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

Good morning, everybody. My name is Lars Jensen, and I'm the CEO of Royal Unibrew. With me today, I have our CFO, Lars Vestergaard, and we would like to welcome you to this webcast where we will cover the release of our half year results and afterwards take your questions. Now please turn to Slide #3. We have had a strong start to the year with good momentum in the business and strong growth up until and including May. The weather in June had a negative impact on our performance in Q2. Despite the poor weather in June, we realized 1% organic volume growth in the quarter driven by continued strong rebound in international and normalized Italian market and solid commercial performance in Northern Europe. Strong product mix and price increases across geographies drove an organic net revenue growth of 4% in the quarter. The price/mix of 3% was positively impacted by strong product/mix in Western Europe and negatively impacted by channel/mix in Northern Europe and the country/mix in international. Organic EBIT growth in the second quarter was driven by strong commercial execution, innovations and efficiency improvements. We increased market shares in our key categories and especially in our most important brands. Soft drinks have continued the strong progress in the first half of 2024, especially driven by Denmark and the Baltic countries. Beer growth has been high due to the normalization of sales in the International segment and the Energy Drinks segment continues its above-average growth with the performance in H1 being driven by growth in all markets. After we have completed the majority of the carve-out from Heineken in the Netherlands, the focus is on commercial execution and on the final aspects of the carve-out of Heineken. Norway is performing well, and the IT integration is on track. We are currently in the process of taking over the sales and distribution of PepsiCo's beverage portfolio in Belgium and Luxembourg markets. The agreement also includes a field service agreement on snacks for the markets and the entire agreement is expected to commence on October 1 this year after heavy IT integration work separating the beverages and the snacks businesses. So on the back of a strong first 5 months of the year, a weak June and in combination with the development we have seen in the beginning of Q3 as well as one quarter in Benelux, we increased our outlook for net revenue to be above DKK 15 billion, while we specify our organic EBIT growth guidance to be in the upper half of the previously 9% to 19% range. Benelux is not expected to add any profit this year due to the integration costs. Finally, the Board has decided that we pay out extraordinary dividend of DKK 14.5 per share in the beginning of Q4. Now please turn to Slide #4. In the first half of the year, we achieved a 9% reduction in absolute carbon emission despite the acquisitions of Vrumona in Holland and San Giorgio in Italy. This equals a 29% organic CO2 emission reduction and the significant reduction is partly due to the transition from oil to natural gas at certain facilities, but it's also a result of our Lahti brewery in Finland now operating on 100% renewable energy. The installation of an additional heat recovery system here in Faxe in Denmark has also led to a decrease in natural gas consumption, which for the site will result in a 30% reduction in energy usage when fully implemented. Measured in gigawatt hours per hectoliter, our energy efficiency improved by 7% in the first half of 2024. We expect further improvements from the heat recovery system in Lithuania and other efficiency projects that will be implemented later this year. During the second quarter, we have also had our long-term net-0 targets for 2024 approved by the science-based target initiative. And our KPIs, road maps and activities are aligned with the latest climate science and the Paris Agreement goals to limit global warming by 1.5 degrees above the preindustrial temperature levels. We have initiated the replacement of trucks in our own fleet with electrical vehicles, and we are also testing concepts with our providers to convert to more sustainable vehicles. The no/low sugar and alcohol segment of our portfolio continues to develop very positively. We have launched new products in the first half within no/low such as Lemonsoda Twist in Italy, Faxe Kondi Booster Pink Dragon and Frosty Blue energy in Denmark as well as Mangali Energy water with natural caffeine in Latvia. And then I'm also very proud that in the alcohol-free segment, our Royal Pilsner 0.0 was named the best non-alcoholic beer in Denmark in 2024, in competition, and amongst 42 beers from 21 different breweries in Denmark. Finally, on this slide, I'm also happy to say that when it comes to gender diversity, both at the Board level and the international management level, we are improving, and we are on the right path to achieve our goal of at least 40% of the underrepresented gender at both levels by 2025. And now I will hand over to Lars who will give a more detailed view on the financials.

