Earnings Call: Q2 2021

Jul 22, 2021

Thank you. Welcome all of you. Peter Nielsen speaking. And as already told, Fredrik Nielsen, our CFO, will join me also on this call. Very welcome to all of you to the presentation of our Q2 results of 2021. And as usual, we're going to use the framework for this call is going to be the presentation, which displayed on our homepage and that is what I'm going to refer to. So then starting on Page 2, in this presentation agenda, as usual, general highlights on the overall performance, then some comments on the business areas, and then Fredrik will guide you through the financials. And then we are finishing up with a summary and some comments on the outlook for the running quarter and then finishing off with a Q and A session. Turning then to Page number 3, overall summary or highlights. Continued strong performance is the headline we have chosen. I mean, most of the businesses of Trelleborg has been doing very well. More or less all of the businesses have been doing well in this running quarter. Sales is ending up at a little bit north of SEK 8,600,000,000 which is an increase on 23% is Swedish kronas. Organic sales up by 31% and then we have a substantial negative CapEx negative foreign exchange of some 8%. This growth has the drop through has been good. And we are reporting an EBIT of SEK 13.87 million, which is then corresponding to a margin of SEK 16.1 which is then as a result turning out the best quarterly EBIT to date for Kralaborg and also from a margin perspective, the best ever Q2 margin and I mean the 2nd best margin quarter ever for below level 43 and as related to ongoing restructuring already communicated and within the guidance, even though Fredrik will get back to you later and provide some different guidance compared to what we said in the last quarter. Cash flow very strong at almost SEK1.3 billion which is in a way too high actually. I mean we are still running fairly low CapEx. It will be catching up here in the second half of the year. And also in all, we are actually too low inventory in a few levels, which has been also good paying customers. But overall, of course, we prefer to keep the cash in our house instead of somebody else's house. So we are happy then to report also very strong cash conversion for the last 12 months of 112%. So very good quarter in more or less all aspects. Turning to Page 4, look at organic sales. Also here, very strong organic sales everywhere, maybe particularly happy with the organic development in Asia, which didn't really see this dramatic downturn that we saw in the rest of the world last year, so good performance in Asia, but basically good everywhere. Noticing of course, you are noticing that course, that North America is a bit lower than others, even though last year the drop was bigger. So that is also where we see a little bit once again a little bit North America behind the development compared to the rest of the world, but overall very good development. Of course, extremely high figure for South and Other Americas, but there also we have to note this that this is a very small part of Trelleborg. And I mean, this is also individual sales here is creating a lot of positive development if you look at the percentage. But overall good development all over the world, kind of as expected, even though once again with a somewhat less good development, although 18% also is very big numbers also for North America. But once again there we see that we are still a little bit behind the curve. Page 5, back to the agenda. Turning over to individual comments for the business areas, looking at Industrial Solutions, strong organic sales, 23%. And here, basically, all businesses developing nice, growing in all geographies and basically in all segments. We're noting that automotive and construction related businesses doing particularly well. We also quarter on quarter here also see a slight growth in Aerospace and where we see also improving from this low base improving going forward, comment a little bit more on that when talking about Sealing Solutions. All of these resulting in then in a very good margin 12.8 percent, which is kind of above our long term target for Industrial Solutions on the basis of good volumes and continued very good cost control. So satisfied, very satisfied with developing Industrial Solutions. Sealing Solutions, basically similar story, similar exposure as Industrial Solutions. So everything is growing, all regions, automotive, general industry growing. Healthcare and Medical is the area where we see a little bit mixed. I mean, here we had a very strong push a year ago. We're entering into kind of the pandemic, but we see it now getting back and turning from this more, call it, emergency supply and going more to these selective surgeries. We see a mix change here. We see it's improving going forward, but overall, still a good development in Healthcare and Medical. Aerospace also improving sequentially, but still down year on year, which is quite as pushing down the organic growth. But here also we note our customers. I guess all of you saw the I think it was yesterday where Airbus communicated that I see more or less a doubling of their manufacturing output in the next 4, 5 years. That is what they are guiding for now. And we also see for the remainder of the year that we're going to grow substantial within Aerospace from this kind of low base. So we see an improvement there and we see that we are kind of now leaving the downturn a little bit and then turning actually upwards also in Aerospace. All in all, very good drop through here as well, is pushing it up to kind of record high margins of 24%. I've been above that before. But I mean, we are touching on the highest margin ever for Sealy