Brenntag SE (ETR:BNR)

CMD 2020

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Nov 4, 2020

Good afternoon, and a very warm welcome to you all. Thank you for joining the Capital Markets update 2020 of Rentac AG. My name is Diana Alastair, and I'm responsible for Brantac Investor Relations. Unfortunately, we cannot meet you in person today. Given the COVID-nineteen restrictions, but we wanted to share with you the details of Project Rentac and our progress on the long term positioning of our company. Today, we will provide a deep dive on Project Gren Taq, our holistic transformation program. The full management board Brandak AG is with you today. Christian Coelpfeiner, our CEO and Gil Muller, our CFO, are here in our headquarters in Essen. And we have our 2 future chief operating officers available, Stephen Turvent and Toronto. Good morning, Steven. And Orennetjat in Bordeaux. Good afternoon, Ori. Both will talk about our new divisions, BrandTech Essentials and BrandTech specialties. Please can I draw your attention to the disclaimer on page 2 of the presentation? Today, we have a full afternoon for you. After the presentation, we will start the Q And A session. The dial in details will be provided at the end of the presentation. And with this, I would We are a company with tradition. A company that stands for quality, passion, and sustainability a company for the customer. In our company's history to meet the challenges of the modern world, to grow with them. Day after day, we prove our corporate strength worldwide because we think and act solution oriented. We purchase our products from all major manufacturers in the chemical industry. We set the highest standards for quality and reliability We are particularly grateful for This enables us to offer our customers the most comprehensive portfolio in the market. From classic product to contemporary innovative solutions geared to the current needs of the various industries. We are specialized in application consult in the most diverse areas, food and nutrition, coatings, and construction, cosmetics, water treatment, pharma, or oil and gas, Our experts are deeply rooted in their industries and work today on the ideas for tomorrow, hand in hand with our customers. When we think about the future, we are aware of our responsibility. We make a difference with our actions to protect vital resources. Our goal, living equal rights, and allowing talents to develop freely. With full dedication and passion, we set the course for Brenntag's successful future development in a changing market environment. We are Brent Ag. Good afternoon and a very warm welcome also from my side and thank you for joining our Capital Markets update 2020. My management board colleagues and I are delighted to give you an update on Brentac's journey of excellence which we call Project Brandtac. Today, we will describe to you how Brandtac from its very solid foundation will be leaping to new heights. Through Project Brandtech, our transformational program, we will become far more market orientated we will optimize our cost base and we will invest into our future. This transformation will help to become the true market leader. We want to Brenntag is the undisputed leader in global chemical and ingredients distribution. We can rely on a terrific team and the largest site network globally to serve around 200,000 customers with a portfolio of more than 10,000 product Over time, our business model has evolved from pure distribution services to an integral part of the chemicals and ingredients value chain. Value added services such as Formulation Solutions, application advice, and mixing and blending are at the core of our business, just to name a few. Brentac has become a one stop shop for its customers and is a strong partner for several thousand suppliers. So how do the markets The chemical distribution market is with about 1,000,000,000 significant in its size. Branchac holds in each region of the world already the number 1 or the number 2 position. The growth in chemicals distribution is driven by the underlying This is particularly true for the specialty chemicals sector, which is expected to grow slightly faster than the industrial chemicals market. In addition, outsourcing is an ongoing trend and an additional growth contributor in our industry. Chemical and ingredients manufacturers use increasingly distributors to reduce their complexity and to market their products tailor made to relevant industries and to relevant customer segments. A further characteristic of the global chemical distribution market is that it is still highly fragmented. According to the last Isis publication, the number 10 by size is only a tenth of Brentax turnover. And the number 100 accounts only for 1% of our sales. Brandt against the largest player acts as a consolidator and has a long standing track record of successful acquisitions. As this is my first Capital Market Day, allow me to share some short reflections on my 1st year as the new CEO of Brandtech. 2020 was a very special year with unique circumstances and significant challenges which we have managed very well so far. This year was of course dominated and still is dominated by the global COVID-nineteen pandemic. When the situation became serious, we implemented a strong and a comprehensive global crisis management to take proper care of the health and the safety of our people and of our business partners. Throughout the year, we were able to report strong and resilient financial results including a positive development We provided guidance to the financial markets as soon as we reliably and accurately were able to do so. We made noticeable changes to our management board in summer, and I am delighted to have now a strong team in place that will drive the future development of our company. We announced the first milestones of project Brentac In particular, our new operating model with our 2 new global divisions, BrandTech Essentials, and PRENTAC specialties. Last week, we also announced the overall framework for Project Brandtak on which today we want to provide all the details behind this transformation program. So let me summarize. It has been a busy 1st 10 months for Brandtac for my team and for me. You heard us talking about our holistic analysis, which led to Project BrandTAC already since the beginning of this year. After 10 months of hard work, despite managing the COVID-nineteen pandemic, the overall framework is completed and are ready to be shared with the financial markets. Brentac and we are acting out of a position of strength. Brandac is a great company, we are the global leader in a growing market. And we offer them the product's portfolio of product solutions and value added services. Our employees are amongst the best people in the industry. Our business is robust and resilient and we have a And above and beyond that, the company has significant untapped potential to be unlocked. As part of our holistic analysis, we also gathered feedback from our different stakeholders, we have identified several areas for improvement, all are addressed clearly by project Brentac. Let me go through have rising expectations on us, the global market leader. We must be the partner of choice in multiple dimensions. In our market position, in our customer proximity, in our industry and application expertise and in our supply Our suppliers prefer strong and efficient channel partners with specialized industry expertise and logistic excellence to best serve their markets, commercialize their products and accompany their growth ambitions. It is our job to make them successful in their markets our customers have an increasing expectation Taylor made interactions must meet their changing demands, including functional expertise and technical know how. With project Brantac, we will sharpen our profile towards the individual needs of our customers and our suppliers. Internally, even though we have a highly motivated workforce, we had at times weak execution and we were lacking a strong and with its unique industry knowhow, we must better utilize our capabilities to support our partners' business development with creative and innovative ideas and with reliable solutions. In particular, the capital markets and also we ourselves have not been satisfied with We believe this has also been reflected in our subdued value creation Let me emphasize, we are ready to exploit our untapped potential, and we have an exciting journey ahead of us. The various aspects and topics I've just shared with you are all addressed within project Brandtak. With this holistic transformation program, we now take decisive and comprehensive action to sustainably strengthen our global number one position and to deliver sustainable organic earnings growth. We have the project Brent tag identified 220,000,000 additional EBITDA uplift over the coming years. So how do we intend to achieve this? Our 2 global divisions, BrandTech Essentials And BrandTech Specialties have a strong focus based on the previously described suppliers and customer needs. They follow a differentiated business steering and a distinct market approach. We will talk about this in more detail later. We will refocus our Salesforce in line with customer requirements to build even stronger partnerships while allocating resources in line with customers current contribution and future potential. An important topic in our transformation program is the reduction of complexity. Over the years, we have reduction of complexity and reducing costs of our organization is clearly a must. We need to better and drive material synergies while ensuring functional excellence. And last, but not least, such a transformation will not be possible without the full support of top management and our highly motivated people. And over the last weeks, we have completed the nomination of our leaders on board -1 and board -2 level based on the newly defined set The competence and leadership skills needed for the transformation are truly reflected in the organizational setup and in the new leadership team. On our performance culture Let me share with you now what we expect going forward. Based on the predicted growth profile of the chemicals and ingredients distribution market and against our footprint, Vrantaq will return to organic operating gross profit growth of more than 4% over the cycle. While moving from gross profit to operating EBITDA, our improved performance management our differentiated steering approach for both divisions, our product mix, our value added services, and our geographic positioning will deliver additional earnings growth. Therefore we expect an organic operating EBITDA growth of 4% to 6% in the midterm over the cycle. This is the potential of the organic In addition, Project BrandTech is expected to deliver an annual uplift in operating EBITDA of 1,000,000 by the beginning will already be considerably noticeable in 2021, and the full run rate will then be achieved beginning of 2023. Furthermore, we will continue to follow our proven MODA strategy. We have a successful track record of bolt on acquisitions and will continue to play an integral part in the overall market consolidation. Therefore also our future acquisitions will contribute to the growth of our company. Ladies and gentlemen, we believe these are ambitious, but overall achievable objectives. So let us take now a closer look at the transformation plan of our company. As we have communicated to you since the beginning, restructured Project Brandtag into 4 major work streams. The core work stream concerns our future operating model, which includes the creation of 2 divisions, Brentag Essentials and Brandtak specialties, catering to the different supplier and customer requirements. Both divisions will jointly contribute to our company's success. They sharpen and the differentiated Brent tax market facing profile. Both divisions will be steered in a differentiated manner, according to their strengths and the market requirements. We will make better use of our economies of scale, our global asset base and our value added application knowhow and our services. Furthermore, our new operating model includes the global harmonization and standardization of our business support functions and processes, like HR, like IT, like finance, like indirect procurement, etcetera. We will create lean support the divisions in their full focus on commercial execution. We remove redundancies. We simplify our structure and we leverage our global reach and our scale. Functional Excellence will secure an ongoing optimization of our business support backbone. The second work stream is the so called go to market approach. In line with our new operating model, we introduced a stringent and globally harmonized approach towards our customer segmentation. We will allocate our resources in a more value oriented way, enabling us to free up capacities to focus on our The third work stream focuses on our global site network. Brentac has grown significantly over the past decade, including many acquisitions. This has resulted in a broad intense global network, but also includes some locations which are either too small, or not as efficient as we would like them to be. So we have, therefore, identified a broad number of sites which we aim to close, while at the same time, we will set up hubs, mega sites and also new facilities to occasionally close white spots. In total, we aim to close around one hundred sites over the next few years while maintaining and even improving the experience for our customers. Last but not least, our 4th work stream is focused on strengthening our execution focus and progressing brand tax culture. Our management port composition mirrors our new organizational setup with a clear focus on global business execution, transformation capability and our change