Essity AB (publ)

and welcome to ESRI's presentation of the fourth quarter and full year 2023. My name is Sandra Åberg, I'm Head of Investor Relations, and joining me today are our CEO, Magnus Groth, and our CFO, Fredrik Rystedt. Magnus and Fredrik will go through the results, and after that, we are very much looking forward to your questions. I would just like to kindly remind you to have one question per call. And any additional questions, please reach out to me after. We will also be roadshowing in Stockholm today and in London tomorrow and in the US next week. So if you would like to meet with us, please let us know. With that, we are ready to get started and I'll invite Magnus on the scene. Magnus, please.

Thank you, Sandra, and good morning, everyone, to this year-end report of the best year ever for Essity, and of course also a thorough follow-up on the fourth quarter. Just as a reminder that every day our brands care for the hygiene and health of over a billion people in 150 countries. And it's done through our fantastic leading global brands, where in many cases these brands are multi-billion dollar brands or billion dollar brands. and in good health and, of course, a fantastic starting point for us as we continue our profitable growth journey. So, what's really, really new, of course, for the first time now, we are presenting the SCT Group with Vinda as a discontinued operation. And as many of you remember, Vinda accounted for approximately 17%

of sales. So this is what the full year 2023 numbers look like without the net of 147 billion, 18.9 billion of adjusted EBITDA, which is the highest. ever with or without vinda and 36 000 please 2023 it was a very very busy year we achieved the highest profit ever and we have created now

what we see as a very strong platform for growth and I'll get back to that and so will Fredrik throughout this presentation. We substantially improved our structural margins for all business areas and of course this is from this position we aim to continue to grow and we made good progress on all our key priorities other than the financial priorities, innovation, efficiency and sustainability which is so important for us in the longer term. In the quarter, we also received a preconditional offer for Vinda, which enables a more attractive portfolio for S&P going forward.

Starting then with the preconditional offer for a very attractive offer for the end of shareholders at the price price of 23.5 hong kong dollars per share the annual return during the nine or ten years that we've been holding the stock would be approximately 14 percent and the EV to EBITDA multiple it ends up at around 18 times so the cash procedure its amount to about 19 billion SEK and we will remain with Vinda as a licensed provider for the some estates the brands that will still be sold in in china and in other We remain committed to China and Southeast Asia. with the strongest brands going forward. The transaction is expected to be completed mid-2020.

And again, interesting or important to note is that we are now in this presentation also looking back the last three years, we will only look at numbers that has been as a discontinued operation. So what does this mean, the offer for Vinda? We have looked at our sales split several times, as you can see here down in the left hand corner, that's the net sales split in terms of sales in 2022, where the two components making up our consumer goods business, personal care and consumer tissue accounts for 61% in total. And the stated aim of

and as you can see there in the middle this is the says 2023 then within the discontinued and there's a huge shift consumer tissue after than in the only amount to 33% of sales and so we could almost stated we have come a long, long way to our long-term direction of having a more balanced portfolio for the The graph to the right just shows what could be known. course not an exact state but some kind of longer term direction interesting to note that with this reduction purchases are reduced by half so to a much more substantial amount than the actual impact on sales because wind has been very pulp intense so our pulp purchases will come down from three

0.1 million tons per year to approximately 1.6 million tons per year. And this together with other efforts we're doing in reducing our pulp dependency in all parts of our business by working with other sources of fiber, recycled fibers, wheat straw and so on. We are taking a big step out of the volatility that has been impacting our earnings due to pulp and other raw materials.

and this change in the portfolio has also been enabled by a number of successful acquisitions and just a brief overview even though these decisions these acquisitions done some time ago because the logic is very different for the different types of acquisitions but common for all these companies and businesses is that they're all growing they're all profitable starting with me The logic was clearly synergetic. We were already part owners and we could achieve cost synergies and scale. When it comes to the medical bolt-on acquisitions, a bigger hydrophilic Aquacast coach. We have a very profitable and successful medical platform and on that platform we can add high yielding low capital intensive leading small smaller companies in a very effective way. While legacy, Modibodi and Nix are all examples of how we are finding new focuses of growth in categories we're already in.

Legacy when it comes to industrial wipers, modibody index, washable absorbent underwears, where we are now the world global leader. And in all these areas, with all these acquisitions, growing and profitable Moving on over then to the numbers. Strong sales growth, record high adjusted EBITDA. And as you can see on a yearly basis, up 57% year-over-year to 18.9 billion. Adjusted EBITDA margin up to 12.8%. Adjusted ROSI, 16.4%. An improvement with 550 BIPs. And adjusted earnings per share at 17.5%.

