Earnings Call: Q3 2020

Oct 27, 2020

Good morning and thank you for joining us today. The call is hosted by Rolf Steinholz, CEO and Samuel Segriff, CFO. The slides for the call 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, which participants are encouraged to read carefully. And with that, let me now hand you over to Ralf to begin the presentation. Thank you very much, Jennifer. I hope everybody on the call is well, and thank you for taking the time to joining us today. I'm pleased to report on another quarter of growth despite the unusual environment in which we continue to find ourselves. Core revenue grew by 4.5% at constant currency. As predicted, this represents a slowing of growth compared with the first half, but it's still a solid performance. In reported terms, sales were slightly lower due to the continuing strength of the euro against most major currencies. The strong top line performance in combination with lower raw material costs and efficiency improvements has led to a substantial increase in the adjusted EBITDA margin versus the same quarter a year ago. Adjusted net income increased to €77,400,000 and free cash flow was significantly higher than a year ago. Core revenue growth in the Q3 was driven by EMEA and the Americas. Europe ended the first half with high stocks across the supply chain and these expected, partially depleted during the month of July August, which had an impact on customer demand for our products. However, in September, there was an uptick in demand as with production continuing at a relatively high level, customers moved to replenish stocks. In APAC, we experienced a softer quarter as customers depleted inventories. We did see signs of improvement in China towards the end of the quarter. In Southeast Asia, on the other hand, the situation remains challenging with ongoing pandemic related restrictions in some countries. Our broad geographic spread is, however, enabling us to compensate for the temporary weakness of these markets. Our star performer in Q3 and indeed year to date is the Americas. We talked earlier in the year about the deployment and ramping up of new filler installations in Brazil. The contribution of these fillers has exceeded our expectations, and I shall come back to this in a moment. In addition to operating leverage, the increase in adjusted EBITDA margin reflects lower raw material costs and the measures we have taken to contain costs in the current environment. This has enabled us to more than offset the continuing currency headwind and margin dilution from the acquisition of Visi Cartens last year. Significant free cash flow in the quarter reflects the robust operating performance and is not a consequence of cutbacks in capital expenditure, as Samuel will show you later in the presentation. This allowed us to further delever compared with a year ago despite the investments into our new plant in China, which we plan to open in Q1 'twenty one as originally scheduled. This is how the picture looks for the 1st 9 months of the year. Core revenue at constant exchange rates was up by 7.2%. As a result of the margin improvement in the Q3, the adjusted EBITDA margin was slightly above the level for the same period last year. Excluding the negative impact from currency, the adjusted EBITDA margin for the 1st 9 months was 28.2% despite the margin dilution from Wizzi. This demonstrates the underlying resilience of margins in our business. Adjusted net income is ahead of last year as is free cash flow, which is a strong performance in the light of a significant plant investment in APAC and given the circumstances of the year. While we do expect a much more subdued Q4, we are very pleased with the way our business has operated efficiently and without interruption. And I would like to sincerely thank all of our employees for their ongoing efforts in this taxing environment. I would like to now show you in a bit more detail how each of our regions has performed in the course of the year. Europe had a solid Q1 with particularly strong sales in March as lockdowns were imposed and consumers stocked up on shelf stable goods. In the Q2, growth reached levels unprecedented in recent times, reflecting higher at home consumption at the peak of the lockdowns. In addition, there was stock building at both the customer and retailer levels during the quarter to preempt further shortages. Following the drawdown of these stocks in July August, customer purchases accelerated in September. We believe this was partly due to retailers restocking in anticipation of a possible second wave of lockdowns. Leaving COVID-nineteen effects aside, I can also report on the positive development of our European business with the ramp up of new fillers at customers such as COBOP in Spain. As already mentioned, the situation in Asia Pacific differs between the North and the South. In China, our sales held up well during the height of the COVID-nineteen crisis as customers built up safety stocks. While it has taken some time for consumption to resume to a more normal pattern following the lifting of the lockdowns, we have seen signs of improvement in the Q3. In the rest of Asia, however, lockdowns were still in full force in the 2nd quarter and restrictions continue to die in some countries, such as Indonesia. With travel and tourism curtailed, also, for example, in Thailand, on the go consumption continued to be significantly affected in the Q3. Schools remained closed in some areas, which has affected school milk programs. In addition, high stock levels at the end of the first half weighed on our sales to customers in the 3rd quarter. Stock levels have now been partly depleted. And while we are not