Thank you, Lars, and good morning to all of you. If we turn to Slide #5, I will take you through the financial results of Q2 and the first half of 2024. Our total volumes increased by 23% in the second quarter and by 27% in the first half, primarily driven by additional volumes from Holland and San Giorgio in Italy. They contributed by nearly 0.9 million hectoliters in the quarter and by approximately 1.9 million hectoliters in the first half of the year. The organic volume growth was 1% for the group. Net revenue was also impacted by M&A and grew 16% in quarter 2 and 20% in the first half. EBIT grew faster than revenue and EBIT grew 22% and reached DKK 866 million in the first half. The EBITDA margin expanded by 30 basis points to 16.2% and the EBIT margin increased by 10 basis points to 11.7%. Adjusting for the dilutive effects from M&A, the EBIT margin expanded organically by 1%. Net financial expenses increased significantly by 52% to DKK 163 million in the first half as a result of higher net interest-bearing debt. As I will come back to the development and -- financial expenses is better than expected when we initially guided for 2024 as results and cash flow have been better than what was initially expected when we started the year. We will, therefore, now expect a full year net financial expense of maximum of DKK 300 million compared to around DKK 350 million previously. Tax payments increased by 30% in quarter 2 and thereby, by 24% in the first half to DKK 145 million. This corresponds to a tax rate of around 20.5%, in line with our full year expectations of 21%. Earnings per share increased by 14% in the first half to DKK 11.2 per share. Please turn to Slide 6. In Northern Europe, the volume development was flat at 5.4 million hectoliters, whereas net revenue increased organically by 2% to DKK 5 billion in line with all competitors reporting. The numbers are impacted by weather in June. In Denmark, we have continued our strong commercial execution, and we have grown our value shares in nearly all categories. In Finland, net revenue increased as an increase in sales of ready-to-drink more than offset declining beer sales, while net revenue from CSD and water remained stable in the first half. Net revenue in the Baltic countries increased in the second quarter, fueled by strong performance within our strategic growth area framework. And in Norway, net revenue increased due to solid volume growth and favorable mix. In Western Europe, volumes increased by more than 200% to 2.4 million hectoliters due to acquisitions and strong performance in Italy. The organic growth of about 6% in the first half. Strong product mix resulted in an organic net revenue growth of 18%. In Italy, the macroeconomic environment remained stable. Our beer and carbonated soft drinks business have continued to expand throughout the second quarter, and we continue to win market shares in all the 3 categories we are operating in. In International, the strong growth continued in the second quarter, and volumes were up 35% in the first half to 0.7 million hectoliters, whereas net revenue increased by 29% to more than DKK 700 million. Negative price/mix was due to a product and country/mix. The African business was normalized, and we are witnessing robust growth across most markets. Despite a general downturn in the Canadian beer market, our business in Canada is successfully expanding its market shares. And in the Americas, our malt beverage business is growing as we now have the capacity to produce and freight rates have improved, but also due to a great effort by our team in the Americas. If you turn to Slide #7. Here, you can see the impact of M&A. On the left-hand side, you can see the 16% revenue growth in the quarter, of that 12% comes from M&A and the remaining 4% comes from organic growth. Making the same numbers on EBIT, then around 5 percentage points of the 22% is from M&A, whereas the remaining 17% is organic. On top of both net revenue and EBIT, one could add the effects of the capacities that we have achieved from both acquisitions. If we look at how they are supporting the group, the 2 new production sites have delivered 177,000 hectoliters to the group, so great to get the relief on our capacity constraints. If we look at where they have supported us, it is primarily giving us relief in Northern Europe on beer and international and freeing up capacity in CSD in Denmark. Adjusting for M&A, the EBIT margin expanded by 190 basis points to 16.8 in the second quarter. If we turn to Slide #8. Free cash flow increased by DKK 17 million in the first half compared to last year. Higher net profit was partly offset by higher taxes and net financials as well as higher CapEx. Cash flow from operating activities was DKK 122 million higher than in the first half of '23. CapEx increased by 37% compared to last year, corresponding to DKK 113 million. The result of all this is a free cash flow of DKK 560 million, which is DKK 15 million higher than last year. A key focus for us have been to reestablish our financial flexibility, and we have achieved this mainly by stronger operating profit than planned and stronger delivery on our cash flow generation. Our net interest-bearing debt to EBITDA was at 2.4 at the end of the quarter, which is in line with our financial targets of being below 2.5. As our financial strength have improved, the Board of Directors have decided to pay out an extraordinary dividend of DKK 14.5 per share on October 1 in accordance with the mandate given to the AGM back in April this year. Please turn to Slide #9. Here, we have the outlook for 2024, which we have updated. On the back of the takeover of the Benelux -- Belgium and Luxembourg, we increased our net revenue guidance to a minimum of DKK 15 billion based on flat organic volume development and a positive price/mix, leading to low to mid-single-digit organic net revenue growth. After a solid performance up until mid-August, we have decided to narrow our organic EBIT growth guidance to 14% to 19%, which is the upper half of the previously guided range of 9% to 19%. This means that the reported EBIT is expected to be in the range of DKK 1.95 billion to DKK 2.025 billion. Belgium and Luxembourg is not expected to contribute with any earnings in the fourth quarter as we have quite a number of integration costs going on. Acquisitions are expected to contribute inorganically to EBIT by a minimum of DKK 80 million in 2024. As said earlier, the net financial expenses are now expected to be around -- to be at maximum DKK 300 million, excluding currency-related losses or gains, whereas expectations for the tax rate and CapEx remains the same. After some years with the many moving parts such as inflation, COVID, stocking and destocking, we are heading for a fairly normal year. Although the weather was poor in June, if you take the weather in totality, it is a fairly neutral year. And at the full year, we do not expect big impacts from weather as we had both good and bad month in the summertime. When we made the guidance for the full year, we highlighted that the macroeconomic uncertainty remained high and, therefore, the underlying volume growth would be modest. This seems to be the scenario that is materializing and consumer spending in On-Trade is not strong as particular interest cost is having an impact on the discretionary income for our consumers. Off-Trade is doing well. So nothing new compared to what we have said earlier on in the year. And with that, I would like to give the word back to you, Lars.