Solutions based again on higher volumes and very good cost control as these volumes are kicking in. Then turning to 3rd business area, Wheel Systems. In the quarter, very high demand for all tire categories. For those of you following our last quarter, saw that we were still in Q1 high on Ag, but a little bit lower in Material Handling Construction. Now we see all of these 3 main segments growing substantially. We are still struggling here some freight. This is where we are exposed a little bit for kind of deliveries from Asia into Europe and North America. And we still have some challenges there to get all the the capacity we need. I mean, we shouldn't highlight this as a very big impact. But nevertheless, there is some negative from this, which we have not really seen in the other business areas. And we also see for EBIT here being held down. I mean, the pricing formula in this means if raw material is going up then the price increases kicks in a little bit later, especially in the OE business. And I mean we could give you guidance here that we are, let's say, lacking some SEK 100,000,000 in the difference between implemented pricing, a raw material impact, which means that we're going to see improvement going forward. Pricing are being adjusted. Aftermarket already very well introduced. But once again, due to the formula we have especially on the OEs for tractors we are a little bit behind the cycle, which is I mean all in all equal if we were once again comment on that, if we were kind of on par with the price increases towards raw materials, which you will be in the next, let's say, 6 to 9 months, then of course we would made another SEK 100,000,000 in this quarter, which is then giving a signal of the kind of overall performance better guidance of the overall performance in Wheel Systems. Turning to the agenda again, Page 9, financials and then quickly turning to Page 10, leaving for Fredrik to comment on the figures. Thank you, Peter. Looking at Page 10, the sales development, we have an organic sales of 31% in the quarter, with organic growth for all three business areas. If we also compare with 2019, sales were organically up 6% with growth for all business areas also versus 2019. Reported sales development of 23%. There are still some negative translation effects. Looking at year to date, you will find organic growth of 17%. Turning to Page 11, showing the historical organic growth. You can see in a historical context, the Q2 is a really strong quarter. Turning into Page 12, showing the quarterly sales of around 12 months. You can see there is an upward trend now since the Q1. Turning to Page 13, showing the EBIT and the margin development. EBIT in the quarter increased by 58% to 1,387,000,000. In the result, there is also negative translation effects from subsidiaries of €59,000,000 compared to the corresponding quarter last year. Looking at the margin, up from 12.5 percent to 16.1%, and that is related to higher volumes, but also to good cost control. Turning to Page 14, looking at the EBIT and EBIT margin around 12 months basis, as Peter mentioned, this is the best EBIT 1st individual quarter and also with a good EBIT margin. Turning to Page 15, the profit and loss statement. Looking at items affecting comparability, that was negative of SEK 43,000,000 in the quarter, that was entirely related to restructuring. Financial net declined in the quarter from €76,000,000 to €58,000,000 in the quarter, and the lower financial cost was related to reduced net debt and consequently less interest payments. Tax rate for the quarter, 24%, which was slightly favorable due to that was less withholding taxes on internal dividends from subsidiaries. Our earlier guidance of 25% for the full year still stands. Turning to Page 16, looking at earnings per share. We had a strong improvement year over year, up 64% to 3.74%, excluding items affecting comparability. Turning to Page 17, cash flow. As Piotr also mentioned, we have a strong cash flow for the 2nd quarter. Cash flow was positively affected by the higher earnings generations. Of course, there was a negative working capital of €424,000,000 which was related to the higher activity level. So we have higher accounts receivable. We have a good development on the payables, very well offsetting the slightly increased inventory. And then CapEx in line with last year. Turning to Page 18, looking at the cash conversion on a rolling 12 months basis, we are continue on a good level of 112%. This is despite the high activity levels. Turning into Page 19, looking at the gearing and leverage development. We had a flat development on the debt equity ratio is 23% despite that we have paid a dividend of €1,355,000,000 during the quarter. And on the net debt over to EBITDA, we are continuing down and now are down to 1.5. I will finish off this section with the financial guidelines for 2021. CapEx, we still guide on 1.4 And as Peter mentioned, we will see a higher activity level during the second half of the year compared to what we have seen during the first two quarters. Restructuring costs, we have lowered with €100,000,000 So the new updated guidance is €400,000,000 for 2021. Underlying tax rate unchanged of 25% and amortization intangibles also unchanged of €400,000,000 By that, I would like to hand back the microphone to Peter. Great. Thanks, Fredrik. Agenda 21, summary and outlook. Turning to Page 22 22, sorry, good very strong performance in the quarter for Trelleborg going into very strong order intake in the quarter and going into Q3 with a record high order book, but also in the quarter delivered very good sales, good organic sales and also as I said highest EBIT, quarterly EBIT to date and also with the kind of a record high EBIT margin. Cash flow