Earnings Call: Q3 2012

Oct 18, 2012

Hello, and welcome to SCA's Third Quarter Report Press Conference. My name is Josephine Edwell. I'm Head of Communication for SCA. And today, our CEO, Jan Johansson, will go through the highlights from the report. After that, we will have a Q and A session where also our CFO, Lennart Persson, will join the stage. So over to you, Jan. Thank you very much. Good morning, ladies and gentlemen. We are very much still in a transition process in SCA after the divestment of packaging, acquisition of Diorcia Pacific. And this is, of course, also reflected in the report. As an example, we have restated the packaging operations, so we can compare year on year. We have not restated Australian business, which is then, of course, need to be dealt with in the reporting. The integration so far of the Deutsche Pacific acquisition has gone according to plan. The business is in line what we assumed in the acquisition assumption or a little bit better. We have not yet seen any of the synergies from that acquisition in the P and L because we are just in the beginning of the integration phase of GP. And if we start to look at the environment we are in, we are not very much helped by the market development or the economic development in the world, as you all know. In Europe, for example, the expectation this year is a decline of the economy of some 0.2% in the euro area with some 0.5%. And the consensus for next year is a moderate growth of 0.2% in EU area and 0.5% in Europe in total. And that is something we, of course, need to adapt to and manage in our businesses. Having said that, we still see a very good growth in emerging markets, both in tissue and personal care. And we also see some growth in Europe in some of our categories, and I will get back to that. The sales and result is, of course, impacted by GP, and I will comment on that when it's relevant. The business area within SA today that are impacted by the situation is, of course, our forest operation. And I will get a little bit deeper into that when we come into forest, what is happening and what we assume will continue. Looking at the summary of the result. We do have like for like a growth of some 16%. We had a negative currency impact on sales of about SEK1 1,000,000,000 Q3 to Q3. And of course, that is mostly then the translation part when we translate everything to SEK. The major transaction impact of the currency is, of course, in the forest operations. Tissue acquisition, positively impacting. GP has an impact of some 10% Q3 to Q3 of the sales increase of 16%. We do have higher volumes excluding the GP acquisition also. We have higher prices. And as I said, a very strong growth in our emerging markets. Forest, from a market perspective, volume is down. We have not lost volumes, but we have seen price decreases in our portfolio. We also have a nice improvement of our results. And of that 20% increase, GP is about 9%. An important aspect of coping with the situation we see in Europe is, of course, efficiency, productivity. And if we look at the current cost saving program we have in the company, we have annualized reach so far DKK 427,000,000 but in the Q3 result, DKK 100,000,000 is impacting that. And year to date, we have an impact of some SEK 250,000,000 from the cost saving program. Looking at it from a different perspective and once again, SEK1 1,000,000,000 impact of currency. We are, for the first time now, above 10% in a long time in EBIT margins. I think last time was 2,007. We have after all the transactions we have made this year, we are still on a gearing debt to equity ratio of 0.59%. So still a reasonably strong balance sheet in the company. And we also see a positive improvement of our cash flow, which, of course, is one of our priorities in SAE today. Looking Q3 to Q2, we have sales growth of some 13%. We have a negative currency impact of SEK900 1,000,000, translation, most of that, Q3 to Q2. Of the growth, GP is about 11%. We also have an improvement of profitability in all our categories in hygiene, both in personal care and tissue. And if we look at the tissue improvement of 28%, GEP is about 17% of that. And as you know, we had GEP in from the 20th of July, which means it was not a complete quarter. Coming into Personal Care. We have a good growth in Continence Care. In Europe, yesterday, we had a growth of 4%. Q3 to Q3, we had a growth of 3% in Europe. Overall, a 9% growth, and of that, 6% is acquired. And that is then our Chinese acquisition and our Brazilian acquisition that has a positive impact on the sales. Baby increase in sales is mainly from Europe, and that is after the restructuring of the Baby business in Europe, where we were able to win substantially volumes in new contracts. But we also have a 9% impact from acquisitions in the Baby Growth. Feminine is 100% organic growth, and it's mainly coming from emerging markets. Also, the increase in the result of 23% is, of course, higher volume. It's also cost saving. Of the cost saving I previously mentioned, about 55% is coming from Personal Care. So we have sort of a higher level of saving in Personal Care today than we have in tissue. And we have a reasonable margin of a little bit more than 30% in overall in the Personal Care business today. Coming into our tissue operations. The growth in Consumer Tissue Q3 to Q3 is mainly from the acquisition. Almost 100% is coming from the acquisition. And then I'm including both GP and Pisa. As you know, we also acquired 50% of PISA, so now we have 100 percent ownership of that. If you look at the tissue increase, some 18% is coming from acquisition. The remaining is organic growth. And emerging markets, the growth of 20%, 7% is coming from