Thank you, Lars, and please turn to Slide #10. I'll take you through what is top of our agenda at the moment. The integration in Norway, which is mainly and almost only the ERP system. The Netherlands, where almost all carve-out is done, hence, the focus moves more towards finishing the CapEx programs and then the commercial agenda. San Giorgio in Italy is now fully integrated, while for the supply chain organization in Italy, the remaining part is capacity investments, which is ongoing, some ESG initiatives and general improvements on site. New to the agenda and the integration is Belgium and Luxembourg, as Lars talked about, which we have been working on for some months and now with the go live, which is planned and will be executed on the 1st of October. The integrations are going according to the plan, and we are seeing the first financial and commercial results of the efforts. As mentioned at earlier occasions, efficiency improvements are very high on our agenda. We have implemented a more stringent and structured process around discovering, prioritizing, executing and monitoring the efficiency improvement projects, and this will remain high on the agenda in the coming quarters and years. We will continue to invest behind our growth categories and our strong and important brands to drive further market share growth. Through innovations and strong commercial execution, we believe we can grow faster than the market in value terms. It is also a top priority to deliver on our long-term organic EBIT growth target of an average of 6% to 8% per year, while improving our EBIT margin at the same time. This year, we are clearly above that target and now we are working hard to secure the maximum momentum going into '25 and beyond. We'll continue to monitor possible changes to consumer behaviors and macroeconomic uncertainty remains. It is important that we react quickly to potential changes should they occur and they will occur. Finally, our ambitions in the ESG area have not decreased, so we will continue to pursue and execute on our ambitious targets within this area. And with that, we are ready to take your questions. So operator, will you please take it from here?

