AAK AB (publ.) (STO:AAK)

CMD 2020

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Nov 17, 2020

Good day, and welcome to AEK's Capital Market Day 2020. This will be a virtual meeting. My name is Johan Westman. I am the President and CEO of AAK. In this unprecedented situation that we are all in, we have chosen to pre record presentations. These are available at aek.com. I recommend each and every one of you to take the time to look through them. We will also have a live Q and A session. So after having reviewed this presentation, there is this live Q and A session, and this one will be recorded as well. So for those of you not present in that one, you could look at that at aak.com afterwards. Now with no further ado, let me take this opportunity to present some business updates as well as our strategy going forward. AK Today, we are a truly global company with presence around the world, serving customers around the world based on our customer innovation centers where we do our co development for new solutions to our customers, with our production sites. We are operating with a decentralized structure, a global company acting with local presence, with local global reach. Before we get more into the business update, let's just stop and reflect a little bit. COVID-nineteen is present as we speak. We, like people, businesses, societies around the world, have been impacted by COVID-nineteen. 1st and foremost, our first priority has been the health and safety of our employee. It was before COVID. It is now and it will be going forward. We're also a very important supplier, a key supplier in the important food supply chain of the world. With this in mind, we have put a lot of effort and focus on our contingency plan, securing business continuity, securing that our supply chain supply chains work. And that has been done successfully together with our suppliers, our full team in AEK as well as with our customers. With this, our business has been working quite well. We are active in the food ingredient supply chain, as I mentioned. We are, to a large extent, resilient, but not unimpacted. The uncertainty is still very high. Now, let's talk a little bit about our current trending. After a COVID impact in Q2, where volumes fell lower, lower versus last year, and we started to act and react. We have managed to come back to profit growth in quarter 3. Our profit in quarter 3 was up 6% year over year. And why is that? Well, since Q2, volume has started to come back sequentially, not to last year's level yet, but still improved. We've also managed our cost base and adapted to this situation, rightsizing the business where we were most severely hit, for example, in Foodservice. But we have also continued to focus on high value added solutions, the product mix with a higher profitability, for example, high value added solutions to infant formulas within our Special Nutrition segment. All in all, that has given us a strong foundation to go back to profit growth and really deliver on our strategy going forward. When looking into our business areas. Within Food Ingredients, we develop solutions to segments like dairy, bakery, special attrition and plant based food. With regards to performance in this business area, it's a bit of a mixed bag. We were severely hit in foodservice, as I mentioned. This is where we deliver to customers that in turn deliver through restaurant chains, airline catering and so forth, dramatically hit by COVID-nineteen. On the other hand, we are performing well in solutions to special attrition, to plant based food and so forth. So a bit of a mixed bag, but all in all, a good rebound in Q3 after the low mark in April, May in quarter 2. We also see in this segment that we are supported by long term trends, health, nutrition and sustainability. Those trends are here now and they will remain going forward. In our business area for chocolate and confectionery fats, we are the market leader. We develop solutions for chocolate compans, for molding as well as confectionery filling fats. In this industry, COVID-nineteen really came and hit hard right in the Easter season of this year. That had a negative impact on volumes. But again, we have seen volume sequentially picking up in Q3. Here also, we have, under the last 2 years, focused on improving our supply chain, getting better sheet kernels in as well as increasing and improving the efficiency in our facility in Aarhus in Denmark. So with this in place, we are now operating at a more efficient level and a better cost base. So in spite of COVID impacting the chocolate and confectionery business, we have seen our margin, our operating profit per kilo being improved, thanks to a better cost structure and more efficient production with more capacity and sequentially returning volumes. For Technical Products and Feed, our 3rd business area. There we are focusing on how to use our byproducts from the other processes to do that in a sustainable and profitable manner. We are developing solutions for animal feed, for technical products like candles and detergents and many other applications. And the focus here is really to continue to innovate new and better solutions. Let's talk a bit about highlights from 2020. A year ago, at our Capital Markets Day, we presented the new strategy for AK. That is now rolled out in our organization and we have started to execute. We also continue to invest in an important sector, which is the plant based food industry. Niall, my colleague, will present a bit more in a specific presentation on plant based food. In a situation with COVID-nineteen, staying together while being physically apart is so important. We have a creative culture in AK and one of the initiatives is an initiative that we call Apart Together where we are filming and connecting people across the globe, really helping the global team to stay connected in spite of the very challenging time that we are in. Acquisitions is in focus. Fredrik will comment a bit more on that on his presentation. During this year, we have acquired the last piece of AK Kamani, our joint venture in India, as well as acquiring 75% of Margaron in Russia to help us grow in a very important market. M and A will continue to be key in our strategic agenda going forward. Sustainability, as important as ever. AEK is focused, have been focused and will remain focused on improving sustainability. Within our Women's Programme in West Africa, we have now included more than 300,000 women in that Programme. That is an increase by 33% compared to last year. We're also engaging in Ghana, for example, to help improve the water, to have safe drinking water, clean drinking water and palm oil sustainability, a very complex supply chain that really needs continued efforts. And let me mention a few things on that. Palm oil is an essential food ingredient, very important to the world. It is also the highest yielding edible oil crop that is out there. So it is crucial that that is a sustainable supply chain. During the year, we have, for example, doubled our traceability to Plantation. Traceability is one way of monitoring and securing a sustainable supply chain. Our priority is to continue to drive impact. We have been doing that. We will continue to do that. And we are stepping up our efforts in palm oil sustainability. We are committing to no deforestation and we are committing to 100% traceability to plantation to prove that. And we are across AK also signing up to science based targets. This to really drive better performance in sustainability as a whole. When presenting the strategy last year at the Capital Markets Day, we talked a bit about that foundation that we built this on. So just as a recap, our strategy going forward is built on the strength within AK, our passion and drive, our regional decentralized organization with accountability, our customer centric approach around customer co development, which is so much in the core of what we do. We are flexible and agile, and we're using that in a customer centric manner. That's the foundation on which we'll build our future strategy. And our strategy is a portfolio based strategy, really targeting the opportunities in industries where oils and fats, plant based oils and fats are important. We are investing for growth within chocolate and confectionery as well as special nutrition, huge opportunities going forward. We're also stepping up and making, call it, bets for the future on plant based food, an industry that is growing dramatically. Also, to build a platform for health and nutrition. It's going to be important to almost all industries that we serve. Equally important is that we optimize segments, more traditional segments, where we have been active for a long time, like bakery, dairy and food service. Part of that optimization is getting the right cost to serve, but it's also about finding the opportunities where high value added oils and fats, specialty solutions makes a difference. So really selecting the pockets of great opportunity where AAK is best fit to serve. So that is how we build up our portfolio based strategy. Some of the achievements made during the year. Important one, investing for growth, like the acquisition of 75% of Margarone getting us into Russia. Russia is one of the most important chocolate and confectionery markets. So that is one example. We're also investing in new capacity for infant formula production in China, the single largest market for infant formula, high value added infant formulas. We've also continued to really focus on plant based food. We are investing in a center of excellence for plant based food in the Netherlands. Those are some examples of what we are doing to execute our strategy. There are many more, but really we are now in the game. We have rolled it out, we are committed and we are making impact. With that, let's conclude this presentation. We in AK, we develop, we offer plant based, healthy, value adding oils and fats based on our co development approach. In spite of the short to mid term uncertainty around COVID-nineteen, those long term underlying trends are strong, and we see no reason to adjust our view on the more long term future. So with that, we do remain prudently optimistic. Thank you for listening. Good day. I am Johan Westman, the President and CEO of AK. Today, I will uncover the purpose, the newly developed purpose for AK. We have decided to transform AK to a purpose led company with a purpose that will constantly pull us forward. Why do we need a purpose? A purpose for us is about how to engage stakeholders, how to commit our organization, how to mobilize our people, how to attract talent, and also about how to really help our customers, really engage our customers. That's what a purpose is all about. Our process to develop this purpose has truly been an inclusive process. We have got some help from more than 1,000 employees in interviews, in workshops and that has given us an enormous and valuable Insight Bank. When looking into that Insight Bank, let me share with you some quotes that you can read on this page. Many, many of the quotes, the insights has been about how we are doing things better. How can we make things better? A lot is also about within AAK. How can we get things done? Our passion to get things done, about making things happen in the way we work, in the way we interact with our customers. With those insights, it led us into the purpose that I will now present. We are AAK. We are making better happen. This purpose has a great potential. Let me share with you some of the examples of the power in our purpose, a purpose that will never run out of potential. About