Cloetta AB

STO:CLA B

Earnings Call Transcript 2022-Q3

[Nathalie Redmo, executive]

Welcome, 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. I'm here today with Henri de Sauvage, CEO of Cloetta; and Frans Rydén, CFO. Henri and Frans will take you through our results for the third quarter, and we will then move on to a Q&A session.

And I will now hand over to you, Henri.

[Henri de Sauvage Nolting, executive]

Thank you, Nathalie. So welcome also from my side. We had another quarter with continued growth and first and foremost a very strong focus on pricing execution that at the time is the name of the game.

If we look a bit more in detail, we have a seventh quarter of growth in the branded business, of course, a lot being pricing, but also supported by increased marketing and innovation efforts, and I'll show you a few examples later on. But also our Pick & mix business continued to deliver profitable growth despite the higher input cost and given the different business model of this division, that is quite an achievement.

We talked about pricing in the previous quarters and the communicated pricing has come into effect in quarter 3. There's also new pricing announced for 2023 because costs keep on going up. We still see raw materials going up, but we also see the conversion cost of our suppliers going up. So we need to keep on pricing. The continued rising input costs were offset in quarter 3. So that is very good, but we offset then on an absolute basis. So there is a compression of the margins due to the strong sales growth.

The macroeconomic and global supply chain challenges were managed without material impact on the business, but this is a day-to-day effort on things like raw materials, packaging, transport, et cetera, et cetera. There's a healthy cash flow as we already talked you through before, it's coming in the quarter and the net debt EBITDA remain below the target of 2.5x. And as well the board has decided to proceed with the investment in a new greenfield facility in the Netherlands. So we are now progressing with that project.

So with that, having said Frans, can you give us a bit more insights in the financials?

[Frans Rydén, executive]

Yes, thank you. As usual, I will start with the net sales where, as Henri said, we are again reporting double-digit organic growth at 11.5% and including currency upside and the sales increased 14.8% and the strong sales are also again driven by both Branded packaged products growing at just over 10% and by Pick & mix growing at almost 16%. The growth is partly due to a favorable mix, but primarily driven by the pricing action we have taken to offset the input cost inflation and which Henri mentioned and which we have spoken of during the last couple of quarters. And I will revert to the point on pricing when we look at the profitability. But I do want to comment though on the underlying volumes.

So overall, we have managed to implement this pricing without volume loss. And I would say it's really a testament to the strength of our brands, that consumers in this inflationary environment feel that what our confectionery products brings to, well, to any moment really, if it's shared or solitary, is worth the higher price. So while we've held the overall volumes, including by also this quarter, increasing the investment in our brands, I can share that pick & mix volumes are growing steadily and that we have also grown or held the Branded package volumes when adjusting for those few cases where we have stopped shipments to customers on account of not agreeing to our pricing. So it's very promising.

And let's look at sales a little bit closer. And starting with the Branded package sales, accounting for 3 quarters of our total sales. So this is the seventh quarter of growth. So we are now only 1 quarter away from matching our prior record of 8 consecutive quarters of growth, which we set in the 2 years that led up to the COVID pandemic.

And then on the lower half of the slide, with pick & mix growing close to 16%; that is the sixth quarter of consecutive growth. And as I mentioned is underpinned by solid volumes. In prior earnings calls I have shared how we have gradually brought sales in pick & mix back towards pre-pandemic levels. And in quarter 3, we are now at an index of 92. But I think it's time to stop tracking that aspect and instead fully focus on ensuring the segment remains and improves its profitability despite the higher input cost, which is a good segue to look at the profitability.

So as we look at operating profit adjusted, let me revert then to the pricing and the effect of that. So we've mentioned many times that we are taking pricing to fully offset the increased input cost, but that there is a lag between input costs going up and pricing coming into effect. And in the Q2 earnings call, I also mentioned that given the aggressive inflation environment, we would need more than pricing. So also the benefit of managing our mix and internal cost savings or avoidances to offset the input cost inflation in the near term.

I'm pleased to say that for quarter 3, we have done that and we are offsetting the input cost by leveraging all the tools at our disposal. You can see the result of this effort as both our gross profit and operating profit in the quarter are in line with or even up versus last year, despite the input cost surge and without the strong volume growth we had in the first half of the year.

