Earnings Call: Q2 2021

Jul 16, 2021

Thank you so much, and good afternoon to everybody. Welcome to AEK's earnings call for 2021. With me today also our CFO, Thomas Bergenthal, and together we will run you through today's presentation. We are in the agenda, we're covering off some highlights for the Q2, some key events, business update and some financial details as well as concluding remarks from myself before we move into a question and answer part. With that, I am moving to Page 3, summarizing the quarter for AK. We've had a strong year on year growth. It is a strong quarter for AEK. Volume as well as earnings have been growing. Adjusted profit, adjusted operating profit is up at a record high level for the quarter 2, And our volumes grew by 14% with our adjusted operating profit growing by 32%. If we look at that at fixed FX or without FX effects, it will be 41% up versus last year. So really a strong improvement, although last year was, as everyone knows, also impacted by the start of COVID-nineteen. When you look at the segments, we see a good rebound for Food Service as well as Bakery, and I'll come back to that in Food Ingredients, but also chocolate and confectionery fats. And all these three segments or industries were also impacted quite significantly in the Q2 last year. Plant based food or our solutions towards plant based food also continue to grow good momentum and especially with regards to meat alternatives, our solutions for meat alternatives. So all in all a strong quarter 2 for AEK. With that moving into Page 4, Key events. At AEK sustainability is in the forefront. We are focusing on making better happen from plant AIM2 Brand, Living Our Purpose. In quarter 2, we announced a partnership together with our dear customer, Mars, as well as NGOs and an impact investment fund. The program is or the initiative is called Wish, Woman in Shea, Shea that we get from West Africa. And the purpose is to improve the livelihood and working with some 13,000 Women in West Africa. This initiative is built on AEK's original program called Colon Afaso, where we in a bit more than a decade have been working with women in West Africa through direct financing and sourcing our sheet kernels. This program that we operate is now involving more than 300,000 women in West Africa. So quite an important and big initiative from our side. We have also linked to sustainability renewed our credit facility. So we have signed a €400,000,000 revolving credit facility, which is linked to a number of our sustainability goals. Also another proof of how we actively work and how we also see our banks being with us and committed to pushing us forward in our journey towards a better sustainable supply chain. We have also entered into With regards to the growing demand for plant based food solutions, we have a partnership with Vista, Vista Processed Food in India, where we will focus on how to deliver better alternatives to the industry in a collaboration manner. We've also entered into a distribution agreement in with Invita for distribution into Australia and New Zealand where plant based food solutions are growing as well. So these were some of the examples of events during the quarter 2. During the quarter or by towards the end of the quarter, we also announced an initiative linked to our strategy. We have started a process to further optimize our bakery business, and I am now on Page 5. So in order to optimize our Baker business further, we aim to consolidate volumes in Europe from 3 plants entered into 2 plants from the site we have in Merxen, Belgium into our sites in Hull, U. K. And Sanddijk, the Netherlands. With this, we recorded in the quarter a SEK 304,000,000 provision of which SEK203 million is non cash items or non cash related. And we also expect improvements out of this. So on an annual basis, we expect to reach some SEK51 1,000,000 in cost and productivity improvements annually with a run rate reaching its full run rate by the end of 2022. With those overall comments on AEK Quarter 2, we move into some more details by segment or business area. 1st Food Ingredients on Page 6. In this sector, we have seen Strong volume growth versus last year. It's supported by a good rebound in Foodservice and Bakery as restrictions are lifted for Foodservice where we predominantly deliver into the Northeast part of the U. S. In the U. K. As well as through the Nordic parts or the northern parts of Europe, we have really seen demand picking up as we see Consumers going back to restaurants on the back of lifted restrictions. I mentioned before also continued good momentum Within plant based food, we have seen a good momentum throughout even the last year with COVID. And in the last year, more so within plant Dairy alternatives, but now we see also on the back of restaurants being more open, we see plant based meat IT Solutions now growing again, which is really a good sign. When looking at the results for Food Ingredients, We have an operating profit, which is up 31% and our margin operating