Looking at growth, how that builds up, volume was negative 3.7%. Our price mix was very positive, 9.5, and the acquisition contributed 0.9. We will look further. on how this has developed in the last quarter. Taking a longer term perspective, perspective, which I think is always important, especially considering how the world has developed over the last couple of years. Looking back three years where we have done the work of putting and the numbers into this in the discontinued with fashion we have seen net sales from 21 to 23 45 percent and an improvement of 65 percent from 21 to 23 and these are the only three years where we have all financials accounted for as discontinued. Still, I would like to take a look at even longer term perspective because of course SCD is a young company and

We are at the final stages of really now having a fantastic platform for future growth that's efficient, well-structured, strong brand, strong market positions. And that's after a number of years of hard work from our fantastic employees in creating this company, Essity. Over these years, and here's then the trajectory from 2014, so nearly 10 years, this has been the development now comparing Not apples with apples, but apples to peers.

Because in the light shaded areas, you will see SD numbers or before that. numbers including Vinda and for the last three years excluding Vinda and even excluding Vinda which of course contributed significantly both to the top line and to the profit You can see that after now these turbulent years with the pandemic, we are back on track. So huge achievement by the organization. and I think it really shows the underlying power that we have in S&T. And from a net sales perspective, that were actually higher than back in 2019, even with wind that discontinued. And of course, Look at that, the adjusted EBITDA is our highest adjusted EBITDA year. In spite of having winter included in a very favorable year. I think it's important to say that that's all behind us. We're now looking forward and we expect and are working to remain on this trajectory for many years to come going forward. So it's really a long-term game.

There will be swings between individual quarters, but for the long term, I think this clearly proves that we're on a very, very steady path. And based on this, there's a suggestion from the board to the annual shareholders meeting to increase the dividend by Half a krona, 50 öre to 7 kronors and 75 öre, an increase with 7%. And you can see that that trajectory is very much in line with the overall growth and profitability. Moving then to the shorter term, the fourth quarter of 2023, we had net sales that were nearly flat and sales growth slightly negative.

and I have a bridge soon to see how this builds up. Yesterday, they continued to develop very, very strongly, plus 18%. compared to a year ago. The EBITDA margin 13.3% and ROSI at 17.1%. So, very strong improvements in all the areas. Looking at these numbers, of course, sales growth is something we should dig into. It has very much to do with that we've done in the different businesses in order to have a higher structural margin in remaining business to grow volume-wise and mix-wise going forward. I think that's very important to note. When it comes to the adjusted EBITDA, we're very very happy about the gross margin. We'll look at that in a while. We had some SG&A costs that we And for the first quarter of this year, we expect SG&A cost to be slightly lower than in the fourth quarter.

So it's something that we're managing. Looking then at sales development in the last quarter, volume accounted for minus 1.4%, while price mix, as is often the case for S&E, was positive. And looking then at the minus 1.4, there was actually an underlying volume growth if you exclude the restructurings that we have seen. presented and talked about in Q1 and Q2 of last year, and the deliberate exit of contracts in IncoHealthcare and in baby care.

And we also tried to be very, very clear about this in the third quarter reporting that this would have a significant negative impact in the fourth quarter and in the first and, to some extent, the second quarter of this year. So that's what you're seeing. So taking this out, we actually have an underlying growth compared to a year ago. And we also have a growth in the entire business. Sequentially in the fourth quarter compared to the third quarter. Next, continue to be very, very strong, 0.9%. Based on our innovation work, our strong brands. our investments in AMP prices down very slightly compared to a year ago. very happy about considering how raw materials energy and other costs of Canada we've been able to hold pricing more as unchanged year over year. Again, a tribute to our strong brands.

You can see that gross margin improved significantly, better mix, cost savings, lower costs for raw materials and distribution. and we actually saw higher energy costs in the quarter since we had some energy we had some energy benefits last year and the lower prices and volumes and salary inflation in cost of goods sold amp increased and had a negative impact of course this is something that we're doing in order to boost our sales, our volume sales to grow the business going forward.

So an investment for the future while SG&A has already had a negative impact and the we are taking action as i already mentioned we expect is likely lower SG&A costs in Q1 than in Q4. Very positive maybe worth mentioning here is the cost savings. This is something that has been difficult to achieve. I'm now talking about cost savings. 177 million in the individual quarters of very strong pace of savings and we expect for 2024 that we will continue to be able to show significant significant savings in cost of goods sold somewhere behind between half a billion up to one billion on an annual basis With that, I'd like to hand over to Fredrik to talk about the three individual business areas. Thank you, Magnus.

As usual, I will start with health and medical. That continued to develop really well with good growth and a significant improvement in margin. In fact, if you look at the business area, this is where we've had the highest increase of margin. So if we look at the growth rate, it was clearly supported by pricing and a positive mix. So pricing a bit over 5%, 5.5%, and mix roughly 1.5%. Volumes were higher for medical, but clearly lower for incontinence. And this was partly on the back of continued aggressive price patterns. management and also due to the different exits that we did in Q1 and Q2 of 2023 so that was

