Sappi Limited (SAP) Earnings Call Transcript & Summary

Good day, everybody, and thanks for joining us. As always, I'll move through the investor presentation calling out the page numbers as I go. And I'm going to start on Page 3. And I'm very proud to say that this was a very strong quarter for Sappi, a period of record performance in Sappi's history, the highest ever EBITDA, the highest ever EBITDA for European business, the highest ever EBITDA for our North American business, the highest ever EBITDA for our packaging business. And as I say, I'm just very proud of the performance from the -- particularly from the lows of COVID less than 2 years ago. And it's been quite a journey. And it doesn't come easy. I think it's through a lot of hard work, a lot of resilience in the business. And ultimately, the success that we're achieving is -- I'm very pleased that it's broad-based. And despite the kind of headwinds that we're currently facing. And the business is in a much better place, and we're going to be coming -- we're, obviously, coming out of COVID much, much stronger and looking very good in terms of our strategy as we move forward. What was behind -- what were the primary drivers? Firstly, the tight paper market. There's a shortage of paper. That enabled us to put through higher selling prices to offset the extraordinary cost inflation. I think our total revenue was up 45%, which offset the higher variable costs, which I think were around 29%. So a very, very good quarter. The Russian-Ukrainian contract, we haven't given some updates, but overall, it increased the volatility of costs, particularly energy, as you know, in Europe and, obviously, created further volatility, as I said, but we have been able to counter that, and we remain confident about our results moving forward. Across each of our 3 segments, demand is good, strong. You can see the respective volume increases, and that created the platform for the excellent results that you see. Off the back of that, we were able to substantially reduce debt. You can see we got up below 2x, and I'll talk a little bit more about that on a future slide. But debt is now $277 million below where it was a year ago. Moving to Slide 4, the EBITDA evolution. And look, this is a great graph for us. You can see back in 2020, when we lost 50% of our sales. Clearly, things were challenging. We were able to withstand that and we progressively improved our performance to the record levels that you see today. Slide 5 just highlights the key factors. And once again, higher costs, you can see it across a number of the segments -- sorry, the product and raw material categories. But in each of our product segments, we were able to improve on selling prices, and we've seen mix improvement, particularly in the packaging area in the U.S. and in Europe. And in fact, across all the packaging regions. So very pleased with that. Moving to Slide 6 is a slide that we've added to the debt just to kind of put things in perspective. And we indexed it off of Q1 of 2020 financial year. And you can see that the kind of headwinds, challenges that we've been facing from a cost perspective. Energy, the biggest, almost doubling, but it's across the board. There's pulp, chemical, delivery. And as I said earlier, total variable costs, I think, I said 29%, but it was 28%. Moving to Slide 7, the product contribution split. And once again, very pleased with the split. And you know this is something that we've been working on over a period of time. And when you see your 3 main segments contributing 1/3, 1/3 from where Sappi was a few years ago, that is a significant progress. And we'll continue to evolve. Obviously, on the right, sales volumes for graphics is still slightly above 50%. But as we continue the journey on our Thrive25 strategy, I would expect that contribution proportion to decline as we reposition the business. Slide 8 has our net debt evolution and a sharp decline. And we've made it our priority to pay down debt in the short term. We're making tremendous progress in the current year. Obviously, you will have seen in the numbers that we put out -- there's are working capital investment, but that's natural because when your raw material costs are going up close to 30% and your receivables, your selling prices are going up 45%, you have a larger investment in working capital. However, as we look at the rest of the financial year, we're going to significantly pay down debt, and moved well below the 2x that you see reflected here. So very pleased, and it's way ahead of where we could possibly imagined it would be even 9 months ago. Alongside that, on Page 9, our maturity profile of our debt. I've talked about this, it's unchanged from our prior quarter, but a lot of great work done during COVID in the challenging times, but we've cleared the runway. We have no major maturities until '26. There is a securitization number there in '24, but that's something that we periodically refinance. So no concerns gives us maximum flexibility as we pay down our debt levels that I highlighted on the previous slide. Slide 10, unchanged our CapEx. We committed to spending less than $400 million this year. We're on track to do that. And we're currently going through the process of our budgeting for next year. So we can't give you a specific number at this stage, but we've been maintaining our discipline as we generate these higher cash flows. Slide 11, just highlighting some