Schouw & Co A/S

CSE:SCHO

Earnings Call Transcript 2019-Q2

[Operator]

Hello, and welcome to the Schouw & Co. First Half 2019 Interim Report Call. Today, I'm pleased to present CEO, Jens Bjerg Sørensen. [Operator Instructions]Mr. Sørensen, please begin.

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

Thank you very much, and also a warm welcome to everyone from here to the Q2 presentation of Schouw & Co.We saw at Schouw & Co. a high activity level also in Q2, despite softer markets around us. Our revenue was up by 10% to close to DKK 5 billion. And the increase was mainly coming from GPV's acquisition of CCS, meaning acquisitive growth. In -- but in general, we can say, looking out in the market, really have a good advantage from the amount of acquisitions in, in fact, in all our companies.Our EBITDA increased 5% to DKK 419 million. We have also to mention here that we saw a positive effect from IFRS 16 of DKK 51 million. In this EBITDA figure, also, we had some one-off costs and PPA regulations, which materialized above EBITDA and which, of course, had a negative effect of around DKK 25 million. Past 2 months' cash flow from operations improved to DKK 128 million.We have, as some of you may remember, a net working capital focus ongoing in the company, but we also have seen that the balance of customer mix and geography has changed a little bit over the quarter. Cash flow, net working capital is on top of the management agenda in all businesses and the effect: Good things to come in the second half. Our return on invested capital was reduced to 12.4%. And here, especially, we saw an effect from our acquisitions and a very strong investments program where the invested capital increased immediately, but it takes time for profit to show.Guidance for 2019 is slightly up. Our revenue is now expected to grow to DKK 20.5 billion, and our EBITDA will now be seen or expected in the range of DKK 1,835 million to DKK 1,985 million. And we have a good feeling for that. We also have to mention that in this guidance, there will be a positive effect from IFRS of around DKK 200 million.From a general view to drilling down to each of our companies, I will start with BioMar, where we saw a flat revenue of DKK 2.5 billion; volume, at 2018 level, which was expected. We had 285,000 tonnes. We saw lower volume in Norway, which also was expected because we didn't gain the last Lerøy contract, and we started -- well, it stopped in Q2. We have seen good development in all other BioMar sectors.EBITDA was up from DKK 174 million to DKK 191 million. Also here, a positive effect from IFRS flat underlying development. However, we also have to mention here that last year, we had income from our company in Norway Letsea of DKK 30 million, which we finish in Q2. Salmon division, in fact, delivered quite strong results in Norway, much better than expected but as expected, below last year. And as I mentioned, from the start off, it was due to the loss of our Lerøy contract. During Q2, we had -- we got 100% control of our Chilean joint venture, which resulted in DKK 29 million accounting gain on equity divestments. We reorganized Norway, the entire setup. In short term, Norway has shown us a very good development. Margins have improved. And I think we have seen a much better customer balance also on the long term in Norway. We had good progress on capacity investments. We are building a new factory in Tasmania. And of course, that will significantly impact the CapEx in 2019 with about DKK 200 million.Guidance for BioMar is decreased. We expect now a turnover of around DKK 10.8 billion. EBITDA is increased and is now in the range from DKK 870 million to DKK 930 million. We have to mention also here that there's an IFRS 16 effect unchanged from the last guidance of around DKK 130 million. Also, everyone has to bear in mind that second half is always very important for BioMar, but we feel that we stand on a good and balanced contract situation for the coming half year for BioMar.Turning to Fibertex Personal Care. Revenue here was up 4% to DKK 506 million. We saw a flat volume due to a continued slow demand in Asia. This demand specifically goes on the global brands suffering in China. I mean they are not requiring same amount of material from Fibertex Personal Care. EBITDA was flat at DKK 72 million. Small negative effects from raw materials, but that has been compensated by a positive effect from ForEx. We have had in the quarter, start-up costs of our new print facility of around DKK 4 million. Still see a quite fierce competition in Europe, which we expect will continue. But we set that off by increasing our sales of what we call value-added products or the products with a lot of specialty functions.In July -- through June, we have been seeing our new U.S. print facility, a positive development. First commercial printing is out of the factory. It's been growing quite well. And also, we have kept our focus on developing a niche in high-value products, specifically for the European market. Guidance for 2019 will be maintained Turnover around DKK 2.3 billion. EBITDA expected in the range of DKK 320 million to DKK 340 million. And it's also first time today.From Fibertex Personal Care to Fibertex Nonwovens. Here we saw revenue increase 6% to DKK 443 million. We have seen very good and positive development in our U.S. operation. And it is a good sign because we are investing a lot in the U.S. market. In Europe, we continue to see effects from slightly softer demand. EBITDA was down quite a lot from DKK 52 million to DKK 38 million. Here, we saw in the quarter still some negative effect from raw materials positions taken in 2018, but we are out of these contracts now. Unfortunately, we also had some import duty just coming up in Brazil that hit our quarter with DKK 2 million. And then we had some one-off costs relating to a strategic review and the restructuring of our setup in India of DKK 7 million. So if we look at EBITDA in general, there has been a lot of unexpected and one-off things going on in that quarter.Looking at the highlights from the quarter. We have our first acquisition of our new U.S. factory, the integration is going quite well. And it's already even better than expected. We have also done a strategic review. As mentioned earlier, on Fibertex Nonwovens, this review has been finalized, and it was started up to find a way to see if we could significantly improve profit and return on invested capital in Fibertex Nonwovens, something that we have on our agenda for quite a while. The review found interesting things and also gave us belief on a long-term, profitable way for Fibertex Nonwovens. A