DKSH Holding AG (DKSH) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the DKSH Full Year Results 2022 Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Till Leisner, Head of Media Relation and Investor Relations. You will now be joined into the conference room.

Yes. Good morning, everybody. It's my pleasure to see everybody in person here again in Zurich. It's been exactly 3 years since we reconvened here at the Metropol Hotel. It's also a great pleasure to welcome everybody in our webcast. Good morning or good afternoon to everybody, wherever you're based. My name is Till Leisner, I'm Head of Investor Media Relations at DKSH. Before we start, it's my duty just to remind you to have a look at the disclaimer of the presentation regarding the forward-looking statements that we are making therein. For those of you who do not have the presentation in front of them, please go to our website, dksh.com, you will find them under the Investor Relations section. With that very brief introduction, happy to have you everybody here, and I'd like to hand over to Stefan. Thank you very much.

Yes. Hello. Good morning, everyone. Good afternoon. Welcome to our full year 2022 results presentation. And it's really great, as Till was already saying, to see you all here again after 3 years face-to-face. Joining me here today is Ido Wallach, our CFO; as well as our Investor Relations team. And then we have a special guest who just flew in from Singapore, Antoine, he is our Chief HR Officer. So welcome also to all of you. Today's agenda foresees a short recap of our strategic progress and the highlights of last year. I will then continue with the review of the individual business units in 2022. After that Ido is going to follow-up with the financial update. And to conclude, then I will provide a brief outlook and hand over into the Q&A session. But let us now please kick off with a very brief video giving us the essence of DKSH. Thank you. [Presentation]

