AAK AB (publ.)

Hello everyone and welcome to AAK's first quarter result presentation. My name is Johan Westman. I'm the president and CEO of AAK. Together with me today, I also have our CFO, Thomas Bergendahl. Please turn to the next slide. As always, I will start by going over the financial highlights for the quarter, as well as some selected events. Thomas will take you through a detailed review of the financials before a short wrap-up and after that Q

&A.

Now, page four. We have started the year on a strong note with a combined profitability and organic volume growth. It's encouraging to see volumes returning to growth after a period of somewhat softer volume performance. With the added volumes, we are delivering profitability not only through our global optimization programs, but also via the operating leverage that comes with our organic volume growth. As a result, we are experiencing continued growth in operating products. Looking a bit closer at the volume development, we grew organically with 3% in the first quarter compared to the same period last year. This was driven by growth in both chocolate and confectionary fats, as well as food ingredients, while volumes in technical products and feed declined slightly. Profitability, measured as operating profit per kilo, was strong and grew year over year. This was driven mainly by our global optimization program, which we also reviewed at the quarter four conference call, as well as the operating leverage that we have from the increased volumes. Driven by the improved profitability and rising volumes, operating profit grew 32% compared to the first quarter last year. And at fixed foreign exchange rates, operating profit increased by 38%

year on

year. Operating cash flow was solid, but declined year on year, mainly due to higher receivables following the increased volumes and despite higher profit. Return on capital employed was strong, with .4% driven by the higher operating profit.

Please now turn to slide number five. As some of you might have

seen already, AAK has received a silver medal in Ecovaries annual sustainability rating and is among the top 15% globally. We ranked in the 93% and we increased our overall score from 65 to 7, mainly in the categories of labor and human rights and sustainable procurement. In addition, we are proud to be in the sixth place in the recently published report Sustainable Corporations 2023. It was a busy quarter, as we also inaugurated our new Innovation Center of Excellence for baking applications in Belgium. As you are all very familiar with at this point, co-development and product innovation are at the core of what we bring to our customers. Before going into the performance of the respective business areas, I would like to address the recent discussions regarding a raw material shipment from earlier this year. Earlier this year, we identified a shipment of raw material that did not meet our quality standards. The raw material was traced back to a part of one shipment. In accordance with established protocols and regulations for these types of events, affected customers and relevant food authorities were notified. It has further been concluded that the incident occurred during transport by a third-party operator and not while being processed in AAK facilities. It involves one incident within a confined space aboard one vessel, in essence an isolated event. Our production has not been affected by the event and has remained uninterrupted. I would also like to emphasize that this event has been well known, documented and has been professionally and well handled by the affected customers and our own quality team. With that, we are moving into the business areas at page 6 and I start with food ingredients. Within food ingredients, our volumes grew organically with 2%, primarily different by the sub-segments dairy and bakery. With maintained strong margins and optimization effects and on top of that the leverage on increased volume, we reached a very strong operating profit and margin operating profit per kilo. Operating profit was up 34% year on year and operating profit per kilo was up 31% year on year despite negative effects effects, both at an all-time high for AAK. With that, moving into chocolate and confectionary fats on page 7. Here we see an even stronger organic volume growth. Our volumes grew 7% year on year. This is thanks to high demand for our spread solutions and also supported by good demand for our cocoa butter alternatives. We see a very strong operating profit and operating profit per kilo on the back of continued optimization as well as good leverage on the increased volumes. With that, we are moving into page 8, technical products and feed. Sequentially, we follow the trend of the later part of last year. Volumes were down 1% year on year but up 5% sequentially. Operating profit was down versus the same quarter last year due to a negative mix and lower margins on the residuals that we have and that are sold to biofuel solutions. In a more long-term perspective, we are still at decent levels if you compare to some years back. Also, as we look ahead, there is still a very interesting opportunity around replacing mineral oil-based ingredients in technical products and solutions. For AAK, this is an area where we focus work and we apply our knowledge in order to leverage potential for replacing fossil-based ingredients

in other sectors.

With those comments on the business areas, I am happy to hand it over to our CFO, Thomas Bergandahl.

