Earnings Call: Q4 2020

Mar 9, 2021

Afternoon. My name is Alex. I'm the operator of Deutsche Telekom. For your information, this call will be recorded. I will hand over to Tobias Erfurd, Head of Investor Relations of Symrise. Thank you, Alex. Good afternoon, ladies and gentlemen, and welcome to our 2020 results presentation. With me on the phone are our CEO, Doctor. Heinz Jurgen Bertram and our CFO, Olaf Klinger. Unlike all the years before, we are not in Frankfurt, but in our headquarters in Holtzman. All documents have been published this morning on our web page in the section Investors at Financial Results. In the same area, you will find the playback of this conference call later today. After the presentation, we are open for your questions. I will now hand over to our CEO, Doctor. Hans Jurgen Bergstrom. You may begin. Thank you, Tobias. Good morning, ladies and gentlemen, And welcome to our 2020 results call. I am very pleased to hear that so many for taking the time to join us today. As in previous years, our CFO, Olaf Klinger and I will run you through the presentation I will try and start by discussing our highlights in 2020. Olaf will then a deep dive into the financials before we finish with some key strategic initiatives and an outlook on the road ahead. You will, of course, have the opportunity to ask your questions afterwards. With this said, let us start. 2020 has been an exceptional and very challenging year for everyone around the globe. We faced and we are still facing the largest health crisis in the past Century. It forced businesses to adapt their products and services and to implement health and safety protections for employees very quickly. Extensive lockdowns led to shifts in consumer demand. We've seen a slowdown in some areas. In others, demand was high than before or emerged in completely new areas. Some of this impacted Sunrise just as any other business. In addition to this global crisis, we also faced a criminal cyber attack in December. We provided you with some background about this effect in our trading update in January. Despite All these challenges, we were still able to continue our profitable growth. So let us have a look at Chart 4. First of all, our top line grew for the 15th consecutive year. Overall sales increased by 3.3% in reporting currency to more than €3,500,000,000 Organic growth recorded a plus of 2.7%. Our EBITDA outperformed last year's figures and increased by 5.8 percent to over €740,000,000 Profitability reached an excellent level with an EBITDA margin of 21.1%. Our business free cash flow has also developed well. It grew 18% to €564,000,000 This equals 16% of sales. Net income for 2020 totaled €307,000,000 an increase of €11,000,000 Accordingly, earnings per share increased to €2.27 after €2.20 and $0.20 in 2019. Once again, we want our shareholders to participate in our success. Management and Supervisory Board will therefore propose a dividend increase to 0.97 EUR0 per share to the Annual General Meeting in May. Let us move now on to Chart 5 and our sales development on group level. In 2020 financial year was clearly marked by the global pandemic. But despite corona and the cyber attack in the Q4, we continued our profitable growth. Group sales increased by 3.3% to more than €3,500,000,000 Organic sales growth of 2.7% was driven by all segments. ADFIDF developed well and contributed €209,000,000 Over to Chart 6 and the overview of sales contributions by segment. In every segment, we observed a shift in consumer demand due to the corona pandemic and countrywide lockdown. Still all segments recorded organic growth in 2020. Starting from the top, the CentenCare generated sales of around 1,400,000,000 Euros in reporting currency. The segment grew organically by 1.5%. Due to the negative exchange rate effects and the cyber attack in December, sales decreased by 3.5% in reporting currency. We saw a good double digit growth in Consumer Fragrance and the high single digit growth in Oral Care. Both were driven by a pandemic related strong demand for personal care and hygiene products. Flavors Displayed in the middle achieved sales of around €1,200,000,000 in reporting currency with an organic growth of 0.7%. We recorded a pandemic related shift towards savory applications, But even this mid single digit growth could not entirely compensate for the lower demand in applications for sweet and beverage products. Overall, sales in reporting currencies decreased by 2.6%. Nutrition increased sales by an outstanding 26.6 percent to €926,000,000 The segment grew organically by 8.2%. ADFIDF exceeded our expectations and contributed €209,000,000 The pet food business was once again a key growth driver for the segment across all regions. Food applications on the other hand suffered from the corona pandemic related lockdown. On Chart 7 for our regional performance. At a regional level, the Americas who were growth drivers in 2020. Clearly ahead of all others was Latin America with an organic growth of almost 22%. The E and E region was strongly influenced by the corona pandemic and the cyber attack in the 4th quarter. Organic growth was therefore decreased by 1.5%. North America and Asia Pacific were also impacted by the corona pandemic and the cyber attack. Nevertheless, both regions achieved a moderate organic growth of 2.1% and 0.7%. Ladies and gentlemen, as we like to take a long term view on our Business, Chart 8 illustrates our sales and EBITDA growth over the years. It was always one of my favorite charts. And even the historic exceptional year 2020 did not break our positive