As you have just seen, DKSH remained relevant over the last 1.5 century, and that is since we followed our purpose and help business to deliver growth in Asia and beyond, made consistent strategic improvements over the year and always stayed entrepreneurial and never became complacent. Let me now focus on these developments and the highlights achieved in 2022. Our clearly defined strategy for growth is firmly in place and focuses on 5 main areas: First, we drive our focused business unit strategies to generate value in the long-term and accelerate our M&A strategy to expand our geographic footprint. Second, we invest in people and nurture a high-performance culture of empowerment, not to only find, but also develop and retain the best and create a better working environment for all. Third, we champion digitization by continuously accelerating digital solutions, driving our e-commerce business and leveraging data and analytics. Fourth, we drive operational excellence and are updating our operations to have modern and automated facilities, as you have just seen some of them in the video that increase the overall agility and efficiency. And last but not least, we focus on sustainability, where we take environmental, social and governance factors into account every business decision we make. Based on this framework, we delivered strong 2022 results that not only confirm our successful strategy execution, but also the resilience of our business model. All these strategic advancements fueled us to deliver a higher operational performance at constant exchange rate across all 4 business units throughout the pandemic. We have outlined our business unit strategies during our Capital Market Day in 2020, and as you can see, we have fulfilled what we had set out to do back then and successfully executed our strategic priorities across all 4 divisions. In Healthcare, our strategy of driving into higher-value segments and services resulted in an EBIT increase of 20.8% from 2019 to 2022 at constant exchange rates. In Consumer Goods business, we have successfully followed through with the transformation and continue to capitalize on our market position in Asia-Pacific. This led to a double-digit improvement of over 40%. In Performance Materials, we strengthened our position as a leading pure-play specialty chemicals and ingredients distributor. From 2019 to 2022, the EBIT increased also by over 40% at constant exchange rates. And in our business unit Technology, we fulfilled our ambition and have achieved results that exceed pre-pandemic levels again with a double-digit growth in EBIT by 37%. At the same time, our functions have developed too and supported our core businesses, ambitions as well as success. We continue the momentum on the M&A side and completed our organic growth by closing 10 value-accretive acquisitions in 2022 alone. We have accelerated our M&A activity and have closed over 20 deals since 2019. These transactions helped us to add strategic value, expand our geographical footprint, access attractive business segments and increase our share of value-added services. M&A is more than simply buying a company, as we all know. Therefore we strictly consider value-enhancing transactions, follow-up a bottom business plan and put emphasis on returns. We have a strong focus on due diligence and regard the integration process as key for successful transactions. With this disciplined and strategic approach and our strong balance sheet, we are in a favorable position to profit from several M&A opportunities, which the fragmented market still has to offer. We have a solid project pipeline for 2023, and we will continue to tap into new M&A opportunities to accelerate our growth with financial discipline over time. M&A is, however, not the only key area we have invested in. In recent years, we have spent considerable time to develop our people who are DKSH's backbone. We are a people organization. We embrace diversity and foster a supportive work environment for all of us. Our continued focus on the development of our talent is visible in the 75 points score we achieved in our latest employee engagement survey, which benchmarks very well with big multinational companies. Advancing diversity, equity and inclusion in our organization with targeted initiatives will remain a strategic focus in our human resource approach. We have made visible progress in DKSH company culture to be a modern company with a clear purpose and shared value to guide us our way. We have on-boarded some great new talent this year, and I look forward to continuing building up our high-performance teams. This brings us to the topic of digitization, which is another driving factor in our continuous evolution. Our investment in online sales has paid off across all 4 business units. Through an ecosystem of digital platform, we remain operationally agile and better understand the needs of our customers. In our e-commerce business, our net sales continued to grow strongly and even increased 3x compared to the pre-pandemic levels, excuse me, of 2019. We want to actively contribute to the promising digital economy. Leveraging data and analytics will remain one of our priorities in this digital transformation. Sustainability is another promising and emerging area. We made good progress on our sustainability agenda in 2022. Our commitment has been recognized with the international EcoVadis Gold rating. DKSH now ranks among the top 5% of all companies rated by EcoVadis. Our improved sustainability ratings reflected the effectiveness of our commitment. You see this on the slide here. Going forward, we will continue to improve our sustainability performance and keep up our commitment. DKSH has always been committed to generating sustainable and profitable growth for our shareholders. We have backed this commitment up by having consistently increased our dividend for 10 consecutive years since the IPO. For 2022, our Board of Directors proposed an ordinary dividend of CHF 2.15 per share, which is equivalent to a growth of 4.9%. We will continue to hold on our progressive dividend policy in the years to come. Let me now provide you with an update on the progress in our business units, starting with Healthcare. The results in our business unit Healthcare are marked by organic growth and a double-digit EBIT improvement. The EBIT margin also increased from 2.3% to 2.6%. The business emerged stronger from the pandemic with higher profitability across key segments. In addition, acquisitions in key growth areas such as medical devices and own brands supported this trend. I'd like to especially mention that in own brands, we signed an agreement with Eisai to purchase the 2 pharma brands, Myonal and Merislon in 9 markets across Asia-Pacific. We also materialize our strong business pipeline by winning regional contracts, for example, with LEO Pharma to advance the standard of care for people with skin conditions across Southeast Asia or with the life cycle management company, Pharmanovia, to bring high-quality pharmaceutical products to patients across Asia-Pacific. Looking ahead, we will continue to expand our strong market position and drive into higher-value segments and services. Let us now focus on the business unit, Consumables. Here the successful transformation resulted in another year of EBIT growth. Our agile structure, stringent rationalization of our product portfolio and value-added services were driving factors in those results. The EBIT margin increased further from 2.2% to 2.3%, while net sales remained largely unchanged since price increases to reflect the inflation and lower market volumes basically balance each other out. In our fast-moving consumer goods business, we continue developing our business with valuable collaborations. We partnered with Global FoodBanking Network to reduce product waste in our locations across Asia-Pacific. As announced this week, we partnered with Lipton, the world's largest tea and herbal drinks manufacturer, to establish their market presence in Vietnam. And we expanded our existing collaboration with disposable soft goods, DSG, in Malaysia to provide our full service offering for a range of sanitary products across all modern and general trade channels in the market. More to come next week. We will continue to capitalize on our position in Asia-Pacific in our consumer goods business and drive growth and profitability. Moving on to business unit, Performance Materials, where we delivered strong net sales growth of over 20% at constant exchange rate. This achievement was supported by our business development activities and improved business demand in Europe and in Asia-Pacific. The EBIT was CHF 112.2 million. However, the underlying result reached CHF 130 million when we considered 3 factors: M&A-related costs of CHF 3.6 million, which were quite high last year, translational currency effects of CHF 6.5 million as well as realized FX and hedging gains of CHF 7.8 million. Let me briefly explain the hedging gain. In the business unit Performance Materials, we typically buy ingredients in one currency and sell them in another currency. If the currency in which we buy the ingredients from our suppliers increases versus the currency we sell it to the customers, this typically reduces our gross margin or EBIT. These exchange rate effects are typically hedged to secure our margin, but the realized FX hedging gains are reported in the net finance result below EBIT as required by IFRS. Showing the results of our business units, including the hedging gains is required to better understand the underlying performance of profitability. So like-for-like, the result is also up 13%. We also continued our targeted M&A approach in Performance Materials. In total, we closed 6 acquisitions across 3 continents, which all helped to solidify our position as a leading specialty chemicals and ingredients distributor. We closed 1 acquisition in Asia with Right Base Chemical in China, 4 in Europe with Victa Food, Refarmed, Georg Breuer and JW Foods, and we expanded our global footprint with Terra Firma in North America. At the same time, we increased our global network to 53 innovation centers in total, where we are helping our clients to develop cutting-edge ingredients and formulations. Backed by our scalable business model, sorry, solid business development pipeline and industry consolidation potential, we will continue to strengthen our leading position in the specialty chemicals and ingredients distribution industry and expect solid EBIT growth in 2023. Ending our business unit review with Technology. I'm pleased to report that we achieved very strong results in 2022, which in line with our ambition, exceeded the pre-pandemic level. We recorded a double-digit increase for our net sales as well as EBIT. We benefited from investments going into Southeast Asia and also the realization of some backlog projects across the region. We also achieved higher results in our consumables and service business too, as pandemic related movement restriction eased, obviously after COVID. With the acquisition of the DNIV Group in Singapore, a major player in the distribution of semiconductors and electronics in Asia, we strengthened our position in a very dynamic growth segment. We have entered promising and future-oriented partnerships with [indiscernible] in the life science industry last year and have a very strong pipeline for 2023 as well. Overall, the business unit is on track with its strategy of building further resilience and focus on higher-margin segments and services. With that, I would like to hand over to our CFO, Ido, who will guide you through our financial results in more detail. Thank you very much.

