Imcd Group Nv U/Adr

Good morning, ladies and gentlemen. Thank you for holding and welcome to the analyst call Q3 results AMCD-NV. At this moment, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. I would now like to hand over the conference to Mr. Piet van der Slikke. Please go ahead, sir.

Thank you. Welcome everybody. I'm here as usual with Hans Corrimans and together we will answer your questions on the first nine months and Q3. Despite the COVID-19 crisis, we report strong results. For the first nine months, EBITDA growth of 8% and even 11% if you correct for Forex. Q3 was in particular strong with 11% growth of operating EBITDA and even 17% when we adjust for currencies. All regions contributed to this success. Furthermore, free cash flow is 21% above last year. We are very pleased to see that we are able to continue our business also in these difficult times and that we are even able to grow by margin expansion and cost control. although we are, like everybody else, affected in our top line. This is promising once this crisis goes away as it leaves room for further growth. Generally, we are encouraged by the positive resonance our business model receives from suppliers and customers, which is evidenced by the projects we are working on and which will hopefully fuel future growth as well. This Q3 was very positive in another sense. We were able to sign an agreement to acquire 70% of the shares of Cygnet Excipients of India and successfully issued almost 4.4 million shares to finance this acquisition. Last week we closed this deal. Cygnet fits very well in our global pharma strategy and expands our position in India. As you know, everything is made possible by our excellent staff who continues to deliver a top performance under difficult circumstances in the various activities, in sales, in order handling, in labs, in warehouses and logistics. I want to thank them all. In summary, IMCD is in good shape and we are positive about our near-term prospects. I would like to hand over now to Hans. to lead you through our results. Thank you, Pete. Hans here. Good morning, ladies and gentlemen. Before we go to Q&A, I will briefly summarize IMCD's first nine-month results. The bio will start on page 10 of the presentation with an overview of the key financial figures. As you can see and as Pete just mentioned, Forage Adjusted's revenue increased 3% compared to the same period last year, and more important, gross profit increased 9%. This gross profit increase is a combination of 4% organic growth and 5% as the result of the first-time inclusion of acquired businesses. In 2019, like Wawon and DCS, further acquisition growth includes the positive impact of Gifroni, Daveling, VitaQuali and Cockle Fiber acquisitions that we signed and closed in the first nine months of 2020. SIGNET is, as you might understand, not included in these year-to-date September figures as we closed this transaction on November 4. Growth profit and percentage of revenue increased 1.1% from 22.2% to 23.3%. This increase is the result of gross margin improvement initiatives, changes in local market circumstances, currency developments and the usual fluctuations in the product mix. Forex adjusted operating EBITDA increased 11% to 190 million. And this increase was a combination of organic growth and first time inclusion of acquisitions. The conversion margin, calculated as operating EBITDA in percentage of gross profit, was 39.1% in the first nine months of 2020, an improvement of 0.7% compared to the same period last year. Net results before amortization and non-recurring items increased 11 million to 131 million, an increase of 11%. Free cash flow was 168 million and the cash conversion ratio increased to 87.5%. A substantial improvement compared to the same period of last year. Operating EBITDA growth in 2020 combined with a lower increase in working capital in the first nine months of this year were the main drivers of this improvement. Year-to-date cash earnings per share were 2 euro and 46 cents. The forex adjusted increase of 11% compared to the same period of last year. And on the last line of this page you will notice a 9% increase of our full-time employees. Most of this increase is the result of the first-time inclusion of acquisitions done. On the next slide, slide 11, you will find growth profit, operating EBITDA, EBITDA margin and conversion margin for operating segments. EMEA, in the first column, reported 4% forex adjusted growth profit growth and 3% operating EBITDA growth. Q3 was a strong quarter in EMEA, with low double-digit operating EBITDA growth. Further, operating EBITDA in percentage of revenue improved from 9.7% to 9.9%. In the second column, the Americas, where we report 11% forex adjusted growth profit growth and 16% operating EBITDA growth. Operating EBITDA margin and conversion margin both improved with 1.4% and 2.1% respectively. Asia Pacific reported 25% growth profit growth and 29% operating EBITDA growth at constant currencies. Operating EBITDA in percentage of revenue and conversion margin further improved compared to the same period of last year. Q3 was a strong quarter with double-digit EBITDA growth for both the Americas and Asia-Pacific. And in the last column you will find the cost of the holding companies. On page 11, a summary of INCD's free cash flow. Free cash flow and cash conversion ratio were both higher than in the same period of last year. And this healthy cash flow was mainly the result of higher operating EBITDA and less investments in working capital. working capital days improved during Q3 substantially from 60 days end of June to 55 days end of September. A more or less normalization of stock levels during this quarter was an important driver of the improvement. Then on page 12, a short update on net debt and leverage. Compared to the end of December last year, net debt decreased substantially to a level of 390 million. In the first nine months, we saw healthy operating cash flow combined with the proceeds of the issuance of €4.4 million of new shares at a price of €91 per share. The net proceeds of the new shares were used early November to finance 70% of the acquisition of Signet and for general corporate purposes. At the end of September, the reported leverage ratio and the leverage ratio based on the definitions used in the loan documentation dropped to 1.2 and 0.9 respectively. Excluding the net proceeds from the new shares and keeping all other factors equal, the pro forma leverage could be calculated at 2.6 and 2.5 times either there. And then last but not least, on page 15 you will find the outlook for 2020. where you could read that we expect operating EBITDA growth for the full year. This was a short summary of our year-to-date financials, and Peter and myself are happy to hand over to the operator to answer your questions.