also commenting very strong cash flow. And actually for the first time since a long time, we have our less than net debt below SEK 10,000,000,000 and it continued to develop well. Very happy with the quarter as I trust you understand. And then let's say going forward, of course, we still have some challenges here in the supply chain, logistic challenges and also the inflationary pressure, but we feel it's manageable. Of course, there is some concerns and some challenges. But so far in the quarter, we believe we've been able to manage it and we don't see any kind of major obstacles going forward even though we'll still be a strain on organization, it'll still be a challenge to do, but I think it's once again it's manageable. We don't know really, could be new impacts from COVID-nineteen. That's of course something we're going to look out for. We are ready to act again if we are exposed to closures or other issues related to COVID-nineteen continue the portfolio management in this environment also with raw materials going up. It's also offering new opportunities to work a little bit more with the pricing in order to get a better portfolio long term and also to make sure that we kind of allocate this tight supply sometimes that we allocate these to the areas where we want it to be. So this is kind of also high end agenda. This action point continue, we must not neglect this better kind of operational cost levels that have been kind of the results of this shakeup coming from the pandemic and that's of course also high on the agenda to make sure that we continue to watch the costs even though we believe, of course, we see that the cost level is somewhat going up in the 2nd part of the year, but also that is to be balanced with somewhat better pricings. We feel the net of this is still going to be decent, continues to invest more in innovation and hopefully also going to tell you more about that in the 2nd part of the year as we are announcing new incentives in this area, Bofon Innovation and the New Technology. And then of course also we continue to Skout for acquisitions, but we are continuing to see very high valuations and we are a little bit reluctant to overpay. So we're a little bit careful at the moment, although with that said, there are of course still quite a lot of synergistic decisions we've been looking for, and we hope that we also will be able to conclude a few of those. But overall, a little bit careful to spend on this very high valuations that we see especially in the private market at the moment. Turning then to Page 24, demand, we say it's going to be on par with the 2nd quarter which of course still going to be a sizable positive. I mean we see here between 10% in percent organic growth in Q3. That is kind of the guidance we can give at the moment. But of course, with that said and done I mean, with that said, of course, we still have the pandemic, which is a potential issue popping up and we need to watch that going forward as well. So that's it. And then I mean I think I'll leave into Q and A. And before opening up that also now I think we open for Q and A and then we see what kind of questions coming. So please go ahead. Thank you. And our first question comes from the line of Hampus Engelau of Handelsbanken. Please go ahead. Your line is open. Thank you very much. Three questions from me. Starting off with the Asia organic growth, as you highlighted, Peter, comps were maybe a little bit tougher here because of the pandemic played out last year. Would it be possible for you to maybe elaborate a bit on the end markets in Asia to give us a perspective of where you're growing the most and how to think about back for the remainder of the year? 2nd question is on the margin, very solid margin in the quarter. And what I'm thinking is how to model this going forward as I would assume that part of the cost that you had just in the second quarter was still like on not pre pandemic levels, talking about travel expenses and all of that. Is that a major impact? And how do you see that if what we're seeing now in terms of vaccine being rolled out, etcetera, playing out for the remainder of the year. Last but not least, of the discontinued operations. Could you talk a little bit about this area? It's still a quite major part and maybe relate to how the operational performance is within that business and if that has changed in a material way, which means that you're even more certain to get paid what you want to have for this area and how to think about the time frame of divesting it. Those are my quick questions. Thanks. Yes. But Asia, I mean, we have a, let's a wide growth in this. I mean, the geographical areas is still a little bit muted in Japan and Korea, but I mean the rest of Asia and also this we have Australia and New Zealand also which is a sizable business for us especially within wheel systems. But overall, we don't see really any differences here. It's a good performance more or less all over each segment. Of course, we know it going forward. It might be a little bit muted since that picked up a little bit earlier than the rest of the world, but we don't really see any overall changes in this direction anywhere. Modeling quarterly, I mean, of course, as you say that, I mean, we are also kind of believing in that kind of selling expenses, traveling expenses will go up and also some other kind of general inflation as the demand is very high, but we don't see really that having an impact on our margin as we also have some price increases still kicking in, which is balancing this. So we feel that this is not really any kind of we will continue in the same as we see it today, we will continue with the same kind of margin level, of course, adjusting for seasonality. As you know, Q3, since