Thank you, Stefan. And welcome also from my side. It's great to see some familiar faces again, and great to see new faces for the first time. We know that in this great city of multinationals and great financial institutions, you have choice. So thank you for choosing to spend this morning, chilly morning with us today. I'm delighted to provide you with further details of our 2022 results. We are pleased with the achievements made last year, which are reflected in our key financials. Net sales grew by 1.9%. EBIT increased by 12.2%. EBIT margin increased by more than 25 basis points. This marks the third consecutive year in which we increased our EBIT margin. Profit after tax when excluding nonrecurring items in 2021, stood 7.3% higher than 2021 and 10% at constant exchange rates. We generated CHF 209.5 million of free cash flow, representing a cash conversion rate of 100.6%, again, a third year in a row of surpassing the long-term target of 90% conversion rate. Let me now cover our net sales development in more detail. We grew organically by 3.0%. As many of you know, in our business unit consumer goods, we have been pursuing portfolio optimization. The strategy has increased the EBIT margin of the business unit from 1.7% in 2019 to 2.3% in 2022. On the flip side, the impact of this optimization on our organic growth in 2022 was 1%. We can, therefore, confirm our GDP plus long-term growth aspiration. We describe our ambition to grow faster than economic growth in the markets where we operate. We do this by winning market share for our existing suppliers as well as winning new clients. M&A has been a highlight once again with a growth contribution of 1.5%, an acceleration from last year and from half 1, mainly from the consolidation of deals closed in the second half of 2022. Combining organic and M&A, our net sales growth at constant exchange rates was 4.5%, ahead of the pace recorded in the first half of 2022. This 4.5% growth rate has been affected by a 2.6% FX impact following the strengthening of the Swiss bank. Moving now to the development of our EBIT. We are very pleased with our continued EBIT growth. Organically, it grew double digits by 10.5%. Net sales growth combined with continued strong focus on gross margin and cost structure optimization, deliver an overall EBIT margin improvement of more than 25%. M&A added 6.1% to EBIT growth, ahead of its incremental 1.5% contribution to net sales growth as we continue to focus on margin-accretive acquisitions. Similar to net sales, currency changes had a negative impact on our EBIT, measuring minus 4.4%. All in all, EBIT reached CHF 319.2 million. EBIT margin reached 2.8% of sales. Let us now move on to our balance sheet. It remains very solid. I would like to highlight 3 things. Our very strong liquidity position is maintained. We continue our strong focus on timely collection and timely payments. Trade receivables and trade payables as a percentage of net sales are on a continued sequential improvement this year and lower since pre-pandemic 2019. This is the result of relentless collaborative efforts of all our business units, all our business of whom we are very proud. M&A and the earlier phasing of Chinese New Year in January 2023, drove the majority of the inventory increase in 2022. In addition, we have also seen in 2022, a normalization of inventory levels from the supply chain shortages experienced during the height of the pandemic in previous years. 2022 was a historical year for DKSH also when it comes to capital deployment. On top of the progressive dividend payment of CHF 133.2 million, which we returned to shareholders, we have invested CHF 472.9 million in the acquisition of businesses and trademarks. Subsequently, and despite these large investments, our net debt position remains marginal at CHF 42.3 million, corresponding to as little as 0.1x net debt to EBITDA. Combined with a strong equity ratio of 31.1%, we have ample room to further grow our platform for industry consolidation. We continue to carefully assess deals and only acquire if we find a value-accretive, scalable and available for reasonable price. Let me also provide you with some financial indications. In terms of M&A, we estimate that our recent acquisitions will contribute around 2.5% to 3% of net sales in 2023. On the FX side, assuming that current rates prevail for the remainder of the year, we expect the full year FX impact of around minus 2.5%. Tax rate. We estimate that it will remain within midterm range of 27% to 29%. Capital expenditure is expected to remain at 0.5% of net sales for the full year. Before handing back to Stefan to elaborate on our prospects, I would like to wrap up my section with highlighting to you the resilience of our business as evidenced during the pandemic and the achievements made for us. On the back of movement restrictions, supply chain interruption, inflationary headwinds and geopolitical tensions, to name just a few of the challenges, we had to endure in the past few years, we increased EBIT margin each year and in some by more than 50 basis points. We consistently achieved cash conversion rates above 100% of profit after tax. We progressively increased our ordinary dividend payments and in total, distributed almost CHF 400 million to shareholders. We deployed more than CHF 600 million of capital in M&A, especially in late 2022, which positioned us for further growth in the future. We're expanding in new geographies such as ANZ, North America as well as new business lines, and we strengthened our position in Europe. We further strengthened our asset-light business model, where we typically lease contribution centers, sorry, distribution centers, IT equipment and outsourced transportation. This track record during the pandemic is testimonial to our successful transformation journey, the resilience of our business model, our unique value proposition and above all, our passionate team. With that, I would like to thank you for the attention and hand over back to Stefan.