committing and engaging our organization, making better behaviors happen, how do we transform and develop, nurture our culture? Making better leadership happen? How do we act as leaders? How do we develop our colleagues? And about attracting talent, retaining talent, making better careers happen within AK. And of course, the potential and power in our interaction with our customers, how to make better solutions happen, better collaboration happen, our co development approach when we work together with our customers to deliver better solutions. That's what it's all about. It's also about helping our customers, making better success stories happen, our customers' success. And last but not least, the shareholder value creation, about sustainable shareholder value creation. Making better returns happen, but also making better livelihoods happen throughout the supply chains where we are active. There are many more examples, but this is just to show a few that really highlights the strong potential in making better happen. This purpose has also the potential to be far more ambitious than claiming to be the best or striving to be the best. When we are really good at something, we might even be the best. Now, we will constantly ask ourselves: Can we make it even better? Can we perform even better? So with that, making better happen every day, every week, every year is a very ambitious purpose that pull us forward. To summarize this, we have made a short film that we will show you now. A desire to redefine what better means. Everything we do is based on understanding what better means for our customers. We make their products healthier, more nutritious, more sustainable, And we help achieve better process efficiency with more effective plant based oils. There's an action in making better happen. And at the same time, there is a humbleness of better in contrast to the boasting of best. Don't let best stand in the way of better. Better has the potential to be more ambitious than best. You can't have this purpose and be complacent. Best is a state. Doing better is a journey of continuous improvement. No matter where we look, making better happen can cover it. In sustainability through better sourcing. In production through better efficiency. For people through a better career This purpose will never run out of potential I hope that you are as passionate as I am about the future for AEK. AAK. My name is Fredrik Nilsson and I'm the Chief Financial Officer. In this presentation, you will get an update about AK's financial performance. AK's strong focus on customer code development and successful integration of acquisitions have driven profit growth for many years. We have seen a CAGR in operating profit over the last 10 years that have exceeded 10%. There's also been a good growth in operating profit per kilo, which we have been able to grow 6% annually. AK's efforts and investments to drive specialty and customer unique solutions have really paid off. Zooming in on 2020, it has been a year impacted by COVID-nineteen. We started the year really good with a strong Q1. Q2 was then heavily impacted by COVID, particularly our food service, but also bakery and chocolate and confectionery was impacted. Q3 was more a mixed bag. We saw a strong momentum in our Specialty Solutions, particularly for special nutrition, plant based food, but also for chocolate and confectionery and fats. Foodservice and dairy were still under pressure. Zooming in on the operating profit this year, we have seen declining volumes of 5%, which has negatively impacted our operating profit by SEK 185,000,000. The volume drop we have seen this year has been mainly during the second quarter. We have at the same time also been able to execute on our strategy to do more Q Development solution. That has given us NOK 100,000,000 in EBIT. We have also taken measures to adapt to the new situation and tight cost management initiated in the 2nd quarter has also had a strong impact on our operating profit and has contributed with SEK 150,000,000 in operating profit. Then we have also seen a negative FX year to date and that has been mainly during the Q3 where we have seen a stronger Swedish krona. Execution of our optimization program announced in the Q2 is progressing according to plan. That should generate annual savings of about €150,000,000 reaching full run rate by the second half of twenty twenty one. To give some more colors on our cost management and our optimization program that has generated €150,000,000 in savings so far in 2020. On the short term, we have traveled less. We are not participating in trade shows. So you can say partly you get that for free into your P and L, but that's also a matter when you're looking at your bottom line. We have reduced temporary staff. Some people in the Group has been on furloughing and we have also saying farewell to some colleagues during the Q2 and Q3. Long term, we will focus on utilizing AK Size as a truly global company to improve and make more efficient purchases. Part of the revised strategy that we presented last year was about optimizing some of our segments. And we are now running full speed ahead to execute on that strategy. Our ambition remains the same, to grow operating profit in average by 10% year on year with a good growth in earnings per share. The growth will come from 4 pillars: Volumes, we have the ambition to grow at least in line with the market, but clearly we would like to gain market share and grow a little bit faster than the market. Mix. Continue to invest in our capabilities and drive Q Development Solutions together with our customers. Productivity. As always, when you have manufacturing, you need to drive productivity, but you also need to drive efficiency in your administrative functions. On top, we will continue to make selective acquisitions. This together will continue the journey of good and solid profit growth in line with our ambition. Despite the challenges in the world with COVID, we have been able to deliver positive free cash flow despite we have seen higher raw material prices that occurred in the beginning of the year. CapEx level have been lower than planned this year as we have been holding back some of the investments planned due to the uncertainty in the world. Slightly more than NOK 50,000,000 has been spent for acquisitions in 2020. There will be more to come during the Q4 as we have paid for the minority shares in India during the Q4. All in all, we have been able to reduce the net debt by around NOK 140,000,000 in 2020. AEK has a strong balance sheet. Our net debt divided by EBITDA is 1.04 end of September. Our target is to be below 3. We have no problem to go closer to 3 if we find the right M and A opportunity. Having said that, we would also like to have enough headroom to absorb the swings in raw material prices, which impact our cash flow, but also to have some dry ammunition to make selective acquisitions. The trends looks really good. And the low net debt of EBITDA is also helping us to not paying too much of margins to our banks on our loans. We have a very solid debt portfolio. Almost 70% of our credit facilities have a duration of more than 1 year. We have total credit facilities of €8,200,000,000 where our €6,900,000,000 is committed facilities. Looking at our unused committed credit facilities by end of September, they amount to SEK 5,600,000,000. So very, very solid debt portfolio. Over the last 10 years, we have been able to deliver double digit growth in both earnings per share and dividend per share. Our dividend policy is to pay out 30% to 50% of net profit. The ratio has been 30% to 35% and closer to 35% over the last years. I will also like to highlight there will be an extra general meeting late November to decide about the dividend linked to the 2019 result. Over the last 5 years, AK has spent more than €4,000,000,000 in investments. This is excluding acquisitions. What have we done? We have added capacity to AK Kaman in India. We have added capacity in Denmark or Western Africa to secure we have enough supply to our high end chocolate solutions. Last year, we announced capacity expansion in China for special attrition on our high end bakery solution. That is $300,000,000 in total that we will invest in 20 19, 2020 and a little bit going into 2021 as well. As I said earlier, CapEx spend in 2020 is slightly lower than planned as we have pushed some of the investments forward due to the COVID situation. That also partly explains why we expect to see a little bit of a higher level in 2021 versus this year. Our efforts to work with the capital structure in the group are yielding really good result. This is key as we are operating in some high tax rate countries. Over the last 3.5 years, we have been able to reduce the tax rates from 28% to 24%. This implies an annual cost savings of more than SEK 75,000,000. Our team in Europe and particular our local team in U. K. Have worked really hard to secure that we as a company are as ready as possible for Brexit. AK has a limited export out of U. K. Approximately 85% to 90% of what we produce in the U. K. Is also consumed in U. K. We have, however, taken some actions because we expect to see some tariffs on some imported raw materials and utilities that we will try to push to our customers. We have built up some additional inventory to secure supply to our customers. We have also added some resources to be able to take care of the expected increased administrative burden. All in all, we don't expect to get a material long term impact from Brexit. However, short term, there can be some bumps on the road. Despite the COVID situation in the world, mergers and acquisitions are high on AEK's agenda. We continue to work really hard with our and I will talk a little bit more about our 4 pillars in our M and A strategy. Geographical expansion. There is definitely still white spots on the map. Looking in Southern Europe, Eastern Europe, Middle East, but definitely also out in Asia where we have a relative limited presence so far. The other thing is where we're looking in for M and A opportunities to adding capacity. When an AK site is running full, you have the option to either invest in an existing site or to explore if you can buy capacity. The 3rd pillar is technology. First of all, oils and fats remain our core. But if we can find an ingredient that we can blend in, in our one of our fat solution that gives more customer value or decomplex for the customer, it's definitely of interest for AK. The 4th pillar in our M and A strategy is about adjacent product portfolio. We took one step into adjacencies last year where we enter into the lessatin market. Here, we clearly have an ambition to be a more substantial player going forward. Based on our strong track record of delivering growth in earnings per share and dividend paid combined with our solid balance sheet. Our ambition remains the same, and we continue to remain prudently optimistic about the future. Thank you. My name is Annemarie Olesen, and I've been with AAK for the last 10 years. I have the responsibility for sustainability, and I have the pleasure today of giving you an update on our activities within the area. I would like to start the presentation by telling you about our commitment within sustainability. And as you see then, we have fully aligned that commitment to our new purpose. So our commitment is making better happen from plant to brand. This means that our commitment starts all the way out in the fields where most of our raw materials are grown. It goes through our operation globally and it continues into the solutions that we are providing to our customers' products that support their brands. We have 3 focus areas that support this commitment. 