Earnings Call: Q1 2021

May 4, 2021

Ladies and gentlemen, welcome to the Q1 2021 Results Conference Call and Live Webcast. I'm Andre, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must now be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jennifer Gough, Head of IR. Please go ahead. Good morning, and thank you for joining us. Today's call is hosted by Samuel Segritt, CEO and Frank Herzog, CFO. Slides of the quarter are available for download on our investor website. This presentation may contain forward looking statements involving risks and uncertainties that may cause results to differ materially from those statements. A full cautionary statement and disclaimer can be found on slide 2 of the presentation, which participants are encouraged to read carefully. And with that, let me now hand you over to Samuel. Thank you, Jennifer, and welcome, everybody. Let me start with the highlights of the strong Q1 performance, which reflects a number of positive short term factors. These factors do not affect our full year guidance, which remains unchanged. A driver of the top line growth in the quarter was restocking in Asia Pacific and the Americas. This came on the back of a relatively soft Q4 in 2020 for the group as a whole and Asia Pacific in particular. In addition, we saw a strong contribution from the deployment of fillers in the Americas in 2020. Consumer demand in Southeast Asia continues to be affected by COVID-nineteen, and we expect growth rates for the remainder of the year to be lower. I will come back to the dynamics in each of our regions in a moment. Globally, we are maintaining rigorous precautionary measures at all our plants and production has continued uninterrupted. We are successfully managing the continuing supply chain and logistic challenges, including the recent spike in raw material prices. A key highlight of the Q1 was the closing of the acquisition of 100% of our Middle East joint venture. This enabled us to consolidate the business in the Middle East and Africa from end of February. At our AGM on the 21st April, Abdalla Alobeikan, Chief Executive of our former JV partner, was elected to the Board of Directors. We were also pleased to welcome to the Board, Martinus Nels, who brings considerable experience in the food industry, including roles with GEA and Friesen Campina. The acquisition impact contributed to the strong growth of 17.8% in core revenue at constant currency. On a like for like basis, adjusting the 2020 base as if the EMEA business had been consolidated from March last year on, Growth was 13.4%. The adjusted EBITDA margin increased by nearly 500 basis points 26.1%. The increase is partly due to a lower raw material cost, thanks to our hedging program and to the nonrecurrence of the negative currency impact, which occurred at the end of March 2020. Adjusted net income also increased significantly €52,000,000 reflecting the same drivers. We were able to finance the Middle East transaction without any increase in leverage. The transaction will allow us to embrace the growth potential of the Middle East and Africa region where the Aseptic cotton market is expected to grow at the rate of 5.5% to 6% per annum. This growth rate is well above the global average of 3.5% to 4%, reflecting favorable demographics and rising disposable incomes. At the same time, the trend towards urbanization increases demand for packaged food and beverages. Liquid dairy is a particularly attractive category as average annual per capita consumption is currently around 3 liters compared with over 40 liters in Europe. We have recently expanded in this category, which now represents more than 60% of the EMEA volume. The joint venture had rapidly increased its aseptic market share to around 25%, and there is still a large white space opportunity. As today, we properly cover only 17 out of the 70 countries in the region. With effect from the end of February, Gabriel Daniel Adib, the COO of the joint venture, has joined the Group Executive Board as President and General Manager of the EMEA region. As already mentioned, Abdalla Alo Beykan, Chief Executive of OIG, was elected to the Board of Directors in April. Both gentlemen bring considerable expertise and local knowledge and will help us to continue our successful track record in Middle East and Africa. Let us now look at the impact of the transaction on our segments in the Q1. This chart shows the transition of revenue from the EMEA segment to the 2 separate segments, Europe on the one hand and Middle East and Africa on the other hand. The bar in dark blue, EUR 119,000,000, comprises revenues in Europe together with sales to the Middle East for the 1st 2 months of the year. The light blue and green bars relate to the month of March and our revenues to 3rd party customers, both in Europe and Middle East. Europe is sales within the European region only, and sales to the Middle East are now eliminated as they became intercompany. Now for the underlying trend in each of those regions. In Europe, at home consumption remained at the high