Earnings Call: Q2 2018

Jul 19, 2018

Hello, and welcome to Essity's Half Year Report Press Conference for 2018. I'm Josephine Edwell, Head of Communications. And today, our President and CEO, Magnus Groot, will go through the highlights in the report, followed by a Q and A session where we'll have our CEO, Fredrik Rooster joining on stage. So with this, I hand over to you, Magnus. Thank you, Josephine. So the Q2 of 2018, we saw organic net sales grow with 2.3% and we ended up with an adjusted EBITDA margin of 11.3%. And to summarize, in all the areas that we could influence, we made good progress. We saw better price mix in all our business areas, strong contributions from efficiency improvements, savings and also strong impact from the continued restructuring that we're doing under the Tissue roadmap. Then of course, once again, I'm sounding like a broken record. We had significantly higher raw material costs with a negative impact that's unheard of so far, 400 basis points for the Group in total. That's equal to 4 percentage points of margin, of course. And as a consequence, we are increasing our efforts in all areas to not only compensate, but of course improve our margins. And one of those efforts is that we have an intention to do further price increases in tissue and I'll get back to this. Some of the financials, maybe the highlight here is the operating cash flow that was 6% higher than Q2 last year. And looking at some of the balance sheet measures, both earnings per share and adjusted earnings per share are higher than Q2 last year. And this is again in spite of the significant cost headwinds that we've seen and the very tough trading conditions that we're experiencing in general. So we are really adjusting to the conditions and creating value for our shareholders in terms of earnings per share. So the net sales bridge where we see a strong contribution from price and mix and this is from all three segments while volume was slightly negative. And all of this comes from Consumer Tissue, where we have 2 impacts. 1 is the tissue roadmap, which has meant that we have closed down capacity leading to lower sales of mother reels, which has a significant impact actually close to 0.6%. So if that would be added back to the 0.3% of sales growth that we are presenting, we would be close to our long term target of being above 3%. The other impact was that we increased prices in consumer tissue in emerging markets. So in Latin America and China to the extent that it had a negative impact on volume and I think this is the right way to go because you only know if you have increased prices enough when you start seeing an impact on volume. And with our strong brands, I'm very confident that we can find the balance between growth volume growth and margins going forward. And we have had a fantastic margin improvement, for instance, in China in Vinda here that really shows that this has been the right way to go in Consumer Tissue. And then some smaller benefits from acquisitions in Latin America, a couple of small acquisitions and currency. The adjusted EBITA bridge, again, strong contributions in pricemix, while volume contribution was lower, maybe worth and then of course, the main theme when it comes to the market conditions in the quarter is that raw materials developed even more unfavorably than we had expected. And if you remember, we already said when we present the Q1 that we were expecting significantly higher raw material costs across the line both sequentially and the quarter over last year's quarter and that happened and then some as you can see here, the overall group impact again 4 percentage points, Personal Care 2 70 basis points. We used to see this as a huge impact, but of course now looking at the Consumer Tissue there in the next line where the impact is 670 basis points, so 6.7% negative impact on our tissue margins, you can really see what we have been able to mitigate to a large extent and what we are facing currently in the trading environment. So negative impact from raw materials on all our three segments and then very, very good cost savings and I'll get back to that in a minute. But before leaving raw materials, we always talk about what we expect this following quarter. And the easiest way to really think about this is to look at the development here in the previous quarter and compared to a year ago and see if you can extrapolate that forward. And our analysis is that, again, we will see significantly higher raw material costs in all areas, in all segments in the Q3 compared to the Q2 and compared to the Q3 last year. So no change there and this does not only apply to the raw materials that you see here. So recycled fiber and pulp, it also goes for oil based materials, so across the line. This is what we're expecting in the Q3. And back to the savings and the number that we show in EBITDA bridge is the savings in cost of goods sold, COGS. And to give some more background and detail on those savings, We talk a lot about tissue roadmap. And when we do that, we refer mostly to the restructuring measures that we also announced publicly, which means closure production capacity, headcount reduction. And many of the closures that we have done recently have been paper machines, which means that the semi finished goods and other real volumes have come down and that is what has the negative impact on volumes in line with our strategy because this is the low margin business that we want to get out of. But very positive in the quarter, we saw significant contributions from operational efficiency improvements, which means that in our primary plants where we focus and where we're investing for the long term, we