This includes a new leadership structure and the removal of hierarchies to create clearer and more direct accountability. On top of these forward extremes, we identified a number of of our working capital, as well as our indirect procurement processes. Across all those work streams, we have identified a total EBITDA potential of around 1,000,000 to be realized by the beginning of 2023. In order to realize this we expect to incur a 1 off net cash out of around 1000000. Girag Muller will later share with you the details and financial implications of the overall program. Project Brandtag is a comprehensive exercise, and given the numerous angles of the transformation program, it will be a multiyear journey my board colleagues and me will now take you through the 4 work streams in more detail on the following pages. Let me come to Full line chemical and ingredients distribution will remain the core of Brent tax business model. Branntag offers the most comprehensive portfolio of products and services and we will continue to do so. However, with the implementation of our 2 new divisions, Brandtech Essentials and Brandtech Specialties we will sharpen our operating model. Both divisions follow a distinct market approach to better respond to the expectations Both divisions will be steered in a differentiated way according to their strengths and strategic necessities to best leverage BrandTech's global position for enhanced value creation. Both business divisions address attractive markets and will equally contribute to strengthening Brantac's global market leading position in specialties and in full line chemicals distribution. Our future chief operating officers Stephen Turbend, and Orin Ishard will lead you through the details of our divisions later on. Beyond the introduction of the 2 divisions, the new operating model introduces Global Business Services as our service backbone to allow both divisions to focus on commercial execution. With the introduction of Global Business Services like IT, like finance, like HR, we will create a step change for Brandtech. Coming from a purely regional and country specific model, the shared business services enables functional excellence enough scale for efficiency and global collaboration. The intended establishment of regional shared service centers for key processes will further drive standardization efficiency and automation. Our business service concept consists of 3 parts: Centers of Excellence with a centralized expert team to provide support for both divisions and across countries. In regional shared service centers, we will bundle transactional activities to ensure global standards and a simpler global steering. Our business partners are regional and local representatives who will be responsible for the adaptation and implementation of global functional policies and guidelines within the businesses. Our corporate functions on the other hand will support the management board to govern and to steer the group. With both Global Corporate Functions And Business Services, we will become faster, more efficient and consistently strive towards functional excellence, with a stringent focus to best support BrandTech Essentials and BrandTech specialties in their commercial execution Now let me come to the core integrated within Brandtac Group, Brandtac Essentials and Brandtac specialties. Due to the different nature of the business requirements, the 2 new global divisions will be steered in a differentiated way according to their related key success vectors and performance levers. Brentac Essentials follows a regional logic with superior reach and customer proximity. Brentac Essentials will be the agile, lean and most efficient partner of choice for customers and suppliers in local geographies. Brandtac Specialties follows an industry logic to achieve better market penetration through dedicated focus and a tailored solutions offering. This division will drive our market position in reputation as the global specialties leader in our selected focus industries. With its size of about 1 1,000,000,000 operating gross profit in 2019, Brantac Specialties is by far the largest chemicals and ingredients distributor in the world and 40% bigger than our largest competitor in specialties. Ladies and gentlemen, in connection with the long term positioning of our company we also made changes to the composition of our management board. I am proud to be here together with my colleagues and we, as a team, are delighted to present the details of our initiatives Besides our CFO, Georg Mueller, whom you know well for many years, we also have Stephen Turbend and Orini Sharp here today. Geoeg has a longstanding history and experience within Brandtak. In this position since 2012, Giyo is already well known to you as a highly experienced CFO with an in-depth knowledge on our industry our company and our financial performance. Ori is a savvy and experienced business creator who built our Asia business from scratch within the last 12 years, with a very innovative and a creative mindset and the spirit and the drive to lead our specialties business successfully in the future. Stephen has an excellent track record within Brandtuck for delivering with passion and dedication superior business results while guided by in-depth experience in the chemicals distributions business. Stephen will lead our essentials business starting January 1 2021. So Steven and Ori will now take the opportunity to introduce themselves and talk about the divisions in detail by GEOK will reflect on the financial framework later on. Thank you, Christian, and good afternoon, ladies and gentlemen. My name is Steven Tarrwind. You could say that I grew up in this company starting as a management trainee. 23 years ago, making sales calls on 100 of customers in different industries, and, of course, in the regions of Latin America and North America. I have witnessed this company transform from a regional player to a strong global market leader. By staying true to its core strength, a deep rooted safety and service culture, combined with strong business ethics and agile supply chain capabilities around the world. Before joining the Management Board of Brandtak earlier this year, I served as Executive Vice President and COO of Brandtak North America. From January 2021, I will lead our new global division of Brandtac Essentials. And I'm very much looking forward to this exciting new role. Today, I would like to introduce you to BrandTech Essentials, and provide details of how we will run this division and drive What excites me personally about Brandtac Essentials is that it embodies who we are and where we come from. The best team in the industry that is linked to the most agile and efficient distribution network around the world, offering lean distribution solutions to our valued customers and suppliers. Aligning on these strengths between the global regions, while sharing best practices through my board role represents an exciting opportunity in itself. Moving to project brand tag, I would like to emphasize that our 2 global platforms will allow for differentiated steering focus, and execution. They will strengthen each other as complementary forces within 1 Brentac. Differentiated steering and execution in the case of Brandtac Essentials is through a low cost supply chain setup. That is efficient and agile in delivering large volumes to a wide range of customers. Based on the 2019 figures, Brandtac Essentials accounts for approximately 1,000,000,000 in sales and 1,000,000,000 of operating gross profit. Our target conversion ratio for this division is approximately 35%. As you can see in the pie chart below, 57% of the business is generated in the Americas. 38% in EMEA and 5% in Asia Pacific in China. Typical product families include solvents, glycos, acetylized and hydrocarbons. Brand ARC Essentials built on our existing undisputed strength which are highlighted on the right side with superior global reach and local market know how, making us cost efficient, agile, and competitive in all regions. Full line distribution of a broad portfolio of chemical products across industries and regions with a true global and local presence. In addition, we benefits from strong brand recognition and our industry leading safety standards as well as high barriers to entry. Taylor Made distribution solutions. That includes breaking bulk shipments into smaller volumes, tolling and blending, drumming and packaging, and inventory management. Let me give you an example. As you know, hand sanitizer and disinfectants have been critical essentials during this pandemic, and will continue to be so for the foreseeable future. Right from the onset, our regulatory teams worked closely with our customers in the sanitization industry as well as the health and regulatory institutions in the regions to make sure that critical ingredients for these products were tested and approved. Meanwhile, our supply chain teams around the world worked closely together with our producer partners to secure the supply isopropyl alcohol, glycerin, and antibacterial bonding agents. We brought these critical materials in bulk parcels via ocean vessels, real cars, and tank trucks into our tank farms around North America and Europe. Close to the producers of sanitation products. We made sure we stored sufficient inventory in our tank farms, toll blended on demand, and package it safely into drums and other packaging sizes. We ensured we were a reliable and are a reliable source of supply and regulatory support to the sanitization industry in both North America and Europe as well as the other regions in the world. To show our commitment to the health care sector and our communities during these unprecedented times, we donated considerable amounts of material to our hand sanitization customers in support of their efforts to the community. With this example, I wanted to illustrate you how we contributed to hand sanitizer and disinfectant cleaners being readily available using our core strength around the Brentac Essentials will continue to be managed with a regional focus, in line with our ambition to continue to be the local partner of choice. At the same time, we will align globally on our supplier strategies as well as our service offering to global key accounts. The 5 regions which you see here the country clusters and subregions will be managed by our highly experienced leadership teams. This means that the current regional setup remains fundamentally unchanged. Given the opportunity that China represents and the focus we will give us, we will manage it as a separate region going forward. We will drive an increased focus on our cost performance and through an efficient back office setup, leverage our skill. This will enable us to offer our customers high volume deliveries in an agile manner at competitive prices. Dedicated product managers with strong market expertise will ensure leading market share positions for our key products. Brentac Essentials and Brandac specialties will each have their own dedicated sales teams. Both divisions will see significant synergies in sharing operations and backend functions. Brentac Essentials will own and manage the infrastructure network and logistics as well as customer service teams that will serve the customers of both divisions. This will allow us to reach full scale in operations and optimize the site network across the divisions. Brentac Essentials and Brandtac specialties are naturally different with regards to the requirements of customers and suppliers, requiring a different steering approach. Brentac Essentials customers, typically buy large quantities of standardized process chemicals, Therefore, the purchase decision is made mostly on a competitive commercial offering. The key value add for our suppliers and essentials is Brandtac's unique ability to efficiently respond to their market share ambitions, even on a short notice, but at the same time providing value. Therefore, from a supplier perspective, it is important to have a strong local distribution partner with high safety standards excellent supply chain management, and the ability to manage swings and demands effectively. In conclusion, Brandtac Essentials combines all the characteristics that we as a global market leader in the chemical are well known for, being an agile and nimble partner of choice in the local geographies, for both our suppliers and our customers. Having a comprehensive product portfolio and local access to a broad customer base allowing us to be true number 1 at local level. Having experienced professionals with market expertise and passion for the business that are hunting opportunities. Best in class customer service, recognized for local intimacy, fast response times, on time and in full deliveries, as well as reliability. Our newly developed digital marketplace Brandtac Connect, which allows customers online ordering document downloads, and delivery tracking, which I will cover in more detail later on. And of course, industry leading safety and compliance standards that will continue to drive throughout the organization. And with this, I'll read over to you and the BrandTech Specialties division. Thank you, Steven, and good afternoon, ladies and gentlemen. My name is Harry Nasad, and those of you who have followed BrandTech for a while by Naomi already. I have been with the company for 12 years, and I was sent to Asia Pacific to build our business back in 2008. I joined the management board of BrandTech AGAY in 2015. Today, I am absolutely delighted to talk about our specialty division. BrandTech specialties is the largest special chemical and ingredient distributor globally, with the new operating model and the implementation of the business divisions, we want to be able to better serve our our responders to the better to our