That said, input costs have also continued to go up and we have announced further pricing at the beginning of next year to fully offset that impact. But for the part of the higher cost that will be impacting us already now in quarter 4, we will have the benefit of the full quarter effect of the latest price intaking during quarter 3 and together with our continued work on savings and mix, and our expectation is then that we can hold the current line until the end of the year despite the continuing inflation.

So while we're on track with our pricing to protect absolute profit, the strong growth compresses the margins. I gave a simple example before and I'll repeat it here since it is really important. If costs are 50 and you sell it for 100, the profit is 50 and the margin is 50%. If cost goes up 20 and you increase the price 20, then the profit is still 50, but the margin now only 42%. That compression is what is increasingly affecting us this year. And with more and more pricing coming into effect, it is impacting us more in quarter 3 than the prior quarters. So it might actually be more telling to note that our Q3 margin of 10.5% is higher than our Q3 year-to-date margin of 10.2%. So that means that despite the increase in compression, our margin is improving versus the first half of the year, which is a good thing.

I also would like to remind you of one thing that underscores this improvement. Historically we build up inventories in the first half of the year, and then we start depleting those inventories in quarter 3. This also holds true this year. And you can see in our reporting that the value of our inventories have come down versus quarter 2 so much that it more than offsets the higher input cost per tonne of inventory. So as we stop building inventories in quarter 3, but actually we will stop doing that for all of the second half of the year, it means a bit less efficiency and a bit higher cost for the volumes produced than in the first half. So the bottom line margin improvement is also despite that, which is arguably quite good.

Now having spoken of the pricing, let's look at the 2 segments separately. So for the compression. So the compression of margin on account of the high growth affects both segments by what absolute branded profit on the top row has increased, the pick & mix profit for the quarter on the bottom row is not. So let me start with pick & mix. So while it is slightly down, more importantly, pick & mix does remain in black figures despite this increasing input cost. That makes the sixth consecutive quarter with profit.

So had it not been for the input cost, we would be looking at a profit step-up in the quarter. And I also want to remind you that this result does include pick & mix having first absorbed its fair share of common cost. So the profit seen on this slide is not fully representative of the favorable contribution from Pick & mix. Of course we're not contend with this, but we'll continue to strive for a fairer pricing through various margin enhancing initiatives.

Looking then at the branded segment in the top row, as I mentioned on the very first slide, our volumes are holding when adjusting for a few cases where we have stopped shipments as customers have not agreed to our fair pricing. So the growth in profit is driven by product mix management, which together with pricing and cost savings has more than offset the input cost in the quarter.

I can also mention that refreshments, so pastilles and gums combined, are growing similarly to the other categories. So the gross margin even excluding the compression has not yet reached its prior potential where refreshments represented the biggest share of sales. So that also remains an opportunity for us.

I also want to say that the quality of the profit is high as we have invested more in marketing of our brands than what we did in Q3 last year. And on a year-to-date basis, we are materially higher invested this year by approximately SEK 10 million to SEK 20 million. And I'll come back to that as we look at the next slide on sales, general and administration cost.

With the pricing raising to top line, there is a significant drop in spend as a percent of sales from 23.8% to 21%. But more importantly, the absolute spend is down SEK 6 million when you adjust for the ForEx and despite the increase in merchandise and spend to enable increased volumes. I mentioned that our marketing spend on the Branded package segment is above last year spent. And this supports the pricing. And when I say it supports the pricing, what I really mean is both with respect to keeping our brands top of mind and visible to our consumers and with respect to letting our customers at a trade very tangibly see that we are investing in our brands, which will ultimately strengthen both our and their businesses. And arguably doing this will be even more important going forward with more and more pricing coming into effect.

In Q4 last year, we did a major step up in marketing spend, about SEK 25 million. And while we will not quite reach those levels in Q4 this year, I can share that for the very good reasons that I mentioned, we will materially increase our spend in Q4 versus the current run rate. During the quarter, we have also continued to invest in our organization and capabilities, such as for our net revenue management program, which drives efficiencies in what happens between our gross sales and the net sales we report. I think we're off to a great start with our organization having found insights, which ultimately will benefit both us and our customers.

Now the increased spend is offset by cost efficiencies, including keeping merchandising costs down and reorganization of sales force in Sweden, which we went live with earlier this year, and by continuing to largely hold back on spend, that were all but frozen during the pandemic.