strong road map has been built. Nine strategic initiatives launched. Among that, pruning of segments and product mix. But overall, also, we see ways to find long-term growth for this company. We are going to put much more efforts in growing our auto, filtration and high-value segments and also growing more in what we call our good geographies. U.S., I would say, consistently is operating at an EBIT margin of close to 10%. We have a plan for adjustment of capacity and cost reductions. And we expect to see effects from 2020 and onward. So we have now really put on a lot of strong strategic initiatives. And we really expect that this will change the long-term outlook for this company.Looking at 2019, we lower our guidance, especially because of weak first half and also with the, as I mentioned, one-off costs. And due to the first half, it will be lower EBITDA, and it's now in the range of DKK 150 million (sic) [ DKK 155 million ] to DKK 175 million, meaning also that we maintain sales outlook for second half.Looking at GPV, we saw a revenue of DKK 714 million, but it doesn't make any sense to try to look at what happened last year because GPV is a totally different company now with the acquisition of CCS, a Swiss EMS company. And CCS came with around DKK 400 million of [ new balance in the ] revenue. We have seen soft demands from some specific segments, but also encouraging order intake from other segments. EBITDA rose up from DKK 24 million last year to DKK 42 million, which we think is satisfactory with the ongoing integration. However, also we have to mention that what we call the old GPV delivered DKK 21 million of -- out of this DKK 42 million. And there we saw in the quarter, quite a negative effect from baht, because of the Thai currency, to U.S. negative of around DKK 5 million. We also had integration costs and PPA of around DKK 10 million, affecting the EBITDA.Integration is running very well. We have now focus on markets and customers. Next step will be factory and supply chain footprint, where a lot of analysis are going on. We still have a very attractive project and customer pipeline. And also important in Q2 is that our Mexican operation continue to show good progress, delivering better quarter -- month by month, still [ loss-getting ] but delivering better than we planned. 2019 guidance is maintained. EBITDA in the range of DKK 190 million to DKK 210 million. And here, we also have to mention that we have one-off restructuring integration and PPA cost of around DKK 50 million included in this guidance.From there to HydraSpecma, where we have seen a very, very good development. Revenue as expected, DKK 565 million, mainly driven by strong sentiment and momentum in the wind turbine segment but also in what we call the moving material segment. EBITDA increased 33% to DKK 64 million. Here, positive effect from IFRS and profit from sales of real estate of DKK 13 million. We also now see productivity and efficiency at a very high level in [indiscernible] of stretching their capabilities because of high sales. We have started up a new 3,000 square meter logistics center in Finland. Our new Polish factory shows good development. And very interesting also now, the production of hydraulic units for the -- for wind turbines in China. It's in very good progress. 2019 guidance increased. Turnover expected around DKK 2.1 billion. EBITDA now in a range of DKK 220 million to DKK 240 million. We have also say that we have strong focus on reducing our net working capital. However, global footprint and global trends will increase inventories in the following period.Last company in the portfolio and the newest company also, Borg Automotive. Revenue was unfortunately 14% down to DKK 232 million. All over in Europe, we have seen soft markets the last 6 to 8 months continued in Q2, especially the OEM, OES segment has suffered most. It's a general trend that we have seen all over. And in fact, we have kept market shares and not lost any customers during these months. EBITDA, down from DKK 41 million to DKK 21 million, which, of course, is unsatisfactory, but we also have to see that -- of course, there's a clear effect from lower volume, but we are also taking some costs -- restructuring one-off costs, closing down a facility in Belgium, one-off cost of DKK 7 million not included in our expectations. We have been much more cautious on the product relation and sales bonuses. So comparing '18 to '19, we are much more cautious on a lot of things. And also now we have learned the company -- well, I know the company better. I know how the season and the year is low in that company.Q2 highlights, we have been streamlining and restructuring our Belgium sale hub. As I said, 28, 30 FTEs have been [indiscernible] out. We have strong cost and contingency plans, scaling down on FTEs in Poland. Started up new Lublin facility for production of brake calipers to improve efficiency. Overall, meaning that a slow and a weak first half, thus, that we need to lower our guidance. EBITDA is now in the range of DKK 110 million to DKK 120 million, but we also have to say that we expect market to normalize over the coming months. I think that we've already seen the first signs on that, that things are going to recover. And also we expect that we will not have same one-off costs in second half as we saw last year. One concern is, of course, Brexit because we have facilities and operations in U.K. And we can speculate a lot in what happens if it's a hard Brexit. It's difficult for us. We are taking a lot of measures to be as prepared as possible for that.So all in all, what I would call a mixed outlook for second half because of the market uncertainty, global economy, et cetera. But we also said we have a lot of good opportunities, positive outlook in what we call our largest businesses and soft outlook in the 2 smaller business. However, we have seen improvements, as I said, in both. Revenue expected around DKK 20.5 billion. We are now working a lot of -- also on how to prepare the companies for 2020. Guidance slightly increased EBITDA in the range of DKK 1,835 million to DKK 1,985 million. I think also here, we have to say that -- again, that we are at the end of a major investment program that we have been running for the last 2.5, 3 years and will now focus on profitably utilizing our capacity and also strongly focus on reducing our net working capital and drive hard on operation and cash flow. Of course, we will always be investing. We are a large company, and we always -- we need to continue to invest in maintenance and uplift, et cetera. So with this remarks, I would allow to open up for questions.