requirement of our business partner. Let me give you some key figures here. Based on 2019 figures, specialty division with €5,300,000,000 sales represent 40% of the group sales. This division generates 1,100,000,000 operating gross profit. With the conversion ratio between 41% to 43%. Brand tax specialties will build strong customer relationship by offering dedicated application Naha. And the broad range of the value added services. The division will leverage our existing applications, expertise, and value added services to grow the focus industries organically. We will be the world's largest solution provider and create an even more differentiated position versus specialty focus competitor. With this setup, we will be able to capture and top opportunities, particularly in the selected focus industries. I will talk about the details of our focus industries in a minute. This division will follow an industry logic It was mentioned by Christian and Steven. Within the brand tax specialties, we stick to the regional setup, having the region, Americas, EMEA, and Asia Pacific. The major change in our approach within the brand tax specialities is that we have identified 6 focus industries. Those are nutrition. We are already in the food and nutrition business We include here, and the nutrition, human nutrition, and animal nutrition, pharma, personal care, home care cleaning, water treatment, lubricant, and material science. Within the material science, we have our coating, construction, polymer and rubber segments. With this setup, the division will focus on growth in attractive industries by offering application and industry know how for tailor made solution and high value products. Prontax specialties will be a true global champion in those focus industries. Besides the regions, we also implement a global industry marketing team, real expert on those industry. Within the brand tax specialties, industry and market, Naha, play an important part and role This team ensure a smooth information flow and knowledge transfer within the regions. With our dedicated industry management, product management, and Salesforce and the technician to ensure an increase and more focused customer interaction and expand the collaboration with our business partner. With BrandTech specialties, we will drive our market position and reputation as a leading specialty player across the globe. As mentioned before, our supplier and customer have specific requirement. They have a specific demand. Therefore, we we apply a differentiation, differentiated steering approach within our 2 divisions. Specialty product and ingredient are used by our customer to make the finished product. Therefore, we have to define right specification, right quality, of course, right product, and satisfy regulatory requirement. In this case, the purchasing decision is often made by relevant product developer, product owner, and required substantial upfront communication and contact with product owner and customers are in the center. From a supplier perspective, RandTech needs to be able to market specific product effectively, implement our supplier's strategies, provide technical and regulatory advice to customers accordingly and promote our supplier's brand. In this industry, often supplier consider Brentech as the continuity of the sales force to the industry. So this promotion of brand it's absolutely fundamental. Our new operating model is logically direct to the basis of the 2 different set of customer group, which we are now addressing in a very focused and distinct way. Obviously, the focus on selected industry is one of the biggest change we implement in connection with project brand tech. And We selected our focus industry using the clear set of criteria, which include the growth and the solution potential. All those industries have increased need for value added services. No doubt on that. In addition, we looked at the size of those industry within BrandTech group to make sure we have the critical mass as well as the ability to service customers globally, particularly nutrition, pharma, personal care, and home care, have a very strong presence in consumer oriented industry in highly regulated market. Those industries make almost half of of operating gross profit in BrandTech Specialties. All of those industries have in common that they are exposed to global megatrend, providing for sustainable end market growth and require a strong distribution partner, like Brandtech. So what is our ambition? Our ambition is to be the distributor of choice for specialty suppliers globally. We want to be recognized as the global number 1 solution solution provider for our customers. We want to increase our market penetration, driving by our new operating model. And together with brand tech essential, we will realize significant cross selling opportunities and will differentiate BrandTech compared to specialty focused competitor. We are confident. We will achieve our ambition. I have no doubt on that. As we are number 1 by size. We have the global footprint. We have dedicated sales and technical expertise. Including labs. We have more than 50 labs globally today, and we will continue to develop. And even create more when we need it needed. And this together with BrandTech Essential will allow us to accelerate our growth which will drive organic top line roles above the GDP. With this, I will hand back to my friend Steven. Thank you, honry. Well, our operating model with the 2 divisions also comes along with differentiated go to market approach, considering the individual requirements of our customers, we introduce a globally harmonized and consistent customer segmentation model for both divisions in our joint CRM system. The segmentation model consists of two dimensions. On the horizontal axis, it is considering current performance in terms of generated gross profits and profitability. And on the vertical axis, it is considering future potential in terms of annualized gross profit opportunity and the relevant water spend of the customer. The objective of our new customer segmentation is a more streamlined and effective deployment of our Salesforce, to create higher quality customer interaction with customers where we see growth opportunities and better leverage the full potential of these customers as well as new prospects. Including sell price and margin management, opportunity generation and conversion, cross selling as well as value creation from value added services. Our goal is to make best use of our highly professional Salesforce and intensify our customer relationships. This more targeted and effective deployment of our commercial team will unlock optimization opportunities, contributing significantly to the financial results of project Brandtac. Brentac Essentials with its strong market position, broad customer base, competitive and agile supply chain setup around the world, and brand ag specialties with its formulation expertise technical service, industry know how, and deep customer relationships will complement each other and strengthen the value proposition of Brandtac as a whole. Let me now briefly explain how our 2 divisions will benefit from our new digital service offering. Brandtag's digital service offering through our digital platform Brandtai Connect is actively being rolled out around the world. We are already live in various regions including North America, Europe, and Asia Pacific, and 20% of our customers in those regions are now active users of the platform, allowing them instant document downloads, product search, and recommendation as well as access to their invoice history. In the U S, as an example, 5% of our active customers are now placing will provide a best in class customer experience and much improved ease of doing business and represents an opportunity for us to reduce service costs while speeding up processes. Our customers, especially during this pandemic time, have reacted very enthusiastically to the core functionalities such as placing and tracking orders online one click reordering, document downloads, product search and recommendation engine. Instant Lab Connects and technical service. As more and more of our customers benefit from the Instant Services being offered online, our commercial and customer service teams are able to focus more on value creation rather than performing administrative tasks. With Brandtac Connect being fully integrated into our CRM tool, we enable our Salesforce to more effectively generate opportunities, while providing Arenry will now lead you through our efforts with regards to the site network optimization. Thank you. Thank you, Steven. Now let's come to the 3rd work stream of project brand tag, the site network optimization, which we call a signal. As I am the sponsor of the site network optimization within the project brand tag, I would provide some more detail on this. During the last 20 years, BrandTech has grown and expanded its global footprint significantly. We acquired more than 100 companies, and as a result, also inherited additional sites when we started our analysis at the beginning of 2020, we recognized that there is also room for improvement within our site network. So so what is our objective? Our objective is to make our site network more efficient, improve customer proximity, consolidate our global footprint, reduce overlap in sub region or countries and develop megasite to drive scale efficiency. We will also close white spot in area where we are underrepresented. In the next few years, we will close about 100 sites across all region focusing on the consolidation of small brand tech on-site and third party logistics site. With our future site network, we improve routing and optimize our distance to customers. We reduce material movement and optimize inventory allocation to site, and we will also contribute to our sustainability program. The new setup of our network, which will be implemented by 2025, provides a lot of advantage. We address the different needs of both divisions. We will leverage our leading market position and improve our customer service level by investing in regional hub with suitable capacity and capabilities. We move more to an asset light model and will replace inefficient sites within our network. The new network will allow both division to concentrate their effort on value added services. For both our customers and suppliers. This transformation will take few years 3 to 4 years. During this time, we ensure a smooth transition process. With the optimized network, we create the basis for future growth by maintaining our global reach and better leveraging economies of scale. And with this, I would like to hand back to Christian. Well, thank you, Orie. Thank you, Steven. Ladies and gentlemen, let me come now to another important part of Project Brandtech. Concerning our people and Brentac foresees quite significant changes in our operational setup. In the business support functions, changes in the leadership team as well as a new composition of the board of management of the group. Implementing these changes and becoming the true market leader is only possible if we take care the capabilities, the dedication and the passion of our employees, where decisive success factors in making us the and we want to build on this strong foundation. In order to realize the full potential of project Brandtak, It will be essential Mill ensure the successful execution of project Brandtak by moving our culture towards a stronger focus on performance and individual recognition, particularly with regards to delivery on promise. This will be supported for the entire EBITDA uplift potential. Project Brandtak needs to be a success for the entire company. Clearly defined roles, responsibilities and direct accountability will be the enablers for this performance orientated culture. Brandtak has a lot of untapped potential. The new leadership and our focus on people will help us to unlock the company's true potential. In order to drive the transformation of our company and to open the next chapter for Brandtug, we have also changed the composition and amended the role of Brentax Management Board. As we change our operational setup, we will also strengthen the joint global perspective in the board. My colleagues and I will focus on the strategic steering and the business development of the group. We will focus on execution and a stringent decision making within the organization. With regards to the composition of the board, besides the CEO and the CFO and our 2 Chief Operating Officers for the divisions, We also have created the role This position will amongst other roles be responsible for the overall transformation process we initiated drive functional excellence, and the digital transformation of Brandtac as well. The selection process has already started and is on a good track. Consistent with our new operating model, the new board structure will be effective from January 1 2021. With this, I hand you now over to Georges, who will lead you now through the financial framework. Thank you, Christian, and good afternoon. Project Brandtak builds a strong foundation. To return the company it will also allow us to and I will now I will also explain what earnings We are a highly resilient company. We weathered each downturn well and delivered healthy growth in gross profit and EBITDA. This is organically and also is through a proven track record of acquisitions. We are also very considerate about cash return to shareholders. In each and every year, since our IPO in 2010, we increased the dividend payment and that includes 2020 in the middle of the pandemic. A key reason we have been able to do this is the strong cash generative and resilient nature of our business. However, In recent years, the organic element of growth has been stalling. We are implementing Project