expecting a significant rebound in sales in the 4th quarter, the medium and long term fundamentals for this sub region remain firmly intact. The Wizzi business, which we said would add around 2 percentage points to the full year group growth rate, has not been noticeably affected by COVID-nineteen. The Americas has shown remarkable resilience given the serious COVID-nineteen situation in our 3 main markets, Brazil, Mexico and the U. S. Contributing to this is high at home consumption of milk in Latin America, where a significant portion of our business is in mid and large packs. Sales of tomato products and sauces in Mexico have also benefited. In Brazil, consumption of basic dairy products has been stimulated by higher welfare payments, although these are now being reduced again. However, the very high growth rates registered in the 1st and third quarters also reflect other specific factors. The Q1 of 2020 is measured against a relatively weak Q1 in 2019 when sales in the U. S. Were constrained by late deliveries due to a strike at our factory in Germany. In the Q2, growth returned to a more normal level with some COVID-nineteen effect visible in the U. S, especially in the foodservice segment. Then in the Q3, we have seen another big upturn. In addition to the positive consumption trends in Brazil and Mexico, this is due to the success of our recent filler placements in Brazil, as shown on the next slide. Last year, we signed agreements with 2 large dairy companies in Brazil, Scheife and VIDA, for a total of 9 fillers. The first filling line was deployed in the Q1 of this year, with the remainder following in the ensuing months. 5 of the filling lines installed were not new, but were taken from our supply of fillers previously with drawn from the market. 3 of the 5 were overhauled locally in Brazil, which did speed up deployment and enabled the customers to accelerate the start of production. As with all our customers, we had a ramp up plan for the year shown in the dark blue bars on the chart. As you can see from the outset, production has significantly exceeded plan driven by the strong demand. This outperformance has been underpinned by above target efficiency and lower than expected waste rates on our machines, which the customers are, of course, very happy about. Overall and across all regions, I'm very proud of the efforts our teams have put in to deliver a high level of service to all our customers. This has not only ensured our business continuity during these difficult times, but has also further reinforced the strong customer relationships, which are at the heart of our business. Let me now hand you over to Samuel for some more details on the financials. Thank you, Rolf. I'll cover this slide briefly as Rolf has already highlighted the main regional trends. One aspect which stands out is the negative impact of exchange rates on the top line, which widened in the Q3. Both the Brazilian real and the tieback continued to weaken and the U. S. Dollar also depreciated against the euro. On a 9 month basis, all regions contributed to growth. Whereas in the first half, EMEA was the largest contributor, the excellent third quarter performance has tipped the balance in favor of the Americas for the 1st 9 months. Asia Pacific is still showing growth for the year to date despite the slight negative in the quarter due to the combination of ongoing restrictions and high stock levels in Southeast Asia. Turning now to the evolution of adjusted EBITDA, which increased by 6.1% for the 1st 9 months of the year. Excluding the negative impact from currency, which I will come back to in a moment, the increase was 15.9%. Looking at the progression in the Q3, the top line contributed €7,000,000 with sales growing at a lower rate than in the first half. Raw materials contributed SEK 6,000,000 bringing the contribution for the 1st 9 months to SEK 50,000,000, which is the indication we have given for the full year benefit. The favorable comparison with last year is now narrowing as prices already began to fall towards the end of 2019 and now starting to rise again. We therefore expect only a small benefit for the 4th quarter. The contribution of production efficiencies in the 3rd quarter reflected high efficiency rates at our factories in Europe and the Americas, with our factory in Brazil achieving record production in the month of September. The dividend received from the Middle East joint venture was unchanged in Q3. Sales to 3rd parties by the joint venture continued to grow in the quarter, and we maintain our expectation of an unchanged dividend for the full year. Finally, SG and A, which had a positive impact in the quarter relative to prior year due to the phasing of R a benefit from the countermeasures we put in place following the onset of the COVID-nineteen crisis. All in all, we were able to register a significant improvement in margin in the Q3. This means that the margin year to date at 26.8% is slightly ahead of last year. This is a significant achievement in a year where we have faced unprecedented currency headwinds due to the volatility caused by COVID-nineteen and, as mentioned before, a margin dilution from WICI of 30 to 40 bps. The impact of currency for the 1st 9 months includes the mark to market revaluation of balance sheet end of March, following the sharp currency movements at the onset of the COVID-nineteen crisis. As previously reported, these revaluation effects were realized during the Q2 given the continued weakness of key currencies. The impact on adjusted EBITDA in the 3rd quarter was a mix of translation and transaction effects. During the quarter, the currency headwind came not just from the Brazilian