[Operator]

[Operator Instructions] We go to the line of Jonas Guldborg at Danske Bank.

[Jonas Guldborg Hansen, Analyst]

Jonas here. A couple of questions. First of all, on BioMar, could you put some words on how the contract negotiations went? So what's the feedback from the market? Are you kind of approaching them more from a value perspective than from a volume perspective? Then on Nonwovens and the strategic review. You say in your statement that this could lead to lower revenue in the future. Could you share with us how big a share of revenue is at risk in here? And also, how long a period we should see this transition happen? And then finally, a question on Borg. You said that -- you showed on the slide that EBITDA is down DKK 20 million in the quarter and DKK 7 million is from the Belgian restructuring. How much is then coming from this more cautious view on the core regulations?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

Yes. Thank you very much. Just -- yes. Thank you, Jonas. Thank you for the questions. First, let me start on BioMar and saying, looking at the -- I think it's generally, also we have to say, of course, Norway is very important for us, but also the other segments and divisions in BioMar, they have been doing quite well. And Norway, they have performed in a way we planned. But we also said that we are going from volume to value. We are going to change our customer base and the contract negotiations have been of course top, but also very positive. We have been perceived open. We have changed our customer base. There's a balance. And I think our value propositions, et cetera, has been well perceived in the market. The quality -- it's a package of quality versus these value-added products, distribution and so on. And that has been received very well in the market. Of course, that's a way to go, and we will have lower volumes in Norway than we had last year. But I think we are -- that we require increasing value and share in our -- and also adding better value. Looking at -- if I go to your question on Fibertex Nonwovens, of course, we're saying we approved on segments, and we'll -- that lead to lower volume materialization in these segments, but we're also saying that we are putting much more efforts into added-value segments into the automotive business, et cetera. We have just acquired this company in U.S. So I think overall, our -- when I think overall, it's the ambition still to grow. But to grow on other segments, more value-added segments. And we have this [ channel online must-win package -- plan. ] It will take 2 to 3 years before we are at the end of them, but we will see, hopefully, all of strong effects from 2020 onwards.If we look at Borg, then you could say Q2, as I said, DKK 7 million from closing down in Belgium but also on costs, sales bonuses, et cetera, around DKK 10 million. So comparing the quarter, you could say, DKK 15 million to DKK 20 million compared to last year. And then, of course, effect of lower top line also means something.

