Royal Unibrew A/S (RBREW) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Royal Unibrew's conference call on the results for the first 9 months of 2020. I'm Lars Jensen, the CEO of Royal Unibrew, and Lars Vestergaard, our CFO, is joining me on the call. Today, we will present our results for the first 9 months of 2020, give an update on our activities, including the situation relating to COVID-19, and finally, we will share our expectations and priorities for the rest of 2020. Now please turn to Slide #3. Before we go through the business results, I will sum up the key takeaways after the first 9 months of 2020, which have markedly been influenced by the restrictions and uncertainties relating to COVID-19. Since March, we have taken part in a very strange and unpredictable journey, not knowing tomorrow's framework for our business with restrictions imposed and/or lifted. It is hardly an exaggeration to state that planning has been and still is an equation with several unknown, which, on one hand, makes everything more complex, but on the other hand, puts a different speed into the market, something we strive to make an advantage for us. On this background, I'm very happy to conclude that Royal Unibrew's multi-beverage business model and our local brands have demonstrated their resilience during the period with COVID-19-related restrictions and uncertainties. Based on our wide portfolio consisting of broad selection of both beer, soft drinks and ready-to-drink products, close relations to our customers and continued adjustment of our supply chain, we have been able to meet and take advantage of changing consumer demand and channel mix. I'm also very proud of the way that our organization has handled the COVID-19 situation. We have succeeded to protect our people and customers, while at the same time, reducing the financial impact of COVID-19 during the very challenging period. Our results in Q3 turned out to be very strong, with an organic revenue growth of 6%, especially due to the continued strong performance in Off-Trade and staycation in most markets. Based on the good development, we have narrowed our outlook to the upper half of the previous guided interval. More developments were in our favor over the summer. The majority of consumers spent their vacation in their home country, and in combination with good weather in August in Denmark and Finland and a resulting solid demand for our attractive portfolio of local brands, provided for strong performance over the summer. In addition, the social distancing and gathering restrictions were partly lifted during the summer, supporting the good momentum that started in June. As can be seen on the graph on the slide, the development across the quarters in 2020 has been very mixed. We had a strong start of 2020, followed by 3 very challenging months from March, which were highly impacting the -- by restrictions and lockdowns across our markets. In June, we returned to the growth track, and the trend was even stronger during Q3. Looking a bit ahead, Q3 will not be like Q3 -- or Q4 will not be like Q3, as restrictions in most countries has been tightened. We were, of course, still negatively impacted by COVID-19 during Q3 as pandemic continues to challenge some of our sales channels. But despite this negative impact, we succeeded to improve our profits during our strong operational focus and cost management and the just mentioned positive effects. For the first 9 months of 2020, EBIT increased by 5%, and we also generated a very strong cash flow. As mentioned in our Q2 report, we reduced sales and marketing spending in the spring in order to mitigate the impact from COVID-19. But in the wake of a strong business performing over the summer, we have decided to reinforce the underlying positive development of our business by supporting our portfolio with selected commercial investments. We, of course, invest cautiously, taking stock of market developments, but we expect that the effect will be a higher marketing cost in Q4 compared to the same period last year. In that respect, we are very much aware of what we are looking into in Q4 with additional restrictions, such as limiting opening hours of bars and restaurants and bans on gatherings in larger group as well as imposed limitations on the border trade between Denmark and Germany. We have also restarted a number of CapEx projects and expect our spending will increase in Q4. Based on the financial development in Q3, we have dedicated -- we have decided to initiate a new share buyback program of up to DKK 200 million that will run until the end of January 2021. Let me close my introductionary remarks by concluding that we are very satisfied with the results for the first 3 quarters, taking into account the roller coaster way markets have developed during the period. And now we will give a short update on our 3 business segments, first, with some comments on the development in the Western European segment. So please turn to Slide #4. Total volume in Western Europe declined by 2%, whereas net revenue declined by 3% for the first 9 months compared to the same period last year. EBIT declined by 4% and was negatively affected by the lower revenue, in particular, in Italy, and a bad debt provision. We have seen improvements in the On-Trade business in Italy during Q3, and September was the first month where we were back on last year's levels since February. October was again challenging, which we'll come back to. In Denmark, the On-Trade business improved during the summer, however, still lagging revenue from events, including concerts, festivals and sports events. September was again affected by further restrictions in the areas of restaurants and bars. The marketing and sales costs were low in Q3, as various campaigns have been postponed to Q4. In the Baltic Sea segment, the total volume increased by 1% in the period, including all the quarters so far, and net revenue decreased by 2% compared to last year. The net selling price declined compared to last year, and revenue was negatively affected by the product and channel mix in Finland in particular. The Bauskas acquisition in Latvia contributed positively with 1% to both volume and revenue and strengthened their earnings in the segment. Furthermore, the volume was positively affected by the stock building at our customers for a large beer campaign in Finland for the period of Q4 this year and Q1 next year. In the Baltic Sea segment, innovations have delivered solid growth as both original Long Drink and low/no alco beers and no/low sugar products continue to grow. The next segment is the International segment. In the first 3 quarters, the total volume in this segment declined by 1%, net revenue increased by 10%, and EBIT increased by 22% compared to last year. Revenue was positively affected by the market mix in the segment as core markets grew and more opportunistic sales and license were lower and also due to the fact that we consolidate the revenue in Canada from the Bruce Ashley Group, where some of the revenue from agency sales comes without volume as it is not our brands. During the last 12 months, our core market grew still up by more than 10%. Now please turn to Slide #5. Despite COVID-19, our focus and commitment to our CSR agenda remain the same. Overall, we are progressing as planned in achieving our short-term CSR sustainability goals for 2022. And we are particularly focused on consumers through a balanced launch of regular and low/no sugar, no/low alco containing beverages; environment and climate, through an increase of recycled material, in particular, in PET bottles, carton trays and paper labels as well as a decline in the carbon footprint from production with 30% compared to 2015; employees health and wellness, with a decline in absence related to accidents of 40% compared to 2018. Although it is key to us to measure and fulfill the outlined short-term goals, it is equally essential to consider potential future challenges. Our aspiration and goals for long-term CSR strategy for -- towards 2030 will therefore be disclosed in the annual report in March for the year of 2020. I will now hand over the word to Lars Vestergaard to go through the financial figures.