of our costs or some of our challenges. Firstly, this is the shipping reliability on the left, it's actually a little bit better, but coming off a very low level. To be honest, it's traditionally not very good, the shipping reliability. But obviously, recent times, it's made it particularly more challenging. Things are getting a little better. And that's the same on the right-hand side. This is the container index pricing. And whilst it's still very, very high, it has come off a little in recent months. Slide 12 has the pulp, an interesting turnaround there because, obviously, we had the peak last year. And then in China, they started to come off a little bit. And then we've seen a kind of second such. And that's across all the pulp categories. Clearly, we benefit in dissolving pulp and BCTMP but it pushes our cost up in the paper businesses. And then on Slide 13, the gas price, we show this one because we are such a big gas user, natural gas user in Europe, obviously, unprecedented volatility. Recently, prices come back a little bit, but still at elevated levels. And obviously, that's a risk factor going forward. But as you can see from our results, we've been able to successfully implement selling price increases to offset these higher costs, and we're confident that we can continue to do that. On Slide 14, just I don't intend running through this slide in too much detail. Just -- it's on Russia, Ukraine, just to say that we did sell about 3% of our European volume into the region. We stopped doing that. We've placed the volumes elsewhere. We had a little bit of raw material supply, but that's -- we secured alternative sources of those supplies. So it does not have a material impact on Sappi's business. Clearly, it's, obviously, the indirect impact on things like energy prices. Then moving to Slide 16, which is the segments, and this is the pulp segment first. The demand continues to be good, and we've seen a bounce back of DP prices towards the end of the quarter. On a later slide, I'll talk about April. But demand is good. Pricing is recovering. In this specific quarter, we obviously had some challenges that the fact that we were off a lower price because of the arrears pricing embedded in our contracts. And at the same time, as you know, costs going up like everywhere else. We also had, obviously, some production challenges at cycle, which I'll talk about a little bit more in a future slide. We did have but we were able to bring down our excess inventories, the backlog, and we did benefit a little bit in the pricing, obviously, because of that lag impact. Slide 17 is our Packaging segment, and we're very proud of this progress. It continues to set new records. You can see on the graph, margins up, volumes up, demand is strong. There's a shortage of paper out there, and the investments that we've made in recent years are really starting to pay significant dividends for us. And that's something that we, obviously -- we want to continue to grow the business going forward. In graphics, Slide 18, I -- EBITDA margin of 17%, it's -- I think, is remarkable. And it just shows you the benefits of tight markets, a lot of great work done by our people to implement the selling prices to offset the higher costs. And you see the benefits there. Our machines are full, margin's good and volumes increasing. It's fair to say it's not going to last forever, but things are very strong, and we must make the most of the opportunity. Slide 19, Europe. And it's -- as you know, during COVID, we had some very, very challenging times. And obviously, costs came under tremendous pressure, but a huge turnaround. And once again, and I know it sounds like I'm repeating myself, but the result of a lot of hard work, a lot of great work implementing the kind of increases that we've had to put through to navigate the challenges of the higher costs. We've been successful. The markets are tight. Volumes, as I said earlier, up significantly. Our machines are full, and we are feeling bullish about the short-term prospects. Slide 20, our North American business. I've been reporting and talking about record profitability for a couple of quarters now, and this was just another great quarter, very pleased that it's -- our strategy is working effectively. It's a broad-based success in that region. The investments that we made at Somerset in the past have really paid off for us. The markets are tight. And once again, shortage of paper, strong demand, and we are once again bullish about the short-term prospects. In South Africa, I referred to earlier, the higher costs coming through, like all the other regions. Obviously, the pulp and dissolving pulp specifically slightly different because it's contractual pricing. So you had the combination of higher costs and a lower lag selling price, which impacted profitability. Having said that, as I said earlier, demand is strong, and prices are rising. We did have the production challenges at the cycle. It was -- if we kind of summarize the production challenges, 2 broad buckets, about 60% is external factors. Eskom had a major outage at the mill during the quarter, and that unfortunately consumed or impacted on production. We had some raw material supplies from a key supplier that once again also took away some volumes. Then the remaining 40% is what we would regard internal matters, some machine or equipment failures. But we've addressed those, and we continue to stabilize