real and the Thai baht but also from the U. S. Dollar, which is the invoicing currency for our sales in a number of other countries in addition to the U. S. Our currency hedging program is working effectively. We have a layered approach, which increases the degree of protection as the year progresses and which will also give us some protection against FX movements in the remainder of this year. Turning now to adjusted net income. While the reported net income was slightly higher for the 1st 9 months, the increase was amplified at the adjusted net income level. This is mainly due to the add back of non cash financing costs and unrealized currency effects on intercompany loans. The adjusted effective tax rate of 24.1 percent has benefited from the favorable conclusion of tax audits. As a result, the tax rate for the full year is likely to come in slightly below the guided range of 28% to 29%. Our business continues to be strongly cash generative with cash generation weighted towards the second half of the year. In the 1st 9 months, free cash flow increased by €9,000,000 compared with the previous year despite higher capital expenditures relating to the construction of our new plant in China. Gross filler CapEx was slightly lower but has held up much better than we expected. When we were comparing the situation with 2009 earlier in the year, we referred to the great financial crisis, which caused a significant reduction in investments by our core investment opportunities for us. While we are not dependent on filler CapEx in any one year to drive growth, it is encouraging that our customers are sufficiently optimistic about the outlook to continue investing. The reduction in upfront cash received from our customers represents a return to more normal levels, which we had predicted. Overall, the performance so far in 2020 clearly demonstrates that the resilience of our cash flows is there. The slide shows the impact on the structure of our debt of the refinancing, which we carried out in June. At the end of September, we see a slight reduction in leverage versus 2019 to 2.7x, which is also lower than the 2.9x ratio at the end of June. This is despite significant investments in the new APAC plant and the currency impact on EBITDA. Let me now conclude on the outlook for the full year. We remain cautious on the Q4 and this based on insights we have from our customers at this point in time. The year end rally will be at a lower level than in previous years for a number of reasons. Following the strong performances in the Americas and in Europe year to date, many customers are already at levels that qualify them for volume rebates and hence have no incentive to stock up during the Q4. For the EMEA region, the comparison will be with a strong Q4 in 2019. In Asia Pacific, where historically the year end rally has been particularly important, some customers are likely to prefer to conserve cash with ongoing restrictions continuing to affect consumption. Also as already mentioned, in some markets, customer have been working their way through high stocks during the Q3, and they have little appetite to start stocking up again straight away. Considering all this, we expect core revenue in the Q4 to be broadly flat versus the Q4 of 2019 at constant exchange rates. This would still allow us to achieve our 4% to 6% growth guidance for the full year. The 4th quarter under this scenario would still be the largest quarter in terms of both core revenue and adjusted EBITDA. With the adjusted EBITDA margin at the end of the 1st 9 months at 26.8%, we expect to reach the lower end of the 27% to 28% range as guided for the full year, subject to no further major capital expenditures. Capital expenses should be around the midpoint of the guidance range of 8% to 10%. Overall then, we are pleased with the resilience of our business. Let me now conclude on the outlook for the full year. We remain cautious on the Q4, this based on insights we have from our customers at this point in time. The year end rally will be at the lower level than in previous years for a number of reasons. Following the strong performances in the Americas and in Europe year to date, many customers are already at levels that qualify them for volume rebates and hence have no incentive to stock up during the Q4. For the EMEA region, the comparison will be with a strong Q4 in 2019. In Asia Pacific, where historically the year end really has been particularly important, some customers are likely to prefer to conserve cash with ongoing restrictions continuing to affect consumption. Also, as already mentioned, in some markets, customers have been working their way through high stocks during the Q3, and they have little appetite to start stocking up again straight away. Considering all this, we expect core revenue in the 4th quarter to be broadly flat versus the Q4 in 2019. These are constant exchange rates. This would still allow us to achieve our 4% to 6% growth guidance for the full year. The Q4 under this scenario would still be the largest quarter in terms of both core revenue and adjusted EBITDA. With the adjusted EBITDA margin at the end of the 1st 9 months at 26.8%, we expect to reach the lower end of the 27% to 28% range as guided for the full year, subject to no further major deterioration in the currencies. Net capital expenditure should be around the midpoint of the guided range of 8% to 10%. Overall then, we are pleased with the resilience of our business in this highly exceptional year. We continue to grow while maintaining a high level of profitability and generating significant free cash flow. And with that, I would like to open the call for questions. The first question