ARYZTA AG (ARYN) Earnings Call Transcript & Summary

Thank you, Laura. Good morning, and welcome, everybody. I would just like to mention today that our risk statement on Page 2 applies to all discussions. And I'd now like to hand over to our Chairman, Urs Jordi, to open the call.

Thank you, Paul. Good morning, all. Welcome to this year's results call. We would continue on Page 4, where you can see that we achieved all 6 midterm targets a year ahead of schedule. The organic growth, the EBITDA margin, the ROIC, the revenue, CapEx and the total net debt leverage. So this is an outstanding result, 1 year earlier than planned. On Page 5, then, the key highlights for the full year '24, with a revenue achievement of EUR 2.195 billion, which stands for an organic growth of [ 0.2% ] with positive volume growth and slightly negative pricing impact. The share of innovation is still high with 18% compared to prior year, 15%. So we keep investing in innovation, in new products, in new technologies. EBITDA of EUR 321 million reflects a margin of 14.6%. The free cash flow was achieved by EUR 138 million. On Page 6, then you can see that the organic growth strategy is working. The bake-off market continues -- shows growth. ARYZTA is increasing market share. Innovation investments are supportive to this growth. Rising labor costs favors bake-off. Efficiency, freeing up capacity is the activity we have. The industry capacity overall remains balanced. On Page 7 then, you can see that the investments we are doing, as I told, are supporting growth. We have a state-of-the-art innovation center in Germany, which is available for everybody in the group from H1 2025 onwards, covering ARYZTA's entire portfolio capabilities, serving all customers and all channels. New capacities are online or coming online in Malaysia, as I told already last time, a laminated dough line is operational, serving the market. A Swiss laminated dough line is now up for delivering the markets. The last tests are now in progress. We have a German artisanal dough line operational '25, somehow around midyear. We will produce for the German and European market, sourdough specialty bread for high-end positioning. Perth, our Western Australia investment is well underway and will become operational towards end of '25. On Page 8, then you see the progress on ESG. On the environmental efficiency, you can see the greenhouse gas reduction, the reduction of water consumption, of food waste is well underway. We increased our share of renewable energy to 56%. In the part of the sourcing, 99% of palm oil is sourced out of sustainable [indiscernible], 82% cage-free eggs are sourced. Sustainable cocoa stands for 74%, and 7% sustainable regenerative wheat is in our books. People and communities, 28% reduction in total incidence rate, a very important number. We achieved an average SEDEX score of 3.0. So you can see our ESG agenda is on well track. Governance. We have a stable and experienced Board under our Chairman's stewardship in place, with a smooth and orderly transition of the dual role to our new CEO to Michael Schai, which is in charge since January 2025. There's a strong oversight and support from Chairman and the Board. The Board did form, as well, a new Technology Committee. This in order to address the availability of new technologies such as artificial intelligence to continue to improve efficiency and effectiveness in our processes. On Page 10, then you can see that we had a good and solid start in Q1 2025 with an organic growth of more or less 3%, supported by volume and by pricing. For fiscal year '25, we are targeting an organic growth in low to mid-single-digit range, an EBITDA margin expansion, an improvement in key financial figures overall and further EPS growth for the next month and for the entire year. I would now hand over to our CFO, Martin Huber, for the financial review. Martin, please?

