AAK AB (publ.)

Good morning everyone and welcome to our second quarter results presentation. Joining me today, I have our CFO, Tomas Bergendahl, and we also have Tim Stiffensen, our president of global sourcing and trading as well as sustainability. With that, let's head into slide number two. This is what we will cover today. We will run through our quarterly highlights, some select events, we'll do a business and financial update including a progress update on EUDR from my colleague, Tim, and then some concluding remarks from myself, and we will also have a Q&A session at the end. So save your questions for that. On slide three, just very shortly regarding forward-looking statements, this is the presentation that includes forward-looking statements that come with risks and uncertainties. These are our views on future events and financial performance, but actual results could be different. So please keep that in mind when digesting the material. With that, page number four, and some comments to our key financiers for the quarter two or 2024. In Q2, our volumes grew by 4%, driven mainly by chocolate and confectionary fats and food ingredients. Our operating profit per kilo increased by 21% at fixed currencies, mainly driven by our global optimization programs and operational leverage from higher volumes. Profitability was also supported by continued favorable market conditions. Overall, operating profit increased by 26% at fixed currencies. Operating cash flow was solid, even with increased working capital due to the higher volumes that we are seeing. Our leverage remains low at 0.41 in net depth to EBGA, and our return on capital employed was strong at 21.5%. Please turn to the next page, page five. We had our AGM, or annual general meeting, on May 8th in Malmö, Sweden, with good representation, 77% of the shareholders represented. We also now are up and running with our bio-boilers in the Aarhus site in Denmark, and we're nearing full capacity. And this helps us to reduce our CO2 emissions from this plant with over 90%. And it's also saving us 100 million sek annually in cost savings. So really good projects there that is now up and running. With that, please turn into page number six. Comments on our business area, starting with food ingredients. We grew our volumes, they increased by 4%, driven by bakery and dairy, while special nutrition declined. Operating profit per kilo increased by 15% thanks to continued optimization and portfolio management. From an industry perspective, it was primarily driven by dairy, special nutrition, and food service. And with that, our operating profit all in all, rose by 19% and reached sek 756 million, despite a 3 million negative currency effect. Heading on to chocolate and confectionary fats on slide seven. Our volumes increased by 14%, building on last year's soft second quarter performance, and it was further supported by favorable market conditions. So really strong volume growth. Our operating profit per kilo increased to sek 3.55, with a sek 0.1 per kilo positive currency impact. And that all in all led to an operating profit that reached 433 million sek, an increase by 58% versus last year. And that was driven by further optimization of the CCF portfolio, good leverage on increased volume, as well as increased market penetration for our alternatives to cocoa butter. With that, page eight, technical products and feed. Volumes declined 11% in the quarter. This was due to production challenges during the restart process after our annual and planned maintenance stop. So really an isolated event with a longer stop than anticipated. As a result, production remained offline longer than anticipated. Adjusted for this one off stop volumes in technical products and feed actually grew by 3%. Operating profit per kilo and operating profit was of course negatively impacted by the low volume, following the longer than normal stop that we had. And with that operating profit per kilo dropped to sek 0.15 and the overall operating profit fell to 9 million sek, a decrease by 80%, but again, very much linked to a longer than normal stop. Production did come back up and has returned to normal. With that, I hand it over to you, Tim, for an update on EODR and what we are doing.

