Nomad Foods Limited (NOMD) Earnings Call Transcript & Summary

All right. Hello, everyone. Good morning, good afternoon, and good evening. We're pleased now to welcome Nomad Foods, the largest frozen food company in Europe, with a portfolio of niche brands, including Birds Eye, Findus and Iglo. From Nomad, we have CEO, Stefan Descheemaeker; and CFO, Samy Zekhout. Thank you both for joining us today. I do want to let everyone know that this is going to be in an audio-only format. So don't worry if your video is not working. Before we get started, I just want to let everyone know that we're going to do this in a fireside presentation format. And if you're joining the presentation via the conference portal, please submit any questions you might have, and I will do my best to integrate them in the discussion. So with that, we'll get started. Thank you again, Stefan and Samy, and welcome to the conference.

Thank you very much, Faiza.

Great. So first, I thought we could just get a lay of the land on current trends for Nomad. Clearly, Nomad has benefited in many ways from the COVID pandemic and executed extremely well over the last 12 to 15 months. And I'm curious if you could talk about how -- as mobility has improved in Europe, how that has impacted your business now, if you could touch on any variation by country, what you're seeing in terms of stickiness, repeat rates. And then we can talk more about your expectations going forward for consumption patterns from here.

Yes. Let me -- thanks for the question, Faiza, which is a very broad question. Let me stand back just a second. I agree with you. Obviously, we benefited from the COVID crisis as many food companies doing retail. But I think probably a difference compared to some of our peers is we were growing before COVID. We've been growing in -- during the crisis, and we intend to grow after COVID. So COVID is not just an accident for us. It's just a continuation. It's probably a catalyst for different, let's say, structural changes in the future, but at least the fundamentals of Nomad have been very sound over the last 4 years, 4 years of uninterrupted growth. So that's one thing. Second, what we see in terms of sell-out is we see across Europe with various degrees, obviously, because the world is opening up a different space, different depending on the countries. We still see an elevated level of consumption. I think probably the best way to dissociate the difficult comes from mathematical or, let's say, mechanical from what we see in terms of long-term growth is to see a bit the evolution over the last 2 years between '19 pre-COVID and what we see, which is not really fully post-COVID, but at least it's part of it, as we see a major difference. In terms of selling, you may remember that Q1, we did 1.9% growth on top of something like 7% last year. So we're more in the region of 8%, 9%, 10% on a 2-year basis. That's in terms of selling. Now in terms of what we see is, as I said, in all the countries, including the U.K., we see some elevated demand. It's obviously still difficult to exactly see -- understand all the phenomenons because what you see is schools are opening up. Restaurants, to some extent, are opening up as well with some restrictions here and there. But a lot of people, including ourselves, are still working from home, and we believe that part will stay for a while at least. I don't think that all people around us will work 5 days a week from the office in the future. So it's going to be different, which is -- which should help us, should help people like us. So that's -- we're in this middle of this, let's say, movements between, let's say, COVID and post-COVID, difficult to analyze. But still, again, as I said, we still have very healthy demand. And what we also see for the future is -- one is e-commerce has been very beneficial to us, not only to us but to frozen food and on top of good brands like ours. What we also believe is this, let's say, working from home is going to remain. Is it going to be 1 day, 2 days? Nobody really knows, but at least it's going to impact us in a positive way. We also think that we've been able to attract some new consumers. We're giving ourselves a retention -- a projected retention rate of between 20% and 30%. And so far, so good. We're a bit ahead of track. But again, difficult to see exactly what's going to be left out of this, but we were right to where we invest last year. So all this moving in the right direction. This being said, obviously, Q2 is -- we're lapping a very, very high rate of around 12.5%. So unsurprisingly, obviously, Q2 is going to be negative. But besides that, we're not changing anything in terms of guidance, and that was to be expected.

Great. Great. That's really helpful.

Samy, do you have anything to say?

No, Stefan, I think you covered it all. Thank you.

Maybe, Samy, if you could talk about -- in the first quarter, I think you had capacity constraints, and that was a limiting factor on organic growth. So can you talk about -- give us any color on the progress of adding capacity through copackers or sort of where your service levels might be and where you think your retail or inventory levels are at this point?