Thank you, Urs. Let's move now to Slide 12. Good morning, everybody. I'm delighted to present today our financial results for 2024. We have successfully completed our turnaround plan and delivered the midterm targets 1 year ahead of the time line. We have started well into the new financial year 2025, with an organic growth currently tracking at circa 3% for the first 2 months. Key callouts for our 2024 financial performance are excellent profit improvement by achieving an EBITDA margin ahead of our midterm target, further free cash flow and capital efficiency improvement above previous year, despite an increase in growth CapEx, strong double-digit EPS growth by both the operational performance and our focused financing strategy as well as the continued progress in strengthening our balance sheet. Let's move now to Slide 13. Let's first look at our revenue. We delivered revenue of EUR 2.1945 billion with an organic growth of minus 0.2%. Volume growth contributed positively to these results and pricing turned positive in the last quarter of 2024. Overall revenue performance was impacted by the muted consumer sentiment and the active portfolio management in H1, which affected organic growth by circa 1% and contributed positively to our margin evolution. Important to highlight, we have a solid start into the current year with an organic growth tracking at circa 3% for the first 2 months. We are expecting to close the first quarter with an organic growth above 3% if current trading trend is sustained in March. EBITDA increased by 70 basis points to 14.6%, supported by margin-enhancing innovation, active portfolio management and our continued cost discipline measures. With this result, we have achieved the last outstanding midterm target and have completed the midterm plan [Audio Gap] cash flow. Cash flow performance is a key callout and increased by more than EUR 5 million to EUR 137.8 million. Further improvements, particularly in working capital and financing costs more than compensated higher investments in growth CapEx in 2024 versus previous year. ROIC improved by 110 basis points to 13.4%, supported by our operational results and focused management of our invested capital base. With this achievement, we further increased value creation for our shareholders. Let's move now to Slide 14. In a challenging context with subdued consumer sentiment in Europe and geopolitical events impacting our Rest of World QSR business, we delivered positive volume growth of 0.3% despite our active portfolio management, which had a full year effect on volume growth of circa 1%. Overall, revenue growth was flat versus previous year, while FX contributed positively. Organic growth was slightly negative at 0.2%. Pricing was positive in Q4, supported by the launch of the new foodservice catalog in France in October, as well as new pricing in Ireland, Germany and Denmark. Rest of World maintained positive pricing throughout the year. Compared to our 9-month results, pricing improved from negative 0.7% to negative 0.4% for the full year. Let's move to Slide 15. Europe delivered a resilient revenue performance with an organic growth of minus 0.7% against the backdrop of weak consumer sentiment and group-driven portfolio management. While pricing was negative, volume growth benefited revenue, particularly the foodservice business in France and solid retail business performance in Poland, Denmark and Switzerland were the key drivers of this result. Overall, France, Poland and Denmark delivered positive organic growth in the year. Share of innovation revenue further increased to 17% with key support from West Burger and McCrispy range in QSR. Positive margin contribution from active portfolio management, further increased share of margin-accretive innovation, as well as our efficiency program were the key drivers of the broad-based EBITDA improvement of 100 basis points to 14%. The overall group EBITDA margin acceleration was driven by Europe. Let's move to Slide 16. We had a contrasting revenue growth picture in Rest of World. While the recovering QSR business delivered low single-digit growth, the Food Service business finished the year on a high note with a strong mid-single-digit growth. Food Service business benefited from innovation and the contribution from the new lamination line, which came online in Q4 2024. EBITDA margin decreased by 80 basis points to 19.8% as QSR business was affected by the geopolitical event. With the gradual progression of the recovery, we expect the QSR business to return to previous margin levels. The Food Service business maintained solid levels of profit despite higher distribution costs. Let's move to Slide 17. Group EBITDA margin surpassed the midterm target already in 2024. The improvement of 70 basis points versus previous year to 14.6% is entirely supported by a further strengthening of the [Audio Gap]. Key drivers of this evolution are margin-enhancing innovation and active portfolio management contributing circa 50 basis points, together with cost discipline measures [cough] by procurement savings and the SIMPLEX initiative, adding another circa 60 basis points to the gross margin acceleration. Negative pricing and cost inflation in operations were compensated by the net effect of a lower input cost basket. Distribution costs increased by 50 basis points, largely driven by higher transport and storage costs. The higher SG&A costs