Thank you very much, Ido, for the -- for your presentation. Let's conclude now. But before we go to the outlook, I have a very brief look at Asia. Overall, the economic recovery in Asia is expected to continue at a slightly slower pace due to the weakening of the global demand. But thanks to a robust consumption and border openings, the GDP growth forecasted for Southeast Asia is still the highest in the world. The region is expected to experience a temporary relief from rising consumer prices as inflation is still settling at lower levels compared to most markets in the Western world. Given China has curbed the long-lasting Zero COVID policy and open borders, Southeast Asia will likely benefit from easing travel restrictions, especially tourism-oriented markets such as Thailand. Thanks to the resilience and the diversification of our business model, we hold on to our aspiration of delivering GDP plus growth and expect a higher EBIT in 2023 than in 2022. We base this expectation as we usually do on the following general factors being realized, economic growth in Asia-Pacific, stable exchange rates and excluding unforeseen events. Looking ahead, we remain very optimistic about the prospects for Asia-Pacific. Our disciplined strategy execution, asset-light, resilient and cash-generative business model as well as our pan-regional approach, empower us to capitalize on the unique opportunities this dynamic growth region has to offer. On top, we will continue to develop Performance Material into a real global player. With that, I thank you all for your attention and invite you now to address your questions in our Q&A session. Thank you very much.

Thank you very much. We start with the first question in the room. Just give us 10 seconds until the microphone is here. Maybe we start ladies first with Stefanie in the back.

I would like to start with consumer goods. I mean before Christmas, you released a press release that Terry Seremetis left the company or is going to leave the company. And when he started I think 3 or 4 years ago, he was announced as like the big Messiah almost. Can you assume that now with the 2.8% margin, where we are right now, that's the limit because the turnaround is done? Or what can we expect in terms of this? And maybe can you give -- share with us a bit more details why he left and just the PR?

Okay. So I mean, first of all, I think if you look back till 2017 and 2018, we achieved a major transformation in consumer goods and the results advanced very well as they also did this year. So a major progress was achieved, but we will remain hungry. So in terms of the margin, it's always our objective to further enhance the margin as well as coming back to a stronger top line growth. And that is our objective for the years to come. Terry is going to leave us in July or end of June after 4 years. And he has done a great job and was very successful with the transformation here. He did build also a very strong team underneath of himself. We are very confident that we will replace them with another strong leader. And then together with the wider management team, they will continue to execute our successful strategy in consumer goods.

