Good morning, ladies and gentlemen. My name is Stefan Raunstrand. I'm here today to present the 2nd quarter result of TOMRA Group together with Espen, our CFO and Bing from IR. In the sum, it's a solid quarter. We are ending up as expected with a good growth of 9% revenue and an earnings improvement of 19 15%.
So all in all, in line with what we have expected in that regard. Collection Solutions, we see continuously that the solutions, which we actually developed in the beginning of 1972, today have become a quite sizable business. The demand here for is increasing all the time. Collection technologies are very efficient in reducing littering, by the way that we motivate our consumers to return bottles and cans after consumption. We are today collecting some 40,000,000,000 bottles every year through our 82,000 machines globally.
And that contributes to reduced littering. If you think of the whole discussion around plastic ocean littering in society, that's really become a core topic in the society. And again, the proof we have with the sort collection technologies to help sort out this problem is really very, very impactful. As an example, in Lithuania, we went in 2016 with a solution. And after 2 years, the littering of bottles and cans was reduced from or a collection rate was improved from 34% up to 92%.
So I think that's a good evidence for how fast such a system can really turn the tide on littering and bring it back into a system. The advantage on top of that is, of course, that these objects we have collected through the machines is they're all very clean. And by that, we can also make new bottles. So food to food, high quality recycling, so to say. Looking at the quarter, it was rather stable.
We had a slower activity in Western Europe and North America, offset by strong momentum in Australia. As you may recall, we introduced quite recently deposit solutions in New South Wales and Queensland and that's been driving the growth in this quarter. Further important is to know that the European Union as of June this year formally launched their single use plastic regulation, meaning that all the member states have to apply or comply with the new regulation. And that says in essence that by 2029, 90% of all the bottles and cans, plastic objects being sold within the European Union need to be collected. And every new plastic bottle being produced need to contain a minimum of 30% recycled content.
So it is a very impactful regulation and we also see already now increasing amount of activities related to that. This is a picture of the most recent deposit initiatives in the marketplace. Western Australia is not completely new to you who have followed us. They have since 2016 launched a process to study and evaluate a contained deposit in the state. And most recently, they have now appointed a scheme coordinator and they have now defined a start up date.
That's maybe the most important new year and that date is communicated to be 2nd June 2020. Given this, we now expect that there will be much more activities when it comes to details around the system and the bidding process in the near term future. So that's a positive development there. Scotland, as we have communicated before, are are also committed to introduce a deposit. They have gone through their consultation period And they have also developed a draft legislation.
So this legislation has now been designed and is as a proposal for the government to decide upon and that was formalized or the proposal was laid out in May 2019. We estimate Scotland will go live with the system early 2021. Portugal already in 2018 in their law described a deposit system to be a part of it. They are working on a decree for how the system will look. They're also undertaking a number of pilots and tests in 2019.
And our best estimate is that, that system will go live in 2022. England has been following the opportunity to introduce a deposit legislation as well for some time now, already starting in March 2018. Also, they have gone through a consultation period, which ended in May this year. So the next logical step now for them is to evaluate, analyze the inputs they've got from the consultation and use that input to draft a system and a legislation. So that's what we expect to happen most likely in this coming fall.
Also, Michael Grove this week again reconfirmed their commitment to container deposit and our best estimate is a start up in 2023. The most recent development is that the Minister of Environment in France this week communicated that they also intend to introduce a deposit system in order to meet the single use plastic directive of the European Union. And they're also working on a draft bill on a circular economy for France. So that's new. We don't have any further dates on when such a system can become implemented.
We just take notice of the developments here. Talking about sorting solutions, and I will start with the food or start with the financial, sorry. So good momentum in the sorting solutions with the growth revenues of 15% and 33% development in earnings, EBITA earnings, ending at a margin of 16%. Food sorting is a critical solution for enabling higher productivity and consistent quality in food, very important, especially for branded producers where they really want to deliver consistent quality over time. We see that we have good developed market in Americas and in Europe, so in the Western Hemisphere, you can say.
And there's a strong pickup in emerging markets as we see that they also go more and more towards automation. Most recently, we have seen a little bit of a turbulent situation in the North American market in U. S. A. In particular, and that's clearly coming from the trade dispute between China and U.
S, whereby China is imposing import tariffs of U. S. Produced food products. The other markets are showing good momentum. Recycling is critical technology, which we in which we are also globally leading in order to handle waste.