acquisition. So still a very, very good organic growth in our emerging markets. Looking at the EBIT increase, of course, acquisition, higher prices. We have improved mix in the system, but we also have lower raw material costs. Cost saving here of the figure I mentioned is about 30% is coming into tissue, and the remaining 15% is coming into our forest operation. Then looking at forest, we are kind of a perfect storm in our forest operations, where you have a structure change at the same time as you have the economic development in Europe. News volumes is down 10% year to date. The magazine paper is down 6% year to date. And on top of that, we also have the stronger Swedish currency, of course, hitting the forest operation. Looking at Kraftliner here, we do have a much stronger position from a market perspective in Kraftliner. The inventories is actually down 23% compared to last year. We have seen price increases during the quarter. We will continue to increase prices, where the next price increase will be about €50, of which €50,000,000 we have received already in September. But we feel quite confident that we will be able to achieve the remaining price increases. We also had some extra costs during Q3. We had repair stop in Obbola that had an impact of SEK 35,000,000. We also had a repair stop in Ostrand with an impact of some SEK 25,000,000. In Q4, we will have a repair stop in Monks, and that will also have a SEK 35,000,000 impact on the result. The negative currency impact is as much as SEK 200,000,000. And here, we are talking about transaction and not translation. So it's real money in currency impact. Looking at the market situation here, we don't see any possibility to increase any prices for the rest of the year. And that goes for everything except, as I said, kraft liner. The market is still very weak in our sawmills, even though we have a good volume, but of course, impacted by the construction industry that is weakening. But also, we do see some negative impact on the home care business, which normally is quite untouched by the economy situation. But now it's so severe in some countries, so people are actually buying less even to repair their houses. The pulp situation, the pulp price is sliding up. Looking at the short fiber, it's higher than we saw last year, about 40% higher. But long fiber is about 8% lower than we saw last year. But there is a lot of resistance in the market for increasing prices for obvious reason because there is no growth there. And we do see lots of new products coming in, in particular in the short fiber side in Latin America. So I don't expect any major changes in the pulp prices, but there will be some price increases. And as we always say in SCA, the best situation for us is actually high pulp prices but stable. Then we manage very good. It's more difficult to take the swings in short terms in pulp prices. So positive on krafts, but no major positive impact in the rest of the operation in forest. So looking at a summary of this. Strong hygiene business, continue to continued growth in that business. There will not be any major price increases for the rest of the year because there are no fundamental for that. We generated strong cash flow. Efficiency program is starting to deliver. And of course, then we have a major impact once we get into the synergy case of GP. And we use this few months to the end of the year to really dig into the different processes and where we should start so we can speed it up after the year end. We have also divested Aylesford, our 50 percent ownership. And as you saw from the report, we had a write down of SEK 850,000,000, of which SEK 140,000,000 is impacting the cash. So now we have mainly after the investment in Utrecht, we have our old machine from 52 that is producing news. And we have been quite clear that, that will also be closed down in due time. We have also, as you may have seen, been included in Dow Jones Sustainability Index. And maybe the most positive thing, at least from my point of view, is that we do see a lot of new innovations coming out on the market in all our categories. And that is, of course, the future and the future margin drivers for us to really get out with new things on the market. Whether it's a big innovation or a small innovation, they are as important. And the improvement we have seen in margins in Hygiene now is, of course, very positive, but it's not a level we are satisfied with. And of course, we want to we would like to improve that going forward. But we need to do that mainly short term, I think, by reducing our own costs and working with the productivity and efficiency within the Hydrogen business. So with that, ladies and gentlemen, Josephine, do you want to join me? Yes. Good. And Leonard, let's open up then for the Q and A session. We let's start over there. Lars Helberg, Credit Suisse. Could you please go through again the sort of margin progression in Personal Care and Tissue, sort of a bridge from Q2 to Q3 with regards to your own cost savings, raw material cost savings? And also if you can try to clarify the actual organic growth like for like in the tissue business, excluding all effects from divestitures and etcetera or and acquisitions, of course? Well, when it comes to the organic growth, I think you can get that from the figures I gave you, what was coming from GP because GP is the main thing. The smaller acquisition in Latin America doesn't impact it very much. And every view is still in transition into the company. But coming into the bridge, maybe Leonard, you have that? Yes, it is. Without giving too many details. Yes, exactly. I mean, you will find that also on our website. So we have some when it comes to tissue, we have