Cloetta AB
STO:CLA B
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Good morning, and thank you for joining us on the Q3 Conference Call for Cloetta. My name is Nathalie Redmo, and I'm Head of Investor Relations. With me here today are Henri de Sauvage, CEO of Cloetta; and Frans Ryden, CFO. Henri and Frans will take you through our third quarter results, and we will then move on to a Q&A session. And I will now hand over to Henri.
Thank you, Nathalie, and welcome, everybody. Overall, a good quarter, really happy with that. The sales of our branded business went up with 4%, but it was also notably higher than the previous record we had, which was 2019. So we're lying something like 5% over 2019 sales. So that's really good to see that we're back on track on that growth journey. Also the pick & mix business recovered. We're still not completely back to 2019 levels. But as we discussed in the previous quarters with all the actions we've taken, and we're also now able to report that we're back to a profitable level pre-pandemic comparison. So that's really good. The strong sales momentum allows also the marketing spend to be in line with 2019. So there's all the positive that seems to work.And we're actually, as we speak for the ones in Stockholm, Sweden or in the Scandic, we have the largest Candyking media campaign ever being rolled out for Halloween across Scandinavia. I'll show you a bit more in detail later on. We also have now submitted our science-based target initiative submission of 46% greenhouse gas emissions by 2030, we'll await their approval before that becomes finalized. Of course, that is a huge undertaking also for us, in particular, in the broader supply chain into raw materials, et cetera. We also went with our ERP system to the cloud, which is a major achievement in the sense that it all was done under corona restriction times, of course, and that will not only help us with enhanced functionalities, but it also is a saving and, of course, also giving us more it security the way it is set up.The net debt over EBITDA became, again, below our targets and net debt levels are at an all-time low, Frans will talk you through that a bit more. And then, of course, looking forward, we're preparing and actioning a lot of pricing in all our markets to mitigate the surging input costs, like pull other companies in FMCG industries, we see that this is happening, raw material, packaging, energy, transport, et cetera. And of course, we are working hard to make sure that we have a stable supply of raw materials, which will need, as we progress into next year.So if we look at the sales results, on total, of course, looking very good. As said, if we split it out in the 2 divisions, we see the branded business now growing with 4%. And remember, last year, we came out of the first wave during quarter 3, and we had a strong rebounce in sales. So, it was not an easy comparator either for the branded or the pick & mix business. But nevertheless, we grew with 4% and also the pick & mix, another strong quarter with 21.6% organic sales. We then look a little bit more on the underlying consumer drivers, mobility, very important for us. We can see that in retail and recreation. So I think that during the summer, the theme parts with also the cinemas or the high street shopping, which is very important for the U.K. pick & mix business I would see now for the first time, positive figures in some of the markets and improvements in the other ones. So that's a good signal, of course, important for our business.And then we see the transit station. So these are the kind of places where you would come in or stop your journey, particularly when you travel to work, but also when you go shopping in town or in the city centers, we still see that it's down versus the baseline, which is 2019. However, there's a significant improvement versus last year. So that is going in the right direction. But the last one that is then the workplaces. So people are still working very much from home. We don't see this really going up yet, and also the traveling to work, which is a little bit in line with the transit stations is happening in some countries more with own car or own transport and with public transport, which is a little bit difficult to judge because, of course, there's less kiosk sales in public transportation hubs like train stations on the other hand that should get more petrol station settle. So a little bit early to judge that.When I look at the branded business, still 75% of it in food and 25% are the other channels. If we first look at the last 3 months market data, we can see that pastilles and gums are still not completely recovered. And let me remind you these are the data of many of the supermarket channels because that is what is being measured by Nielsen, so the out-of-home channel is not in there to a large extent and candy that's 1% up. Of course, that we have seen at much higher levels in the past. So therefore, I'm also pleased to be able to report this kind of growth figures.Now if we then look at the category trends, I mean, we already saw that traffic is increasing, also in travel retail, and particularly on the ferries. But pastilles and gums is a category still below 2020 levels, and candy and chocolate are above 2020 levels despite a tough comparator of last year and also the pick & mix recovery. Because, of course, there is some relation between pick & mix sales and branded sales. And if we look at ourselves, we keep on working on strengthening our top 25 brand positions. Yes. So whatever Red Band in Germany or Kex in