1 is better sourcing and this is about making sure that we engage to transform, engage with the suppliers to transform their work, but also the sustainability of our raw materials. Another focus area is better operation. And here we focus on minimizing the environmental impact as well as the social risks. A third focus area is better solutions. And our focus here is to provide our customers with solutions that enable them to identify the key priorities we engage with our key stakeholders to understand what is important for them. And in the latest engagement we've done, we pulled out some 3 key focus areas from their messages. And one of them is about responsible sourcing. And for them, responsible sourcing about full traceability, the environmental impact of our raw materials and also mitigating social risks in our supply chain. Another important focus area for them is the environmental resource efficiency of our global operation, making sure that we minimize it and we do our contribution on the climate side as well as supporting the human rights in our supply chain, which leads to the 3rd priority, which is about human and labor rights. Through the guidance of our key stakeholders, we made the following priorities. So we grouped them also into 3, one which is about ensuring a sustainable sourcing of our raw materials. And here, it's really important for us that we can ensure that there are no deforestation happening in our supply chain, that we contribute to reducing the climate risk and that we make sure that we respect human rights across our full supply chain. But it's also very important as smallholders is an important part of our supply chains that we work to improve the livelihood of these smallholders. A second focus area is driving sustainability in our operation globally, and that is focusing on our environmental footprint as well as the well-being of all our people and then also being a good neighbor, knowing where we are operating in the world. A third focus area is sustainable solutions. And this is about co developing solutions with strong sustainability credentials that can support our customers and specifically also support the plant based food area, which is a fast growing area and where we have an opportunity to make a real difference. To support the priorities we've set, we've identified a series of approaches. So if we start with how do we drive sustainable sourcing, we do this through what we call Engage to Transform program, where we engage with all our suppliers to really drive sustainability in our cooperation. We also continue to work very dedicatedly with ProFORCE, and agricultural sustainability specialists that help us monitor and guide us in minimizing the risk in our supply chain. And as something new and with a special focus also into the palm area and really mitigating the risk in our palm supply chain, we are now working with a satellite monitoring system that will enable us to even better follow-up on our palm supply chain. A very important part of actually driving transformation is also the partnerships, partnerships within the specific industry, but also partnerships with NGOs and local communities. And that's especially important for doing the impact and improving the livelihood of the smallholders in our supply chain. When we look at driving sustainable operation globally, this is very much about making sure that we benchmark our sites across globally. We identify the better practices, acknowledge them, so people feel that we really understand when you make a unique effort and create unique results. And then is focusing on continuously searching for best available technologies that can support us in reducing our environmental footprint. It's also about making sure that all our employees stay health and safe, and specifically under the circumstances we've been navigating the last year. But it's also about making sure that we have an inclusive culture that makes sure that all our colleagues around the world feels appreciated and integrated in to our AEK family. Driving sustainable solutions. We do that a lot through our customer co development. I think you've heard about that many times. But this is also very important when we drive sustainability into our solutions. And specifically for the plant based area where we have a lot of customers coming up, which is rather new into the space as well and where we can be a good partner for them in finding the right solutions. We also do it through identifying future needs. So we've actually lately done a really deep dive customer interview where we've tried to understand more long term and more broadly what are the sustainability needs that our customers see coming up for the future. To support us in delivering on our priorities, we've learned it's very important to have targets and specific ambitions because they guide us in the process on delivering on our priorities and driving progress in general. So if we look for sustainable sourcing, here we focus on making our supply chain deforestation free by 2025, And this covers for both soy and palm. And this is really a very important priority and centered in the activities we have. To deliver on this, it's also really important that we support the climate situation. So what we have decided and what you will see here under both sustainable sourcing but our sustainable operation that we have decided to set science based targets and do our part in contributing to mitigating the climate situation. So for sustainable sourcing, we will be focusing on setting targets where we engage with our suppliers and get them to commit to do their part of the journey as well. What is also very important for us is that we have a long tradition for making a positive impact on the smallholders and the women in our supply chain. And that's definitely something we would like to scale even more in the future. If we look at what are the targets for our sustainable operation, then the target is to continuously improve our environmental efficiency in how we operate as well as do our part on the climate side. And as we as we are a manufacturing unit, we also have a strong focus on making sure that it's safe for all our employees around the world to work. For the sustainable solutions, here we focus a lot on being a knowledgeable partner for our customers and being a catalyst for change. This is especially important for many of our big branded companies, but it's also extremely important for the plant based segment that we can be a knowledgeable partner that they can lean on for guidance on sustainability. And we follow-up on that in our customer survey. Another important element here is actually that we, with this partnership, believe that we can actually drive progress and a larger and larger part of our business will be leaning on products and solutions that have really strong sustainability credentials. Now I've covered our commitment. I've covered our priorities, the approaches we use to support our priorities as well as also the target and the ambitions that we have within the sustainability area. I would like to use the last part of the presentation to share with you some of the achievements that we have made over the last year. If we first look at the achievements within better sourcing, then we've had a very strong focus within the palm area as this is an important area to have a strong hold of. And what we focused on here is really getting very close to our suppliers and making sure they understand the importance of sustainability and that they support us with in our commitments. So what we've done is we've established what we call supplier sustainability dashboards, And it means that our sourcing and trading people, when they engage in the dialogue with our suppliers, they also focus on their sustainability credentials and are responsible for driving the progress within this area. This have been part of and supported us in actually doubling our traceability to plantation, So a really good progress over the last year. We definitely want to strive for even more, but it's been a good progress over the last year. Then one of the things that is very important for us within the area is also to even further strengthen our monitoring activities. So we've done a pilot where we have looked into the satellite monitoring even stronger risk management on our palm supply chain. One of the things we've also focused on is really partnerships. We strongly believe that partnerships are really critical, both short term and long term, for driving progress within the sustainability area. So we established a lot of partnerships to suppliers, with our customers, also within industry operations and with NGOs and local communities. And I would like to share a little bit more details on the outcome of some of these partnerships. Within the SIA supply chain, we've actually managed to scale our Kholanafaso operation with an additional 75,000 women, which means that we are engaging with more than 300,000 women to improve the livelihoods of them and their families. Besides working and scaling the women group activities, we've actually also planted 30,000 shea trees in the West African landscape of shea trees. And that is an important contribution to making sure we do a reforestation as well within this area. We've also within this year area, we're fully aware that child labor is one of the risks we need to mitigate. So we've done a child labor campaign where we focused on creating awareness of the child labor issue and making it very clear that we want to make sure that that's not part of our supply chain. Our last efforts within the, CHEA area have been actually to work with securing drinking water for our Kholanafaso women groups in Ghana, where we worked with SAHA Global, an NGO organization. And besides the activities we actually do in West Africa, we've also engaged with NSEAD on trying to pull out some learnings of the operation and the scaling we've done within Kona Faso. So NCAT have actually been on the ground in West Africa trying to pull out learnings of how do we scale social impact long term and also balancing it versus profit. And there's come out a business case that will be used at the NSEAD Business School and also some good learnings from us having fresh eyes to look at our operation in West Africa. We also see very good progress within the other raw materials, and one of them are within the coconut area where we've just signed a coconut sustainability charter called SaviCharter, which is about the whole industry going together and trying to drive sustainability much stronger also within the coconut supply chain. We've also over the last year supported the establishment of a coconut nursery, which will support the replanting of coconut palm trees. Another area of of deforestation risks, which is a potential risk within the soy area. And then finally, we specifically for our Carlsam site have managed to do an international sustainability certification of both our sunflower and also our rape seed. As I said, we strongly believe in that partnerships is important to drive the transformation in our supply chain. And part of this is also our partnerships with customers. And over a long period, but also specifically last year, we partnered with Nestle to support them on their sustainability commitments within the palm supply chain. That has led us to work specifically with the suppliers that support Nestle and our supply chain. And among other things, this is where we've done the pilot testing of the satellite