Thank you, Lars. Please turn to Slide #6. As mentioned by Lars, the COVID-19 pandemic has had a significant impact on parts of our business as well as how we managed the business during the first 3 quarters of 2020. During the first phase of the COVID-19 period, our key focus was to mitigate the impact of lower sales by optimizing our spending. But as we have returned to the growth track in Q3, we have, as Lars have already mentioned, gradually started to support the positive development of our business with selected commercial investments as well as we have restarted a number of projects. All in all, we achieved a better result and a stronger cash flow generation during the first 9 months of 2020 than we had dared hoped for. Of course, some of these costs we are starting up, we will only see the impact of in Q4. The volume for Q3 have increased by 5% compared to Q3 2019 and amounted to 3.2 million hectoliters. For the first 3 quarters, the volume was at the same level as 2019. In Q3, the revenue increased by 7% and amounted to DKK 2,258 billion compared to DKK 2,114 billion in Q3 2019, while the net revenue was 1% lower in the first quarter -- 3 quarters and amounted to DKK 5.8 billion compared to DKK 5.9 billion in 2019. Compared to the same period in 2019, the overall average net selling price per volume decreased due to COVID-19-related shifts from the On-Trade to the Off-Trade channel and the move to larger pack formats that we saw in particular in Q2. While the average selling price decreases, we have, at the same time, succeeded to win value share in most of our markets. Denmark, driven by a low/no sugar soft drinks, low/no alcohol beers and energy drinks. In Finland, the original Long Drink have continued to perform well. We grow in our low/no sugar soft drinks, our specialty range increases and also our low and no alcohol beers. In France, we are not only over-indexing the lemonade market, but also the soft drinks market in general. This is the Lorina brand that we acquired a couple of years ago that is performing well here. In Italy, we have also gained share with our Ceres brand, which is partly innovation-driven. EBIT for Q3 was DKK 108 million higher than 2019 and amounted to DKK 600 million, where it was DKK 492 million in the same period last year. Year-to-date, EBIT increased by DKK 61 million compared to 2019 and amounted to DKK 1,263 billion. The EBIT margin increased by 1.3 percentage points to 21.7% in the first 9 months of the year as a consequence of our strong focus on cost during the pandemic we have experienced. It is important to highlight that Q3 was exceptionally strong. It was supported by factors that are of non-repetitive nature such as staycation and good weather, but also our cost management is not at a level where you can say it's sustainable over the longer period of time. So Q3 was unusually strong. Also, a number of the initiatives we initiated in Q3 in the commercial area will mainly impact Q4. Therefore, some of the factors driving what we have seen will not be repeated in 2021. Please turn to Slide #7. The free cash flow amounted to DKK 889 million in the Q3 2020 compared to DKK 427 million in Q3 2019. In the first 9 months of the year, the free cash flow was DKK 1.4 billion compared to DKK 1 billion in the same period last year. It was positively affected by one-off effects due to the extraordinary beer campaigns we do in Finland, where we have factoring and extended payment terms on VAT and employee taxes in a number of countries. Based on the strong cash flow in Q3, we have, as Lars have already mentioned, decided to initiate a new share buyback program of up to DKK 200 million which will run until the end of January. This is on top of the DKK 245 million of share buybacks we have already executed during 2020. So the total amount of programs launched during 2020 is now DKK 445 million. Please turn to Page #8. The outlook announced in August for EBIT is narrowed to the upper half of the previously guided range. So we are now at DKK 1.475 billion to DKK 1.525 billion. The updated outlook is based on what has happened in the market up until year-to-date, which, of course, include October; the COVID-19 impact on the On-Trade; the almost closed border trade between Denmark and Germany and the higher marketing investments in Q4 compared to last year. We do see significant impacts of the restrictions in the last 2 months of this year. We are currently in the process of making our plans for 2021. This is, of course, a difficult task, and we do not know what restrictions will impact the various channels during next year. In general, we are planning on the basis of -- that COVID-19 will have an impact on On-Trade in the first half of the year, but we do not see closedown scenarios like we had this year. We will prioritize selective and commercial opportunities from the start of 2020, but in general, we will start the year with extreme focus on cost management until we have more clarity on how COVID will impact the various sales channels. This year, and in particular, Q3, have been helped by staycation, good summer weather and cost management, and some of these effects we cannot put into our plans for next year. The remainder of the year of this -- the remainder of this year, our focus is to help customers get through a difficult year with many changing restrictions and take advantage of the commercial opportunities that may come by remaining flexible in our supply chain and sales force, but also to ensure that we have invested sufficiently in our brands to ensure that we get a good start for 2021. With this financial update, I give the word back to you, Lars.