level with many people still working from home and restaurants closed across much of the region. This resulted in strong growth in the 1st 2 months of the year. In March, the relative performance was weaker due to the high base of comparison as March 2020 marked the start of lockdowns in Europe. This high base of comparison will persist for the rest of the year. And in addition, the level of at home consumption may decline as life resumes a more normal pattern. Looking beyond the temporary factors relating to COVID-nineteen, We continue to see strong demand in Europe for EcoPlus and Signature Packaging, our formats with enhanced sustainability. And we continue to expand our presence in new categories such as plant based milks. The Middle East and Africa business saw strong constant currency sales growth in March with a recovery in the consumption of non carbonated soft drinks. The growth rates shown on this slide, to some degree, tell the story in Asia Pacific. The second half of last year showed a decline with destocking by customers in Southeast Asia in the 3rd quarter followed by a greatly reduced year end rally in the 4th quarter. As a consequence, customers opted to replenish stock levels in the Q1 of this year, even though many countries continue to be affected by COVID-nineteen restrictions and the resulting economic impact. This means that on the go consumption remains subdued. In China, consumption started to return to more normal levels in September last year. In the initial phase of recovery, The focus was on white milk, but we are now also seeing a pickup in yogurt drinks, an important category for us. Celebrations for Chinese New Year, which in 2020 has been canceled, were able to take place, although people did not travel long distances as in the past, which reduced consumption. Chinese New Year is an important factor for our business as many of the products we feel are presented as gifts at this time of the year. Our business in the Americas reported another exceptional quarter. And I'm pleased to report that this was in part due to our successful deployment of new fillers in 2020. These included fillers placed with Nestle for chocolate milk as well as the deals with Lieber and Schafer, which we have discussed previously. There was almost no contribution from the new fillers in the Q1 of 2020, but they ramped up rapidly in the course of the year. We also saw a significant restocking effect in the Americas due to a relatively soft year in rally in Q4 2020. This related to the strong performance in the region in the 1st 9 months of last year, which meant that by September, many customers had already reached levels qualifying them for volume rebates. We therefore had little incentive to place further orders in Q4. However, with at home consumption of liquid dairy remaining strong in Brazil and Mexico, customers needed to rebuild stocks in the Q1. In the U. S, at home consumption of food products continues to be robust, and there is now some improvement in the foodservice sector. Finally, we can report continued positive momentum from our expansion into Latin American markets outside Brazil, including Peru, Argentina, Chile, Colombia and Ecuador. Although there are clearly some temporary factors boosting growth in the Americas in Q1, Performance in this region has been very robust over time, and the prospects for further growth are good. In this slide, we announced earlier this month that we will construct a new production plant to serve North America, principally Mexico, the U. S. And Canada. We're very excited about this project, which represents a further expansion of our global production network and will enable us to continue our strong track record of growth in the Americas region. The plant will be constructed in Queretaro, Mexico, to serve most American markets and will enable us to serve our customers faster and more efficiently. Until now, these markets have been served through imports of finished cartons from either Asia or Europe. Delivery lead times will be reduced with the local plants, and we will be able to respond more quickly to changes in demand. We will invest around EUR 40,000,000 in the new our 3 year period. In addition, land and buildings will be financed through a long term lease with an NPV currently estimated at approximately EUR 20,000,000. The investment will cover state of the art production capacity for printing, cutting and finishing of cotton packs. Unlike the new plant just opened in China, we are not at this stage investing in an extruder for the production of laminated board. The plant is expected to open in the Q1 of 2023. And at this point, we'll have capacity of over 1,000,000,000 packs, which may be increased over time to 3,000,000,000 impacts. This project is a further example of our localization strategy and of our commitment to invest in the business, whilst remaining within our guided range for net CapEx of 8% to 10% of revenue. Let me now hand you over to Frank for a review of the financials. Frank? Well, thank you, Samuel, and also a