Long Term Dynamics. You can clearly see, Simaris has an outstanding track record of generating sustainable and reliable sales and earnings growth, and the year 2020 is no exception. Since our IPO in 2006, we have recorded a sales CAGR of 7.8%. Our earnings CAGR of 8.3% over the same period is equally strong. We are Not only one of the fastest growing companies within our industry, we're also one of the most profitable ones. Our EBITDA margin increased in 2020 to a very healthy 21.1%, which is spot on in our long term target range. At this point, I would like to thank all our employees across the world. The continuous profitable growth of our company have been achieved through their commitment and dedication. They are key contributors to our success story. Let us now move on to Chart 9 and our share price Development. I'm very proud that Symrise once again outperformed the DUCs and MDACs. This makes us even prouder this year. Our share price continued this positive development in 2020 and increased by 16%. We see this as a clear sign of appreciation for our strategy and performance by investors. We want our shareholders to participate in the company's success again. Therefore, the management and supervisory board will propose a dividend increase to 0.97 percent cents per share at this year's AGM. This is the 11th dividend increase in a row, a clear proof of our long term value creation. Moving to the next slide. Let me briefly to touch on an issue that in addition to corona had an influence on our business in 2020, the criminal cyber attack. In December, we faced a cyber attack by unknown perpetuators with blackmailing intent. It forced us to shut down major operational activities temporarily. Sunrise Shields his IT structure and brought important systems back up as quickly as possible. In consultation with our customers, we prioritized their orders to avoid production downtime. However, we were working on backlogs and trying to minimize lead times by additional shifts. Next to the impact on our customers, the attack impacted our business results. Despite the corona pandemic, we did an excellent job of staying on track to achieve our organic sales targets for almost the entire year. On the last stretch, however, the incident eventually slowed down our progress to 2.7% organic Groth. After this rather unpleasant episode, let me now hand over to Olaf. He will present the financials in more detail. Olaf, over to you. Yes. Thank you very much, Hans Jurgen, and good afternoon also from my side. Following Hans Jurgen's initial remarks, I would like to give you the promised deep dive into the financials. Let us start with group sales development on Page 12. As published already on January 26, We grew 2.7% organically, thereof onethree price and twothree volume. In light of the corona related lower industry growth of only around 1% in 2020 and the mentioned cyber attack in December. We see this as a very good outcome for Sumrais for the year 2020. Our latest acquisition, ADFIDF, contributed EUR 209,000,000 sales in 2020. The 1st 10 months of sales fell into the bracket of portfolio growth was EUR 174,000,000 and the corresponding portfolio effect of 5.1%. In November December, ADF IDF is reflected in the bracket of organic growth with sales of EUR 35,000,000. After supportive FX in 2019 was positive 1.3%, we suffered in 2020 with a negative impact on sales was minus €152,000,000 or minus 4.5%. We had strong headwinds from almost all currencies, especially in the inflationary development of the Brazilian real and the Argentinian peso followed by the U. S. Dollar and the Mexican peso. Please turn to Slide 13 to take a closer look at our bottom line. ADFIDF comes with proportionally higher manufacturing costs compared to the rest of the Cimerais Group. Therefore, the gross profit grew slower than sales growth. The cost of goods sold include material cost of €1,500,000,000 This represents a material cost quota of 43% from 44% in 2019. For 2021, we expect overall slightly increasing raw material costs. Moving to earnings. We benefited from the excellent performance of with ADF, IDF and a corona related decline in travel and R and D cost. We could increase our EBITDA by 5.8 To EUR 742,000,000 Our EBITDA margin of 21.1 percent was better with our normalized margin in 2019 of 20.6%. We ended the year within our 2020 margin guidance of 21% to 22%, which we gave mid year before the cyber attack. Following higher depreciation related to prior year's CapEx and the additional impact on D and A related to ADFIDF, Our EBIT still rose 3.4 percent to EUR 488,000,000 staying on last year's normalized EBIT margin level of 13.8%. Please turn now to the next slide, Slide 14 for the segment reporting. CenteneCare achieved an organic growth of 1.5% and saw a 5% headwind from FX. Corona changed customer behavior across the business units. Fine fragrances, fragrance ingredients and UV filters slowed down, while consumer fragrances and oral care went up. In CenteneCare, 40% of the organic growth was pricing and 60% was volume related. Q4 suffered from the cyber attack, which led to a negative volume impact during the quarter. Reported sales were €1,370,000,000 for the year. Looking at earnings, CentenCare EBITDA amounted to EUR 272,000,000 after EUR 278,000,000 the year before. The margin increased from 19.6% to 19.8%, supported by reduced costs due to corona related limitations like sales and marketing and R and D and quite a strict cost control during the year of the pandemic. On Slide 15, we see flavor with 0.7% organic growth and a 3.3% FX