are due to salary inflation and the ramp-up cost of our future efficiency initiatives. A few words on them. In 2024, we have successfully launched S/4 in Switzerland and have made further progress in simplifying and standardizing our IT infrastructure. During the year, we have onboarded the transactional finance activities to the shared service center in Poland for businesses representing circa 60% of our revenues. First phase of the above-market procurement went live in June. Group procurement is now covering over 75% of the addressable spend. Let's move to Slide 18. Our cost discipline measures have been a cornerstone of the margin progression since the start of the current midterm plan. In 2024, they continue to deliver important contribution to our results. Cost optimization in manufacturing, such as automation of packaging lines and energy savings initiatives, added additional efficiencies aligned with the targeted improvement range of 2% to 3%. Procurement and the SIMPLEX initiative delivered in the year additional EUR 17.5 million of cost optimization. With this, we have reached the upper end of the target range of EUR 26 million to EUR 36 million for the midterm plan. Salary inflation, higher third-party service costs and the ramp-up cost for our future efficiency initiatives increased structural costs ahead of organic growth. Therefore, this part of our cost discipline measure did not contribute in 2024 or to 2024 results. Nevertheless, the percentage share of structural cost of revenue, excluding the incremental ramp-up costs for our future efficiency initiatives reduced in the period 2022 to 2024. Let's move to Slide 19. Free cash flow generation was strong in 2024 with EUR 137.8 million. This performance is noteworthy and was supported by a higher profit and working capital improvement, excluding securitization, which added over EUR 20 million to free cash flow, as well as lower financing costs that contributed slightly more than EUR 18 million to the results. These elements more than offset the effect of the CapEx increase of over EUR 25 million, which was driven by additional investments in new lines and the IT infrastructure as well as higher cash taxes due to improved profitability of our businesses. Slide 20, please. Apart from the improved operational results, the increased working capital efficiency has been a key contributor to our cash generation. Since 2022, we have reduced working capital as a percentage of revenue by almost 300 basis points through focused initiatives. Slide 21, please. Continued strong cash generation and improved operational results reduced total net debt levels from almost EUR 1.1 billion in 2022 to under EUR 900 million in 2024. Over the same period, the leverage ratio improved from 4.8x to 2.8x, which is well below the target for 2025. Strong cash flow and efficient bank financing have allowed us to eliminate, since the start of the midterm plan, almost EUR 900 million of hybrid financing. Our latest action was the full repayment of the remaining principal of the CHF 400 million hybrid in October 2024. Let's move to Slide 22. Financing costs reduced by over EUR 12 million to EUR 61.2 million in 2024. This result is below the lower end of our previous guidance range of EUR 67 million to EUR 71 million. Our hybrid buyback program is the main driver of this optimization. Slightly higher bank financing and lease interest partially offset the lower hybrid financing costs by EUR 2.4 million. Supported by the contribution of the hybrid buybacks up to 2024 and the continued strong cash generation, we expect to deliver financing costs in the range of EUR 46 million to EUR 50 million in 2025. We will evaluate further optimization of our balance sheet going forward to reduce our financing costs. The focus will be on the following elements: diversification of our financing structure without considering equity-linked instruments, the refinancing of the remaining hybrid with a principal of just under CHF 145 million will be considered in the context of an appropriate equity ratio. Slide 23. Operational result acceleration, paired with our prudent management of the invested capital base increased ROIC to 13.4%, further consolidating our organic growth-driven value creation strategy. Slide 24, please. EPS increased by over 22% to EUR 0.10 per share. Strong profit improvement and continued optimization of our financing costs are the driver of this significant increase, partially compensated by the increased tax charge due to overall higher profitability of our businesses. Slide 25. Summary, the result of 2024 marks a key milestone in our journey. We have successfully delivered our midterm plan 1 year ahead of schedule. Over the last 3 years, the organic growth focused strategy, combined with disciplined cost management has proven to deliver sustainable shareholder value and has consistently generated strong cash flow, which allowed us to strengthen our balance sheet and normalize the leverage ratio. As a conclusion of our turnaround plan, we proposed to the AGM in April to approve a reverse share split and establish with this the share price of ARYZTA close to the median share price of the 6 listed companies. We are ready for the next phase. of our growth journey, which we are -- which we will present to you in our Capital Market Day beginning of May in Dagmersellen. Thank you very much, and I hand back to Urs.