Plantac to build a strong foundation for returning the company Let me shed some light on the highly cash generated nature of our business model. Brandtac delivers high free cash flow. On average, we have produced about 1,000,000 free cash flow annually in the last few years. In all likelihood, this year, And that is despite the crisis, we will generate the highest free cash flow since our IPO. Year to date September, we already delivered around $800,000,000 and there will be more in Q4. Our strong cash flow generation allows us to continuously pay dividends and it supports the resiliency of our business. Particularly interesting, it gives us the ability to continue our proven track record of self funded M and A. Our business is asset light compared to any production model. In fact, 2019, our CapEx was only 1.6% of sales. In 2019, we had a 35.5% conversion ratio and our working capital turns stood at 7 times. Both are solid numbers for our industry. We are certainly building on strong foundations, but we are convinced we can do better on our conversion ratio and working capital turn. Part of our focus and our work is to drive these numbers up. Let us now look at We will deliver a 1,000,000 operating EBITDA uplift through Project Plantech. From a timing perspective, we expect a ramp up year by year and the full amount will be achieved by the beginning of 2023. Every work stream we have shared with you today will contribute. You can see the respective numbers on this slide. Let me point out that the operating model actually has a So operating model anchors our new structure on Brandtac Essentials And Specialties. This new structure is a fundamental basis. To return the company We are going to achieve the million uplift in operating EBITDA through enhanced top line growth as well as efficiency measures. Let me now cover About million are related to top line measures and will positively impact our gross profit. These include pricing initiatives. We will implement stricter pricing guidelines and discipline. An amount of 1,000,000 is related to efficiency measures. The measures of Project Brandtak deliver a step by step increase in the financial performance as we move towards the financial year 2023. We expect a somewhat front loaded trajectory as we benefit from our early win initiatives. Long tail products, transactions with negative margins and transactions with inappropriately low margins give us plenty of potential. We also expect quick results from bundling purchases and having more professionalized purchasing processes moving away from having indirect spend managed locally as we do now. And finally let me touch on working capital. We started to reinforce focus on working capital management. We also implemented a new governance structure for term decisions, While this will not impact EBITDA, it will show in working capital turn quickly. Let me be transparent about our plans This is partly from acquisitions, but also we employed more and more people. Our organization has become rather complex, there is some overlap between functions and we also have only limited global harmonization. This creates potential to reduce overlap to increase harmonization and to generate efficiency gains We expect to reduce existing headcount by about 1300 jobs, about 8% of the total workforce over the next 2 years. We are in consultation with the employee representatives in line with the legal framework in the different countries of operation. The headcount reduction contributes materially to the focused EBITDA uplift So what financial means do we need to make all of this happen? To achieve sustainable organic EBITDA growth, we will continue to invest into the infrastructure of our business. We expect annual CapEx to be give or take what we spend 2019, so say about 1,000,000. In addition, we are reviewing our global ERP landscape and we will upgrade the IT infrastructure. We are defining the scope of the project. Our current expectation is a spend of about 1,000,000 over the next 3 years. Project Brandtak will require a cash out of about 1,000,000. The cash out will be spent between this year 2023. The amount comprises expenses and CapEx. And then there is M and A, which is continuously on the cards for Brentac. We continue to EMR an annual M and A spend of 1000000 to 1000000. Any given year might be lower or well higher depending on the pipeline. Let me summarize our ambition for growth. Project Brandtech will enable us to fully capture the underlying 4% and organic operating EBITDA by 4% to 6% through the economic cycle. In addition, the different work streams of Project BrandTech will deliver an annual EBITDA contribution of 1,000,000 and we will For reference, let me give you a side by side comparison of our 2 divisions. Essentials accounts for 1,000,000,000 of gross profit and specialties accounts for 1,000,000,000 of gross profit. This is roughly a 60% to 40% split. We also give a range for conversion ratios. As we are in the process of finalizing the that we will report the rest of world segment separately. This is mainly the global headquarter. The EBITDA for that segment is a negative the next two pages, let me explain how we allocate our web you to the 2 divisions. As previously mentioned, the buying decisions are often taken by different stakeholders. In order to offer tailor made solutions and to fully meet the product and services demand of our customers, Brentac specialties will focus on selling baskets of ingredients and value added services that are directly used in the production of our customers and products. As an example, we have shown on this slide, products and ingredients that are accounted for in Bredag specialties in the nutrition industry. These are, for example, flavors, emulsifiers, sweeteners, or tolerance. All these products make up the specific products of our customers in the nutrition industry like pastries, yogurt, ice cream, or soft drinks, just to name a few. Plantac Essentials, We complement this product and service portfolio with so called process chemicals. These products are bundled in Brandtac Essentials and are needed in the broader production processes of our customers. They are typically not part of the final product. Here, the examples for the nutrition industry would be sodium hydroxide sulfuric acid or hydrochloric acid. Tailoring these baskets to the specific requirements of our customers will increase our value add opportunities and will help us to better respond to our customers' needs We want to be very Only a transaction with 1 of our 6 defined specialty industries will be accounted for as specialty business. And even within the specialty industries, there is a further requirement. It needs to be a sale of ingredients. Only then will it be accounted for, especially sales. Everything else, particularly the sale of all process chemicals, will be accounted for under essentials. As you can see, we have a precise and demanding definition of our specialty business. I want to give a Our reporting will reflect our new divisional setup. We will report separately on the 2 divisions, Brand Ag Essentials and Brandtak specialties. Within each division, we will report regional data for EMEA Americas And Asia Pacific. This will give you Last but not least, I would like to spend a little time on our capital allocation going forward. We will continue our dividend policy of spending 35 percent to 50 percent of our profit on dividend payments. There is no change in our leverage target we do feel comfortable with the leverage of around 2x, and we recognize the benefits of an investment grade credit rating. If and when our leverage falls sustainably below 2 times, we will consider further cash return to shareholders. Let me summarize. Project Blendtec is a strong foundation for our return to sustainable organic earnings growth. We expect 4% to 6% EBITDA growth per year through the economic cycle. On top, we will increase EBITDA by around 1,000,000, we see help of the dedicated measures and initiatives in Project Blindech. Our reporting will provide you transparency to analyze our performance division by division And finally, we will allocate the cash generation of the business That's it from me regarding the financial framework back to Christian. Well, now we have almost finished our capital markets update 2020, but I would like, of course, to summarize the key takeaways for you and also let you know what we are going to do over the next couple of months. In introducing the new operating model we provide now for the first time, full transparency on the 2 distinct businesses and their performance in are insured as well as one success factor I greatly believe in. Focus and full management attention. So what are the benefits for having both under one roof? First, we have a significant overlap of customers across both divisions, providing for significant synergies as well as one customer only buys 1.5 products from Brandtak. 2nd, our suppliers value our BrandTech brand and our ability to offer the best suited channels to their end markets. 3rd, we have a leading global distribution network the synergies and in efficiency gains for both divisions by the joint utilization of the common supply chain common infrastructure and common site network are substantial. 4th, Global Business Services are efficiently managed and are utilized by both divisions to greatly improve the cost base for both divisions. The same applies for the corporate center. Last but not least, The large scale of Brandtac with its 2 divisions allow us to prepare Brandtac for the future. For instance, both digitization and sustainability requires substantial investments. Our size allows us to make those investments shared by both divisions and thus reaching the highest level of return. Over the next 8 weeks, we will finalize our organizational design and we will prepare the reporting systems and structures. A large and significant amount of work which needs to be executed we will assign the relevant customer and supplier relationships Let me emphasize that for 70% of our gross profit these personal relationships will not change as of go live January 1st. Early wins have already contributed to our performance this year, and we will continue to extract value as quickly as possible out of these initiatives. Let me assure you that our leadership team is determined 2021. Ladies and gentlemen, in summary, what are we going to achieve with our transformation program, Project BrandTech. With the initiatives we developed within this comprehensive program, Brandtug will expand its global market leading position and deliver sustainable organic earnings growth in the coming years. To recap, we will be the channel partner of choice. Using the differentiated steering via our 2 divisions. We will increase with an agile organization and strong accountability. This will further sharpen our profile as a true full liner or a one stop shop distributor. We truly believe that we can only be the shareholders and all other stakeholders, the Brandtak team will drive the evolution of our enterprise. With Project Brandtuck, we strengthened our competitive positioning, our performance and we will expand our position as the market leader to become With this, I would like to close the presentation, and thank you for staying with us this afternoon. And the operator will now provide further instructions Yes, ladies and gentlemen, we are about to start the question and answer session for the capital markets of the 2020 of Brentock AG. You can follow the Q And A via the webcast in a listen only mode similar to the presentation you have seen. If you would like to raise the question, please dial the numbers mentioned in the subtitle and enter the PIN code 928270 5, 6, and When asking your question, please mute your PC device to avoid background noises. Please be patient and one moment until the questions are registered. The first question we received is from Ben Hopkins of Credit Suisse. Your line is now open. Please go ahead. Well, perfect. Thank you. Yeah. Dan Hoxton from Credit Suisse. Obviously, quite a lot and digest, but maybe just a couple of clarification questions first for me if that's okay. So question number 1, the exceptional ER investments, the I think you see additional 1,000,000. Is that included within the 1,000,000 cost out or is that in addition to that? My second sort of clarification question is around the regional reporting. So I think you mentioned sort of the 3 different territories under specialties and under essentials. Are they going to be externally reported to us? So when we think about building the models, do we have EMEA Specialty And EMEA Essentials. Question number 3 is on the phasing of the 1,000,000. I think the recognition of the additional EBITDA is going to be front end loaded, is the same for the 1,000,000. Then maybe my final sort of clarification question. Your midterm guidance of 4% to 6% growth in EBITDA are we to think of that from 2023 onwards or is that a target that you're seeking to hit every year and the 1,000,000 is then on top of that? Thank you. Thank you very much for the question. So those are mostly related to georg. And so I would hand over now to georg to go through those four questions you had and then, you know, I'd chime in if necessary. So, Giyak, please. Thank you, Dan, for for the questions. When it comes to our ER global ERP landscape and to our IT infrastructure, we are in relatively early phases of defining that project, nevertheless wanted to be fully transparent and flag already today that a more harmonized and more standardized steering of our group probably probably requires over several years, investments into our ERP infrastructure. So in that sense, the million I mentioned, does come on top of the 1,000,000 but it is a number that is much more preliminary at this