monitoring. This has both driven both really good progress on the sustainability as well as it has given us some very good learnings for the future. Another area where partnership is extremely important is when we want to drive livelihood improvements for the smallholders and the women in our supply chain. And as you can see on this slide, we've here outlined some of the key projects that we are working on. We actually have 2 projects within the palm area, one where we work with Solidaidat in Mexico and one where we work with Forever Zapa in Malaysia. And both of these projects is about helping smallholders to be certified. And part of making them certified is providing them training about good agricultural practices and other support. Another important project for us is the project we have within Coconut, where we're working out in Indonesia with smallholders, support them also to be certified sustainable within the Coconut supply chain. And this is in partnership with Rainforest Airlines. We also have more direct projects, what we call direct sourcing programs. We have one within the SIA, which I have already elaborated on, but we also have a smaller one within the soy area in India. So all in all, what our learning is for sure that partnerships with NGOs and local communities is what really enable us in scaling the impact we can have on smallholder livelihoods. When we look at our achievements within better operation, the achievements the last year have been that we've reduced our energy and water consumption per processed unit. We've also managed to significantly reduce the waste to landfill. And that has also been through a lot of partnerships where we locally have been looking at what can we do with our waste? Are there different ways where we can use our waste rather than letting it go to landfills? So trying to think in more circularity in also our waste streams. And one example of that is also that we installed a bio boiler in Aarhus where we are processing the sea kernels and where we will be working going forward with burning the sea meal, which is the leftover from the sea process. Another achievement the last year is that we've aligned to the greenhouse gas protocol, and that is very important because this is the foundation for us to be able to set science based targets for our operations globally. And also, we risk assessed our sites, which is really important because this is the foundation for climate risk mitigation activities at all our sites globally. If we look at the achievements within Better Solutions, what we see as one of the main achievement is our solutions that we made for the plant based food segment. We worked very dedicatedly over the last year to come up with solutions that can even better support the plant based food industry to making more tasty and also healthier solutions. The focus have always been on sustainability. But to get the real customer uptake of these products, it's very important that it's also a pleasure to taste them and it's also good for your health. So our AquaPlanet is a very important effort to support this. Finally, I want to share with you our most significant contribution to the Sustainable Development Goals. As you can see here in the presentation, we are contributing to many of the Sustainable Development Goals, but there are 3 of them where we have a more significant contribution. The first one is the Sustainable Development Goal number 1, which focusing on no poverty. And the fact that we include a lot of smallholders in our supply chain actually enables them to fight the poverty. Another sustainable development goal number 2, which is about 0 hunger. And the fact that we over the last year have trained more than 100 practices as well as business skills is important for them in fighting the hunger for their families. The 3rd area where we have a significant contribution is the Sustainable Development Goal number 5, which is about gender equality. And where we have done a significant contribution here is within our West African operation, where we focus on getting more female leaders and also more female extension officers. And what we see is that they are doing an outstanding job, which gives a strong foundation for our operation today, but also for the future. I would like to close this presentation by saying thank you very much for your interest and for listening in. I'm based in our regional office in Singapore. With more than 25 years of experience from the Food, Health and Nutrition Business, I joined AK in June at the peak of the COVID-nineteen pandemic. Today, I'm happy to share that we are in a much better place, and I'm looking forward to share with you the latest development of AK in Asia. Over the last 10 years, AK have invested in Asia, and we now have our global sourcing hub for our own production facilities and most importantly, our sales and innovation centers where we co create our specialty oils and fat solutions together with our customers. As an example of our Asia expansion, in 2011, we opened our sales office in China. In 2013, we expanded it with an innovation center. And in 2017, we opened our first production plant. And now in 2020, we're expanding it and we're also adding more specialized products. We are now more than 700 passionate colleagues across 10 countries, with India and China being the major production hubs. We're still eyeing expansion opportunities, but now we have the platform to grow Asia to become a larger part of AEK. Let's remember that by 2,030, Asia will have 59% of the world's middle class. In addition, some food categories will grow even faster as consumption habits change. Asian consumers are becoming more aware of health and nutrition, where food is coming from and what it contains. All of these macro drivers positively impact AK's opportunity space in Asia. During these unprecedented times, our focus has been on keeping our customer promise and protecting our employees and supply chains. As China was one of the first countries to be hit, I want to share with you how we're seeing fast moving consumer goods return to a new normal. While some categories have kept growing, others have rebounded fast. And we also see some coming out of a U shaped recovery. When we look at the last Q3 numbers released in China, we're seeing a 4% growth over same period last year. The good news is that consumers are getting out in the bigger cities and we are also able to meet our customers physically in addition to the increased online engagement. Internally, in our innovation center and factories, we're keeping our guards up to secure business continuity and the safety of our employees. I'm very proud of how our teams have acted with care, resilience and optimism. We stay in China. In the picture, you can see the latest factory expansion being installed as we speak. While we've been in China for almost 10 years, AK is still relatively new compared to other ingredients companies. And it's only 3 years ago since we inaugurated our own plant. During 2021, we will ramp up to serve the Chinese special nutrition market locally. The new plant is supported by specialized operator team for the 1st years to ensure highest quality and our local capability building. Over the last 2 years, our China team has transformed. We continue to see our customers respond positively to a more capable and more inspirational local presence. And we're also able to attract the right talent. Our co development team in Shanghai is working with all industries from special nutrition, bakery, confectionery, dairy and personal care and as well the new meat alternatives that are eyeing the Chinese market. As modern Chinese consumers become more demanding, We also see our customers increasingly focus on clean label, traceability, nutrition and delicious products with higher quality standards. We now own and manage AK India after 5 years of great collaboration with the founding family of Kamani. I'm very proud to see how our teams, customers and other stakeholders have managed to keep food production running through these challenging times. India is now looking into 35 years where there's more people in the working age than in the dependent age. This is usually a strong indicator for future growth and our dialogue with multinationals and local food companies indicate a strong long term trust in the developing Indian market. AAK India supports the development of India centric versions of global brands. We train corner bakers in making better bread to build better businesses. And we also are trusted partner of the important engine pharmaceutical industry. So let's look at our current customer structure. We're serving more than 700 customers today, with 69% of our sales coming from midsized local companies and the rest from large global or regional customers. With the changing marketplace, it's key that AAK is well positioned with both global brands and local brands. Sometimes innovation comes from global brands going into local markets. Other times, it's the local companies that are leveraging their consumer reach to go faster. We aspire to be equally relevant for both groups. We already built a solid Asian business, but there's an untapped potential in categories, which we work hard to win every day. As you heard earlier, an important part of our strategy is execution of the critical enablers. I will walk you through a few examples of how we work with product management and customer co development 2.0 in Asia. As part of our journey, we will secure best practice in commercial excellence. And one of the enablers is product management. The way we design and govern our product portfolios, the value based benefits our products bring to the industries we serve and how well we utilize our assets. Our innovation can come from customers, consumers or macro trends. The outcome of better product management are several: higher profit per kilo, more sticky sales and scalability across our value chain. Let's look at the other enabler. In the middle, you see our customer co development cycle, where we ideate, create, prove, implement and launch, all in close collaboration with our customer. I'm proud to report that we have advanced our customer co development 2.0 digitally during the last quarters. We quickly engage more and deeper with much more customers. Our customers' decision makers have even received test samples at their home to be evaluated in person, but virtually. Also, we have advanced tools to show meltability and texture in foods virtually. We have learned we can advance to industrial trials much faster than having to travel. It's been great to see we can also generate sales lead directly in webinars or during training academies. Let's look ahead at our strategic priorities in Asia. We're very well positioned in the fast growing core segments of Special Nutrition and Chocolate and Confectionery. Looking ahead, the growing middle class and prevalence of lifestyle diseases is also very relevant for our health and nutrition platform. The plant based food categories are both driven by affordability and innovation and we can help with both. We see increasing interest for up trading in bakery in Asia, better bread, better desserts. And our plant based dairy solutions can bring delicious ice cream that can withstand the hot weather across Asia. Plant based cheese alternatives grow as a category and our solution deliver both on functionality, taste and cost. And finally, to illustrate our relevance and capabilities, our specialty oils and fat can help make both high performance fish feed, as well as it can bring sustainability, clean label and naturalness to the growing