Sure. Thank you, Faiza. I think it's -- this has been effectively a limitation factor to our growth not because we were not aware that effective there were a fluctuation to come. But I think the magnitude of the fluctuation has clearly gone beyond the normal range. Usually before COVID, we were at that level in our largest manufacturing site that's roughly about 90-plus percent capacity utilization, which is a good number to be simply because then you can manage the fluctuation of the demand from the retailers across the digital markets. During COVID, we had expense effectively rise, and we were clearly at pretty tight capacity situation a year ago. But over the first quarter of the year, we have seen a significant spike, primarily driven by the fact that many of the retailers did not want to get caught into the situation they were caught a year ago by the crisis as they saw the third lockdown coming in. And therefore, the demand has risk allocated. That has led us to a situation where we've been running the business at 100% capacity utilization, which in itself is not manageable because then you necessarily get to customer service issues with that. So we've taken a number of measures there because, unfortunately, these are lost sales, if you want, so -- and clearly, that's not acceptable. So we've taken some measures effectively on this one, which is the first step was to clearly rush to increase our capacity through a number of productivity interventions, extending the days, accelerating lines, reducing waste and so on and so forth, managing our safety stock as well in a way that's probably more on the low end of what is acceptable in order for us to clearly take our customer service back up quickly, and at the same time, make a structural investment in, let's say, the area where we had some bottlenecking. And the coated fish and poultry was one of them, and then we made the decision to invest into an additional line in the U.K. that will come to effect in Q4 of this year. So we did have some customer service issue, which in turn had created effective some decision to move promotion from Q1 to the subsequent quarter. But as we have talked in the prior communication that we had with all of you, we clearly now have a path to return back to effective good customer service level. We already see now some strong performance from a customer service level at target level, which is clearly in the very high 90s, which is great. And we expect to return to a full, if you want, capacity utilization in line with our targeted level of about 90-plus towards the end of the year. That in itself had a negative share impact as we had discussed earlier. But clearly, now we are back on par with our glide path to return to share growth by the end of the year.

All right. Great. Maybe I'll move on to the Fortenova Frozen Food Business that you recently announced. Now it does -- it gives you immediate access to new European markets, the ice cream category, and you've said that it's high single-digit accretive to EPS. Can you talk more about that? Sort of discuss your level of confidence in the growth algorithm there and the opportunity to grow EBITDA. I know you've talked about EBITDA growing sort of 50%. So can you discuss more about sort of the drivers that get you there, including the synergies?