are working more efficiently. We're lowering the cost per tonne of product produced in many different ways. This goes not only for Consumer Tissue, but equally for Personal Care where we are also making good progress. And the same with material rationalization where we are seeing maybe even bigger benefits in Personal Care than in Consumer Tissue, meaning that we are using the raw materials in a more efficient way and we're also being able to qualify other lower cost materials for use in our production. So these are very tangible long term structural cost benefits that we're achieving. And then sourcing savings, very important area for us, which is getting more difficult in some areas because of the shortage of some raw materials. So we discussed that last quarter and we're seeing that those sourcing savings are still coming, but at a lower rate than previous quarters. In addition to the COGS savings that we are presenting every quarter, we also work to lower our costs across the business everywhere. And just to show some examples where we had progress in the quarter, travel, hiring costs, office costs, headcount reduction in SG and A and also improved A and P efficiency, altogether contributing to a reduction of our SG and A as a percent of sales of 30 basis points. So this is also contributing. And if I remember correctly, our SG and A is now down to 17.8% in the Q3. So we're not only working with COGS, but with costs across the line. Innovations, shortly, many of the innovations here are focused on lighting continents and on fem care and this is part of our program to really increase our competitiveness in these categories and especially where we are now competing since several years, as you know, with P&G in light incontinence. So very much focused in that area and in the area between fem care and incontinence care. And we will support these launches with important and strong launch programs in the next couple of quarters. Looking more closely at each of the 3 segments, Personal Care organic net sales increased 2.4% with contributions both from volume and price mix and adjusted EBITA margin that's down slightly to 14%. Positive additions to the margin include mix, a very good performance in Medical Solutions, growth over 3%, but also a very good improvement in margins compared to the same quarter last year and the Q1 last year. Typically, we see stronger performance in the second half of the year in Medical Solutions. And some of the issues that we discussed last quarter regarding emerging markets, Asia Pacific and so on are easing. So we are doing progress in most of those areas and that's immediately visible also in the margins of Medical. Strong growth in Feminine Care and difficult market conditions in Baby as you can also see there in the organic net sales per product segment down in the right hand corner, with fantastic 10% growth in Fem Care, but conversely negative 5.7% in Baby and all of that is in emerging markets where trading conditions are very difficult. And also in Personal Care, this is easy to forget. We talk so much about pulp costs, but actually also the oil based materials and other materials like chemicals are all getting more expensive with a negative impact of 2 70 basis points quarter over last year's quarter and most of that we were able to mitigate, but not all of it. Consumer Tissue, where we also saw an organic net sales increase of 1.7%, but with a big drop in volume, minus 1.7%, positive price mix, so exactly in line with our strategy that we've stated that in this category margin is our number one priority and growth comes second. Then of course within the category, we are very much focused on our strong brands and stepping out of unprofitable pipe label contracts, mother reels sales, etcetera. And as you can see, higher prices in Asia, Europe and Latin America. In Latin America and in Asia to the extent that we actually had a negative volume impact, So we will balance that in the rest of the year. And in Europe, we had a small improvement also from price and mix in the quarter. But as we have stated all along, we expect that the price increases that we achieved in the Q1 would have a gradual impact in the second quarter and then full impact in the second half of the year. And this is still what we are expecting. In spite of this, we are now already embarking on a second round of price increases because there is a higher acceptance of this in the market and of course a big need for it. So this 2nd round will only have a slight impact this year and mostly then in the coming year 2019. I think that's important to underline. And as you can see there, unheard of negative impact from raw material, 6 70 basis points. So if you would add that back to the 8% margin that we had, of course, we would have a fantastic value creating business. So this is what we're striving for to improve the underlying structural profitability of this segment so that we will catch up and then improve our margins in this category and segment going forward. And finally, Professional Hygiene, another good quarter. Organic net sales growing 3% coming from both volume and a very healthy pricemix. Improved margin to 14.1% due to higher price and better mix in Europe and North America. Also emerging markets as you can see they're growing again 12.3%, so excellent growth. And in this case, we were able to overcome the raw material headwinds of 180 basis points and even improved margins. So very strong performance in professional hygiene, also in line with our strategy. Finally, before summarizing some initiatives during the quarter, we continue to work together with the United Nation, United Nation Foundations and