comes from Sandeep Piti from Morgan Stanley. Please go ahead. Good morning. I have a couple of questions. Firstly, on 2021 guidance, how should we think about 2021? While you have not provided any official guidance and I do understand it's difficult to predict raw material prices, but if it is possible to give some sense on top line growth and the underlying trends in the each region would be good? And then second question is on APAC region. Southeast Asia has been a drag for your business in Q3. What do we what do you expect the business in that region to normalize? And what is the EBITDA opportunity if things get back to normal in that region? Thank you so much. So I think on your first question, if I understood correctly, you asked for 2021 outlook. Top line development is going to be subject also to top line development is going to be subject also to more normal levels post this COVID-nineteen crisis, but we're going to obviously again come back with more details on top line guidance early next year. With regards to raw material, we have already stated publicly that we do continue to see a tailwind as with our approach where we hedge 80% of the demand on a 12 month rolling basis. We have already visibility, at least to some degree, on raw material pricing for the next year. And we did not quantify that yet, but we talked about a continuation on year on year tailwinds of raw materials. I think when we speak about APAC and Southeast Asia in particular, you're right, Southeast Asia definitely has been a drag in the Q3 in general. And I think it's fair to say for most part of this year, we did see a pretty good progression along quarter by quarter in China. Clearly, Southeast Asia still suffers from prolonged lockdowns in most of markets. Schools are closed, etcetera. And we clearly see that also in our numbers. Having said that, I think knowing from usually how quickly these markets do rebound, they are very positive and bullish about the midterm prospects in Southeast Asia in general. And as you rightfully say, once that is back as it's such a big and strong market for us, it would provide an uplift on all accounts. Okay. Thank you. Thanks. The next question comes from Jorn Ifert from UBS. Please go ahead. Good morning and thanks for taking my questions. The first one would be please on your organic sales growth outlook for Q4. Maybe focusing a little bit on APAC, China seems to recover in the exit rate in September, I mean, Southeast Asia. Do you really expect a significant deterioration here for Q4 versus Q3? And would this mean that overall APAC will be incrementally weaker in Q4 versus Q3 in terms of year over year sales growth? And second question on your EBITDA margin outlook for the second half, I think this for Q4, I think this implies minus 100 or 200 basis points in between this. Where exactly is this coming from? And this is some is this something structural we should also read for the first half twenty twenty one? Many thanks. So on the growth outlook for the Q4, you talked about different aspects, but your question is more specifically, obviously, to the Asia Pacific region. We have seen first signs of recovery in China with the September numbers. But obviously, China went through the COVID-nineteen crisis much earlier compared to Southeast Asia. And it has been taken almost 9 months to get back to now first signs of recovery. And we do see that, especially in Southeast Asia, there is a prolongation of lockdown measures or partial lockdown measures, and we do believe that, that's going to affect also the situation in Southeast Asia in the Q4. In addition, we have talked about the elevated stock levels, especially of customers also in Southeast Asia. Some of that was depleted in the Q3, but it's little appetite to stock up again now. And bear in mind, we already talked last year about the fact that we operate closer to capacity limits within our plant network in Asia Pacific. And in order to accommodate the strong year end rally, we would have needed to pre cone production into the Q3 to accommodate that in our plant setup. So these factors together make us believe that there will be a softer Q4. And overall, we have the same expectation for the entire group. I think we don't provide specific guidance on APAC for the Q4, but I think these factors together gives kind of a broader picture. With regard to your question on the margin outlook for the Q4, I don't think there is anything structural to consider. But there will be slower growth in the Q4, which will have an impact. But given where we stand year to date and combined with the continued rigor on SG and A development as well as probably slight tailwind from raw materials, we believe to get into the lower end of the 27% to 28% margin. Okay. Many thanks. And if I may, a quick follow-up on APAC again. Your new customer pipeline for 2021 also when your new production site is ready to produce and manufacture, You have a strong pipeline on new customer for 2021 in Asia in general? I would say we're very pleased with the filler pipeline in general in this given year. I mean, probably some might remember that early in the year, we were quite coy about filler placements and signing deals and agreements based on the experiences from 2,009 throughout the financial crisis when there were less co investment opportunities and everybody was more cautious. By and large, we have very strong and solid filler pipelines also throughout this year. I would also add to your question specifically on APAC and the plant opening. Clearly, it has earmarked the new plant for Asia in general, where China, we do see is coming out of the doldrums already. But then keep in mind also that