Thank you, sir. Ladies and gentlemen, we will start the question-and-answer session now. If you have a question or remark, please press star 1 on your telephone. Go ahead, please, star 1 for questions or remarks. And the first question is coming from Mr. Mutlu Gondogan, ABN AMRO. Please go ahead, sir. Your line is open now.

Yes, good morning, Pete. Good morning, Hans. Hope all is well, and thank you for taking the question. So I have two. The first one is on the gross margin. Can you tell us why this was down sequentially by the basis points? I know there can be fluctuations between the quarters. But here, all three regions saw a similar decline. And I remember you saying at the Q2 results that the gross margin has actually benefited from structural price increases. So I'm surprised to see it come down sequentially. That's the first question. The second question is on order patterns. Can you talk about what you've seen in terms of client activity in life sciences versus industrials? I mean, looking at some of the share prices, we see some of the lifestyle customers come down to have some de-stocking, and there's obviously the hope of industrial customers re-stocking. Are we seeing that in the order patterns? Thank you.

Moeder, Hans, perhaps I should take your first one with respect to margin development. I think if you look over a longer period of time, then you see changes between quarters every year and during the year and during the regions. And basically that has to do with changes in the mix, changes in product portfolio, changes in certain products that are more linked to a summer period or a winter period and whatever have you there. So it is For me, it is just the usual fluctuations that we see during the year, whereby we are absolutely happy to report that the overall growth margin percentages are still higher than what we did last year. And that is partly the result of the things that I just mentioned, and part of it is the result of margin improvement projects that we run internally to optimize margins in segments where we have the feeling that we could do better. Okay, Pete here for your second question. I think generally speaking, if we go back to the start of the COVID crisis, it's clear that in the industrial sector, And then I talk about what we call coatings and construction, advanced materials, all kinds of plastics, composites, etc., lubricants, synthesis, which is, let's say, chemicals, intermediates, etc., There, of course, we have seen and still see, let's say, a decrease in what we expected and what we saw last year. And that has to do, of course, with the end markets that we're going through. In the third quarter, I think we could say that we saw a slight improvement. But we have to see how this develops now after the second wave, so to say. In life sciences, differences between the segments. Of course, you have effects of COVID also. in our personal care business and food business, less than, much less than in the industrial sector, and as I reported earlier, a very positive boost, I would say, in the pharma business. All in all, so if you divide it quite a stable, steady, and an industrial business that has in certain regions more difficulty. And I say in certain regions because it also differs a bit from country to country or from region to region. depending on, very often depending on the severity of the lockdown locally. So, I think that's a summary of what we see.

Thank you. Thanks.

And the next question is coming from Matthew Yates, Bank of America. Please go ahead.

Hi, good morning everyone. Forgive me, but I just want to follow up on that question about near-term trading. Normal seasonality would be for a sequentially weaker Q4, but I guess we would have said that was also the case for Q3, and that didn't necessarily happen with this year being unusual. So can you be any more explicit on the order trends through Q4, what you've seen so far in terms of whether customer behavior changes is any different to what it might have been in prior years. The second question, I'd like to come back on the Cigna deal for a moment. As an independent entity, they were clearly very profitable and growing quite nicely. So can you talk a little bit more about how IMCD can add value here? In particular, I'm interested about operationally what you can do from embedding your IT system and then whether your customer service model would be different to how Cygnet has gone to market historically.