some smaller going from quarter 2 to quarter 3. We have some 3% coming from raw material. And then it is, as Jan said, the acquisitions, of course. So on the other line, we had 29%, but very much of that is coming from the acquisition side. But we have also positive cost saving, as Jan talked about, out from the SEK 100,000,000 we saw in addition during the Q3. Yes, I think that's what we can we have seen higher energy costs in the 3rd quarter. So I mean, that's roughly. Then it is more plus and minus volumes, price, In the tissue. In personal care, it is the same, some 4% coming from raw material and from cost saving. On the other line, we have 4% and half of that is from the cost saving. So if I may come back just to the organic growth in tissue, that really means that if price is slightly up you actually have volume contraction ex the acquisitions then. Is that the way to interpret that if you got 100% from EuroTe Pacific? 100% was consumer tissue, not all the tissue, not away from home. Of the duration, we have minus 2% on organic volumes, so to say. Okay. Thank you. And then we have a question there. Yes, excellent. Oscar Lindstrom from Danske Danske Bank. I'd like to continue on this sort of hygiene margin track. Ahead of this report, you've highlighted that the Georgia Pacific Tissue business had a lower EBIT margin than your own sort of business. And I think you mentioned a level around 8% or that's a level that was discussed. Could you tell us what the EBIT margin level of the acquired Georgia Pacific Tissue business was during the Q3? It's lower than S. A. Margin, but higher than the level you mentioned. That is as far as I can go. Okay. And coming also back to this issue of raw material costs, which seem to be one of the main factors excluding the acquisitions for driving the stronger EBIT for the tissue division during the quarter. To what extent were you able to sort of benefit from sort of very low spot prices on pulp? Is that something that was a bit of exceptional during the quarter that you don't expect to see going forward? No, it's most of the pulp we are buying is on contract. So it's if Ann is very small, Matsun, very small on spot. All right. Moving on to Personal Care, where also raw material costs or lower raw material costs seem to have been an important part behind the sequential EBIT margin improvement. Could you give some more details as to what was behind that and what the outlook is? I think in Personal Care, the raw material has significantly lower value than you see in tissue. And as you know, we have a 4 to 6 month delay on the price changes in our oil based materials. And we did see oil price go down 4 to 6 months ago. And then, of course, we get the benefit on that. And now we have seen it coming up during the last maybe 2, 3 months. And that will, of course, then have an impact in 4 to 6 months' time in Personal Care. And following up on Personal Care, you now sort of been in possession of the Everbeauty business for more than a full quarter. Could you tell us a little bit about how that business is developing? It appeared from the press release when you acquired it that the margins were very low. Is that something we should expect to continue to be the case? Well, I think as we said during presenting that acquisition, it's not going to change the margins of SA in total in a while. I mean, it's quite a minor thing in our portfolio, and we're using the time now to really understand the business, to decide where we should be, where we should not be, how should we integrate it with the current business we have in the area, etcetera, etcetera. So you can expect that it will be similar for at least a short time period. Right. On the synergies from the Georgia Pacific Tissue business, how should we expect those to come in sort of front loaded, back end heavy? Well, I mean, people are always in the front and plants are always in the end. And I would say, Mats, a bulk of this is coming from the factory side. 2 to 3 years' time, we will have the full as you know, the same. Right. So we really shouldn't expect the bulk of this to come in next year as it's back end loaded. And you talk about the negative FX effects, but if I look at your deviation table, which you published on your website, and the sort of quarter over quarter effect seems to have been fairly small. I think the problem with that is that the currency impact on forest you will see in price mix and not in currency. So you see it in price and not in currency, and that was quite a substantial part. Yes. All right. Thank you. Those were my questions. And then Sofia. Mikael Jovs from Chevron. I'd like to continue a short question on Personal Care and Super Absorbance given that one of the larger producers faced production problems. Do you see any effects from that in the short term? Yes. There was a very sad explosion in Japan in Nippon, which is producing 20% of the global supplier of that. And we have, of course, very closely looked into that. But we can't really see that it will have an impact on us since we have a very firm contract with our suppliers. Okay. And then just a housekeeping question. I noticed that in your intra group deliveries that they're down quite a lot between Q2 and Q3. Is that just a function of the new structure of SCA? Interesting question. Do you have an answer? No, I have not. But I mean it differs from time to time. But partly it is due to the change in the structure. Okay, really thanks. Do we have anything here in the middle? No? Thank you. Garri in the Handelsbanken. A question on cash flow. There was quite sizable working capital release in the Q3. Was this typically, you would see that in the Q4. Do we still have working capital