Thank you, Johan, and good morning everyone. Turning to slide 9. Our first quarter, as you can see, saw solid cash flows driven by strong earnings. We did observe, though, as you also can see, a negative cash flow from working capital. This is primarily driven by improved sales in the quarter, which resulted in an increased level of receivables. This is partly balanced by reduced inventory levels. Cash flow from accounts payables was also slightly negative in the quarter, and this is driven by changes in parts of our supply chain and logistical structures. Other working capital factors like prepaid expenses, tax liabilities contribute to the fluctuations quarter to quarter and are often influenced by timing. But over time, they tend to normalize, as you can see in our past as well. Interest and tax payments were reduced compared to last year's likely, despite the challenge of higher interest rates, mainly driven by lower debt levels. Other non-cash items include mainly changes to unrealized hedging contracts, as mentioned before, and raw materials. And like other working capital, this fluctuates between the quarters but tends to normalize over time. Our CAPEX capital expenditure totaled 264 million SEC in the quarter. And this is, as in previous quarters, mainly allocated towards maintenance, productivity and capacity enhancements. And consequently, we achieved the free cash flow of 453 million SEC for the quarter. The guidance on CAPEX spend for 2024 remains at 1.2 billion SEC and is at level with the spend in 2023. Turning to the next slide. Looking at our return on capital employed, and it continues to show strength, as you can see, as Johan mentioned, have now reached .4% in this quarter.

And

this is driven by the strong development in operating profit, combined with the stable level sequentially of capital employed. Slide 11, please. And when we look at Nettet i Bittan, this is driven by solid cash flows in the quarter, and we now see a further reduction in Q1 2024 to 0.38, which is down from about two times roughly two years ago. With that, I'll hand back to you, Johan.

Thank you. So on page 12, to just

wrap it up a bit before we take questions. A strong start to 2024. We have organic volume growth and improved profitability. We face both both challenges and opportunities in the market where we operate. As a multi-oil ingredient house, we are committed to deliver value to our customers, regardless of market conditions. We do remain prudently optimistic about the future. We are committed to making better happen by focusing on our financial target, which is to deliver 10% year on year operating profit growth over

time. And lastly, a short reminder that our AGM is on May 8th in Malmö, Sweden. And with that, we are happy to take any questions from the audience.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key

six on

your

telephone keypad. The next question comes from Alexander Jones from Bofe.

Please go ahead.

Good morning. Thanks

very much for taking my questions. Two, if I can. The first one on chocolate. You talk in the press release about seeing rising interest in your solutions due to the high cocoa price. I'm conscious that custom reformulation often takes time. So can you help us to understand to what extent you're already benefiting from that in Q1 or whether we should expect to see a gradually larger benefit as the year goes on? And then the second question on the optimization program, please. I think you talked last quarter about how your efforts in 2024 were shifting towards some of your smaller plants and you weren't sure whether you'd see the same magnitude of benefit on the margin from those as you did of the larger plants over the past year or so. Given the strong progress in Q1, are you able to update us on whether you still think that's the case or whether you're a little bit more optimistic now?

Thank you. Thank you so much. I

start with the question on cocoa, effects of the cocoa price and so forth. And Thomas will fill in on the optimization program. Yes, you're right. You know, reform any type of reformulation, it does take time and so forth. So when you look at this as a potential structural impact, that would have an impact for the future. When looking into the quarter per se, what one should keep in mind is that our solutions, our applications, which are targeting better functionality, cost optimized solution, if you will, compared to the other alternatives, we have seen a positive development, for example, into spread and so forth. And why is that? Well, it's a combination again on the application that we're targeting, how cost effective our solution could be versus an alternative. So I think it's the volumes that you see today is probably linked to a mix of customers formulating products linked to maybe a consumer down trading trend. When you buy something from the shelf in retail, we have commented often that that could be a customer choosing a product where the content, the penetration is higher for AK and maybe a pure chocolate, if you will,

on the

high end. So some of these trends around inflation and so forth actually speaks in favor of AK. So I think it's important to keep that in mind that the Q1 volume does not have a direct link to a spike in price for the same quarter. However, it does impact structurally. And back to your start of the question, is there a chance that this situation has a structural impact? How do we see this going forward? Yes, I can confirm that there is an interest from customers around the world to look into potentially reformulating products where you might have used 100% Kaukkoa in the past, but now willing to look at, can I use an alternative and still have the same performance? And that type of discussion, that type of co-development is exactly what AK is good at. So structurally going forward, yes, this is an opportunity. But also, let's keep in mind that if prices are too high, it's a risk on the absolute consumer demand at the end of the day. But through time, AK has shown to be quite resilient. And as I said, even when consumers are cost conscious and shop like that, that might be

choosing products where AK has good content.