Okay. Let me start maybe with the -- Faiza, with the strategic rationale. I think for -- some of you guys must have read it, but it's always good repeating what are the key points. What -- the first thing we like with Fortenova is the power of the brands. They are the undisputed leaders in their regions, in their countries. The brands like Ledo and Frikom, for most of us, we still do not speak too much to our mind. But I can tell you, in these countries, they are very much the equivalent of Birds Eye or Iglo or Findus. And the difference, it's very much iconic brands not only in savory frozen but also in ice cream. And that brings us to the second topic, which is ice cream. So 50% of the business is ice cream. And it's very, very complementary to savory frozen. Actually, it's interesting because when you think about what the business was in Western Europe back in the '90s, '80s -- '80s, '90s, I would put it that way. Most of the time, the Nestlé of the world and the Unilever of the world had both. And they have -- they have the ice cream and savory frozen. And as a result, they were really very strong at the freezer level with the retailers. And they have lost that by basically by splitting the businesses. So what we now have is these brands do really -- I mean have a very important say in all -- throughout the seasons with the freezers in the supermarkets, which is really great. What -- another thing we know is, and is something we obviously we're learning, not so much for me and for Samy because we have more of this on-trade experience, but it's a great -- it's on-trade experience. It's a great way to market with something like around 120,000 freezers across the countries. So in terms of go to market, it's really strong. And so this combination really, I mean, definitely, we thought it was -- it's a great combination, and it's not the kind of things that you see everywhere. Some people ask us, would you like to sell the ice cream, and the clear answer is no. I think there would be -- there are a lot of synergies between both. There would be a lot of these synergies of splitting them both. And the margin, by the way, in ice cream are very strong. It's an interesting combination in terms of seasonality for us. So that's EBITDA. So back to your second question, which is -- or do we think we can improve -- increase the business EBITDA margin -- the EBITDA by around 50%. It's going to be a combination of different things. One is inherently, the market is doing well. So in savory frozen, for example, the consumption is lower than in the Western Europe but is catching up. So there is a natural tendency to grow, especially with the supermarkets, obviously. We may lose a bit of market share with the supermarkets because, basically, in the traditional trade, we have a very, very -- they have a very, very strong position and it's difficult to maintain the same level. But all in, I think definitely, it's going to -- the natural progression of the market is going to more than offset any different mix -- any difference in terms of mix. So the first thing is the market inherently is very sound. It's very healthy. The second piece is or, simply said, let's say, the business suffered from COVID compared to us because they have food service and they have tourism. Let you judge. But obviously, last year, not a lot of people were eating ice cream in Croatia. And this year is going to be moderate at best. So definitely, there is a catch-up or a natural catch-up that is going to come in the years to come. And then you have what we think we can do and what we have a proven track record with brands like Goodfella's, for example. We think that this business has been under invested for obvious reasons because it's coming from, let's say, different financial situation. So where investment was not probably the main priority, we're going to reinvest behind the business. We're going obviously to optimize costs, but we're also going to reinvest behind the business CapEx-wise and also OpEx-wise, behind the business and behind the brands and behind some of the freezer and the go to market. And we definitely believe that the combination of these 3 elements -- so inherently, very healthy market. Second is a catch-up from coming from pandemic. And also, let's say, business model that is already proven with the brands like Goodfella's should do the job, and obviously including the synergies, which goes without saying.

Yes. Yes. You alluded to the market being really strong. I guess are there any other differences that we should think about Western Europe versus Eastern Europe? Like are the retailer dynamics different? Are the competitive dynamics different? And similarly, you alluded to how ice cream and savory frozen foods, sort of there is sort of a synergy there. I'm curious if you can talk a little bit more about really the differences apart from the seasonality? Are there any different dynamics between savory and ice cream?

Well, there are -- the dynamics are quite different to your point. I think in ice cream, a lot of P&L is coming from the hot season, especially obviously Q3. That's very clear. You'll make a lot of -- where in savory frozen, it's very much -- it's across the board. Let's say, Q1 and Q4 are a bit stronger than Q2 and Q3. But it's not a big difference, which is fine by us because, anyway, with the EUR 2.5 billion sales, we're adding EUR 150 million of ice cream. So increasing slightly -- or seasonality, that's fine. At the same time, which is really great, again, back to this point about the freezers at the store level, we -- most of the time in the real-world in Western Europe, there is always a fight between, let's say, the ice cream guys and the savory frozen guys in, let's say, by spring time and by fall time, trying to find -- to grab a bit more space, which is a lot of effort, a lot of resources, which is, quite frankly, sometimes a bit of waste. We won't have that with the combination of ice cream and savory frozen, which is great. And as I said, the dynamic is -- yes, the market is growing a bit faster than in -- overall than in Western Europe because there was a catch-up, and people starting to realize that ice cream -- let's say, for savory frozen, is great. It's convenient. It's affordable. And let's say, supermarkets are coming in and the supermarkets are coming with the higher consumption of frozen food, which is great.

All right. Excellent. That's really helpful. Maybe you can pivot now to your plant-based product, which is Green Cuisine. Can you just update us on how that brand is performing, sort of the trajectory from here? And then also there's, as you know, and we've talked about this before, the competitive dynamics are it's been competitive. There have been a lot of new entrants generally. So maybe talk about what sets Green Cuisine apart and sort of how your product has evolved?