Thank you. Your first question, I can't elaborate further on let's say the forecast. But as we have given that also in the press release, generally I can say that given the fact that we are, all of us in the economy working under difficult circumstances, I'm happy about the performance the ability to expand margins, to save calls, the stability of our business, the possibility to work under difficult circumstances, as I noted. it will depend of course on the severity of the lockdowns overall but I you know given the fact that hopefully there comes an end to this to this crisis gives us reason for optimism and hopefully the third quarter is a bit of an indication of that now on sickness um I think generally speaking, and that's why we're also happy with this business, is that it fits very well within culturally, but also in terms of the type of business that they're doing with IMCD. And we have said, I think also when we announced this acquisition, that it is not reasonable to expect a lot of cost synergies, but of course we will bring our systems at a certain stage into the company. We have synergies on top line, on the supplier front. We can together expand also in the region, so not only in India. There's a lot of knowledge, there's a lot of relationships that both of us can further exploit. So I'm very positive about using the strengths of us and theirs to further grow the business. So in our view, it fits perfectly with us.

Can I just squeeze in a follow-up? I think you said that your employees were up 9% year-on-year, and that's obviously before you even closed Signet. Can you talk a little bit about how the integration process for those people is being managed in clearly what's a very unusual environment today?

That's a good question and of course it's more difficult because most of us work from home but depending a little bit on the acquisition normally of course the smaller ones we do integrate and we have an elaborate program to welcome them in the company to make them part of IMCD, to put them on our IT systems. So in that sense, that is successful. In the particular case of Cygnet, of course, that's just closed. That's on the 4th of November, so it's not in these numbers. But we will, for the time being, it will run separately. but the smaller acquisitions people are with an elaborate program integrated and IT of course is a major factor as well in addition to our internal communication you know these kind of elements to make them feel at home perhaps to add to that I think that Companies like Daveling in China and DCS in Switzerland, Cocofiber in the Nordics, the markets are just open and people also commute, visit and meet each other and these companies are in the meantime in a standard process of integration.

Thanks, take care.

And the next question is coming from Karine Mulder, ING. Please go ahead.

Yeah. Good morning, everyone. My question is about the organic growth mentioned in the press release in the comment of Pete. 10% organic growth impacting growth profit. If I do the math, looking at 9.4% and for me it's somewhat at the high end, but maybe you can elaborate on that. And then you remark on, let me say, resumption of growth and you are optimistic when the pandemic is over. Can you indicate where you will see the improvements, let me say the improvements, is that you expect, let me say, higher revenues, higher growth profit, or is that you still think to benefit from the cost savings in 2020 that will continue? Is that... Or is that a combination of many factors?

I missed your first one, to be honest.

No, my first question, if you look at the press release, you speak about nine months organic growth for growth profit of 4%. And Pete made a comment in the press release about 10% organic growth for growth profit. If I do the math, then I do not come to that number. So maybe that's an explanation for it.

I'm looking for the 10%, to be honest. I did say that. At least I can't read my own quotes and I don't see it.

No, you say 5% organic growth, including epics. And that means, in my view, 10%.

Outgrowth profit increased by it. And that's what we don't mention the word organic there.

And that's correct. And this is 5%.

So in the 5% increase, there is an organic and the result of acquisitions. So it's a combination of the two. And the year-to-date organic growth, profit growth, is 4%, as mentioned on page 2 of the press release. Exactly. Perhaps that takes the confusion away.

Yeah, and that means for me in the third quarter, it grows between 5% and 6%, or maybe 5% to 7%. given what we have seen in the first half year.

Yeah, and that is, there you do the calculation right. Okay, thank you. I think on your second question, I think, of course, if this crisis would be over, of course, we would be seeing, hopefully, top-line growth coming back. We have, as I said before, in the industrial sector, we have... We have missed a top-line addition. So that's an important element. Of course, we save costs also because of this pandemic that probably were more socially safe in a situation where people can travel again, for example, or have exhibitions again. We will have to see that. But net-net, so to say, we expect positive results because we have hoped that we will significantly grow our top line there as well.

And you see all those structural changes in your cost levels, in fact, in your SBA expenses because of, let's say, the opportunities which were offered by the COVID-19 pandemic.