And maybe still with consumer goods, Maurice Lacroix, how much did it contribute to the current EBIT? Did it contribute in a positive way? And if you take this out, how much would it be at?

Yes. I mean, as you know, Stefanie, we don't give specific EBIT numbers by sub-business line. But you can be rest assured that also in 2022, we did grow that business faster than the market. So we gained market share in the segment in which Maurice Lacroix is active. And the results of 2022 were stronger than the results of 2021. So it's a single million EBIT contribution we are generating through Maurice Lacroix.

And then maybe one last question, and I'll go back. On inflation, how much of organic growth in consumer goods but also maybe in performance material was driven by inflation? And how much was volume driven?

Yes. So maybe I can help with this one, Stefanie. Overall, we have seen organic growth in CG of 3%. And as I mentioned, overall, is a game of [indiscernible]. So various effects have been offsetting each other. We have seen a growth of 3%, but at the same time obviously pricing effect. But at the same time, we've seen a volume effect because consumers have been spending and buying less in volume. So together, the 2 offset each other.

[indiscernible] volume?

Minus 0% on the volume and plus 3% on the price.

Next question. Olivier, if you could just for the webcast, mention the company, please, also that you work for.

Yes, sure. Can you hear? Olivier Calvet from Credit Suisse. I have 3 general questions -- 2 general questions on PM and one more specific one. First of all, maybe I'll take them one by one. Could you provide us some color on the order behavior that you've seen from your customers in Performance Materials? That will be the first one, or do you want the 3?

You mean general behavior in performance. I mean, as you can see, I mean, we did grow the top line at constant exchange rate by 20%. So in our sector, there was a healthy demand of ingredients and services we are providing for them. And we are very confident that this will continue into the year 2023.

Second question would be just on the organic growth in PM, so the 12.2%. Could you actually break that down perhaps in price and volume? And yes, if you could kind of give us an indication on how it worked in H1 and H2 that will also be quite helpful?

Yes, look, in general, it depends, of course, on the various business lines and of course, different demand levels in different countries. But the average of the growth is about 70% of volume and 30% of the price. That helps the comment on overall that we continue to see strong demand. Certainly, the first half was stronger. We still saw the -- we're still seeing the catch-up effects from post-COVID. It has -- the growth has slowed down somehow in the second half, but it's still there.

Just to confirm, 70% and 30%, so in PM volume price, right?

Correct, yes.

That is correct. And there was a slightly -- I mean, higher cool down on the industrial side than on the life science side, but overall, life science is the major part of the business. Okay. And then just on the Terra Firma deal, it's -- in the notes to the financial statement, it says if you had consolidated the business for the entire year, you would have reported about CHF 150 million of net sales. I had about CHF 240 million in mind. I just want to -- obviously, there are probably some scope effects. Could you explain this, give a bit more color? And yes, just help us understand the pro forma numbers maybe referring to with this CHF 240 million, yes?

Yes. You're going to keep the CHF 240 million. It's just -- it's completely technical because we annualize the 2 months in which we own Terra Firma, which includes December. And December, especially in North America, also Canadian business there, is very soft every year. So just annualization of a seasonally low month, that's it. There also has been some exchange rate effect. The U.S. dollar was stronger when we bought Terra Firma. It's a bit weaker now versus the Swiss banks, but overall, the performance remains on our target.

[indiscernible] acquisition including Terra Firma…

No, no.

No, we are making some very good progress with the post-merger integration of that business. We are right now almost completely rolled our existing relatively small North American business already into there. And yes, and we will continue to deliver the strategy of building a serious North American business on the back of the platform we acquired.

Thank you. Next question may be from Gian-Marco.

Gian-Marco Werro from ZKB. 2 questions from my side, please. First one is on the cash conversion for the CFO. I think also a positive surprise over 100% compared to originally indirectly guided around 90%. At the same time, your inventory is also increased. Maybe you can give us a bit of guidance about where the current cash conversion could be for 2023? And then from an M&A perspective, also impressive pace there for 2022. Can you maybe also elaborate a bit? You already mentioned your targets that you want to continue to acquire companies. Maybe you also can mention for us a number of companies or a total enterprise value that could be in your mind, especially now the new situation in the U.S. where you also want to expand that will be interesting? And then the third question is the healthcare margin that was from positive surprise, strong improvements there. Maybe can you elaborate a bit also about your expectations for 2023 now? Can you keep this margin? Maybe also if the recovery phase that we might see in healthcare with the tourism in Thailand coming back, will this maybe dilute the margin or even enhance the margin that will be interesting?