warm welcome from my side. We had a strong start to this year, while we did benefit from some positive special effects driving growth. This performance has set us up well to achieve our goals for 2021 as we confirm our full year guidance. I'll now take you through the numbers in more details. Let me start with the progression of core revenue at constant currency compared with Q1 2020. You can see the relative contributions of organic and acquisition led growth of 10% 8%, respectively. Bear in mind that Q1 has historically been our smallest quarter. We expect the organic growth rate in the next quarters to be lower as we do not foresee the special effects we saw in Q1. On the other hand, the acquisition impact from the former JV will increase as the EMEA business was only consolidated for 1 month in Q1. Assuming that we had also had 2 months of the EMEA joint venture and 1 month of consolidating EMEA in 2020, Our like for like growth rate at constant currency is 13.4%. The impact of currencies on the top line continue to be negative with the depreciation of the Brazilian real and the tieback against the euro. Remember that these currencies were relatively strong in the early months of last year, only experiencing sharp drops towards the end of March 2020. Let's take a quick look at the effects of the Middle East joint venture acquisition. On the left hand side of this slide, you see the reminder of the reporting impact. On a net basis, Taking account of intercompany eliminations, the EMEA business would have contributed revenues of around EUR 150,000,000 to the SIG business in the last 10 months of 2020. This forms the base of our like for like constant currency core revenue guidance for the full year, which is the lower half of the 4% to 6% range for our medium term growth. The adjusted EBITDA of the EMEA business will also be consolidated over 10 months. This will be partially offset by the fact that we will receive no dividend from the joint venture. Also, no dividend was paid in January February prior net income in the Q1 of 2021 does not yet include any impact from the acquisition accounting or any potential gain on the previously held interest in the joint ventures. Upon completion of the transaction, Around 17,500,000 new shares were issued to the Ovekhanne Wesner Group, together with a cash consideration of EUR 167,000,000. Post closing, we kept our leverage constant at year end 2020 levels. Turning now to adjusted EBITDA, which shows healthy profitability. The currency impact was positive because the negative revaluation effect, which we saw at the end of March 2020, did not reoccur. This favorable impact was partly offset by translation and transaction effects resulting from the weakness of the Brazilian real in Taipa in the Q1 of this year compared to Q1 2020. The strong top line growth was a key driver for the EBITDA increase. The contribution of raw materials was positive due to the hedging carried out last year at a time of relatively low aluminum and polymer prices. I'll cover this in more detail in a moment. The contribution from SG and A was also positive, reflecting the phasing of expenses last year, which were weighted towards the first half. As the year progresses, we expect SG and A cost to be higher than last year as we step up growth investments and resume some activities, which had been put on hold in the course of 2020 due to the pandemic. The consolidation of the EMEA business has two effects: a negative impact due to the cessation of dividend payments and a positive one due to the consolidation of adjusted EBITDA for this business. In the Q1, the net contribution was relatively small versus Q1 2020 as the dividend affects all 3 months, whereas we only have 1 month of EBITDA contribution. I would now like to take a closer look at why we consider our exposure to recent spikes and raw material costs to be limited. Altogether, raw material costs are equivalent to approximately 36% of core revenues based on 2020 figures. Of this, over half consists of liquid packaging board. We purchased this from our external suppliers through long term contracts with a high level of price visibility. Prices for liquid packaging board do not reflect movements in the pulp prices. It has historically been at or below the rate of European inflation. So what about aluminum and polymers? Their prices this year have been influenced by supply shortages and an upturn in demand. Excluding the cost of aluminum conversion, which is not tied to the metal price, these costs represent about 12% of revenue. And of this, 80% of our exposure is hedged on a 12 month basis. As I mentioned on the previous slide, we saw the benefits of these hedges in the Q1. Of course, we're already paying higher spot prices for the non hedged portion of our requirements. But on a full year basis, we expect this to be offset by our hedge contracts, which are at lower rates than the prices we paid in 2020. The hedges will not eliminate price movements, but they give us time to manage them. In summary, we benefit from having