Thank you, Johan, and good morning, everybody. Please turn to slide nine, which deals with progress on deforestation related targets. First, some context from our sustainability report for 2023. You can see that up to 2023, we have made excellent progress towards our target of having 100% deforestation free sourcing of palm oil by the end of 2025, and it's at 83%. And on traceability to plantation, which is at 93% in 2023. We are also now making progress in planning to meet our science based targets for 2030, which were accepted by the SBTI in December last year and which comprise various targets in relation to carbon emissions. This is all very good news and displays a positive impact which can and does make being one of our key aspirations for 2030. Please turn to the next slide, which is slide 10, deals with several actions to meet EODR compliance. The EU deforestation regulation enforced since mid 2023 provides mandates for traceability and deforestation for commodities placed on the EU market, including palm oil, soy, cocoa, coffee, rubber, cattle and timber. Starting from December 30th 2024, so this year, all imported raw materials in these categories must comply with EU deODR requirements, including evidence of traceability to source, proof of legal production and being deforestation free since 2020. For AAK, this impacts palm and soy in particular and the input then there imports into the EU. It's a regulation already in force and although there is speculation that its application may be delayed beyond the end of this year, it is a regulation with which we are planning and expecting to comply in line with the timeline of 30th of December. We've already taken steps to comply, including working with suppliers, revising our make or buy strategy and preparing our production setup for increasing increased processing in Europe. We're also maintaining an open dialogue with stakeholders, underlining IT systems and documentation requirements with customers and authorities, so far as those requirements are already known. There do remain some gaps which we expect to be filled and need to be filled by the EU Commission and member states in order to allow a smooth transition. We're working with suppliers to meet EU deODR requirements by year end and strategically replacing elements in our supply chain to safeguard compliance. We're also adjusting our sourcing strategies and increasing production flexibility in Europe to mitigate risks. Our 2024 capital expenditure includes 100 million SEC for upgrading European fractionation facilities and to ease compliance with EU deODR standards. And we're investing in expanding our presence in the Port of Rotterdam and integrating IT systems for all material traceability requirements. These investments represent early steps in our careful approach to EU deODR compliance. And with that overview, I'll hand back to Johan.

Thank you so much, Tim, for that clarification on EU deODR. As mentioned by Tim, we are indeed allocating some 100 million SEC to upgrade our facilities in Europe for compliance. We've also invested a similar amount to enhance our presence in Rotterdam, as you just mentioned, and we're also integrating a new IT system. And these investments really mark our initial steps to cautiously monitor regional EU deODR implementation and enforcement. And we are consistently and continuously assessing potential future CAPEX in order to comply and develop as AAK. And with that, let's move into further comments on our financials with you, Tomas.

Thank you, Johan. Good morning, everyone. Turning to slide 11. As you can see from the graph, cash flow in the quarter was driven by earnings primarily, offset by changes in our inventory mix with a higher share of palm versus shea and rapeseed, mainly driven by seasonality and growth in our CCF. Overall inventory levels remain stable, as did accounts receivable and cash flow from accounts payable were positive in impact, also driven by the change in inventory mix. Building on Tim's earlier comments, in order to ensure smooth implementation of the EU deODR regulation, as well as the effect of seasonal procurement of inventory related to shea and rapeseed, we will have a temporary stock buildup, which is expected all else equal, to have a negative cash flow impact of roughly 500 million SEC in the second half of the year, primarily in the fourth quarter. This effect will then reverse and return to normal over the first half year of 2025. This is a regular seasonal effect, but this year exaggerated by the EU deODR implementation. And the EU deODR part of the buildup is there to manage existing uncertainties that still remain in relation to the implementation of the regulation. CAPEX amounts to just over 300 million SEC in the quarter, 570 million SEC year to date, and we continue to guide the 2024 full year number to 1.2 billion SEC. Our return on capital employed increased, as Johan mentioned, following the continued strong development of operating profits. With a rolling EBIT in the calculation of roughly 4.7 billion SEC, the return on capital employed is 21.5%. And capital employed in the calculation is then at 21.6 billion SEC, and the latter remaining very stable over the last few quarters. Next slide please. When we look at our net debt to EBITDA, it remains at low levels, 0.41 in the second quarter, marginally higher than in Q1, but this is also following the dividend payout of 960 million SEC in May Q2. With that, I'll hand it back to Johan for some concluding remarks before we open up for questions.

Thank you, Tomas, and please then turn to the next page, slide 14. Let me just summarize the key messages here today. We are pleased with our continued progress towards our 2030 aspirations. We delivered year on year volume growth, organic volume growth, and maintained an operating profit per kilo above 2 SEC. Resulting in a 27% increase in operating profit. We remain focused on achieving an average operating profit growth of 10% over time, and we are prudently optimistic about the future. And with that, we would like to open up for questions. So operator, please go ahead.

5 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 Alex Jones from Bofe. Please go ahead.

Thank you for taking my questions. Two, if I can. The first on the food ingredients margin in particular and the sequential development. I think EBIT per kilo is down 4% versus Q1 while volumes are slightly up quarter on quarter. So can you explain what's driving that sequential movement and whether we should expect further sequential deterioration into the second half or whether it's something that's specific to Q2? And then the second question just on chocolate, clearly very strong volume growth this quarter. Can you talk a little bit about how much benefit you think you're already seeing from customers shifting recipes in response to the higher cocoa price? And how your pipeline of such reformulation opportunities is evolving into H2 and whether that sort of eventual opportunity is much bigger than we're already seeing in the results today. Thank you.