Thank you, Martin. This has been the financial figures. I would hand over now to our new CEO, Michael Schai, looking onwards with focus of the Capital Markets Day, as Martin mentioned, in Dagmersellen. Michael, please?

Thank you, Urs. Good morning, everyone, on the call. This is Michael Shai, ARYZTA's new CEO. That's the new voice on the call. I have rejoined ARYZTA 9 weeks ago on January 1, and I deliberately say rejoined because I've worked for ARYZTA and HIESTAND over 18 years in different roles and geographies in my past. I look forward to meeting you in person at the Capital Markets Day in about 9 weeks' time. And the plan, as you see on Page 27, is then to share in detail how we assess the total bakery market overall, but in particular, also the segment we are in, it's the bake-off. And then on the left side, on Page 27, we will then share the details of our next midterm plan, 2026 to 2028, where we plan and how we plan to continue the successful strategy we've embarked on 4 years ago. If we then go to Page 28, the focus on the Capital Markets Day is then to share the strategy, how we ensure the profitable growth over the next 3-year period and also how we return capital to shareholders. So of the 4 building blocks of that day will be an outlook on our revenue growth, that is market growth, efficiencies and innovations and what the elements of this is. We will share in detail the building blocks of the margin progression for the next midterm plan, '26 to '28. I will then discuss also how we ensure the continuation of the strong cash generation and year-on-year EPS growth. And obviously, a question is also the prioritization of capital allocation. Sort of high level, the topics we will share is, on one hand, investments to support our organic growth agenda, how we further plan to strengthen the balance sheet and also then how we envisage to return capital to shareholders over this period. So at this stage, a warm welcome, and I look forward to seeing you in person, hopefully, on May 7 in our bakery in Dagmersellen. And with this, I pass back on to our Chairman, Urs Jordi.

Thank you, Michael. This is a good outlook for this Capital Markets Day. I leave it open now to round for questions, which we would then answer.

[Operator Instructions] We'll now take our first question from Jorn Iffert if of UBS.

I will start with 2, if I may, and then go back in the queue. I'm sure we get more details on the medium term than on the Capital Markets Day. So I will focus more on the near term, if I may. The first question would be, please. When I look on the organic growth performance in Q4 of what was around minus 2% or so and now year-to-date is tracking plus 3%. What actually has changed that you have a delta of 500 basis points on organic sales. So really what were the drivers here? And also you explain the weakness in Q4, please? This will be the first question. And if it's okay for you, I take them one by one.

Thank you, Jorn. Maybe on the overall organic growth, organic growth can be fluctuating. We had portfolio optimization in the last year. We had geopolitical impacts, which were significant. Q1 did just have a good start. The trading dynamics are there, have been there as well last year. So as you know, we had to work against a headwind. Our innovations are doing well, and we are very well positioned. The market is doing well the way we told. Bakeoff is outgrowing the overall bakery market. So it's exactly the way we thought. So the Q-by-Q comparison in organic growth might be difficult for the mid and long term, as we have told the market is growing. Maybe Martin, some numbers on Q4 and Q1 on Jorn's question.

Thank you, Jorn. I think, let's say, when we look at the market, I'd like to start with that, our 12-month view when we look at our retail market, where we capture market share data in the European area, we have outgrown the market in terms of volume. And this has actually accelerated in Q4. Now our organic growth, yes, was negative. Certainly, that goes with this muted or subdued consumer sentiment. And in Q1, we have started well. We are delivering growth that is a good combination of mix, pricing and volume. When we look at volume and pricing, we have around 30% of that growth is supported by pricing. The balance is supported by mix and volume growth.

Jorn, did we answer your questions?

Yes. Just a very short follow-up on this plus 3%. Is this including already the new capacity coming on stream you were speaking about, the 4 new lines or not?

No.

Well, it is what is considered in the Q4 and Q1 results is the Malaysian lamination line that has come on stream towards within Q4. So that's the only line that's currently reflected in the growth figures. The Swiss line will come on stream in the second quarter of the year 2025.

It is a step-wise ramp-up, Jorn. As Martin told, the Malaysian line since some months there. This is then an innovation and let's bring the products into the market process. The Swiss line is just going out of testing and producing first products for customers. And the other 2 lines we mentioned, Perth and the German line, these lines are coming into our world on the course of this year.

