, we moved the platforms out of Heineken into Royal Unibrew, which of course drives a lot of IT activity.
We have a long list of IT projects that are being executed, amongst other, the Norwegian integration in the remainder of the year. We are spending quite a lot of money on admin, on IT integration in 2024.
... Yeah, but I was sort of looking at more into 2025 and 2026. What sort of ballpark figures should we expect incrementally then for those two line items combined?
We're not guiding on individual lines because I think the important thing is that if you look at something like IT, it is a line that drives benefit elsewhere in the group, so it really depends on what is the opportunities that we see to roll out new IT tools to take efficiencies out in other places of the business. So looking at admin cost in isolation does not really give a lot of added value because it's a totality and it is a part of the total business, so we're not guiding on admin in isolation.
Okay. Any question that's on this San Giorgio factory, you and the trusted pilot partners. Let's say, I mean, a back of the envelope figure suggests that since you have quite some spare capacity when you actually completed your expansions, and also the fact that you also pointed that the private labels, relatively low margin business, there looks to be a tremendous upside, at least on the gross margin level to increase that business by regional, let's say, 2 percentage points to group level as a very optimistic scenario, if you expedite and efficient in putting in some higher value or good products into that factory.
So to me, suggests that you are, at this point in time, cautious, or giving a cautious view on the potential for that particular factory.
Well, I think the way that you should look at it, if you take the Italian case, that is that the private label is actually a reasonable business. It's good customers, and with these customers, the team, our Italian team, have actually managed to get extra listings. So we have a number of customers, predominantly in the discount channel, where we did not have our trade beer available. And through the contracts for the private label piece, we have gotten listings, and thereby we can get more into the hands of more consumers. And the more, of course, that we can do with that, the more it enhances the overall business case for Italy.
If we can continue to grow the trade beer, as we have been able to do during the last 6, 5, 6 years, then of course, that will benefit not only the Italian business, but also the group, as this is a very attractive position that we have in the Italian market. And this is not just about Italy. This is, I think, the core thinking that we have throughout the company. On the whole discussion around capacity, when you look at it from a mathematical point of view, you would say that you should never exhaust your line capacity utilization to more than about 85%, because then you start to run it too hard, and you get breakdowns, and then you start losing sales.
You need to spend too much money to get it up again, and so on, so forth. So as long as we continue to grow, we will continue to kind of ramp up our capacities so that we try to balance out on this 85%. And of course, in that, we also need to consider what kind of opportunities that we would have to extend on the partnership front, because that would also be the same capacity that we would utilize.
So I think our core scenario would be that we will, with the growth that we have, we will put up a new line somewhere every 6-9 months so that we, well, well off, in terms of having enough capacity, but also capability to do the price pack exercise that over time can premiumize our business.
Perfect. And just a final question for me before I pick up. The last time we spoke, I think the market sort of perceived that you weren't unwilling to communicate firmly on metrics such as return on capital employed, et cetera, or margins. Have you sort of reconsidered that stance, or should we wait until the CMD and then wait for potential presentation at that point in time?
Yeah. When we have the CMD, one of the big topics will be how we work with capital employed and what are the criteria for deploying capital. So you should get some more insights into that at the Capital Market Day.
Thank you very much.
We are not changing anything in terms of our operating model. It's the same way that we have done it the last decade, and but we will be able to give you some, I say, concrete examples, also on how some of the acquisitions do not generate necessarily the in the segment where they are, because it's a benefit of the totality in a total. You need to look at the benefit in a total perspective and not just in a single country perspective.
Perfect. Look forward to that. Thank you very much.
Thank you. We will now go to the next question. Your next question comes from the line of Mandeep Sangha from Barclays. Please go ahead.
Hi, good morning, Lars and Lars, and thank you for taking my questions. I have three, if I could. Number one, I just want to understand, maybe better quantify the impact of the tailwinds from sort of better than expected procurement and efficiencies. Obviously, the guidance has been increased by 4% at the lower and top end, which sort of implies DKK 65 million of benefit on EBIT. Is that fair to say that encapsulates all of the benefits, or is the actual benefit much higher than that, and you're keeping some out to reinvest in future top-line growth, or are you allowing it to then drop to the bottom line in 2024? My second question is then to Lars.
Is there any update on current trading that you can share, maybe around how weather is impacting demand? I appreciate it's only a couple of weeks into the quarter, but is there any update on weather and consumer demand, and as you sort of head into the important 2Q season? And the third question is actually just a clarification. You mentioned previously that the inventory valuation was a low double digit impact. Just want to clarify that is in fact just to clarify that on my end. Thank you.
Yeah. If we start with the procurement element and the efficiency question. So we have not looked at our commercial plans at all for the remainder of the year. The upgrade we have is basically because we can see that our cost base is developing more positive because we are on track with the integration. We get supports to take the pressure off our supply chain, and we have locked in some good supplier agreements, and hedging for the remainder of the year. So this is not a net number where you have spent more on sales and marketing. So the update here is related to the change in efficiency that we have.
And then, we have the same commercial plan as, as when we came with the full year guidance, a few months ago.
Last, can you take the inventory question?
Yeah, I didn't catch the last part of the inventory question. What was that?
Yeah, I, I just wanted to clarify that the low double digit negative impact on the inventory valuation is on EBIT.
That is on EBIT, yes, and it's in production costs, yeah.
Just the update, anything on Q2 that you can share in terms of how weather has been on the market so far, and anything to call out on selling trends into the important Q2 season?
Thanks . Current trading, we see a continuation of what we have seen in the first quarter of the underlying performance. Italy, April will be the last month where we have relatively easy comparison because of the destocking. So from May and onwards, that would be a normal comparison. The unrest in Africa was a Q1 comparison. From a weather perspective, I think Q2 was a relatively nice period of the year. Basically, last year was Southern Europe, so France, Italy was not so good weather. On the contrary, the weather in the Nordics was not very good in Q3, whereas it was more normal in Italy and France during July and August.
The current trading is in line with our plans and what we report.
Thank you again.
Thank you. We will now go to the next question. One moment, please. The next question is a follow-up from Søren Samsøe from SEB. Please go ahead.
Yeah, just a quick follow-up. Just what you said about the, the cost, you said you mentioned that, maybe I got it wrong, but you said sales marketing costs are up, but the production and transportation costs going down. Is this, you mean—do you mean this in absolute terms or as a percentage of sales? Just if you could, clarify.
You need, you need to look at it, of course, sales and marketing costs, we consider as fixed costs.
Mm-hmm.
Right. So that in absolute spending, that is going up, but it's also going up as a percentage of sales. Logistics cost, which is more of a relative variable nature, is going down, but it's not only going down because of us running it more efficiently, but it's also going down because we are avoiding costs from moving production to Canada to China, as an example. So that's the underlying. If you look at our production costs underlying, if you look it up on a per hectoliter basis, that's going down, whereas the revaluation is a gain and thereby takes the production cost into a negative territory.
So without the revaluation, you would see a decline in the overall production cost on a per unit basis.
Okay. That makes it more clear. Thanks.
Thank you. There are currently no further questions. I will hand the call back to you.
Thank you for participating. Thanks for good questions. Again, as I would always say, at the end, you know where we are. Give us a call if there's anything that you need, and enjoy the day. Thank you.