the mill. Obviously, we completed the Saiccor expansion earlier in the year. Pleased to say equipment performing in line with expectations. And obviously, we're feeling good about the production and then the floods came. But well, I'll talk about that on another slide. The paper -- just like everywhere else, the paper category is very strong, a lot of great work being done. And that's from the packaging, and it may surprise you to hear that even categories like newsprint are extremely tight and doing very, very well. So broad-based success on the paper categories across all of our regions. Moving to our strategy, our 4 pillars. And I'm only -- it's quite a busy slide, so I'm only going to highlight a couple of factors. The first bucket is our driving operational excellence, gets over more -- ever more important when selling prices are so good. You want all the volumes that you can get. It's a focus on efficiencies, productivity and obviously, looking for cost opportunities in these volatile times. And we -- although the overall costs have gone up, we've been able on the procurement time -- on the procurement side to realize some market -- savings against market moves. Our safety steps continue to improve, and we're making very good progress. In terms of enhancing trust, we're almost complete getting our science-based targets verified and we'll be in a position soon to announce those publicly, but we are on track to achieve the targets that we've set ourselves. The forestry certification gives Sappi a strategic advantage for -- particularly for our dissolving pulp. And our BBBEE certification. We're a Level 1 category, which is, obviously, the best you can get, and we're very proud of the work that we've done within Sappi. In terms of growing our business, obviously, we've made investments in recent years. You're seeing all the benefits of that coming through in the packaging and specialties. We've got a couple of smaller investments, some of it embedded in the $395 million CapEx that you've had for the current year. These are not big numbers, but they're important further steps for us. We're enhancing our label capabilities at the Gratkorn Mill. We launched that early in the year, and it's ramping up ahead of our expectations, and we're enhancing our capabilities, as I say. We -- on functional papers, which is packaging, we're putting in -- we're almost complete, actually putting in a new culture at alpha mode, and we do believe that will enable us to stay ahead of the competition in a very potent and growing space. We're, obviously, going to have the additional DP volumes going ahead. Obviously, the floods hopefully now behind us, and we can ramp up from there. And then in terms of our financial health, I've talked about it. Cash generation, extremely strong in this year on the back of the high profit. We've repeatedly said that our immediate priority is to pay down debt. We're doing that. We are going to significantly increase in the second half of the year -- sorry, significantly decreased the debt levels in the second half of the year. So we turn to the outlook statement. Page 24. And first and foremost, you can hear from my comments that we are bullish about the prospects for the quarter ahead and the rest of the financial year. Each of our segments, demand is strong. Firstly, on pulp, the DP price has hit 10-year highs. This morning, I think, it went to 1110, 1,110. So significant momentum behind the pricing. You'll, obviously, only start to see the benefits of that once we get to Q4. We do have our shuts. We have to do our shuts once a year. And these are -- we typically schedule these in Q3. And the combined impact of that is $50 million, and I'll refer to that a little bit later. Packaging, I've mentioned many times through -- going through the presentation, in a good place, we continue to grow. Graphics, tight markets. We are successfully implementing selling price increases. There is a shortage of paper, and we are bullish about the short term. Obviously, the cost is a risk factor, but I think we've demonstrated our capabilities to combat those headwinds and we'll continue to look for opportunities there. Unfortunately, we had the flood occur in KwaZulu-Natal in South Africa in April. No major damage to the actual plants themselves, but we had to stop production. We don't -- there won't be any material impact on EBITDA itself because, obviously, we're insured. The net loss we take below the line as the next special item. And at the moment, we're busy with the cleanup at the warehouse. And hopefully, once that's done, the insurance guys can finish their work and we can get the payout. So taking all of that into account, the favorable operating environment, our underlying EBITDA for the third quarter should be consistent with the second quarter, subject obviously to the impact of the maintenance shut. I've been asked a couple of time, what does that actually mean? Well, we made 57 -- $50 million impact from the shuts. So the starting point is $287 million. But we are bullish about the prospects. And I guess what's quite remarkable is and those of you who followed Sappi for many years, will know that Q3 is seasonally our lowest quarter. So the fact that we're starting it and estimating for you all a number of $287 million as a starting point should give you lots of confidence. So that's -- operator, that's me finished. And I'm going to hand it to you now for questions.