[Operator]

We now go to the line of Laurits Kjaergaard of ABG.

[Laurits Louis Kjaergaard, Research Analyst]

Also 3 questions from me. First of all, on BioMar. Can you take us through what type of contracts that you have won in Norway, Chile, U.K.? Sort of what can we expect in regards to volume versus value here? Where did it go well more specifically? And where can you perhaps be getting the better earnings here in those sort of 3 jurisdictions? Second question on Fibertex Personal Care, we still see softening as you write in Asia in regards to the larger players. I imagine the -- Procter & Gamble and Kimberly-Clark may be on the radar here. In your annual report, you write about -- that you're refocusing your sales force or sales activities towards perhaps some of the other players in the markets. Perhaps a few words on that. And then the last question's more to do with the car industry growth in terms of Nonwovens but also in Borg. What sort of triggers are you seeing? In your initial statement, you saw that you see sort of more positive indicators in the market. What specifically are you looking at here?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

Yes. Thank you very much, Laurits, for the questions. Of course, BioMar, it's a big question to answer because it's U.K., Chile and Norway. And in general, we do not comment on all contracts and what kind of customers we do have. Of course, everyone knows that we have this very large U.S. contract in Norway, which we didn't gain -- get this year. But normally, in general, we have -- we are -- normally, there will be 2 suppliers at one customer. We have changed sometimes from being a -- having 30%, now going to 70%, et cetera. So some of the customers there, we have changed the volume balance, meaning that we are the biggest supplier now. We have been coming in to new customers in all these smaller players. So we really worked hard on just getting a much better customer balance and not being dependent on one very large customer. And also looking more on customers where they could see that the profile we are having with our value-added products, our distribution network, et cetera, are that -- they want to have us. So in Norway, you could say, it's set. It's something and a strategy that has been planned for -- or simply a goal for maybe the next years, and start is this year. So volume lower in Norway than last year, but they're more [indiscernible] volume. So, so far, so good. U.K., a very good contract situation. We have some contracts won for some years now, so that has been very good. And in Chile, we took over more capacity because we acquired 50% of -- the remaining 50% from our joint venture. And in Chile, we are more or less full now. We had a very good and successful contract negotiations. Maybe also based on that, we finally have capacity enough to approach some of the attractive customers in Chile.If you look at the Fibertex Personal Care, you could say -- it's rightly said Asia has been soft. And then you're right, it's -- it is a big customer P&G, KC, but also some of the Japanese big players. And we have been looking into a big -- been doing a big study in China. And we are setting up a small sales facility in China and looking on how to get a much broader customer base in China. It's just started, so let's see how that develops. But we are putting resources there.Looking at the development in the car industry, you could say it's twofold because Fibertex Nonwovens one situation where supply and materials for new cars, mainly to Tier 1 suppliers, it could be to a seat supplier also, a supplier doing something specific, delivering directly to the car industry. Of course, do we see a soft demand in the car industry in general? We are, of course, cautious on that because of what's going on. But we are -- we have won new contracts for new car models, and that's where we are positive. Looking at Borg. It's a totally different thing because that's parts for old cars. And if the sale of new cars will be lower, then people will be running the older cars much longer and they will need new spare parts and new brands. And so it could be, in fact, maybe a positive, long-term situation for all.

[Laurits Louis Kjaergaard, Research Analyst]

And just 2 follow-ups, if I may. On BioMar here, do you have any suggestions, how you can guide the market on the second half of this year and the first half of next year in regards sort of a gross margin perspective on these new contracts? And then also a follow-up there on Borg. Shouldn't that be less of a correlation between new build -- new cars going down and the restoring of old cars?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

You could say -- of course, I believe -- I would say, our experience is from a totally different business, but still we have been into unoriginal spare parts for the [indiscernible] sector and so on. And we always saw when things were a little bit difficult in the new sales, Schouw would say that we had good times. And I think you could say that when there are sold fewer new cars, those -- the old cars will still be running, and they would be needing spare parts and the brands. And so that's why we see maybe that could be good for [indiscernible]. I think guiding on [ CN ] for H2 and H1 '19 and '20, we do not do that. But of course, in general, second half will always be a better because of volume and scale.