headwind. The slower growth was mainly a result of the changed consumer behavior during corona. A decrease in out of home consumption who could not be compensated by higher demand for several applications. Volume was slightly negative during the year. Q4 started promising but fell back with the cyber attack. Nevertheless, also flavors saw an EBITDA margin increase from 21.4% in 2019 to 21.8% in 2020 related to lower raw material cost and corona related savings in OpEx. Let us move to Slide 16 for Nutrition, An impressive 8.2 percent organic growth was pushed again through a strong performance in pet food. Price volume was a ratio of 20 to 80 for the full year and 10 to 90 in Q4. ADFIDF added €209,000,000 sales. Nutrition achieved an EBITDA margin of 22 in 2020. Some remarks on ADFIDF. We achieved a very smooth integration despite the well known travel restrictions, and we are very pleased with the current development. We already realized substantial cross synergies between ADFIDF, Diana Food, Diana Pet Food and Flavors. Please follow me to further P and L elements on Slide 17. The financial result increased from €6,000,000 to €64,000,000 partly related to interest payments to tax authorities. In addition, we secured extra liquidity during the early phase of the pandemic and accepted some interest overlaps with the early refinancing to a €500,000,000 bond issued early July 2020. Normalization of the prior year's figure who occurred from a positive U. S. Dollar hedge effect for the ADFIDF acquisition. Income tax expenses in 2020 amounted to €109,000,000 The resulting tax rate of 25.6% was lower than in the 2019 fiscal year with 27.1%, mainly due to higher earnings in countries with lower tax rates and the utilization of tax credits linked to the acquisition of ADFIDF at the end of 2019. For the time being, we confirm our midterm tax guidance of 26% to 28% until 2025. Net income attributable to our shareholders amounted to EUR 307,000,000 which is EUR 11,000,000 higher than the normalized amount of the previous year. Earnings per share rose to EUR 2.27, which compares to an adjusted and normalized 2.20 in 2019. The proposed dividend of €0.97 per share as a new record level semis. It equals 43% payout ratio, which is Fully in line with our long term ambition of 30% to 50%. Let us now turn to Page 18. Business free cash flow as our primary KPI helped to further strengthen our cash flow orientation within the company. Business free cash flow, which is EBITDA minus capital expenditures, including payments for lease obligations End changes in working capital amounted to EUR 564,000,000 or 16% as a Percentage of sales in 2020 fiscal year, an increase of 18% over the previous year. The main reasons for this improvement were decrease in working capital, lower CapEx and significantly higher Net income. Overall, the Cyberattack had a positive effect on the working capital situation at the end of the year. For 2021, we expect business free cash flow above 14% of sales. Please turn to Slide 19 for the review of our balance sheet. Total assets on December 31, 2020, who are at previous year's level with €5,940,000,000 On the asset side, the increase in cash and cash equivalents It was mainly due to the strong cash flow and additional liquidity reserves, partially offset by a declining level of trade receivables and inventories. The decrease in property, plant and equipment and intangibles was mostly driven by higher depreciation and amortization and further enhanced by strong FX translation effects. On the liability side, pension provision increased again by EUR 76,000,000 due to further decreased German interest rates. Equity was EUR 2,362,000,000 on December 31, 2020, €95,000,000 below the level of the previous year. The equity ratio is at 39.8% compares to 41.3% in the previous year. Equity was negatively impacted by currency translation effects. Overall, we see our equity ratio of around 40% as a very solid base to further develop our business ambitions. Let us now turn to Page 20 to our solid financing structure. Net debt, which includes leases, decreased due to the strong operative cash flow by EUR 269,000,000 to now EUR 1348 million. This corresponds to 2.7 times EBITDA including pensions or 1.8 times excluding pensions. We are well on track to achieve our long term target of 2 times to 2.5 times, Including pensions, which is unchanged since the IPO. Our top priority remains to have and investment grade profile for Cimare. I would like to finish my part with saying thank you to all the colleagues in Cimare's who made an extra strong effort during and after the time of the cyber attack. We have quite an outstanding team here, which managed to bring us back to normal business within a very comparable short period of time. This has been well noted and positively recognized by our customer base. With this, I would like hand back to Hans Jurgen for some final remarks. Thank you, Olaf. Ladies and gentlemen, let us now have a look at the road ahead. If you would please proceed to Chart 22, and we will have a look at the base of our success, our corporate strategy. Right upfront, the global corona pandemic did not change and does not change our midterm targets for 2025. Therefore, we are holding on to our target of an annual Sales growth rate of 5% to 7%. With our expanded core portfolio, we aim for an EBITDA margin between 20% and 23% in the same period. We also stand by our commitment to let our shareholders participate appropriately in our success as a business. Our dividend payout ratio will therefore remain at 30 to 50% of our net