Looking then at cash. In the Q2 earnings release call I reminded everyone that our business cash generation is skewed towards the back half of the year, with inventories normally being built early on and receivables coming down the weeks after the selling for Christmas. And I said that I didn't expect this year to be any different. And that is also what we see now in Q3.

Our discretionary free cash flow for the quarter was SEK 223 million, meaning that the year-to-date our free cash flow is positive after a strange first half with inventories and receivables increasing with input cost and pricing. As mentioned in Q2, inventories were up not only due to the higher input cost, but also indirectly due to supply volatility, as we have built some extra safety stocks to manage around that. And we will continue to do that to some extent, so we can continue to secure good service levels to our customers and an extension, great products to our consumers.

That said, inventories have come down in Q3 and I mentioned this, that's in line with the normal seasonal pattern. And here you have to again take note that those inventory levels are down despite the much higher input cost per tonne sitting in those inventories. The opposite of this would be payables and our payables are up in the quarter, which is good from a cash point of view. But it also suggests how much the underlying inventories really are down. The final part of working capital are receivables and they have continued to go up with higher sales. So although tying up cash given that our overdues are under control, that is not a primary concern.

And that brings me to the net financial position. So at SEK 2 billion in net debt, it is down versus the last quarter, and it's in line with last year. And that's in line with last year despite the revaluation effect of SEK 91 million on account of the weaker Swedish kroner versus the euro. And that's 2.2x EBITDA. Our leverage is down versus both quarter 2 and last year and it's also below our long-term target of 2.5x.

As we close quarter 3, our unutilized credit facilities and commercial papers and cash on hand were SEK 1.9 billion, which is up versus quarter 2 and unchanged versus a year ago. Now these numbers do not of course include the commitment we have from our group of banks to extend us further credit facilities totaling SEK 1.6 billion to finance the greenfield and which we now, following the board's approval to proceed, will finalize in the next few days. For more details, please see the material from the investor event held on September 27, which is available on cloetta.com.

And before I hand back to Henri, I do want to mention that in the presentation, I have included 2 simple slides showing our reported numbers, the numbers relating to items affecting comparability such as the greenfield and then our results excluding all of that. So it's showing both for the quarter where there is no material effect, but more importantly for year-to-date, where there is one and that way you have it in one place and in a simple to read format.

And with that, back to you, Henri.

[Henri de Sauvage Nolting, executive]

Good. So, we talk a lot about our growth journey, in particular, in the Branded, but of course also the growth -- volume growth in Pick & mix. And although a lot of it is coming from price, we remain strong, focused on the strategic agenda. And one, of course, is the whole move into premiumization and also to follow consumer trends and consumer interest in more healthy, natural products. So just to give you a flavor of a few of the launches, this is the real fruit launch, which in the Innovation 2.0 platform is now going in, in multiple markets, which you can see there above and we're not to the end of it yet. And you can also see that it is really valorizing with premium price, and I'll show that on the next slide.

So in the bottom, you can see the price index per kilo. I mean, this is Norway, which we've taken out that were really on a higher price per kilo for this product, and consumers are willing to pay for that because this is the first European launch of a product with 50% fruit in it, and that's not like fruit juice, but it's real fruit puree. You can also see that the RFC that stands for real fruit candy. So the launch we're talking about is nearly all coming on top of the existing Gott & Blandat range. So in the red, you see the existing business we had, and then you can see the real fruit launch coming completely on top, now being 20% of the total Gott & Blandat sales in Norway. So that's really good. It's a valorization, and that is one of the things in Europe, you really need to drive in branded in order to get growth and to expand your profit margins.

Another very good example is our really strong chocolate brand Tupla in Finland. Now finally we got this launch to work. It's been quite difficult technically to make this work, but Tupla is now going into chocolate bags with small puffs. So they are much more lighter than the bar, and it is a stunning success. I mean, in candy bags, chocolate candy bags, this launch has 24% market share. I mean I've never seen such figures. So it's really a testament to the product, to the development, but also the execution of our Finnish business to get this into the market. It gives a really nice addition to the Tupla brand, which is stretchable into other categories and also over here, it is a premium price and a premium position.