Waste is growing more or less at the same speed as is the economy. Also, we see that more and more people on this planet are living in cities. That means that the waste is getting generated more and more concentrated in urbanized areas and growing rapidly. As a result of the urbanization, the whole problem becomes amplified because the waste really becomes very obvious and concentrated. In the past, a lot of waste from the Western Hemisphere has been exported to countries like China.
China, therefore, in 2018 imposed a ban on importing of waste and that has created quite big ripple effects around the world. As a result of that, we see strong demand Mining, we are a small player in the big mining sector, predominantly active in diamonds or in gemstones and in industrial minerals, very project oriented rather lumpy business. For the moment, we have seen a slower period in this sector. If you now think about the single use plastics regulation of the European Union and the collections solution of TOMRA and our recycling sorting, how do that all hang together? Well, I hope this illustration here can help you give an idea about what we are actually striving for in our long term ambition.
So this is our model showing how circular economy will be built in the waste sector. You will see on the very left bottom left here a consumer. The consumer have a choice how to dispose of the waste, either they can do it through reverse vending machines, which is a very small part of the whole waste stream, but yet high valuable and quality wise important materials like plastic, aluminum and glass. They can dispose of that waste through reverse vending machines. When they do so, they get rewarded for their activity through the deposit.
So it proves to work very well. That material normally is so clean when it comes in and it will be so efficiently handled through our compaction and efficient transportation and processing that those bottles actually end up becoming new bottles. So the material is high quality, it's high value and it follows a separate process. We call that clean loop recycling. So the material is clean from the start, remains clean throughout the process and will end up in becoming a new bottle.
So in my view, the highest level of recycling when it comes to quality. And that, as you know, is proven. We have 82,000 machines and all the deposit initiatives we are talking about here are related to such a model. The biggest volumes though from consumers and industry will not go through reverse vending machines. That will go through traditional waste management and that is through curbside collection or other collection means.
Traditionally, that material has ended up either on landfills or in the nature or being burnt up. Very small fraction of it has been sorted out. I estimate about some 10% of that has been sorted out and been recycled. Unfortunately, not very well recycled. It's been rather downcycled.
So we have seen the industry making textile fibers out of it where you basically then have end of life of that material. And that is what you see on the very far right corner down what we call low quality recycling. The material then also is traded at the low value of say €200 per metric ton of mixed plastic waste. However, with our technologies, we have proven and are capable of upgrading this plastic into much higher quality levels whereby also the value of the plastic can increase a factor by 2.5 to 7 times. So there is a strong in sentiment for the industry here to actually start looking for that path.
That requires that we will work holistically through the value chain to create more demand, make consumer goods and producing companies using plastic components, redesign their processes so that they replace virgin material with recycled material. So we call that design for recycled material and design for recycling. So that is really part of that process.
And creating the infrastructure needed to
deliver these volumes over high time, industry for where you see that recycled plastic becomes more like a product. So there's quite a lot of heavy activities involved in this, but we are determined to drive for this direction. And we see great interest in what we are doing here. For that, we just had a big conference, what we called TOMRA LEADS, where we had some 200 participants debating, discussing, analyzing and evaluating these concepts. So we see that there's a strong amount of interest in different stakeholders to look into how can we transform this problem of plastic waste into an opportunity of a circular economy.
Further to that, Tomra just recently joined the very big industrial the biggest industrial alliance to end plastic waste. We are there by sitting at the executive committee in this team. So again, giving us really good access and opportunities to work with the main companies in the industry into how we can transform into a more sustainable business model. So we take an active role here. We are committed to this.
We see big opportunities for the world, for the economy, for the society and for Tamra in developing that. So that waste that goes through becomes collected through the curbside. Then our ambition is to bring that into what we call a closed loop recycling. So there's a difference slight difference between the clean loop and the closed loop, whereby the clean lope is really clean from start and stays clean, where closed lope is really where we upgrade the material and make much higher value out of it and enable that to be used over and over again. With that, ladies and gentlemen, I stop this little introduction about how the markets are looking, how the business is going.
Again, a sound quarter, but I will hand over to Espen to give you further details on all the economics.
Thank you, Stefan. Yes, as always, quick look at currencies first. We are exposed to particularly the U. S. Dollar and the euro.