And in response to your question on optimization, you are correct that we have gone through the main plants and facilities that we have currently running somewhere around 60% of the overall volume. We do have the smaller plants left. Also, as you mentioned, in range of about 40%. These processes take time. It takes several months of each plant and we don't expect to be completed until mid 2025 with all the capacity that we have. That said, we have also mentioned, as you say, that we expect less benefits from the smaller plants than from the larger ones. The continued improvement that we've actually seen now in Q1 is the increase in volumes. When we go through the plants and do the optimization, you see some direct benefits in terms of efficiencies and things on existing volumes. The second step is then when we add additional volume to that improved facility with now increased capacity with the same cost base. That's when you get the second leg of this. And that's what we see contributing to the good results in Q1. In addition to this, as we mentioned before, we're also initiating a procurement focus in 2024. That has not yet had any impact on the results in Q1. And this is also a longer stretch, I would say. That would be something that would

develop throughout the year.

The next question comes from Alex Sloan from Barclays.

Please go ahead.

Hi, morning all. Thanks for taking the questions. I've got three if that's OK. First one just on pricing. So price per kilo looks like it's down double digit in the quarter. Any color on how we should expect that trend to develop over the coming quarters in the context of input cost, but also maybe competitive dynamics. The second one just on the volume inflection, obviously good to see. We've heard from some ingredient peers regarding kind of quite strong January with some maybe customer restocking on Red Sea disruptions. Is that at all relevant to AAK or not so much? And then finally, just on the CCNF business, can you remind us how much of your business is chocolate versus spreads? Thanks.

Thank you. So first of all, regarding the price per kilo trend, I think the best answer we can give there is that, as you know, we're always trying to follow the trend with raw materials going up. And now we always have a tight dialogue with customers. So there's some element of when market move up, we follow and market move down, we follow. But at the same time, we're also optimizing, working with our portfolio, etc. So it's not always a direct link. So I think that's the way we look at it. So when I look at your question, I would say the trend that we see is we're going to continue to focus on improving our mix, having a strategic view on pricing, as well as combining, you know, leverage on increased volumes and these programs that Thomas talked about. So that plays a bigger role. There's always competitive pressure, if you will. So there has been some focus, of course, with us. And we talked about that before. How do we strike the right balance between pricing, making sure we win the volume and then the absolute EBIT and EBIT per kilo that that generates? So raw material is down year on year that has an impact on the overall pricing without sales. However, we're trying to maximize the impact by having, you know, winning enough volume. And that's what I call striking the balance.

And I could add to the raw materials, you have to add the lag as well, nine months, right, six to nine months. And that's when we see prices down year over year, affecting this as well.

Yeah.

And then please remind me the second question was again.

A second question was on volumes and the volume inflection that we've seen. Any contribution at all from restocking or not?

Yeah, I mean, that's been at least from the consumer goods company's perspective. There's been a lot of discussions on restocking and restocking over the last year. I think we supply to production of products that typically has a bit more of a stable nature. Versus at least retail stocking, destocking. We cannot see a clear evidence of really impacting in the quarter. Nor did we see a real impact of the destocking, nor did we see a real strong impact of restocking. There could be elements of that, but I see a stronger element leading to the solutions that we supply.

The pickups that we have seen sequentially. Yeah, and

the third question on CCF and the allocation between the different subsegments there. I would say rough numbers you're looking at. The cocoa butter alternatives make up a little bit more than half of the overall volume. And filling and spread makes up the remainder. What we do see in the market now, of course, with cocoa prices going up, there is a bit of changing consumption, at least from our perspective. We see consumption going into not just chocolate, but other bakery chocolate combinations and so forth.

Other type of indulgence.

Other type of indulgence that still includes chocolate. And that's why we see the filling and spread segments, if you will, increase a little bit more than the alternatives.

And

that could add to that. There is something called choco bakery, right? Combining baked goods with chocolate, something sweet, but could be less pricey for the consumer. A cost-efficient solution for our customer. But where again, the AAK solutions as an ingredient provider on both bakery and chocolate and confectionery has a good input. So some of these trends really

speak in favor of our business model. Thanks

very

much. The next question comes from

Joan Lim from BNP Paribah Exane. Please go ahead. Hi

guys. Three questions from me, please. Can you remind us of this sweet spot for cocoa butter prices where customers will reformulate using the cocoa butter equivalents? And there is a cap of 5% generally. Where are customers at globally and how much further is there to go? That's my first question. And my second question is, in your release, you also talked about relevant regulatory agencies should consider raising that current limit of 5% on CBEs. Has there been talks in the industry with regulators about raising this cap? And my last question was to build on Alex's question on the products in CCF. Can you share what's the difference in margin profile between fillings and spreads and chocolate

bars, please? Thank you.