to be released in the Q4? Or was there something that sort of made it happen sooner this year? I think when we look at the working capital, you may see some deviation from the normal standard since we're now digging into the GP acquisition also. And then they had a slightly different view on working capital than we have. So give us a few quarters, and then you will see the sort of normal pattern on working capital. Okay. Then the comment you made on Oerthviken, I believe, in terms of the newsprint machine. And you mentioned due time, it will most likely be closed down. Is that due time influenced by what happens in the market? Or is it more your reinvestment needs, I. E, when you have to invest, you don't do it, you close it down? Or would you do it for sort of market purposes? It's more an internal process, I would say, than a market process. Since we have now invested in the PM5 in Otvik into a completely new grade that is not really on the market today, then in at a certain period, we will use the PM2 as a test machine rather than producing full volumes. I can't give an exact date, but it's not, of course, too far away. Okay. Then finally, in terms of Q4, you typically would see some seasonality in the Q4 that helps the margins both in Tissue and Personal Care. How should we view that now in the light of Georgia Pacific and very strong margins that we already saw in the Q3? Well, as you know, we have different seasonalities in the company. The strongest season in U. S. Is normally when they start to eat ice cream and in Europe when we get sick and use handkerchiefs. And I don't believe that the seasonality will be in a different this year than another year. The only difference maybe from the past 2, 3 years is that we have a lot of red days in the calendar. It's a very good it's a bad year for companies. We have 2% less invoices days in Q4 than in Q3. All right. Thank you. I hear we also have questions from the phone conference. So let's open up for them. Operator, can you help us with the first question please? Certainly. Your first question comes from Peter Telstra. Please go ahead announcing your company name. Yes, it's Peter Telstra for 1 Investments. I had two questions please. One is just on operating costs. If you look at operating costs excluding Extraordinary, it's a very muted development year over year and sequentially integrating Georgia Pacific. And I was wondering if you could just help us understand what you've done at the SG and A level to deliver that result to what happened? And the second question please was just on the material cost side on the hygiene products businesses. I was wondering if you could just help us give some understanding of what sort of visibility you have of sustaining the benefit you've seen so far going forward based upon your contract exposure, please? I think the first question is the efficiency program we are running now is also very much directed to the SG and A. And hopefully, we'll see further improvement on that side going forward since we have still some more savings coming in from the program we started last year. The second question, Annette, I'm not sure I understood that too. I'm not sure. Okay. And maybe if I could just ask one follow-up on the first question, then I'll re ask the other one, Steve. If you look at the I would have thought there would have been some step up because of the integration of Georgia Pacific in the quarter. I think you talked about cost savings of 100,000,000 dollars in the quarter, which is compared to the size of the Georgia Pacific business. Net, I would have thought there would have been some increase. And I'm just curious as to whether there's anything else I didn't understand, FX or something else? If you look quarter over quarter, it is mainly the impact you're talking about. But if you look compared to last year, it is, of course, also that last year, we had Australia or in the comparison year, we have Australia, New Zealand in the figures as well. Right. Okay. And the question I was just trying to understand was personal care businesses. And I was wondering based upon your contracted position, the degree to which we could see that going forward or maybe even trying to understand your contracted position We have some delay of We have some delay of 40 to 4 to 5 days to the market price than what we paid to our suppliers. And that is the absolute bulk of the pulp supply we have today. Okay. Would you expect this sort of run rate of benefits to carry on through the rest of the year into early next year? Or is it not so what do you think? I mean everything else like we see some slight increases in part now, but with the contractual situation we have it, it is 40 to 45 day before we see that coming into our P and L. Then of course, looking at the PIX prices, etcetera, etcetera, it's not the whole truth because then you, of course, have a lot of rebates in the system also. So I would my view is that I don't expect any major change in that size during Q4. Okay. And is the tissue business ultimately pricing, does it somehow ultimately reflect the material position as well with some sort of timeline on the tissue side? Well, I mean, depends on the different parts we are in the world. But looking at the result now, even though it's quite a nice improvement of profitability, it's still not enough. So we will not very easily or gladly give away anything of that margin, if that is an answer to the question. Yes, it is. Thank you very much. Okay. So I suggest we take the second question from the phone conference. So operator, please help us. The next question comes from Stefan Lueck. Please go ahead and answer your company name. Hi, guys. Stefan Lueck, Deutsche. Two quick