Sweden that's what we mean with those. So really get clarity in consumer language of what these brands are standing for, building stronger marketing capabilities in all the markets, so we're still in approach of recruiting stronger marketing people and increasing the share of working media, I'll come back to that.Also, the whole agenda of our innovation 2.0 to come with more margin accretive innovation is helping us. A good example is the real fruit launch we have with Gott & Blandat, for example, here in Sweden. And then very important, I mean, how are we going to get back our pastilles and gum sales to the levels of 2019, we need to reconquer the penetration, get those light users who have now maybe for 1.5 years, not being able to encounter our products because the channels were closed or they have not seen the need to buy those forward because they were not traveling to work or going out in the in the weekend. So that's a very important one because it is a category with above-average profitability. And that, of course, is not good for our mix in gross margin for the branded business.Pick & mix, not that much change in the channels because now everything is more or less open. You can see the U.K. now also with the Bond movie coming out, the cinemas have opened their pick & mix places, so that's that good. Consumer activation still in the quarter on an unchanged level, meaning that we don't have a lot of consumer promotions, price promotions in the pick & mix category. And that will be important going forward to get penetration going again. However, our clear mission with pick & mix is sustainable value growth and so price promoting does not completely fit into that. So we'll find other ways like the asset anytime activation, I will show you a bit later to get consumers back into pick & mix.And the consumer demand for pick & mix is still going up. So that's positive, that's a positive trend. You can also see that from the figures. So like-for-like sales on the existing stores is up, and that also means that even without promotional mechanisms, we're able to attract consumers back into the category. So actions are that the premium Candyking concept is now live in all markets with good results. We even have the premium mix, as we call its a much more expensive concept in some 20 stores in Finland, really doing well. It's a lot more expensive, better quality, but even the volumes are up. And then, of course, the efficiency program is still delivering, and that's the efficiency in merchandising, transportation, distribution, warehousing, et cetera, et cetera.Now we go to Frans, to give us a bit more insight in the financials.
Good. Thank you, Henri. So as usual, I will start with net sales. And by now, you have probably both read and heard Henri and then seen in the documents that we're talking about back to best ever, pre-pandemic, and I'm going to continue on that theme. And it will be a bit dishonest to prepare that, I'm not actually quite delighted to be able to present our latest Q3 financials, especially with the backdrop of the challenges we've met over the last 18 months. So overall, organic growth, up 7.5%, and this growth was again driven by both branded packaged and pick & mix.And as Henri mentioned, for the branded package sales, that means that the quarter is up 5% versus Q3 in our best year ever for branded package sales, which was 2019 previously. And also that now on a year-to-date basis, we're ahead of 2019. In Q1 and Q2 earlier this year, we were on par, but this actually takes us one step forward versus that. Now we know that part of that is cannibalization from pick & mix, but this solid branded package growth is coming shoulder to shoulder with pick & mix growing 21.6%. That takes us to an index of 83% versus 2019. And I'll come back to that point.So on a year-to-date basis, organic growth is actually not far from 7%, and with branded package sales up 4.5% and pick & mix more than double-digit at 13.8%. So let's look at the segments then over time, and starting as usual with the branded package sales by quarter in the top row. So this is the third quarter of growth. And it's also worth remembering, and you can see that here, that in Q3 last year, at the time when COVID actually seemed to be receding before the second wave hit towards the end of that year we were growing. So the growth in this quarter is on top of the growth that we had already in Q3 last year.Now that said, within the Branded Package segment, sales of pastilles and gums are still down on account of the still reduced mobility due to COVID. So we do have an unfavorable mix. I'm going to come back to these 2 points when we look at the profitability. Both what happened sort of in that interim period before the second wave of COVID and also with unfavorable mix. Then looking at the lower half of this slide and the pick & mix business, so at 20% growth, that's really great. And as mentioned, it gets us an index of 83% versus 2019, which is another step forward, given that in Q2, even though the growth was very high, it only got us to an index of 75%. So continued recovery, continued growth, and then let's look at the profitability.So as you can see in the graph, our operating profit adjusted increased versus last year. This increase was driven by volume, and margin-enhancing initiatives, taking operating profit adjusted to 12% of sales in the quarter, and year-to-date profit back to double-digit margin at 10.1%. Now the gross margin, and we don't show that in this slide, but you have the details, it's also very strong versus last year. I mean, on