[Operator Instructions] And your first question comes from the line of Thomas Lind from Nordea.

I have 2 questions here around the guidance that you have. First one, top line. Now you're saying at least DKK 15 billion. Just can you maybe elaborate on the difference here between around and at least DKK 15 billion? And then maybe also if you could put a few comments on your flat organic volume growth assumption for the full year? You delivered 3% in the first half. You have very easy comps in the second half, and you're saying that you are seeing a solid momentum in July, August. So just here, what are you imagining happening with the consumer in the second half? And then the second question would be around your EBIT guidance narrowing. Just maybe if you could elaborate a bit on what's behind the narrowing here. You're seeing solid July and mid-August, is that it or is there more here?

Yes. Thank you, Thomas. On the guidance for the top line, I think there's 2 readings into this. We are adding the Belgium-Luxembourg business, and now we know what the timing is of that. And that was not a part of our initial guidance, so we are adding that. It's not significant that this is a small quarter and it's not a small business. It's a reasonable business, but it's not as big as some of the other add-ons of new countries that you have seen in the past. So that's a piece of it. The most important thing is the momentum in the business. And as we have highlighted, we have a very strong momentum in the business until and including May, and then the weather took a bit of that off. And I think if June would not have been bad in the industry, not only in the beverage industry, but I think for all FMCG companies, then I would have guessed that we could maybe have changed it to something that was slightly higher than what we do now. So we take the bottom off, which is positive. And of course, we are also now 7.5 months into the year. So we are confirming basically our strong momentum overall. I think what you should also read into this, and we have also given comments on it, and that is that there is a bit of a mix change in the market, so there's a little bit less On-Trade, and that is then being consumed more at home, so that is Off-Trade. And that, of course, also from a revenue point of view, initially dilutes a bit of the revenue. But it's small numbers, a little bit here and there. So the overarching thing is that you should read into this that we are following the assumptions that we put in the beginning of the year. And then on the 3% that we had in the beginning, you need to also remember that we had some easy comparisons in the beginning of the year, among others, due to Italy. And it's not like we will hold ourselves back if we can do a volume growth, which is slightly higher than our current assumptions. But I think you should overall also read through this that we are more value-focused than we are volume-focused. So we are not running after empty calorie net revenue volumes. We want to have a balanced approach to the quality of the revenue that we capture. So that's, I think, the comments that I will give on the top line side and then maybe, Lars, you can comment on the EBITDA.

Yes, I think, if we look at EBIT, then what drives our expectations to the top half of the guidance is, as Lars mentioned, on revenue and top line, we are neutral-ish on the full year compared to what we guided initially. So bad weather in June is compensated by good weather in July and the beginning of August. What takes us to the upper half is that our efficiency initiatives are progressing well. And both the relief we got from the sourcing from Italy and the Netherlands have given us more easy, what you can say, we have better service levels to our customers, and then we have been able to take some cost out in other places than in the acquired companies from that. So that is helping us. But in general, most of the business is performing according to the plans we set out at the beginning of the year.

Your next question comes from the line of Richard Withagen from Kepler Cheuvreux.

I've got 2 questions, please. First of all, your marketing and sales expenses grew slower than revenues in Q1 and then faster again in Q2 of 2024. And obviously, you talked about intense competition in store. Does that continue or are you allocating marketing money in a different way? And are there any major differences among the markets? So that's the first question. And the second question is, you've moved production from Denmark to the Netherlands and maybe already also to Italy. So when is the next sizable transfer of production from Denmark to one of the other international facilities going to take place? And by when should Denmark be on a more normal capacity utilization level?