Then I thought I'll give you also a flavor of what we're doing in the U.K. I always remind people, 60 million people living over there, 60 million potential consumers compared to what we have here in the Nordics. We have a very nice old-established brand Chewits and a little bit of love and care, I always say, and this brand starts to prosper. So when we put the new team into place in the U.K. and international markets, marketing-wise, we started to relaunch this brand, rejuvenate the brand.

And as you can see, we're getting really good results, in particular, on the bar chart, you can see that we're really selling more consumer units, and we've also added the new range to it, which are the bites, which you then see there in the middle picture, really adding the number of consumers buying into this brand. We also get awards for people externally looking at our guerilla marketing campaigns. I call them, we're not on national TV, therefore we don't have the size, but you can do a lot to really get into the right target group. So very positive as well building a platform for the future.

And then we also did a big piece of work on our sustainability agenda where we have, as you know, subscribed to the Paris agreement through the science-based targets initiative, where we commit to a 46% reduction of our total Scope 1, 2 and 3 greenhouse gas emissions. We've not quantified that, and we are confident that we are coming close. We're not completely there, but identifying all the 3 scopes. And of course the most important biggest one is the one where we work together with our suppliers to see how they can also contribute to this journey. But over the years, up to 2030, we now have initiatives in place to reach this goal of 46% reduction. So that's also very good. We have selected a number of KPIs, which we'll be sharing also with you on a regular basis because what measures gets done is our firm belief.

So that was the last update from the strategy before we now open up for questions.

[Operator]

[Operator Instructions] The first question is from the line of Skogman, Nicklas with Handelsbanken.

[Nicklas Skogman, analyst]

So I'm going to focus a little bit on the input costs and your plans to offset this. I think Frans, you said that something -- I think you said we're going to hold the line or we expect to hold the line in Q4. Was that -- did you refer to sort of the absolute level of gross profit being unchanged year-on-year? Or what were you referring to there?

[Frans Rydén, executive]

Yes. I was -- yes, close. I was referring to that. Obviously what we've shared before is that when input cost goes up, there's a bit of a delay before our pricing come into effect. And only once costs are sort of leveling out, does the pricing catch up. And then, of course, when input cost starts coming down, then we also have a bit of a benefit for a period of time. So in quarter 2, we also said that pricing wouldn't be enough given how quickly costs were going up, it would require us to work everything else. And we managed to get that down in Q3 that we are offsetting the input cost.

Now in Q4, costs are also going up again, and we only have new pricing coming into effect from beginning of next year. But we do get the full effect of the pricing we took during quarter 3. So we can also offset some of that there. So together with the pricing we have that rolls into the quarter, together with working mix and savings, we will continue to hold the line against this input cost increase. So we will continue to offset that.

[Henri de Sauvage Nolting, executive]

On an absolute level.

[Frans Rydén, executive]

On an absolute level, absolutely, yes.

[Nicklas Skogman, analyst]

Because in Q3, you did slightly better than just offsetting on an absolute level on the gross margin.

[Frans Rydén, executive]

Well, I mean, that's -- yes. I mean I would say that using everything we had, we've been able to offset the input costs. So -- and that's what we're expecting to continue also to do now in Q4. If -- of course if the input cost would have stopped going up, then we would also not be talking about more pricing in the beginning of next year. But unfortunately that's not the case.

[Nicklas Skogman, analyst]

But on a net effect, will there be -- because you said there will be more -- you will have a full quarter of price hikes now in Q4 compared to, I guess, only partial in Q3. But at the same time you said costs are going up. So will there be more or less cost pressure in Q4?

[Frans Rydén, executive]

I think you should assume it offsets. That's when I say we will hold the line. Let's -- we will basically do neither worse or better from a sort of ability to offset the input cost in Q4 than what we've done in Q3.

[Nicklas Skogman, analyst]

And then on the cost control, I note that it's the -- the big change year-on-year is within admin costs, which, of course, were -- I mean, were exceptionally low in Q3 2020 and then quite a bit higher last year, but then at 143 it's like still below '19. So what are you holding back on here within admin costs to keep them this low given all the inflationary pressures?