different organizations within the United Nation to promote the 17 sustainability goals. This is very appreciated by our customers. We jointly attend meetings in New York over the last couple of years and this quarter also in Geneva with European customers. So very well received by our customers. We have set new ambitions for people and circularity, some of our sustainability goals, focused on the 3 pillars, well-being more from less and circularity. And circularity, of course, with the discussion about plastics and so on is becoming is moving up on our agenda like everywhere else. And just quite fun fact to end with the U. S. Space Agency, NASA has awarded a contract to Essity to develop the compression garments that the astronauts will use in 2024, I believe, for the Orion Deep Space Mission. So that's quite cool, I think, that we are working in this area. Strong co branding there. And to summarize again then, I think we've been through this a couple of times. Please have a look at the picture there to the right. It shows I think one small benefit of the acquisition of BSN joining that with the marketing skills of Essity where you can see a new line of compression stockings with a much more modern look and feel than what we used to see from Jobst. And so this is part of the kind of intangible but important benefits of the acquisition of BSN Medical that's performing very well. So with that, I end this presentation and that's open up for questions. Fergie, do you want to join? Okay. So do we have any questions from the audience here? Yes, Michael. Yes. Hello. Mikael Joffs, Kepler Cheuvreux. A couple of questions. You talked a little bit about upcoming price increases. Could you try to describe a little bit how is the market functioning right now? I mean, are you the only one? Or is it broad based? What are the clients saying? To give us some color and flavor on that process. And of course, this differs by segments, but focusing in then on Consumer Tissue initially. In Europe, we have a mix of contracts. Some are annual, some are just running contracts and then there's a difference between private label and the branded products. So we are trying to increase prices or our intention is to increase prices everywhere we can. So for this year, it will be on part of the volumes with most of them impact next year. But then very soon after summer we will start with the annual negotiations on some significant branded volumes for next year. But we are speeding up and moving forward negotiations in this area and we have also achieved some further price increases that will impact them next year already now. So that's already negotiated and agreed. And this means of course that the entire industry has the same need, otherwise it wouldn't work. So there is a strong need for price increases in Consumer Tissue in Europe, very clearly. And then in the emerging markets, we have already increased prices to the extent that it has a negative impact on our volume growth and we will rebalance that going forward with promotions, etcetera, to find a way forward with profitable growth. We want to keep the improved margins that we achieved, but continue to grow volume as well. And then in Personal Care, it differs by category where we have been successful in increasing prices, especially in Feminine Care, not so much in Baby, that's challenging in general. And in incontinence in retail. We are also progressing and the price pressure most importantly maybe in Inco Healthcare has decreased over the last couple of quarters. So that's also looking slightly more positive. Of course, this is then an improvement in pricing that can only be achieved as contracts come up for retendering. So that's a gradual process. And then last question from me. You mentioned there that you were able to offset the high raw materials in Professional Hygiene. Why does it seem to be easier to do it in that segment versus, let's say, Consumer Tissue? Yes. I don't think it's fair to say it's easy. It's not easier. But of course, the mechanics of the market is slightly different because we work differently also with service contracts with longer term relationships. So typically, we've seen, if you look back in time, you have normally seen a slight price uptick in every year, so to speak. So there is a better structure of that market and we've been able to do that. And then of course the impact of the virgin pulp is much, much less. We still have virgin pulp also within professional hygiene, but to a much, much lesser degree than we have in Consumer Tissue. So, recovered fiber is much more common. So it's not easy, but it's slightly easier to increase prices historically and that's also the case now. And of course, the raw material impact is much, much lower. Perfect. Thank you. If I could add to that, Torque is a business to business brand that's incredibly strong. We are the global market leader with 20% global market share. So and we're selling more than just the tissue. We're selling systems including the dispenser. So it's another logic as Frederic also mentioned, from that perspective. While in Consumer Tissue, we have the mix also of brands that are super strong, some of them are less strong private label and so on. So that also makes it easier in professional hygiene. Any other questions? Okay. So, operator, do you have any questions from the telephone webcast? We have four questions. The first one comes from the line of Linus Larsson. Please go ahead. Yes, good morning. Thank you very much for taking my questions. First, maybe further to the previous discussion on pricemix. And I think it's encouraging to see that you indeed have pricemix improvement year on year, 