Earnings Call: Q4 2019

Mar 10, 2020

Full year results conference 2019. So analysts tend to look We work on our work team and the safety telephone banker, and we also work on our work on the phone. We'll be our CEO, the client, the restaurant, and our CEO, Celestina. Our document has been published this time on our efforts in the past and investors, the financial results The same area you will find the figures at this point in time in the course of today. After the presentation, we are open for your questions. I will now hand over to our CEO for some period of time in Asia. Thank you to the Good morning, ladies and gentlemen, and welcome to the senior investor and analyst conference on the appraisal of our 2019. We're more than welcome all thank you to everyone who joined us over the phone. As in the previous years, I joined by our CFO, on October. Together, we will walk you through today's 2018. I will start by giving you a recap our highlights in 2019. We'll then see a brief slide into the financials. Afterwards, we will listen through the month, so there's some features, initiatives, and it's an outlier. We will, of course, have the opportunity for questions during the end of our call. We will speak into that to let us site wide range. That's all for our financial highlights. 2019 as the yet another year of strong and profitable growth. We have achieved all our targets and seen more resources for continuing to build on our foundation of sustainable growth going forward. We benefited from this capacity utilization and strong demand across all segments and regions. Our hotline is for the 4th consecutive year. Overall, sales decreased by 8% in reported currencies, more than 1,000,000,000. And then it closed with also strong with a plus of 5.70%. Despite a number of imported investors, we set profitability, high and outperformed our prior year to us. Our normalized EBITDA increased by over 12% to more than €707,000,000. Oh, EBITDA margin stood at 20.8%. It's a very healthy level. The order made this progress with our regards to our business free cash flow. We increased by 53% to 476,000,000. This is worth 14.1%. Net income for the period increased by 10% year on year and payment of 3040000. The company's normalized earnings per share increase to €2.25 after 2 years and 12¢ in 2000 rupees. We want our shareholders to participate in our success against this year. Management and Supervisory Board will therefore propose a dividend increase $0.95 per share to the annual generate reasons in my end. Let us move on to Chart 5 and our sales development and road map. We continue to see strong demand in this capacity utilization in 2019. Driven by all 13th and regions. Adjusted for 14.86 decrease increased by an excellent business case to more than 3,400,000,000. ISF, which was for the first time consolidators in November 2019 contributed 30 We hope to be strong and inorganic cases, if you're up by 45.766. I'm proud to say Finrite was once again one of the fastest growing companies in the Philippines. An overview of sales contributing by segment and charge fees. Centimeters Care increased sales by more than 70% in important currency over €1.430. Organically, the second piece 5.6%. We saw a pleasing double digit performance percentage growth with 5 vessels. Essentially, the region's easy and Latin America shows very good dynamics. Financially in cosmetic and even and ophthalmology results were good. In reporting currency, labor achieved a plus of 5.6% and increased sales almost 1,000,000,000. On the organic basis, the first increase by 3.8% year on year. Recorded in particular strong demand in the Asia Pacific region. We are then a growth in the high single digits percentage rate. Applications for sweet and beverage products as well as these alternatives were very popular. Especially in the region, Malaysia and China. Nutrition increased sales by an outstanding 14.5% to over 730,000,000. India, Eylea had a good start and contributed 32,000,000 barrels today. Due to the initial consolidation of the week in November, the fourth quarter was particularly strong. Sigma sales in Q4, and by almost 29%. The new equipment business was also very good in this and in on an organic basis. It's just more than 9%. Famous growth driver was once again approved. Chart 7 for our UGL performance. In the region level, both engines were in Latin America and Asia Pacific, they benefited from very good dynamics and research by 12.8% and by 7.4% respectively. Over the year 2019, the EMEA region also recorded good demand, growing by 3.6%. In North America, we achieved sales growth of more than 4%. Emerging markets accounted for full 4.3% of total sales, which was slightly above the prior year figure. We grew in these particularly dynamic markets by 10.7%. It is a gentlemen. Let us move on to a chart, which are very familiar with. On Chart 8, one of our favorite ones as it illustrates our sale and EBITDA growth over the years. We can clearly complete senior services from track record in generating sustainable and reliable sales in early school. We have created significant value to our IPO back in 2006. Net 1, not twice, but every single year. Meanwhile, no matter how volatile exchanges or raw material prices were. And we're expecting the irrespective of political uncertainties. Since our IPO, we have recorded a sales radar of 8.6%. We're equally strong on this development. We are not only one of the fastest growing companies in our industry. We are all also one of the most profitable ones. Our EBITDA margin in 2019 stood at the very healthy 20.8% and as you know, We will not stay but have set ourselves ambitious goals for the future. I would like to thank all our employees across the world. The commitment to retention and the preliminary thinking of products to where we are today. They are key contributors to our success story. Let us know meet with our share price development and sharp lines. In 2019, we have yet again outperformed the And I'm even more proud of is that we have to be simultaneously established and need all time high. Our share price increased by 42% in 2019. A clear sign of the appreciation of our strategy and performing from the Capital Markets. Straightforward dividend policy. We want our shareholders to participate in our success. Maybe to our management and supervise rewards which represents a dividend increase to $0.95 per share at this year, AGM. Our outstanding shareholder return in 2019 cents, therefore, at more than 17%. Let me now and over to Olak, who will present to you the financial in more detail. Olak, Yes. Thank you very much, answering, and good afternoon also from my side to all of you in the room, but also on the phone. Hello, my students' initial remarks. I would like to give you a promise deep dive into the financials. Let's start with group stage development on Page 11. We had another year of strong organic growth, while the industry grows between 3% to 3%. We grew 5.7% with a price variance of 50 50. ADS IDS IDS finally contributed 1,000,000 since November 2019 the portfolio is set up 1% after negative as its impact in 2018, mainly the from U. S. Dollars reported our growth was 1,000,000 or 1.3%. Flenting to Slide 12 to take a closer look at our bottom line. In 2019, our profitability grew stronger than the top line. Mainly due to under proportionate raw material price increases and good cost management. The cost of goods sold includes material costs derived as it looks like it's amounting to 1,000,000 This represents a material quota of 43.9 percent, slightly leased from 44.4% in 2018. Overall, raw material prices were up at around 3% in 2019 after 5% in 2018. For Q1 'twenty, we expect there were stable raw material prices across the portfolio. As you probably noticed during the last past few years, We have a huge asset in our backup integration, even natural, even chemicals, which helps to steer through relative times. Which we are facing again at the moment. Moving to earnings. Normalized group EBITDA amounted to 707,000,000 an increase of 12.2 percent or $76,000,000. The margin of 20.8 percent meets our 2019 margin target of around 21%. The IFRS 16 impact on EBITDA was 20,000,000 and the normalized integration costs for ADF IBS amounted to 1,000,000. 