Thank you. First of all, with regards to sequential development, it's not a big drama. There are always movements between quarters and Q2 is typically slightly softer quarter. But I do understand your question with regards to volume sequentially, but we don't see big movements. But there are always some movements between in the mix and the portfolio and also between certain regions. So not a big shift there with regards to EBIT or Kilo development all in all. With regards to chocolate and confectionery, this is of course, you know, this is a we need to look at this in a total perspective. There is no doubt that we offer alternatives to cocoa butter, as you know, these alternatives bring, you know, that brings functionality. It also brings cost efficient solutions to our customers. So with the higher cocoa prices, there's certainly an interest in looking at alternatives. And we've seen that and we comment in our report that we see a increased penetration for cocoa butter alternatives, be that a customer used to cocoa butter alternatives, using more of it to be that a customer that hasn't used it before that is now using it. Or even certain segments of customers that there's really trying it for the first time and now replacing cocoa butter. So that is a clear trend that we have seen with regards to the direct link to cocoa price. I think it's important to keep in mind that we're always selling this in the market. There are competitors out there. You only win businesses based on what you offer and the value that you bring. And the total mix of why we are performing well is still back to higher volumes, which is certainly linked to market dynamics, but also that we continuously optimize our operations, our portfolio management and the value that we bring to our customers. So the total of that is what leads to our earnings and earnings growth.

Great. If I can just follow up on that a touch more, I suppose. I think last quarter we talked about this high cocoa price creating that interest, but you also talked about the fact it takes customers time to change their recipes. Have a lot of them now had enough time or do you still think for many of your customers, you know, it's going to take longer and therefore there's more potential benefit to come if, as you say, you can out compete your competition to win that business.

Yeah, great question. It does take time for reformulating and with food and with many other industries. Obviously, the consumer product companies always want to be very careful on testing things out within the chocolate and confectionery business. There is also a bit of, you know, yearly tenders and planning ahead. So we have seen some impact of this, and that's what we mentioned structurally. I do think that there is a real opportunity for cocoa butter alternatives going forward that we haven't seen yet. And I do believe that when customers do reformulate and see the benefits, both from a functional perspective and a cost perspective, and have proven that in their product to consumers, then it becomes a bit a stickiness to it because then you are in the recipe. So we're quite positive with that regard. And then we'll keep highlighting that. I think there are even more opportunities down the line if certain countries or government bodies would challenge the restriction of using cocoa butter alternatives, which in many places are capped to five percent only in the ingredient list. But we could, with good functionality, go higher.

Thank you.

The next question comes from Alex Sloan from Barclays. Please go ahead.

Yeah, morning all. Thanks for taking the questions. I've got a few. The first one just actually building on the last discussion on the CBEs. So certainly get that, you know, you think there's a structural volume opportunity from penetration. Does the high cocoa butter price also give you license to raise your pricing on CBEs in 2025? And where are we on the sweet spot there? The second one, just in terms of the group more broadly, I mean, obviously, AAK returns are historically at very good levels on the back of the margin uplift that you've delivered over the last couple of years. I mean, that's also been somewhat visible at competitors like Bungie and Fuji Oil over the past year or two. So, you know, I wonder, do you think that sort of the high return on invested capital that the industry is making is kind of structurally sustainable in vegetable oil processing or particularly in segments like CBEs? Could the strong developments maybe encourage more capacity from larger competitors over the over the medium term? That would be the second one. And then just finally, Tim, thanks very much for the detail on the EU DR. Really good to hear you're making progress there. Obviously, you know, last year there was a investigation piece in Sweden Nature that that linked AAK and others, you know, buying from mills in Indonesia that, you know, had been linked to palm fruit from protected lands. I wonder, are you confident that the traceability that you now have in place to plantation would have prevented that? Thanks very much.