Yes. Let me start with a bit of the trajectory of -- in terms of sales. So year 1, which was 2020 -- 2019, sorry, we started with EUR 10 million. Last year, we did EUR 30 million. Objective, this year is EUR 30 million. Then obviously, again, additional growth up to EUR 100 million in 2022. So that's the objective, and we are on track with the objective at this stage for 2021. So that's one thing. Second, what we see is also the power of distribution. We have -- obviously, with all our brands, we have a unique access to all the retailers, which, to your point about the market is crowded, it is true. The market is crowded because it's a very interesting category. It's still a bit of a white space, and we strongly believe that it's going to grow a lot, but we're not the only ones, which makes sense. But we're probably a very few with that kind of distribution muscle, which makes a big difference. Now in terms of brand, the brand is, as I said, is doing well. Green Cuisine is doing well. In a market, it is a little bit more mature like the U.K. We are the #3 brand after Quorn, which has been established decades ago. Same thing with Linda McCartney and we're #3, and we're growing market share. So that's -- so we're in a good shape from that standpoint. Then back to your point, yes, you have a lot of competition, some more established players, some are more startups. What's also interesting is we see a little by little, the market is going to split a bit between, let's say, the red meat analog, which is very, very crowded with the people like, obviously, with -- people like Beyond Meat. And obviously, Vegetarian Butcher and Garden Gourmet, which is branded business with brands like -- with products like burgers, sausages, meat boards. We're doing well. Our products are really considered as excellent without any preservatives, which is a bit of a difference compared to some others. So that's very good. But what we also developed -- we see developing is other "categories". Like, I would say, technically speaking, we would call it poultry analog like nuggets or fish analogs that we have just launched a few weeks ago in Germany with fish fingers, fishless fish fingers. And then also visible veg, which is a bit like Strong Roots for those that knows in the U.K. And so with -- at least with these 3 categories, we basically -- we definitely believe it's -- we would label them as our must-win battles. We definitely believe that in poultry, for example, nuggets, we have a competitive advantage with coating, pretty much the way we do it with fish and/or with real poult with nuggets, with nuggets at least -- poultry nuggets. Same thing with the fish and the visible veg is really something that we are also mastering visibly well. So this means that we're learning every day. We're starting to split the businesses between the different categories, which is great. We're also learning that you need to move a bit faster compared to other categories. We're also learning that probably, depending on the market, A&P needs to be differently between TV and digital, probably more digital. You need also to be very aggressive at the store level with in-store activation, with sampling and all the things we're testing and learning as we go country by country. So we're learning also a lot from the different countries. We're unique in a way that all our countries have Green Cuisine and all are learning from the others. So overall, very pleased with what's happening right now.

Okay. Yes, that sounds really interesting. Thank you for that. Maybe we'll shift now to -- cost inflation is obviously a hot topic. And there has been increases in raw material costs broadly, but you've talked about you're only expecting sort of low single-digit inflation net of FX this year. Can you discuss sort of how -- why you're only seeing sort of that low single-digit inflation?

I'll take that one, Faiza. Thank you. I think it's the combination of different elements that are effectively compensating each other in many ways. I mean just to give you some perspective, I mean, about 70% of our COGS sits in raw materials, of which, for instance, I mean, coated fish represent a big percentage. We are seeing, for sure, I mean, inflation in poult, for instance. But it's clearly in line with what we have seen historically. The vegetable exposure is mainly in crops like peas and spinach, which had a strong harvest last year. I mean this is dependent on a number of factors. But very clearly, I mean, we had quite, let's say, strong start coming from that perspective. The other piece, which is important is we purchased about 20% to 25% of our COGS in U.S. dollar, which has been weak, I mean, versus European currency. And then, frankly, last but not least, certainly, we have been able to do through our procurement team, I mean, a very good job actually in buying long, let's say, end of last year flowing into this year, which has reduced our exposure. So when you get the combination of all of these factors, this is why effectively we reiterated the message of the low single-digit inflation net of FX, I mean, in 2021.

Yes. I'm curious, like are others in the marketplace -- other brands that you compete with, I imagine that they maybe were not able to take advantage of this as well as you were. And I know you previously talked about the fact that you don't need to be aggressive on pricing. But I'm curious, like, is it -- can you still take pricing because there is so much inflation in the marketplace? Or would you rather sort of use this opportunity to prioritize share gains?