Strong euro, strong dollar is good for Tamara and have seen a strengthening both euro and dollar, particularly dollar compared to the same quarter last year. So for that reason, we have some tailwind from currencies, particularly in sorting, where the cross between dollar and euro is important They have more dollar revenues and more euro costs. So you see this also in the figures on the right hand columns in the following slides. Moving to the P and L for the group. As Stefan said, healthy growth, currency adjusted 6% for the group in the quarter and 10% year to date, improved gross margin in both areas, but also increased operating expenses, some from currencies, some from more ramp up related costs in collection, also some in recycling.
1st 6 months. These figures are the 1st 6 months. These figures are influenced by IFRS 16 implementation and not have a separate slide on it. But if you go to the quarterly report, you see on disclosure note number 6, the effects. And it's the same as we saw after Q1.
So consequently, we have around 16% positive effect on the EBITDA from IFRS 16 this year to date and with a corresponding SEK20 1,000,000 hit on the finance line. So the EPS is more or less unchanged due to IFRS implementation. Collection Solutions, overall stable in the quarter. We see the same picture this quarter as we saw previous quarter. The base business is stable.
We were unchanged in U. S. In Q1, down 2% in Europe. This quarter, we were down 2% in Europe and sorry, 2% in U. S.
And 5% in Europe. So it's been slightly down on the base business and is compensated by new business in Australia. Typical picture, the base business in Tonga is usually stable, small pluss, minuses. Then you have new markets that represents the growth. Gross contribution, gross margin is increasing.
We have increased operating expenses mainly due to ramp up in new markets. It was €25,000,000 in 1st quarter and now its increase is SEK29 1,000,000 in 2nd quarter. Sorting Solutions, good growth, 11% in the quarter, 16% year to date. As Stefan addressed, FUDS U. S.
Is somewhat slower. And you also see that this is now coming through in the revenue figures where Americas is down. In this slide, the North and South America is combined. But if you go to the quarterly report, you see North America and South America on separate line items. And you will see then that U.
S. Is down 9% in this quarter. And in addition, there is 8% currency effect. So it's actually 17% down for recent mentions by Stefan. Gross margin is, however, improving in both business areas, and we have some increase in operating expenses, mainly stemming from recycling.
But bottom line is 22% up, currency adjusted of 35% actually for year to date figures. We have a slight decrease in order intake, mainly is coming from FUD, but we have now actually filed consecutive quarter where we have been between SEK1.1 billion and SEK1.2 billion in order intake. Revenue growth has been good, and we have had the 15% increase in revenues to $1,200,000,000 So consequently, when the order intake is somewhat down and the revenue is up, the order backlog is also down. So we are down at $1,345,000,000 in order backlog at the end of second quarter. We believe that the conversion ratio, meaning the revenues in the upcoming quarter, will be 80% to 85% of the backlog at the end of second quarter.
As I always say, this is not guiding, but just an indication of where we end up for those of you that want to model us on a quarterly basis. The balance sheet, again, we have not restated the previous figure. So the IFRS is a so called reconciliation item between this year's figures and previous year's figures. And it's around figures, dollars 1,100,000,000 increase in tangible fixed assets with a corresponding increase in interest bearing debt. So adjusting for that, you see that we still have some increase in intangible fixed assets related to at least compared to 1 year ago, where we have had the Queensland ramp up in second half of twenty eighteen and also some the rest of the New South Wales ramp up.
That explains why fixed asset has increased the last 12 months. Working capital is increased mainly coming from inventory, some, say, strategic purchases and also some new machines introduced in introduced in new markets, but inventory is slightly high. So I hope over time we will manage to work that a little down again. Also on accounts payable and other non interest paying liabilities is not increasing with the same speed as the revenues. So we have slightly negative impact from that item when it comes to working capital because of somewhat fewer prepayments.
But Tomra, in general, usually have weak cash flow in the first half compared to second half. It's mainly coming from the material recovery business we have in the U. S. It's mirroring the drinking consumption, which is warmer, people drink more and it's Thais working capital on the balance sheet. And also some prepayments in the beginning of the year, so bonus payments and so on.
So as you see on the slide, on the graph that we usually have slower up until June, July and then it's better in the second half. So also this year, but not as good as previous years because of the reasons mentioned in the working capital, but more close to the middle what we have experienced the last 10 years. Solidity is still good, but IFRS 16, of course, influenced, but we are at 44% in equity. Gearing, 1.1 percent interest bearing debt on EBITDA. It's actually down from what we have 1 year ago, was 1.2 percent even though we have paid out both ordinary and extraordinary dividends during Q2.