Yes, I think all of us and all kinds of different companies, so I don't think that's IMCD specific, but we see, of course, everywhere, as also all airlines see, that we don't travel anymore. So that is a very significant cost reduction. Partly that, of course, as everybody says, tells us something for the future. On the other hand, of course, you can't expect that we now stop traveling for the rest of our lives in companies. So we'll come back to a certain extent. But certainly, this crisis helps us also to look at that again and hopefully save, let's say, more prudent in the future also with this cost item. Okay.

Thank you.

And the next question is coming from Mr. Stephen Galdon, Deutsche Bank. Please go ahead.

Hi there. Thank you for taking my question. If I look at the difference between revenue and gross profits, it appears roughly that maybe the combination of pricing, mix, you know, maybe some FX and also the the internal self-help efforts that you've done kind of added around five percentage points this quarter. You know, if we have to sort of break that down between those impacts and volume impacts, is that roughly right? And that seems kind of stable with the last quarter. Based on what you've said in terms of, you know, the general margin improvements, particularly in North America, Should we therefore expect that kind of gross profit per unit to be relatively sticky going forward? Or would you expect maybe some normalization toward the end of this year and into next? And obviously, we've talked a bit already on the call around Cygnus, but given the company has given Cygnus acquired margins, which are obviously so much higher than IMCB, Would you say there is scope within the business to, and potentially it's just within pharmaceuticals or within the geographical region where it's particularly prevalent, but to essentially replicate those practices or to spawn other similar business units or products that have the potential to have significantly higher margins in group as you expand the core SIGNET business. That's it.

Thank you. Yes, Steve Hans here. I think the first question is a bit in line with what Quireen asked. I think we were looking for what was the organic growth level in the margin in Q3, isn't it? Was that exactly the question?

Well, what I'm trying to get a feel for is just the extent to which, you know, the growth in gross profit per unit will be sticky going forward. And, you know, obviously that's a combination of pricing, mix, et cetera. Some of it's obviously cost-cutting and operational improvements. But, you know, should we essentially assume that growth margins are –

going to continue at these levels going forward or should we because of obviously the extreme circumstances assume maybe something of a normalization I think you more or less gave the answer yourself it very much depends on a lot of factors like the mix like pricing in the market like availability of products like currencies and so on and so forth but I think it's fair to assume that over the years we have show to the market that the gross margins have a tendency to stay at a level round about 20-23%. But you always see fluctuations between the quarters and between the regions. And what Pete said before, if certain business lines come back to more normal, that could have a bit of an impact on overall margin percentages, either positive or negative, depending on the margins that we typically generate in these business lines. Yeah, I think adding to what Holmes is saying, I fully subscribe to that. I think in addition to that, of course, as we have told before in various quarterly meetings, is that we also put a lot of emphasis on increasing the margin in North America. And I think that I hope that we are able to also increase these margins. But I think that we have to be careful to give guidance for, you know, whether or not our margins in the future will remain at this level. If we add product lines that are significant but have a bit of a lower margin that has an effect on the mix. I think in the end we have to look at our productivity and not only to our close margins. And the absolute amount of Yidda. Yes, the absolute amount of Yidda. On SIGMET, I think it's always good to have a benchmark, and so in that sense we carefully look at possibilities also, learning moments for ourselves. It is a specific business in a specific region, so I don't want to to give the impression that we easily are able to transfer that to others as well, but we will look carefully at how we can also learn from the way they do this.

Great, thanks a lot.

And the next question is coming from Mr. Henk Veerman. Ken Panenko, please go ahead, sir.

Hi, good morning everyone. I have two questions remaining. especially on the conversion margin in the Americas in Q3 was about 45%. You just commented that it's very difficult to sort of forecast these margins in the future, but maybe could you comment that 45% is that also the result of maybe, for example, less traveling costs or any currency effects in there? And Is that an indication of how the conversion margin in sort of what the median term will also look like, that you can sustainably ramp up that margin from, let's say, 40% in 2019 to closer to 45% in the next years? That's my first question.

Yeah, I think we start repeating a bit here that it's very difficult to predict the future. For sure, if you save on travel costs, that has a positive impact on the conversion margin because your cost base is lower. But we also see in Q3 in the Americas is a drop in top line. compared to last year, but still margin expansion there. Because as Pete said before, we work hard there to improve the growth margin percentage. And I think the impact of the higher margin percentage plays a bigger role here than the cost savings on travel. And what that will mean going forward, future will tell.

Right. Okay, thanks. The second question is on the working capital. Quite a strong result at the end of Q3. Now that you're very busy with integrating Cignet and the working capital as number of days to the 55 days at the end of Q3. I think during the last conference call when you acquired, announced the acquisition of Cignet, you mentioned that the working capital profile of Cignet is a bit higher. Could you maybe give any idea, any indication of the number of days at Cignet, for example, at the end of Q3, just to give us an idea what the exact difference is between the two companies?