we are still kind of quite a lot of exposure in Europe. We will be exposed to the European vacation period and it will be a little bit pushed down on the margin in Q3 from that perspective, but not really from an overall cost perspective. And then going into Q4, we believe it's going to continue in the same way. There on the margin maybe also I just wanted to highlight some guidance and that especially on Wheel Systems. We do expect some kind of positive pricing impact kicking in Q3 and then continuing Q4 and also going into next year that we will see a positive impact on the pricing. But we have to be aware also the Q3 margin last year was a record high margin in Wheel Systems. So I mean Q3 in 2020 what was the best ever margin for us in wheel systems. So I mean if we can reach similar level as last year, I think we will be very so this is kind of the level not to give any guidance, because a year ago we had a positive raw material in wind systems. I mean, the raw material is going down and demand in the ag was still on a relatively high level. But overall, we feel confident that the existing kind of margins not to be impacted, but for the seasonality. And then discontinued operations is there also of course benefiting from these improvements, but we are still keeping the guidance we believe that we're going to divest this within the year at kind of book value. I mean that is what we feel and we feel that the overall package is going to be delivered. And of course, you can say that we feel more confident on that, not that we have not been under confident before, but we feel of course financing in this has improved somewhat. But I mean the overall guidance is still that is going to be divested in line with the Capital Employed and that we're going to conclude it well before year end. Thank you very much. Is that okay, Alpost anything else? Yes. Thank you. Our next question comes from the line of Klas Bergland of Citi. Please go ahead. Your line is open. Thank you. Hi, Peter and Fredrik. It's Klas at Citi. So first on price cost in wheels. Just to confirm the commentary, Peter, the net effect of not matching the cost inflation was SEK100 1,000,000 in the quarter. And this was a comment for wheels, not for the group. So if that's the case, then the margin wins would have been 17% in the quarter if you would have been fully compensated. So I just want to clarify that first. That that is correct. And we feel within Industrial Solutions and within TSS, Sealing Solutions, we feel that we are fairly well balanced, while in the wheel systems we are lacking SEK100 1,000,000. So the calculation is correct. And I mean the explanation on this, course, when we sell into a tractor, a OE manufacturer, they sell the tractor and delivering it 3 to 6 months later. Then of course, they want to know the pricing on the tires. So there is a delayed impact, but we're going to get that back. When or if the raw material, let's say, start to turn down, then of course, we're going to get a positive impact on that. So that is kind of the way we have agreed pricing on the OE, especially on the tractor manufacturers. And the gap in this quarter is some SEK100 1,000,000. And as you say on top of this, also in the quarter, we also had a slight negative mix. So there is actually even higher potential if we can get even better balance, which had more aftermarket than we. Now everybody has been screaming for tires in this quarter. And we have for long term benefit and maybe put a little bit higher priority on the OE than on the aftermarket. Short term, of course, we would have benefited from selling to the aftermarket. But long term, we are firm that by supporting the OEs a little bit better, we will get long term benefits on this, which you could see a year ago, if you look on the 2020 performance, then of course Wheel Systems was doing fairly well as we look it throughout 2020 and the benefit from that was of course that we had very strong OE exposure which is then kind of not as volatile as the aftermarket. So that is the way we play it. So but correct, as you said, SEK 100,000,000 negative in the quarter, but it could have been even higher if we could have, let's say, also get a bit more normal mix in a way. Yes, because the interesting thing is that if you run rate the current quarter get to SEK10 1,000,000,000 and so if that is the potential then when you'd fully price compensate that it's quite encouraging into next year all else equal? Sure. I mean, we see also the benefit. I mean, we still expect a slight negative because it is moving targets. So yes, not to because that could change in a week. But as we see it today, we have slight negative pricing in the wheel systems also in Q3 and then it's turn positive in Q4. That is the way we look at it at the moment. But of course, that requires that the raw material stays flattish. And then it goes down, then it's going to be even higher benefit. And if it starts to continue up, then there's going to be less benefit. So but that is the way it is. Yes. My very final and third question is on aero. And I'm thinking about the cost program you launched, which was both geared aero being down a lot and then you had sort of part of that program was also for wheels. How much of those savings can you keep here? I mean, how much is structural if ARROW is coming back, because it can become quite interesting looking at the incremental margins if ARROW comes back against the cost actions that you have initiated. Yes, we believe I mean, it's depending a little bit on the product mix, but we do believe that if when or when the volumes come back in aero, we were going to grow into a more efficient structure than before. But then it's still what this is to store for out of sealing some 