Outlook. Starting with collection. As I said, in the bottom, collection is a very stable business. It's hard to find new places for machines in existing markets where all retailers have a machine installed. But it is a good replacement market and it creates a lot of stability.
50% of revenue is stemming from service. And after 10 years, you usually need a new machine. So quarter over quarter, year over year, it's usually rather stable. And then the picture we've seen the 1st two quarters is something we will expect to see also the rest of the year going into 3rd Q4. There has been some delays in orders in Central Europe, and I think that will pick up going into 2020 and create some growth opportunities in the base business when they come to next year.
On top of this, of course, Australia will continue to generate year over year growth in the performance. We said in the beginning of the year that we believe that we will add SEK 100,000,000 dollars very round figures on operating expenses due to mainly ramp up costs preparing for new markets to materialize. We have CAD25 1,000,000 in 1st quarter, CAD29 1,000,000 in 2nd quarter. I still think CAD100 1,000,000 is a rather good estimate, maybe slightly above, but Q4 OpEx was rather high also. So it's not given that we will be $25,000,000 above in 4th quarter also.
So $100,000,000 $100,000,000 plus is still something that we think is a good estimate for the increase in OpEx for the year in Collection Solutions. When it comes to sorting, we gave an indication on the conversion ratio, giving you an indication of where the P and L will look in the coming quarter. There are some regional differences in food. The U. S.
Is mentioned. And with recycling in general, this is a good momentum. And we have a good pipeline in that respect. Also in this segment, we will continue to invest, particularly in recycling, but not in the same way as we see in the collection business. Currency, as always, has an impact.
Now the comp figure becomes higher because on the currency side as the dollar continued to strengthen throughout 2018. So still some tailwind in the quarters to come if current regime stays, but not as much as we've seen on the as in the previous quarters. With that, we end the presentation and open up for questions from the web.
Yes. We start with the first question from Andrew Van Der Relt. How do you see the evolution of your current market share in collection in view of the competition? New companies from Asia like Clean and Gem, but also known competitors like Envico and RVM Systems seem to be very active? 2nd part of the question.
Also on RVMs, Western Australia will introduce a bottle deposit next year. How big is the market for Tomrock compared to New South Wales and Queensland? And seeing that the same scheme coordinator is appointed, will it resemble the New South Wales system?
Let me take the first question. I'll let you take the second question so we can share it. The first question, so, Tomra has a global market share of some estimated 75%. We are to the largest extent in existing and very mature markets. So in these markets like in Northern Europe, in Central Europe, in North America, there are no big movements.
There has been a recent replacement in Germany as we have those who follow us have seen that was in the period of '15 to 'eighteen. So we replaced a number of machines stemming from the introduction of the scheme in 2,006. And after that, there is a back to normal business again, so to say. So we have not seen any big changes in these existing markets. Then the other question or the other part of the answer related to the same question is what about the new markets?
Well, in the recent time, we have had 3 new markets. That's been Lithuania, that's been Queensland that's been New South Wales and Queensland in the right order. And Tom has been very successful in all these three markets. Certainly, when we come into new emerging markets and probably also as a result of the European Union Single Use Plastics Directive. I would anticipate that we will see new entrants, but we have to this point in time seen no credible changes in that.
We have the traditional players, the industrial players, they are all there. They're all doing a great job. And we have been those are the companies we have been competing with over the last century the decades, sorry, not centuries. And anticipate that they will also be playing in the future. And as I said, we have to anticipate there will be some new entrants.
But there is nothing big, new that is really making an impact at this stage.
Okay. The second part of the question was related to market opportunities in Western Australia compared to Queensland and New South Wales. The number of citizens is around 2,000,000 in Western Australia compared to 4,000,000, 5,000,000 in Queensland and 8, 9,000,000 in New South Wales. That's given the indication of the difference in opportunities. The systems is also different.
It seems like Western Australia is going for something that's more similar to what they have in Queensland. But they have stated that they will, at the commencement date, shoot for 179 collection points increasing to 220 over time. So that represents probably 220 opportunities to place 1 or a few machines at the collection points. But that's entirely dependent upon the ambitions when it comes to system as such, how automated and so on. So we assume there will be a tender process where it would be possible to kind of market our solutions.
And those 2 20 points in that respect represent an opportunity for us. I don't think we can be more concrete at that current stage.
Thank you, gentlemen. And then we move on to a question from Thomas Rafior. It was announced during Capital Markets Day last year that TOMRA are targeting an annual production capacity at 24,000 RVMs in the next 5 years 5 to 10 years. Is this still a valid number? Or do you need to adjust this due to the extreme global attention we have seen for bottle deposit systems the last year?