cost of only 12% of revenue being exposed to volatile commodity markets, and we benefit from our hedging strategy. We therefore maintain our guidance of a broadly neutral impact from raw materials on adjusted EBITDA this year. This takes into account the consolidation of the EMEA business, where raw material costs were not hedged for 2021. Now a quick look at adjusted net income. It's primarily driven by the increase in adjusted EBITDA. The main reason for the higher EBITDA adjustments is a higher restructuring charge, which relates to the closure of the Wakatana paper mill that we announced in February. Our slightly negative free cash flow is in line with our usual seasonal pattern. Historically, Our cash flow has been weighted towards the second half of the year. This reflects the seasonality of our business, the 4th quarter being the largest with the final buildup of the bonus accruals. Also in the Q1, we pay our volume rebates for which we have accrued in the course of the previous year. Our cash flow in the Q1 of 2021 was slightly negative compared with an unusually strong Q1 in 2020 when we benefited from favorable working capital movements. For the full year, continue to expect free cash flow to exceed €200,000,000 Our leverage was not affected by the cash outflow to finance the cash component of the EMEA acquisition that closed at the end of February. Owing to the strong adjusted EBITDA performance over the last 12 months, our net leverage ratio remains unchanged at 2.7x, despite the purchase price payment and the consolidation of the joint venture debt. This ratio has been calculated by including the LTM EBITDA of NEA and deducting the joint venture dividend. Our medium term plan remains to reduce leverage towards 2x EBITDA. The new €100,000,000 credit facility has been taken on to refinance the joint venture debt on very attractive terms. Finally, our full year guidance remains unchanged. Given the one off nature of some of the revenue drivers in Q1, we expect a slower rate of growth for the remainder of the year. For the full year, we continue to expect core revenue growth at constant currency on the like for like basis to be in the lower half of the 4% to 6% range. This takes account of the ongoing impact of COVID-nineteen in Southeast Asia and the tougher base of comparison in both Europe and the Americas. The adjusted EBITDA margin is forecast to be well within the 27% to 28% range, bearing in mind that we will not have the same one off currency tailwinds in the coming quarters. We are maintaining our net CapEx guidance for both this year and in the midterm at 8% to 10% of revenue. In summary, SIG had a strong start in 2021, driven also by specific factors in Q1, and so we're confident to confirm our guidance for the full year. This now concludes our presentation for today. Thank you for your attention. Samuel and I will now take your questions. The first question comes from the line of Sandeep Piti from Morgan Stanley. Please go ahead. Good morning. Congratulations on the strong result. I have two questions. 1, firstly is on the production plant closure in Malvern, Australia that has been announced today. So can you just provide us, are there any costs or provisions attached to that plant? And then what portion of new capacity that has been constructed in China will be utilized to serve that market? So that's my first question. And then second one, during last conference call, you had indicated that the company normally has price negotiations during first half of the year. Can you please let us know how the discussions are progressing, The shutdown of the plant in Melbourne is probably associated with around €7,000,000 cost, which we will accrue accordingly. It was always the plan to serve the market out of our new Chinese facility and the Chinese facility has sufficient capacity to harbor the growth that we expect to come out of that market and the existing volume. And you also recall that, obviously, our Chinese facility, over time, we'll be around close to 40% of the capacity of Asia Pacific. So that will be really a plant that will allow us to grow and continue to grow in the entire Asia Pacific region. Now with regards to your second question, price I think you understand that the weaker price negotiations in our business take place in the 1st couple of months of a given year. We take into account the number of different sectors. On the one hand side, there is definite changes in the input costs as you see them today. But on the other hand side, what is also very important is obviously the way how we create value for our customers. So it's obviously the way how customers use our filling machines, the products they and our filling capabilities vary from year to year. And last but not least, we also look at the competitive environment. So all those factors together are factored into our pricing decisions with the customers. Okay. So just Just to follow-up, were you able to have a discussion to pass on the higher raw material prices to the customers? Like what they did they have