Thank you, Lars. And now please turn to Slide #9. As some of you or most of you have noticed, I took over as CSO from Hans 1st of September. And I can hardly claim that I'm a new and -- a new guy in the company as I've been here for more than 25 years. And I've been a part of the Board, the executive management since 2011, and most recently, as a COO. But even though that and I'm very familiar with Royal Unibrew, this is, of course, a new role for me, and I'm very honored to have this opportunity, and I'll promise that I will do my best to fill this role. There's very many exciting challenges to take care of in the -- especially in the present situation, and I'm sure that most management teams will agree that they have never experienced such a high level of uncertainty. But we remain optimistic and of good cheer, and we are very aware that it is a team task to run the business successfully. If we were not completely convinced of that before, then recent times have showed it very clearly, and our positive results through the period of COVID-19 can only be attributed to the fantastic teamwork across the organization. We have therefore decided, with the aim to prepare Royal Unibrew for the future, that we have established a senior leadership team, which is consisting of Lars Vestergaard as CFO; Kalle Järvinen, who has been appointed -- promoted to Senior Vice President for the Baltic Sea and Managing Director of Hartwell; Jan Ankersen, Senior Vice President for South Europe and the General Manager of our Italian business; and Carsten Nørland has been appointed -- promoted to Senior Vice President for International and following me on that task; and then ultimately, of course, myself. It's -- the aim of this reorganization is, of course, to strengthen the commercial and -- call it, commercial and marketing side of our job management, and we really look forward to include the 3 guys in the team. Before we're ready to take your questions, I would like to wrap up the session by saying that our short-term key priorities are the same as in August and when we presented the Q2 results. And on top of that, we will continue to closely follow the latest [ Q-19 ] restrictions and adjust accordingly. And with that, we are ready to go to the questions.

[Operator Instructions] Our first question is from Jonas Guldborg from Danske Bank.