2018, we benefited from a positive impact due to VAT tax receivables in the world. As some of you might remember, that fell into other income at that time, amounting to around 1,000,000 needs to be considered in measuring our good performance in 2019. Group visits rose 10.7 percent to 481,000,000, resulting in an impeded margin of 14.1 percent. Which comes after 13.8% in 2018. Depreciation increased in connection with IFRS 16, accounting by 17,000,000 as well as the finalization of some larger investment projects. Please turn to the next slide. Slide 13 for the segment reporting. Centimeters And Care achieved an organic growth of 5.6% and benefited 1.5% from FX. While AM and CI had huge comparisons in 2018, The year after so called ceasefire crisis, the growth in 2019 was mainly driven by frequencies, especially fine frequencies. In Centene Care, 90% was pricing and 10% was volume. This volume starting to pick up again in the 4th quarter. Reported period were 1,419,000 Looking at turning, Centimeters EBITDA amounted to $278,000,000. This comes after $254,000,000 the year before. And the margin improved from 19.2percentto19.6percent. Looking Slide 14 is for flavor with the lower growth versus 2018 due to limited price increase opportunities. At the same time, we also saw an EBITDA in marginal recovery from 20.5% in 2018, to 21.4% in 2019. Moving to Slide 15 for Nutrition. An impressive 9.3 percent organic growth, mainly achieved from our Petrol business. Cost volume was 1 point 1 quarter, price and 3 quarter volume. ABS Ios added $32,000,000 sales of 5% growth into closing in November 2019. Nutrition EBITDA margin achieved 22%. Somewhere marked on 80s ideas. It wasn't late, but successful start. The integration is fully on track. The culture fits very well together. And then present for me as a CFO, the numbers, sales and profitability wise, were as expected. Looking forward, we expect for 2020, a slightly positive growth and an ADP margin definitely above 25%. Please get us continue with the P and L elements below E book on Slide 16. The Manalite financial result dropped 24 percent to 1,000,000, when excluding positive U. S. Dollar exercise of 1,000,000 for the ADS IDS acquisition. Including this FX gain, we achieved the financial rise and prior year levels. Income purchased in 20 19 increased by 4.6% to 130,000,000. The tax rate was 27.1 percent after 28.1 percent the year before. Mainly due to higher earnings in countries with lower tax rates. This is fully in line with our midterm guidance of a tax rate between 26 percent 28 percent for the years to come until 2025. Net income increased 10.3 percent to $304,000,000. Normalized EPS achieved a new record level of 2 year 25. That is attributable to similar shareholders after 2 year 12 2018. Consequently, we will propose a dividend of 0.95 to the euro to the annual general meeting in May $5 more than last year. Now turn to page 17. I'm glad to report that our increased focus on cash flow generation paid off in 2019. This is strong EBITDA, moderate working capital growth and the reduction of CapEx we achieved a business free cash flow of 14.1 percent of sales in 2019, which is a huge improvement compared to to the 9.9% in 2018. And if you can say much better than we expected, For 2020, we foresee the business free cash flow at around 14%. Please turn to Slide 18 for the review of our balance sheet. Total assets increased by more than 1,000,000,000 or 21.1 percent. To $5,000,000 minus $57,000,000 over the previous year, mainly for the ADS IDS acquisition. On the asset side, this was mainly due to an increase in candidates and PPE, mostly driven by the inclusion of ADS IDS again. We expect the final purchase price allocation to be ready by mid of this year, at which point does it provide with an updated amortization schedule for the group. Burns went up 1,000,000 for the financing of ADS IDF mainly through the $250,000,000 for its own, issue and that's in additional remarks. Remember that we financed the Explora's new bond of 500,000,000 in early summer last year and enjoyed an improvement in the interest rate. Of 4.5% comes with 1.25%. Now Provision for pensions and similar obligation increased by 1,000,000, mainly due to the decrease in the discount rate for pension commitments granted in Germany, and that came down from 2% in 2018. To 1.2% at the end of 2019. Other liabilities increased by 1,000,000 for IFRS 16 lease accounting reasons. The final financing element for ADF IDS as our 400,000,000 capital includes in February 2019 when we sold 5,600,000 of new shares at a share price of at that time, 71 point to 5. It's an equity ratio, including a non controlling interest of 41.4 percent, Sunrise has a very solid foundation for driving future business development forward in a very sustained manner. Let's now turn to Page 19 to our financing structure. Our net debt amounted to 3.1 times EBITDA, including pensions, of 2.3x excluding these pension. Despite the acquisition of ADS IDS business only slightly above last year, Our ambitions are unchanged. We want to achieve a net debt, including pension to EBITDA level of 2 to 3.5 times. Our top priority remains to have an investment grade profile for Sunrise. As a summary, In 2019, we saw good improvement of our financials all in the right direction. We did successfully through the 1 or 2 crisis, which is support our strong asset integration strategy And finally, we closed the highly attractive portfolio addition ADF IDS. And together, as many of you, we enjoyed in borrowing capital markets day in January of last year, where we gave our new guidance and which leads the way into our similar future. With this, I would like to hand back to Hans Yoon. Thank you, Olav. Ladies and gentlemen, let us now look at the road app. Chart 21 reiterate the basis of our success, our proven corporate strategies. We earned familiar with both 3 strategic pillars, growth, efficiency and portfolio. Both on our values and embedded in our sustainability approach. We are the leaders to make our vision come true. To create meaningful and sustainable value for all to life stakeholders. Our track record and our 2019 results are clear proof of strategy is followed. Today, we will specify the immediate limit for 2020. In terms of growth, We worked with a particular focus on exploring the full potential of our customer base and target markets. A cross sale, expanding our capacities, or making strategic additions, like we did with ADF ideas. Our efficiency efforts will focus on further advancing internal processes. Artificial intelligence, for example, will support our efficiency programs. And with the help of the internal stream, we will further advance our production technologies. Our portfolio related initiative was focused on the ADF IS integration. In the air to facilitate innovation through the networking of all complicated, especially in the U. S. Let us look at these initiatives in a bit more detail. Chart 22 shows an overview of our client and first distribution. The key points are here. Whether broadly balanced presence and the variety in the very diversified product and client portfolio. We have multiple touch points with our clients. As the graphic on the left shows. 