positive outcome. No, I understand Sandeep. But I think the way how we look at our top line, our top line is predominantly driven by volume growth. And volume growth is driven by the end market demand and the macro drivers you are familiar with, which is disposable income growth, population growth. We don't disclose the disentangled cut on mix, price and volume on the top line, but simply also because volume is the key driver. Okay, understood. Thank you very much. Thank you. The next question comes from the line of Jorg Iser from UBS. Please go ahead. Hello, Samuel and hello, Frank. Thanks for taking my questions. The first one would be, please, on the Mexico side you are building. To better understand the return on this side, can you tell us what's roughly you expect as a margin benefit for this region coming from serving these markets more locally now, in particular, North America? And are there also already new contracts surrounding this new site materializing over the next 2, 3, 4 years? And the second question would be, please, on your outlook. For the next 9 months, your outlook assumes low single digit like for like sales growth with comps getting easier, in particular, in Q4. Is there anything special you should read into this? Is there any customer consolidation happening or any customer loss in any region? Or is it also more the concept of prudence given the ongoing uncertainties on COVID-nineteen in Southeast Asia? Many thanks. Thanks for your questions, Jorgen. On the Mexican plant, obviously, we're very excited about project. This will allow us to serve our customers in the North American Hemisphere in a much better way as lead times from Europe and Asia obviously are longer and that has an implication of our way to do business there. So it's predominantly an enabler for continue our growth record in the region. And you're familiar with our production set up and the fact that once we put a local extruder in place that, that allows us to source locally. So I would say some degree, this plant is more of a growth enabler than a margin enhancement tool at this stage. But equally, given the capacity that is put into place there and recall this 1b impact with a liter pack. So there is basically 4 times the equivalent of the volumes we normally have expressed to our Chinese plants as 1 liter compared to the 2 50 milliliter on average in Asia, but 4. So that's a sizable facility serve the market. We do have new customer wins in the region, including North America. And we believe that Plant is going to continue to help to grow the business there. Now on your second question on the outlook, obviously. We had a very strong start into the year, and I think we talked about that earlier. It is a function of, to some degree, replenishing on stock levels. I would say stock levels came back to more normal levels. And we confirmed the outlook for the full year, which is obviously the 4% to 6%. And we said we expect to come in, in the lower half of it. And there is no particular reason in terms of a new flex in terms of the customer loss. But if you look at the current uncertainty related to the COVID-nineteen situation. We continue to see obviously headwinds in Asia Pacific, especially if some markets there continue to be under partial lockdowns. I mean, schools, for example, in Thailand, Indonesia, they remain closed until summer, and then it's going to be seen how they continue. Cool milk programs, obviously, which is a factor in our business, are parked for this period. I think everyone on the call has followed what happened in in India and how rapidly this change has happened and what the impact on business in general is. So that definitely continue to be a washout. And then on the other hand, we're going to have strong comps as a result of the increase at home consumption last year, starting that started basically in March and continued throughout the year. So that is a strong basis of comparison in those markets where we had these tailings of higher home consumption. And with Europe and like the 1.0 so Latin America, going back to more normal patterns of life, we probably have to expect that home consumption will come down a bit. And that's why, all in all, we maintain the outlook for the full year. Thanks for this. If you allow me one quick follow-up. Would you still say after you saw more data in the last couple of months that COVID-nineteen is still net net, mildly negative for your growth on average? Yes. I think on average, that's a fair statement. It's a net headwind to us. So obviously, Asia Pacific is an contributed to growth. And over 60% of what we sell there is sold for on the go consumption. So that statement holds true. I mean, you can think about the perfect storm, respectively. The perfect coverage you want what happens if there is no lockdown in Asia, but continued running those markets where we benefit from higher total consumption. In those instances, obviously, they could turn around from a net headwind to a net tailwind. But as the situation currently is and as you have