Thank you. Great questions. So

first of all, with regards to cocoa butter and cap, it's very, very difficult to fully have a picture of where are customers today because it's up to them where they use cocoa butter alternatives and where they use pure cocoa butter. And we have been, our solutions have moved into that. As a general, you could say that in pure chocolate, where you also call it chocolate, that's where these caps apply for solutions like an energy bar or a filling, other types of confectionary, indulgent consumer products. And that's where you can use much more. Right. But that's also where we are also much more penetrated as of now. When we look at this structural opportunity challenge, then there is a relevant discussion to be had, I think. There is a regulation of a cap of five percent in certain markets. In some markets, you can go higher. That is to protect cocoa, if you will. Now, there are solutions that we can bring to our customer products that makes up a very good product, even if you do replace the cocoa butter. So I think a relevant conversation to be had with spiking prices, potentially a difficult supply profile. Is there an opportunity for the market for consumer prices to be managed to some extent by allowing a slightly more of cocoa butter alternatives versus cocoa butter? For example, moving from five percent to ten percent? Yes, I think there is. You asked also about do we see that? There are two things that we do see as an interest, which hasn't really impacted quarter one result, but as an interest from the market. One is to say I might be willing to look at reformulating an existing product where I'm using 100 percent cocoa today. The other one being long term structurally, and that is coming back to these regulations. In some countries, there is already a conversation ongoing to potentially lift it. Our question is, will that be in bigger regions like EU and so forth? Let's see. I think it's an opportunity for them.

I think in addition to that, for those who are looking at reformulation, the interesting question is then how sticky is that when the price, if it changes on cocoa butter and goes down again, how sticky is that behavior? So that's something we need to look at going forward as well. When it comes to margins in the CCF segment, we don't disclose that for competitive reasons. But I can say, as we've mentioned before, that all subsegments in CCF are well above the average margin for AK. I think

also the comment back on the sweet spot for cocoa butter, that analysis that we made and commented on before was in a more stable situation. So when there is a more stable price development, then it's easy to see the direct link between if cocoa price would be too high, it would impact demand, so therefore not good. But on the other hand, still with a higher cocoa price than our solutions, that still creates the demand for our solutions. With this change that we see now, a sharp pickup, then we'll start discussing as we do in this call, what are some of the structural impacts which could move customers into a slightly different viewpoint on certain products and or even regulatory policymakers to look at this. That's what we're talking about now. So that old band of sweet spot is a bit outdated where we are today now.

Yeah, and I guess in addition to the price spike, there's also supply chain issues that we haven't seen before to the extent that we do now. That also puts the sweet spot logic a little bit out of play at the moment.

That may be to just add a bit of an industry perspective. Things do not move as fluid as a quarter spike in pricing. Most customers source with long term contracts, both from us and from Calqua suppliers, so there's much more stability in the industry, in the supply and the demand from customers and also on price in retail than a quarterly spike. Over time, this will of course move in and out. Thank

you. That's really helpful. If I can just follow up on the, you mentioned that you've seen some discussion to potentially raise the cap in certain countries. Can you share which countries was it? Was it the EU?

I'd rather not create a big hype on this. I can only confirm that these conversations are now starting and start to happen. I think it's more, let's keep it as that opportunity, something to have on the radar before commenting too specifically. We do have discussions ongoing, but I don't want to go too specific on that with regards to also non

-public conversations.

Okay, that's very helpful. Thank you.

The

next question comes from Simon .A.s from DNB Markets. Please go ahead.

Good

morning guys

and congratulations on a very strong quarter. I have a few questions and I'll just follow up on the CCF topic here. Obviously, if you just chart up the COCOA price in relation to the profits in the CCF segment, you basically see a perfect correlation there. I'm just wondering, could you give us some color on what kind of visibility do you have on these profits here on the current COCOA price levels? Is it like 69 months ahead you see that this custom behavior that we have seen into more fillings and stuff? Is that what you see in your pipeline as well or is it any changes to that from what you report here in Inc.U? That's my first.

Thank you. I think first of all

that you referred to perfect correlation. I'm not sure we agree fully. This is just to repeat what we sell our COCOA alternatives. We do that in competition with other suppliers. That's why it's not the direct correlation to the prices. The impact that the prices have is, of course, whether a customer chooses to look at an alternative to COCOA or not. I think that's where we can see a positive interest in the market. These are also contracts that typically are made on a six months to a year. So longer than our average profile, these type of contracts are made. In essence, what we sold in Q1 has to a large extent been contracted last year and vice versa. In essence, what you're asking, do we have visibility? Yeah, we have quite some good visibility. What is changing to some extent in different market dynamics is the way customers source these things, whether they want to secure a price and a volume for a longer time period or if they want to go shorter depending on market dynamics. But in general, good visibility, longer type contracts than average.