stage. The reporting that I presented indeed we expect this to be the external reporting structure. So you will not only see data on the 2 division essentials and specialties. Within each of the two divisions, you will also see regional data for, India, the Americas and Asia Pacific. The timing of the 1,000,000 one time cash out cost to achieve is between this year 2023. The bulk of it will be 20212022, but some amounts this year already and some small amounts also in 23. So 4% to 6% organic EBITDA growth are definitely on top of the 1,000,000 EBITDA uplift Project Brentac. Project Brandac has its defined initiatives and its defined measures that deliver the uplift So 4% to 6% is capturing the underlying market growth. We are, as we all know, we had some struggles over the recent years we are convinced that we see new setup in, into the 2 divisions essentials and and specialties. We will be much better able to steer the business in a differentiated manner and to go back on an underlying growth track. So that is not only 2023 onwards. It's also on the path to 2023, obviously next year and maybe the year after are a little bit difficult to predict particularly because of the COVID-nineteen and pandemic situation So 4 to 6 is through the cycle. It requires some normalized condition, which we hopefully will see soon. Perfect. And maybe one follow-up or additional question and then I promise I will stop. And in terms of the M and A, obviously, sort of no change there to the strategy, I was just wondering if you could provide a bit of color on the pipeline. Obviously, there is a better market consolidation underway and possibly a hiatus this year as you to develop the scope of Brainsag. And how should we think about M and A? Is it near term, midterm and how does the pipeline look? Yes, thanks for the question concerning the M and A. I think as you have seen, we are also historically have spent $200,000,000 to $250,000,000 on M and A. So we are not changing that. It's earmarked for M and A and we will continue to do that. We will, you know, of course, look on how, what lens do we apply when it comes to geographies when it comes now to which industry segments we want to perform M and A and also to which sizes of targets we are looking. So of course when you have that amount earmarked, you need to have a healthy pipeline in place, which we do have. So we are constantly working and filling the pipeline and exploring the opportunities as we move forward. So I'm not concerned that we are running out of ideas or out of out of targets to be very clear, but it will be an ongoing effort, maybe a little bit sharpened lens of where and how we want to acquire. Thanks very much guys. Cheers. The next question received is from Christian Kors of Warburg Research. Your line is now open. Please go ahead. Yes, thanks. Good afternoon, and thanks for taking my questions. First, maybe to Brenda Connect? Do you have any penetration target? Yeah, with regards to customer penetration, do you offer customer incentives And do you expect to roll out this device also to other countries? If I'm not mistaken, you have just rolled out to 12 countries so far. Secondly now with this new 2 divisions, am I right to assume that this that the business would still be run on a joint asset base. And, so that does actually actually mean that you can steer the divisions solely on a gross profit and operating EBITDA basis and not on return on capital or EVA numbers. And then lastly, with regards to the million uplift, can you maybe also provide us an idea how this will actually allocate on these 2 divisions? Okay. Thank you. Thanks for the questions. So there are 3. So I would ask Stephen maybe to ask for the first one. Also maybe shedding a little bit the light on on the asset base and how we're running it. The implement implications on the asset base and also the to 20,000,000 uplift question, and allocation to the divisions, I would then suggest that georg is answering. So, I give the first question to Toronto, Steven. Thank you, and thank you, Christian, for your question. So on on Brenda Connect, our digital platform, we are, of course, trying to penetrate a large amount of customers and certainly the smaller customers where we see that there's an enormous benefit from allowing them to use the platform to place their orders. But what we are also seeing is that we are able to cross sell much better a wide range of products. Christian Colpaintner mentioned that we today have roughly 1.5 products per customer. Well, we see on the platform that as we have now a product search and recommendation engine, that customers typically look for more and more much broader range of products, which helps us to build a broader portfolio insights each of the customers. Obviously, the speed of roll out, you saw that we are rolled out now in 12 countries, is accelerating. We are adding countries in EMEA in Europe and in Asia Pacific. We will soon also roll out platform in Canada, for example. So this is on the go, a continuous effort, and we also expect, especially now during the pandemic, that there is an accelerated adoption level of customers coming on the platform. Thank you. Then on the asset base, I mean, Stephen, I forgot that first part of your question, Christian, So the asset base will be operated and owned by BrandTech Essentials. So they are focusing on the lowest cost to serve in that network and, driving competitiveness with our global asset base. And, you know, the financial implications, you asked about the asset base and, and and how we steer that. Plus also the allocation of the 220,000,000 uplift to the divisions I give now to GEAque to answer that question. Thank you, Christian. Let me be very clear. Return on invested capital is very close to our hearts in the management board. So we will absolutely make sure that that for every euro invested we do achieve an adequate return. Allocating or steering the division by return on invested capital is still a little bit at early stages for the reasons that Christian mentioned. So, the base will mainly be operated by the essentials business. So they will host the asset base and specialties will mostly purchase services, warehousing services, logistics services, from the central part of the business. But return on invested capital in our business is not only on the PPE. On property plant equipment. For return on invested capital in our business, it's also important to consider working capital and intangibles, particularly those intangibles that come from M And A. So the point I want to make is we still have to make steps to steer the divisions appropriately on return on invested capital, but it's by no means that we have nothing at the start. So there are elements to controlling the return and controlling the assets that are tied into the divisions well at our hands. When it comes to splitting the $220,000,000 EBITDA uplift into divisions, I would if I may, I would try to stay a little bit away from fits from our go to market approach from measures and initiatives in the operating model and from the site network operations And as you can well see, all of our business, both divisions will, for sure, benefit. And the next question received is from Markus Mayer Bader Helvea. Your line is now open. Please go ahead. Good afternoon, gentlemen. I have three questions. Coming back to your own digital platform, Brenter Connect. Recently also signed a corporation. This LANXis came on this platform. Could you shed some light about what is behind this move and are there additional corporations planned and how do they interlink with your own platform? That would be my first question. The second question are again on this ambitious medium term targets, which makes you imply market share gains. And, the question here is, should we expect those in particular to happen in the specialties business over last year's several competitors outperformed you. And therefore, we've been looking at things that you have to highest catch up potential. That's the second question. The last question is then on what Giox said with the leverage falls below two times that Brent Agua can do further cash out. Does she help us? What are the preference for this cash returns versus cash returns to shareholders is a special dividend than has a higher priority than a share buyback or this would be also interested. Thank you. Marcus, thank you for the questions. So I will take the first two one, the last one, I referred to Gheorg on the leverage question. Now the first topic on Digital Connect and our digital efforts and Brenda Connect, I think you have seen by Stephen's presentation that we are making good progress there. We are rolling that out now. Globally into many different countries and we are encouraged by what we see is happening and the world is changing and also our business is changing here. And what we have now, started as a as a first collaboration with the Kimondis, which is a digital market place to be as the global market leader to also market our products there. Is something where we are exploring what various digital channels will mean for the chemical distribution world And so for me, it's not either or it is an additive channel we want to explore. Should we get the expected benefits out of that, that is something which we will continue to explore further. Then we had the question on the medium term growth, whether we are able to capture market share. Let me be very specific. When we look on the underlying organic growth is, you saw on the gross profit of roughly 4%, slightly 4%. So this is driven by the underlying chemicals market growth, And this is different from industrial chemicals to specialty chemicals. You certainly know that. So specialty chemicals growing faster than industrial chemicals. So we expect a certain underlying chemicals demand growth as we move forward and we add to this the ongoing outsourcing trend which as I've also mentioned in our Q3 call is definitely there existing and even more pronounced as we move forward. So this gives us the 4% operating gross profit growth. And then with our performance measurement and steering the business in a different way and also being more efficient of how we are acting and operating in the market, we believe those 4% gross profit growth will translate into an EBITDA organic growth of 4% to 6%. So this is not yet about talking, grabbing market share. Brandtak would have not an answer for that. We are developing that answer in the year 20 21, 2022, when the divisions are operational and when we draw our strategic plans, division by division and business unit by business unit. And once we have defined that, we will show a plan also going forward after the time of project brand tag, which is ensuring that we are returning And with the leverage question, I refer it to Georges so that he can answer that question. Markus, good afternoon. You, you actually named 2 obvious routes for cash return to shareholders, one being a dividend. And the other one being share buybacks openly, we haven't really done the detailed work yet. So let's approach this step by step understand better what the advantages and prerequisites for for each of the two boots are. And once we reach the stage, we will take a decision. No decision taken yet at this stage. Okay. Thank you. And the next one is from Stephen Godwin of Deutsche Bank. Thanks for taking my question. I just wanted to go into a little bit more detail on the working cap an improvement. Can you give us a bit of a feel for roughly where that could be obviously, you're saying at the minute working capital turns around 7 times or maybe you have to think about in terms of some percentage of net working capital potential sales, but where do you think that could get to? And I guess across the organization, where do you see the major opportunities and how quickly can you can you begin to address those? And I guess just the final part of that question would be how material do you think that could be in terms of an improvement to your cash position. And then wanted to clarify earlier. I think you said that the 200, CapEx and the IT within that, the IT spend would be on top of the 3 70. I'd originally it was kind of within the million, but I just want to clarify that if that's okay. And then you touched on something earlier on around looking to be a little bit more capital light when we were discussing site decommissioning. Can you give us a bit of a bit of an understanding as to as you close down these 100 sites. And I think you've commented previously that around 50 would be 3rd party. And I assume within that you're implying that it's a lot easier to decommission those. What is in getting to the cost savings that you've outlined, what is the kind of cost to run per site And is there and is there going to be a focus toward, 3rd party sites or just more generally a more capital light approach here? And will that, how material will that be? That's it. Thank you. Stephen, thanks a lot for your 4 questions. If I counted them correctly, the first three about the working capital improvements about the material cost impact of our organizational changes and how the ERP investment plays into the cards will be covered by Georges. Let me maybe take the last one, the capital light approach of site decommissioning, you're absolutely right from the about 100 sites, which we intend to close about half of it is 3 third party locations, this is something just very natural where you try to optimize the network where you have because some of the sites are are not ideally utilized, which we own and and so we bring back, you know, we bring back, inventory. We bring back business. Into our sites to also reduce the overall cost per unit sold into those sites. This is I think a home work which needs to be done, Ori, I think has very, very nicely