Asian Personal Care Industry. So where does this bring us? With our execution platform in place, we will grow faster than the average AK. And despite the current economic environment, we're prudently optimistic about the future. We have several growth dimension. We can grow from the underlying growth from current business. We can grow by winning market share. We can grow by upselling to more advanced specialty solutions as industries mature. We also see opportunities in operational efficiencies across several platforms. And M and A will also support our organic growth in Asia. And finally, let me recap my key messages. Irrespective of COVID, our strategy still remains highly relevant. And our sales volumes are already back to pre COVID levels, and we're building our opportunity pipeline further. After the recent years' investments in Asia's 2 main economies, we're now ready to mature the business further. And our leadership teams are building their capabilities to support the Specialty Ingredients journey even better. And from our broad customer base, we are now ready to build AK Asia as an even bigger part of AK globally. Thank you very much for listening in on the latest AK Asia developments. Hello. I'm Niall Sands, President of Plant Based Foods. I've been in this role since January of this year, having previously worked in our Specialty Nutrition business, leading some of our global accounts, and prior to that, Commercial Director in South Latin America. Today, I'm going to steer you through our Plant Based Foods business on how we are building a profitable new industry segment. Today, plant based foods is the fastest growing area of retail grocery in key markets across the world, albeit an emerging category. Taking root in the early 1980s, these last few years has seen an explosion of activity, both in plant based dairy and, in particular, in plant based meat. Emerging and affluent Asia, coupled with an increasing world population, has resulted in increasing consumption for traditional meat products. Interestingly, while Asia has increased consumption for traditional meat, Europe and North America, in particular, has started to pivot away from meat towards a plant based diet driven by concerns with health and well-being, climate change, frequent food safety concerns in the meat supply chains, sustainability and animal welfare. Generation Z and Millennials are the core consumer group, but they are already influencing other consumer groups to move towards a flexitarian or lessitarian lifestyle. There are numerous players active in this space approaching it from different angles, from traditional food and ingredient companies to universities, investors with 1,000,000 invested in 2020 alone, and innovation ecosystems. In AAK, co development has been our approach for some time now, and we believe that we are stronger together, working with customers and consumers to bring new products to market confidently and efficiently. This approach is very much the mantra in plant based foods, Collaboration, both formal and informal, by parties coming together with their respective expertise, recognizing the technical and culinary challenges are significant, how to develop a great eating experience with respect to taste and texture. As previously mentioned, the percentage sales growth in plant based foods is outpacing that of total grocery. When you drill down into the individual categories, you can see just how fast these are growing versus the standard equivalent. This is not isolated to 2020 alone. This trend has been continuing for a number of years now and is forecast to continue to grow aggressively in the years ahead. And with changing consumer patterns and behavior, we see the innovative and progressive food industry reacting to fulfill the needs of these shoppers. Various projections illustrate the growth of plant based meat expected to grow to $140,000,000,000 by 2,030, almost twice that of plant based dairy. CPG companies are active, looking for opportunities in the M and A arena, extending the portfolio to include plant based offerings or where they do exist, they're increasing production capacity to meet demand, all signals of a healthy category with a strong future. Similarly, we see retailers acting accordingly as well with new private label ranges or increasing shelf space as announced by Tesco and NASDAQ just recently. Food service is adopting as well. In fact the food service channel in our view will be as important as retail to plant based foods. And with that, from QSRs to sandwich bars to casual dining chains, we are seeing an increasing number of menu options to choose from. The cumulative effect is creating more choice, but importantly, it also creates more awareness to pull new consumers into this category. AAK has been very busy in the plant based food segment. The world over, we have commercialized new business with new and existing customers on every continent and in each of the main subcategories in both retail and food service. The removal of dairy fat and animal fat from products poses quite a challenge in plant based foods. Therefore, the need for sustainable plant based oils and fats are critical to development of these products. Much more than that, it's also critical that they deliver against the taste and texture expectations consumers expect, especially non vegans, as we endeavor to keep these consumers in the category with our ambition of making meatless Monday a more everyday occurrence. Our strategic ambitions in plant based foods is underpinned in our efforts to build a global business unit. Acting globally but adapting regionally, we share formulas and recipe development knowledge along with application best practice globally, but recognize culture and taste is local. Therefore, our local CI centers play a significant role in engaging with customers in San Francisco, Shanghai, Sweden, and Sao Paulo. Investing in talent. We are investing in talent to help us build success to ensure we have the right competencies and behaviors to succeed in this dynamic market. We're co developing our portfolio. Plant based foods is a very broad, transcending many traditional categories. Therefore, we are co developing with partners in key categories, extending choice. We're developing global process technology. We're finding new ways, new innovative ways to create fat delivery systems that give the sensory experience consumers crave in terms of juiciness, mouthful, succulents and appearance. Plant Based Foods has found a natural home in AAK With our long heritage in working with plant based oils and fats, we understand profoundly the role of oil and fat with respect to health, sensory, functionality. Moreover, there are distinct overlaps with other key areas of AK, namely health and nutrition. We'll continue to see the launch of new products in the market with a health and plant based position, augmented by COVID in the weeks months ahead. Sustainability. Consumer briefs often come anchored in this key criteria, unresponsible sourcing, with respect ever more so to the planet and animal welfare. To support our efforts in plant based foods, we announced in recent days 2 key enablers. AAK has joined Mista as a corporate member. Mista is a San Francisco based food innovation optimizer. We're leading branded food companies, dynamic and innovative startups, along with specialist peers from the ingredients industry, come together with a shared mission of finding a better way to innovate in food. We are very excited and we look forward to contributing. We will build a dedicated center of excellence in the Amsterdam region of the Netherlands for plant based foods. This asset and the daily working practices it will provoke will support our efforts to really gear up our plant based foods business. The vision is that together with our customers, we navigate through each stage of the new product development process to bring great tasting, plant based food and beverages to the market speedily and with confidence, supported with 2 pilot plants, a sensory suite, and a customer culinary kitchen. When you pull all that together, we expect plant based foods to be a profitable new industry segment for AAK, driven by differentiated fat solutions providing a functional and sensory experience to customers' products, volume growth as the categories continue to grow through increased market penetration and frequency of purchase by consumers, partnership accelerating the commercialization of innovation with disruptive startups and leading CPGs, investments in process technology to deliver our solutions in new ways, and investments that put our customers at the very heart of everything we do with a dedicated and fully equipped center of excellence. Thank you very much. Welcome to the Q and A webcast of AK's 1st Virtual Capital Market Day, November 17, 2020. I'm Fredrik Nielsen, Chief Financial Officer at AEK. I will moderate today's sessions as well as answer any questions that you might have for me. We hope that you had a chance to review the pre recorded presentations from selected members of our management team that was released in the morning on aek.com. We have set aside 60 minutes for this session. For today's Q and A, we have some panel members in the studio while others have to join us online due to current travel restrictions. With me in the studio is Johan Wiesmann, AK's President and CEO. Good afternoon, everyone. Annemeth Olesen, Chief Strategy and Sustainability Officer. Good afternoon. With us online are Steyn Estrrup, President, Asia, joining us from Singapore. Good afternoon. Tim Stevenson, President, Global and Sourcing and Trading joining us from U. K. Good afternoon. And finally, Niall Sands, President, Plant Based Food joining us from Ireland. Good afternoon. We very much welcome your questions here today. Please submit your questions 1 at a time through the question box on the right side of the screen. Once it's your turn, please unmute your microphone. James Targett from Berenberg. Please unmute your microphone. Then we move on and come back to James here in a few seconds. Next question is coming from Heidi Vesterinen, Exane BNP Paribas. Please unmute your line, Heidi. Hi. I hope this works. Yes, it does. I submitted perfect. I submitted 2 questions on m and a. First of all, in your presentation, you said that you have an ambition to become a more substantial player in adjacencies. What are some adjacency of interest aside from lecithin? And how substantial do you mean when you say substantial? That's the first question. Hi, Heidi. Thank you for that. And just to add to that, we in our strategy, we have concluded that our main operating space is really within oils and fats, and then we're adding adjacencies to that. But it is really in that context. So it is other adjacencies where our total offering becomes better or where the blending with oils and fats can make a superior product for our customers. That is how we go about it. So it's not a strategy or a target in itself to grow adjacencies. But we do think that, that is one of the opportunities we have to really leverage the total benefit of oils and fats for AK. Anything to add to that, Fredrik? No, I think you have a very good answer, Johan, on that question. All right. So that's how we see it. So next to Lesothin, it could be other adjacencies to blend in for Special Nutrition, for example, to really advance products that are in the market today. Thank you. And then the second one, you had said that you are willing to go to 3x leverage. I think it was in Frederic's presentation. Do you have sizable targets that would require an equity raise? Whether