Yes. On the in-store versus marketing, I don't -- we do not really detect any larger movements here. So this is tweaks, in general. So if you look at the old Unibrew markets, it's not very big changes that we do, to be honest. I think that the biggest change that you see is what we are building up in Holland, and it is not a balance between spending less on marketing and more on field force, but we are ramping up on field force and have hired people that went live in the -- with the setup around 1st of July, and that means that we are in the stabilization phase, where we are building up the organization to be able to deliver on a consistent in-store execution. So you're not seeing any results of that. That is something that we will see, I think, more hopefully towards the high season, November-December or the second high season in November-December and into next year, but no larger movements, and we do not hide from ourselves, and we do not really detect any larger change of priorities on in-store versus above the line from our competitors either. So that is the view. When it comes to the question around production, our supply chain, as Lars said, has been fairly good at providing the service levels that are more in accordance with what we saw back in '18, '19 and '20. So we have had relatively strong ramp-up, but also because that we have been better in allocating volume earlier, so it has been more well planned in terms of where to produce what. We are still getting some help between the countries, but it has been well planned and well executed, and that's the reason why the service level has been so high. So the remaining part of it is when we have capacities up and running, with a new PET line in Denmark, with a can line and the glass line in Vrumona and the full capacity up and running in San Giorgio, that would more be a combination of efficiency gains of not using vehicles to move goods between countries, so that will yield some efficiency gains. And then on top of that, we will get capabilities that we believe will enhance our commercial position for our brands in the various markets. And that will be a ramp-up that will -- with the capabilities that we are putting in, all of it will be up and running around May, so there will be a ramp-up of 2 other projects in the autumn, late autumn here, into winter time. And then the last pieces will be end of Q1 and then into the beginning of Q2. And then we should -- unless that growth will increase significantly, we will be in a good position and thereby be able to strike a better balance on the efficiency use and thereby create some efficiency gains.

Your next question comes from the line of Mandeep Sangha from Barclays.

Just wanted to touch on the Northern Europe division. When we look at the second quarter, pricing rolled quite aggressively and are just down to about sort of 1% in the second quarter versus nearly 4% in the first quarter. Just wanted to really understand the dynamics there. Is it really the channel mix that you sort of alluded to earlier between the shift from the On-Trade to the Off-Trade and how should we maybe think about that in the second half given your comments around July and August? And my second question is actually more of a bigger picture, longer-term question really around sort of the Pepsi portfolio. You obviously would have seen Carlsberg's ongoing acquisition of Britvic. And one of the things the company has said is that they very much want to expand to new markets with the Britvic partnership. Could you maybe sort of touch upon does that change your strategy at all? Or do you remain confident you can sort of be competitive in that Pepsi expansion going forward?

Yes, I'll take the last question first, and Lars can answer the question around the numbers in Northern Europe. I think it has been pretty clear for quite some years that not only Pepsi but a lot of the partners that we work together with, so that is not just soft drink play, but we also have seen that with our partnership with Heineken, as an example, but also among our spirits and wine partners. And that is that they would also like to get synergies and get scale. I think we have seen some companies in the market that have done this really, really well. I think if you look at the creation of CCEP and the Hellenic journey in the Coke system, I think they have been able to prove that they have created a lot of cross-country synergies. So this is, of course, something that we -- I would say, we all look at. This is something that we have been able to do with our own portfolios, with our own supply chain. Richard just asked the question around utilization of capacity. And of course, if you have facilities that are nearby, you can optimize your buildup of capacities and capabilities and that helps everybody. It is simpler to work together with fewer partners. If you work together with only one partner, you also get very dependent on that one. We see that when we work together with our own suppliers sometimes, then it sometimes become more like a power game when this is the case. So all in all, I think what you see here is a wish from a lot of partners to consolidate, to create efficiencies in the supply chain, efficiency in the execution, create coherence and priorities. So I think it is for the partners something that they want. It is not something that changes our strategy. I think it enhances our strategy that that is the way that the partners think about their business. So no, it doesn't change anything to our strategy at all.

And if we jump to the pricing question, then if you look channel by channel, product by product, we are following the plans we have, so there's no additional pricing pressure or anything in any category. So the answer is really down to weather and what impact that has on country/mix and general/mix. One of our high-priced market is Finland, where the weather was pretty poor, and we have a fairly high share of On-Trade in Finland. So when the weather is bad in June, it has a pretty big impact on price/mix for the whole Northern region. So it's really down to weather and channel/mix in Northern Europe.