the reported basis, we're up almost 600 basis points. But then, to be fair, if we adjust for the phasing of costs that went into Q3 last year, and we take out the restructuring cost we had for the plant closure last year gross margin is still up by a solid 200 basis points. So from below 33% in 2020 to over 35% in this quarter.Now even so, if it wasn't for the challenge that we mentioned about unfavorable mix within the Branded Package segment, gross margin would have been even stronger. So refreshment has declined further versus 2020, whereas, the rest of the branded package sales are obviously doing really well, being up versus 2019. So we're widening the gap between the categories, and that is worsening the mix. So getting consumers back to pastilles and gum, first with the return mobility, and then, of course, rebuilding previous habits is and will continue to be one of our key challenges. That said, the nonetheless growing operating profit, as you see here by SEK 49 million that's partially offset by costs, SEK 29 million, which is the net of a tough comparator as we released incentive programs last year, although, we also have lower supply chain cost here.Importantly, the SEK 29 million in increased cost does not include an increase in marketing spend as we kept it in line with 2019, given the good sales momentum from the first half. It is a reduction versus Q3 2020. But then again, we did a big step-up in marketing last year in that period I mentioned when COVID seem to be receding until the second wave hit. And we did that to bring consumers back in. But I'm going to get a bit more detail about this when we get to actually the SG&A slide.Now importantly, what you do not see in this bridge or in the commentary are any significant increases of input costs, which you see reported on a daily basis in the media nor any of the supply chain challenges with logistics or missing containers, et cetera, that is happening across the world. For increased input cost, given our forward contracts and inventories, there is no material impact yet, and we have also been able to manage our supply chain to avoid any material disruptions.Now we're going to look at this topic again a little bit later on, and Henri will have a slide on that, but we are actively working on mitigating both of these challenges, including through required pricing. So before moving to the SG&A, let's look at operating profit by segment. So I'm pleased to report that the branded package business delivered SEK 181 million in operating profit adjusted and a 15% profit margin. So again, above the 14-plus percent margin that we've used to quote before the pandemic and also before we actually introduced segment reporting earlier this year. Versus prior year, as shown here on the slide, and having adjusted for that cost that was phased to Q3 last year, profit is largely stable, as the growth and somewhat lower marketing spend offsets down favorable mix and the absence of last year's release of the incentive program.But then when we look at pick & mix, we have a really good trajectory. In Q1, we said we could get back to profit without all the volumes back, thanks to the margin-enhancing initiatives. And in Q2, we were just about breakeven and now above breakeven again. Actually, with these results, we're back to pre-pandemic profit level. So it's really nice to see steady profit without full recovery of volumes. But it's important to note that this result does not -- does also include that pick & mix first, having absorbed its fair share of common costs like in headquarter, IT, supply chain. So there is a favorable contribution also in that respect, beyond the reported profit.Ultimately, however, and I said that in Q2, the most relevant comparator is not 2019 or 2020, but where we want to go. So this is not where we stop. And as volumes continue to recover, profitability can improve further, and we will also have further margin-enhancing initiatives, whether that is fairer pricing, reducing cost for warehousing, distribution, merchandising or in support functions.Looking then at the sales, general and admin costs. So the total cost increased, as you see, SEK 15 million to SEK 362 million in the quarter. Now if you look at this increase, if you exclude items affecting comparability, you exclude the Forex, then the SEK 47 million increase is almost fully explained by the absence of a repeat of last year's release of bonus programs. So basically, this means that the lower marketing spend dimension paid for other increased SG&A. That's in line with what we talked about in the last quarter, which is that cost would start to come back as the business also started to normalize. That's also the case for quarter 3. So rebounding sales of pick & mix naturally brings higher cost of merchandising and for fixtures. So these are good cost increases. And you can also tell that from the progress on building sustainable profitability in pick & mix.Secondly, other costs are also coming back, and we do have continued to invest in e-commerce and other capabilities. Now part of these increases are offset by our VIP Plus program, which continues to deliver savings versus last year. And here, what we have in is restructuring of our Swedish business, the launch of the shared service center in finance and migration to the cloud-based ERP. Now if we compare to Q2 again, now the reason there are no cost increase at all versus last year. Again, when excluding this incentive program release, is due to the lower marketing spend versus last year's step up. And here, I want to reaffirm our commitment