[Henri de Sauvage Nolting, executive]

Yes. Well, I - so, let's -- I think there's, let's say, 2 components to keep in mind, first of all. So when you go back all the way to 2019, that's when we also launched our VIP+ program. And we have shown previously that we have actually taken the equivalent of 1% EBIT margin of cost out of the business in a sustainable fashion. And we've also kept investing, which we've also offset. So of course when you compare back to 2019, you'll have the effect of that. But then in 2020, because of COVID, we, of course, just stopped doing certain things. And where we are now with the input cost, some of those things, we are still holding back on even though COVID wouldn't be a reason to -- not to -- for example, not to travel, COVID is not really a reason for that any longer, but we're still holding back on the cost until all the pricing kicks in.

Then the other aspect, of course, in the sales, general and admin here is you have the marketing spend. And the other one, which is more volume-driven is the merchandising costs. And I think we've shown that with the growth continuing on Pick & mix, then the merchandising costs haven't been rising at the same rate. So there's a nice efficiency gain we get out of that. But now, of course, merchandisers also have to travel between the stores. So fuel costs are going up there. So it's not quite the same situation now as it used to be. So we have to work hard on that as well.

And then on the marketing spend, here we have increased the spend versus last year. We're up year-to-date. And as I flagged, we will actually accelerate the spend in the next quarter versus our current run rate, but not to the extent what we did in Q4 last year when we really did a major step-up. And this is simply because we couldn't take this pricing. I mean the fact that consumers with less money in their wallets are willing to pay more for our products is largely because we are also investing in buying the brand. So that's sort of one of the last things that we want to hold back on.

[Nicklas Skogman, analyst]

And I think the shift to private label is taking place in some of the subsectors within the grocery segment. But I guess for confectionery, it's still private label penetration, I guess, remains extremely low. Do you see any changes recently in this setup?

[Henri de Sauvage Nolting, executive]

Yes, not yet. Of course you have a bit of a Nordic view on this. In other markets like the U.K., private label is much more developed. The only market where we are having a higher private label share than what we see here in the Nordics is the Netherlands. But I would say, in general, no. But what we do see is a move of shoppers to do more discount, both soft and hard discount channels and also that in what we call our new channels that we see people spending less money or trips like all the do-it-yourself stores, we see that we sell a lot less because, yes, people just don't have the money at the moment to buy paint or start refurbishing the houses. Of course there was a COVID effect there as well. But I would say that is normally what happens first when spendable income goes down is that you see a channel shift and then maybe later on also a private label increase.

[Nicklas Skogman, analyst]

And do you see a step-up in this -- by the food retailers using pick & mix sort of a traffic driving -- traffic driver now?

[Henri de Sauvage Nolting, executive]

Yes, it's a bit different by market. But in the end, that is their decision to do that. I mean, our clear strategy is to get profitable growth from Pick & mix, and we see that there's also a very good baseline sales improvement in Pick & mix. So in some markets, we see promotions are going up when retailers are deciding that themselves, but that is not Cloetta, who are very much behind that kind of pricing policy. And it could well happen.

[Nicklas Skogman, analyst]

And last one for me on the -- this pastille versus non-pastille sales, how is that developing now?

[Henri de Sauvage Nolting, executive]

Yes. So, it's getting -- we're getting back on track. So we see positive sales on pastille. So that is very positive there, where we have our own cough and cold brand like in Finland. We see indeed also in ourselves a really good development. We're talking like 20% plus in that sense. And we see also on the -- in the other markets where we have the strong lateral brand that we are growing and that first signs also of market share recovery are happening. But there's still a lot we have in the plan to really start gaining market share in all of those markets, and we've changed both the agency, the media company, also the creative company and coming with a new campaign to support that profitable business.

[Operator]

The next question is from the line of Lundberg, Andreas with SEB.

[Andreas Lundberg, analyst]

Thanks for the clarification on the cost equation, cost versus sales. But are you saying that you need a decline in input cost in order for your gross margin to stabilize or increase?

[Frans Rydén, executive]

I mean so the gross -- since we're offsetting in a very transparent way, we work with our customers, but we are increasing our price commensurate with the increased input cost. Then, of course, that drives top line, but not gross profit. So that's why we get a compression of the gross margin. So obviously the gross margin from a pricing point of view will only increase when you reverse this. But at some point here, costs will stop going up, we still have pricing and then you start seeing more effect of mix and the margin-enhancing initiatives and Henri shared here on the value-accretive innovations that we have, et cetera. So that's a different track of getting to gross margin. But with this level of input cost increases, that's obviously not possible. I mean that has a depression on the margin.

[Andreas Lundberg, analyst]

So would you say it's more fair to judge you on your operating profit performance?