First of all, on the outlook, clearly, I acknowledge the high uncertainty right now. But maybe you could talk a little bit about the different scenarios you have looked at in defining the upper and lower end of the guidance range. And also talk a bit about the marketing spend. As you said, you are increasing marketing spend in Q4 compared to last year. But could we also see a chance of you actually stepping on the brake again because we're seeing these lockdowns and restrictions being tightened around at the moment? So if you could talk a bit about that. Then also in seeing this second wave of COVID-19 and restrictions post of new business, how is the M&A environment developing? And then my last question would be on competition. You touched upon it. But how is it especially developing in Denmark and Finland? And I'm also thinking on potential changes in competition due to COVID-19.

Thank you, Jonas. I think what we have tried to -- we have tried on the outlook, of course, to learn from what we have seen during the period of time that started from March and onwards. Now in the restrictions that are put in most countries, have been put in until next week, and then -- and until, I think, 3rd of December. And we do not really know what governments will do here. Are they going to lift a bit here and there also towards Christmas? So we have tried to evaluate what we have seen in terms of ups and downs and what-if scenarios. And that's -- based on that, that we have created the outlook that we put forward. When it comes to the marketing spend in Q4, I think it's important for us to underline that there's, I would say, 2 angles into that piece. And one thing is, of course, the share of voice. So we would like to make sure that we are not losing share of voice with any of our core brands in any of our core markets, so to speak. And that -- there has been a trend of, I would say, higher spending towards the end of Q3, generally speaking, than what we saw during the summer in the beverage industry in general. So that's one. And the other one is, of course, that in spite of COVID-19, we're still building our brands. We are still, where possible, launching innovations. And we want to make sure that we have sufficient funds to support those initiatives because it's important for our performance, in particular, in Off-Trade, but it's also important for our brand-building for the long run. And maybe, Lars, if you want to comment on the M&A landscape?

Yes. There's -- as you have -- as you may have seen, we have not announced anything in this year in terms of M&A. It is, of course, a time where a lot of companies are facing difficult challenges. And we do not see that there has been an increase in terms of activity and [ eco-seller ] even though the market is difficult. So at this point of time, we have nothing new to say in this area. We continue to look for opportunities to grow our business, but not a lot of activity is actually ongoing in the M&A space.

And on the competition question, I think the reading that we have is that -- and that was also, I would say, a part of it, a bit predictable, given that On-Trade (sic) [ Off-Trade ] has experienced growth, while On-Trade and convenience is more in a struggling territory. We have seen, call it, marketing, commercial money from those channels move towards the Off-Trade channel. So if you -- I think if you generally look at the price picture in the stores today compared to how it looked 12 months ago, I think you would see that the level of activity has increased and you see a wider span of different multipack formats being activated. So ultimately, if you boil all that down, I would say that, yes, competition has tightened a bit over the corona period.

Our next question for today is from Marcus Bellander from Nordea.

Two questions, if I may. The first one, a follow-up to Jonas' question. I'm just wondering, the marketing spend, you said it's going to be up year-on-year, which -- I don't remember what Q4 was like last year in terms of marketing spend, but it just sounds like you're making a pretty big increase compared to the previous quarters. So I'm just wondering if you can comment on that a little more. And then secondly, I'm curious about your gross margin in Q3. It's close to record high. And you spoke of mix effects in your prepared remarks, but I guess there's also still a negative impact from less On-Trade and more Off-Trade. So I'm just -- I was just hoping you could elaborate on that dynamic a little bit.

Of course, Marcus. I think on the marketing spend, I think the reason why we have comment on this is that Q4 is a relative small quarter. So if we move some costs between the quarters, you often immediately see an impact as the EBIT for the totality of the quarter is relatively small. So you should not see this as we are massively investing in Q4. That's not what we're highlighting here. But you should expect that there will be spending moving from Q3 into Q4, and because of the relatively size, that is something that you need to take into consideration when you do your math around the quarter. So that's how you should consider it.

And on your mix question, I think the important thing to notice in Q3 is that the majority of all sales channels were open in Q3. So when you look across our business, in particular, the Italian On-Trade was open. We had good momentum behind the convenience channels across the markets. Our ready-to-drink in Finland did really well in the third quarter. So it's more a normal quarter where you can say very few impacts, and we were, of course, also sitting very tightly on our spending in the third quarter. But basically, you saw a big normalization of spending, and in particular, On-Trade went up, which, of course, impacts positively our gross margin. So it's probably the most normal quarter we have seen this year where all channels have been open.