9 of out of our 12th largest customers, our clients, of more than one Finrite application. 5 of them are clients in more than one segment. And 2 of them are clients in all our segments. In 2020, we went to work specifically on further increasing our customer penetration across all our segments and markets. There's still a lot of potential. As T Mobile has proven over the years, a balanced business is a resilient business. It does not only account for our client portfolio, The maintenance activity demonstrates that this applies to our entire business. Conferred distribution by segment immediately up to our customer type and market. 2020 will therefore be about all about further leveraging our position and fully exploiting our potential. Let us move on to our strategic pillar number 2 on Chart 23. As outlined before, our focus in terms of efficiency and efficiency will be on improving processes and expanding access to warranty areas. When it comes to processes, we will remain committed to our disciplined cost and efficiency management. For instance, we will expand purchasing projects with cross divisional potential. And then it's to keep everything in price is stable. Our R and D efforts on the other hand side will concentrate on simplifying our formulas. The other aim is to reduce the number of raw material in use. On the laminated side, we will further invest in our backlog integration. In order to secure access to high quality raw materials at all times to realize costs and planning efficiencies in our store bins. Our laboratory platform for green chemistry plays accretion role in this. It focuses on innovation and continuing increasing for sales. We confirm the processes and products. On the top of that, the ARPU increases the positive, safer and environmental impact of our products. Last but not least, our portfolio on Chart 24. And today, our state was the degree of innovation and reinvention in a cast consumer brand product is crucial. Our customers rely on us in the effort to strengthen their product lines and expand their value creation. We highly appreciate our innovation drive and the ongoing additions to our own portfolio. Being it in this additional trailer and fragrance business or in new areas, such as care and nutrition. Under the group, we have successfully expanded our competencies. We only generate 1 third of our sales outside the traditional flavors and fragrances business. With leading positions across numerous categories. Our focus going forward will be to further leverage opportunities within our existing application areas. And first, the innovation by cross linking our competencies. Ladies and gentlemen, let us now move to another integral part of our strategy. Higher sustainability efforts on chart 25. Here, no client protection and the biodiversity are 2 focus areas. In terms of climate protection, I'm proud to say that we managed to further cut our ecological footprint in 2019. Since 2016, we have been reducing our carbon emissions successfully every year, and we are fully committed to continue on this path and become climate positive by 2030. By 2025 already, we will source all our electricity from renewable sources. Our Climate Protection efforts have yet again, being recognized by the carbon disclosure project. We were awarded a rating in all three categories, client, water, and forest. CEO therefore remains a global sustainability leader within its industry. And the second focus area is better configuration. To us, it is a prerequisite for a long term commercial success. We use tired of warranty from all over the world. We are therefore dependent on sustaining interest for GeoMakes. And it ensures vulnerability, quality, and price stability. We work very closely with our partners and farmers. The new popular collaboration is currently on the NEMA production in Madagascar. But there's a map on the right side illustrates There are many more collaborations in very different parts of the world. In Sierra, we foreclosed and particularly for Calabria and CCI for sustainable citrus. One thing that is important to us, All our collaborations are 3 main street. We are working closely with communities and farmers to improve living and working conditions in the countries we serve from. CAD26 provides an overview of our key investments and growth initiatives. We've achieved a net in the 2 past 2 years alone. An investment in every 2018 followed by intense and busy 2019. In this news, our focus was on capacity expansion to meet the high demand and to lay the basis for growth. Our CapEx spending stood at 7.2% in 2018 alone. Exceeding the OIBDA target of 5% to 6% export. We will certainly continue to dedicate significant resources to growth initiatives, but this will be more at a more normal level. We managed to work towards this target already in 2019 where CapEx was back at 5.3%. And on our key investments in 2019 year, a brand new manufacturing site for fragrances and flavors in Nantong in China. The expansion of production capacity for mental and natural extracts in the year. And in a digital tattoo facility in Colombia and in France, just to make a few. As you can see, there are more new projects lined up already. One project that I am putting a product with our investment into meat alternative. In other words, consumers want food and beverages with alternative proteins. This includes primary meat and dairy products. And the desire keeps going both out of conviction and for health reasons. We will have in-depth know how simulator developed safety issues of premium, well rounded and protein rich alternatives. In order to provide products made of e cell or rice proteins. All of them with a paid profile that includes all consumer preferred estimates. Our mission, helping consumers to discover and develop their life of plant based food. Let me show you an excellent example of printing alternatives with beverage application of on Chart 27. Our subsidiary brings our development and launched mid-twenty 19, a new and innovative debit range under the brand, Princess, and the P. Please now offer 3 gun, 303, ProTE, and casting which worked as well as a volunteer, distributed in Germany and Austria. The piece of mercury is, comparable to classical milk products and comes in 5 different flavor varieties, coffee, chocolate, vanilla, and original and, which we can get untreated or with dairy products. Is January the contract is very well received and purchased and highly rated for its innovative in EPS by the trade community. Anything, gentlemen, let us concludes today's presentation with the outlook for 2020 and beyond. Chart 28 please. We will yet again to outperform the growth of the relevant markets. In fact, we expect all our