to our brands. And although it's down in spend versus Q3 2020, we're not down on a year-to-date basis. And we intend to continue to invest strongly behind our brands, both in the near and long-term.And while we talk about lower spend in Q3, the spend is nonetheless on par with our spend in Q3 2019. So we're not talking about having got the support here. But it is lower than what we would have spent without a good momentum from the first half. But also the mix of the spend is also better because we have also improved the ratio of working spend versus nonworking, and within the working spend, the ratio of pure media. So basically, what is really reaching the consumer is also increased.Now finally, on SG&A, if you take a step back, as a percent of sales, 23.1% in the quarter, it is the lowest percent we've had since around, I think, 2014. So that is really very good. And even with a higher marketing spend, this KPI would have been one of our lowest percentages for quite a number of years. Looking then at cash. We had, again, a healthy free cash flow in the quarter, delivering SEK 238 million on an operating profit of SEK 189 million. And this strong operating result in cash is the main driver of the good free cash flow, almost on par with last year. But then in Q3 last year, we benefited a lot from the reduction of inventories that we had built up to avoid supply disruption when COVID broke out.So with respect to working capital, as we closed the quarter, days inventory on hand is actually further down by 9 days versus last year, in line with what we said that we were going to do. At the same time, our receivables are up, but so are our sales, so that is really expected. And our overall cash conversion cycle is down 6 days versus where we closed 2020 Q3.Now the working capital is not yet affected here by the new European UTP legislation. So our days payable outstanding, and our days sales outstanding is fairly similar. But the new UTP legislation is nonetheless risking, having a negative impact on our working capital, given that different countries in Europe are implementing UTP differently, and our manufacturing sites supplies multiple markets. That means, our trade payables and trade receivables do not line up by country. So we're working through this, and we will have to report further on when we know how this will affect us.Now for the investment in PPE and intangibles, it was SEK 52 million and a bit lower than last year. The cost for the new carton packaging technology that we mentioned earlier this year is not yet materially reflected in the numbers. So there was SEK 130 million. We said we were going to invest, out of which SEK 40 million was going to come in this year. And I think we're going to land a little bit below SEK 40 million on account of restrictions to traveling because of COVID, and that has slowed down the work somewhat.Now with the seasonality of our business, we tend to generate our cash in the second half of the year. Yet with our strong start, we have now delivered a solid SEK 359 million in free cash flow in the first 9 months. So a good improvement year-to-date versus last year by SEK 237 million. Now we had a very strong cash flow in Q4 2020, so you have to factor that in when you think about Q4 2021. Then moving to my last financial slide. Leverage is one of our key financial targets, and this slide seeks to capture that and our debt position. And I'm pleased to share that our leverage is back below targeted 2.5 in the quarter, which is the first time since the pandemic started.I'm also pleased to share that our net debt is at an all-time low since the Cloetta merger basically at SEK 2 billion that's the lowest we've had since 2012. And we're still having access to additional unutilized credit facilities and commercial papers, not yet on the market of almost SEK 1.4 billion. And we held a solid cash of SEK 505 million at the end of Q3. So our conclusion is that our financial position remains really strong. Now before handing back to Henri, I have one additional slide to you, which is more of a heads up.So earlier this year, the IFRS Interpretations Committee finally concluded on the treatment of cost for system implementations related to cloud computing. So basically, software as a service. Now this has been an open question for some time. And if one should treat that type of implementations, different from when you house the software on your own server. And they have concluded, yes, it should be treated differently. So we're currently investigating to what extent previously recognized assets are now going to be retrospectively expensed, and we're going to be able to have figured that out by Q4. Things are leading in that direction, however, and we expect to record a negative adjustment of the operating profit. We don't think it's going to exceed SEK 25 million for the full year of 2021, and that impact will be distributed across all 4 quarters because we're going to do a restatement.So if you look at this table, I'm trying to illustrate this that the cost of cloud computing is going to go up. That's the 3 red arrows towards the middle, but then it's going to be partially offset by amortization charges being reversed, so that takes it down a bit for a net negative impact. But there's no impact on cash. And again, only a limited part of this will impact Q4, probably not even a quarter of that SEK 25 million. And when we close the next quarter, we will have nailed down these numbers, and we will populate the table for you. So that concludes my part of this presentation, and hand back to Henri.