Our next question for today is from Richard Withagen from Kepler.

I have 2, please. Now, first of all, you're saying that you still expect to see significant impact from restrictions in the fourth quarter. But could you talk a little bit more on where you see that? Is that more in the beer business than in soft drinks? Because what I see is that, at least, people mobility in your key markets holds up relatively well. So why would you still expect a significant impact from these restrictions? And then the second question is on the recovery that you foresee in '21 in the On-Trade in your markets. As you just said, already in Q3, I think, there was quite a nice recovery in various channels and various On-Trade parts of your business. So doesn't it make you too cautious when you say that you still expect a significant impact on the On-Trade in the first half of 2021?

If we start by the Q4 restrictions, I think it's quite clear that in most of our markets, we have seen that the On-Trade, there have been significant restrictions imposed on On-Trade. Very tight in Italy, but also in Denmark. And if you look across the group, we are trading in the month of November, to date, we are at less than 50% in terms of index compared to last year. So we do see very significant impact on the On-Trade as we speak. And it's more impacting beer than it's impacting soft drinks. So it's a fact that there are significant restrictions impacting our business at this point in time. The other restriction is, of course, that the border trade between Denmark and Germany is more or less gone at this point in time because people are not traveling outside the country. So that is also something that is impacting our business. And in general, the on-the-go consumption is impacted. So I think we can we can clearly see in the numbers that there are channels that are heavily impacted in Q4. What we saw earlier in the year was that retail channel was able to capture some of the lost business. But I think it's still early. After, we have that more restrictions have come. So we have not seen that dramatic pickup in retail that we saw earlier on.

And I think to your question around the different categories. Yes, beer, as an example, and ready-to-drink in general is categories that has a little bit of a bigger struggle when you have, like in Denmark, closedown for alcohol sales after 2 -- 10:00 in the evening. Then that, of course, harms that piece of the business more than the non alco portfolio. And we have also seen, I would say, at least in the Nordic space, that soft drinks and energy drinks and similar kind of propositions are getting through this in a -- with better indexes than the alcohol territory. So there are some mix changes. And building into 2021, I think, realistically, Q1 will be with some restrictions continuously. The question is more about the level. So at this point in time, bars and restaurants in Italy are not allowed to sell alcohol after 6:00. Will that remain? Will it be moved to 8:00? I think it's not realistic to assume that it will be lifted totally until that we have a vaccine or an effective treatment. So that is the thinking that we have around Q1, that, that would be something that will probably be a struggle in the beginning of the year. And then hopefully, over time, we will see a gradual improvement month by month.

Yes. As a follow-up, you also talked about still a focus on costs in 2021, certainly in the early part of the year. But does that also apply to marketing expenses? Because I think it's clear, you would love to increase your growth rates. So would that cost containment also apply to sales, marketing expenses?

It relates to all kind of spending that we have. So there's no -- nothing that we do not look at, basically. I think what is important for us is that in the categories and channels where we see growth opportunities, we must secure that we have sufficient funds to support it. So -- and that is all a matter of priorities. So we will undoubtedly, as we have gone through that process over the last 8, 9 months, we will repeat to go through the exact same exercise, and we will be ready to ramp up when things are opening up. And if it's not opening up, we are prepared to continue down, call it, the road that we are following as we speak, stop and go, that we need to be prepared for.

Our next question is from Fintan Ryan from JPMorgan.

I've got 2 questions, please, and just one quick clarification. So firstly, in terms of your free cash flow, it's been -- the Slide 7 highlights, very strong free cash generation year-to-date, and in particular, net working capital and CapEx being areas where you've had efficiencies this year. Can you give us a sense of what your outlook for free cash generation is for the full year? And I appreciate you started talking about renewed capital expenditures coming to the business. And how sustainable are the working capital efficiencies that you've delivered year-to-date? And like, would you expect that situation to normalize into 2020 and 2021? Secondly, I guess, just following on really from the last question. Could you give us -- I appreciate it's still not at the end of the year yet. But conceptually, could you give us a sense of an absolute number of cost savings delivered year-to-date or delivered for the outlook for 2020? And how sustainable -- how much of those incremental cost savings delivered this year can realistically be held into next year? I appreciate as things are sort of slowly getting back to normal, the cost that was cut dramatically in Q2 are going to naturally come back. But if you could give us a quantification of that, that would be very welcome, please. And then the final clarification is just on the German-Danish border spend. How much of that -- or how much of your Western European business would be affected by that sort of that border trade that you mentioned?