profit. Our 3 strategic pillars, growth, efficiency and portfolio are embedded in and accompanied by sustainability. As you all know, we place strong emphasis on our environmental footprint and the sustainability of our supply chains. This is why we also set a mid term goal regarding sustainability. By 2025, we will reduce our greenhouse gas emissions by more than 60%, and we will aim to be climate positive by 2,030. I will come back on this topic in a few minutes from now. Over to Chart 23. You may have noted that we recently announced some changes our management board. Heinrich Schaper, President of the Flavor segment is going to retire on 31st March. He has been with us for more than 4 decades and has key roles in growing our business throughout his career. We will use this moment of change to combine the flavor and nutrition segments. President of the New Flavor Nutrition segment will be Jean Yves Parison. By merging the 2 segments, Sumrais can better leverage the strength of both areas, exploit synergies and further differentiate itself in the market. There will be one leadership team and one research agenda. The customer approach, especially for global accounts will centrally be managed to increase customer penetration. Overall, this will enable Summarize to offer an even more extensive portfolio of Ingredients and Solutions across taste, nutrition and health in the future for human food, for butt food and other Animal Nutrition Activities. On Chart 24, we highlight the global setup for the combined flavor and nutrition segment. As you can see on this map, we are already represented with both segments in all regions globally. But in combination, we will be able to create an even stronger global setup of competencies and With 65 manufacturing sites worldwide. For the combined flavor and nutrition segment, we expect sales of more than €2,000,000,000 and an EBITDA margin of more than 21%. The other organizational change concerns our Centen Care segment. If you would please proceed to Chart 25. Achal Daup, who has been Board member since 2006 and responsible for the Sudden Care segment, has decided to a few new professional opportunities. He will also leave the company on 31st March 2021 by mutual agreement and on best terms. Again, I would like to highlight Achem's strong contributions to our Successful business development over many years. The succession planning, of course, has already been initiated in the meantime. I will manage the division on an interim basis. In the context of this change, we have to reorganize the leadership functions of our Scent and Care segment. Eda Harmos, an experienced manager from the segment, who will lead the Fragrance division. Norbert Richter, who is very experienced, especially in terms of shifting towards Renewable and Green Chemistry will continue to manage the Aroma Molecules division. And Jan Andreas contributes to this international leadership experience as a leader of the cosmetic ingredient division. We also consider this a solid base for a smooth integration of Sensient Fragrances and Aroma Molecules. In November 2020, Sumneraz signed the purchase agreement for this acquisition. Let me explain the rationale of the expansion in more detail and on the next slide. We consider the acquisition of Sensient's Fragrance and Aromo Molecules division as an excellent strategic opportunity. As a result of the transaction, we will expand our leadership position as a supplier of fragrance and in fragrance ingredients. We also strengthened our backward integration and enhanced our value chain to meet the significant Internal demand for aroma molecules. With the manufacturing site in Granada that will be We will not only strengthen our footprint in Spain, we will establish a second production hub in Europe as the basis for future successful growth. As soon as the deal will be closed, we will initiate the integration process. Ladies and gentlemen, let us now move on to Chart 27 and dive a bit deeper into sustainability. As you know, climate protection and biodiversity are 2 focus areas of Sunrise. In terms of climate protection, I mentioned our goal earlier. Sumrais aims to become climate positive by 2,000 and 30. This will require some effort, but we are confident that we will achieve this goal. Our climate protection efforts have again been recognized by the Carbon Disclosure Project. Sumrais achieved AAA ratings in 2020 in all three categories: water, with Climate as well as Forest. With this, Sumeriz ranks 1 of the top 10 companies in the world and as number 1 in Germany. Our second focus is biodiversity. We use thousands of raw materials from all over the world. Sustainable resource procurement is therefore crucial to us. It ensures availability, quality and price stability. The map on Chart 28 illustrates some of our joint activities in different parts of the world. Together with customers and partners, we work to improve living and working conditions in the countries we source from. Chart 29 provides an overview of our key investments and Growth Initiatives. As in the last two years, we continued to Focus on capacity expansion and meet the emerging demand and to lay the basis for growth. This includes New production plants for pet food in China and Brazil, a development and application center for flavor and nutrition in China and the expansion of the Sensient site in Grenada. On the other hand, as I said, we focus on climate protection. With investments In advanced technologies, we strive to further reduce greenhouse gas emissions, for example, in the USA and France. At our largest