Good. So a quick update of strategy. Frans already talked about the marketing investments just to see -- show you that this is part of the strategic agenda. So in order to get our branded growth to levels where we want it to be, we are investing more efficient, and we're investing more in marketing. And if you talk about marketing cost, you should think that it takes external companies like agencies or production companies to make, let's say, social media campaigns or good market research, and that money, you tend in FMCG language to say, well, that is nonworking media. And all the money we spend on buying time on Facebook or on TV or on the show outflow or media is called working media. That's the kind of stuff which the consumer sees.And when we started this journey, you can see that 60% of the money we were spending in marketing, which actually paid to third-party companies. None of that money was seen by the consumer. So let's say that's the production cost. And then only 40% was received by the consumer. So we're now proudly, I would say, saying that we're now up to 70%. So 70% of the money we invest is being seen by the consumer in one way or the other. And that also is, of course, a big contribution to the strengthening of the top 25 brands.So that can be outdoor, that can be TV. And of course, you're all very excited by the launch of the second car manufacturer in Sweden Volvo cars today, I think they get a little bit too much attention because we are by far the #1 car producer in Sweden with August dealer and will continue to be so. But I would say, congratulations to Volvo with the #2 place today.If we go to the next chart, we, of course, have the science-based targets, and very important for us, but that's not the only part in our sustainability agenda, we're working hard with the living income for farmers in Africa and also, of course, on the 4U, and the whole drive towards natural flavors, natural colorants is really progressing quite well. So that's an important part of our strategy as well. And then, we go to the next one, Nathalie. Yes. So we already talked about -- I mean, if we want to get into sustainable value growth with Candyking, and if we need to activate towards the consumers, also to bring them back into the brand. But to do that only with price promotions is, of course, not helping so much with the sustainable value part of it.So I'm really pleased to say that we're launching now a cross-Scandic cooperation with SF anytime, where we are basically gaining penetration for them on their streaming platform in-store with our enormous numbers of penetration moments with pick & mix Candyking bags, where if you buy a certain amount of pick & mix, you get a QR code, which you then can redeem for a free move with SF any time. And they are using their channels of communication to talk about Candyking. And of course, the 2 things together are really a nice fit because when you consume our product just when you're sitting on the sofa with the family of Friday or Saturday, watching a movie. So it's a fantastic way to activate the Candyking brand without price promotion and getting more, yes, brand-building activities around the Candyking brand, which is good for consumer activation, also, of course, showing to our customers that we are the #1 in this category who are taking care of building this segment into a really branded business.So very, very pleased to see this. It is really good. Yes. And then we already talked about it. I mean, what is happening out there in raw materials with everybody in FMCG. We try to give you some sort of a feeling. We made a basket, a weighted basket of our most important raw materials and say, well, what happened with the price index since January, and you can see that it is somewhere 17% up since the beginning of this year. And that is, of course, something we are mitigating. We are out there with pricing in all the markets now taking the right moment in the proper way, we do this with a 3-month average in some countries looking forward in all the ones and discussing with our trade partners, how we are going to price towards them, and then it's up to them to see what they're going to price up towards the consumer.So that's a lot of work, but it is really important because these are big sums of money, and therefore, the only way to do this is to price up. So that's happening. Yes, key business priorities, no big changes. And you can see from the presentation today, branded growth, really important, getting the top 25 brands stronger and stronger. And also like both Frans and me mentioned, pastilles incomes that needs to come back because it is helping us in our profitability. Pick & mix, sustainable value growth are really important. Maybe one piece of information as well and really nice to see our largest customer in Norway also voting Cloetta based on our fantastic work with pick & mix, a supplier of the year. So that, again, gives confidence because we're not the biggest one in Norway in the candy and chocolate category, but they really we see us as a very professional player.And of course, cost very important still. I mean, Frans, talked about, yes, we have costs going up with merchandising because we have more sales. Good. Yes, we have incentive programs, which were 0 last year and now are getting reservations, but it's very good to see the progress on both Perfect Factory program efficiencies and the VIP Plus program. So that's happening, but of course, looking forward, surging input costs, we need to take care of that. And that was it for the presentation. And now we open up for questions.