2.4% in the Q2. Could you but you also said that there is some gradual spillover yet to come from what you have achieved in price negotiations. Could you share some more detail on that? Should we expect the price mix to be up the same magnitude or rather somewhat more in the 3rd and or 4th quarters? Fredrik, this is such a difficult question. I leave it to you. Yes. Thank you, Linus. Of course, as Magnus already alluded to, we have initiated discussions on continuing price increases. And we also have some left, so to speak, as we have already communicated last quarter of the initiated price increases that we've already done. So yes, there will be more in Q3, Q4. The magnitude is always very difficult to say, Linnus, but we expect further price increases in Q3 and additional also in Q4. Having said that, of course, we just to point out the obvious, you have seen from the graph shown by Magnus that we also have raw material hikes that continue to be very strong or cost increases that continues to be there. So for us, it's as long as price increases on pulp is there or oil based material, we need to continue to increase prices. So yes, we expect further price increases to come in Q3 and Q4. The magnitude is difficult to estimate. That's helpful. Thank you. I interpret your answer as you expect sequential group price mix improvement in Q3 as well as Q4. Is that the case in all three business areas? Yes. We are normally not that specific, Linus, and it varies a lot between both business area, geography and category. So I think as an overall ambition or intention is, of course, to exactly as you say intentionally or sequentially increase prices, yes, but not we haven't specified on individual areas. The obvious area where price increases are needed, you can clearly see that's consumer tissue. But we also have, as Magnus alluded to, very significant impact on Personal Care. Yes. And then maybe a related question. You are obviously quite selective in your business approach, and you've given up some lower margin volumes. Will you make new initiatives there as well to cut back on lower margin businesses? And second to that, what is your current Mother Real net balance for the group? So first question, the tissue roadmap program is continuing. We have previously stated that we have moved forward much, much faster than we expected than when we launched the program in early 2016. So we have done maybe the easier things, but with the current pulp prices and market conditions, this program continues. But we have come past the halfway mark of when it comes to restructuring, I'm quite convinced. But there could be more initiatives coming, also depending on the development of pulp prices and recycled fiber prices and so on. So we're not done with that yet. And then your second question was our mother reels balance. So we're still slightly long on mother reels, but much less than we used to be. So we are much more balanced. And in some areas, we are also not net buyer of mother reels. Okay. And do you have an intention to become neutral or slightly short or to remain somewhat long on mother reels? Do you have a strategic target in that regard? Yes. And that's mostly based then on being as cost efficient as possible, which means that we want to have integrated mills with both paper production and converting. That's a very important component of the tissue roadmap. And that should then eventually lead to the perfect situation where every mill is fully balanced. That will never happen, but that's what we're moving towards because there is a big cost disadvantage of having to transport the mother reels between from the paper machine to the converting equipment. So that's our long term ambition. And when you see the shutdowns that we have done over the last quarters, in the second quarter when we closed the La Riva Mill in Spain, that was a singular paper machine without any converting capacity for instance. And in another Spanish mill, we closed one small old paper machine so that that mill became completely integrated volume wise between the paper capacity and the converting capacity. So that's what we're striving for. Excellent. That's very helpful. Thank you very much. So you can take the next question, please. Okay. Your next question comes from the line of Stellan Halstrom. Please go ahead. Hi. Thanks for taking my question. First on your price increases here now in Consumer Tissue in Europe. Would you at all expect volumes to be affected negatively as you've seen in emerging markets? We already see a negative volume impact on the mother reels again and also partly on private label volumes. But actually that is compensated for the private label volumes by a good growth in our branded Consumer Tissue business in Europe, also exactly in line with our strategy. So we are very happy about that development. Okay. Also coming back to the question of price increases here or maybe the 2nd round of price increases, so to say, you say that you still expect to see some effects already this year. Are those or have these even a possibility to be material? Or how fast can you implement those? Yes, I think Magnus already alluded to, generally for branded assortment in Europe, we control pricing much more. We can increase prices quicker. When you look at the private label side, which is approximately about half of our European business, then we're bound by the expiration of the contract. So it's a little bit different, but we will have some impact during particularly latter part of the year, but of course most during next year. Okay. Then also on Baby, if you can just elaborate a little bit on weakness here, how much is due to just weak markets and