profit per kilo is up 11%. With that moving into chocolate and confectionery fats on Page 7. We've had a strong rebound also for this part of our or where we sell. So for chocolate and confectionery fats, Those of you who were with us last year remember that we saw a bit of a wet blanket for demand in chocolate and confectionery fats, But this has really picked up with raw. We saw a good sequential improvement during the fall, and then we have seen a steady business going forward. So on a year on year perspective, volumes are up 28% and our operating profit is up 31% comparing to last year. We have had good volume growth in basically all regions, especially for our specialty fat solutions like cocoa butter equivalents and filling fats. But really glad to see that there is a good volume pickup across the board. We are confirming our strong position in the market, and we are positioned really to take advantage of future opportunities in these markets. We've also been speaking earlier about raw material movements and customer behavior. So when raw materials moved up Significantly, during the latter part of last year, continuing into Q1, we also saw customers being am really focused on where is it going, moving into a bit more short term behavior in terms of how to lock in volumes for the future. With a sharp reduction in prices now, we have seen customers going back to contracting longer, Locking in volumes for longer periods, that is basically moving back to more normal behaviors as we've seen them in the past, which is also very good in terms of a longer term visibility. On Page 8, Technical Products and Feed, another strong quarter for Technical Products and Feed. We have an operating profit, which is up 11% versus last year, Despite volume being down 15%, but the volume is down due to an extended maintenance stop, so not really driven by market, but rather an extended maintenance stop. So all in all, very good performance in our operations, especially in our crushing operations. I mentioned when speaking about chocolate and confection side a bit on the raw material markets. Here you can see 2 examples on Rate Seed, palm oil and you also have kakwabarra. With The current situation is very dynamic, dynamic and volatile. After a sharp rise, we then saw a significant contraction in quarter 2. And this volatility and the dynamics leads to also a more challenging way to manage understand customer contracts, risk management and so forth. But AEK has a robust model. We have a way of working with this to secure risk, but also have to work with our customers on how to approach this when looking at the future business. So all in all, we are managing the situation. But It's worth to mention that this dynamic situation also continues as long as we are on quite high levels in raw material prices. With those comments overall for AEK, I will now hand it over to our CFO, Thomas, for some further comments. Thank you very much. Good afternoon. We're now on Slide or Page 10. Looking at our cash flow for the iQ222. Cash flow from operating activities amounted to SEK 231,000,000 And free cash flow amounted to SEK 77,000,000. Working capital, We can see was impacted in the quarter by raw material price increases. Both inventory and AR was negatively affected by these increases and AR was partly the effect on AR was partly offset by seasonal effects on sales within Q1 towards the end and then between Q1 and Q2. And when looking at year to date, these seasonal effects disappear. We see a better match on increases from raw material prices between AR and AP. In addition to AR or in addition, AR was also positively affected by strong cash management during the quarter. With the current raw material prices, given that they continue on the level they are at now, We expect a continued negative impact on working capital for the second half of twenty twenty one. And also commenting on CapEx, expectations that we previously communicated on an annual spend around SEK 8.50 to SEK 1,000,000,000. As you can see or as you can see from the report, we've spent about 25% to 30% of that in the first half year. We expect given the situation we have now that we'll end up at the lower range of that spent around the SEK 8.50 million for the year. Moving on to slide or Page 11, Return on capital employed. We've shown, as you can see, a strong recovery since the beginning of the pandemic about A year ago, and we're back to historically high levels, mainly driven by improved profitability. And rolling 12 months, we end up at 15.4%, including IFRS 16, as you can see. Moving on to the next page, which is Page 12, which outlines net debt to EBITDA ratio. And as you can see here as well, over time, we've had a very nice development with a continued reduced ratio. We have a solid foundation for continued growth, both organically and through acquisition. And the increase that you can see in Q2, if we look at the green lines, which includes IFRS 16, also applicable to the blue ones, is driven by the dividend payment that