[Operator Instructions] Our first question comes from the line of Nicklas Skogman of Handelsbanken.
So my first question is on -- if you can give us some guidance, how we should think about this raw material cost inflation? And then your response in terms of price increases for the quarter ahead. Do you expect some mismatch there? Or do you feel like your hedges and the price actions taken will be enough, so to speak?
Yes. This -- I mean, first of all, I think nobody knows, yes, because prices might go up even more next month or the month after. So we have a way of doing this with our customers by market. In some countries, it's an average of a number of months because we don't act on spot prices in other markets, it's more like a momentous negotiation as I'll show in the moment, and we are trying to find this or we have been finding it in the right way, so that we capture the increases, but we're also not delaying it too long so that we might have a quarter with no price increases while the input costs are going up. So there is always a bit of delay in this because we are not acting on spot prices, both when it goes up and when it goes down. And then it is clear that it might not be only one price increase, it might be multiple price increases we will have to do during the year in order to cover the increases, which we are seeing. But how high these increases are going to be, we don't know because then we will probably be trading raw materials at the moment.
And I'm thinking about these pastilles and sewing sales still being lower than last year when mobility was lower. How do you think about that? What do you think is the explanation? And is there some new competing category that's taking share? Or how do you think about that?
No, that is not the case. But what we do see is, one, the mobility is still not completely back. And these are, of course, products which you are not only buying in the supermarket channel, but also on the go when you are on the toddle banana and you stop at a depressed bear on to a buy coffee. You take a Läkerol with you in the gym or when you're entire and a lot of these channels are seeing recoveries, but not fully yet. So that is one thing. And that will come for sure when the pandemic is going to get more and more under control in most of our markets. But the second thing is that this situation has been now going on for 1.5 years. And in each brand, in each category, you have like heavy users and medium users and light uses.And what we can see that particular on the light users, we have lost light users who have just not seen the need of buying chewing gum, for example. As we can relate to that with all our categories that if you're not going out in the weekends or you're not going to work every day that you buy less makeup or in our case, you buy less product to refresh your mouth. And that is the actions we're working on how do we get those light buyers back into the category and then, of course, back into the Cloetta brands. And that will take a little bit more time in that sense, a bit comparable to the pick & mix challenge, where we're also -- all the stores are open now again, but we don't see all the consumers back into the category. Yes. And that's a little bit the same challenge in a different way, of course, with the refreshment category that we'll have to reach.