Your next question comes from the line of Søren Samsøe from SEB.

So I think it looks like it's going well in most areas if adjusted for the weather effects, of course. But one of the black boxes, at least, I have, is the Norwegian business, where you say profitability has been restored. What does that actually mean? Does that mean that it's back to where you want in terms of absolute numbers or in terms of margin? And what can we expect for this business in the second half and in 2025?

Yes. So the Norwegian business is on track to deliver on the profitability that we acquired. So that is the aim of this year that is to restore what we acquired. So the team has been able to do that by taking out costs, so enhancing the efficiencies, and that's both done by the team in Norway, but also by the help of all the group functions like procurement as an example. And as we have talked about in several quarters and because of the Norwegian kroner have devaluated and is still at a devaluated level, we have taken price increases through the last many windows and have thereby been able to restore or get back to the profitability on a per hectoliter that we acquired. So that's the aim of this year. And then while implementing our ERP platform towards the end of the year, we have another layer of synergies that we will be trying to hunt down for '25. A part of it is, of course, on the admin, logistics, back office site by having better and stronger systems. And the other part of it is, as an example, the cross-selling, so that we can, to a much higher degree, do cross-selling between the Solera portfolio and the Hansa portfolio. But that is -- the majority of that, that work is when we are live with the ERP system.

Okay. And then second question is on Italy. More on when you expect to have moved all of the products and tariffs to Italy?

So we are looking at the San Giorgio facility as a network addition. We are ramping up on capacity and that will go live. April-or-so, we will be up and running with the capability piece and the capacity piece. And that means that we hope that Italy will be supply chain self-sustainable on, I don't know, 90% of the volume from thereafter and that means that we are going to free up a lot of capacity in the Nordics that can be utilized to support the international business or the Nordic business. And then, of course, that is going to drive synergies in both places. So there will always be an efficiency effect coming out of that. They're are produced for the Italian market, so the numbers that Lars mentioned in the beginning is a combination of help from Vrumona to support the Nordic business and then it is a volume that has already been produced in San Giorgio, sold in the Italian markets and thereby helping the Danish supply chain to deliver what has been needed for international.

[Operator Instructions] And your question comes from the line of André Thormann from Danske Bank.

So my first question is in terms of gross margin. And I'm just wondering what you're seeing here for the second half. You saw a good improvement of 160 basis points in the first half and even more organically. So can you give us any indication of what we should think here for gross margins in the second half? That's the first question. The second question, and I'm sorry if this was already answered. But in terms of Norway, now that Carlsberg have renewed the contract with Pepsi, do you need to rethink the blue sky case in the Norwegian business? And can you get profitability high up in Norway now that it looks more difficult to get a Pepsi contract there?

Yes. Thanks, André. And of course, we're not guiding on gross profit. So I'll just give you a few data points to answer your question. We have hedged the majority of cost categories throughout the year. So our cost levels during the year is more or less stable, which means that we should not have any incremental savings or increases coming in the second half compared to the first half. But that's, of course, another piece to gross margin, that is the channel/mix where if On-Trade comes back, then gross margin goes up. So there's a lot of moving parts in terms of gross profit. So I think the answer to your question is that the improvements we have seen in the first half will continue into the second half. And of course, whether it goes up or down a little bit is also dependent on channel/mix because On-Trade has a much higher gross profit than Off-Trade, as an example.