was done in the quarter. With that, I hand over back to you, Johan. Thank you, Thomas. And with that, concluding remarks From myself, we do offer plant based healthy high value adding oils and fat solutions. And we base this on a approach where we work together with our customer and co develop products, improved products and new products. We continue to strengthen our portfolio of solutions that are good both for people and for planet. And despite some mid Term uncertainty, short to midterm uncertainty, we see no reason to adjust our view on the strong favorable underlying trends in the markets that we serve. And with that, we do remain prudently optimistic about our future and we are committed to making better happen living our purpose. With that, I will stop the presentation and we are more than happy to take questions have a question for clarifications with regards to our Q2 report 2021. Thank you. Our first question is from Alexander Jones of Bank of America. Please go ahead. Your line is open. Great. Thank you. Thank you for taking my questions. 2, if I may, please. The first on Special Nutrition. You mentioned within the release The raw mat price increases were a bit more difficult to compensate for here. Can you give a bit more color on that? Is that something that you can recover in due course? And how much did that impact margins in the quarter? And then the second question is on the CapEx guidance change. What's driving you towards the lower end of that range rather than the upper end. Is that a change in your plans for growth investments, maintenance or just phasing between years? Thank you. Thank you, Alexander. And yes, a bit more color, maybe I'll start with the latter part of your question, Special Nutrition. Food Ingredients is built up on many sub segments, and we have a strong quarter built up on really good growth in some sectors. And so in essence, the this impact that we talk about is not impacting our margins that much. What it is about is that in Special Nutrition, there is a higher degree of Longer contracts with fixed pricing and more so in China, in China for China. And you know since earlier that we are growing with China for China as well as with our international customers, and we have a good balance. We have a good penetration in the local Chinese market, but there is a higher share when shifting to the Chinese market of contracts that are locked in for a period of time, both in price and so forth. And with that, it is more difficult to compensate sharp movements. But on the other hand, yes, We have an opportunity and possibility to manage this as we roll forward and renew our contract. So Not a big worry about just explaining a bit of the details on the quarter. Okay. And thank you, Alex, for the question regarding CapEx. I'll try and respond to you as well on that. As I said and I'd like to restate that we still stay within the range that we provided before. We now indicate that we're going to be at the lower end of that. And year to date, we've spent on about 1 third of that CapEx range. We haven't canceled any investment programs or anything like that. Everything is still up and running. We do see Some slight delays on certain things provided COVID, but there is also in certain instances as we see in the world in general Some supply chain issues. This doesn't change the focus on The different investments that we have, of course, but it may move things slightly past the year end, which is an uncertainty right now. And that's why We put ourselves towards the lower end of the range, just to be a little bit cautious on it, but no dramatic changed this at all too. No. Great. Thank you. Thank you. Thank you. Our next question is from Herr Jorgensen of INTS Management. Please go ahead. Your line is open. Yes. Thank you for taking my questions. Johann, a bit back from your comments about China. Could you comment a bit about the infant nutrition situation in China also in relation to your new factory? How it's think it's going. Is it filled up? And are both local and international players buying from you? That's my first question. My second question is, if we try to compare yes, I know Q2 last year was very special. This one is also. But if we compare to the Q2 2019, the CCF is I'm doing very well compared to the 2019, but the Food Ingredients is still a bit behind volume wise, Not margin wise, is it due to the foodservice and bakery? Or how's that difference there? Thank you. Thank you, Per, for your question. And starting then with Specialty and Frist. Yes, our plant in China up and running, operational, loading it with new business. So we still have some way to go in terms of there's still a bit room in terms of capacity, But it's also getting fairly loaded, right? And that was the plan due to the growth that we see in Special Attrition and saw earlier. And also some of the higher value added solutions also take a bit longer time to process, so you need more capacity to continue to grow on the premium products. So that's all good. And