So a good question. Rightly, you have seen in our ramp up expenses that we are investing in expanding our production capacity. So that we're doing as we speak. Look at the the there will be some 3, 4 years from the announcement of a new system until that goes live. So that gives us quite a lot of time to adjust if we need to adjust it further to what we have just communicated here.
For us, expanding production is not so extremely demanding. Of course, it's something that needs to be done in a prudent way. But remember that TOMRA has a production setup where we are heavily involved with and relying on long term suppliers. So most of what we produce is actually supplied as components from our global supply network. We are then creating the modules and producing the final product in either our own facility or in license production.
So I'd say we have rather good flexibility in ramping up and actually ramping down if the markets will swing over time. So we are not a company that is investing SEER heavily in big fixed assets. We are investing in robotization or automation in order to have high productivity and quality over time. So that's something we take very seriously. But when it comes to scaling volume, I'd say we are rather flexible as long as we can work through our supply infrastructure to make sure that our suppliers are informed in time and are able to expand their capacity in time for us.
Thank you, Stefan. And then it's a question from Dag Tricheset. Do you see any concrete in your pipeline regarding collection solution systems in Southeast Asian nations?
Maybe I'll take that one too. So far, very concrete is, of course, what we have seen the initiatives we have discussed before regarding new deposit legislation in Europe and in Australia. We are active and we are committed to have this as a global offering. So we have teams working in Asia promoting the concepts and supporting legislators and the industry in how would it work. At this stage, there is nothing where we can concrete point that something will happen, but for sure we are looking in the Southeast Asia area.
There are some markets which have announced actually deposit, but we don't see that these systems are matured out, so they will function the way today. So we think there is still a journey to be done here to work around that. We have also a partner in China. So we have a capacity both to R and D products for emerging markets and to produce locally for emerging markets. And if you go into China, although there's not the deposit system, we actually do have quite a number of 1,000 machines out there which are kind of testing and showcasing how it could look.
So we are active, but there is no concrete evidence at this stage where we can start talking about.
Thank you, Stefan. And then we have a couple of questions from Mikael Nieholz, Netzing, Carnegie. The first one, I think, Espen, you addressed, but let's read it anyway. Last cost guidance for collection implies around NOK100 1,000,000 up for 2019. Any change to this?
Yes. We mentioned in the outlook that it was NOK100 1,000,000 plus. So it's more or less the same as we said previously, yes.
Thank you. And then as the entire EU now should be looking into deposit systems following the EU legislation. Looking beyond your market overview this quarter, are there any countries that you rule out as possible business opportunities for Tomra at this point? How do you see, for instance, Eastern Europe versus Western Europe? How do Tomra think Europe will look like deposit wise in say 2027?
So I and you support me, Espen, if you feel like I'm missing something here. But in essence, we see from our point of view no difference if it's Eastern Europe or Western Europe. It's the European Union. They all live under the same concept and commission. And the regulations that are being have been communicated, have been communicated after consultation with all the member states.
So I would anticipate that all the markets within the European Union will be treated the same and we will approach them with the same kind of type of interest. Minga, we also need to invest in resources and we have seen that in our ramp up cost again that we are actually building up resources so that we can support with local language and local knowledge the different countries here. So from my point of view, a single answer is we will not say no to any opportunity and we will embrace any opportunity and we think it's great.
Thank you, Stefan. And then a question on the order intake also from Mikkel. Should we assume the current order intake for recycling to mark a temporary ceiling? What timeline do you emphasize when talking about upside for food?
So when it comes to the recycling, we have a couple of strong drivers. So one of the strong driver has been and still is the China National Sword that remains for some time. For how long, I cannot really tell. But I can only say that there is a huge demand to handle waste now in U. S.
A. And in Europe being the biggest waste emitters and biggest exporters of waste traditionally. So not to say that, that demand has now been covered up in this period of time. We also see new developments. There is a general basic demand.
Waste is growing, more waste needs to be treated and it calls for upgrading of waste. If you think of what I talked about circular economy, until now very little of the real upgrading has happened. Most of that little waste, especially in the plastic that has at all been recycled, has been downcycled. So there's a lot of opportunities by showing the industry how this can now be progressively and more positively treated and taking out the fair value of the waste instead of dumping at the low value. So that's for sure will be and also depending on how successful we are in collaborating and promoting these concepts will be a driver.