questions. Firstly, on the A and P spend, that was quite volatile between Q1 and Q2. How was it in Q3 versus last year? If I remember right, Leit, it was on a similar level. Yes, yes. Similar level as last year. Okay, perfect. And my second question is if you've seen any sort of aggressive movements from your competitors on the tissue side here in an attempt to grab some shares following your acquisition of Georgia? Well, one would have expected that maybe during the long time we had to deal with this in the EU. And of course, during the long time, the people in GP knew that they were going to be acquired by SA. But we haven't seen anything actually. They've been running the business very well. Okay, perfect. Many thanks. Thank you. Good. So let's continue with the phone conference. Operator, let's have the 3rd question. We have the next question from Linus Larsson. Please go ahead, announcing your company name. Yes, thank you. It's S. B. Enskilde. Just a follow-up on the A and P question that we just had. Do you have a guidance for the full year how 2012 A and P spend will be compared to 2011 expressed as an absolute number or as a percentage of sales the way you prefer? I think it will be in the same level as last year, plus, minus. And then you are referring to an absolute number or Absolute number. And what does that mean for Q4 versus Q3? Yes. It's rather something we don't really want to communicate because then, of course, we give all the answers to our competitors also. We have quite a big flexibility in this, of course, depending on the needed promotions, depending on how our competitors are acting. So it's not it's sometimes it's very reactive, sometimes it's very planned actions, tend to be more and more reactive because the buying behavior in the consumers is changing from more buying in the shop than deciding in their house they want to buy something. And what do you sense now among your competitors? If you look at Europe in Personal Care and Tissue, what's your sense of promotional activity among your competitors? I mean, in the baby business, it's always high. Everywhere. It's always a tough competition. And particularly also since the private label is very it's a very big part of it in Europe. In continents, very different depending on if it's the health care or the home care or the retail business. But I mean, the general statement would be that there is always, always tough competition somewhere in our business all the time. And on tissue, any remarks, comments? From a European perspective, tissue is more impacted of the private label movements and the retailer movements than the competitors' movements. Is there a downgrading taking place right now in Consumer Tissue in Europe? And if so, where and how? I think we see the same behavior as we saw in 2008, 2009, not really downgrading, but smarter shopping, waiting for promotions, maybe buying bigger packs, etcetera. And overall, especially in the southern part of Europe, the spending per week is going down from a consumer perspective, but not really in our area because, I mean these kind of products, it's very difficult to reduce your spending. Then you need an alternative and that may be more expensive. Great. And then just also on the cost side, at least sometimes in the past, you've had some quite significant energy cost increases in the Q4. Do you have any suggestion as to the cost development for energy in the 4th compared to the 3rd quarter? Normally, you would see an increase in the 4th quarter due to the weather conditions, and that's what we're assuming also. How much is hedged on the gas and electricity side, respectively? For the Q4? Yes. No, I don't have a figure for that. Okay. That would be it then. Thank you. And we have another question from the floor now. Oscar Lindstrom from Danske Bank. The past 12 months really have very intensive in terms of M and A activity from your side. Will you sort of keep this up going into next year as well? Or was this a bit of an exceptional year in that regards? I think when it comes to getting the right position in the right geography in the world, we will continue to look at acquisitions. But the main focus now will be integration of what we have acquired, taking out the synergies and organic growth. Okay. No more questions from the room. I hear there are 2 more questions from the telephone line. I suggest we take them. So operator, you need to help us here. Your next question comes from Johan Zuberg. Please go ahead, announcing your company name. Yes, it's Carnegie. Just looking at the tissue operations, sorry for boring you to death with all these tissue questions here. But if you look at your deviation analysis here, you have other having both results in the Q3 compared with the Q2 with SEK293 1,000,000. And just looking at your Q3 results here, GP reported EBITDA SEK182 1,000,000, which I guess is part of that. And then my question is, what is the other SEK100 1,000,000? It's a combination of lower A and P, SG and A. You have the cost component into that and some distribution, etcetera, etcetera. It's a lot of small things, but acquisition and cost is the main part of it. Okay. And also if you look at these one offs that you will take going forward in order to drive the synergies from GP, EUR 130,000,000 I think you have guided here. This cost of EUR115,000,000 during the quarter, is that part of that? Or does that come on top of everything? We don't have any GP in the figures yet. Okay. So the €130,000,000 will come in the coming quarters or years here? It will probably not be anything in Q4, Lennox. It will be in the next year. But we still have some costs not taken from the October 2011 program. Yes. But just if you look