we're taking business to a variety of customers. But predominantly from that plant, it is For Chinese customer or for the customers that have production in China, I should say, independent or whether that is a pure Chinese player from another company perspective or an intermersion. So it's all good following plan. With regards to if that is okay then moving on to CCF. Yes. Yes, I mean and you've been with us, right? We implemented capacity increase see improvements in our supply chain and did our sourcing in West Africa. So we have been in a good position With regards to CCF since end of 2019 into 2020 and then forward and then obviously COVID came. So call it, Our operations and our way of doing business in CICEF is strong, and we have a good position. So that's all good. With regards to Food Ingredients, We are still impacted and that goes for others that goes for CCF also to some extent. Foodservice came back, yes, not to the full extent. So there is still not we're not at pre COVID level. And we also have markets like Turkey, Like India, where COVID is still impacting AEK and obviously, locally quite significantly. So there are Some regions, countries where COVID is really impacting us still, and I think that is part of the Food Ingredients. Okay. So you can't say it was 381000 tonnes In Q2 2019 and now it's EUR 3.65 billion. So the difference is that pure foodservice In these countries, are there more dynamic issues in the sector? There is a bit more, but also internally, we have You've seen one example of that going forward. We have also in our strategy, we're also working on optimizing our portfolio, focusing more on the high value added solutions And so we're also working with our portfolio. There is a bit of management of products and customers within that as well where we're not shooting for All volume we can get, but for the volume that we believe is where AEK is best fit. So there are a few areas where we've also looked at what to serve, so to say. But apart from that, I would argue that there are COVID dynamics, but also, I mean, in a big business area like this with many industries, also there is a bit of mix flows between the 2 and different dynamics overall. Yes. But it's performing quite well. Yes. Great. Thanks. Thank you. Thank you. Thank you. Our next question is from Oskar Lindstrom of Danske Bank. Please go ahead. Yes. Good afternoon. Three questions from me here. Number 1 is on bakery. You said that you had a tougher sales situation in the Q2 due to more lockdowns in India and Turkey. What should we expect for H2? Should I mean the bakery operations normalize in Q3 and Q4 versus what we had in Q2 or yes, what should that affect be? So that's question number 1. The Question number 2 is on the raw math impact on customer behavior, which you mentioned in the presentation. I mean, first off, did this have any meaningful negative impact on volumes or even EBIT per kilo in the second quarter? And what kind of should we expect a Positive normalization in H2 or just kind of put things to continue the way they were? And could it lead to any long term changes in customer behavior? And then my final question is on the return on capital employed, which has, I would say not only recovered from the COVID trough, but has actually recovered The decline that you saw early in 2019 already, should we expect this recovery Can return on capital employed to continue? I mean, is there some kind of an underlying efficiency movement going on. So those were my 3 questions, bakery, raw mat impact on customer behavior and rosy development going forward. Thank you, Oskar. I'll try to cover them in that order. So when looking at bakery, I mean, we are serving bakery across the globe. So we fall basically all markets in the world almost we sell bakery solutions. So with COVID came A bit of impact in general because bakery is also sold through QSR restaurants and restaurants, school kitchens and what have you. So there was a bit of a follow through negative impact from that. That we're now seeing a rebound, right? But we are also when looking at different Markets, we have a significant and nice business in Turkey, for example, where we're supplying have up to an 8,000 or so artisanal bakers in Turkey through a distribution model, And that's quite unique. We have also in Mexico similar one, Mexico, Colombia. But obviously, Turkey now, that's been impacted quite significantly. So there Bakery is doing well, Food Ingredients is doing well. But if you look at it really on the total scheme of things, yes, then we're not I fully yet in India and Turkey. And if those markets come back, then it would be even better, you could argue. And looking in the future, of course, we expect Turkey and India to come back, and we've seen slight improvement. It really follows lockdowns and how you can behave as a consumer and so forth. But for sure, we expect, for example, artisanal bakery shop and coming back. That's to be expected. With regards to raw material impact, I'm trying to be transparent