Thank you. Great question. Starting then with CBE and whether that would be a license to raise prices, I think, need to be repeated. Right. We always win and lose against competition and there's always a price negotiator. I don't necessarily I wouldn't call it license to price. However, we can all understand that if there is an increased demand and increased opportunity, you know, that demand pull is also playing into the industry dynamics and the competitive landscape. So with that, of course, these dynamics is supportive in terms of continue to focus on good alternatives to COQA. Then with regards to, you know, is the higher return sustainable and so forth with regards to the total loads and fat. So, you know, from my point of view, I've been quite vocal about this in certain context is we are a multi-oil ingredient house as AAK and we compete against other oil ingredient players. Some of them were to be integrated. Some would call it, you know, commodity type setup. But these are ingredients. We sell ingredients. And if you look at the profitability, if you look at the EBIT that we have as an industry, it's a quite low EBIT type industry. So I think there is a huge opportunity to make sure that any ingredient is sold based on the risk we're taking, the value that we bring. And in that context, I do believe that higher margins for companies producing oil, which play a huge role in the end product quality, the taste, the texture, etc. It makes sense to have good returns. And I think that's where I leave it internally. We do have continued opportunity for optimization, alignment across our industry and driving portfolio management and learning from food ingredients into chocolate and confectionery, vice versa, and also leveraging opportunities in replacing fossil based ingredients within technical products and feed. So huge opportunities, I think, to drive value. I don't know if you have further comments to that, Thomas.

No, I think the improvements that you've seen in 22, 23 that now continues in 24, as we've stated before, we see the majority of that being driven by the internal changes that we've made and efficiency gains and so forth. Getting up to a more sort of reasonable level of profitability for a business like ours, as we see it, as you once said, providing functional ingredients into the food industry.

Yeah. And then the last question here on traceability. Great question. So important that we drive fully sustainable supply chains. Palm is such an important product for feeding the world. And traceability, stopping deforestation is key for us and key for the world. Tim, do you have specific answers to the question?

Sure. Alex, yeah, I mean, in relation to the issue, one issue that you raised that was brought forward by Swedish Nature last year, our traceability, as we've already said, in to plantation in 20, 23 was 93 percent, so not 100 percent at that. And even if it was 100 percent, then I think we can't rule out individual issues arising. It's a bit like sort of health and safety. You never want them to arise, but sometimes you get them. And then it's important as to how you react to those sort of issues when they do arise. So I think that we are confident that our traceability to plantation is appropriate to what we do. It's actually quite different from the EU DR requirements as well as perhaps important to say that the EU DR requirements are around compliance and providing polygons from from each individual location, from where we source. So so that is that is a difference. And ours is focused more on the sustainability side and making sure that we contribute to sustainability and are recognised for doing that. So I can't give you absolute confidence that we won't get anything else that arises, of course, because some things do come out from time to time. But I think we are our level of traceability and our actions in that area are appropriate and industry leading, in fact.

Yeah,

and we are we

are so active in driving it as a positive driving force for sustainability in all these areas. So I'm confident that we are doing the right thing, but there is never a guarantee for someone misplaying things in a certain situation.

Very clear, thank you.

The next question comes from Priya Patel from UBS. Please go ahead.

Hi, congrats on the results today. I have two main questions. So firstly, within food ingredients, I'm just digging into sub segments. So bakery grew volumes year over year, but the EBIT per kilo development was flat. Was this due to mix or like price to raw spread? And then also for special nutrition volumes declined year over year, but you saw EBIT per kilo grow. Could you again just explain the dynamics here?

Thank you for the question. I think as you mentioned before, in food ingredients, there is some seasonality coming into Q2, as we mentioned before. So no sort of big items that stick out for us in the quarter. The margins and the volumes will change somewhat up and down. When we look at special nutrition, as we mentioned over the last couple of years, we do have challenges on the volume side, particularly on the high end products that goes into the Chinese market, mainly driven by the reduction in birth rates. That trend continues, but the margin has improved somewhat over time, which is nice to see. And that's also connected, as we mentioned before, to some of the raw material prices. But the pressure on special nutrition in terms of volumes continue.

Yeah, so all in all, I think we focus on these optimisation programmes, portfolio optimisation. We also are there in the market in a competitive landscape. So back to Baker, of course, in some cases we take a bit of volume sometimes on the lower margin, but we focus on higher margin businesses. So looking at the total portfolio, as you can see, we're up, we're leveraging high volumes, but there will be dynamics between segments in quarter to quarter.