On your question around Norway and blue sky scenarios is a little bit like -- kind of like saying that you shoot for the stars and hit the moon. It is -- we are not buying companies because of blue sky scenarios. We are buying companies because we can see that we can enhance the business organically. And then often that comes when we have been ramping up and increasing the, I would say, the capabilities and enhancing the local portfolios, then that sometimes comes with optionalities to put more business into what we have acquired. I think Norway demonstrated and have demonstrated that the takeover of the Diageo portfolio has been -- project has been very well executed. You always risk a lot when you change partners or change setup and the Norwegian business have been able to avoid that and start to build further on on top of that. There's a lot of categories in Norway where we can enhance our business. We are working up our presence in all the old categories, so to speak. Our RTD portfolio with Hansa Hard Seltzer is performing extremely well and is building on top of the RTD -- sorry, the cider portfolio of [indiscernible]. And if you just look at how that trends formation have gone in Finland, as an example, then I think the potential for us, as a business, if we can make a copy of the transition of RTD in cider, as we have seen in Finland and we can do the same in Norway, then that would be as valuable as any partner agreement when you look at it from a bottom line point of view. So I think there's many ways to try to achieve the objective of building a business in Norway that is ending up as being as strong as Denmark, Finland, the 3 Baltic countries. And I would give you the same answer if it was a question around Sweden or Holland or the way that we look at Belgium or other countries, where we are competing in the mainstream scenario. So -- and also back to the answer that I gave earlier on: no, we are not changing our strategy. We have a very, very solid strategy. I think if you look at our performance in the second quarter and compare that to peers, yes, if you bundle Northern Europe and Western Europe together to create a comparison to our peers, we are the one that has the lowest loss of volume with minus 0.8% volume loss in the second quarter. And if you look at, I would say, the 2 nearest in terms of geographies, one is down 3% and the other one is down 5.4%. So I think we have proven that the strategy that we are pursuing is well functioning. And because of competition taking certain moves, it doesn't change the way that we do our business, operate and execute for all our partners, not only for Pepsi, as you mentioned.

[Operator Instructions] And your next question comes from the line of Peter Sehested from ABG Sundal Collier.

I have actually only one. It pertains to margins in France and Italy. If you could -- I know you don't guide specifically, but if you sort of tell me where the index for that is at the moment compared to what you see is normal or where you want it to be and sort of for time line to achieve the 100% index?

Yes. So I think when we look at EBIT margins, in Italy, it really depends on the mix of our products. And what, of course, changes a bit the margins in Italy is the private label business that we acquired from San Giorgio. So we need to -- to get a comparison, we need to have a full 12-month period. If I look at it individually in terms of the different buckets that we have with beer, private label, soft drink, energy drinks, we have, I would say, a normal margin level, which we are happy with. So there's nothing that indicates. If you look at what has been achieved in Q2 in actual, I think it's -- yes, you cannot see it. So Q2, first half is a pretty normal half year, I would say, in France and Italy together. But to look at it from a full year perspective, it's probably the best way to do it. So you need to wait a little bit on that one. But we have no initial margin challenges in any of the geographies. We have a very strong performance in Italy. Whereas, the performance by itself relative to the market in France is very strong. We are one of the few companies that actually grow our business, but the market has been a bit down due to weather like in the Nordics in June. So that takes it that slightly down. But overall, we're happy about where we are.

All right. Then just perhaps just a follow-up on the private label in Italy because I think we discussed this at the previous call and I had a question on this, whether you would dispose of it, et cetera, in order to better utilize the capacity on higher margin own brand, et cetera? And I think that wasn't your plan and you believe you could do something with that business to get it better. So just your thoughts at this point in time exactly what is precisely that you're planning to do here to sort of improve the profitability on that private label business?

I think we are, of course, looking at the capacity in Italy in combination with what capacity we have in other places. The private label business we have in Italy is making money. So I think for us, it's a pretty good situation to be in that we can move -- we can increase the capacity of the site in San Giorgio and not have to cancel any profitable contracts, although they are, of course, not as profitable as when we sell our own products. So to get the scale and efficiency out of the plant in San Giorgio, we are keeping all the profitable private label contracts. And if we are running out of capacity in a few years' time due to beer growth and we cannot expand capacity, then, of course, we'll start to look at taking down some of the private label contracts. But so far, it's actually a pretty good business, and we plan to keep it as long as we can make money on it.

[Operator Instructions] There are currently no further questions. I will hand the call back to the room.

Thank you for participating, everybody and for good questions, and I wish you all a nice day. And if you need more from us, you know where to catch us.