tougher competition? And if you see any signs of evening maybe in light of higher raw material costs? So this is the volume decline that we saw in the Q2. It's all related to emerging markets. So for us that would be then Latin America, it would be Russia, Eastern Europe and some Asian markets. And it's when growth comes down, competition increases. So there's an increasing push for volume. And this is what we're seeing. So it's intense competition basically. So what we're doing is that we have complete overhauls of our assortments ongoing in these emerging markets, moving more towards premium and super premium offering. This takes time. And what we've seen over the last year or so is that we are growing really nicely in the high margin premium and super premium segments, but that's not enough to offset the volume drops that we're experiencing in the value segment. And this is across the line. And so it's our strategy, but of course, we would prefer not to see these volume declines and we're working also to relaunch in the value and premium part of the markets in emerging markets. All right. Thanks. And to improve our cost position, this is essential in all categories, but very much so in Baby in the long term to be competitive there. I also want to emphasize that in mature markets in Europe, we are doing really well. It's a very value contributing category for us, but we need to fix the issues in the emerging markets. So operator, you can take all the questions from the telephone, please. Okay. Thank you. Our next question comes from the line of Oscar Lindstrom. Please go ahead. Yes, good morning. Four questions from my side. First off, on these consumer tissue price increases, when you sort of announce these or are you going into it with the ambition of recovering all of the raw material cost increase? Is that sort of your starting point when you announce price increases? The starting point is yes, the starting point is to get as much pricing as we can. And ideally, I was going to say we want to not only recover but improve our margins, of course, Or you could actually express it in another way. We don't like giving away the improvements that we are achieving in our cost structure by lowering our production costs in all the ways that we have presented previously. We want to keep some of that for ourselves, of course, and show improving margins in Consumer Tissue. So that's very much the case. But if you look back 1 year or 2 years, we still have some ways to go to kind of recover, of course, the margin levels that we had when pulp prices were lower. So we're still in recovery mode, but that's not our long term objective. But you would say that the momentum for price increases and consumer tissue in Europe in general is good? Yes, absolutely. And this is we believe also because of the fact that many of our competitors in Europe have lower margins than we have to start with. So they are in as much need of price increases as we are or even more so. Good. My second question is around organic growth in the quarter. You mentioned in the report an impact of tissue roadmap restructuring on consumer tissue during the quarter. Were those new actions or simply things which were made sort of in previous quarters? It's a combination, Oskar. It's basically the shutdown. So the main impact by far from tissue road map is related to the reduction in mother reels. And Magnus mentioned there, it would have been 2.9 basically without that, the organic sales growth. And this is of course a combination of things that have gradually been implemented and of course also announced the restructuring. All right. And have you taken also actions in the Medical Solutions segment, which have reduced organic growth? No, not really. We are our efforts are more we did end of last year to sort out some issues in mostly in Latin America. Of course, we had Venezuela at the time and some other very difficult markets like Brazil. That's all improving now and we're focusing more on getting back to growth with the structure that we have. So we had done that, but that's not our emphasis or focus going forward. All right. I think that takes up my third question. But the final question then is the status of M and A. I mean, do you feel that you have sort of the Medical Solutions segment and the integration under control and then have a good enough balance sheet and outlook to be ready for further acquisitions, let's say during the second half of this year and starting next year? And do you have a list of can you be proactive or is it going to be more if something comes up for sale? So we are committed to the plan that we announced at the time of the acquisition of BSN, which means that we are right now in the face of strengthening our balance sheet and committed to our solid investment grade rating, which means that throughout this year, that's our main focus as we have stated for a long time now. And as we get out of that into next year, then we will start looking at acquisitions again. Of course, we are already looking at opportunities now, but that's when we will be back in shape to start also doing acquisitions. And maybe the assessment, Oskar, was also at the time of acquisition was that this is a very fragmented industry, much more fragmented than the rest of other businesses we're in. And so there are many opportunities for Your next question comes from the line of Ian Wood. Please go ahead. Hi all. Thanks for taking my question today. Just 2 from my side. First, if I could start off with Personal Care. I wonder if you could give some more color on the breakout between price and mix in the quarter. If I look at the drop down to profits from the pricemix