German site in Rosmen, we extend the generation of our own Electricity for our operations. Ladies and gentlemen, let us to conclude today's presentation with an outlook for 2021 on Chart 30. Summarize looks with confidence into the current financial year. With our robust business model, we navigated solidly through the exceptional year 2020, And we will continue doing so. We are assuming that the global economy will recover with rising vaccination rates and further improvements for battling the pandemic. Against the backdrop of these expectations, we Expect reliable demand and want to return to our original growth momentum. Once again, We want to grow faster than the relevant market, with this projected growth around 3% to 4% this year. We are targeting organic growth of 5% to 7%. The EBITDA margin should reach around 21%. We believe that Simaris is very well positioned to achieve these ambitions and we will continue to build on our proven strategy. In this context, we will leverage growth opportunities such as joint innovation programs for flavor and nutrition. In Scented Care, we plan to commercialize growth opportunities related to the Sensient business. And of course, we also will remain committed to our disciplined cost and efficiency management. And with this, I would like to conclude today's presentation. Olaf and I I'm now happy to answer your questions. Tobias, back to you. Thank you. Thank you very much. Hans Jurgen, thank you very much, Ola. Let us now start with Q and A. We kindly ask you to put only 2 questions. If you cannot take all your questions during the conference call, we will answer the remaining questions later, maybe today, maybe tomorrow. Many thanks and first question please. But first, Alex, our operator will help with instructions. Thank you. Thank you very much, Tobias. We will now begin the question and answer session. Mrs. Lisa Denee from Morgan Stanley, may we have your question please. Hi. Good afternoon, everyone. Thank you so much for taking my questions. Two questions from my side. So high level question just On the R and D, can you provide us with some color on what you're seeing on the customer side in terms of pipeline and launches, especially in the light of the world is slowly opening up again? And the second question is, I mean, your Nutrition gross margin has reduced by 2 40 bps in 2020 year on year And actually, 430 bps over the last 4 years. Can you provide some detail on what has actually impacted this gross margin, Not just as it relates to 2020, but also last 4 years and how much of that was actually driven by the inclusion of ADS acquisition? Thank you so much. Okay. Thanks for your question. I think I'll start with the first one and Olaf, I'll leave the second one to you, was a financial thing. So The R and D, I'm happy to pick up. Well, major trends, which will help us to continue healthy growth is, of course, the in the Flavor Nutrition. And first, The ongoing trend towards more healthy and Quality high quality food, meaning meat alternatives, vegetarian, vegan food with Full taste properties and the full health benefit that was a starting trend and that will Continue to move on for quite a while. The same token is sugar reduction, not with Artificial sweeteners, but with natural solutions, which don't require any declaration. So these are things where we see strong growth demand also ongoing in the future on the Flavor Nutrition part, In the scent and care part for sure, if we look at delivery and encapsulation systems for Detergent, biodegradable, natural environmentally friendly systems are on the horizon. And also on the fragrance part natural ingredients, so the trend for naturalness is also increasing there, in particular in Fine Fragrance in Beauty Care Products. So these are just a few highlights on some things which are ongoing on the flavor and on the CentumCare end. And last but not least, also to mention our strong ongoing demand for pet food, which will continue to be a megatrend in the future to come. Okay. I hope that answers your first question. With that having Said Olaf, you would like to pick the second? Yes. Lisa, thanks for this very special observation When it comes to development of the gross profit in Nutrition, I think there are a couple of reasons. First of all, when we bought the business, it was Quite a little bit under invested, so we put a lot of CapEx into the environment. And for good reason, there was a huge opportunity in pet food. And And today, we are very happy to have the additional capacity. We built several new spray dryers. We built a global footprint for pet Over the years and this will continue. So that is one driver. In general, the business itself In proportion to the other parts of Cimerais has higher cost of goods sold. And over the past few years, We also saw a slight increase in raw materials. The market is partly tight and that had also an impact on the gross profit situation for the segment. These are the main drivers nevertheless, and I think this is Coming also along with the ADF IDF acquisition, we see a nice development of the margin situation in this business despite the slightly higher COGS development in our environment. So all in all, I think we enjoy this Business quite a little bit and we will continue to do so in the coming years. Thank you so much. Very helpful. Mr. Matthew Yates from Bank of America. May we have your question, please? Hi. Good afternoon, gentlemen. A couple in, please. The first one is about your Slide 23 on the new divisional structure. You mentioned there's some opportunities here for