shown to you that we have grown over the last 2 decades through a lot of a lot of M and A. So we never really looked at the site network in a structured way in saying, okay, this the right set network, bringing us into the future 5, 10, 15 years down the road. And I think we have a very clear vision of how our site network will look like in the future. And this, of course, does not exclude per C third party warehouses if they are needed in a certain location offer a certain market entry, but this is a very typical, I must say, initiative where you try to optimize your footprint, from various angles. And so from that perspective, uh-uh, this is a very holistic approach of how we wanna deal with this. And the other three questions, you know, I hand over now to Georg who will give you the answers there. Steven, good afternoon. When you start working on working capital improvement projects. In my experience, it gets pretty granular pretty quickly. So there is not necessarily the one catches it all answer how how we are going to improve working capital turns. But let me point you to a few directions. First of all, I would point to standardization and harmonization of inventory management. And historically, a lot of inventory management within Brandtac has taken place at the respective warehouse, and was very much based on the experience and the focus of the local warehouse manager. I'm not necessarily saying this was handled in a weak way, but it was handled in a non harmonized non harmonized approach with light and shadows throughout much based on the knowledge of the individuals and now with more and more professionalized IT tools being available to use available data in an objective way to take inventory decisions will for sure help us a lot. So inventory management end. But other than that, we spoke about customer segmentation, And even though it's kind of a side effect, part of customer segmentation is also how do we take term decisions for customer So have we in each and in each and every case appropriately insured that customers with specific turn, turn terms, are particularly interesting for us. So there also lies quite some potential. Where will it take us we currently planned for a 1st positive material step, we would expect the working capital turn to quease from last year 7 times to say 8 times rather quickly, and then let's take it from there. An increase from 7 to 8 times would actually free up 1000000 to 1000000 from working capital which is also a a question you asked. I I have to admit the ERP question escapes me because I was making a note about the working capital So can you remind me of the ERP questions, Steven? Yes. Sorry. I I I just wanted to clarify, and I I didn't hear Hopefully, earlier on, but, in terms of the 3 70, when you originally gave that number, my Understanding was that within that a component of it would be CapEx and obviously today we've discussed the RP. There wasn't much information a couple of weeks ago. I think I've heard before that you said that the 200 of the CapEx will be on top of the 3 70. Just wanted to clarify and apologies if I got the wrong end of the statement. No, yeah, you are right. That's what we said. And the next question is from Timona Sterling of Bank of America. Your line is now open. Please go ahead. My questions. So a couple of them, you mentioned that for specialty, you will follow a sector logic with dedicated Salesforce, and same for essentials. You already have such expertise in house, especially for specialty. And if not, how difficult will be for you to recruit externally sales people with specialty chemical expertise and what is the timing for that? Secondly, you talk about a more disciplined pricing approach. Could you maybe provide some practical examples on how you're achieving that and how receptive are customers in industrial versus specialty? And, lastly, a question on Brandtac Connect. And overall on the increasing role played by digitalization in our chemical distribution to what extent this can be an opportunity to address the long tail of very small customers that potentially you are not reaching today versus the potential risk of increasing pricing transparency. Okay. Thank you very much for the question, which I think the first question I would like to ask Orie about the dedicated Salesforce and special teas and how he sees that evolving. So we will give it to him in France. And, Steven, then I ask to talk about the pricing, the pricing approach, because he has worked intensively on this one already. And also the digitization question, I also let Stephen Stephen answer. So, or you maybe you start first. Thank you. Thank you for the question. When you say the sales forces, if you have efficiencies and or good team in place, yes, definitely. I think we we demonstrate that We have already ourselves 5,300,000,000 cells, we have on specialty divisions. What is not harmonize is the maturity of bio region. Just illustrate this one. We start, 2 years ago. Exactly. We start with our food and nutrition. We build a structure on the food and nutrition. We have a real expertise on food and nutrition globally. Through 28 application labs, an expert already in our organization. What we have done, we leverage from the knowledge that we have I just gave you a state one example. We have a knowledge on ice cream, in in Italy, we duplicated in the rest of the world. We had food expertise and whether it's coming on the meat, particularly meat expertise in Poland, we use it the rest of the world. But US we didn't have this kind of expertise that we are trying to leverage and use. Vietnam was wonderful investment we did on UHT, which is the 1st in the as as a distributor, I think we were the number one investing on UHT on the milk industry to develop in the know how on some of the developing countries. So we have a lot of expertise that is not harmonized way that we wanted to do that. Food was a very wonderful experience, It'll demonstrate that it works. We need to have the right work marketing, and we were talking about the flow of the information and expertise across the region. It works perfectly. We do have an expertise in cosmetic in the US and Europe. We need to leverage to develop that in Latin America. Etcetera. So I can go through all those industries. So what what you should take away is we have a different expertise on different industries. But we this is the fantastic opportunity to build this harmonized approach globally, and using the marketing team that we need now to structure this one properly. So are we gonna need, going to outside and and bring some new people Probably, yes, here and there, but we have also a lot of experts in house already that we want to leverage on that and develop this one. When it's coming to the different structure you were talking, sales and marketing team will be really on the sales and marketing platform. That's the reason why we use all the logistics services from BES as well as we use our, business excellence and partners, I would say, from HR, from IT, etcetera. So that will be really, for me, and sales and marketing platform for development. Hope I answered your questions. So, Stephen? Yeah, thank you, Andre. And Simone, thank you very much for your questions. So let me address first your question about the more disciplined, sell price management at Brandtak. And what we are aiming for here is a more consistent and coherent, pricing focus. As you can imagine, we do 1000, tens of 1000 transactions per day, to make sure that there's a more coherent approach, for example, to low margin or even sometimes negative margins, which fall through the cracks, with all the pricing fluctuations that's going on. So what we want to make sure that there is a focus on enhancing low margin business, lift that business to more acceptable margin levels but also make sure that we minimize the negative margin transactions, which sometimes happen as a result of price fluctuations in the market. So that's one area where we will focus on. Another area is, for example, we see that the more products customers buy the more value they perceive from a distributor. And as you broaden your basket of products, you can improve the overall value of the basket to the customer. And that's why we will also focus on cross selling. Then there is another area which we are focusing on, which is the differentiated sell price management, making sure that the price reflects the value that you create you can't have a one price fits all across the market, for each customer, for each application there is a different individual sell price and to be able to identify that, to be able to manage that through our system, will enable us to improve the profitability to mention here is that we are intending to extract better value from our value added services. By focusing on the value of, for example, formulation, blending, even outsourced tollblending that we do for certain customers, packaging, etcetera, etcetera, making sure that we charge the correct value for these services, we can also improve the sale price and margin of that business And so that illustrates a few of the examples how we intend to have a more coherent and disciplined approach to sell price. Which means also that our leaders are commercial leaders and our commercial excellence managers across the regions will, in a more coherent fashion, drive those measures not only in country clusters, but in regions like North America, a, an Asia Pacific in a coherent way. I hope it answers your question on sell price. Let me move to your 3rd question on, Brenda connect our digital platform. And, yes, you are absolutely right. It will help us to reach a lot of small customers where in general, the value of BrandTAC margin wise is very interesting. And by allowing these customers through their username and password to get on Brandtai Connect and have access to a broad portfolio, have access to product information and certificates to be able to download those instantly provides a huge value. And at the same time, for us, it is less cost intensive as it would be if we wouldn't have those customers on our digital platform. Now pricing transparency, we have no issues really with pricing transparency, and you will see Brent tag, sharing prices on Brent tag connects to the customers. On the one hand, you have, of course, a general price list. On the other hand, we will also have customer specific pricing in BrandTA Connect, allowing them to make instant decisions on their purchasing intentions. But in the end, the the the big value here is reaching a much broader customer base in a very easy to use fashion and allowing customers to really purchase a much broader portfolio from BrandTAC than they would otherwise do today. I hope that answers your question. Thank you. Thank you. And the next question is from Laurent Favre of Exane by BNP Paribas. Your line is now open. Please go ahead. Thank you very much. The first question, I guess, for Bjorg, on the 2020, can you perhaps talk about how much of that is already falling into 2020? You have talked about early gains or easy wins. It sounds like some of those might already be seen already this year. So can you talk about that And the second question for Christian, can you talk about changes in the incentives throughout the organizations. And for instance, in UCap's divisional management or indeed support, it's difficult to imagine that you can be equally incentivized against efficiency gains on one side and organic growth on the other side. So how do you think about that? And when you go further down the organization, let's say for 2 salespeople sitting in the same country, they fully on one side, essential or specialties, how is there incentive plan really changing based on this organization? Thank you. Yes, Laura, thanks. Thanks for the question. I will take the second one. I will ask GEA to talk about the early wins 2020 a bit. On the incentive scheme, this is clearly a work in progress as we progress now to our go live on January 1, 2021. So it's an ongoing debate. We have with the supervised report of what we intend to do, but let me be very clear delivering project Brentech in its uplift potential is extremely important for Brentech. And the delivery to promise is a core value of us as we move forward. And so we need to make sure that we have the proper incentive schemes behind who allow us to deliver with a high level of security of the results which we are today, outlining to you. So again, give us some time before we have finalized this. It's an ongoing discussion which we're having, so I cannot talk too much about this. Then I would ask maybe Gia to answer the question about the early wins and the impact in 2020. Hello, Ron. Good good afternoon. We are in the middle of preparing the go live for January 1 2021. So 2021 will really be the 1st year where you see material EBITDA impact from from the uplift potential we see. The EBITDA is a positive EBITDA impact from the early wins, in 2021. And keep in mind, we just started implementation. It's probably a single single digit million figure. Where you do already see a positive impact from early wins is working capital management, where we improve working capital turn over the last 2, 3 months and we fully expect that to be sustainable towards the end of the year. Thank you, Angela. Maybe if I can follow-up on this. I mean, I assume immediately not want an S2 start with the 2020 target and just add on all the positives without necessarily thinking about the negatives and in particular and thinking about temporary savings that you may have in 2020, for instance, on travel and entertainment. So I'm just wondering, can you help us with what we should be aware of, in the negative column when we build out bridges to 2020 3 from 2020? My that's if I got the question correctly, that's more a question of underlying business dynamics with the COVID crisis. My idea is, of course, we have some cost savings this year that just related to lower business activity like dislike travel and entertainment, that would be in a moment in time where we would expect this to be fully compensated, overcompensated by better gross profit generation. Understood. Thank you. And the next one is from isha Sharma of MainFirst. In terms of CapEx, just to be clear, is it fair to assume north of 3 50,000,000 for 2021? Given the additional ERP investment and cash out related to project pent up, and then, close to 2017, 2022, 2023. That will be great. 