[Operator]

We now go to Claus Almer of Nordea.

[Claus Almer Nielsen, Senior Analyst of Capital Goods and IT]

Also a few questions from my side. And yes, I will take them one by one. The first question goes for the whole macro situation. And I know your [indiscernible] might not be as large as we see for other [indiscernible]. But have you taken any steps to mitigate if things should deteriorate from here? That would be the first question.

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

Yes. I think we have -- just before the summer holiday, we have all our CEOs together where we are looking into what if things goes as we could fear. We have -- and that we discussed, of course, a lot. Every company has contingency plans if things really go bad. But we have already said we will be low on investments. We have the capacity we should have. We think we can run our capacity even in China. We have been looking into our cost base, we are looking into innovation. And also, as I said, we had a strong net working capital program going on [indiscernible]. We are really cautious on [indiscernible]. We have tried to be in a situation like that before, and some of the experience of what we can use again, but it's a new world. But we'll be discussing it a lot. And especially on the investment and capacity side, we are -- have been very cautious.

[Claus Almer Nielsen, Senior Analyst of Capital Goods and IT]

Okay. And just -- is it fair to conclude that so far it's actually only within the automotive industry you have seen some softness, very softness in the demand picture?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

Yes. Yes. It's -- yes, more or less that. I mentioned also on the GPV that we have, in fact, some segments, we have seen a softening. It could be some of the companies supplying the semiconductor industry. We've seen some other industries softening the demand [indiscernible] and increasing from some other industries. So GPV -- so you're right, [indiscernible] yes, GPV mixed. But if you look at a company like BioMar, once you -- really cautious when I'm saying. But maybe they end up having seen the same macro outlook because it's a total different business, supplying feed for fish and the food, et cetera.

[Claus Almer Nielsen, Senior Analyst of Capital Goods and IT]

Okay. And then you mentioned working capital, and I saw that your working capital drag was much better than last year, but I guess you're still not in a -- I don't know. It could be better, I guess. So what's going -- what is your initiatives to push all divisions to improve net working capital? And yes, I know this is your personal KPI, so...

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

This -- thank you very much for asking, Claus, and reminding me. Now, we have just had a big seminar going on, on that. And the problem is, of course, it's something that takes a long time. Maybe I can have that -- and sometimes you also need lobby points if things soften up a little bit, component suppliers will be shorter, et cetera, et cetera, so we can make -- produce inventories. But we've been working a lot on it, and there's stronger learnings on it all over. One Interesting thing is, in fact, the mix of geography. Peak volume in Norway, in BioMar, where terms of payments, very, very short because [indiscernible], they have strong cash flow and so on. But to remove that volume and business, et cetera, to [indiscernible] to China, et cetera, then it's a total, different ball game. And that change your -- affect your base, et cetera. So there's a lot of things in that all. It's not an excuse, but it's very complicated. And we are working hard on it. And we expect to see reductions on that and also to see a quite strong cash flow.

[Claus Almer Nielsen, Senior Analyst of Capital Goods and IT]

This year?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

This year also, yes.

[Claus Almer Nielsen, Senior Analyst of Capital Goods and IT]

Yes. Okay. And then just the final question is Hydra, and we expect exposure to the wind sector. How do you see your pricing environment? Will you -- are you able to take advantage of a very strong demand [indiscernible] your customers?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

No. We are -- I think we are able to take advantage of -- they want strong, reliable, long-term suppliers. Maybe you can soften a little bit on terms and so on. But always, you need to be competitive. And if you are too eager on pricing and so on, they don't forget that for the next time. So of course, there are small things you can do it and then so on, but it's not [indiscernible].

[Claus Almer Nielsen, Senior Analyst of Capital Goods and IT]

Okay. And [indiscernible] all viewing negative impact from all the trade war implications?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

So far, not really. Of course, we have moved the production of some hydraulic units to China to supply. Rest is -- and other [indiscernible] that is in the U.S. We have the Borg, a manufacturing set up in U.K. We have BioMar in U.K, so that's [indiscernible]. It's something -- if you're thinking [indiscernible] but it's difficult to see what happens.

[Operator]

We now go to the line of Lars Heindorff of SEB.