Yes. We have -- and we have been historically passing through inflation, I mean, through pricing, as you have seen in the past. I mean we've been -- there's repricing each and every year and with the appropriate justification. I mean because -- I mean there was some inflation. And we intend to do so. I mean, we have strong brands we have category captaincy in many of the categories in many of the countries. And therefore, we are in a unique position sometimes to really lead pricing. And of course, I mean, pricing being at the discretion of the retailers, but the reality is that we have all of them in our hands to not only support but to execute the pricing in different format through our revenue growth management. However, frankly, our strategy in 2021 has been a bit fine-tuned in a way that we wanted to ensure that we remain price competitive, given our expectation for the macro environment that was going to come out, I mean, after COVID. There was uncertainties. We clearly -- there were some uncertainties. And clearly, we wanted to stand ready for that. And so we've taken advantage of the position that we had that I just mentioned earlier from a procurement standpoint, to, frankly, mitigate our approach while doing pricing in some of the markets. But as effective those benefits fades away and we have a better clarity, if you want, as to when the return to a more normal life is coming up at the end of the lockdown, we clearly will be continuing to price as we move forward. The reality is that our capacity has restricted our ability to gain share in Q1. And that was something that we expected to get in the coming months. So that's -- the combination of all of these elements had, let's say, pushed us to be more prudent from that perspective, whilst effective planting the seeds for pricing as we come to recover inflation.

Okay. Okay. That's very helpful. Maybe, Stefan, I'm curious, like big brands have outperformed both private label and emerging brands during the pandemic. I think that's a global phenomenon, it seems. How are -- do you see this reverting once we're on the other side of the crisis. I'm sure it would revert to some extent. But how do you make sure that you don't cede share to private label or emerging brands in the new normal?

Well, that's obviously our job to make sure that we're going to keep these gains. To your point, I think it's interesting to see that at the very beginning of the pandemic, we gained a lot of market share because people have the tendency when, obviously, there is a bit of uncertainty to rely on brands they know well, which is a big, big plus for us. Then beyond this, we have all the materials and -- let's say, of big brands to make a difference in terms of [ renovation ], in terms of innovation, in terms of must-win battle, which is basically what you've been doing over the last 5 years, which is 70% of our business, category by category, and we're growing by 5% every year with all these categories where we have the right to win. So that's not going to change. What is -- what we have added to this is 1 or 2 things. One is we decided -- you may remember last year, we decided to overinvest behind our brands, especially with the new consumers. A lot of new consumers have come to us. They have either discovered or rediscovered the category and our brands, and they like what they've seen. So that's why we decided last year to invest -- overinvest by around EUR 10 million, and we did it. And we did this in a very focused way behind these players and mostly in digital. Our objective is to keep something like between 20% and 30% in terms of retention. So far, so good. We're probably are a bit ahead of time, but it's too early to say because still it's a bit choppy right now with the aftermath of COVID. But definitely, between what we've been doing, what we also have seen with digital, which is great for us, e-commerce is really something where we're over indexing. For example, now e-commerce represents 22% of our sales in the U.K., so -- which is a big, big boost. And what we see with e-commerce is, number one is this -- let's say frozen is doing well with trading. And again, also people tend to rely on brands like ours. So that combination between investment behind of in terms of retention, with natural progressions like e-commerce because obviously, the rest of our toolkit, which is what every, let's say, respectable, let's say, branded business should be doing, which is to always be ahead of the game in terms of innovation and quality, including packaging vis-à-vis private label, which is some -- which is our bread and butter, this combination, we think is going to help us to keep a good portion of this in the future.

Okay. You -- thank you for the conversation on e-commerce. I'm curious how do you think about e-commerce sort of trending from here, and clearly, last year and into this year, it has benefited just because consumers haven't been able to go to the store. So -- and it sounds like you view it as an opportunity versus a threat. But I'm curious what you're seeing, I think the reopening sort of what some of these e-commerce trends are and do you think those trends sort of take a step back?