at these costs in order to derive synergies, will they come as of 2013 and onwards, we'll say? Yes. Okay. And then just also looking at your synergies, when will they start to kick in then? Well, they will start to kick in at the same time. But as we said, when it comes to the synergies from the operations, from the production, that will take a little bit longer time and even though costs can come a little bit earlier. But they will be a little bit later also, of course. But as soon as you have identified and done your negotiation with the unions, you have to take on the costs even though you haven't seen the saving of the costs. Okay. And also just looking at European Tissue Operations. Now you have a big bulk of your Tissue Operations being in Europe. What is what do you say is an organic growth rate for tissue in Europe long term given the population and stuff like that? Depends if you look at the market growth or if you look at the ambition we have. We assume growth in line with GDP in the Western Europe, but of course substantially higher in the Eastern Europe and Russia. Okay. But then you also you include both price and volumes here, I guess. But if you just look at volume growth, what is the volume growth in all that you have? I was actually talking about volume. Okay. All right. Thank you very much. Thank you. And then the last question from the phone conference operator. The last question is from Celine Pernodtj. Please go ahead, announcing your company name. Yes. Good morning. It's Celine Pannuti from JPMorgan. I have three questions. First is on the raw material. Can you give us a bit of an outlook for where you feel you will be in 2013? My and the follow-up question I have on that is that we've seen for several quarters that raw material has been a tailwind for most of your hygiene divisions. And at which point you will need to price this back to your consumer and pricing will turn negative, which we have not seen yet? That's my first question. My second question is in August late August when you gave your conference call, you guided that raw material will be a headwind for personal care in Q3 and it happened to be a tailwind. And you've mentioned that you have 4 to 6 months delaying in cost in your in what you see versus the spot. So I'm wondering what is it that happened in September that you didn't know in August? And my third question is on incontinence. Could you some of the other staples company have seen some pressure in the coming from Europe in any kind of products that are sponsored, so to speak, by the governments? And could you give us a bit of your feel of what's going on right now in the institutional business? And whether the cut and the austerity measure we see for most of those governments have started to have an impact on your incontinence business? Okay. See if I remember all three. To start with, when it comes to raw material, with the current economic environment almost all over the world, we don't assume any major increases in raw material for next year. It's more a currency game actually than a raw material game, and I'll get back to that. When it comes to raw material this year, we actually had quite some headwind in the first half of the year due to the current situation. If I remember rightly, I think we had an increase of 6% in Europe of pulp during the 1st 6 months. And that was mainly due to the currency changes. Since we buy we operate in euro and we buy in dollars, We have not been helped by currency until Q3. And looking at the situation, the competitive situation, it's always, of course, depend on the competition whether or not we need to reduce prices. And the raw material is one component, but of course there's a lot of other components into that at the same time. But having said that, I think that you and the market should be aware of that the level we are on in today is not enough. We need to generate a higher margin and a better return on capital employed in our tissue business. And I think all our competitors are in the same situation. So it's not as we are doing extremely well. We need to do better. And we, of course, have to try to let our customers to understand that also even if it's not always easy. When it comes to the sup prices, I can't really remember if we said that it will be a headwind in Q3 or not. We saw oil prices coming up. And of course, at a certain time, the 4 to 6 month will hit the raw material prices. And but I can't really recall that we said that it would all come in Q3. Since we have this delay and the prices actually went down in the beginning of the year. So logically, it should not come in, in Q3. If we said that, I'm sorry, because that was probably answering some other question. Inco, of course, there is a pressure on the health care system in Europe in many places, and they all try to cut costs. And I think the best way for any health care institutions today to cut costs is actually to work with SGA with the knowledge we're having in incontinence. And we that is also what we are trying to discuss with all our customers. I mean, the price of a diaper is 3%, 4%, 5%, 6%, 7% of the cost of an incontinence patient. And sometimes we are successful, sometimes we are less successful. But looking at the development so far, we are doing quite well even in that segment. Can you share the growth maybe in Continence Europe, institution versus return? The only thing I can share with you just now is the overall growth, and that's 4% year to date in Europe. Thank you. Okay. So any final questions from the room? It seems to be none. So with this, I think we can conclude today's press conference. Thank you, Jan. Thank you, Leonard, and thank you all for attending. Thank you very much.