segments to grow faster than the labor market which is projected to grow around 3% to 4% this year. At the same time, we anticipate an EBITDA margin of more than 20 percent in all segments. Assuming that raw material costs and the euro, U. S. Dollar exchange rate remained stable. We believe that Sunrise is very well positioned to achieve these growth ambitions We will continue to build on our global presence, diversified product portfolio and proven strategies. In this context, we plan to expand into fast growing high margin business areas. We will be fooled by combining organic investments with targeted acquisitions. Of course, we will also remain committed to our disciplined cost and efficiency management. Slide 89 gives an overview of our financial and sustainability targets for 2025. Well, Capital Markets Day, we have presented an updated mid term financial goals. We have increased our sales policy around 5.5to6. The 8 year renewals by the end of 2025. We will see in plans to achieve different wishes goals by needs an organic growth of an annual rate of 5 to 7 percent. Our EBITDA target was also raised long term, Fingoized, it intends to achieve an EBITDA margin within the target corridor of 20% to 23%. Hello. Financial BioChap, page 30, we would like to introduce to We need phase 2 new faces. Mister Harris and Peter Valleca has been nominated to stand for Supervisory Board election at this year's AGM. Both managers have extensive internal international experience in various management positions. Michael English is the CEO of Stock listed aircon ASA, a leading supplier of vacant based advanced utility headquarters in Africa previously He sent 4 years as CEO of China. Please start in Nutrition of Turner Materials And Animal Nutrition. Michael began his career in 1990 at Baja, where he has heard a number of management positions in Germany and China for 25 years. For 2013 to 2015, he served as a member of the board of management. Energy was responsible for technology, HR sustainability, and the Asia Pacific Africa and Middle East regions. Michael reduced experience in wind chemistry and product design as well as his extensive expertise in the Chinese market will be a very valued member of the board. Tito Valeta is currently in CEO to finish Westy Corporation, Nesty, the world's leading manufacturer of sustainable product solutions such as a near experience road and aviation trade war. Trinity EBITDA experienced in the flavor, fragrance and cosmetics industry as CEO of Capital, the provider in the field of specialty chemicals. It will begin its career in 1990 Iowa where he spent over 20 years in Germany, the USA, Brazil, and Belgium. This last position was Chief Marketing Innovation Officer at Biomaterial Science. Ida is recognized as an expert in developing sustainable processes and product solutions. As we all know, we have very high ambitions to further advance our sustainability efforts in Finwise. And therefore, it will be an excellent addition to our board. While the individual managed both candidates will be valued as contributors to our corporate strategy. The similar to provide me, as well as the executive board are pleased to introduce both manager managers for election at our annual general meeting on May 6th. In this registry, I would like to conclude today's presentation. Urs and I are now happy to answer your questions. Let us start with all this year, Louis. Many thanks, I'm sorry, many thanks for the last 20 We are now happy to take the questions. We will start in the room in Frankfurt and switch to the phone afterwards. We kindly ask you to give your name and company first, We also kindly ask you to take any 2 questions. Anything? Thomas Swoboda from Societe Generale. I have two questions, please. Firstly, on raw materials, you have a number of raw materials sourced from China. Sometimes it's a similar sort thing. Do you see any indications of for shortages, increasing raw material prices because of the current situation. So that was number 1. Number 2, a little bit more strategic, if I may, by boat move, ISF, could have started a consolidation in the wider specialty ingredient space. My question is, do you see pressure to further consolidate is the combination of flavors and fragrances and bigger ingredients play as something you see as a strategic rationale for the sector. Thank you. Okay. Sunny, thanks for the question. I think I'll take them both. 1st, 1988 Of course, the challenges we see at the moment coming from China Archer and used us, but we are probably happy to say we state the most robust and stated supply chain in our industry. 2 years ago, when, the warranty crisis, with us, in the process that we are pretty much the only one to contain innovative materials and rest assured the same situation is here again. We spend a lot of time thinking through a very stable and robust supply chain. Yes. We have issues, but, if someone can deliver it is us. So I think we call the clients back when I came up in our industry with the ideal backward integration, right? To explain why we do this and the question came from new community, is it because of the higher margin? And I have to say no, not really. Why do you do it? Like an insurance. And these are the times in the insurance, and we have one. So this challenge the moment, we have not seen the China challenges in our comment to pay out of any alternate, any guidance, anything so far, so good and rest assured, we are talking to the most robust supply chain in our industry. So that is network. 2nd point, ISS and, DuPont, Please change all the time. And the industry is moving. And, it would be it would be or if things didn't change. So yes, we will see probably new changes because of that, move, we will see challenges because the rest of the competition is now trying to copy our strategy that is fine. I think we take pride in it with something like the backlog integration, which will continue taking on more and stability for the materials resource has helped to make the world a good setup. I think we can all be proud of it. But it is by far, and we are by far away from leaving our feet from the ground. We have to adapt our strategy Yes, there will be challenges, but so far, we have been able to cope with our challenges, and we will cope with these challenges as well. For me, challenges are opportunities, and that is what I'd like to talk in yet more. So please know just call to pause opportunity for those who want to see it. And I can tell you, I will be in that If you're merging and doing a big merger, let's say a lot of internal distraction, a lot of people are concerned about their job closures and all these things. So it's wise to think not business opportunities could be up for that. So there will be also opportunities, but for me, the glass is always half full all of us are full. So you're right, but, that is what makes life interesting. The way that things change in this. And for us, it will be full of challenges, right, prefer to see the challenges. Okay? It is a lengthy date that, there will be merger in the industry. For us, what could we get out of it? We are one of the fastest growing companies in our industry. So it seems that we are doing something not feedback. We're not concerned at all. You see that. That is not something which concerns me. I looked at this. It's an interesting news and the way to do something That's