Well, again, it's too early to say, but I can see that the COVID is some sort of, let's say, a structural change in the way people do order and do eat. So I don't think that e-commerce is -- may slow down. The progression may slow down. That's possible. But people have seen how convenient that is, and I don't think they will change their mind. What we see more is our average penetration is around -- average sales for the whole group is around 8%. And what we see is in the U.K., which is more advanced, is around 22% and growing. So we don't see any reason why it should remain -- it should be limited to 8% because other countries will start to catch up in a different way and be click and collect as opposed to home delivery. Still people really understand that it is convenient, and it's there to stay. And the COVID was only a catalyst for this.

Yes. So how has the -- there is this perception that e-commerce margins are lower than in-store margins. Can you talk about that a little bit? And how are you working with the retailers on -- how are the retailers thinking about e-commerce? Like do they like the click and collect business? Are they -- is it more expensive from their point of view? And do you think just the cost of competing in this e-commerce environment might go up? Or do you think the benefit is just so substantial that it sort of evens out over time?

It's a great question, Faiza. I had a series of conversation with my former colleagues in the retail lately. And it's overall -- number one, our margin is very comparable to the margin in the brick and mortars. That's one thing for us as well. For them, which is a key question, to your point, I think it all depends how they organize. If they're mostly urban and they have dark stores as opposed to, obviously, collecting from each and every store, definitely, the margin can be better, can be better. So the combination of urban and dark store is a great plus for them because it's more effective. And by the way, also at some stage between expanding further in the urban area where the rentals are very, very high or deciding to invest behind a dark store, I can tell you in a lot of the big cities, it is much more attractive to go to dark stores. So that's what they've seen across the board. Again, it's a worldwide phenomenon. Now obviously, if you go to, let's say, the nonurban places, that's -- the game is a bit different. But overall, I can tell you, yes, they like it. Initially, I believe -- I thought -- a few years ago, I thought that was some sort of prisoner's dilemma for these guys because they have no choice but to go -- for them to go there even if the margins were not great. But I think they've learned a lot. They've been much more, let's say, efficient, again, much less picking the projects from the stores, which is, quite frankly, not a very attractive way to do it but much more with -- obviously with dark stores. Look at the -- Ocado, for example. They're doing excellent job. And it's a very credible proposition with very decent -- with decent margin, to say the least. So it can work definitely, and it will work, which is very reassuring for us as well.

Great. And then do you -- just last question on this point. Are you satisfied with your sort of digitization and e-commerce infrastructure? Or do you think you need to make more investments in this area?

Well, I think it's going to grow. Unsurprisingly, we will need to make more investments. I think we are well positioned at this stage, especially in countries like U.K., where we definitely -- we have a strong organization around e-commerce. But some of the countries, obviously, the spectrum is very different. If your average is 8%, U.K. is 22%, you can imagine that some of the countries are only in the region of 1% or 2% or 3%. So these countries will have to invest, obviously, in the future, which is fine, which is absolutely fine. That's one thing. Second, which is another interesting question is should we go DTC, direct to consumers. We may try some pilots and see how it's working because it's also an interesting perspective, which is not limited to frozen, by the way, but some of the FMCG guys are doing it as well.

Okay. Interesting. Maybe we'll move to -- you've talked about like expansion internationally, and I'm curious sort of what some of the considerations are. And how aggressively might you think about looking to expand in the U.S., for example? And I think the frozen market is a little bit different in the U.S., but I'm curious on your view on that and if you think you can be competitive in the U.S. frozen food aisle over time.

I think we can be competitive but in a very, very, very specified way. So if we think that going to the U.S. with all the assortments will work and we will start from a small basis -- baseline and then move on, I think it would be naive at best. This being said, if we limit ourselves to where we are, probably, let's say, among the best in the world, if not the best in the world, which is fish and coated fish more specifically, where there is -- definitely, there is a product superiority, I mean, quite frankly, and you should add the consumers and compare with the consumers in the U.K. -- in the U.S. with other -- with the others, definitely, we think we have a role to play. And that's what we're starting to do now in the U.S. with some stores, with chains. We're just offering where we definitely believe we have a product superiority, recognized assets by the consumers. And it's going to be fish fingers. It's going to be coated fish. And if we limit ourselves to this, I think, definitely, we believe we have a role to play. And we're starting, and we see that over time, we're starting -- in H2, we will start to see the difference.