We also have the effect that many leading companies today, especially consumer goods companies that have a strong voice from the consumers telling them we want sustainable packaging, we don't want plastic waste, we care about the nature, We can see the movement there. That puts pressure on these companies and they in turn are speaking to us about how can they solve that problem. So we have different drivers here. So from our point of view, recycling has seen a very strong growth in the recent period. I don't think we can expect it expecting the same kind of rapid growth.
We are, however, convinced that there's a long term, I call it, double digit growth opportunity in the recycling sector for the coming year and years to come. However, having said that, of course, it can fluctuate from year to year given the cyclicality of economy or any major movements on a global scale. But we don't see any underlying break in demand for recycled solution recycling solutions.
Thank you, Stefan. And then the second part of the question was about food, basically the order intake and the upside there.
So again, I think Espen explained that clearly. There is certainly an effect on the U. S. Market now when it comes to exporting food to China. It's evident tariffs have gone up.
It's impacting both the sentiment in the U. S. And the ability for the producers to export. However, demand for food produce in China or globally is constantly growing. As the population is growing, as the mid class consumer group is growing and people look for better quality food.
So there is no change in that fundamental. So if there were a prolonged challenge between for the exporters out of U. S, there and we already see that there would be other companies stepping in, other regions stepping in. So we see good development in other parts of the world, like emerging markets, like Australia, where actually these companies are now having to ramp up in order to satisfy these needs. So for me to comment or for us to comment on any political processes, it's impossible.
We can just note that they have impact on what's happening in one marketplace and it's a big market for us. So it has impact, But we see that it's moving in other directions as a result of other capabilities being developed.
Very well. And then it's a question from Giacomo Fermagalli, Rebecca Sam. Could you regarding the gross margins. So could you please give us some granularity of where the improvement in gross margin is coming from? And how do you see that evolving over time?
Yes. In collection, it's stemming from currencies and mix between regions. In sorting, it's a mix between business streams and currencies, but also an improvement in food because of the focus and initiatives that has been launched and executed partly executed in food. Going forward, I will be cautious on giving very strong indications on the gross margin side. We have not communicated kind of targets around that.
Our target is more linked to the EBITA and the financial targets. And it's a little dependent upon which market, which products and so on that kind of represents the sales in the future. So I'm I would be a little cautious on the gross margin. But overall, I think we have produced rather stable margins for many years. So I don't envision any significant change on the levels we have experienced the last year just because of the it's something about kind of the older regions, older products.
And so we are into the swings will not be significant from quarter to quarter and probably not even from year to year
slowdown in food? And is this just a temporary delay in orders? When do you think the negative momentum could turn?
So I think partly we have addressed this question in the previous, so I tried to repeat in a condensed way. The global food market we see is the demand is continuing. More food needs to be produced, automation is called for, especially if you go to emerging markets where you see high level of manual food production today. You see that a lot of the young people are leaving the countryside. So the one who produces the food is the older part of the population.
And of course, as they age over time, there needs to be new solutions to that. Automations will be called for consolidation probably also in the industry. So I don't see that there is any reduced demand for sorting or for automation in food rather on the contrary, it's rather increasing over time. Until now, we have had a strong development in the Western world. So it's highly advanced, still growing, but it's still highly advanced there.
And we have quite a long way to go to develop up to the same level in emerging markets. The U. S, as I said, is exposed the U. S. Food production is exposed to the tariffs as a result of the trade conflict between U.
S. And China. How long that will last? Impossible for us to comment on. The fact of the matter is that if that remains a long term problem for the U.
S, there will be others to step in. There is production in other parts of the world and they will need to step in. However, we also see that the U. S. Food producers, the trade dispute has generated a sudden uncertainty and delays in decisions.
Even though the trade dispute will continue, we also see that they still need to invest because they might have planted new trees or new fields for more production. That needs to be taken care of. If that can then not be exported, say, to China, they will also seek other markets. So this is kind of the whole food system is kind of rearranging itself, but it doesn't say it stops. So there is a sudden and temporary change here, but it will find a new equilibrium, I'm sure about that, and we might just see new trade flows coming out of that.
That's the period in which we are. But that is not the fundamental problem with the food industry. The food industry as such is constantly growing, and we are trying to be there whether modest.
Thank you very much, Stefan and Esteban. And with this, we conclude the webcast. Thank you for listening.
Thank you for listening and have a wonderful summer.
Okay. Thank you.