Okay. And then the second question, and I go back in the queue. When I look on your EBITDA margin development in the second half '24, I think it was down, what was around 20 basis points. Any trends you can comment here for the first half '25? And also the building blocks why '24 was down? Was it only driven by top line? Or are there any other reasons, please?

Thank you, Jorn. We have finished H1 '24 with 14.2%, and we have finished the full year with 14.6%. So we have actually accelerated our margin in H2. So maybe we can...

Sorry Okay. Then maybe I have a here in the back of the envelope spreadsheets. I will go back in the queue then.

We'll now move on to our next question from Patrik Schwendimann of ZKB.

[indiscernible] and a warm welcome to Michael. It seems that you're expecting an organic growth of around 2% to 3% for the current year '25. Can you please elaborate a little bit about the different channels, what you expect here in terms of growth for the different channels for '25? That's my first question. And second question, you have mentioned that the industry capacity overall is balanced. There are some players expanding. You don't see a risk that this balanced capacity could change in the next 12 to 24 months. And my last question, what is your best guess assumption for the free cash flow for '25?

Thank you, Patrik. I would start with the capacity question, would then go to the channels, and would leave the cash flow question to Martin then at the end. As I have told, the bake-off market is outgrowing bakery market. Bakery market is growing more or less with population growth, 1%. The bake-off market is outgrowing this by 2%, 3%. So new capacity is needed overall to serve the market. There is a ramp-up in retail with some [indiscernible] in bake-off. There is an Asian bake-off growing. So capacity investments will be there all the time. The important thing is that the investment is not outgrowing the market. But on the other hand side, the fact that competitors and we are investing in this business is to prove that the judgment of the market is everywhere the same. Bake-off market is growing. So we see a balanced capacity landscape around us. Let me go to the channel growth. We don't give growth figures by channels. But if we would start with food service, the dynamic is there the way we laid it out. Labor costs raise, energy costs raise, the lack of availability of skilled labor, labor, the unpredictable behavior of some consumer channels are clearly driving there the bake-off. Bake-off is clearly there, the dominant helper for solutions food service providers are offering retail. As I mentioned, the share of bakeoff, these bakeoff corners in the stores are outgrowing the total bakery market are gaining versus fresh. So this trend is clearly there. We have seen over the last some months a bit more flattish evolution in quick-serve restaurant. This was driven by geopolitical impacts, maybe by some inflation trends we have seen in the market. There, we see a recovery of this quick-serve restaurant market. So we assume that all 3 channels we are in will continue to support our organic growth. Martin? There is one left, Patrik.

Yes, the cash flow question. We expect cash flow to continue at comparable levels. Bear in mind that we have some important growth CapEx to finalize. So there will be a bit of stronger CapEx element in our -- in the composition of the free cash flow in 2025. Therefore, you will see probably slightly lower overall free cash flow, but that is driven by the higher expected growth CapEx investment. So -- but underlying performance, you can expect to continue.

Perfect. So what's your best guess then for CapEx for '25?

It will be certainly above the guidance range of 3.5% to 4%. So you can expect the CapEx north of 4%.

And we'll now take our next question from Andreas von Arc of Baader.

First question would be focused on the input costs. Of your around 20% personnel costs, how much is roughly in minimum wages and especially in minimum wages in Germany given potential discussions of the new government? That will be a. And b, on the input cost, could you comment if this significantly higher cocoa prices have led to recipe adjustments on your side? Or how do you cope with that? So that's the first question. And the second question, coming back to that net working capital question just before and also the free cash flow statement you had last year and within the still relatively high positive net working capital effect of around EUR 30 million, I was wondering if that around EUR 30 million is sustainable? Or could we see a similar number in '25? And if not, and on higher CapEx number, is then a free cash flow above EUR 100 million realistic for 2025?