[Frans Rydén, executive]

Yes. Yes, I think so. And I think, for example, the Pick & mix, and I think I mentioned that, is that -- I mean, the profit is low, but it's still profit despite all of these things coming in, which we're, of course, very pleased with. But that's why if we can hold the line on the gross profit and operating profit, then I think we've done a good job on the input cost, given the model we have of only pricing for the input cost increases.

[Andreas Lundberg, analyst]

And on the inputs you're buying today, are those costs higher or lower than a year ago.

[Frans Rydén, executive]

Well, of course, they are higher. I mean all the costs are up significantly.

[Andreas Lundberg, analyst]

Have you seen any sequential decline? Or is it going up throughout 2022 as well?

[Frans Rydén, executive]

Well, yes, I mean, costs are going up to going up in this quarter as well. And I think if you -- I mean, I'm sure you're following just as much as we are what come through various sources that there is an expectation that cost will continue to go up also during next year. And then we will stick to our strategy, which is to take fair pricing for those increased costs, at the same time, trying to work mix, savings, avoidances and also invest behind the brands because, I mean, that's what gives us sort of the passport to take this pricing.

[Henri de Sauvage Nolting, executive]

So, maybe a bit of a flavor, and you see the raw material cost. And for us, that is like sugar or cocoa or wheat, starch, et cetera. And you see that still going up, maybe not as fast as a few months ago. But what you should not forget, all of these raw materials are then being processed by our suppliers who have higher conversion costs because they are now also being hit with higher energy prices and labor inflation and transportation. So that is a big effect on the raw materials.

It's not just the raw materials coming from harvest, it's also the conversion cost. And then most of these raw materials are also quoted in U.S. dollars when we buy them. And of course there's also a ForEx effect of the U.S. dollar versus the euro and the Swedish krona. So there're quite some variables in the raw material components other than just what is a kilo of maize or starch costing when it comes from the field. And then, of course, on top of that, we are ourselves also faced with energy inflation and labor inflation for next year.

[Andreas Lundberg, analyst]

And lastly, what do you see for your CapEx for 2023, excluding any potential stuff from the greenfield?

[Frans Rydén, executive]

Yes. I mean, so -- I mean, for the CapEx, the guidance that we've given is obviously mostly relating to the greenfield where we've said that we would reduce CapEx over the next 10 years, roughly equal between the 2, 5 year segments. But that is the avoidance would come more towards the end of the next 5 years. So as of now, over the next year, there's not really any change versus our current run rates. We will obviously maybe some CapEx that would have happened in the plants that are scheduled for closure now is not going to take place. But then there're those other areas where we need to catch up a bit.

[Henri de Sauvage Nolting, executive]

Then I think we have a question here on the web. So I will take that one, whether we will expand to new countries in the coming years. I mean, let me start first by stating we have a -- the vision within Cloetta called international markets, where we're selling to 40 plus countries already. So we're not just a Nordic or European company. We're selling in Asia, in North America, in Eastern Europe, travel retail. And that is a very strong division. Maybe it's good to also give some flavor of the stuff we're doing over there. In the next quarter we're growing way above double-digits in that area. So that's very positive.

But of course, like in good FMCG practice, we focus on those markets and on those brands where we are already strong. And that means that just going into a lot of new countries with unknown brands for those markets, that's a costly exercise. So it is much better, in my opinion, to keep strengthening the Red Band positions we have in many countries, Red Band, Tutti Frutti, but also Chewits, which we talked about, very famous brands in like CEE and some markets in the Middle East to strengthen those positions. I mean, that is -- those are huge markets, a lot of people, and we're making very good progress. So very pleased to see that where the ambition we have is to double that division within Cloetta to also contribute to the volume growth in branded business.

[Operator]

[Operator Instructions].

[Henri de Sauvage Nolting, executive]

Okay. Nathalie, I think we can close. So thank you very much for the call. I think it was a good quarter, good growth, a lot of pricing, and that remains the name of the game for us to offset the high inflation with pricing also when we go and look forward, but not forgetting about the long-term strategic priorities of branded growth, pick & mix to profitable growth and then cost and efficiency underpinned with the sustainability agenda. Those 4 priorities remain important. But first and foremost, it's the pricing we work on.

So thank you very much for today, and speak to you soon.