seen it throughout last year, it remains a net headwind to us, yes. Thanks very much. Thank you again. The next question comes from the line of Alessandro Foletti from Octavian. Please go ahead. Yes, good morning. Thank you for taking my questions. Just first to start with a very Technical one maybe. I see in Slide 6 of your presentation that you say the growth rates now accord the new definition of constant currency growth. Can you explain what that definition is? Sure. No, thank you for this question. Let me take the technical one. We are adjusting for constant currency both for translation effects, which we've but also for transaction effects. The transaction effect is when our entity in Thailand, which is recorded in Thai baht sells in U. S. Dollars. And we made that change because we really want to capture with our constant currency growth rates, the underlying business and eliminate all effects of currency movements. So you can see that there's really a proxy to the underlying, yes, close to closer as we can get towards the volumes. Well, my understanding is, Frank, it's not materially Yes. I mean, as we disclosed last year, it would have changed the growth rate by 10 basis points. So it's not a material number. Does that answer your question? Alessandro, you're probably on mute. Yes. Hello? Can you hear me? No, we can hear you again. Thank you. I'm sorry for that. I don't know what happened. 1 year in lockdown, still not able to use this technology. I was wondering on the Middle East growth rate, dollars 29,000,000 was posted for basically the month of March. I was wondering if this does not indicate actually a very, very strong rebound in that region. And I was wondering if this is sustainable for the rest of the year or if there is also special stock and destocking effect in that region? And also if at the end of the day, the €150,000,000 you have indicated are not a little bit too small for the consolidation effect this year? I would say you described it very well, Alessandro. I think March was a very strong month, and you can't expect that we see now 12 of those March of those months within a given year. We did see and there was a continuation of what we discussed on Q4 that there were some headwinds, especially also in the local related soft drink category. Schools remain closed in wide parts of Middle East and Africa. Saudi, Egypt, the schools closed until midyear, and then they revisit. So this juice box business is an important factor there, and that definitely did affect us. In addition, there is a drought in South Africa, which is obviously a key dairy market and it impairs the dairy production. So the volume is much lower. So those factors explained also the weaker starting to the year, but March to some degree showed a catch up effect. But I think the 29% is a very strong number for a single month. Thank you. Just to come to your second half of the question, the EUR 150,000,000 That is the adjustment for 2020, so not for this year, but for last year to get to the jump off point or basis for the like for like comparison. So the net effect of eliminating the intercompany sales and adding the 3rd party sales for the 10 months from March 2020 through the end of the year. Just so that you could help you. All right. So that means for 2021, there is the growth to put on top, but It will be like this 4% to 5% as well. I mean, because you said that the growth is for the whole consolidation perimeter, The guidance. Yes, exactly. The growth is for on the like for like basis as we described this. And so you need to have the right jump off point for 2020, and that is $150,000,000 to get to the right starting point. And that's at the group level and not for the EMEA business because we guided the group level. Okay, great. One final question, if I may. On the Mexican side, again, Did I understand correctly that you may put a lamination line there in the future? Or this increase of packaging will only be on the sort of finishing side? It's the latter. So the capacity we referred to with SEK 1,000,000,000 to start with and SEK 3,000,000,000 up to SEK 3,000,000,000 that's basically what the cycle harbor in terms printing and finishing. The extrusal capacity, we manage on a global basis. As laminated board travels very well. So we can produce it in one region and supply it to the other. And also as it is not yet with the customer specific design, we can keep it in the inventories of those satellite plants, as you call them, that only operate with printer and finishing. So there are no plans at this point to put an extruder into the North American facility. But obviously, if we at 1.3 to point where we need the extruder capacity, we're going to analyze what is the best location for the extruder. And the plant could theoretically harbor such an extruder if need be. Right. So at the moment, can you share with us where the laminated rolls are coming from, Brazil or Germany Or it doesn't matter really. It's really a question of global optimization of capacity. I think that's the answer, Alessandro. It