Okay, so sort of we haven't seen what will happen to your sort of mix and sales. It's like six, nine months ahead then given the recent spikes in COCOA. Is that what you're saying?

I think what I am saying is that to just look at the spike in a quarter and think that things will change dramatically, that's not correct because also the way we understand the market is that the producers of the finished product, which are buying not only ingredients from us but from other suppliers, they typically do that in the same way that I just described. So long term contracts, trying to balance swings in the market. And also my view is that that's how they also work with their customers' retail in order to not have too much of a price volatility on the shelves. So much more stability than a price hike. What the price hike is creating is, of course, you start looking at, okay, how do I mitigate this? What are the opportunities, the risks? And you start having conversations with suppliers and others. And that is what we can say that we have had. There is a positive interest into how our solutions could potentially help, both with longer shelf life, with enhanced functionality, taste and so forth, but also to be cost efficient. And that you would see in that case as a structural change over time. But then I would say we're talking end of 24, 25, 26 type of impacts. Basically, you could call it a market expansion for cargo-bottled alternatives, if that were to be sticking.

That's very helpful. And then on that topic again, you know, this is the third quarter where you have EBITDA per kilo above 2, the Swedish crown. So when should we, when will you update this or will you ever update your 2030 ambition?

Thank you. Good question. First of all, we are very happy, proud that we do deliver on one of the targets in the 2030 aspiration. That aspiration also includes an ambition to grow our volumes faster than the market. Again, happy that we see in this quarter volume growth coming back, but we are, you know, the journey doesn't stop here. We're not satisfied. So we're going to continue to push for growing organically. And last but not least in our aspiration is also to get to continue to have a positive impact in our supply chains and to get recognition for that. So there's a lot still to deliver. So I think it's a bit too early to say we've got to change it just because we deliver on one of the targets. But we are also not shying away from that. Should we want to increase the margin targets going forward? We will review that at some point in time. But for the time being, the most important thing is to conclude. Yes, we have managed to deliver on strategy on our aspiration. Our margins are up. We do see volume coming back. The main focus is the combination of the two, which is to deliver on our financial target, growing our earnings 10 percent year on year over time.

And as you understand too, as well, of course, that the sort of a little bit delay in maybe updating our aspirations and we want to take our time to go through it and so forth. That doesn't limit us in forming. We do our best every quarter. We push for both margin volume to make the combination of those two in terms of the best possible at any given time.

Yeah, I get that. But, you know, at some point, if you continue to deliver, it would at least make sense to do something about it. But I hear you. I hear you. And then my final question here on capital distribution and M&A. And if I'm not mistaken, you were out in the media, the Swedish media, a week back or something talking about larger not ruling out larger M&A. If this is sort of what we should be thinking about, you know, you're at 0.4 times net at TBTA. If you continue at this pace throughout this year, it will be net cash at some point. How should we think about that and capital allocation going forward?

I think, first of all, to be crystal clear, there is no change in our M&A agenda versus communication over the last years. I would say we have been quite clear that we in our ambition to grow, we're looking at organic opportunities as well as acquisitive opportunities. With media, you pick words and you put the labor on that. Yes, we're interested to grow through acquisition as well, but it's not been a change. This is something that was picked up and commented specifically on. We are looking at acquisition opportunities for geographical growth or expansion. We're looking at it from a bolt on perspective. And I think what I can emphasize is that with our position today, with the growth that we have been able to achieve over time with a strong balance sheet, we are capable and willing to do larger acquisitions should they come as an opportunity. That is clear. But from an M&A strategy perspective, nothing changed in recent weeks. So it's been the same message over the last years, I would say.

Okay, so in case of if there were to be no larger M&A, extra share buyback or extra dividend, is that something that you think about?

As management, we focus very much on building our business through Capex investments, potential acquisitions and so forth. That's how we want to grow the business, of course. Other capital allocation opportunities or alternatives, dividend and so forth, that's a discussion that's always ongoing with the board. But that's more a board question than an operational question. We focus on the operations and do the best we can in that sense.

And I'll ask you one final one here on working capital, a bit negative here in Q1. How should we think about that for the remainder of the year? Should we expect you to normalize?