[Lars Heindorff, Analyst]

Just one question for my thoughts. And that's regarding Nonwovens. I think on previous conference calls and presentations, you have been talking a little bit about the market situation and mentioning that it would have been nice with some sort of consolidation or maybe there's some of your competitors withdraw because of a very -- basically unsatisfactory competitive situation. What is it that has changed now since you believe that you can actually turn around Nonwovens by doing internal measures only and only rely on that? And has something changed in the market that will support that? Or how should we view that?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

I think, in general, of course, we'll say the competitive situation is tough, but I think also we have said the other Fibertex business, that's where we see real tough competitive situation, especially in Europe. But still here, we have a tough competition, but we have changed the segments we are going to work in. We are moving out of the low-margin shipments over time. We have had invested a lot into facilities where we can produce more value-added products. And we have seen strong demand from -- after some of them, particularly [ minimal ] special products for the automotive industry, for wind turbines, et cetera, so we see a strong move that way. And now we have capacity, we have product, we have innovation in place. And then also, we have been working a lot on factory footprint capacity. So it's a plan involving all aspects of the [indiscernible].

[Lars Heindorff, Analyst]

Okay. And when you say that you expect that this will be [indiscernible], will it be completed next year? Or will we start to see the impact over the next year?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

Yes, I said you'll see impact, hopefully, already when we are working on the plan now. So things will start materializing and you will see impact in 2020. And it's a plan running over 2 to 3 years because there's a lot of factory footprint, building facilities, structures, et cetera, around it. So it's a plan that we work on and how could we move variably strong assessing what plan [indiscernible] that we'll be taking.

[Lars Heindorff, Analyst]

Would it be advisable for us to put in some sort of restructuring costs in relation to such closures? Or -- that's the first -- that's the sort of follow-up. And then the second one is, do you actually believe that Nonwovens will be able to deliver return on invested capital, which is [indiscernible] some of your targets?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

To address the last question and without being too specific, first target of this because we need to be realistic is we want to move [indiscernible]. We have a plan for that into the range of 11% to 12% [indiscernible] invested capital, and there we have a plan. And next step is pushing it towards 15%, but we have to see first that this 11%, 12% materializes. We have not considered any restructuring cost so far. There might be some, but it's not significant.

[Operator]

Okay. Before going on to the next question, which is the line of [ Ulrich Bach ] at SEB [Operator Instructions]. So [ Ulrich ], over to you.

[Unknown Analyst]

Two questions from my side, and I'll take them one by one. My first question is regarding BioMar, where it is mentioned in the quarterly report that BioMar is focused on greater efficiency and more flexible collaboration with customers during the first 6 months. And firstly, can you please elaborate a bit on that? And secondly, will this happen anytime on costs? Or in -- during the second half of 2019?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

Yes. Thank you. This is specific -- it goes specific on Norway. And as I also mentioned, we have restructured Norway quite a lot, meaning we've set up new team in some areas, new ways of approaching the market and in the new ways of working with the -- our recipe optimization, [indiscernible], et cetera. So it's a lot of things that has been going on. And then also, the way we approach the customers, maybe midsized, smaller customers [indiscernible] than very large system like Lerøy. So that's what we mean by this being more flexible, even more increasing productivity by also utilizing a broader recipe spectrum.

[Unknown Analyst]

Okay. And yes, my second question is regarding raw materials. In the report, it is mentioned that the guidance for several of the portfolio companies is highly dependent on these raw material prices. And so which raw materials are you most exposed to that you can name a few or the main one?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

PP, poly polyester -- polypropylene, sorry, to -- especially to Fibertex Personal Care, where I think it's 100% raw material and meaning 100,000 tonnes of that at least. Then we are in polyester, viscose. And then, of course, we have a lot of raw material -- actually, proteins in general to BioMar, meaning these proteins [indiscernible] proteins, it's [indiscernible], it's [indiscernible], it's a lot of niche products. So especially proteins and oils and not to forget electronic components that we use in GPV. I think that's the main raw materials. And we have a raw material sourcing of plus DKK 10 billion in the group, in general, for a quarter. It's very, very important for us that we have a strong [indiscernible].

[Operator]

Okay. And there are no further questions on this call, so could I please pass it back to you for any closing comments at this stage?

[Jens Bjerg Sørensen, President, CEO & Member of Management Board]

Thank you very much, and thank you for questions, and thank you for listening. So this would finalize our Q2 '19 call. Thank you.

[Operator]

And this now concludes the call. So thank you all very much for attending, and you can now disconnect your lines.