this new plant is earmarked for combismile, our new product portfolio, and cater to that globally, where we also signed agreements also today already, NF filler installations outside of APAC. Many thanks. Thanks, Jan. Thank you. The next question comes from Lars Kjellberg from Credit Suisse. Please go ahead. Thank you. Very strong performance, of course, in the Q3. Your guidance, you talk about 0% probably speaking in Q4. Is there a reason for why you're not tightening the guidance between 5% to 6% because you seem to be believing that the middle of that range should be hit. On the SG and A front, you, of course, had quite a big SG and A increase in the first half. Now you've got a 3% sorry EUR 3,000,000 improvement year on year. Is that something we should continue to expect for Q4? I think, Sam, you kind of imply that raw mats and SG and A will continue to be tailwind into the final quarter of the year. And then I also had a question about you mentioned, of course, the filler installation have been running at a high pace or potentially better than you had expected. But you also have mentioned something in the Americas where you said, if I got it right, that 5 pieces had been withdrawn from the market somewhere and not placed in Brazil. If you want to put some color to that, why would they be withdrawn? And how should we see the returns on those investments in those assets, I guess, would be materially lower than building new ones? So just interesting to get some color on that particular point. Thanks, Lars. I mean, with regard to first question, the top line guidance of the 4% to 6% and why we did not narrow the range. I mean, I think we have greater visibility than in previous quarter. But that said, I mean, we cannot predict with precision the extent to which we're going to see the sales evolving in the Q4. I mean, it's still a year with unprecedented uncertainty. And against this backdrop, we feel comfortable to maintain the 4% to 6% range. With regard to your second question on SG and A, I think you can expect for the full year to see the step up in SG and A to be on a similar level like in the 1st 9 months. And with regards to your third question On the filler withdrawals, I mean, clearly, what we always try to is to keep and maintain or manage the destiny of our installed filler base across all countries. And whenever we see that there are certain fillers that are underutilized or could be optimized in general within the network, we try to discuss that with customers and optimize basically the utilization of the broader fleet. Obviously, it needs certain trigger events to be able to take out filling lines, which are probably not running at good capacity or if customers install new filling lines in general within their existing plant network, these are the kind of trigger events where we try to pull out filling lines. It happened in Brazil that we had the opportunity to optimize over the last period to some degrees, obviously, the installed filler base to withdraw underutilized fillers. We discussed also in the last fiscal year the fairly high amount of filler withdrawals where we said you should not necessarily look at the filler withdrawals, but also the capacities which go in and out. And in that instance, now we managed to fairly quickly redeploy these filling lines. I mean, very often, they are still in very good shape, probably need only a minor overhaul. And for us, it's very attractive, especially in this instance where the new customer wants to ramp up fairly quickly, switch volumes to us, existing volumes which were there. And clearly, in that instance, with a new filling line, we would have had much longer lead times in general. And that's basically the background for it. Just want to stay with the Americas for 2 seconds. I mean, you obviously, the growth has been variable to say the least, very strong in Q1, less on Q2 and again, a surge in Q4 sorry, Q3. I would assume that the foodservice element that you pointed out in the Q2 is still not doing fantastically well in the Americas. Is that something that you're seeing any signs of recovery or setbacks, etcetera, with the pandemic? Or is it not worth commenting on as a driver for the full year? No. I think it's not necessarily worth commenting for. I think the fact that it's been so choppy with very strong Q1 and Q3 and a weaker Q2 is also the function of a very weak Q1 2019 in the Americas, where clearly our North American, specifically U. S. Sales suffered a lot, given that we couldn't ship on time due to the strike we had in Germany at the time. And I think the base of comparison was rather weak. Equally, in Q3, we did not have a super, super strong quarter in general in the Americas, so I think last year. So I think the base of comparison is a factor. And then clearly now we did ramp up very quickly the new filler installations in Brazil, which clearly added to an already buoyant underlying base market for us. Very good. Final point for me. EMEA, of course, have seen tremendous growth this year. This is a region where you sort of didn't really expect any meaningful growth. Even if we take out the exceptional Q2, you're still in around the 3% growth mark. Has anything structurally changed? Or this is all COVID related? Or are you gaining share in the market? And should we expect a sort of 2% to 3% growth going forward in this region, which would be clear uptick? I think, I mean, how we look at Europe is clearly that markets like Europe had strong in home consumption in general. We have a strong milk business. We have a strong food business. All of that is rather family sized packs. And clearly, during the lockdowns and probably even now while in home