good. Alright. Hi. Thank you for the presentation and for taking my questions. I have to please, your growth in EBITDA guidance is based on the growth of 3.2% in 2020. Things have changed a little bit since then. And on the other hand, also on stable raw material prices. So given the current situation around COVID 19 and also the falling oil prices, how can we better estimate how to look at this guide from today's perspective, please. Yes. First, your assumption is correct. Our guidance is based on the raw material prices as they are. And, you're right. The coronavirus, whatever we have seen so far is in there as well. And if there's nothing, which is totally unexpected, we should be able to cope with this thing, and we should see no reason to use this as an excuse to move away from our guidance. We should be able to make it up. We have seen somewhat slower start of the year, won't surprise. Our fully turnover in China is 6% in the visibility of the business in China is somewhat limited Yes. Again, what we see has been able for the rest of the year to make this up. Again, it's not something totally surprising happened. Talking raw material prices, which is close linked to this. As we said, the China crisis So far very limited impact on our supply chain. We have taken our time to make it pretty robust. We need to make prices change and change all the time as we move 10,000 raw materials typically typically from this kind of activity. Most of these levels out or we just learned these days is plummeting, vanilla is still high. There's other prices all too high. So this levels also some expense. That is that makes big part of the greediness of our business. It is If this if you do it right, pretty robust because the negative effect never shuts out. Having said that, in our guidance, there is quite some comfort level in raw materials as so far as your result. There's also one thing else and which then I expect a bit in Thomas's previous question. The raw material issue can add on to opportunities if no one else can deliver materials but just us Let's just can also put a smile on your face. So a crisis and limited levers and if we are among the winners along to be possible. So I shall back to your question. There is some uncertainty, but for us, There's no reason to be too skeptical, and there's somewhat another of comfort in this raw material price fluctuation. Okay? I want a little bit more, but at least This is not something where I would change my balance tomorrow already just because the oil price has changed. Thank you. And the second one, please. Could you talk about the trends that you see at flavor? Because we talk about strong growth in Asia, but how do you see Europe and North America developing? You look at the margin progression, in the first half, we have seen a significant improvement in maybe the margin, but we didn't see that in the second are there specific reasons for this, or is it the usual seasonality? That's it from my side. We had seen in the last second half year, some slowdown. Yeah. No question. On the other side, we had seen a strong momentum in the first half of the year. So, there may be some destocking some more talked with some of our commit competitors. We're talking, it may vary well. At this point in time, you should have nothing where I would be concerned of. Yep. We call that we were after last year. He was so concerned about our fragrance division that it's not moving in. 68, nothing, which I should tell you, which I'm concerned about. It's a bit of a cyclical business. This year, no one is complaining about and the final is the fragrance just happy about the numbers and the same will come through on flavors. So flowing us, we'll be back on track and some of the stuff straightforward. I don't know even better. It's a tentative explanation, some destocking. As you know, if someone is destocking, that is the explanation from a certain point on behalf to start buying again. It's nothing which we are concerned of at the moment. Next question, please. 2 questions from my side, Michael Sheaffer from Commerzbank. First one, coming back to Centene Keya, which had a strong finish rate of the year with the organic growth you've reported. I'm just going to, you touched upon that basically 90% in 2019 was price driven 10% volume where we catch up basically in volume side in the fourth quarter. So going into 2020, how should we read, let's say, the volume elimination you have is already visible basically in terms of capacity, which is there, So how comfortable are you, with Centricare growing your 5% to 7%? So what's the volume contribution there already visible? In this regard. And the second one is on the free cash flow side, congrats and great achievement in 'twenty 19 with a strong contribution from working capital management, so just getting a bit of a feeling how 2020 may look like on the working capital side. 2019. It looks to me that, that you really, it's a opportunity to deliver on this, on this end, is there some catch up or reversal effect we should think about heading into 2020, primarily also with every 5 years coming from your table, basically? Thank you. Thank you, Michael, for the question. So under Centennial Organic Growth, just as an additional information, we are coming out of this cycle of strong raw material price increases. And, something clear has worked a lot in this regard. I think at the end of the cycle, and as I indicated, we see stable raw material situations pretty much across the portfolio. That should lead to a more normal situation, which for us is the 5% to 7% growth ambition out of that one third price to a third volume. This is what we would expect in a more normal world, and that's what we also expect for Centantra. And in fact, tended to in the first quarter, the volume part in Centimeters Care was already at 40%. So we are on track to this normal situation, which we connect to our 5% to 7% organization. And that's the reference said, we are not moving away from our ambition, and that was true for all three segments. There's no reason to put any question mark behind this. However, we have, and we know that very well, very strong comparative in 2018 or 4 quarters were above 8% organic growth. The first quarter of 2019 was above 8% organic growth keep that a little bit in mind since we're missing this price element, in the current environment, given the high level of warranties. That's what I would refer to also specifically through Centimeters Care. Yes, for Kessel, I'm, of course, very happy that this move finally, and I think we did a lot of internal work to change the mindset and penalize in this direction I would have liked, if we would have seen this nice improvement in two steps for those huge, I guided for 14% this year in 2020. And if you look at the parameters of our business free cash flow, it's low understandable where we are coming from, with the CapEx guidance and our ambition that the working capital grows slower than the growth itself, the top line growth, and that's, in combination, would give us 14% level, which we foresee a very good level at the moment. There are some extraordinary items like environmental area that we have pre step material for new production, but we're slowly but surely phased out now. So this will further support our hopefully ongoing improvement of better working capital management. However, and I also want to say that, and