or not an equity raise is needed, we'll see. I'm confident that when we find the right targets, we will be able to do that. We yes, indeed, we could go to a leverage at about SEK 3 billion. And if equity is needed, then that is what we would go after. And yes, we have in our M and A pipeline many targets that we try to review, analyze and also nurture and build relationships with. So there are not that many very big acquisitions, but many smaller to midsized. But we do have a pipeline of both. Thank you. I'll get back in the queue. Okay. Thank you, Heidi. And the next question is coming from Per Jorgensen, INT Asset Management. Please open your line. Yes, thank you. On sustainability and your targets, a question, are you ahead of peers with these new targets? That's my first question. And my second question in the same regard is, will the Nestle deal on palm oil be the first of many for you? And will it maybe discipline the industry more than we have seen until now? Hi, Per. And let me start and I'll hand it over to you, Anne Matthe. Our main focus, our priority is to make impact to really drive towards an improved supply chain of all the supply chains that we work with. And certainly palm oil is one of the most important and complex ones. And that's how we drive ourselves. And given our purpose that we also launched now, it's all about how we can make better happen rather than necessarily benchmarking and competing, call it, on the impact with competitors. For us, it's our impact that is important. With regards to more comments on that, Anne Marie, please. If you look at it, I'm fully aligned with what Johan also says that what we focus on is what adds value to our customers because we believe that's the best guidance rather than necessarily benchmarking us. I do understand that might be where you are looking, but we are focusing a lot on where we can add value and set targets that are aiming to support us in that direction. And sorry, you had So it's fair is it then fair to assume that you will actually inform the investment community on a running basis how you are doing on the benchmarking towards 2025? Yes. We will definitely be reporting progress. And you also asked into the cooperation with Nestle. This was pulled out as an example of how we also do customer co development within the sustainability area. And this is more an ongoing partnership. So this is not something that's finished with a specific contract. It is that bar continuously raises on the expectations and the commitments within the sustainability area. So this is just an example of where we've teamed up very closely with Nestle on their specific requirement and to make that happen. So on general, we have a portfolio of customers where we are working with, you could say, with different requirements, but similarly trying to create the right solutions for them to both deliver on their promises and to support their brand. And I think it's crucial to succeed that we cooperate to make real impact. We need to do this together with we, our customers, our complete supply chain, upstream our suppliers, but also governments around the world and at the end of the day consumers. That is the way we can make real impact throughout the supply chain and that is how we try to really also drive our impact. Thank you, Per. Great. Thanks. Then let's make a new try with James Targett, Berenberg. Please open your line, James. Still seems like we have some problem with James' line. So let's move on to Alexander Jones, Bank of America. Please open your line. Hi, good afternoon, everyone, and thanks for taking my question. On the plant based space, if I may, could you talk a little bit about how you're seeing this segment evolve in terms of commodity oils and fats compared to specialties and kind of premiumization within that? And then linked to that in the slides, it appears as though you're aiming for a significant increase in plant based EBIT, maybe more than 4 times higher by 2023. Is that a it's a scale illustration or just something showing the potential opportunity? Thank you. Thank you. So I will in a bit hand it over to you Niall to get some color to this. Certainly, we do believe in plant based food. That is in the long term, we will ask consumers eat more plant based, have a more plant based diet. That is something that we definitely believe in. And to get some color to that question, I'll hand it over directly to you, Niall. So please. Thank you, Johan. Yes, to answer your question in terms of the current development that's ongoing in the markets today, there is an absolute position for a high level of specialty oils and fats that deliver a very clear functional benefit to the product, be it in terms of the performance relative to the standard equivalent product, especially in plant based meat. That's not to say that there is some commodity oils and fats out there. However, there is a race by some brand owners to get products into the market. And what we see is that they have been brought to market rather quickly, but maybe not with the best solution. So we are active in terms of reformulating with brand owners who have launched on improvement opportunities to put an even better product out in the market. So this approach of iterative prototyping and testing products in the market rapidly improving is a trait in terms of product development in this and therefore that gives us an opportunity to highlight and show the benefits of our specialty oils and fats, which gives an overall better performance. In terms of the graph, it's for illustrative purposes towards the end, but clearly it shows the drivers that we see which will create us with a more profitable business unit going forward. Thank you, Niall. And I think it's fair to say that in a segment, an industry that is growing so fast, the number of reformulations, new solutions will be high into this space. As it evolves, as it matures and we get new food on the table, of course, this will be a mature industry where there will be opportunities for some commodity oils and fats, but certainly opportunity for highly specialized solutions for taste, flavor and so forth. Thank you. Thank you. And the next question is coming from Kenneth Toal Johansen from Carnegie. Then we move on. I think James Targa from Berenberg should be online now. So let's do a new try, James. Hi, James. Hello. Can you hear me? Yes, we can. Great. Great. Okay. So I've got a few questions on sustainability, if I may. Firstly, could you talk about what percentage of your revenues currently come from sustainable solutions where you know where you're looking for that to go. And then secondly I was I was interested why you didn't have the sustainable development goal number 3 which is good health and well-being is one of your sort of main goals to address considering your portfolio of making products healthier and obviously plant based as well. And then thirdly, with sustainability, are you considering integrating your ESG targets initiatives into executive compensation? Thank you. Thank you. We will take your questions. And Ani Mette, I will hand it over to you in a bit. To answer the first piece of this, our target is obviously to get our supply chains sustainable. So at the end of the day, that's what we are working towards. And it's more complex and call it difficult or the hurdles are higher in some of our supply chains than others. Why we do not disclose exact percentages? It's because we work towards the impact we're making. We're working towards making these supply chains sustainable and taking those actions together with customers and suppliers, as I mentioned. But with regards to the more specific questions, Anne Marie, happy to let the word to you. You asked about the measuring of the revenue and how big a part which is related to sustainable solution. The tricky part is what is the definition of sustainable solution. So you could say corporate nights have one definition they call clean revenue. And you have many other definitions out there. Some lean more on revenue that is linked to the SDGs. So what we are actually looking at, we are measuring the different measurements, but we are trying to figure out which is the best measurements that can guide us to turn a bigger part of our revenue into being built upon sustainable solutions. But we are still figuring out what is the best driver or lighthouse to work with to drive our progress within this area. And I think you had a very fair question on why we're not focusing on sustainable development goal number 3, the health and nutritional part. And I think it's probably a little bit to do with that often when we think sustainability, we've been very focused on our supply chain, our operation. And often the solutions we've developed within health and nutrition, we often looked at that, you know, that's a business need coming out from our customers. But I think it's a very fair point that we focus on and we'll definitely do a high contribution into this area. So a good point, maybe we need to recast our thinking on the importance and our contributions within this area. We definitely aim to scale that also going forward. And about setting targets for the future, when we know the measuring stick, we'll also know how to set targets going forward. But there's no doubt that we see an increasing part of our revenue and increasing part of our opportunity pipeline relating to requirements on sustainability. So we believe it's a strong business driver and strong business opportunity for us for the future. And with regards to our compensation, it's an annual dialogue between myself, the leadership team of AK as well as the Board of Directors and at the end of the day the Remuneration Committee. So that is certainly something that we evaluate and but also sustainability is built into our complete business model and it is a crucial essence. So it is indirectly impacting everything that we do and every compensation KPI, but certainly we are discussing also specific sustainability ones. All right. Thank you. The next question is coming from Philipp Mettler, ZKB. Please open your line. Then we are moving on and coming back to you, Filip. The next question is coming from Per Jorgensen, I and T Asset Management. Please open your line. Hi, again, Per. Yes. Thank you. Hi, again. A question on food service that has been an issue this year, estimated around 15% of food in food and greens, if I'm correct. Could you comment a bit about the rightsizing you have done in the food service and also the comment about plant based opportunity that I've heard Niall he talked about And do you see it actually as a growing category again if you put it all together in the foodservice? Yes. Thank you. So foodservice, as we all know, were hit hard. It's due to that we, at the end of the day, deliver through restaurants, hotel chains, airline catering and so forth. And with the restrictions we've seen, that has had a dramatic impact on our customers' volumes and with that our volumes. We were very quick to act in that. So our team in Foodservice did a great job in adjusting, adapting to the new situation. And we have restructured that organization to a leaner, lower cost base, lower cost to serve. And from that base, we are now growing or following the market. We saw a pickup from Q2 into Q3, but we also see restrictions being tighter again around the world. So let's see. There is still a high degree of uncertainty, while in the mid- to long term we do expect that to come back. And there is a certain portion of food service that is linked to plant based food because also within plant based food some of our customers