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 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 confectionery 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 called 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 20.4%, 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 Ecovary's annual sustainability rating and is among the top 15 percent globally. We ranked in the 93 percentile 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 type 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 effective customers and our own quality team. With that, we're moving into the business areas at page six, 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 FX effects, both at an all-time high for AAK. With that, moving into chocolate and confectionery 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. And with that, we're moving into page eight, technical products and fees. 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. And also, as we look ahead, there is still a very interesting opportunity around replacing mineral oil-based ingredients in technical products and solutions, right? So for AAK, this is an area where we focus, where can 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, Tomas Bergendahl.

Thank you, Johan, and good morning, everyone. Turning to slide nine. 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 solutions. 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. uh interest and tax payments were reduced compared to last year slightly despite the challenge of higher interest rates mainly driven by lower debt levels other non-cash items includes mainly changes to unrealized hedging contracts as mentioned before in raw materials and like other working capital this fluctuates between the quarters but tend to normalize over time our CAPEX capital expenditure total 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 453 million SEC for the quarter. The guidance on CAPEX spend for 24 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, we have now reached 20.4% 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 net debt EBITDA, 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. Go ahead. 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 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 6 on your telephone keypad.

The next question comes from Alexander Jones from Boffet.

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 at 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 Kaukua, effects of the Kaukua price and so forth, and Thomas will fill in on the optimization program. Yes, you're right. 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 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 than 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% Kaukoa 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 AAK 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, AEK 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 AEK has a good contact.

And in response to your question on optimization, you are correct that we have gone through the 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. They take several months with each plant, and we don't expect to be completed until mid 2025 with all the capacity that we have. That said, We've 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've 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.

Yeah, 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 quite a strong January with some maybe customer restocking on Red Sea stocks. disruptions is is that at all relevant to aak or or not so much and then finally just on the um ccnf business can you remind us how much of your business is chocolate versus spreads thanks thank you so first of all regarding the 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 moves up, we follow. When market moves down, we follow. But at the same time, we're also optimizing, working with our portfolio, et cetera. 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 uh having a strategic view on pricing as well as uh combining uh you know leverage on increased volumes and and these programs that thomas talked about that plays a bigger role there's always competitive you know 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 price and with that sales. However, we're trying to maximize the impact by 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 of 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, it's been, at least from the consumer goods company's perspective, there's been a lot of discussions on destocking 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 linked to the solutions that we supply and the pickups that we've seen sequentially yeah and the the third question on on ccf and the uh the allocation between the different uh sub segments there i would say

rough numbers you're looking at the cocoa butter alternatives make up a little bit more than half of the the overall volume and filling in spreads 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 from our perspective that we see consumption going into not just chocolate but other bakery chocolate combinations and so forth other type of indulgence all the type of indulgence that still includes chocolate and that's why we see the filling and spreads segments if you will increase a little bit more than the the alternatives and that could add to that there is something called choco bakery right um

combining a baked good 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 Paribas 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 you know cocoa butter and cap it's very very difficult to fully have a picture of where our customers today because it's up to them where they use the cocoa butter alternatives and where they use pure cocoa butter And 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 confectionery, 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 5% in certain markets. In some markets, you can go higher. That is to protect Kauko, if you will. Now, there are solutions that we can bring to our customer products that makes a very good product, even if you do replace the cow cover. So I think a relevant conversation to be had with biking prices, potentially a difficult supply profile. Is there an opportunity for the market for consumer prices to be managed to some extent by allowing slightly more of cocoa butter alternatives versus cocoa butter. For example, moving from 5% to 10%. 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% 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 into bigger regions like EU and so forth. Let's see. I think it's an opportunity for the industry.

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 is that analysis that we made and commented on before was in a more stable situation so when there is a stable more stable price development then it's easy to see the direct link between if if cow price would be too high it would impact demand so therefore not good but on the other hand still with a higher cow price than our solutions that still creates the demand for our solutions With this change that we see now, a sharp pickup, then we 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 in the market.

Yeah, and I guess in addition to the price back, there's also supply chain issues that we haven't seen before to the extent that we do now. And 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 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. So 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 Ayas 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 sharp up the cocoa about the 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 sort of visibility do you have on these profits here on the current cocoa price levels? Is it like six to nine months ahead? You see that, you know, this custom behavior that we have seen into more feelings and stuff of that sort of Is that what you see in your pipeline as well? Or is it any changes to that from what you report here in Q1? That's my first.

Thank you.

I think, first of all, that you refer to perfect correlation. I'm not sure we agree fully. This is just to repeat what we sell are Kaukabar 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 Calqua or not. And 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. So in essence, what we sold in Q1 has to a large extent been contracted last year. and vice versa. So 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 time 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 and given the recent spikes in cocoa is that what you're saying i think what i am saying is that uh 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 the producers of the finished product which are buying not only ingredients from us but from other suppliers they typically do that on on the same in the same way that I just described so long-term contracts trying to balance swings in the market so 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 Kalkua battery alternatives, if that were to be stick.

That's very helpful. And then on that topic again, you know, this is the third quarter where you have EBIT per kilo above 2. Swedish crown, so 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 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, our aspiration is also 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. 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 respiration. 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% 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 performing. We do our best every quarter. We push for both margin volume to make the combination of those two in terms of EBIT the best possible at any given time.

Yeah, I get that. But 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, in the Swedish media too. you a week back or something talking about larger not ruling out larger mna is this 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 you will be net cash at some point uh 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 mna 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 Bolton 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 or so. It's been the same message over the last years, I would say.

Okay, so, so yeah, in case of, you know, if there weren't to be no larger M&A, so extra, you know, share by back or extraordinary dividends, 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 that's kind of a final one here on working capital, you know, a bit negative here in Q1. How should we think about that for the remainder of the year? Should we expect it 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 of a quarter year of year, then sequentially. then that everything else equal will build up the accounts receivable we don't see any increase in q1 in overdues 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.

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

Thank you.

The next question comes from Oskar Lindström 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 – you know, interested in or able to take on, you know, new products from you, new more advanced products?

Well, thank you, Oskar. 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 and 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 Choco Bakery and combinations like that, when customers spill once or 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 the you know 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 we supply again to production or consumer products These trends that you talk about are in retail. Those are trends from consumers. The way 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 positive.

Okay, 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 market developments which we should note?

Thank you. And yes, 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 product and consumer demand. On the other hand, you have had a positive growth premiumization trend, which have helped us and our customers to also sell value in the market over, 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 the stabilization both from a demand perspective, but also a combination of good value creation in the products that 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. 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 a combination with our optimization program and the fact that we get operational leverage on increased volumes does 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 talked about today. Our journey doesn't stop here. We are currently 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 aspirations. That's a very good sign. Thank you very much.