[Operator Instructions] The first question comes from Brian Morgan of RMB Morgan Stanley.

Super set of results, very good. Just a question on cycle right now. What's the logistics actually looking like? Is there rail operations up to the port at the moment? Are you tracking stuff up to the port, how is it actually working?

Yes. Obviously, and I'm going to let Alex expand further. Obviously, at the moment, the cleanup at the warehouse is occurring, the mill has recommenced for production. Obviously, we do have the shut that we referred to earlier and the ports slowly picking up. But I'll let Alex expand further.

Thanks, Steve. We are able to turn rail volumes into a port. We obviously -- we have some backup warehouses as well. But we don't get quite the volumes that we had before. So we're also using truck back up as well. But that's really improving as we speak day by day. So not really a concern as we go forward.

Okay, good. And then if I may, just ask 44,000 terms of DWP inventory at the end of March and then you lost 30,000 tonnes of development helped in the floods. Am I right in thinking that inventory levels should be down to 14?

Well, that was the excess inventory, Brian, the 44, right? So it's fair to say that, yes, a big chunk of the excess inventory what was damaged in the flood. Obviously, we had to go in contact with our customers and explain the problems, which they understood. So we declared force majeure on those volumes.

Okay. So effectively able to book the margin into the income statement of the 30,000 tonnes now that you've lost in this quarter, right?

Effectively, yes, yes, because it's insured, the selling price.

Okay. Okay. Very good. Then can I ask on graphic, paper, it's just unbelievable set of numbers there. To what extent do you think can restart in halfway through April is going to get that market back into balance?

Look, Brian, you know we can't talk specifically about individual competitors. But what I would say, and I'll allow -- I'll pass to Marco to elaborate further, but what we will say and you can hear from our comments earlier that we are positive about the short-term outlook. So yes, that may be happening, but markets are still very tight. Marco?

Yes, Steve. You're right. I think the tight markets that will continue for a while. There's still a logistics back up. Our order book is very, very strong and would allow certainly some headwinds if that's coming through, it will not necessarily hurt our position. We've got a very strong safety margin there and markets as we believe for the short term, short or medium term will stay very tight.

Yes, we -- Brian, we effectively put a -- not a deadline. We would put a date on our orders because the order book was just so big. We actually put a 5-month deadline on it.

And prices realized in that order book has negotiated now or indexed in 5 months' time?

No, no, no. It depends, obviously, on the prices at the time.

The next question comes from James Twyman of Prescient Securities.

Yes, an amazing quarter. Could I just ask 2 questions? Firstly, could you talk around the hedging you've got in place for gas in Europe for this year and the future years, maybe in the U.S. as well, but I think mainly in Europe? And then secondly, you mentioned your net debt to EBITDA is at 2x, and it's probably going to come down well below 1.5 million by the year-end. Just interested to know whether you plan to consider restarting a dividend given that the debt should be down to a very comfortable level.

Okay. Firstly, on hedging, I'll let Mike talk about the U.S. a little bit now. But in terms of Europe, which is obviously where most of our exposure is, we have hedged 65% of the current year, and we're about 50% of our 2023 requirements. So that's going to put us in a pretty strong position. Mike, do you just want to just explain a little bit about how it works in the U.S.?

Yes. Thanks, Steve. James, typically, we hedge in North America 1 year out through the summertime. We've got small amounts hedged right now at this time, but gas prices are higher than typical as we sit. So we'll continue to look for those opportunities through the next -- through the coming months. But at this time, we don't have large positions hedges out in multiple years.

Obviously, James, that our biggest -- as I say, our biggest exposure is in Europe. Our pulp integration and our energy integration in the U.S. is in a stronger place. So we're less exposed. Another question, James?

The dividend...

Yes, just on dividend.

I thought you'd forgotten. Look, our immediate priority is to pay down debt. And you could hear our commitment to doing that. I think you can -- we're, obviously, going to be significantly less at the end of the year. I -- we need to assess at the end of the year and with our Board, discuss our options and make a decision at that point in time. But certainly, nothing has been decided as of yet.

The next question comes from Sean Ungerer of Chronux Research.

Just a couple of questions. Just in terms of, I guess, if we look at the net working capital, presuming inflow in H2. How we should think about that sort of given the current environment that we're in? That would be pretty useful. I think it's the first half of that, then I'll move on to the rest.

Sean, it's Glen here. So we do expect an inflow on the net working capital over the next 6 months. For the year, we expect it to be a net outflow, though, just given where the operations are at the moment relative to the beginning of the year.