without you shouldn't over exaggerate, over extrapolate in any neither down or up, right? But You can imagine, as you've seen, there are inflation across the globe and very sharp prices like palm and rapeseed and so forth in our industry. Of course, that creates a customer focus on that's getting towards them. We have a good way of renegotiating prices, am passing through, if you like, in a professional manner. And you can look at our numbers adjusted for FX and so forth. You see that we do that. You see that we maintain our margins. But of course, in a sharp rise, it creates more dynamic. It's more difficult. So if anything, it becomes a net, net small, have probably negative impact, but we're doing a good job. So would I be more optimistic when things are sliding down? Yes. But again, we have a good model for taking away the big swings both up and down. So I'm just giving a bit of color that that's I know how it works. With regards to customer behaviors, you also have we have a dialogue how to lock in. So when we look we look together on the raw material price situation when we are taking contracts because we are then going back and do back to back hedging to take away the risk forward. And with that, we have a dialogue with the customer, whether you lock in 3 months, 6 months, 9 months or 12 months. And there has been a bit of tendency towards the shorter when prices were spiking. And then immediately when prices came down, you started to see more long term locking. And that, of It creates a little bit more stability and visibility. But again, we have a robust model. So if anything, should be opportunity going forward if Things move downwards or slightly downwards. And then finally, returning capital recovery, very much driven by our earnings. As Thomas said, it's not a big structural change. We're constantly trying to optimize our working capital and assets, of course, but not dramatic. So it's really a function of Earnings improving coming back, we have not set the new target for significantly increasing the return on capital employed, but rather Yes. And if you look at the where we ended up in Q2 on return on capital employed, it's actually Historically, a high number as well. So it leaves out Q2 out of the rolling 12 month calculation, of course, and It drives it upwards to a good level historically as well. Arthur, thank you. I mean, very good answers, Alton. Just on this ROCE, I mean, is there an element of you coming out Of the pandemic period here and you cut some costs and therefore I mean the ROCE numbers will be a little bit boosted by this and that has business as normal. It should come down a bit? I wouldn't say that. I mean, we the cost side of things, of course, but it's really the cost that we have and the way we try to optimize. We also implemented, as you know, a cost optimization program last year that is now finalized with some SEK 150,000,000 savings. But that drives our EBIT margin. I wouldn't say that we have had any temporary COVID capital I'm not sure if you're aware of the structural reductions, but rather continuously with this improving our earnings basically. So Yes, of course, we're trying to cost optimize our cost base in order to increase our earnings, increase and Iain, that impacts it, but it hasn't to do with any temporary low capital situations. Maybe a bit of, as you said, maybe CapEx is a bit slow down based on being a bit cautious and a few things just moving slowly, but that's not significant. Thank you. Thank you. Thank you. Our next question is from Heidi Vosinan of Exane BNP Paribas. Please go ahead. Good afternoon. Starting with Special Nutrition, just to clarify what you said, you said the margin issue is to do with Existing contracts with fixed pricing, so is there no additional pressure to speak about in pricing new solutions? That's the first question. Thank you. Well, part of it one part is There is a as we move into China for China, there is a slightly higher portion of the contracts that are more on a fixed price basis and that you don't adjust as often. So that's a small portion of it. We see that we have a good position. We continue to take new contracts. Is there any dynamic? Yes. We are as you have seen, the market is shifting a lot towards China for China, Chinese infant formula producers are growing in terms of market share, and that creates a bit of a different Dynamics, call it, in the market, but we are well positioned. Are there different price points in certain products and with certain customers? Yes, there is, but Some is up and some are down. So it's not easy to give you a straightforward answer on that. But I think it holds what we've said before. We have a good position. Think we are well balanced in our customer portfolio. But yes, there are some differences depending on what customers you serve and how the competitive landscape is in China versus when we sell in Europe, for example. And how large is Medical and Senior Nutrition? And does the margin profile Both of them are still fairly small With