And in food ingredients sequentially, we also see our food service business growing, and they tend to bring a little bit lower than average margins into the business. So this also has an effect. So good year

on year improvement, but slightly dilutive on margin.

Those are the dynamics.

OK, thank you.

The next question comes from Joan Lim from BNP Paribah Exane. Please go ahead.

Hello, thanks for taking my questions. I have two, please. So just picking up on the food ingredients point, other than optimisation, I think EBIT has been strong in part by your strategy to improve mix. Can you share more about what are some of the drivers of growth and premiumisation within this segment, excluding special nutrition? That's my first question. And my second question is in CCF. So how far is there to go on this reformulation opportunity? So you mentioned there's annual contracting. How should we think about H2? Is it going to continue? Is the strength that we are seeing so far going to continue? Or can we expect a deceleration? Thank you.

Thank you. Well spotted. Speaking about the optimisation and portfolio management that we have done within food ingredients, excluding special nutrition, large volumes in bakery dairy, obviously. We have had really nice programmes running with the structure process. We call it like a factory deep dive, where we go in and look at a total factory, how we run it, how we plan it, what the profitability is by product category, etc. And then try to optimise. And that could be internal improvements on how we plan the production to save cost, but it could also be how we challenge lower profit type products. And I mean, that method and that concept, that works on any segment, any industry, right? So but we have seen benefits in that. And further to this, our focus is on high value added ingredients, really speciality ingredients. And within all the industries that we serve, absolutely dairy and bakery, as well as special nutrition, chocolate and confectionery. There are pockets of opportunities where our functional ingredients really play a different role or a good role in terms of the recipe for our customers. So it's been a focus within dairy, bakery, food ingredients and total, also within food service to really optimise the portfolio, really deliver the high value added products. And with that drive, call it a better mix or at least a better EBIT per kilo. So if that helps answer the question there on food ingredients, then I'm moving over to continued strength. Repeat the question on the second quarter, please, or the second half of the year. Was that CBE?

Yes, in the CBE reformulation opportunity, because contracts are annual, right? So just trying to get a sense of each two.

Yeah, thank you. I just needed that reminder. So, yes, with regards to CCF in total, right? Let's keep in mind that when we speak about the performance in chocolate and confectionary fats, we bring within that industry offering, if you will. We have a broad portfolio of solutions, be that CBEs, be that other alternatives to cocoa butter, be that filling fats and so forth. In total, these alternatives replace cocoa butter one way or the other in different confectionary applications, CBE being a dominant one that really is a cocoa butter equivalent. So the total portfolio does deliver a value, a cost-efficient value to our customers. When we then look at this from an industry and a kind of a yearly cycle perspective, the large players in these industries, the large consumer goods companies, they do often yearly tenders where we offer our ingredients and price and so forth. And then we get allocation, but you typically don't allocate your full volume. So then during a year, there will typically be opportunities to win business over time. So therefore, as we look into the second half of the year, a lot of it has been contracted already back in Q3, Q4 last year, but a lot of it, not a lot, but some is still there to be contracted, you know, during the first half of this year and even now during Q3 into late Q3 and Q4. And then we will come into allocation contracting a season again, end of Q3, Q4 for 2025. So that's kind of the dynamics. And some of these dynamics in the industry linked to cocoa prices and so forth has really accelerated towards the end of last year and the beginning of this year. So I think we're far from seeing the full impact of that, but we have seen some of

it. Okay, thank you. That's really helpful. Maybe, can I just squeeze in one more question? So on finance costs, they have remained high even though they've come down year on year due to your reduced debt levels. Can you just remind us what's driving these higher finance costs this year?

Thomas? Yeah, thank you for the question. I think if you look at the financing costs, the interest rates have come up over the last couple of quarters, as you've seen. Now we see about 60 million sec a quarter on average in financing costs, so it's remained fairly stable. What you see in the cash flow also includes then taxes. And there's a seasonality to that where we pay from a liquidity point of view more taxes during the Q2 period compared to other periods during the year. So that's part of the at least the liquidity effect to it.

And is there any hyper inflationary considerations in finance costs? Because previously I think there was an earthquake in Turkey and is there any more from hyper inflationary?