Okay, that's great. And then just going back to the European type of order books, I guess. So like if it's been capped at 5 months, I think, this is a pretty fair assumption to say that it's looking pretty decent, I guess, for the next couple of months. I mean, outside of that, I mean, is there any other sort of visibility or insights that you can provide us? And also linked to that, I think historically, 25% of the European business was exported. Have there been any sort of interesting trends or reversals there?

Yes, it's actually amazing because demand has been so strong within Europe and across the globe, and that's why we cut the order book back. We've actually had to pull back on allocations for our export markets. South America, Australia, but everywhere, everywhere is strong. And so actually, the percentage actually has come down a little bit, just below 25%. But the orders are out there, and those same pricing issues or the same pricing dynamics that I've repeatedly been talking about on the call are equally at play in all those export markets.

And then just in terms of the packaging and specialties, pricing mechanism environment in Europe, sort of based on the commentary and the results, it seems like there's still quite a bit to go there, which I think, obviously, in my ways at least provides more upside for the European business. Is that a fair assessment?

Yes. Yes, it is. We -- as you know, we have is contractual -- certain contractual business. I've talked about it in previous calls, we've been playing catch up. And then as you get to the end of those periods, you implement new selling price increases, costs have been going up. So I think there's scope for further margin improvement in the European packaging business, yes.

Okay. Great. And then just last one, Steve. So if $287 million is the sort of starting point for Q3, I guess, I don't know if this is a fair or unfair question, but with the additional -- where could the potential additional upside come from? I'm assuming, obviously, the one lever is more aggressive pricing filtering through. But are there any sort of other issues or things at stake we should think about?

Look, what I would say, obviously, DP prices are going up, not that we don't have a lot of spot business in this quarter, but certainly, that will help. And then I think the other thing is things like the gas process and the other costs, we clearly anticipated a certain level of pricing or costs and they've come off a little bit, let's say that. And you saw it on a couple of the graphs. Look, that's not to say that there's not risk and you know how volatile they can be. But clearly, when we look forward and we implement our selling prices, we [indiscernible] cost. And if things were to stabilize a little bit, that could be an opportunity.

[Operator Instructions] The next question comes from Wade Napier of Avior Capital Markets.

Thanks very much for the time this afternoon. Just a couple of questions from me. Just on the order books. I know you've got customers on allocation with the European business, you've mentioned 5 months out. What is the latest that a customer can cancel an order? I think I recall something along the lines, they can cancel an order about 3 weeks before it's due for delivery. Can you just sort of correct me on that number? And what would you...

I'm sorry, I was just talking to -- sorry, I thought you wanted just the answer, but have you got a second question.

Yes, I've got a second question. Just on your follow-up from James' previous question on energy hedging. Have you sort of always hedged energy or is that a more recent sort of thing that you've done in the European business given gas process? And I'm just wondering if this is more recent, do you still have sort of higher energy prices coming through the business in the second half of the year?

Look, we've always hedged a proportion of it. The levels of 65% that we're currently seeing are higher than normal. And obviously, that's a function of what was anticipated to be the volatility as it became clear that there was -- when -- back in November, December, when the risks were on the horizon, we decided to up it. But typically, and I'm looking at Marco here, it's about 50% we would hedge in a current year. So you can hear we're up at 65%, which is more than normal.

Yes, a little bit more. And then on the -- just on the order books and when a customer can potentially cancel?

Yes, Wade, that is a bit similar to what Steve just explained about the hedging. We've taken into account the current market circumstances, which are tight, and therefore, we want to manage our order book as well a little bit tighter than what we do usually. We're less flexible, obviously. We don't want to have any surprises in our order book. So we would have a bit less flexibility in terms of order cancellation, and it would be 3, 4 weeks before production, where usually, if the market is less died, you would give some leniency there that is disappearing now.

Just to come back, it's not that the orders are not there beyond that period. The book is extremely tight. And obviously, I talked about export markets. We've had to cut back on allocations. And whilst theoretically, there's a risk that customers could cancel up to 3 weeks before, we're certainly seeing nothing on the horizon that would tell us that's going to happen.

Yes, that's comforting. It's just obviously, as you know, there's, I guess, there are macro concerns heading into the second half of the year. So I just sort of seem to checking that. And then maybe a final question from my side. Just on dissolving wood pulp markets and the sort of downstream fiber markets. You've, obviously, sort of seen this sort of second wind in pricing sort of happened over the last sort of 6 to 8 weeks. I mean what do you think is driving this, particularly with sort of China sort of being in locked down? What is sort of supporting the sort of very positive price increases?