I think we don't want to go too much into details of working capital days per country, but I think it is a common understanding in the market that typically debt-free days in India are much longer than what we see here in Western Europe. However, if you look at the revenue size of Signet, they do about 150 million euro of revenues. Overall, I don't expect it will move the needle in working capital base substantially if we integrate them. But for sure, working capital base, especially depth of base, are higher than group average in a country like India.

Okay, thank you.

And the next question is coming from Mr. Rajesh Kumar, HSBC. Please go ahead.

Good morning. Just when you look at the performance here today, are there any one-off gains from COVID-related products which might, you know, which we need to consider when we are looking at our forecast next year in terms of they might be not recurring. The second question is, I'm not sure if you touched on this, but do you have any exposure to the vaccine supply chain in any of the businesses? And finally, you have very clearly deployed a lot more capital in the generic space and you're leading in the market chart, one of your competitors has indicated that they wish to consolidate the market itself. How do you think about your competitors' positioning when you think of market consolidation in speciality central space going forward?

Okay, thanks Rajat. Here's Pete. Your first question on, let's say, incidents in our one-offs, in our results. Let's say, I don't want to, I don't think that you should take that into account when looking at our results. What we said, we had, of course, pluses and minuses because of COVID generally. Stronger pharma business in particular in the first period of the year. Maybe COVID related or stock building related. We don't have a big HINI business or household, so we don't benefit a lot from all these, how do you call that, sanitizers. So that's the business that some of our competitors have. So generally I would say of course we save costs as we have said earlier in the call, which in a normal situation some of that costs will come back. So yes, there are COVID effects. But on the other hand, of course, there are negative COVID effects and positive ones. And let's see how that will even out when the situation turns to normal again. Your second question, I think on competition, because it's a bit difficult for me to understand how we look at a particular brand tag in terms of focusing more on specialties. Was that your question, Rajesh?

Yes, I didn't name any competitor, but yes.

At least they announced it very big. Exactly. Listen, Bentec is of course a very important competitor. I don't want to comment too much on competitors. Let's see how they... this form and shape we have always been very confident and I'm going back now many years in the fact that we have focused on specialties that our total model is focused on specialties and let's see if you split up your company into segments how you do that and how That affects your total business. It's very difficult for me to predict. But we regard any competitor and also we take them all serious and also Brenta. And of course, they are, in terms of size, they are a very, very important player.

Understood. Thank you very much.

And the next question is coming from Mr. Lauren Fafre. Please go ahead.

Yes, good morning. Thanks for taking my questions. On Cignet, I think when you disclosed the deal, you talked about, you announced the deal, you disclosed 39 million of LPM EBITDA as of June. I was wondering if you could provide us with an update of how Cignet has been doing in Q3. And also, if there's any seasonality, we need to be aware of when we model two months of contribution for Q4. And then the other question on Cygnet I had, well, I guess in execution, they do have exposure to vaccines. So I was just wondering if they had or you have now any exposure to companies involved in COVID vaccines and if that could be a significant opportunity.

Thank you.

I think on your first question, I think that we should not say more about, let's say, the results of Cygnet than we did when we acquired the business. We become owners now, since last week, so I don't want to comment on that. I guess that I don't see that in particular, although generally speaking in pharma, and you have to see how that works out with Sigma, this is a bit more skewed to first six months than the second six, but I don't know exactly how that is in India, in this particular case. On vaccines, You're over asking me, quite frankly. I don't know. It probably depends on the vaccines. It depends on who makes them and where. So we will see if the products that we deal with play a role in that as well. But I have a lot more to say about that now. Okay. Thank you very much.

And the next question is coming from Mr. Dan Milhouten, Credit Suisse. Please go ahead.

Morning both. My question is focused around the vaccine, so maybe I'll just move on to one final question from me. Given maybe we've moved out of the COVID restrictions going through the summer and coming into the start of Q3, I was wondering how you'd seen new contract discussions, if there's been any increase in outsourcing penetration and how you'd seen sort of win rates or new engagements through Q3 and looking out across Q4 perhaps?