better account management and maybe some cost savings from putting these two divisions together. I wondered if you could just elaborate on that a little bit and also provide some background. I'm not sure how long you've been thinking of making this move or whether it's been more recently thrust upon you by the executive turnover. And then the second question, just a quick clarification please, Olaf. I think you said ADF did €35,000,000 of sales in November, December. Given the currency moves, am I right in thinking That is a double digit organic growth rate. And maybe just elaborate a little bit on the pipeline of new opportunities you see in that business. Thanks. Okay. Yes, Matthew, thanks for your questions. I'm trying to answer them as honest And enlightening as possible. So new divisional structure in flavor and nutrition. We had this combination for a while when Diana came on board, as you may still recall, and I was doing it. But The priority at that time was the first phase of the integration, having the new teammates of Diana Welcome and feel treated appropriately. And we intentionally left some synergies on the ground and focused on making it a good hope for our friends from Diana. For after having done the first phase now after several years, now I think it makes sense to combine the divisions and have a look again on the opportunities which the combined business cross selling allows. As I said, the first phase is completed. And our feeling strong feeling is that the teammates from Diana are now summarized teammates and feel welcome and are Open and contribute to a leverage on all the opportunities we may have, cross selling strong Top line synergies, but also bottom line synergies across different areas. As you may recall, in flavor, certain business Areas were not totally always flavored, but made more ingredient and Vice versa in Diana. So Jo Yves will focus sorting that out and making it more efficient and also leverage on bottom and top line opportunities. So we have good hope that within the years to come, We see additional growth momentum and also a nice impact on the bottom line. Having said this, you see from my words, This was not something which occurred spontaneously, but it was always on the agenda when the first phase of the Integration of the onboarding process of Diana is completed, and we believe this is the time now we will to the next phase of this. Having said that, I hope that answers your question on the new structure. ADF double digit growth, let's put it this way. At least it is a strong and healthy growth momentum, which we have seen. And We're happy to see that the ADF acquisition has even exceeded our expectation. And what you see there is that the Jean Yves and his group, they are starting now to tap in some additional Top line opportunities, which we have highlighted, having access to new protein sources, to new starting materials And with a broad application range we have here in Sumra's unique application range in aqua, in pet food and In human consumption, you see this is paying off. So I hope, Matthew, these two points this answers your two questions. Okay. Thank you very much. The observation is right. We had EUR 32,000,000 in the 1st 2 months of 2019 And now €35,000,000 plus currency, definitely double digit. Can I be greedy and just squeeze in one more? On your Sensient Slide, you talk about the Simrise Express model. Sorry, forgive me, I don't actually know what the Express model is. Can you just explain that briefly? Sure. My pleasure. SimRaisexpress means for certain customers, In particular, lower customers, a business model which focuses on instantaneous service, which means sample service within a day if we have to be. That means this model is a bit different than the traditional one. You have to develop and service from a sales collection, which means a collection where these things are pre composed. And if the request comes in, you service instantaneously. So their speed is The success model and our acquisition at Sensient offers us the opportunity to look in this direction. This is important in particular for emerging markets like Northern Africa, just to mention one thing. Mark, I hope, Matthew, this answers your question here. Thank you, guys. Take care. Mr. Thomas Swoboda from Societe Generale, maybe you have your question, please. Yes, good afternoon. Thank you for taking my two questions. My first question is on the trends in the Q1. In your written remarks, you say you were able to catch up on the lost sales from the Cyber Tech in December. So my question is, is it right to assume that this will give you some 300 basis points of extra growth in Q1? So We might be actually looking for a jump start to the year in Q1 with some 7%, 7%, 9%. Is there anything I'm missing in this equation? My second question is a little bit more top down, if I may. Your 2 peers, Zhivodong and IFF, are going more aggressively towards enzymes. Is this a technology Symrise Has to look at, is this needed to further replace chemical raw materials by renewable ones. In other words, will you have to address enzymes going forward for on Simaris' platform. Thank you. Yes. Thomas, I'm happy to answer that question. The SOVU question about the trends in Q1, yes, you will see a jump start at Sumeras. Very simple. So expect that we will not fall short there. I hope that answers even and you make your mark, but yes. 2nd, enzymes and biotechnology as a tool necessary, absolutely. So and that's why we invested not in enzymes directly because many of them you can buy anyway commercially, but it's