some products being really high margin and others a bit lower, but also we have that in Special Nutrition, a bit of a spectrum between really high I'm margin specialties or high priced specialties and a bit on the low range. So I wouldn't say it's very different. It kind of fits the profile of Special Nutrition as a whole. Thanks. And then on CCS, so you talked about competitive You said this in Q1 as well. Has the intensity changed at all since Q1? And was this mainly relating to more spot type business? I wondered if this could ease raw material costs come down and then you have more long term contracts? Yes. And actually, so first maybe no to your answer because what we talked about the competitive intensity was, first of all, linked to some of the Global tenders type of business that we have with the multinational global players, and we saw that there was a bit of competition to win those and put a bit of pressure on the margins, and so we already knew coming into this year that we would have a year on year difference, call it, on some product categories, But also knowing that there was a lot of volume not being contracted and a bit of uncertainty. So if anything, what we have seen, Heidi, is that CCF have been continuously moving along nicely. I have repeated, as I've said, there's a bit of uncertainty. How would Christmas be? How would Easter be? And now we have been flowing through another Christmas and Easter, and the market holds right. And we see that we are winning contracts. So if anything, during Q2, we have seen a better, call it, competitive landscape and AEK being well positioned because we are winning new contracts. We are, if anything, slightly less competitive, but still, it's competitive. So in essence, what I'm saying, could have been even better, but it's but we are not without competition. So and could it ease? Yes. I don't think inflation in general helps anyone really. But If raw material prices starts coming down, I think it would create somewhat an improved situation, and it would improve the possibility for our customers am going to produce products at lower cost and without having probably lower prices on the shelves in retail, etcetera. So but that is I mean that is in the details. So but all in all, CCF has really developed nicely since a low quarter last year. Thank you. And then a last one, you have the €150,000,000 cost cutting program. I think Not much of it was in the numbers last year. So how much have you achieved so far? We have now finalized all the actions. And then, of course, reading it in exactly from the P and L sheet is a bit difficult since we've also seen inflation during the same period. But in our own books, when we try to do the like for like, the program is done, the actions have been completed. And with that, we see Our cost structure have been improved, but at the same time, we obviously have some costs going up due to higher input prices. Thank you. You're welcome. Thank you. Our next question is from Alex Sloane of Barclays. Hi, afternoon, Johan. Afternoon, Thomas. Yes, a couple of questions for me. Just firstly, going back to Chocolate and Confectionery Fats. On the volume side, another very strong quarter. I appreciate that there's sort of there's a base effect here. But If I look over the last three quarters, you've kind of consistently beaten the consensus expectations. So I just wonder, When you compare your growth over the last three quarters to your customers or the end market growth, I mean, it looks like you're significantly outperforming. So is that related to kind of an inventory build at your customers? Or are you kind of winning new market share? And I guess if it is related to sort of inventory build, is there any do you have any view on kind of Where inventories are relative to history? So that will be the first question. And then just the second one, On raw material costs, which has come up a lot already, I think at the start of the year, the guidance was think we're going to have a very strong balance sheet for free cash flow to improve in the second half as raw materials costs normalized. Obviously, that's been pushed out a little bit with the guidance today. Just thinking about the drivers of these Higher prices in some of the vegetable oils. I wonder to what extent you think kind of the renewable diesel capacity IT additions in the U. S. Where there's quite a lot coming on stream. And the demand that, that's driving for soybean oil is maybe sort of part of the reason why the broader complex is moving up. I appreciate soybean oil is not necessarily a big one for you, but it does seem to be quite correlated with I think we're going to see some of the growth in the U. S. And palm oil over time. So yes, just appreciate your thoughts there in terms of how relevant that is as a driver of this Inflation and higher prices we've seen. Thanks. Thanks, Alex. I'll take them piece by piece. I think, First of all, I do not sit with the complete details of our customers' stock levels, so because it's been