The working capital effect that you saw here in Q1, I see that as mainly driven by the volume increase. So if the volume continues to go up and then we don't talk, of course, quarter over quarter year over year, then sequentially, then that everything else equal will build up the accounts receivable. We don't see any increase in Q1 in overdue, for example. So it's all driven by the volume. And so that will continue, given where the volume will go. As it relates to inventory, we continue our optimization programs, as we mentioned before, our cash to grow. So we continue to work on that. And I expect that to generate positive results throughout 24 and 25 as well. I would look at Q1 as a combination of more one time effects than change in trend.

OK, that's very clear. Thank you guys.

Thank you.

Thank you. The next question comes from Oscar Lindstrom from Danske Bank. Please go ahead.

Good morning. Three questions from my side. I mean, first, coming back to something which previous participants here have touched on is the high cocoa prices. But I'm wondering, are you seeing any impact on consumers behavior in terms of sort of becoming a little bit paralyzed by these wild swings in prices and then sort of that translating into them not being interested in or able to take on new products from you, new, more advanced products?

Well, thank you, Oscar. I think what we see, we saw some Nielsen data on consumption and we see more strength than we would expect, given the in consumer demand, given the cocoa butter prices increases. But as Johan mentioned before, we also have to realize that the increase in cocoa butter doesn't go into the end consumer product instantly. There are supply agreements that are fairly long. So that change will take time. What we do see is a shift, at least from our product perspective, of consumption going into more chocolate bakery and combinations like that. When customers still want more spread, customers still want the sort of chocolate taste, but they don't like to sort of spend the money that we've seen on driven by inflation and so forth over the last year or so. So there are some trends like that, but the effects from the cocoa butter price is slower to come into the through the supply chain, if you will,

over time. So in essence, the consumer trend is still driving opportunity for AK. That's what we've been repeating both if you go from a pure chocolate to a chocolate bakery, might even be higher penetration from an AK ingredient perspective. Also, what is called down trading when a consumer might buy something but a lower price product with other type of formulation, where again, our solutions might be there to a higher degree. So I think those are the things where we supply again to production of consumer products. These trends that you talk about are in retail. Those are trends from consumers. The way they they shop, we don't see directly. But what we do see is that there is an increase and a good demand for a variety of our broad portfolio. And that's possible.

OK, thank you. My second question is on the China infant nutrition segment, which is an important market for you and has been turbulent in the past. We've not heard so much about it lately. How is that developing for you and any any market developments which we should note?

Thank you. And yes, it's a it's a it's a part of our business, not as big as it was before. It has been stabilized. So you've seen birth rates coming down in China, which has had an impact on the industry total and consumer demand. On the other hand, you have had a positive premiumization trend, which have helped us and our customers to also sell value in the market. I'm speaking like the last five years. But in this quarter, it's very stable versus the last quarter. So I think we're seeing a stabilization both from a demand perspective, but also a combination of good value creation in the process we deliver. So quite stable at the moment. And that's why we have

more

than that.

Good to hear. Thank you. And my final question is, if you have any further comments on the palm oil shipment contamination incident with one of your customers in Denmark, which was in the news the other day. And I think you also issued a press release. I mean, is this an isolated incident to this one incident? Is it behind you or will there be any sales or financial consequences of it?

Thank you, Oskar. Yeah. First of all, it was not a press release. We put information out in order to just be very clear. Yes, it's an isolated event. And as we have concluded, it was actually happening during transportation. So it has nothing to do with the specific raw material. It was not happening through processing at our suppliers or at AAK. And therefore it is an isolated event. Yes. And with regards to financial impact, we are always looking at any type of situation, be that quality or other things, and make appropriate provisions. And we have done such assessments also in Q1 and the report that you've seen.

All right. Thank you very much.

There are no more questions

at this time, so I hand the conference back to the speakers for any closing comments.

Thank you so much. Thank you all for listening, for your questions. I'd just like to repeat that we have had a strong start to the year. Profitability is up, organic volume growth, that in combination with our optimization program and the fact that we get operational leverage on increased volumes, just deliver record results and record margins. We continue to be focused as a multi-oil ingredient house to deliver value to our customers, regardless of market conditions and dynamics, some of which we've talked about today. Our journey doesn't stop here. We are pretty optimistic about the future and we continue to focus on our financial target, which is to grow our earnings by 10% year on year. Personally, I'm very proud of our organization that is really delivering on our strategy and aspiration. That's a very good sign. Thank you very much.