Yeah, that's a good question. I alluded to that a little bit in my opening remarks. I think what we see here also during COVID times is that we continue to engage very well with suppliers. That's also one of the lessons that you can also do that through video. And that, let's say, I'm encouraged by the projects we are working on. in terms of outsourcing, expanding with suppliers, and in this way also ensuring that we have future growth. So in that sense, I'm positive about the traction that we have in the market, also with suppliers.

Perfect, thank you.

And the next question is coming from Mr. Chetan Udeshi, JPMorgan. Please go ahead.

Hi, morning. Just one question from my side. Seems from IM3 perspective, this year has been probably a bit more busier than usual in terms of acquisitions. Is that because underlying you see a change in terms of, you know, the seller behavior? Is there more eagerness or more willingness to engage in discussions on transactions now in this environment or is it just like a bit of coincidence that you know maybe this year has been a bit more busy than usual in terms of acquisitions and second sort of associated question is do you think we are at this point just looking at all the deal flow that you might be So considering, is there a reason to believe that we are at a stage where we see some sort of a bigger consolidation in the industry, given it's still pretty fragmented? Thank you.

Yes, I'm not sure if we see because of this more deal activity, because of this crisis, many of these transactions started also pre-COVID. Generally, I would say my experience is that people are less willing to sell... Sorry, I have to sneeze, but... Generally, I would say that in situations where your profits are under pressure, that owners are less inclined to sell. So, let's see how that develops. I think we're always active and busy in having a pipeline. On the consolidation question. I find it very difficult to predict I think we are of course fragmented on the other hand if you compare big players now with 5 to 10 years ago there's a huge difference in terms of bigger companies coming on the scene whether or not we will see further consolidations with big acquisitions I can't predict that I don't know but generally I would say this trend continues understood thank you and the last question

There's a follow-up question from Mr. Mutlu Gondogan from ABN Amro. Please go ahead.

Yes, thank you for taking another question. So it was actually on a remark that you made on the repricing and the gross margins of North America or the Americas. So just wondering, can you talk about the impact when you reprice your contract? I mean, do you generally lose? customers or a certain amount of volume and that is more than offset by your higher margin that you make on that and then maybe related to this so clearly America, for example, how long will it take you to get to a similar level or is that even possible given the product mix that you have there?

It is a complicated question because first of all, of course, we don't have long-term contracts with customers. And we also should always bear in mind that we have to reconcile let's say, optimal pricing in the market with growth or volume as well for our suppliers. We are also here, of course, to ensure that there's growth, also volume growth for our suppliers. So it's always a mix. I think what's more important is, I think, the diligence of our own processes each order to ensure that we price it in the best possible way. And of course it depends a bit on the product name that Hans often reminds you of. So I know it's maybe not too satisfactory to bring so many factors in, but it is a difficult play of outside circumstances, on competition, on our own ability and quality of our people, our systems, etc. to ensure the highest possible margin. a lot in the mix but that's of course why we are sitting here and our people to ensure that we do that in the best possible way and with 40 or 50 thousand products and many different product lines this is often of course not uncomplicated but yeah I think I think I should leave it with that right thank you

And there's a last question coming in from Mr. Fernand de Boer, the Frost Paper Camp. Please go ahead, sir. Your line is open now.

Yes, good morning. Thank you for taking my questions. Actually, I have two. One is on the working capital, now at 55 days, where you mentioned that the inventories have now been normalized. So from that, I conclude that this should be the normal level. But if the market picks up again, of normalizing back after COVID-19, should we then initially expect cash outflow for working capital, working capital to deteriorate in the short term? That's the first question. And on the other one, if you look at the top-line growth, organic growth seems to be flat to slightly positive in the third quarter. In the industrial side, has there been any restarting effect yet, or is there still to come? Thank you.

Daniel, perhaps I should answer the working capital. I would love to show a big working capital investment because of substantial pipeline growth. If you look at the three most important components, stock, creditors and debtors, then what we typically see in our business is that most of our stock we can finance with our creditor positions and the working capital investment is often driven by a movement in debtor positions as a result of increasing sales values there. I would love to report a higher working capital number related to a higher top line growth there. Your second question, I think your conclusion was a top line The question is about restocking of the industrial sector and I think the answer is that we don't see and again it's a little bit anecdotal because it depends a bit on which region you talk about but we don't see a huge change. Yes.

Okay. Thank you very much.

Thank you. There are no further questions. Please continue.

Okay, well, then if there are no further questions, then I think we're done for the day, at least for this item. And I thank everybody again for the interest in the company and I wish you a very good day.

Ladies and gentlemen, this concludes this IMCD event call. You may now disconnect your line. Thank you.