Thank you, Andreas. Anyway, I would start with the 2 first questions and then would hand over to Martin. The input costs, labor and Germany, out of my head, roughly 40% are more or less on the minimum salary, which are becoming then impacted by the discussions we see. We should always remember as well that once the minimum labor costs are becoming elevated, all the other salary costs are in process to go up as well. So this is an appearance we see in Germany, but not only in Germany. So the answer on this is clear, and I mentioned this in our presentation. We are analyzing clearly where we allocate future investments, where the most efficient areas are for our, for example, manufacturing hubs. This is a task we are doing. We are planning new laminated dough lines. And these lines most probably will not be placed then anymore in Germany. But there is a second answer on this. the efficiency and the effectiveness of our manufacturing is under continuous improvement. There are technologies we can use such as artificial intelligence, helping us to let the assets harder and better run. There is an enormous potential still in the system, not only with these new technologies, but as well with these new technologies. So we continue to leverage this. For this, we formed a technology committee and are investing time, brain and money in this. And there is a third true on this third question, this cost raise, this minimum salary raise is appearing and valid for everybody in the market for everybody. And we believe that our ability to absorb this to find the right answer on this is a very good one. This is this point. Cocoa, the downs of recipes is nothing we are taking in consideration. This would be the wrong answer. A good [indiscernible] for [indiscernible] is a high-quality product, a value-added product and to reduce quality of chocolate just to address the pricing would be the wrong answer. No, we are not doing this. Martin?

Thank you Urs. Maybe in terms of add or complementing of what Urs said in terms of the input cost evolution, overall labor and raw and pack we are at index 159 versus pre-COVID pricing. So you can clearly understand from that, that the overall input cost basket, including labor, is actually increasing. When we came out in H1, it was index 150. So we can clearly see that there is a continuous pressure on the input cost side, which has to be taken into consideration in a combination of pricing and continued efficiency initiatives from our side. And with Project SIMPLEX, we are simplifying the recipe structure. We have always said Simplex is helping us to drive standardization and simplification of the recipe structure. It will be always done with a view of maintaining or improving also the quality of our products. We're not down specing the quality of the product. In terms of free cash flow, yes, we have done some good progress in terms of managing our working capital. Progress -- you can continue to expect progress there. We have focused initiatives that help us to identify opportunities, and we'll continue to do so. And we have higher investment in CapEx in -- or we expect to have higher CapEx in '25 versus '24. your estimate to expect a free cash flow over EUR 100 million is certainly in the correct ballpark.

[Operator Instructions] We will now take our next question from [ Arvind Asana ] of [ Vontobel ].

I would have 2 follow-ups around the top line. So first of all, those portfolio adjustments, do you expect them also to be a headwind in 2025? And maybe kind of ballpark what you see there? And then based on those capacity additions that you are making, so what do you expect to be the contribution of those in terms of sales this year?

Thank you for this. Portfolio adjustments will always be one of the possible answers in a negotiation. So for the moment, we don't see bigger adjustments waiting for us. But at the end of the day, this is a normal appearance. We have to have an eye on our margin. So at the moment, there is nothing looming there, but this is reaction on a certain constellation, which could come back again. This is not out of the world. The capacity, as I have told last time, this is a step-wise ramp-up of phase-in into the market. We are investing line by line, something between EUR 20 million and EUR 40 million. This is a question whether it's only a line in an existing building or a line and a new building, like, for example, in Australia. And there is an incremental sales coming with this somehow around EUR 25 million to EUR 35 million once the line is fully used, fully utilized and optimal place. So this is a process then over 18 or 24 months. This is the impact you can expect.

And we will now move on to our next question from Jon Cox of Kepler.