we all see that at the moment, the supply chains in the world are pretty much relying on just in time. You'll see interactions here and there We don't have that, and one reason is raising the stock level, which we can use at the moment to keep going. And that is the other part of the coin, but if you have a certain fluctuation, you can see it through the crisis situation. Both in the same direction as the backlog integration that you have discussed. Not touching on the room, maybe. Thank you very much, Patrick Schmidt from all the research. And could you maybe elaborate a little bit on your situation in Latin America? We from volatility in Q1, we were up 21% came down to mid single digit in Q2 and Q3 and now back at 20% in Q4. That will be my first question. And the second one, please slide that your gross margin came down in the second half and then a bit. But despite that you were able to keep your EBITDA margin, and I was wondering where you were able to make up this cost savings. And why are you not a bit more, let's say, confident about 2020 on your margin? Okay. That I'm, for me, actually, it is a miracle. You see an ear about the challenges and the economic crisis going there. Actually, we're doing surprisingly over. For me, like most of you are surprising, we're doing Fine. And there's no sign that this will change this year. It's a typical case for what I'm saying challenges are opportunities and maybe challenging environment where you have or problems in the country and in a continent like that is logistical and nightmare It means a lot of political unrest and the commemorative situation changes. And what is important as well is great people, great countries. It's a great area to be. I was at the end of last year again visiting And we are committed to that area. A clear sign is that we are doing something which we haven't even talked about in is rebuilding its 1st evergreen factory in Syneas in Colombia. It's clear sign, we have all confident in the stability of that continent. We have strong dedication in our company to help young people, young talents grow, and we have what we call future generation. And one project where The young talent we're working in our company was hard to build a new factory. And our company, it's culture, it's the project work of DCA Intelligence is convincing enough the company has committed with doing that. And so This young tenant did such a great job, and, they came up with a good comfort and the next plan to be elected for the 1 in Columbia. And so we have no reason to be concerned about the economy in South America. It would be challenging I cannot even give you a clear example or or or or or why this is We have a good team here. I'm particularly proud of our team and, it's the churn, really challenging environment is not a need not to deliver good and solid business performance. And that is for what we use as a highlight in these challenging time, the challenges coming from China. Do you want to take the next one? Yes. Just to add on this one, I course, we have some impact first coming from the poultry business, which is very, very established in Brazil. As well as in Argentina that the bottom talked about the new facility in Colombia. So the volume growth there We have, certainly, the U. S. Dollar pricing environment, which is visits, in Frontincare, 100% of the business is in U. S. Dollars. So we had some tailwind from this angle. In Florida, it's around 50% and pet food wise 70, 80 percent is an increase in addition to move it to U. S. Dollar pricing environment, especially in countries like Argentina. So that supported the growth profile. Perhaps we worked also in this U. S. Dollar pricing environment on price increases in situations where raw material prices go up. So that's expense a little bit, there is some volatility, but I think it gives you a good feeling that, it's hard to at least mention. And there are different reasons why we see this very good growth. The second question was on the gross margin improvement, I think. Which is, of course, connected to raw material assistance. It was on the deterioration in the second half of the gross margin, but despite that, you were able to make it up at the FDA level. At the FDA level? Oh, okay. So we had some influencing factors coming on the cost side. As I mentioned, the extraordinary items in 2018 played a role here. So that helped. I think we had good cost management overall across the group. There's a little bit of impact coming through the 2 months of, ABS IDS consolidation, which changes a little bit the profile, the mix of all, for the group. So I think you will understand it's better when you go into 2020 and and see recorded growing, including ADS IDS. So most of it, referred to the next effect we have is. And EBITDA guidance is poised very conservative, but you all did ask since a while. At the beginning of the year, we're always cautious. And we talked with some of you typically, we said about 20% we heard, and that is too conservative. So we increased it to more than what we typically did go to about 20 end. And we believe that's the best we can do at the moment is simply have no visibility of the year Under the criteria to give us credit, we were not looking for an excuse for the China team or whatever. We have not paid out And we have not found any reason to already shy away from any guidance, but also also it is our good Good practice got to promise you something which we don't know. And I can guarantee you at this time of the year, no one has accrued what the final and profitability will be the only point. And again, also to Heidi on the phone, I'm sure she's on the phone, and he is confident. But for the moment, that is not his debt. Okay. Thanks, Clive. I hope you have found this message on the phone. So I would love to switch to the phone Elaine, our, operator. Please go ahead. Hi. Through that antitrust process. It's more shorter term in nature around the fine fragrance business, which you said grew double digit last year. I would imagine quite a lot of sales go through airports and travel. I just wondered if you'd seen any impact from that in Q1 so far? You're still there. You're still there. This is falling in the water. Anyway, and thanks for the questions, sir. Timeline on the second time frame, let me start with the second because it's closed. The rest is strong momentum in time frame. So you see we actually had a good momentum there. What we've seen so far that won't reflect anything going on that you mentioned at the airport and we things. We will not exceed that this will become visible at so far so good. And we believe over the years, we should be okay in that segment. If we, over the years, see double digit needs to be seen, so far, we are not concerned and we have not seen any major negative impact to put it down there. So to that question. Second point is, synergy's timelines, ADF IVF, and that was something I was I wasn't nearly concerned of, because we announced to you that we are particularly proud of the Acquisition ATS, IBS, we had no clue that it would take more than 10 months to get this thing sorted out. For various reasons, the guidelines in America that's what we learned over the course of have changed. In around April last year. And, they are different now. The good news is we've got it done. We always told you, we are confident we will get it done, but we will want to