15% of sales or? Yes, last year was 15%. Yes, so some 15% of sales. So it's still not I mean it's going to have an impact. But I mean it's not a meaningful impact on the totality. So but of course it's going to be a positive twist to it. As a main clue. And I mean, just to give you a flavor, I don't know, I mean, just I don't know how much or many of you are following Airbus, but the Airbus communication was this 220,000,000 which kind of the bread and butter, current run rate, if I remember the figures correct, manufacturing is in the range of 40 airplanes a month. And they guided that they're going to go up to 70%, 75% by the end of 2024. So of course, it's going to be a substantial growth. And they also said that they have some orders to this. But so there is kind of substantial growth to be expected. I mean, if you get to that, you're going to be almost doubling the manufacturers Airbus 2020, which is one of the biggest platforms, almost doubling it in 3, 4 years. Of course, it's going to be then that equates to a 20%, 30% growth per year. So that is of course what we are guiding and we have and they are getting concerned because they know as us we have been cutting down all the other aerospace has already told Fredrik clients has been capping down. So now we are in a strange discussion that suddenly they ask us to confirm that we can grow with them. So easily kind of turning the corner very rapidly and suddenly orders is flowing us. So we need to watch that. But once again, so we see from this low base, we see a substantial growth in Aerospace. But once again, we don't want to make like everything else, we don't make it a very big story out of Trelleborg because it's still, let's say, 5%, 10% of total sales. So it's not really a major thing. But once again, positive and also positive both from a volume perspective and positive from kind of portfolio margin mix. Thank you. Thank you. And we have one further question left in the queue. And that next question is from the line of Ed Goreng of SEP. Please go ahead. Your line is open. Thank you. I have three questions. First one, trying to square everything you've said on sort of pricing and costs going forward. So you have price increases coming through to a bigger extent. I guess raw mats are also coming up from the average level of the Q2 for you and then there's a bit of activity based cost coming up as well. So was the net of all that compared to the Q2, is that still positive or more neutral even if you include the raw mat headwind in wheel systems you want to cover? Quarter on quarter on the group level is going to be a a net positive, because we feel that the price increases coming in on wheel systems is kind of substantial compared to these other cost increases. But then, of course, we're going to as you said, we still have increasing raw materials. But of course, the acceleration in raw material pricing has been not as high the last few weeks as we've been in the beginning of the year. So we think from quarter on quarter cost increase of raw material is going to be rather limited, even though it's still going to be a cost increase, but it's not at all in comparison if you look from kind of Q4 Q1 or Q1 to Q2 is going to be substantially lower cost increase going into Q3. And we do not I mean, I know, but we do not expect a substantial cost increase coming from selling expenses or administration expenses. So I think that's full and on a total net net on pricing in comparison with raw material increases and other kind of inflation. We are not concerned that that's going to create a negative difference. Okay. Thank you. Second question on Seating Solutions, if I do the numbers right, its organic sales is 6% or 7 percent or so above the Q2 of 2019 here in Q2 this year, which is quite impressive given the sort of automotive and aero exposure that had going into 2019 and what we've seen in the recovery, where would you say sort of your that growth is coming from. I mean, is it mostly a share market share gain thing? Or is it an expanded portfolio, increased share of wallet. What are the drivers for that very strong development in sealing relative to its end markets? I think we've been we have a good supply chain in ceilings. So we've been able to cope with the demand where maybe some of our competitors will be struggling more. So that is kind of a market share gain in a way. But if that's going to stick or not, we have to wait and see, because we've been better geared up in our supply chain compared to some of our competitors. Maybe been holding inventory a little bit higher than some of the other guys. And we've been able to treat our customers better than some others. But then once again, whether that market share increase is actually a fact going forward. We have to wait C, but hopefully as we support them now, hopefully they support us later. Then automotive has been surprisingly good to be honest as well. I mean that is maybe where we see that there have to be some inventory fill ups or something, because we've been in certain areas we've been selling a lot more than the underlying production has been up. And the same is basically valid also for several industrial segments where there has to be some kind of inventory buildup in the quarter. So all in all, of course, we are happy that we've been able to support our customers, but at the same time, we need to be a little bit Humble when we look at the overall performance. And I think that once again the major benefit for us has been that we've actually been able to supply while some of our competitors has been struggling. And hopefully, that will show that we are good in supporting our customers and the customers will continue to put us. I don't know if Fredrik wants to add something