Okay. Interesting. Do you have any -- I don't know, any targets that you can talk about? Like how much of a contribution would you like to see from the U.S. over time, let's call it, over the next 3-plus years? Or is it too early for that at this point?

Yes. I think it's too early. The only thing we can say is where international/export was a bit of a collection of different businesses, partly private label, by the way, private -- partly other people's label with sometimes decent margins, sometimes not great margin at all and a bit tactical, I think we've decided to be much more strategic, focused only on fish, more specifically even coated fish and also potentially with Green Cuisine. So that's -- so internationally, it's going to play a much bigger part in the future. And U.S. is going to be only part of this because we're not limiting ourselves to the U.S. We have a role to play in Central and Eastern Europe. Aside from buying businesses, we think that Middle East is also a great option, more to come, and also to some extent in Asia. But very focused, again, to where we think we are, where much we're doing best, which is fish and more specifically coated fish and Green Cuisine. But more to come, Faiza. To be fair, once we have better visibility behind our numbers, obviously, we will come back to you.

Okay. Excellent. Maybe we just have a few minutes left. So maybe we can end on your outlook for M&A from here and sort of your capital allocation strategy from here. I do want to note that you did recently. I think it was just a couple of days ago, you recently did announce a potential refinancing. Samy, I don't know if there's anything you want to call out there. And then I know you noted that your leverage is going to be 3.7x post that. So how should we think about M&A? And if M&A is still going to play a role, are there -- what type of assets are you looking to acquire? And maybe, like, do you think you need acquisitions to get to your 2025 targets at this point?

Yes. Maybe I'll take that one.

Samy, you -- yes.

Yes. Yes, absolutely. I think there's a number of activities, I would say, going on. I think, to your first question, I think, M&A is an integrated part of our strategy. I think for us, we view that as a clear opportunity to accelerate our way to, frankly, making Nomad a significant player in the frozen food industry and really going beyond the level that we have. We have set some targets, which were inclusive of M&A. The reality is that, effectively, those targets, just to remind people, it was a EUR 3 billion revenue, EUR 600 million of EBITDA and EUR 2.30 of EPS, and all of that in euro. Suffice to say that with the acquisition of Fortenova, the performance that we deliver in 2020, we think there's a good chance that we will achieve the target sooner than 2025. But more to come as we progress through 2021 and close the deal on Fortenova. But the more profound point is M&A is there to be an enabler to really complement the portfolio wherever needed. Our strategy has not changed from that perspective. We're working on the pipeline. But the first focus is to make work what we have acquired in the Switzerland to make happen what we have announced, which is Fortenova. And as things develop, we would see effectively when and where things progress. But clearly, our agenda on M&A has not changed. From a capital allocation standpoint, no change to what we have communicated. We clearly want to operate within a band of about 2.5 to 3.5 leverage with a max of 4.5. That has not changed. And frankly, today, with the pro forma number we gave you at 3.7 and a cash flow generation that you are delivering, everything is effective going to enable us to return quickly, if you want, to the level that we have been talking about. The refinancing that we are talking right now is [ effectively ] an opportunity for us to clearly amend and extend on the one hand, which is effect to extend the maturity of the loans that we have in place and the bond program that we have in place and take advantage of the market opportunity at the same time. So this is currently going on as we speak, to clearly do that and, at the same time, enable the funding -- the completion of the funding of Fortenova and leave sufficient cash, of course, I mean, to run the business as needed. As we generate more cash, we'll have more cash and then we'll decide effectively how to best manage our capital to maximize the return on shareholders. So Faiza, from a strategic standpoint, nothing has changed on the business. Nothing has changed on the need for M&A for us. We will continue to deploy the agenda, as Stefan has said, which is we will take our time to buy the right assets at the right price to maximize shareholder value within the means that we have been fixing in order for us to maximize shareholder value.

All right. Great. Thank you so much. I think we'll end it there because we're at time. Thank you so much both of you. Really appreciate you both being on here, and apologies for technical issues and that we couldn't do this on video. Thank you.

Thank you all. Thank you.