use it. So after 10 more than 10 months with the returns, But leaving a company which you have agreed on the price for more than 10 months alone I absolutely like to go a high risk, and I was very, very pleased to see that what has been the lead, what has been communicated to you and through. And, so to request you the synergies, which we have indicated, the timeline, which we have indicated, all this would be still come through and it may delay. The only delay we faced was this 10 month breakout period. So nothing which we have to be able to send it back or bail out at all. Having said that, we see this as a confirmation of our long term strategy and belief in sustainability, sustainability is not just saving the planet and taking care of certain climates. What we say is in a bit labor. And edge trading, that is the big value, which we also sometimes are pleased to see some of the value coming back. We are needing our industry to be a good owner, a good business owner, We need both Diana. We did not hear anything negative in the press. German, company and the French company. It is not always easy, and we never heard anything negative in the He heard our friends from Ryan and say what's the best which could happen to us. People tend to forget, we sales 10% of the whole Diana business in France. It was never anything negative at the cost because we took care to our former employees to find a good new home. The owner was even more risky. We bought the company and fall on 1 third of the company because we were convinced of the territory, the green chemistry basic. And, when we bought ADF ID, it was a family visit. It was the worth of lifetime from the owner The result, of course, we noted the full price. We paid including the tax rebate by 13 times EBITDA, which is The good points have not overpaid. But more important, they want to take work of a lifetime to be in this home. And Michael, no question asked, we benefited over these 10 months that he tried to respond to me to make sure that this work of a lifetime gets basically the difference. That's the only explanation I can find that a company for 10 months, more than 10 months, we have to resolve this legal trade. For you, for us, for all of us, We were thinking lucky, and we got a statement for something, a lot of trust. And, the good thing is There's no disclaimer to your question on the synergies. They will come in, for instance, with this 10 month delay as originally indicated. Nothing to be allowed, okay? Next question, please. You're gonna take care of it? And Tom Rigglesworth from Citi. Please go ahead. Okay. Thank you very much. Sorry, there's there's been an echo on the line. Two questions from me. Interested by the subsidiary, the princess, and the p idea is this part of a bigger ambition for Sunrise to move further downstream. Do you have more of these subsidiaries? How do you exit, your, the the princess and the projects? Or would you would you look to keep that over the medium term? And the second one, bit more mechanical, could we just go through the price and volume dynamics by division? In your GAC sales growth for the fourth quarter? That would be super helpful. Thing across our printers and the team. I have to say, I like the concept that one of you won't even take it in there, but I I like this idea. And to your question, clearly, we will not expand our approach to the market. Based It's very nice that it's very young company. The guy who is dealing with, I keep always telling him how is the emperor of Wyoming. He's, following and he's doing, as I said, in the age of the truth that we can be ready, market ready concept, Vrinsa is in the market penetration limited primary to more than Bavaria and Austria. So We will not go in competition with our major customers in that area. It was just and exercise, everyone is talking about proteins. Our competitors are making a big fuss out of proteins where they're in and what they're doing and what is So we showed something right in the market, which is in London, it's pretty creative. Concept, and it is made from the right quarterly invoices. It's not the composition of 20e's and minerals in to a big extent better. So it's a very, very creative concept, but it will not be extended more than necessary On the other side, for us, it's a good learning exercise also kind of a short path for our customers working with them. Okay? And in analytics, you alluded to your question to margin and performance in the last quarter. Yeah. Our molysis has a tough time, and they keep having a tough time at the moment. But it is not all business areas. There isn't a IPL is is is is is is is is And we had a few questions about slowing up a bit, slower. And last year, we had a lot of concerns about presence, which is not an issue as for today. I will guarantee you, fragrance will be another quarter of concern in the future. Well, it's been well. I don't know more if you, the way we have set it up is a long term successful way. That's why we invited many of you to our charts. We plan to see how we're doing things sustainably in chemistry. If I'm in a mood to suffer for any benefits, and they are their customers. So we were simplifying just looking at one side of the coin. We fortunately, the good situation is one business unit suffered, the other one, benefit from it. Overall, we see our Fencing Care picture pretty healthy, around 20% growth is nice. There's no way at the moment to print innovative picture, but you're right, in the morning, first quarter. It's very challenging. That not change our long term view on this business and our general visit. I hope that's in first place. So Tom, I think you also asked about the price volume in Q4, if I get that, right? So if you have a group of one third price and 2 third volume flavor basically had no price in this quarter, 100% volume growth. Nutrition, one other, 1 quarter price and 3 quarters volume. And Centercare already mentioned, it's 60% price and about 40% volume growth. So that's a very mixed history that come its way to the normal. Thank you both. Very helpful. We will take our next question from Patrick Brocrest from Kepler. Please go ahead. Yes, good afternoon, gentlemen. Thank you for taking my questions. I've got 2. The first one is on, on neutral turnip how big of a business is that for you today and how big could that become as part of flavors? And also, is there only an opportunity for you, or is it also cost seeing, let's say, some pressure in other parts of your business. 