2nd question, the midpoint of conversion ratio that you indicated for the respective segment brings me to a group conversion ratio around 37%. Is this an indication of your target conversion ratio, or is it where we stand today? And the 220,000,000 EBITDA uplift are these net savings and included in this indication or not. And the last one, could you please shed some light on how you would achieve the more than 4% growth profit, does this target include the 14,000,000 pricing impact that is expected to drop down to EBITDA It would be really great question if you could share with us some tangible examples of why we should expect a significant change in organic progression for Brenda over the cycle. Thanks a lot. Yes. I take the last question and let Gheorg ask your question about the CapEx and the conversion margin and also the $220,000,000 net savings And I will then talk about the 4% growth. So, Kiya, do you want to take a start on the first one? Isha, thank you. Let me take the CapEx question, and I hope I capture all the different elements. So we basically have to talk about when it comes to CapEx planning about 3 building blocks. So one is the ongoing maintenance CapEx and CapEx for returning the company to organic underlying earnings growth, that would be a give or take in line with the numbers that we spent in 2019. So let's say 200,000,000 annually, but there are 2 further building blocks. So one building block is the the CapEx element of the $370,000,000, cash out for project Brentac. And the CapEx element is roughly 1 third of the SEK370 1,000,000, and I can't give you an exact timing at this stage. So the CapEx from Project Brand Act will mostly hit 20212022 to a degree also 23. And the 3rd building block is that where we are least specific currently that is a review of our ERP landscape and IT infrastructure upgrade where we are in early stages of defining the scope of the project in order to be transparent and to give you the full picture we are assuming a total of €200,000,000 at this stage, but that will spread out over several years where where I can't give you the exact number of years at this stage. So a little complicated, but I hope it helps you to build to piece the different blocks of CapEx together. Conversion ratio, the number of frameworks that we shared for Essentials and for special is actually based on 2019 figures. So in that sense, it does by no means include ambition of savings or growth going forward. It is a snapshot of what the business is or what the business has been in 2019. I do recognize, that the average for the midpoint of the 2, ranges that we shared is 1,000,000 as such 7% apologies. Let's not forget that on top of that, we will have a rest of world segment, which will carry around 1,000,000 cost for the global headquarter. So if you make a step from the average of the divisions to the group, we have to include the rest of world segments and that takes off 1.5 percentage point of conversion. Hope that answers the question. It does. Thank you very much. May I help you? Sure. So, isha, let me come to your last question, about, you know, why we believe we can return to at least grow with the market. First of all, we talk about, as I've described earlier, when Marcus asked the question, how does this underlying gross profit growth is composed of. It's the underlying chemical markets and demand growth. It is the outsourcing trend, which I think is, is unbroken and it's it's true. But then, we start to look in this differentiated steering of those 2 divisions. Think this is extremely important to understand that that Project Brandtak is not only in the 220,000,000, but it has of course effects into harvesting the organic growth on the gross profit side as well. By this differentiated setup, we are absolutely convinced that we are much, much better catering to the needs of our suppliers and also catering better to the needs of our customers and that makes us confident that else we have as we have been lacking this kind of growth in the past, this differentiated approach towards the market, towards our suppliers and to our customers will bring us in a better position to participate better in the underlying, in the underlying growth of the industry. Thirdly, project BrandTech has a substantial amount of cost takeout and that will make both divisions much more competitive. And based on the stronger competitiveness, we are also convinced that we are able to harvest more growth with our existing customer base and with our supplier base, And this will, you know, will also contribute to capturing this, this, organics operating earning, operating profit growth which we couldn't harvest in the past. And last but not least, there is a small portion on pricing there as well. We are also, you know, as we said, differentially steering these businesses and that will have also an impact on how we are benefiting from, I know, what Steven has described, impacts of an improved pricing and how we move forward but again, that's, for me, a small part to contribute to this 4% growth. So I think overall Project Brand Tech should be a really convincing answer to the question. What does Brent what does it need to bring Brent back to organic earnings growth and Project Brandtug is the answer, not only because of the EBITDA uplift, which is substantial, but also building the foundation and creating the prerequisites, which allow us to capture that normal market growth which we see for our industry. Moving forward. The next question received is from Rajesh Kumar of HSBC. Good afternoon, gentlemen, again. Thanks for taking the questions. The first one is, can you explain to us if there will be cross charging of logistics between specialty and the bulk business, So, when you report the conversion margin that assumes a cross charging of logistics and warehousing facilities, or are you thinking of using 3rd party logistics going forward? So in terms of the asset intensity? The second question is on the specialty chemical business. Obviously there are quite a few consolidation opportunities in that industry. There seems to be a few high profile deals. Do you think you are well positioned to play into that consolidation story? And if so, what are the steps you need to take before you get there? And the third question would be on the technical or the lab capacity within the specialty business. Are you happy with your existing footprint or do you think that's something you can build up on? Thank you. Thank you very much. I will refer the first question about the cross charging of logistic costs to Georg. On the specialty side, I will ask Orie to talk a little bit about the consolidation in that sector. And also about the technical capabilities we have, we have in that, in that place, and then maybe I say a few words afterwards, how I see that landscape developing, in particular, in the consolidation in that sector. So I give the first question to, to geog. Latya, good afternoon. So, we have no intention whatsoever to let the specialty business wide for free So what I mean is, indeed, essentials will host most of the assets and will provide warehousing and logistics services to specialties. But the specialty business will pay for So the essential business charges out it it services to specialties. And the 2019 snapshot, which we have shown the conversion ratio ranges, which we have given actually does consider these charge outs on a preliminary basis. We are still refining and we have 8 more weeks to go, but the conversion ratios we have shown already consider a service charge out for warehousing and logistics services from essentials to specialties. At this stage, there is no intention for the specialty business to purchase services externally from third parties. We have a great and professional asset base and we can more than handle that internally at this stage. Since that would be my answer to the question. Thank you. So just Go ahead, Rajesh. Sorry. I think there was a follow-up. Yeah. There's a follow-up for Rajesh, right? Kiyo. Sorry about Jeff. Did I misunderstand? I thought you had a follow-up question on the on this charge out. Doesn't seem to be the case, so apologies. Let me go over to Andre. I would suggest. Okay. Thank you for the question. I think we we already mentioned we have as we are focusing on the 6 selected industry, they are all attractive, but the level of the attractiveness and consolidation, the distribution Right. Definitely for the some opportunities on some of the selected Okay. Okay, sorry, obviously we have a connection problem to France. So let me then answer that that question. The two topics you had was about the M and A and the consolidation in the specialties field. And how we want to partner and move on and also the technical capabilities on specialties. Of course, I've said before when we look on our earmarked M and A and what we do to build a strong pipeline and having a strong pipeline in that field is absolutely clear that the specialties distribution market is also clearly in focus. I mentioned that we are looking at where do we want to acquire what geographies, what technologies, what industry segments, So I think as being the number 1 and the specialty chemicals distribution market already by size, I believe we will and will concretely play an active role in also consolidating in that sector. On the technical capabilities on specialties, I think, or reset it in his conversation, we have about 50 laps globally plus and this gives us a strong basis and we will continue to add our technical capabilities moving forward. For me, that's a prerequisite to be successful in the specialty distribution market. And so we will continue to strengthen our capabilities and strengthen our technical advise capabilities, but also regulatory capabilities which you need to have to be successful in regulated markets like let's say pharma or in nutrition. So, I hope that answers those two questions and sorry for Orie's disconnect. Orie, you're back. I hope for the next question. Okay, good. Now we are all fine now. Alright, thank you very much. I'm sure that you handled very well, Christian. And the next question receives from Rory McKenzie of UBS. Your line is now open. Please go ahead. Good afternoon. It's Rory here. Firstly, just following on from the earlier point on incentives and KPIs. For us externally, will you actually be reporting a quantified organic gross profits and EBITDA growth metric given that's kind of still as always at the heart of your targets? And secondly, Gail, sorry if I missed it, but of the million costs, did you give a CapEx versus restructuring cost breakdown? And are you expecting any offset from asset disposals as you exit sites. And then thirdly and and finally, for for Christian or or maybe on re actually, on those site closures, obviously, it's quite a large number. Can you talk about the plan to transfer business operations from closed sites to new combined or mega sites, peers in the past or in similar industries, have you seen market share Have you maybe seen market share losses where that local service has been withdrawn or changed? So any thoughts to how you plan to handle that? Hey, Rory. Thanks a lot for the questions. Let me assign that course, we'll talk about the 3 70 also maybe about the KPIs and the incentives going forward. My take on that one, it's early days and we will prepare now the reporting to the external world as we move forward. Into 2021. And so then we will define and we'll give you a transparency on that one. And on the on the site closures, you know, I'll let Ori take it over if the we have for France online again. So maybe the first one Skierge, he should talk about the CapEx versus restructuring and then Orie should continue with the site consolidation question. Thank you. We are setting up the reporting. And when it comes to the question, can we report organic growth rates going forward? It's a little bit of a challenge we also have today that on an organic basis, you basically don't get audited figures, which makes it very difficult to include some unpublished report. Having said that, my already today, we we try to help you guys along in understanding the organic development of the business by, for example, using our quarterly call presentations and including organic growth figure there for EBITDA. We haven't structured each and every detail, from here going forward. But I I I I would say you can expect a similar approach that we will for sure help you along also to understand the organic growth profile of the business. The SEK370 1,000,000 is about 2 thirds expenses and 1 3rd of these $370,000,000 is net CapEx. So the term net CapEx also already implying that this is a net of some site disposals, not too significant, but some are in there. And I'll hand it over to Henri to give you a little bit of color and an understanding how relevant these are. Yes. Thank you for your question. I hope you will not be disconnected here. Apologize for this, technical issue. So, your your question about the site, you say, no, there's a lot of sites today. Yes, we we we were talking about a 100 to be closed. Roughly we can consider half of them is is a third party