consumption continues and home office work continues, we are a clear beneficiary of that. We always characterize the European market as one which is more or less flat and where we aim to grow and win market share. I think there is definitely also an element of this embedded in that. Clearly, I wouldn't necessarily say that now the growth rates in the market in general, not necessarily us, but we if markets return towards or if the way of living returns towards normal. But I think for as long as there is home office work, it should be rather a tailwind than anything else. So there's no element of new launch in new pack formats that you're sort of driving that growth? Well, definitely. As I said, we are we firmly believe that also year to date, we managed to build further our position also in Europe and gain market share. I mean, we did ramp up, for example, a new fillers in cobalt. I mean, we did speak at the time also at the analyst conference about all the filler wins we have that continue to ramp up and that we have more in the pipeline. That is, for example, embedded in there. We do have also other wins, for example, in the Nordics, which we do ramp up and did ramp up. So clearly, our impression is that we continue to place new filling lines and win market share also in the European market. Final one on that one. Any new categories that you're entering to drive that growth as opposed to standard UHD milk? Yes. I think we did have very good wins in, for example, coffee segment, coffee drinks. We had good wins in dairy alternatives, yogurt drinks. Also in the European markets, I mean, clearly, it's from the size and scale. It's not as big. But as I said before, very often, these new segments come at attractive margins. And so we are very pleased clearly about these wins and broadening in general the scope, the portfolio of where the income is coming from. The next question comes from Alessandro Foletti from Octavian. Please go ahead, sir. Yes. Good morning, everyone. Can you hear me? Very well on the sound of the call. All right. Very good. Thank you. Just a couple of ones for me. You mentioned the dilution from the Wisy acquisition. Can you be a bit specific on how big that dilution is? The dilution from the Wizzi business on the 20 9 2020 margin, EBITDA margin is approximately 40 bps. And that's a function of obviously a bit of a lower margin business compared to group average that we acquired back then. For the 40 bps for the group or for the Asian? For the group. For the whole group? Yes. Thank you. Then on Middle East, you gave last quarter a bit of an update on how it was doing. So can you tell us what's the growth rate there? What drives it a little bit and how it's going given the COVID situation? At least until Q3 has not been very much under control, I should say. Sure. I mean, as you remember, we talked for the half year about the constant currency growth rate of approximately 7%, and we do see basically a similar pace also in the Q3. We have a year to date growth in the Middle East, approximately 6% constant currency. So that's the 3rd party sales of the JV. I think this is a function of a number of different drivers. I mean, since 2018, we have placed many more lines in the liquid dairy segment, and we do see that, that is holding up very well. Also alongside with other SKUs that are designed or made for in home or at home consumption, We do see that those effects help us to continue to grow the business in the Middle East. And I mean, what the midterm perspective is, and we discussed it on the earlier calls, we remain very positive about the region and the outlook. It was fundamental, the growth drivers, they are aligned in that region. Right. Thank you very much. 2 small ones to go for me. 1 on the CapEx. Can you give an indication of on how much of the Chinese new plant you have already spent of the portion that pertains to you, of course, so excluding the leasings and so on. But of that, that you have to spend, how much do you spend already run rate and how much will be spent by the end of the year? So, Alessandro, we haven't quantified those effects for every single year. We talked about an overall commitment of €180,000,000 which included the NPV of Belize of €65,000,000 So the remainder obviously is CapEx. You can assume that the plant that comes on stream in Q1 next year needs to be close to finish, right, at this point in time. So that holds us at best. That's probably a larger part of the CapEx is already spent. But we always talked about it as a multi year CapEx program. Great. Yes. Thank you. But okay, that means, let's say, at least €50,000,000 €60,000,000 maybe even €70,000,000 have already been spent for this plan. So as I said, we haven't broken up. Okay, okay. All right. Last one for me. We're just speaking about new categories. Can you in Europe, can you give an indication of how much these new categories represent the business in the U. S? I think let me frame that differently. I would say in general in the U. S, these new categories are a larger percentage of total sales, also as a result of the fact that the U. S, to a large degree, is a chilled market, especially in the plain vanilla category like plain milk and plain juice. And as a result, all more, for lack of a better word, exotic categories, be it milk drinks, super high in protein, coffee creamers, dairy alternatives, etcetera. They are overweighted in the septic category. And as a result, I would say, they broader percentage of our income in the U. S. Vis a vis Europe. I think also the U. S. Was kind of a front runner, obviously, and very innovative in launching and developing these new categories. But at the same time, I think