2nd question is on nutrition. Could you kind of gives the growth rate of nutrition like for like Q4, excluding the impact from Probyn. Thank you very much. Yes. Okay. It's it's good growth rates to nutrition excluding for the 5, 6 years, the number. I I I will give you a number, but here is the more correct number or accurate number. And services opportunity, showing us an opportunity, showing us an opportunity and we are very well represented For example, a big burger of a big Swiss Multinational company is made by us, probably say, you guess what this company is. It's not here to tell me that we are in silence. So you see, you're pretty good at this. You're, into this and, it is an opportunity, but And it's like any other things, it will, will the consumer, sometimes will shift the way some other consumption. So, if it's not new, it is like a sugar replacement, it is a meat replacement, Well, I see it as an opportunity. I see it for sure, and as of its work, I see it in some areas as a We can contribute to make food healthier to make the world look better. I think that is great. And here, that's the just finally and provides the meat alternative that's of secondary priority, at least we're positive. And second, we have a good share in contributing to healthier food and making things improve a bit better. So that's how I look at it. And, I would say, for the moment, that should be enough for the course. You won't have to give a nutrition Exactly. Something we could be able to cancel at the home, but we'll have to cancel it. Right. No. It's better. I need to do a follow-up because you don't have the number with me. Yeah. No worries. We have disclosed the nutrition numbers and the policy has, obviously, So they published their stuff as well. So, it can be calculated. Oh, I'm disappointed. Actually, you've got us. So we will deliver this number and probably provide to you. Thank you very much. Hi. There's a bit of an echo, so I hope you can hear me. Thanks for the earlier margin, question, comment and, the free cash flow, by the way. So first question on the coronavirus, could you talk a bit about the demand side, please? So We're hearing that travel retail is down. So do you have big exposure there? And we also see that there's stock filing going on in certain area like food and cleaning products? Do you see this at all? Are you exposed? And then the second question is on aroma molecules. I know they're confused here because you're saying Q1 is weak, but at the same time, you seem to be alluding to the fact there may might be an opportunity here giving your back integration So could you clarify your expectations for the year? And, related to that, how is Genova doing? It was quite interesting to see one of competitors make a similar move. Thank you. First, we answered your question from last year, wealth management care about cash. So we do agree with you. Now the coronavirus, as we said, in our outlook so far, what we see is included in cleaning some changes in retail behavior. It is too early to say that we benefit or suffer on this or that, but at least we were not in the camp just to transfer them out. I mean, so tell them that, and there is a problem here, and they are saying you're right in some areas because of changing consumer habits where we even may benefit because some of our products are then used It is too early to give it to your picture. Honestly, what we've reached you, so far, our guidance is even if there will be a certain impact and we see that in China. That is clearly the case. And we should make it up. Our 20 business in China is 6% and the visibility in our Chinese business is simply not good enough to give a detailed answer here today, but at least we are confident if that's, can't stay with the within the next time, we should be able to make it up. Having said that, I would I'm sorry not to be more detailed here, but it is just not clear enough airways. But the impact on us so far was manageable. The other point is also interesting. Our mammology is down that you're absolutely right. This crisis also with opportunities. And we have both the most robust supply chain in our industry, we're benefiting from it. And in our normal model, that may be one of the area and, actually, we already got some customer calls from customers which we haven't seen in a long time. And we have to make sure that we are using our resources wisely. So I did you're absolutely right. It could be an opportunity, but also take too early to say there will be an opportunity at least to anticipate that these will be significant. There are already some small opportunities, but nothing where I would make a big cut out at the moment. If it continues to go on the crisis, there will be good opportunities for sure. One area building cost in animal molecules for sure. And then you're absolutely right. The observed market is interesting but obviously, others are trying to be a similar move. So far, we've got to say, this is the best deal. Thank you. We will take our next question from Jeff Hair from UBS. Please go ahead. Good afternoon. I was wondering if you could ask about gross margin. In a flat raw material environment, I was wondering what you expect the gross margin benefit to be in 2020 versus 2019. And then just secondly on China, I think, you recorded on Reuters today saying that we can write off the Q1 China business, and you can catch up later in the year. Where do you expect that catch up to come from given a lot of your business is discretionary consumer spending? I'll take the second one and you take this. Okay. As you said, the crisis in China has also opportunities. And with China, every supplier, is in some areas not existing anymore. We tested a very robust supply chain which can cope with this situation as it is. At the moment, totally, we have we are not depending on China as a supplier. So we are making some of it up already. Then Other areas, we see a shift in consumption where we also have opportunities to make it up. And even in China, as I said, the first quality, I didn't say we have to write it off totally, but at least there will be an answer in the question about it. The good news is and you have people always have to eat and drink, and people always eat and drink. Of course, again, what do they eat and drink? And that is the big thing, the big point. So consumption patterns will change. And its opportunities for those who are agile enough to see the new opportunities. And for sure, there will be opportunities and that is what makes me very optimistic that we will cope with these challenges. We have proven that in the past. Please try eight lines when the date tries to fit In both practices, everyone was concerned. First point is we have no idea where this will be released and where our entry is needed. It turned out the way it But I was surprised at the very end of 2009 at this crisis. We won the prize, both of European business awards Anna, do you recall that? And we were in Berlin. I was surprised even after a tough start of the year, basis, we even have to start with the Mayo program. At the end of the year, we had 3.5% growth. And, you're far away from that crisis. So just that's what we are saying. We did, we see an impact at the moment that we're far away from the reason that as an excuse to to redo our forecast and outlook for the year. We're far away from that at the moment. Okay? Thank you. As Martin, given that we have the 80th ID expectation not in for full quarter, I need to ask for a little bit of time. As I said, next year, we will have to purchase parts allocation in place, and then the picture will be more clear. In general, ADF IDS comes with, in proportion higher production costs, manufacturing costs compared to the rest of the group. If I take that out from a legacy perspective, I would expect that the gross margin will slightly improve for the group. Legacy wise. Okay. Welcome. I think there are no more questions on the floor until ladies and gentlemen. It's been up to the end of our 2019 results conference and conference calls. Thank you very much for your patience. This was in 19 minutes prior to Lonza EZLS This is maybe not traveling also at an advantage rate, but this is just a slight point. Good night and thanks, sir, and have a nice day. Bye, Andrew. Thank you.