we operate or it's it's completely operated by 3rd party services and obviously, Brantac, a small size and some of them, they are really old and it's, it really need a lot of investment to maintain them. So that's kind of the site and very small process that we have in place that we want to manage that during the next 3, 4 years that we mentioned. Your question about the mega side, how we will consolidate our business together on the mega side, and is there any risk of losing the market share or losing the business because of this megaside or or distance. Let me just assure something. This analysis was wonderful. We never made we have a 6,000,000,000 data points that we collected everything. There's a different models was built in and the locations particularly we made a different scenario when it's coming by region, when it's coming within the regions, or or between the few countries, and the board are very accessible to to build this kind of operation. So our plan is very well structured to do that but I you will be surprised. We are not going to be far from our customers. The way that we did it, we will be even much closer to our customer Also, we will reduce the distance to our customer. That was what I was trying to illustrate. Of course, the mega side, it's it's it's, is one of the big operation that we will have, but the focus on the 100 that we were referring is really optimizing our network today and getting the much more modern structure that you want to have automation, everything, having the digital plan, digital plows are within our tractor that we can use that and get rid of the everything which was roughly old. We have, few examples Then within the countries, within the same region, we have 2, three sites very close to each other with the different size small, very small and medium sized is the heritage that we have from the acquisition. We will combine it. It will be the same region with the new one operating in which much more efficient way. And and that's that's the objective that we have today on those site closing. I think what Gailock mentioned also concerning the CapEx and the spenders, of course, we have some CapEx allocated to the mega site And those CapEx, of course, it's a way we're talking about a net. We will sell what we have, the sites we will close. It will contribute a little bit to, to bring it our net CapEx, which was mentioned to by, by GEOK. Hope I answered your question. Yes, that's helpful. Thank you all very much. And it comes to the next question, which is from Markus Mayer of BARDA Heavy. Your line is now open. Please go ahead. Yes, good afternoon again. Only one question remains. ESG is becoming more and more important to you, not only to invest in those for corporates and you have also in particular S and G parts in your new strategy approach to Brentact, but what is the ambition on the E part do they have ambitions to reduce this CO2 print of Pranta or, a more sustainable value chains yeah, that would be my remaining question. Marcus, thanks, for the question. You know that topic is dear to my heart and, and it's very clear that, Brantac is already on a good path on that sector. We need to strengthen that efforts. We need to be much clearer also how we communicate about our sustainability targets moving forward. So, you will see that evolving in particular now with the new operating model and what does it mean for Brentac? We mentioned briefly that also the site network optimization is paying into our sustainability efforts. So we are about now to quantify this as well. We have some numbers available, but before we share that, we want to make sure that we have the quantifiable targets there, but it is also, of course, as we come closer to our customers, we reduce actually the travel distance for our products for delivery to our customers on average that this has also an impact on the CO2 footprint, which we will then quantify as we move forward. And the next one is from Timona Serlin of Bank of America. Your line is now open. Please go ahead. Yes, thank you very much. Just one follow-up question from my side. So you are showing the current conversion ratios for essentials and specialty. And I was wondering if you could say, what is your medium term target for both division? And also how do you expect the current 60 to 40% mix to evolve in the medium term both as a result of organic and M and A driven growth? Thank you. So I would give the first question to to gear about the conversion ratio and and medium term targets. And, I can maybe share some thoughts on the sixty-forty split you with requesting. So maybe Keogh, you'll start with the first one. We don't run this on a very specific conversion ratio target, but nevertheless an improvement in conversion ratio is obviously a consequence of returning the company to organic earnings growth and from all the specific measures and initiatives we have within project conduct. The way I would suggest to approach it is out of the €220,000,000 EBITDA uplift, 180,000,000 actually relate to cost measures. So if you take out 180,000,000 of the cost base and then do some modest, moderate progression of conversion ratio from returning the company to organic earnings growth and you get there. I beg your pardon that we don't want this against the conversion ratio target. We want this again an return to organic growth and an EBITDA uplift target. 40%. First of all, we are very happy with the 60 40 split, to be very honest, given even the the real, real clear definition of what we consider as specialties versus essentials. So I think this is probably one of the most stringent definitions you can come up with. So, we are not counting anything into specialties. We are not clearly convinced that it is really indeed a specialty specialty sales. So we're very pleased when we made the analysis of our portfolio and then when we assigned the product baskets accordingly, to come up with a sixty-forty percent split. Is specialties better than essentials? No, I think both divisions will contribute to the success of BrandTAC overall, both in the different ways. Specialties, of course, focusing on regulated markets focusing on growth, focusing on more technical sale and also on higher conversion margins. But also, you know, taking essentials, we are, you know, here having a massive, massive player in that field with a very, very strong position and a very unique asset base globally. And we only need to steer them in a different way than specialty. There will be cost to serve. There will be efficiency. There will be a constant drive for getting better and more efficient as we move forward. So if you ask me as the CEO, I'm very, very happy with those 2 divisions and today would not be the day and not be the time to say that this ratio should should change and should move as we move forward I'm very happy Before we take the next question. Using the numbers providing in the subtitle and press 1 after entering the call. And the next question We received this from Joel Vargas of HSBC. Your line is now open. Hi, thanks for taking the question. I have one. From the cancellations, we can understand that the gross margin specialty business comes to around 21 percentage, while bulk it's around 24 percentage. Can can you just explain why the margins are lower for the bulk business? Yes, thanks. Thanks for the question. I will hand this over to GEA to give you a little bit more explanation behind how that looks like and what is behind the gross profit margins. So, GEA, maybe you share a few thoughts. And what what you observed is is not unusual in distribution business. Keep in mind that the average selling price, the average value of the product in essentials is clearly lower than in the specialty business. But the core of the services are pretty similar. So warehousing, repackaging, transporting the product, are are as a core of the service pretty similar, notwithstanding that the specialty business, requires some more technical expertise and advice. On the other hand, SE selling price for specialty is much higher than the selling price for an essential even at a somewhat similar or lower percentage margin, the actual absolute value contributions across profit per unit in the specialty business is clearly higher than in the essential business, and that supports actually the higher conversion ratio in the specialty business that we have shown you in comparison to the essential business. So long story, but the observation you have is very similar to what you will spot in other distributors. Okay. That helps. Thank you. Sure. And the last question for today is from Ethan Bazin of JP Morgan. Your line is now open. Please go ahead. Yes, it's actually Jason, from JP Morgan. Just a few questions from my side. I think there was a question previously on whether $220,000,000 EBITDA contribution, is that a net number? Can you confirm that is a net number? And it's we shouldn't include any inflation on cost base or reinvestment to consider within that $220,000,000. That's first question. 2nd question was just historically the problem with VENTAG has been just that the operating expenses have grown consistently faster than the gross profit growth on organic basis. How are you addressing that sort of specific issue we've had in the past? So can you maybe lay out a few specific examples which have been undertaken to make sure that doesn't happen in the future. And last question was Can you give us some flavor on what has been the historical growth rate of specialties and essentials either on gross profit or on EBITDA line. And I'm not necessarily asking this 2019, but maybe like 3, 4 year perspective. Would be useful. Thank you. But you don't thank you very much for the question. I will refer question number 1 about the 1,000,000 net, not net to GEA. I will also refer to him the question about growth rate of specialties in the past over the last 3 years. On the second question on the operating expenses We have a very clear understanding while we are now drawing up our financial framework and our plan for the different divisions that the operating expenses need to be under proportionate to what the profits are created And here, it's absolutely clear that when I'm talking about functional excellence moving forward, This is a program Brandtak needs to start needs to be clear that we have efforts in place which constantly take out cost out of the system. So the project BrandTAC initiative and the project BrandTAC transformation is actually the first step to get a couple of things straightened out and, building on the strong foundation we have and preparing ourselves for the organic earnings growth moving forward, but it's also clear that function excellence needs to be implemented in a broad sense so that the organization constantly is taking cost out of, out of the enterprise. And that is, you know, a very concrete way forward. I have a lot of experience in doing that in the past. So, we will make ensure that the operating expenses are not overproportionately growing as we also recognized as a weakness of BrandTAC over the last couple of years. So, I hand over now to Gheer to ask to answer the two other questions you had. Yeah. If I look into the recent 3 to 5 years and come up with, the historic organic growth rate on gross profit, for essentials and specialties, then the historic specialty organic gross profit growth rate has been clearly ahead of 4%, well higher than 4%. The essentials growth rate has been much lower. The essentials growth rate has been give or take half of it, if not, if not a little less. So it is actually in terms of differential, what you would expect you asked for confirmation on net or gross, the million EBITDA uplift is a net number. Thank you. And maybe if I can squeeze last one, you recently announced collaboration with commodities on selling some products on that platform. Strategically, can you help us understand why would you do that given that you have your own BlendTech Connect platform as well? So, what is the upside for Bendact from selling on come on this. Yeah. Chetan, as I have said before, it is the world also for us, when we look on the digital, distribution arm or the channel, we are using as as Brandtech is, are constantly emerging and changing environment and we need to not only have our own efforts in place, but we also need to look for alternative ways of how we can create a business for Brentag and learning what could, for instance, a digital marketplace which is, you know, which is in a much broader sense, organized and set up, what can it give to Brentact? If you want to call it, this is, you know, a first step into exploring this. So it's an exploratory move, which we are, which we are undertaking. And we will review and see how that emerges and how that develops. But I want to make sure that we when we look on the digital environment and how it is evolving, that we actually have all the potential options in in our few and in our considerations. And then, you know, trying it out and and see what can it bring to to Brentact. So this is our first step where we try this and explore this because we have to. There's something a company of our size and of our meaning in the industry needs to explore as well. Very clear. Thank you. Okay. Ladies and gentlemen, That was the last question. Thank you very much. We have now reached the end of our capital market update 2020. So today, it was really the exciting opportunity for my board colleagues and me to share with you our transformation story of Brandtac to achieve our joint vision. And this is to become the true market leader in chemical distribution. So thanks a lot for your attention and for your available time and I'll see you soon again and please Stay safe and healthy. Thank you very much.

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