obviously sell through restaurants versus retail. And that part that goes through restaurants has been impacted as well on plant based food. But from the low base in Q2 or May, call it April, May, we have seen a sequential pickup. But again, uncertainty is high given what happens now over the next months quarters with regards to COVID-nineteen. Okay. Thanks. Thank you. The next question is coming from Alexander Jones, Bank of America. Please open your line. Great. Thank you for the opportunity for another question. This time on the Chinese capacity that's starting up next year. Could you just give us an idea of what capabilities to drive organic growth this will give you compared to what you have currently? And how long you expect it to take to ramp up that new facility? Thank you. Yes. If we start with the latter part, the ramping up will be starting early next year and we should be up and running well towards the second half or the later part of next year. With regards to what it's giving us, it really gives us more capacity. So it is a capacity step up that we could use globally. But certainly, China is the end consumer market for a large portion of what we are already producing and selling today. So with this we also get local presence, regional presence in one of the most important markets for infant formula. So it's a very nice add on that we're getting capacity and in the right market. Great. Thanks. Then coming back to you, Filip Mettler at Seat B. Your line is now open for your question. While we are waiting for that, I might just add one thing to Per, your question on Foodservice. One other part we have been doing apart from rightsizing in Foodservice is also that we are trying to leverage the capacity that we have and the production lines that we have to see if some of what we're selling, for example, in airline catering like small portion bottles and so forth can go through retail or restaurants instead of airline catering. So also trying to kind of shift the business model a bit to adapt to the current situation and make the best out of it. Okay. But it's fair to assume that sorry, is it fair assume that the main part of the foodservice capacity is mainly foodservice? You can't use it in other categories. That's correct, understood? That's correct, understood, because our volume business is about refining oils and fats, and this is about blending sauces and bottled products directly used in restaurants or airline catering and so forth. So it's a different business model. Yes. Okay. Thanks. We have one more question from James Targett at Berenberg. Please open your line, James. Hello again. Thank you for taking my follow-up. It's just on M and A. One of the sort of the pillars of your M and A strategy was adjacent ingredient products. So I just wondered if you could talk about where you see which categories you see of most interest to you and where you could perhaps leverage your portfolio and footprint the most? Yes. So we're certainly targeting and this is where we see the opportunity. Lesothane is a good example. It is very tightly linked to chocolate and confectionery fats. So that is one adjacency linked to that industry, but it can be used in many others as well. And as we see invest for growth in chocolate and confectionery, in special nutrition and our focus on both plant based food and the whole health and nutritional space where we are trying to build a platform. In those areas, that's where we really look for adjacencies that can play a role for nutrition, for health and then leverage that through the industries where we are present, be that into chocolate, be that into infant formulas, be that into a baked goods. And that's how we see that. So it's certainly looking at ingredients that can play a role in the markets where we see the best opportunities. Okay. Thank you. Further questions? Let's do a new try with Kenneth Toal Johansson from Carnegie. Please open your line, Kenneth. Still seems like we have some issues with your line, Kenneth. So let's move on. And the next question is coming from Heidi Vesterinen from Exane BNP Paribas. Please open your line, Heidi. Hi, again. I have a few questions on plant based. So you announced a new center of excellence in Europe. What will this center bring that you didn't have before? And is this similar to the setup that you announced in the U. S? I think it was a year or so ago. And the second question on plant based, when you work on the mouth feel of a product, you need other ingredients like flavors to combine with the fats and, you know, together it creates the juiciness, etcetera. So do you work with other ingredients players? Thank you, Heidi. And I'll hand it over to you, Niall, in a heartbeat. Just to comment on what are we trying to achieve. We know oils and fats. This is a new industry. What we are building now is to build in the capability and the strength like we have in chocolate and confectionery fat. Some of you have been with us on our Capital Market Day that we held in Aarhus in Denmark and entered into our CI center and met our colleagues that helped you get a picture on how we work with chocolate and confectionery customers to really improve their products. That is the knowledge base that we are now trying to achieve in plant based food. And with regards to the further questions, Niall, please take it over from there. Yes. So to answer the first question with regards to the center of excellence we have announced in the Netherlands, the center we have in San Francisco is a fantastic asset to have and supports us with our activities in that region from a customer innovation perspective. But the center of excellence in the Netherlands is where we have essentially upped our game with respect to customer infrastructure. And again, in terms of pushing forward how we engage with customers on the umbrella of Customer Development 2.0. So with that, we will have a more complete facility to engage with customers where we can mock up prototypes of products, where we can put them through sensory testing either internally with customers or with their focus groups that can come into this facility. And then ultimately we can replicate the cooking experience whether that's the at home cooking experience or whether that would be as a product may be used within the food service channel. So all under one roof, we will be able to really step up our ability to offer a more complete service in terms of new product development. So it's quite broad in that essence. With regards to partnerships, you may also have noticed that we have announced a strategic partnership in California last week. That again is very much linked to the collaboration that we see is necessary in plant based foods. As you allude to that there is other essential ingredients that contribute to the overall taste and sensory experience. And therefore we are actively collaborating with our peers who have specialist ingredient knowledge in order to do a better job for our customers. So it's a win win for everyone. Thank you, Neur. Thank you. We have one more question from Per. Jorgensen, I and T Asset Management. Please open your line, Per. Yes. Thank you. Regarding this management ambition of plus 10% EBIT per year CAGR, It's no secret that 2020 will be a bit challenged in that respect. If I listen to you guys today and hear about ambitions on Special Products and China and India and food ingredients restructuring and so on. Is it fair to assume that we can include the 2020 in the calculation? Or is it going too far? Thank you, Or is it going too far? Thank you, Per. And we usually have these kind of conversations, so certainly happy to answer it. Well, our ambition and it is a company ambition of growing our operating profit by 10% year over year. It is an ambition over time. It is an ambition that stands longer than here and now. As you said, yes, who knew that COVID-nineteen would hit us? Of course, that's a kind of a significant bump on the road. And whether or not we can include it, our ambition is to really have achieved that as an average over years. And but is it possible to deliver that over a period 2019 to 2022? Is it 2019 to 2023? Or is it from 2021 and forward? Let's see. But our strive is certainly to get back to a high growth number as soon as possible. But as we all know, COVID is still here. It's still a high level of uncertainty in Q4, in Q1, in Q2 and then let's see. But we have also shown that we can react and we are to a large degree resilient. But now we're speaking about the specific target on growing 10%. And of course, that's a bold target. And we need to deliver both on volume growth, on our ambition in high value added solutions with higher margins as well as getting our M and A pipeline to deliver into concrete M and A. So it is a combination of all that will give us this. So a bit of uncertainty still there, but certainly we are striving for it. Fair enough question or answer. Thank you. Thank you, Per. If you have further questions, please submit them in the question box in the right corner on your screen. I will continue with a question from Filip Mettler from ZKB. Please open your line, Filip. It seems like it will not work, so I will read Filip's question. In order to reach your sustainability sourcing targets by 2025, What actions are necessary to take in your supply chain? Thank you. And Tim, I'll hand it over to you in a bit. So we're certainly stepping up. We have been AK has been for many, many years making impact in the supply chains where we operate. And specifically to the Palmo supply chain, we are members, co founding members of RSPO. We are driving and stepping up with regards to making impact. In order to succeed, it is crucial that we do that together with supplier development, commitments, monitoring, but we need to take it quite far in order to succeed. And Tim, please add to that. Thanks, Johan. That's absolutely right. I think collaboration within the industry is absolutely key to those targets. If we take deforestation this deforestation target for 2025 clearly we can measure that by satellite monitoring. But if we're going to have an impact given our position in the supply chain as well, then we have to work with others, including in particular, our Tier 1 suppliers and working through them towards the upstream side. So as well as the RSPO, which Johan has already mentioned, we are participating in other cross industry organizations like the Palm Oil Collaboration Group, which is which deals with more palm oil, which is not certified by the RSPO, which is the RSPO being the effectively the gold standard. So we have to work with them in order to get them to achieve it clearly because the targets are not those which are directly within our control. They are they tend to be more upstream. Certainly deforestation is not something which occurs on our sites. It's stream with suppliers. And the same with other key areas like human rights where which are less obvious from more difficult to monitor through through the satellite monitoring systems. And we have to work with others in order in order to do that. That's absolutely key, not and it applies to customers as well as well as NGOs. We have so we're developing more relationships with international NGOs as we go forward. And the sort of initiatives which Anna Mehta outlined on her presentation relating to satellite monitoring relating to smallholder development as well which is absolutely key are going to be absolutely fundamental to achieving those goals. But and they are quite ambitious goals. But we are committed to to getting there and they will make a difference in terms of