kind of a steady pace, Q3 was better than Q2, Q4 was better than Q3, and now moving into something that should be more I stabilized, I would argue, because otherwise no one builds that much stock. So but it could be an element in it, of course. But on the other hand, we've seen that although maybe protecting a bit on the price side, AEK, we have a strong iGen in CCF. We have really good solutions for high end plant based also fats into these applications. And we see that we have been able to win new contracts in a good pace, and that speaks in the direction of probably us taking a bit of market share. And we know we're starting to see a bit of seems like capacity starting to reach capacity levels maybe here and there with some in some markets for competition and so forth. So it's been fairly promising. Moving into raw material and the impact. Yes, first of all, we're pushing it forward a little bit just because we've had high prices for some time. And with that, you push it forward. We've always said that it's a 69 month lag, and we only saw a contraction in our now Q2. So one should expect that then to flow through in a 69 month lag. With regards to we obviously speak a lot about this, what are the underlying factors and drivers on raw material prices And of course, renewable diesel or biofuel, I mean, that is a significant Market as such, there are significant powers in terms of automotive, energy generation. What are the sources of the future? We have an automotive industry shifting to electrics, but the commercial vehicle fleets shifting more towards renewable Diesel power stations as well. What is the if you look at this at the long term play, I think it's one answer. How do we work with Power generation, what's coming from solar and other sources, what is but the here and now moving from fossil If you will into something else that is better than, of course, biodiesel is an opportunity for some industries, right? And then that has a follow through Impact on raw materials that are many times used for food like palm, like rape, like soy as you mentioned. So I can only say our perspective, yes, it has an impact. During COVID, we've also seen an impact in Southeast Asia on workforce, where labor didn't could not travel as they used to from different countries coming into plantations and work. So that could have had an element. And then you also have government political decisions on how to protect prices, which has usually been used to protect prices or impact prices for renewable diesel or I should say biofuel type of solutions. So yes, it has an impact and it will impact prices up and down. But I think in the long run, it's I think still the world will use a lot of plant based food plant based oil solutions into food, And there are alternatives to create power. So let's see how that develops in the future. On the other hand also, we have a good model. And over time, we will The whole industry, the whole food industry will adjust prices accordingly. So I don't see it as a mega threat, but it does impact short term market behaviors. Makes sense. Thanks for the answer. But I guess if I could just squeeze in one more, just on M and A and The state of the pipeline, is there anything to kind of update on there? Sure. We have a steady focus on M and A, and we have maintained that during COVID. So we do have our pipeline. We do have movements in the pipeline through COVID, and we are committed, as ever before, to move on. So maybe checking with Alex, did you hear my last part of the answer? Or should you just ask the question can't hear where I was cut off, if you are with me, sir. Alex is Not with us anymore actually. So if we go on to the next question from Kenneth Tull. So Kenneth, the floor is yours. Please go ahead. Yes. Thank you. So on plant based food, you're right that you have double digit growth as you reported the last couple of quarters and that it's I mean, is it growth of existing products that the customers are selling? Or are you expanding your business you talking about the existing customers or is it new customers that you do business with that where growth comes from? And Can you talk a little bit around what is happening so that maybe we get a feeling for what might happen around the corner, so to speak? Yes. Thank you. And a short answer will be yes to all of your comments there, right? We're certainly growing with some of the existing customers. The volume base is higher. And when they return, like in plant based meat solutions, we have some customers where Demand was a bit slower due to COVID in restaurants and now that comes back, so that becomes a year on year growth. On top of that, we are adding new customers, I shouldn't say maybe every day, but we're adding new customers in a very good pace. And that is across the board with a plant based meat solution, so meat alternative customers as well as dairy customers. And dairy alternatives being a higher volume market to start with, But both of them developed well. In the quarter and looking at