an interesting area. May I interpret your question a bit wider on biotechnology? And then we're right in the middle of some key investments we did like Probi, for example. So yes, biotechnology will play an even more Important role in the future and if some of the materials which we need to manufacture, In particular, natural materials require enzyme technology. Absolutely, we utilize that. I hope, Thomas, this This answers your 2 questions. It does indeed. Thank you very much. Mr. Ryan Tomkins from Jefferies. May we have your question please? Yes. Thank you. Good morning all. Only one from me. Most have been covered. It was just on the margin, if we could have a comment on the moving parts. I assume we have a bit of operating leverage and better volumes next year. Also the raw materials that you called out, anything else that we're missing there? Thank you very much. Thanks, Ryan, for your question. I knew you would ask a financial question, so I happily shifted over to Olaf. Yes. I think we are in this period of some cost savings coming along with the pandemic. For me, the most important part for developing the margin further is around portfolio development. We are investing, as you know, into higher margin businesses. And in the long run, this should really develop our margin in the right direction. We start this year with the expectation that the margin will be around 21%, and I think that's a good guidance for this year. Let's see how it goes and what still needs to come, but this is the expectation for 2021 for the time being. Great. Thank you. And apologies, Hans Jurgen, all my non financial questions have already been taken. No, no. Brian, it was nice. We have Olaf in the call, and he has to do something for the money we pay. Exactly. Thank you very much. You're welcome. Mr. Charles Eden from UBS, may we have your questions, please. Hi, good morning. Thanks for taking my questions. 2, if I may. My first question is just on your 2021 organic sales guidance. And given your comments about being fully on track to achieve the upper end of the 3% to 4% range last year Prior to the cyber attack combined with the strong start to this year, should we view the bottom end of your 5% to 10% guidance range as early year conservatism? Could you also discuss the extent to which you believe the cyber attacks sales have now already been fully recovered in Q1 to date? And then my second question is just on your 2020 margin. Are you able to quantify the higher costs associated with the cyber attack? Or perhaps another way of asking, where do you think the margin would have been in the prior 21% to 22% range in the absence of the cyber cap mix? Thanks very much. So let me start with the first one, the growth for this year. Yes, our guidance was 5% to 7%. You can read it as you want. I committed to before that we will have probably a jump start, yes. But at this point in time to review our guidance For the growth, our long term guidance is too early, 5% to 7%, we feel pretty safe. And already that is more than all our competitors and our peers in our industry. So We commit to getting back to our dynamic growth rate for today. That should be enough. But to your second question, Q1, all the backdrop pretty much is reconciled in Q1, and that is a good sign that we Mastered the cyber attack on our own, and we got out of this without major losses. And we were able to to service our customers even in this difficult situation. And that again is a good sign for the robustness of our Supply Chain. I hope that answers your question. Olaf, you may take the second one. Yes. So The real impact from the cyber attack is a little bit difficult to judge. So basically impossible to come up with the Real numbers. The estimate on the top line is €30,000,000 to €35,000,000 which we missed in December and which will shift to the New Year to the vast majority. Now from a margin perspective, we expected definitely a Slightly higher margin for 2020 compared to where we came out in 21.1%. I think we were well on track. We had some idle costs in December just because a lot of production environments were on standby, Plus we had some extra costs related to IT and the initial measures we took. Nevertheless, we have a cybersecurity insurance in place, and we are, of course, in the process of collecting all the elements. And at some point, we can tell you to which extent We will get a reimbursement for some of the costs related to Cyber Tech. That's great. Thanks very much. Mr. James Targett from Berenberg Bank. Maybe you have your question, please. Hi, good afternoon, everyone. It's James Targett from Berenberg. Two questions. So firstly, sorry to come back on the margins for 2021. So just at the current expectation of lower margins in 2021, could you I'm just trying to understand how much is coming from sort of the cost normalization from last year versus your growth or your ESG growth initiatives and ESG investments. And I also wonder to what extent you expect Mix to play a role in margin development in 2021 considering the various moving parts during on the top line during the pandemic. And then secondly, you mentioned that the savory business had a big benefit from COVID, a sort of pivot towards the savory business In 2020, to what extent do you expect the Savory business to continue that strong growth as the pandemic eases? Is there some sort of Structural change or was it all temporary? And it would extend that the ADF business benefit from that boost in Savory Business in 2020. Thank you. Okay, James. First question, I'm not sure if I Understood this