Yes. Look, I'll let Mohamed elaborate further. But the main drivers -- I mean, first and foremost, on the supply side, you've seen all pulp move upwards on the back of supply constraints and the logistical challenges helped that. On the demand side, you're still seeing kind of record levels of cotton. You're seeing record or very high polyester prices. So the viscose prices had not followed up to the same extent as the alternative fiber. So you've seen a big surge in viscose prices in recent weeks. So in spite of the challenges in China that you referred to, you're seeing momentum from both sides, which is underpinning the positive prices. And obviously, more recently, obviously, the fact that the flood in KwaZulu-Natal, Sappi is a key supplier. So that would have had a benefit as well to DP prices. But maybe Mohamed wants to elaborate further.

Yes. I'd just add that there's significant cost pressures that I think are supportive of higher VSF prices from the dissolving wood pulp to chemicals to energy as well in China. We are also seeing a significant tightening of supplies of VSF. The one interesting, the one positive that has come out of the COVID issues, there's been some major challenges in terms of transportation from one province to the next, and that's made a lot of the buyers of viscose staple fiber a little bit more eager to stock up. And at the same time, that is happening. What we have seen is that the VSF producers initially early in the quarter, cut back on the operating rates. They've now started lifting their operating rates again. But as they cut back, they've dropped their stockholding of viscose to very, very low levels. And then the last point I would add what we are also seeing is some improvement now on the exporting of viscose staple fiber. Clearly, the weaker renminbi is helping, but also container availability has started to ease, and that's made it a little bit easier for the guys to export. So that helped the demand situation.

The next question comes from Brent Madel of Absa CIB.

Just a single question for me, if I may. I wonder if you could give us a little bit of color just with regards to what the backlog at the Durban Port is at the moment. You discussed earlier on just the movements of rail and using a bit of road in order to get the products to the port. Can you just give us an idea of what the backlog is there? Are you getting -- is stuff currently being loaded on to ships and being exported? Or is there a delay in terms of fulfilling your deliveries?

Yes. This is Alex. Really, the delay over December was about 7 to 10 days. And we've actually seen that come down to about 3 to 4 days. There's been a slight worsening now, but we're, obviously, also taking action in terms of getting alternative vessels, break bulk vessels in place, and that does spread the demand on capacity. So we've actually not seen a significant impact on backlogs.

But obviously, post the floods, the recommencement of our deliveries, I think, the first shipments, Mohamed, this week, yes?

Yes, yes.

Yes. The first ship, if that's what you were asking, are our first [indiscernible] is going up.

[Operator Instructions] The next question comes from Riccardo Ottaviani of Ares Management.

Congratulations on the strong print. Just a quick question from a debt perspective capital structure. I think you understand you're guiding towards leverage in the second half of the year, some 1.5x. Just trying to get a sense again in terms of future leverage target if the below 2x is still appropriate. Or if you just end and whether you do have at this stage any rating ambition? Secondly, I think, you mentioned pay down debt. Just wondering whether you mean using some of the liquidity to effectively repay that and -- or even buy back bonds in the secondary market in light of, obviously, the more opportunistic buybacks there [indiscernible] as we expect.

Yes, thanks. In terms of -- yes, as you know, we had said that longer-term sealing of the 2x leverage. I think there's a tremendous opportunity in the short term to pay down as we've illustrated. I think what's -- we're going to take advantage of this opportunity. In an absolute terms, we are going to pay down our debt further. I don't think I said 1.5, but just where the numbers are going, hopefully, it can be even less than that come the end of the year. But we recognize that we are a cyclical business, and we've got strong cash flows at the moment, and we must take advantage of that opportunity to pay down our absolute levels of debt. And that's our immediate priority. In terms of utilizing the cash, you can imagine, it's too early to consider that. We, obviously, want to bank the strong cash flows over the next few months. And we'll assess where we're at as we move into the new financial year.

The recording does that conclude the questions.

Thank you very much.

Thank you, sir. Ladies and gentlemen, that does conclude our question-and-answer session. I will now hand over back to Mr. Binnie for closing remarks.

Thanks, operator. Thanks, everybody, for joining us on the call today, and we look forward to discussing our Q3 results in 3 months' time. Thank you very much. Bye-bye.