quarter over quarter, the plant based meat solutions I have been growing higher, but also dairy solutions were growing nicely. So it's a bit across the board. And yes, we bring new products to market. Yes, we increased on the ones we already have in market. And yes, we add new customers to the portfolio and with that expand as well. So it is still a very positive and dynamic industry to serve where new applications are coming think we're going to continue to see customers working with us continuously to find new solutions to get new products to market. So that is still ongoing. That trend is still there. And from your side, do you feel that Your competitors are also getting more active here. And do you see the sort of big commodity players Entering the scene and trying to compete as well or? This is such an interesting I mean, this is creating mean, you can look at it from a capital perspective, capital markets perspective. There's a lot of investments going into plant based alternatives too. Let's call it building Sustainable food supply chains for the future. And I think the world is really starting to look at facts and figures, what is driving Sustainable food supply chain and when you look at that, you see alternatives to meat and dairy being really an opportunity. And we are there with our oils and fats being a specialty player. Of course, competitors are looking at it as well. You're looking at it from a protein perspective, an oils and fats perspective, Flavors, fragrances, ingredients you need to use in these applications. So everyone is there looking at it, seeing it as an opportunity. And if the estimations that many have in front of themselves looking 20, 30 years down the line, think there's going to be plenty of volume, and this is going to be an industry where you would have specialty solutions for more difficult applications, and you would have am confident that we will continue to see the more volume plays and with less complex solutions. So I think my forecast is that this will develop to a industry with significant volumes with regards to plant based meat solutions, that being from Burgers to chicken alternatives to sausage alternatives to steak alternatives will be a wide range of opportunity as well as you have in dairy solutions. So and that is a bit how you see the development, how you see new customers popping up, how you see new products popping up. So at the moment, short answer is most companies in the food industry is looking at plant based food solutions. But there will still be the need for more advanced solutions to create more advanced products. And that's where AK has a strong position. And you still have above group average profitability within that segment. Is that right? Yes, definitely. Great. Yes, thanks. That's all for me. Thank you. Thank you. Our last question It's from Heidi Vassainen of Exane BNP Paribas. Please go ahead. Hello again. I was just curious hear your answer to the M and A question when we got cut off. You had said there were movements in the pipeline through COVID. So what does that mean? And could you elaborate, please? Thank you. Yes. So I'll take it a bit from the beginning, then not knowing when we were cut off. So we still maintain our focus on M and A, so that is as important as before. We have had we are working with our pipeline. We have been doing that through COVID, so building relationship, responding to opportunities that come out, but also working on the opportunities that we want to try to materialize. That has continued through COVID. The one thing that is more difficult is to get the proper due diligence made where we want to look at The hardware and get into a plant, look at the stainless steel and see how it's operating and so forth. That is more difficult If we have a team that needs to get in from abroad into a country to a specific opportunity, that piece is more difficult at the moment. I think that's we're not the only one. Would try to find ways to shortcut and reduce the time you loosen in theory. But that's where we are, right? So there is momentum. We're still working, and we have a pipeline that is there. And we see Things are moving, things are moving forward. But at the same time, with all M and A, you got to close the deal at some point in time. You got to do your final due diligence to get the trust you need and that's where we are. Is this more to do with consolidation opportunities or more stepping into adjacencies? We're certainly looking at bolt on and consolidation, that's a piece of it, and a bit also tactical M and A opportunities, but also adjacencies. There's a little bit of all of those in the pipeline. Thank you. Thank you. Thank you very much. There are no further questions. So I'll hand back over to our speakers. All right. Then thank you very much everyone listening into this busy day on the stock market. Lots of companies reporting. Appreciate the time you took And looking forward to speak to you again. Have a nice rest of the day and a nice weekend to you all. Bye bye.