doesn't really matter really. We take into all constraints and all factors there from supply chain costs, from plant utilization. And that's how we handle the laminated port supply to all our plants. All right. Thank you very much. Thank you. The next question comes from the line of Lars Kjellberg from Credit Suisse. Please go ahead. Thank you. Good morning. I'm just looking at the drop through margins, if I were to adjust last year's EBITDA margins, which for the FX component, which was then 26.2 percent, now you have 26.1 Why don't we see a bigger jump on those margins considering both raw material tailwinds and of course exceptional strong volumes? Well, thank you for that question. I think we're very pleased with our margin. And yes, you can adjust the FX elements and we also driving the top line. So those are all elements that we think are really working well for us. And we look for our margin really also on the annual basis where we've given the guidance of 27% to 28%. So that is clearly while we look to drive our margin. And yes, you see there is obviously part of the non recurrence of the headwind that we had at the end of March last year and the revaluation. But also this year, our exchange rates are already adverse relative to where they were last year. So there's also a continuing headwind from FX related to translation and transaction. Right. But this is not an indication that you don't necessarily have strong up through margins. That's what I. E. That you should have disproportionately high margins as you have strong volume growth in any given quarter, meaning that if it slows, it's not necessarily going to weigh on your margins? I think if you look at the volume or the top line contribution to our EBITDA, the $13,000,000 we're actually quite pleased with that contribution. So that's where I think we see our business performing well and fully underpinning where we drive our margins overall. Got it. Coming back to Europe a bit. Of course, you've had a well, you had certainly last year good business from selling into the EMEA region. And as you highlighted now, there's still on the go, sorry, at home consumption, reasonably elevated, but at comps get tougher, it's going to be difficult to meet or suddenly beat those numbers. But if I were to look at slightly more medium term, this used to be a region that kind of flattish growth, but you are winning business. I mean, you called out yourself there's good interest in the Echo Pack and then I guess the Signature Pack and also winning in new categories. How should we think about Europe as a region in sort of the medium term in terms of growth rate, do you expect to outperform the market given your wins and offering that you have, we should be back to this kind of 0% to 1% growth market as we transition through COVID? I think obviously you're familiar with the fact that you provided an outlook on a group level. But to give you a bit more color on Europe And you recall what we discussed back at the IPO when we say, we are we expect all our segments that included also supply into the Middle East, which is not the case anymore. All our segments to positively contribute to group growth. But also if you recall what we saw in the last 3 years since the IPO, there was growth not only in the EMEA segment, but also in the region of Europe, as always during the call, we addressed that point. And that is just a testimony to the filler wins that we had. And you also recall that we talked about continued Philippines. And if you look at our pipelines for future projects, not only for Europe, but also for the rest of the world, our previous OIBIT. So we remain positive on the market outlook for Europe. But I mean, if you think about growth rates in a more flattish market, I guess, We're definitely not going to see a repeat of last year where we really benefited off this very high level of at home consumption. Generally, we remain positive also for the medium term outlook on Europe. I appreciate you don't comment necessarily on pricing, but can you give us a sense of how very weak currencies and potentially then imported cost inflation is benefiting your organic growth in that or the Americas market, if that's a component? Just curious to how to think about a 41.6 percent constant currency growth? So I understand. But I think when we always say that volume is the key driver of the top line growth that still holds true also for what you see here in the Americas. I mean, there is a number of factors in this one quarter that came together that really drives the volume growth. There is a number of new filler deployments. We talked about that earlier with Nestle, for example, with Lidar Sherpa, 9 lines with them, about 4, 5 lines with Nestle. We also made good inroads again now into the neighboring markets of Brazil with Ecuador. For example, it has presence already in the other neighboring countries where we see good progress. I think then keep in mind these welfare vouchers that we saw in Brazil to low income families continues until into the January