Exact number, Nicklas. But I'll help you triangulate this a little bit, and maybe I'll think about it. So let's say, what we have shared. So in Q2, our SG&A was up SEK 50 million. And that was in the report of SEK 53 million, let's say, SEK 50 million. And at that time, we said it was roughly SEK 30 million was on account of higher marketing spend. So that leaves SEK 20 million on everything else. And that SEK 20 million, of course, is, again, like we said, when the business comes back, some of these costs are also coming back. So if you then say, hey, well, if you were up SEK 20 million in Q2, maybe you should be up SEK 20 million in Q3.But obviously, once you adjust for that incentive thing, we're not up at all. So you could sort of conclude, maybe it could be somewhere around SEK 20 million, which is the reduction in the marketing spend versus last year. And then I think to understand the quality of -- is that SEK 15 million or is it SEK 20 million but let's say, somewhere around there seems plausible. And then if you want to think about the quality of the spend, then there is like 2 points there.One is that we know that last year, we really stepped up to get the consumers back in when we thought kind of COVID was receding. So when we're spending less, it's not because of a reduced commitment to invest behind our brands, that will be the wrong conclusion. And certainly would be a wrong conclusion to have when we think about Q4. So that's one. And the other one is, and as Henri showed on the slide, on a year-to-date basis what we spent our money on has been steadily improving.And also, again, in Q3 this year versus Q3 last year, so the ratio of spend that goes to working is higher and within working pure is higher. So while, let's say, reported spend is down, that doesn't necessarily mean that the marketing spend that would have reached, if you will, the eyeballs of the consumer or the eardrums has been reduced.
And if we think about Q4 now, this Halloween campaign, should we think that marketing spend should at least be on the same level as last year in Q4?
So in Q4 last year, again, we had a big step up there. Again, because the second wave really came more towards the end of Q4. And of course, these investments gets looked in a little bit earlier. So I think I would sort of go back to the same sort of scenario, I think, well, if we were up SEK 20 million in Q2, and we're probably up SEK 20 million somewhere around there in Q3 on the sort of all other SG&A spend. Maybe it seems possible that we should be up also on that type of spend in Q4. And then the question is, well, are we still going to be able to spend more efficiently? And do we need to step up as much as we did in Q4 last year? Or is it possible that Q4 SG&A will be pretty much in line with last year in the same way that we saw Q3. And there, you sort of have to decide which direction you want to go.
[Operator Instructions] And there are no further questions at this time. Please go ahead, speakers.
Good. Well, then, we thank you for the call on Q3. As I said, we're pleased. Good progress on the branded business above 2019 levels, a good recovery of the business in pick & mix and, of course, working hard to mitigate the raw material prices and over inflation going forward. We have Stefan posting a question, are there any larger pick & mix contract up for negotiations? Well, that's happening all the time. I would say not in this immediate quarter, but for next year and each quarter, I think there are contracts up for negotiation, both on keeping and also on gaining new contracts, but I can't comment due to competitive reasons of the exact nature of those contracts.Any changes in the competitive landscape within pick & mix? Well, that's interesting. What we do see is that quite a few of the third-party suppliers we are using. So these are not pick & mix competitors, but these are, let's say, factories producing pick & mix items that they are actually having trouble to supply to keep up with demand, how that is exactly going to impact the competitive landscape. We don't know, but we feel we're quite well positioned because we have our own factories, which are producing, of course, also for pick & mix, so we should be able to capture a bit more of that.Travel retail sales, yes, we are recovering. We can see, and particularly in the Nordics that we are above halfway on the recovery versus pre-pandemic, that is mainly coming from areas like the ferries or the boat passenger both sales that we travel, air travel is still low. Of course, that is also picking up, as we can see that the airline industry is not back to, of course, where they were, and that they're also finding it difficult to find personnel, et cetera, to bring the capacity back, and we see that in the sales in the shops on the airports.Nevertheless, we're not that big in travel retail. I'm very pleased to say as well that on outside the Nordics, that with the new international team, we have, we're also making really good progress with some of our international plants like Jelly Bean factory on closed cooperation with a few big players adding 50 to 100 new airports going forward for Jelly Bean. So that is, of course, the opportunity within travel retail for us as already the new player in this field to take new contracts and to increase sales of travel retail outside of the Nordics. So there will be a gradual improvement as we expect, but an important business, not only for sales, but also to build our brands, in particular, those international brands. Good. That was Stefan. And no further questions. So now we ended, and we thank you for today. This now concludes our conference. Thank you all for attending. You may now disconnect your lines.