you achieved, it doesn't really seem to have fallen down. So I wonder if there was more mix impact in there than price? That was the first question. And then on the second question, can we talk a little bit about the restructuring that you're doing? I know we've talked about the Tissue roadmap extensively. Could you talk a little bit about the level of cash, how much cash is going to be consumed by the tissue roadmap going forward? Is it going to be a similar level or less than previously relative to the amount booked in the income statement? So thank you. Yes. I can maybe start with the first question, Ian, because I think Maarten just mentioned that it's a mix of a lot of different things. So we've experienced price competition on, for example, Inco Healthcare previously, which has now become milder, as Magnus alluded to. And we still have some price competition in various categories and we've raised prices in others. So it's a mix. But if you sum up all of that, the of the components of price and mix, it's basically all mix. So pricing is on balance, on average for all of personal care largely flat and the rest is basically mix. So it's a very, very positive mix improvements in all parts of personal care. The second question, I guess I can take that too, the cash of tissue roadmap as we go forward. We still have as we have announced, some restructuring measures that we have announced but still not executed. Of course, there's some CapEx coming from the napkin restructuring in Italy that we have announced, etcetera. So there's still some cash remaining from the already announced. And as Magnus said, of course, in history, we've done a lot of restructuring. We're sort of past the halfway there. So over time, it will become less. Okay. Thank you. Thank you. Our next question comes from the line of Faham Bey. Please go ahead. Hi, guys. Two questions for me as well. Firstly, on your growth of Consumer Tissue in emerging markets, could you help me break out the growth by Asia, LatAm and Eastern Europe just to identify where the biggest sequential deceleration was felt? And then secondly, in Europe, could you help me understand the industry dynamics shorter term? Because I believe there were increasing capacity coming in Southern Europe and also Eastern Europe as well. Are we do we still expect them to come on board? Have they been delayed or canceled? Could you give us an update on that? And I believe Turkey is a market where there is significant overcapacity currently as well. Are we seeing paper and tissue travel from Turkey? And finally, on that front, like you said earlier in the call, your peers are finding it even more difficult than you guys. So do you expect to see further consolidation in the market? Sorry for the long questions. Okay. Let me start. When it comes to Consumer Tissue in the emerging markets, we don't provide that level of detail really the price mix versus volume in the different emerging markets. So but in general, we had much lower volumes and very good margin improvement. So that's the general message actually in all these areas. And we will rebalance that going forward. And since we're working with number 1 brands in all those markets, we feel very convinced that we can find that balance going forward. When it comes to yes, the new capacity is coming in, most of that is coming in during this year and as we speak, so in Spain, in Portugal. And we believe that kind of this has been accounted for in our plans because remember, we have taken out a lot of capacity also and there has been some smaller shutdowns from other players. So we believe that that's kind of accounted for in our intentions to continue to raise prices going forward. And of course, many of the announced plans for further capacity intentions capacity additions from our competitors have been shelved or postponed. So we don't see any new projects, but rather the opposite that projects that have been discussed have been canceled or delayed. And then further consolidation, I don't know. So difficult to answer actually. I don't have an answer to that question. We will not take part in any further consolidation. We have a very strong market position in the markets where we are active in consumer tissue. Do you expect more companies to go bust, to put it bluntly? Don't know. We haven't seen anything so far. So it's not something we're expecting in our plans. The capacity will still be there and someone will be running those pit machines and converting lines. So even if they do, it doesn't really help is our history. And then I forgot about Turkey. And that overcapacity has been there for several years now. And there is an ongoing import of motherfils from Turkey to Europe, especially to the U. K. In the last couple of years. So it's something that's also already accounted for and we don't expect that to change going forward. There has been a lot of discussions on this capacity and it has some impact, but it's if you actually look at the demand and the supply and the growth and the development between those, the differences aren't huge. So in 2017, it was about 1% or in that order of magnitude between demand and and supply. These are just estimates, but in that order of magnitude. And we expected also a small oversupply in comparison to demand for 2018. Now it's more unclear as Magnus said some are postponing or even canceling. So looking forward, perhaps in 2019, there is no expectancy at least now for an oversupply in comparison to demand. Things have clearly developed in that sense to the better. Thanks. Thank you. Our next question comes from the line of John Ellis. Please go ahead. Good morning. Just a couple of outstanding questions