Okay. Let's start with the cash related. Yes, we are very pleased with 100%. It's not that far from the 90%. Again, there will be occasion in which will be slightly below. So please credit us for the slightly up as well. Yes, we've done a tremendously good job, not myself and the team at -- on accounts receivables. That's beyond our usual expectation for them. But everywhere we look in the company, there are teams that are just focusing on getting the cash back on time, sometimes with the transaction. And let's not forget that that's one of our core activities, customers, the clients come to us because we operate those invoicing and collection for them. So that's also a sign that the team has been doing what clients are expecting us to do. Inventory increase is not concerning. If you look at the -- as a percent of our COGS, if you do the calculation, we're looking at 7 weeks of inventory. The best companies in the world in green inventory management, the Walmarts and Targets of the world, they hold 8, 9 weeks. We don't get credit for 7 weeks that could be at best of maybe we should. There was an effect last year that we were at 6 weeks. That's -- I'm not sure we will always be able to run at that level. So I see it as an organization and as I said, with Chinese New Year coming in mid-January this year, we need to keep some inventory late into December. So that effect is a one-off. There was also a bit of coming from the M&A, about 1/3 of the increase is from M&A. So as a percent of net sales, we will probably maintain at this level. In absolute, it will grow as the business grows.

Coming to your second question, Gian-Marco, regarding M&A, yes, 2022 was a very successful year in terms of mergers and acquisitions. We closed 10 transactions. We spent almost CHF 500 million in 2022. And we will continue to progress our -- we continue our aggressive M&A strategy, right? That I have to be specific here, also in 2023. But a lot have come together, right, to really make all those transactions available for DKSH. And it's really hard to forecast or promise anything. If you look at the current M&A environment, it's slightly favorable for us because many P&E players who are normally competing with us in the market are cooling the engines slightly. On the other hand, multiples are starting to come down. So sometimes it can make sense to slow things slightly down to then secure better deals a little bit further down the road. If you look at our balance sheet, we still have a lot of firepower, and we will continue to use this across all 4 business units. The pipeline right now looks healthy going into 2023 and then let's see what we can deliver during this year. In terms of healthcare, yes, I mean, we said before, we are pursuing a strategy to go into more high value-adding segments where we can achieve higher margins. And we made some very good progress in 2022, and we will continue to try to improve the margin, right, going into '23 and even beyond that. But there was quite a significant jump we have done in 2022. The opening of the tourism market is going to help us because as we stated in the past, the margin on over-the-counter products is slightly higher than in big pharma. So that should give us small tailwinds. But the big increase in tourism, especially in Thailand, we expect in the second half of the year. So last year, there were around 10 million tourists going into Thailand. This year, they expect around close to 30 million. I think the official number is 27.5 million and pre-pandemic levels, we had like 45 million of tourists. So we will continue to go after our high-value strategy and try to enhance the margin also in healthcare.

Thank you. Next question, Pascal? Yes.

Pascal Boll from Stifel. A couple of questions. So first, overall, outlook-wise, you gave us, as usual, the outlook of a higher EBIT in 2023. Now after 2 years of pandemic where you were quite cautious but then performed quite solid and well. Is it now the time where you could become more optimistic as we see that markets are reopened, less restrictions? Now with the reopening of China, which should help tourism, as you just outlined. And further on, I just listened to the Unilever call, they were quite bullish on [ APAC was widening ] Thailand and Philippines, in particular to mention. So what's your view here? Should we now really expect an acceleration in 2023? Or is it too early to get excited?

I mean, first of all, thank you very much for recognizing our good progress and very solid results in 2023. I think we achieved what we achieved by more or less giving you the same outlook like the year before. And as we were stating before, I mean we clearly expect a higher EBIT in '23 than in '22. I mean you are right. If you look at the macroeconomic environment and all the driving factors, '23 on the one hand, looks better than '22 with the opening of China. The tourism coming back, you're quoting exactly one country. The Philippines is doing very well in that -- in the region. On the other hand, I mean, you still have this dark cloud of a global potential recession still out there. So it's really hard to predict exactly where the economy is going to land. The forecast for Asia Pacific in terms of GDP growth, weighted according to our footprint is currently 4.2%. And as always, we expect that we deliver GDP-plus, if that gives you a little bit more of guidance here for 2023.