Congratulations, Urs and Martin. I think the company is back on a far stable footing and welcome, Michael. Which leads me to the first question. You're down below 3x net debt to EBITDA at 2.8x. There must have been an outside chance you would have announced a dividend today. You haven't. Just wondering what your thoughts are on that. It seems to be maybe not a great vote of confidence in the future of the business or at least some could read it like that. So there's a dividend question for you. Then on the free cash flow and particularly securitization, can you tell us how much securitization was last year? And also how much it has been in terms of that reduction in working capital as a proportion of sales we've seen and how much more you see of securitization in 2025? And then just more of a broader question on demand. You obviously were hit a little bit this year or rather last year on the boycott related to Gaza. Just wondering, are you concerned about potential anti-U.S. backlash, which seems to be happening and potentially the impact on your sales again into some of those foodservice channels with the Starbucks and McDonald's and this sort of stuff if we get what could be a European boycott of U.S. goods. That's the first part of this more general question. And the second part is GLP-1s. Do you see any impact? Do you expect to see any impact? And what are you planning to do if there is an impact of GLP-1s, which you've -- as you're fully aware, basket sizes of bakery products are down substantially in the U.S. from GLP-1 users.

Thank you. Let me start with the GLP-1s. The markets are growing. We are in an indulgence business. We don't see any impact from this side. We had the capacity question some minutes ago. So the industry is investing as we are doing. So we do not believe that this is impacting bakery business. The bakery consumption in our part of the world in Europe remains stable on 72, 75 kilograms per capita per year. In Asia, it's growing up. It was even not measured at the beginning. We started business there. And the first numbers I remember being 5, 6, 7, 10 kilos per year. Now we are north of 20. So we do not believe that this has a significant impact. There were Atkins diets over the last years, other carbohydrate diet, bakery consumption remains stable. On the geopolitical question, the demand connected to the U.S. situation. At the moment, we don't see anything looming there. We believe that this is going to be managed in a wise way. There are not only U.S. protagonists in this market. So we believe that there is a stable outlook. Concerning capital usage, capital allocation, this question will become answered at the Capital Markets Day in Dagmersellen in May 7. Therefore, we can't comment on anything concerning this at the moment. Martin?

In terms of a couple of points, you mentioned working capital improvement, including and excluding securitization. So when you look at that chart that I presented, that is the working capital improvement, excluding securitization. So this is inventory receivables and payables that we have managed through focused initiatives to optimize on a continuous basis. When you look at securitization, the contribution to the free cash flow when you look at what it has contributed in '23 versus what it has contributed in '24, it's actually a negative impact of about EUR 5.8 million. So -- and we have a facility of about EUR 130 million, and that facility is pretty much used at the end of '24. So you could continue to expect to see efficiency from working capital, but that is coming from, let's say, let's call it the core components, inventory, receivables and payables.

Great. And I wonder if I just have a follow-up question. I see Jorn went to the back of the queue. He's been very polite. But just on the gross profit margin, this year or rather 2024, 21% plus. I think that's the best it's been in over a decade. Just wondering where you see that can go. And I'm not sure if I'm sort of comparing like-for-like, but I know at the start of the 2010s, you were into the sort of like 27%, 28% gross margin. Do you think that's ever feasible again? Or has the business sort of fundamentally changed and we can expect improvements from this, say, 21.5% or so, but maybe up to 22%, 23% as part of the longer-term plan, but you're never going to get back to that 27%, 28%.

Look, the improvement was driven by our initiatives that we have consistently used to improve overall profitability within the current midterm plan. It is to increase in the share of margin-enhancing innovation. We have reached now for the group almost 18%. What we have said that over the long run, you can expect it to be at around 15%. We'll continue to innovate products to drive products with margin-enhancing profile, premiumizing our portfolio. So that is something that will continue to be part of it. Our continuous improvement programs in the manufacturing side as well as the contribution from our procurement initiatives and SIMPLEX is a continuum, and we will continue to focus on that. So gross margin is a core focus of our activities as we have most of our costs, be it the variable, raw and pack material and labor as well as fixed factory is the major part of our cost element, and we will continue to have focus there. So that is a continuous element of driving profitability. And you will certainly see that when we come online again in Dagmersellen with the building blocks of our next midterm plan. So I would say about -- that's what I would add to this.

There are no further questions coming through. [Operator Instructions] I don't see any questions coming through. I'll now hand it back to Urs Jordi, the Chairman of ARYZTA for closing remarks.

Thank you. Thank you for joining the call, and we will have the opportunity to talk over the next days. I wish you a good day, and see you soon. Goodbye.