from me. The first one was on the Baby business. I wondered if you could call out any individual countries that was a big negative driver for your Baby performance. And I wondered if you think that your cure or kill list will grow in this segment if competition remains at such high levels. And then the second question was just on the fact that you cited improved A and P efficiency. I wondered how much this had reduced as a percentage of sales and what your full year outlook was? Thanks. Yes. A and P, if I'm correct, reduced this from 5.4 percent to 5.2 percent quarter 2 over last year's quarter 2. So that accounts for a big part of the SG and A savings, but we also have SG and A savings in all other areas as I already presented. Then when it comes to the baby details, this is not our plan to do further cure or kill in baby. Actually part of this volume drop is a little bit of that because we had a baby business in Central America that we pulled out of a few quarters ago that is partly impacting this minus 5% that you saw there. So we've done taken some further measures. But in the remaining markets, so very much with Familia in Colombia and joining countries, we are very much focused on fighting back on re launching our assortment and adding some new premium products. And same for Russia and Eastern Europe and then in Asia, where of course this is run by Vinda. So I will not get into too much detail. There were some other reasons because our Malaysia Vinda's Malaysian baby business where we are the market leaders is actually performing quite well, but there were some specific Malaysian issues with the introduction of a new tax and there was an election and some other reasons really leading to the volume drop. And then in China, as you know, we're not really focusing on the baby category in Personal Care. We're much more focused behind Inco and Feminine Care. Okay. That's all very helpful. And then on the A and P for the full year, do you think sort of 5.2% as a percentage of sales is a reasonable estimate? I think we will have John, we will have a slightly higher A and P spend during the rest of the year. Okay. Thanks. Good innovations that we're launching that we want to support properly. Okay. Thanks very much. Thank you. Our next question comes from the line of Rosie Edwards. Please go ahead. Yes. Good morning. Just a couple for me. One just to clarify. Just in terms of your intention, obviously, to pursue further price increases in Consumer Tissue. I'm right in thinking that you're just talking about Europe there. You're not necessarily talking about emerging markets. In emerging markets, we're much more flexible. We have already increased prices substantially to the extent that we actually see margin improvements in many emerging markets for us in spite of then the much, much higher raw material costs. So in the emerging markets, we're more focused. We're more prioritizing finding a balance, keeping these margins, but growing faster. And then in Europe, it's more cumbersome. We have the big strong retailers. We have the mix of brand and private label and different contract forms. Okay. Fine. And then so just a technical one. Because it seemed like despite slightly weaker sort of operating profit levels versus consensus that the EPS is ahead? From what I can see, I think that's due to minority interests, which were a lot lower in the quarter. Can you just explain that? The minority interest was lower in the quarter. Yes. Yes. We the minority interest is basically consisting of the joint ventures. And for us, the bigger parts there are Familia and Vinda. Those are the major contributors. And we never normally comment specifically on the performance of those individually for obvious reasons, but of course they are the main contributors on that line. Then we have the associated companies. This was minorities. This was minorities, yes. Okay, fine. That's fine. Thank you. Thank you. Our next question comes from the line of Martin Nalby. Please go ahead. Yes, good morning. Could you say something about the margin level difference between, say, private label and branded goods now compared to 2, 3, 5 years ago? It's much bigger than 1 year ago and 2 years ago because it's been easier to protect margins on our branded assortment than on private label over the last couple of years. And we don't expect this to continue. Margins have to come up also in private label because most of our competitors are pure private label players in consumer tissue. So I think they are under a lot of pressure right now. So but this has been the trend recently. And of course, that's also why we're focusing so much on our own brands and launching innovations in that area. But that has been the trend, but I believe that that's to a large extent related to the higher pulp prices and the new capacities that have come in over the last couple of years and that should correct itself going forward. There should of course be a margin difference between brand and private label, but not as high as it is today. And on these price increases from the competitors, I've seen 1, which was 7% in the second half. What are you seeing there, if you summarize? We don't go into that level of detail. It's a nice number that you have there. Okay, good. Thank you. Thank you. Thank you. No further questions on the phone. Good. So that was the final question. Magnus, do you want to mention anything about the Investor Day? Thank you, Josephine. You are welcome. I nearly forgot. Yes, we are planning to have an Investor Day here in Stockholm on the 5th December. So make a note in your almanacs and very welcome. Thank you for listening today. Thank you for joining and good