There is a little bit of impact, but it's very limited in Q2 and it relates to Turkey still, which is in hyperinflation definition, if you will, from an accounting point of view. But not a big impact in the quarter, no.

Okay, great. Thank you very much.

Thank you.

The next question comes from Benjamin Wollstedt from ABG Sundial Collier. Please go ahead.

Good morning. I'm following up on previous questions with higher prices for cocoa and thereby also chocolate. What is your view of volume growth in the chocolate market overall going forward? Do you get any indications from customers in this regard, please? That would be interesting.

Yes, thank you. And of course that's the end consumer demand we're talking about, the absolute volume growth. We haven't seen a lot of impacts still, so kind of small movements in the market. As you can see, our volume growth is higher than the market and that's linked to the things we already talked about. Technically, I think it's worth considering that, of course, if you see high inflation, I mean, if cost really goes up and up and up and that impacts the price on the shelf, then of course that has an impact on consumer demand. We haven't seen a huge impact yet, currently, low single digit minuses. So far called it's so good in terms of end consumer demand still being there. We're still using indulgence to treat ourselves and that has been the case many times in ups and downs in industry. I am confident that we have a great opportunity to work with this opportunity for penetration in our solutions, but it's hard to say whether we will see further more significant changes in the market demand. So far, it hasn't been there.

Perfect. Thank you very much. And perhaps a follow up on this one, on the previous question as well. I get a few questions on obesity-related medication possibly have a negative impact on volume growth for products such as chocolate. Do you see any difference in consumer demand between, say, North America where the penetration of such medications is higher than in Europe, for example?

No, a simple answer is no, absolutely not. Not yet, maybe would be the prudent answer. But I think these are medicines that potentially can help us have better health and so forth. And our view at the moment is like, it's great that we focus on health and possibility for us to live longer. When we look at it in a total perspective with the sustainability challenges that we have that it needs to impact our diet. So I think there's a huge opportunity in the future for a growing population that might live longer even with the help of such a medicine. But also the greater need for plant-based ingredients and so forth to shift diets from animal-based and also from in the other sectors shifting away from fossil-based. So when we look at this, we do see a strong future for plant-based oils and fats, but there might be some impact from medicine like that. But that's where we stand at the moment. We haven't seen anything in the demand picture at all.

Perfect, thank you very much. And then a final one from me. You gave us an adjusted volume growth figure for technical products and feed after the unplanned production stop. Is it possible to give adjusted EBIT figure for the segment as well please?

Yes, thank you. Good question. We can give you some numbers on that. If you look at the volume for the group, we were plus four percent. If we adjust for the extra downtime on TPF, if that would have run normal schedule, we would have been at plus six percent instead of plus four for the group as a whole. We saw the combination of lower volumes, meaning lower sales in the quarter with the reduced net margin and additional costs related to the stoppage about 35 million. So instead of EBIT being up 27 percent year over year, it would have been up close to 31. And an EBIT per kilo that would have been up a few or to about 215, 216. And it's not because feed has a higher margin EBIT per kilo as you know, but it's the additional cost that is also contributed with the stop in addition to the lower volume. So about 35 million in the quarter.

Perfect, thank you very much.

Yeah,

thanks.

The next question comes from Victor Hansen from Carnegie. Please go ahead.

Hi, Joanne and Thomas. Thank you for taking my questions. A couple of follow ups here. Firstly, if you could provide an update on your M&A pipeline.

Well, I could, of course, but we don't comment specifically, right? So let me maybe rephrase the question or the answer. An update on M&A. We obviously with our continuous strong balance sheet, we do believe that we have an opportunity to consolidate, expand, geographical expansion, bolt on acquisitions, and or if something bigger would materialize. So I think the same answer to what we have said before, we're still very interested, we're still very capable, but there is not a lot of transactions out there in our market. So we just need to be focused, making sure that we are relevant when anything flips, and we are much willing to do so. But I can't comment on any specific.

Yeah,

yeah, of

course. That's yeah, exactly. That's to before. I think it's like that. Yeah. And the next question I had here on if you could give an update on your cash to grow program. Could this perhaps mitigate some of the EU DR driven additional working capital?