sustainability generally and particularly the most probably the most difficult area and certainly the most high profile area of palm oil. And just to add on that, and this is also a delicate balance where we're really trying to make impact across the whole. Because to achieve this, of course, we are looking at how to reduce number of suppliers, how to work with more strategic partners upstream. That in itself will improve traceability to plantation and so forth. But we also care a lot about smallholders and making the livelihoods of many better. So it is that delicate balance of doing the right thing long term and having an impact long term versus certain KPIs and perceptions around the world with stakeholders, consumers and so forth. And that's really where we try hard to strike the right balance. And our next question is coming from Janne Kugjala from Evliefant. Please open your line, Janne. Hi. Can you add a bit more color on setting the science based climate targets? When do you think you can come out with these? And I'd be curious to hear your thinking on the ambition level. Thank you. I'll hand that one right over to you, Anne Mette. Thank you. Thank you. Thank you for the question. What we've used the last year, as I also shared in my presentation, to align to the greenhouse gas protocol because, as you know, that's the foundation to be able to set the targets. And then we've actually done an assessment both within if you look at our assessment of where our footprint on Green Tile Gases comes from, a heavy part of that comes from our supply chain. So we've actually worked with our sourcing and trading organization on making sure that we can commit to the ambitious targets within the science based target. And we've also worked with our whole global operation organization, assessing where are we tracking, what would be the key next steps and so on. So we believe that we will be able to sign off on a more detailed plan beginning of next year. But we will definitely already, before entering next year, sign up to committing to sign for the targets. And then we're more making the detailed plans in the beginning of next year. I don't know if that covers your question. Thank you, Annemijn. Yes. That's what I was interested in basically the timeline when we get to hear more. Thanks. Thank you. You're welcome. Our next question is coming from Victoria Liden at Oman. Please open your line, Victoria. Thank you. And I basically had the same question as Jan here before me. So I think my question was answered. But just to add to that in terms of science based targets, is it safe to assume that these will be in line with the 2 degree scenario? We're actually looking at the 1.5 degree target. That's what we are assessing ourselves against. So but we want to do the final detailed work before we come out with a more formal, but this is what we've been assessing ourselves against. Okay. Thank you very much. Thank you. The next question is coming from Karri Rinta at Handelsbanken Capital Markets Day. You have a very strong balance sheet and you want to be proactive with M and A. What is the main bottleneck? Lack of targets, limited management resourcestime, COVID-nineteen or something else? Thank you. Thank you, Kari, through Fredrik. I would say from a call it what is challenging a bit, it's certainly not the ambition as such we have the capacity. It is that there is a mixed bag of opportunities out there. And I mentioned that a little bit in a question before. And obviously, I cannot be specific on our pipeline. But there is it is a pipeline within oils and fats or call it our colleagues around the world is a mixed bag of, I'll call it, small rather small to midsized companies, very local, and then quite some larger companies. So the larger acquisition, the call it more game changer acquisitions that we're looking at, those are not that many. And many things need to fall in place in order to make them happen. With regards to bolt on acquisitions, we have continued to do that and we will continue to make them happen. We have a pipeline. It's about a bit about getting the specifically to COVID, we have felt that we can specifically to COVID, we have felt that we can nurture our pipeline. It is quite easy to get contact, to get a virtual meeting going. Most of the world we're now used to a quick meeting over a certain platform, have a acquisition, the targets that come out and then getting through a due diligence, being able to get to a facility. For us, it's most often a production plant or several production plants within a company where we need to do the diligence and look at the assets and get a bit of a touch and feel around it. And that is, of course, more difficult with COVID all around. But certainly, we are managing our pipeline and we are nurturing our relationship. So that ambition stands. But it is not, call it, enough opportunities out there to just cherry pick and make them happen overnight. It takes relationship building. It takes time for some of them to materialize, but certainly we have opportunities out there. If you have further questions, please submit them in the question box. Then we will continue and see if we can get Kenneth from Carnegie on the line. Please open your line, Kenneth. Seems like we still have an issue with Kenneth's line, So let's move on with Alexander Jones, Bank of America. Great. Thank you. One more from my side would be on kind of competitive landscape of ingredients overall. Do you worry at all about the ability to compete as a kind of small independent player as the larger players, the Zhivaudens, the IFFs of this world kind of also expand to adjacencies and talk about offering solutions offerings? Is that a concern? Or do you think that doesn't really impact your ability to drive growth? Thank you. Thank you. Great question. I think for myself, I think I speak for many. We should always look at movements and development to one degree as a concern, meaning that we force ourselves to really look at what we're doing and how competitive we are, but also look at them and that's how we really strive in AK, what is the opportunity in the change in the industry. And yes, we have chosen to be staying at oils and fats with adjacencies. We do not have the strategic ambition to be a one stop shop for many ingredients. And that is partly because that space is taken by very successful and strong companies. We like to see those companies as potential partners. Some of them are partners to us today. For example, in Special Nutrition, we have partnered up with companies to develop solutions and deliver really strong value adding products into infant formula, for example. We talked about plant based food just now, also an area where collaboration will be key going forward. So we are certainly looking at what partners do we need to leverage our strengths and where can we team up in order to get a better solution to, at the end of the day, end consumers? But that specific example you mentioned just now, we don't see as a concern rather than an opportunity. Then of course, in the broader landscape, yes, we are one of the most specialized players. Some of our competitors in the oils and fats space are vertically integrated and much larger than AK. But we have also focused to be a player in the high end value adding oils and fats. And that's the niche where we want to operate and that's what we are known for. So we're trying to really build on our strength also going forward. But one should be humble. Every change could be a risk, but also certainly an opportunity. Thank you. And the next question is coming from Heidi Vesterinen, Exane BNP Paribas. Please open your line, Heidi. Hi, again. A few questions on CCF, please. Could you share what you are seeing in the market at the moment? We saw IRI data suggesting a very positive trend ahead of Christmas. Do you see this as well? And could you also update us on recent innovations such as Cobao, please? Thank you. Thank you, Heidi. I'll start off and then I'll hand it over to you, Frederic, for the latter part. We certainly saw in Q3 a sequential pickup and you saw that in our numbers, strong numbers for CCF on the back of the improvements we have made already in our supply chain over the last 2 years. So more capacity, more efficient production set up as well as better yielding kernels. That impacts our cost to serve. And then on top of that, getting volumes back after the quite weak Q2 as COVID hit in the middle of the Easter season and so forth. So confirming that trend as you spoke about it for Q3, not commenting exactly the trending at the moment. But yes, there has been a pickup sequentially and certainly targeting Halloween, Christmas. But there is the uncertainty again. How will Christmas evolve in terms of how will we as the world population consume chocolate and confectionery over Christmas, next year's Easter. That will of course drive our demand. So there's a big uncertainty out there, and I think it's a given to every one of us. That's what it is. But certainly, the trend was good in quarter 3. And then with regard to the latter part of the question, I'll hand it to you, Frederik. Thank you, Johan. Regarding Cubao, there is a great interest from customers. We are right now doing quite a lot of queue development with different customers, but it's still a little bit too early to see talk about the future potential, Heidi. But as far as we can see, there's been a very positive feedback from customers so far, but it's still in the development phase. Thank you. And while I have this line open, more general question. Have you seen any changes in the competitive I would say that we haven't seen a dramatic change in I would say that we haven't seen a dramatic change not in our competitive landscape with regards to the broader spectrum of oils and fats. There's been, call it, nuances with regards to performance. Obviously, if we go into the our business area or segment food service, yes, there we see differences mainly at our customers, but certainly within more niche players. But that is also a smaller part of AK and a more of a niche part of AK. So I wouldn't say that in general the competitive landscape is that much different. Anything to add to that, Fredrik? No, nothing to add here. All right. Thank you. Thank you. Let's then do a final try with Kennet. Please open your line, Kennet. Do we have you online, Kennet, or otherwise write your question perhaps? As we have no further questions, I hand it over to you, Johan. Thank you. And let me just check with the control room if we have a line open or if we should just round it up. All right. Then first of all, I'd like to thank each and every one of the colleagues with me today, Niall, Steen, Tim, Fredrik and Annamette. Thank you so much for joining me here in this live webcast, also for presentations and so forth leading up to this. And of course, to our whole team around us that has made this virtual meeting, the virtual webcast happening. It is an unprecedented situation. That's what it is. And this is a new way of doing a Capital Market Day for us. And with that, I would also like to thank every stakeholder, investor and other stakeholders that have listened to our presentations, that have been part of this webcast. And thank you for your question. Always like to get them and have a good dialogue with you. So I wish you all a very good rest of the day and see you next year, hopefully in a physical meeting, but who knows, and we're all learning. So maybe there will be a combination of the 2. Let's see going forward. Thank you very much. Bye bye.

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