it's also fair to acknowledge that, that trend started in the U. K. First and now in other Western European markets, where we see an influx and see as a result a very good opportunity for us. All right. Are you willing to give a ballpark figure like 80%, 50%, 20% of sales? I think I would be willing to say that in the Europe, it is growing very nicely and consistently, but it will still require for the foreseeable future strong footing in plain milk because simply Europe is a very strong plain milk market in general on aseptic. All right. Thank you. Thank you. Thank you, Alistair. The next question comes from Miro Tuzak from JMS. Please go ahead. Good morning. Thank you for taking my question. I have a couple. Most of the other questions have already been answered. The first one is on the FX impact that you had in Q3. Can you give an idea what the impact is going to be in Q4 on group level, assuming that the currencies are staying are going to stay where they are at the moment? We can be around 5%? If they're going to stay where they are, we would expect a continued negative impact on EBITDA. But we have factored that in. Sorry, I was talking about the top line. So what's the negative impact on the top line? Is it going to be 5% again roughly like in Q3? Or is there an acceleration again that's going to be worse? On the top line, obviously, you're familiar with the fact that it's difficult to predict, especially along the lines that there are significant mix effects. And in the quarter, where we have such a strong Americas, obviously, that is one of the explanations for the widening of the spread between constant currency and also reported currency. But it's going to be a function of the mix of the regions that we're going to see in the Q4. Okay. And can you give an idea about the number? Is it going to be 5% again? Or is this going to be 3% or so? Because we have the only mix again. It's quantified as given that it's really driven not only by the currencies but also by the mix between the regions, that's a number which is very tough to predict and we can only be wrong. Okay. The second question is on EMEA. We have this strange pattern with this very strong Q2. Q3 was now weaker again versus a stronger base, frankly speaking, but still much weaker. Can you was there an element of destocking in Q3 after this intensive buying during the 1st lockdown in Q2? Was there a destocking in Q3? And do you expect kind of restocking in Q4 again? I think the restocking is tougher to answer. I mean, how we perceived it in general was that Q1, we saw, especially towards the end of Q1, the hoarding effects, for lack of a better word, the panic buying to some degree, restocking along the entire supply chain. So we're big beneficiaries for that in Q2 with that very high growth rate. We saw depleting stocks in the 1st 2 months of Q3, I would say. In September, we saw a pickup again. I think it's too early to say that retailers' ammunition themselves now, again, in light of potential further more severe lockdowns, which are there to come. I think that's also one of the uncertainties in predicting now really Q4 or narrowing the guidance. Is it 5% to 6%? Is it 4% to 6%? That it's really tough to say on the one side what lockdowns will be in Q4 and in general what that will mean for purchasing patterns, especially in Europe. But we did see some depleting in July August and some building up and good momentum again in September, which did lead also to that reasonable growth in the Q3. Okay. Then the Hochwald ramp up, can you say a few words on this one? Is this going according to plan? Do you expect first revenues next year? Can this confirm? I mean, absolutely, it's going according to plan. I would also say not like when we build a plant, it's more also there the customer who has to meet us with timelines for that new facility. And for us, in that instance, I don't want to say it's easier, but to some degree, it's easier to just put in the fillers and deploy them on time. But we expect the ramping up to start in 'twenty one and as a result, first impact in the P and L in 'twenty one. Okay. Just quickly on Brazil, and that's my second question. You have this nice chart with the ramp up, but it's going actually faster than anticipated or than planned. There is no x scale on this chart. Can you give us an idea how much just like a house number, how much revenues you already make with this client? Is this just a couple of 1,000,000? Or is this a couple of tens of 1,000,000 already? Well, it's not going to be a couple of tens of 1,000,000, of course, but can you give an idea about how much that's roughly how much the drop is? I think I would refrain from that. But to give you some color, I mean, in the very early days, you said normally a liter filler, just to get a feeling, can generate $2,000,000 to $3,000,000 in revenues roughly and per annum if rent up. Obviously, it always depends to some degree what the customer feels, what USP feels, etcetera, but that gives you a proxy reset. It's 9 filling lines. So by and large, that gives you a corridor as to when fully ramped up where the potential can be. So we are fairly pleased given that definitely it's been a very good deal in general, which is ramping up quickly, but which also still leaves room to grow into 4 'twenty one. Okay. And the last one, an easy one. You mentioned the lower tax rate of 24% in Q3 due to these tax audit that you had. Are these effects going to last into the next years? Is now the new flight level, of course, not 24%, but the lower end of the 27% to 28%? Yes. I think it's a good question. Obviously, I wouldn't read too much into that. And I we wanted to position it also clearly