Thomas, yeah, we we the program is continuing. We have scheduled a few more facilities and plants during the fall, and it's progressing well. We did measure the development of working capital days between the facilities that we had gone through the project and the ones that hadn't. And we saw actually, so far, a seven day working capital reduction with the ones where we had gone through the cash to grow process compared to the ones that we hadn't so far. So we do see a good effect. And we hope that will continue as we then roll this out to the remaining plants and facilities in 24 and continuing them through 25 as well. So good progress. But it is quite labor intensive in each plant. So it will move continue into 2025 with this activity as well.

Perfect. And perhaps a final question here on on TPF, the lower volumes due to a production stop. Should we expect this volumes to be delivered in Q3 instead?

Thank you. No, it was a longer stop. And we kind of lost that opportunity for production and sales. But we are up and running as normal. So not an unexpected catch up, but still expect it now back to kind of normal operations.

Okay, perfect. That's all for me. Thank you.

But we just as an additional comment, sorry, we don't see any negative effects on volume going forward from not being able to supply during that period. So it's more a hand to mouth type of business in that way.

Okay, thank you.

Thank you. Right, I think that was the last question. Or we have actually time for one more question, I think. So if there's one more question that we could take.

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

Yes, most of my questions have been answered. But I do have one question. And I guess it's for you, Tim. On EU DR, and if you know, any way to say what kind of impact this regulation is having on the competitive landscape? You know, are you seeing any changes in supply to the EU with competitors perhaps giving up on the European market or at least segments of the market due to the tighter regulations?

Yeah. Thank you, Tim.

Yeah, I asked her. Well, it's not being implemented yet, actually. So it's a difficult one to answer because it doesn't come into effect until the end of this year. I don't expect any major changes in terms of that competitive landscape, really. Everybody's affected in pretty much the same way. Certainly as far as the oils and palm and soy, which impact us. And I couldn't comment on the other commodities. It may have some sort of impact, but it would be speculating to see if it had yet. So maybe ask me in six months' time or something, and then I'll be able to give you a better answer on that.

I mean, and as a case, you know, I mean, we are agile. We are on top of it. We're trying to lead and be, you know, really well prepared. I think our greater concern is rather what these kind of very detailed regulation and detailed focus on compliance is doing to Europe. You've heard those voices in many areas. So it's a bit of a concern that they choose a very comprehensive way of approving compliance. And with that, you know, likely, you know, cost for importing goods into Europe goes up and so forth. But we are on top of it, and we will be able to comply as we understand more of this. And then see what impact it might have on competitive landscape. But I think the greater conversation should rather be on Europe as a whole and these kind of regulations and the cost of compliance versus the benefit where, as you've heard us being focused on, for example, satellite monitoring, driving no deforestation. So we share the same objective and intent. However, EU has chosen a more difficult way for compliance versus maybe our choice.

I agree with you that that seems to be the case. Just I mean, have you seen any of your customers, you know, considering at least changing their sourcing and use of raw material for oils and fats due to this regulation, you know, making palm oil relatively less attractive and other oils relatively more attractive? You know, is it happening any, having any changes on demand?

Thank you. Great question. There are some examples, but it doesn't move the needle on the big items, right? So large customers, large products, you know, volume products in the market, no big change and I don't expect it to be. There are some that do look into that and it's part of our plan, actually. We are, for us to comply, we're looking at reformulations, we're looking at how we source and what suppliers we're using and we're looking at some internal make-buy investments, as you've heard. But I think it's worth raising the view here again, that could be a simple way for someone to just don't, you know, you don't have to deal with it. Let's say you choose another oil, you reformulate and you don't have to deal with that. Does that make deforestation lower in the world? Does that make our world more sustainable? Does that mean that we would meet our targets faster on the 1.5 degrees? No, it won't because many of the other solutions are less sustainable than a sustainable supply of palm, for example. So this is where we advocate facts on the table, look at what ingredients, what kind of diets are more sustainable than others. But these type of regulations will have some consequences and some of them are maybe irrational or would not lead to the right result. But for certain customers, they're choice. And their AK is great again. I mean, we are good at reformulating. We're good at helping our customers. We do have a multi-oil ingredient house offering. So this could be beneficial for AK, but I'm not necessarily advocating it being the best choice for feeding the world sustainably.

Great. All right. Thank you. Those were my questions.

Thank you so much. Thank you to everyone that has been listening in, calling in for your great questions. Thank you, Thomas and Tim, for this call today. I wish you all the best. Thank you.