If I start with the last clarification here, we do see the Danish border trade as a part of servicing Danish customers. And of course, we have differences between the -- call it, product portfolio that we carry in a border trade versus Denmark. As an example, we do not sell Pepsi on the border, whereas we have the Pepsi sales in Denmark. So when the border trade has closed down, some of that will migrate into sales in Denmark, which we -- hopefully, as we did during April, May while the border was closed, we'll be able to take advantage of. So we look at it as a total market. So what happens with -- I think, in general, around the border trade is stock building on and off. So people -- while the border trade is closed -- almost closed down now, we would expect that people will ramp down their stock at the house. And then at a certain point, they will run dry, and then they will have to go and shop in the Danish trade. Or the border trade will reopen, and then they will go to the border again and replenish. So there's a dynamic between the 2 areas that needs to be taken into consideration. I think net, it is negative for the consumption in Denmark, for the stock pressure at the households, that the border trade is closed. So we do believe that during this period of time, there will be a net negative impact, not only for us, but for the whole market.

If we turn to the question around free cash flow. Of course, we have had an exceptionally strong first 9 months of the year. I think it's important with a seasonal business like ours that we look at the 12 months, not 9 months. So if you look at where do we expect to end the year, we will, of course, get a positive of, let's say, around DKK 120 million from what we're doing in Finland with one big retailer. So that is a positive. That is, of course, not permanent. So if we lose that business next year, then we will get that pressure in next year's number. So there are anomalies. We also see that the channel mix and what countries are open or closed have an impact on our working capital. So in a closedown scenario, of course, we have less business in Southern Europe where payment terms are normally longer. So that actually helps us a little bit when restrictions are ongoing for working capital because that means that business migrates to Northern Europe and more to Off-Trade where we get money a little bit faster. So when you look at the full year, we will, of course, have an improvement in working capital year-over-year, but it is extremely good in -- at the end of the third quarter. Free cash flow -- sorry, CapEx, we stepped on the brakes when COVID broke out and when we had very little clarity on what's happening. The majority of the investments that we had initiated in the beginning of the year, we are still continuing with these and we have restarted them. So we expect that there will be a substantial level of CapEx running into the fourth quarter. But whether we will manage to get to the same level as we had expected for the year, I think that may be a little bit doubtful. So some of the CapEx will run into next year. But I think you should expect a substantial increase in CapEx in quarter 4 compared to what you have seen so far this year. But then on cost savings, we, of course, have pulled the brake on a lot of costs across the business. And where we have really seen the biggest reduction in cost in the business is on the more discretionary type of spend, where we, in particular, in sales and marketing, have been running quite low in this year. The question is, how sustainable is that? When On-Trade opens up again and the music festivals goes on again and the football stadium goes back to normal, there will be an increase -- a natural increase again in sales and marketing. But there will be some more permanent cost savings, I think, on travel. We will be traveling less in the future. But I think, in general, our -- the way we match cost before corona was quite efficient. So I don't think we see dramatic new levels of cost across the business when we are out of the corona pandemic again. But of course, there will be some on travel. And maybe we will start to spend our commercial money differently, but I think it's a little bit too early to say where we end after corona.

Great. That's very clear. I just have one follow-up there, just a follow-on from that last question. You've said that margin targets was 19% to 20% at the start of the year. Given what's happened since those targets were set out early on out, is that 19% to 20% still a good place to start as we think about 2021?

That's a good question since we are looking into a number of different scenarios for next year. I think the 19% to 20% here, we have put that in the markets not considering that the COVID-19 and what kind of an impact that does to the ratio also between top line and cost and channel mix and so on and so forth. I think if you do just a simple math on what we are performing this year, it's above or at the top of this range, which is not a normal year. And I would expect that next year will not be a normal year either. So as we see it now, we feel that the 19% to 20% on a midterm basis looks reasonable. And as we have, I think, repeated over the last period of time, is that we are more focused on creating growth on the top line and we would rather want to grow the snowball bigger then to add another 0.2%, 0.3% to the margin. I think we have an organization that has proven to deliver growth. And if we can strengthen that a bit, we believe that in the long run, that is more valuable for the business than to add some roundings to the margin.