as a one off. That's why the reference to the tax audit that came to a close. I think we, as a function of that, expect to come in slightly lower than the indicated 'twenty eight to 'twenty nine. But I wouldn't read too much into the tax rates 2021. Obviously, we will come up with the guidance in line or when we come with the full year guidance 2021. Okay. Thank you very much. Thank you. Thank you. The next question comes from Christian Arnold from MainFirst. Please go ahead. Good morning, ladies and gentlemen. Three topics, if I may. Maybe first on filler withdrawals. I mean, you're always talking about filler replacements and benefit in Latin America, Brazil, you mentioned. Can you talk a little bit about the filler withdrawals where you have actually lowered the capacities? We don't publish the placements as well as the withdrawals with the full year numbers 2020, where you have a schedule, obviously, in number of fillers that are placed and that are withdrawn. Now in general, these numbers historically are available already. In general, I think it's always important to keep in mind that what we place is of much higher nameplate capacity than what we withdraw. Obviously, a single serve pack that we place a new one, it has a speed of 24,000 packs per hour, whereas what we withdraw is half of that nameplate capacity then. And that's keep in mind that the utilization of a new line that we place is obviously much higher than of an old line that we retire. So the nameplate capacity delta, which is already factor 2, is even amplified by different utilization. So I think in terms of effective use capacity that we add to the market, the number of fillers that we add is always significantly higher than what we withdraw if you kind of think of a capacity equivalent. Okay. Thanks. And if you can just take a quick look at Q4 margin, I mean, you were in Q4. Nevertheless, I mean, we have the seasonality. And you're also talking that sales as well as EBITDA, you expect in Q4 the highest level during the whole year. So why shouldn't we expect Q4 margin being similar at the Q3 level of 30.2%. So where should be the difference come from? Parts of your question were difficult to follow. I think the line is a bit bad, but I understand it. The full year guidance of 27% to 28% for the EBITDA margin. I mean, from a 2 days perspective, you think that's achievable because if you look to the first 9 months and where we stand, that is a solid basis. And as you referred to the strong margin in the Q3 and you have seen in our EBITDA bridge for growth that I think for the Q4, you need to keep in mind that we expect, obviously, lower contribution from the top line and hence a bit of lower operating leverage. But at the same time, we can expect continued benefit from raw material and the SG and A. And we talked before already about the fact that if you look at FX rates and where they stand today, that, that will be rather a drag on the margin also in the Q4, obviously all subject to no major deterioration on the currency front. But all those factors together led us to the guidance or to maintaining the guidance of the lower end of 27% to 28%. But yes, would you rule out that the Q4 margin is at the same level as in Q3? I mean, I can only repeat what I just said. Obviously, it's difficult to make predictions with the level of precision that you asked for. But we are comfortable from today's perspective to maintain our guidance for the margin as outlined. Okay. And then the last question on EMEA. I mean, you were saying September restocking compensating for the destocking in July August. So that somewhat leads to assumption that we see we saw in September high single digit growth at least in EMEA. And I wonder why we should yes, what should we expect for Q4? I mean, thinking back of Q2, I think we are now in a similar situation, right? Pandemic, we have the 2nd wave. People are not going to travel in the Q4. Everybody is staying at home. So we should actually see a very strong home consumption in EMEA in Q4. Now knowing that we have a higher base, nevertheless, Q4, I mean, looks very promising for EMEA. Or is that wrong? I refrain from speculating the psychology of the end consumer. I mean, clearly, we saw buying behaviors in February, March when the lockdown started, which were significant and probably higher than just normal in home consumption, and there was also a certain element of hoarding effect in there. I would not be able to judge now whether people start now to stack up on toilet paper again, given that they realized the first time there is good supply in toilet paper and it suffices. So I refrain from speculating on that one. Having said that, obviously, if lockdowns come and start again, in general, that should lead to reasonably more consumption. And have in mind the strong Q4 in EMEA last year where we were up 6.2% in the single quarter last year. Okay. But is the assumption right that in September you have seen at least high single digit growth? We did see that the market was stronger in September than in July August. Thank you. Thank you. Thanks, Christian. Thanks, Christian. Gentlemen, so far, there are no more questions. Well, if there are no more questions, let me conclude the call. The business is performing very well in difficult times and is demonstrating the essential role clearly it plays in supplying food and beverage to consumers worldwide. And I think this in combination with our resilient business model is indeed enabling us to continue the track record of growth and cash generation. So thank you very much certainly for listening in for your questions. Stay safe, and I wish you all a very good day. Thanks a lot. Thanks.