to that. Otherwise, I think that is covering the I think you have covered all areas, Peter. Yes. Yes. Thank you. Difficult. I mean, yes, the final comment that the difficulty for us is really to judge how much is this is underlying demand or how much is inventory fill ups. That that is really very difficult for us to estimate. Yes. I think most other industrials You listen to talk about very depressed inventory levels still. So I don't know how much inventory rebuild there. No, I think that is correct because you're coming from very low inventory level. So it might be that it's still low. But for sure, I mean, we've been to certain customers, we've been selling more than they've been using for sure. 3rd question, you talked about M and A and or reasoning that valuation is elevated at the moment. And I guess history would tell us that it will come down at some point, but that can take time. So how do you I mean, is there a point when the balance sheet is just too strong and you say we need to shift out more capital to shareholders for a bit more Or what's the for how long will you sit and wait for valuations to come down? No. And I mean, we need what I said, the public processes is little bit too high. Even all the auction processes, a lot of bidders and some newcomers in certain industries where we are questioning a little bit how they value the business. But we are still so what we are doing now is we are kind of more active working on these bilateral discussions. So we're trying to pick up. It might be a little smaller acquisitions, but we see a big potential to execute a few of those instead. It's more on this public tenders or sending out teasers and investment bankers and staff where we feel that in certain areas it's too high. But we are not don't misunderstand. We still see a great possibility for us to spend money on clever acquisitions. And if we are not able to do that, then of course, we need to balance against the higher valuations against other kind of possibilities to use the capital. I mean as part of this also of course we need to balance against making acquisitions and investing more in inorganic efforts. That is also an area where we've been upping our efforts and also where you're going to see a few incentives here also in the next few quarters, where we're going to announce a few kind of bigger organic area since we feel that the organic efforts is a better payoff than maybe paying north of 20 times EBITDA for something. So that is where we are looking. But don't misunderstand me. I think we still have plenty of possibilities to Duke acquisitions, but my comment was more linked to these big public processes. We feel that some of the valuations are a little bit too elevated at the moment. That's clear. Thank you. Thank you. We've had one further question come on the phone. And that's from the line of Karl Bucharest of ABG Sundal Kalia. Please go ahead. Your line is open. Thank you. Good afternoon. My question is on Industrial Solutions. The update on the parts of the businesses that were included in industrial, how they are developing. And also, if we look at kind of the core Industrial Solutions business, how the improvement efforts are progressing there would be interesting to see if we look at continued margin potential from these levels? Yes, and to talk about the business that were included from kind of discontinued operations and moved back to Industrial Solutions. They are performing well. I mean, slightly as an average probably, I don't have the figures here in front of me, but slightly below the average of Industrial Solutions. But there are also actions is ongoing and they're going to integrate that we have some kind of structural improvements to make on that one as we integrate it into other businesses. But we feel that that is not going to be a margin drain here in the kind of next 6 months or something else, where we have some restructuring to be done and some changes to be done. But after that, they're going to perform at least in line with the overall performance of Industrial Solutions. And then of course the core underlying improvement, we are happy with the development of Solutions, we have been doing a lot of structural improvements. We still have some structural improvements ongoing. Of course, we're looking at the margin. I mean, we have the margin of +12%. We've been above 12% now for a few quarters. And of course, we're looking into what that is kind of is this kind of enough an ambition or should the ambition be higher and that is something we need to get back to you and comment when the time is right. Understood. Thank you. Thank you. And we've had one further question come through. That's from the line of Douglas Lindahl at Kepler Cheuvreux. Please go ahead. Your line is open. Yes, thank you. And just one question from my side on the restructuring costs, euros 400,000,000. Can you give some sort of visibility on when you expect to take the residual part of that? Will it be 1 in Q4 or a bit in Q3? It will be shared between Q3 and Q4, but most likely a little bit more in Q4 than Q3. 3. Okay. Thank Okay. So there seems to be no further questions. I'll hand back to the speakers for the closing comments. Okay, great. Thanks for the interest in our report. And as usual, Trailaborg is always available to assist you with some questions. And of course, you can contact Christophe whenever. And also Fredrik and myself is, of course, also fully available for any kind of follow-up questions or comments. So please contact us if you need any further information. Otherwise, I guess most of you are going into some kind of vacation mode. And I wish you a very nice vacation and hopefully see you again, let's say, early autumn. Take care and best regards from Frelavar.