completely, but what I can tell you, your assumption that we will see a lower margin this year Compared to last year, as I heard you talking about margin loss, no, and margin lower, no, we don't see that. We're very early in the year. And as typically at this time in the year, we are cautious with our outlook. But I think It is wrong to assume a margin loss at this point in time. We actually don't see it necessarily. Having said the second point to your savory question, the business in savory was strong indeed last year. It will continue to be strong this year because the underlying major trend of meat alternatives, vegetarian, vegan and these Things will continue to drive the business. And that is not where ADF links into the ADF links into the second big thing, big driver is The declaration friendly flavors, the declaration free product, chicken flavor from chicken. How creative is that? So ADF opens the opportunity. And as I said, ADF, IDF, the strong performance also is rooted in the fact that we have a unique application platform. We're the only ones in our We're having pet food and aqua as outlet, and so we have a unique outlet for the ADF product. So I guess some of The things you brought up in your questions have been mixed together and these trends have to be separated. But Back to your question, the Savory business will continue to do well. That is what matters, and this year will be another good year for Savory. And if I didn't answer the first question totally, James, then feel free to Just bring it up again and we'll try to fill it as good as possible, okay? Sure. Yes, let me just do that. So I suppose the question is, maybe you could if you think about your growth initiatives and ESG investments in 2021, How much larger are they done in 2020? And Yes. Is that how much is that impacting your expectation on margin in 2021? Okay. Now I got it. Sorry. So thanks for repeating it. Yes, our commitment for ESG is very prominent in our communication. Actually, it is important, but the financial impact is not any bigger in the future going forward than what We have done in the past. We have already committed in the past the necessary financial resources in this, And we will continue to do so. As we did with IT, that was another related question, which the one or the other of you may think as a consequence of the We have invested enough in IT, and we will continue to do so. Do not expect any major changes in our cost allocation going forward. Okay? Thank you. You're welcome. Our today's last question comes from Mrs. Isha Sharma from Stifel. Your question please. Yes, hi. This is Ms. Isha. Hi, gentlemen. Thank you for taking my questions. I have 3 please, if I may. First one is a simple one. What are your expectations on raw material costs through 2021, please, and if you already see some inflation. Secondly, the organic decline in Q4 Came mainly from CenteneCare and regionally in EMEA and Asia Pacific. Is that exclusively explained from by the cyber attack situation that you had in Q4 or is there are there other underlying factors? And the last one is on Nutrition Margin. It was quite strong in the second half of twenty twenty. Could you give us some color on that and if That is a reasonable run rate going forward. Thank you. Okay. Yes, Isha, good to hear from you. So I would happily to pass on the 3rd question to Olaf, And I take the raw material cost question. We see a slight or we let's put it this way. We expect a slight headwind this year. At the moment, at this point in time, We do not see it yet in our numbers, but that's the challenge with SAP. It is already or it may already Be coming in, but it is only entering the cost book the moment you touch the material. Anyway, so The sales, I would say, you see already a certain slight headwind, and we will continue to see a certain Stronger headwind in the 2nd part of the year. For the total year 2021, we expect a slight headwind in raw material costs, and this anticipation is pretty much in line with what our peers are saying. Organic decline in Send and Care in the 4th quarter, mainly cyber Tech. We had to make some decisions, Isha, on what operations we start first. I have to say it was a mess, All was shut down, and you have to start somewhere. And some of the Cent and Care Factories were the last to start. And due to some internal challenges, it was a question how it had been programmed and all these But the point is actually some larger sites were down nearly 4 weeks and you see that. So that answers hopefully your second question, and I happily pass on to Olaf, who is already waiting. Olaf? Yes. So on the Nutrition, very nice contribution from ADF. IDF, we Talked about strong top line performance, and you can see from the development that ADFIDF is contributing not only top line, but also bottom line quite a little bit. So we consider this margin development as Sustainable and going in the right direction going forward. Isha, did that answer your question? It did, but just the reason. Reasonally, it was only in EMEA and Asia Pacific that you saw a decline in Q4. Yes. But it is simply a question when this production was started up, as I said. Right. So there is no financial logic behind it. Thank you so much both of you. Thanks a lot. Thank you. Welcome. Thank you very much. Ladies and gentlemen, this brings us to the end of our conference call. Thank you very much for your time and your interest in SimWise. We will not travel afterwards, but we are looking forward to meeting you in the upcoming virtual events. Have a good evening. Stay safe and goodbye from