of this year. Now they're discussing to reinstall them for April, but not to the same degree as you saw them earlier. So that helped. And I mean, the at home consumption in Latin America is really strong. In addition, we did see a recovery of the foodservice business in the U. S. Especially. And also there is an element of replenishing stock levels, which all translates into volume growth, which is clearly the key driver of our top line. All right. Thank you. Thank you, The next question comes from the line of Miro Zuzak from JMS. Please go ahead. Good morning. Thank you for taking my question. I have only one regarding the EMEA, the new EMEA segment. From the calls when you did the acquisition basically of the 100% acquisition of the JV, the second half of it, you were very positive on the region, of course. I think now Q1 was extraordinarily strong. Now for the full year and also for the years to come, all this organic growth rate that you expect for this market, both for the market, but also for you because I think you're counting with market share gains going forward. But what should we take into account there? I think you have a clear understanding for the other with me, I have a clear understanding for the other three segments. But for this one, I'm a little bit puzzled by the very strong results from Q1. So what's the longer term outlook for this? Thank you. Sure. Thanks for your question, Miro. I think Q1, obviously, March was very strong as you see here in the number. We said January, February was a bit of a slower start. But your question is a fundamental one, how we look at the market. And you're absolutely right that we were very excited and still are when we announced the acquisition of the remaining 50% stake. The study we normally cite, which is the study we developed and published also at the point of the IPO with regards to mid term CAGRs of our end markets, which is suggesting a global growth of 3% 4% of our end markets, which is the global average rate. As part of this study, Middle East and Africa, that's also the number we cited at the announcement of the deal, suggest that the market is expected to grow with 5.5% to 6%. And then you rightfully said, we have the ambition to continue to outgrow the market. And that's how we look at the market fundamentally. And we remain very positive on this medium term outlook as everything that drives our end market demand, and we briefly talked about that before on the call, population growth, disposable income growth, these urbanization trends, the kind of the desire of consumers to have access to processed and packaged food. And once you start to buy processed packaged food. You don't go back if the economy slows down to kind of old consumption habits, for example, loose milk. And then keep in mind that another factor why we're so excited about the region is that today we are present in 17 out of the 70 countries. So there is a lot of white space for us to go after. Today, we are presently in Arabian Peninsula, North Africa, and as I mentioned before, South Africa, but in Sub Saharan Africa, many markets, but also markets like Pakistan that we are working on. So that explains our excitement for also the medium term outlook, if that answers your question, Will. Okay. Thank you. There's one small technical which I have, you posted the €13,000,000 unrealized in your adjustments, the €13,000,000 adjustment from the derivative. Is this €13,000,000 mainly for the FX hedges that you have in place? And are they basically benefiting your top line in this region? So are there $30,000,000 in a sense booked in the top line in Asia Pacific and the Americas? Sorry, it's a technical question, but I have not understood it so far. So please help. Let me take this. Those are hedges for FX, but also for our commodity hedging. So that then in total helps us with the commodity hedging, but this is the unrealized portion. So it's the commodity hedges for the month still to come that are still outstanding where we haven't yet procured and have delivered and executed those forwards. Yes. Does that help you? Yes. Can you say what the FX component was? Or is it Just the commodity hedges or is it both? Sorry, I didn't get it. It's a combination of both. I don't have the exact breakdown with me at the moment. Okay. Thank you. Yes. Back into the queue. Ladies and gentlemen, that was the last question. I'd now like to turn the conference back over to SIG for any closing remarks. Thank you so much for your time today. While the performance in the Q1 was obviously exceptional. It demonstrates the ongoing strong demand for our cartons and the attractiveness of our filling system. We continue to invest in the business and to expand our geographic footprint that we just discussed. And we are confident that we can continue our track record of growth while maintaining a high level of profitability. Thank you very much for participating in today's call and for your questions today, Have a very good day. Goodbye, everybody. Ladies and gentlemen, the conference is now over.