part of the decline for the business area. And this will, of course, just... To remind you all that this will actually then still impact the volume growth for the business area in Q1 and Q2 of 2024 but just worth mentioning that none of these exits were done And we're not planning to do so as we go forward. It's much more, as Magnus talked about, about growth. Going forward. Now, if you look at medical and the volumes there, or the growth there, all therapy areas actually grew. And if you look at particularly wound care, it was supported. by just the great performance of the acquisition of Hydrofera that mine is managed with Hydrofera having organic sales growth of 19%. So really very, very strong. Now operating margin, if I go to that, increased with 520 basis points. And this was

very much due to pricing. It was about mix and, of course, also lower input costs that we have seen now in the last couple of years, or throughout the last several quarters, I should say. So this is obvious that we are now working off a much higher structural margin in our business area as a whole, and this is particularly the case for Inco. Magnus talked about SG&A being a bit higher, and one of the areas

where we actually see this is health and medical. And this is marketing, selling, and the personnel cost. that we actually have added during the quarter. If we look at going forward, as I already mentioned, expect growth but we will be impacted in terms of all you mean thank you through the restructuring measures that will not be in the second half of 2024, but it will be in the first half. So just worth remembering. And I'll comment to be on on the raw material side or input cost is generally when it comes to raw material we expect slightly higher during the first quarter sequentially versus Q4. This is basically some increases on the fluff and also oil-based materials. Light increase sequentially. Now, turning to construction. consumer goods, there you can see that growth has slowed down a bit, so if you take the

over a bit over 2.5 roughly about 2.5 percent down and this is mainly you can say driven by consumer tissue or all of it actually but let me walk you through all of the categories one by one so I'll start with Inco there having a growth of 9.8%. So really very, very strong. And that's based on pricing up by roughly about five. And then volumes also positive with about five and in a slight positive mix. So really very, very strong performance for incontinence retail. Feminine is where we had the strongest growth of

It's a bit over 16% volumes up. It's also there by 6.5%. And we had a strong price impact there of approximately 10%. Also there we had... And we're very proud of that because, of course, as you know, there has been a bit of downtrending throughout last year. last year through 2023, especially in Latin America. And despite that fact, based on our innovations, we achieved a positive mix coming to the baby then the price and mix were positive positive, but volumes were quartered on last year's quarter, or 23 versus 22, still today. but this is basically just the result of the exits that we did in... one of the big private label companies for profitability reasons so the underlying growth

is actually positive and if you look at the volume development sequentially for baby it was quite positive actually nearly seven percent so it's really going in the right direction for baby in in many ways both volume wise and profitability wise and then finally consumer tissue minus ten percent so this is what is driving basically the overall development And here we see lower prices and volume. And so you will recall from Q3 and Q2 that we saw a fairly significant volume decline. This was based on our aggressive pricing. And we also talked about then making sure that we start again having a reasonable growth in consumer tissue.

And as was the case With baby, it's also so with consumer tissue that sequentially we had a very good growth, so roughly about 7% there. as well so all in all quite a good development from the volume perspective for all our areas And this is actually resulted in good market share development. And this is particularly the case for feminine, for consumer tissues. and actually for baby and we are continuing to invest in amp to make sure that our market shares all also on incontinence retail will elevate or start to increase. So just a couple of words on the operating margin. As you can see, it's up with 180 basis points 13 and this is very much due to the price management of course lowering less than the advantages we've had from the input costs.

It's also the efficiency gains that we have in COGS. So generally, a very good performance in terms of margin development. I'll just make a few comments on when it comes to raw material. We expect higher raw material here when it comes to particularly pulp and to a degree also recycle. So in this business area, we'll see higher cost. And once again, this is also sequentially. I haven't commented on the energy costs, but again, that's a much smaller number.

But generally speaking, when we talk about Q4 and Q5, we expect those costs to be stable. So if I then finally talk about professional hygiene, here you can see that the growth is large. a lot of movements in the different components so as we said in Q3 we have now actually during Q4 exited the vault volumes that were subject to the restructuring that we announced in Europe and North America, and the combined impact of those exits in terms of volume in Q4 was roughly about 8.5%. And as you can see, If you look at the volume here, it's 1.7%. You can basically conclude from those two numbers that the underlying volume was exceptionally strong. So it was a great quarter for professional hygiene.

Actually also as a result of that we were growing in much higher end products than previously so mix was positive with close to about 3%. So really good in that sense. Prices were down as expected and as we also communicated and this is partly based on all the energy surcharges now kind of out of the system that we've had before. Now pH is the category where we've had most launches of new products or innovations during the quarter five actually and of course this has support to this good volume development

And basically, if you compare to Q4 2022, the margin in Q4 2023, decreased by 1.1%. It declined sequentially as we also talked about in connection with the q3 and as you will remember the way we execute these restructuring measures we didn't just have the volume from one day to another, but we rather did it in another way. We raised prices a lot, and And as volumes actually then have gone out of the system, margins have then gone back to more normalized levels. So this is part of the sequential margin detection. And the other one was that we had higher SG&A costs in the business area, higher than and what we would have wanted. And as Magnus has already alluded to, this was partly of more temporary nature.

And then going forward, just to highlight the obvious, we will have this impact from the volume also in the first half, as we will have with incontinence. Also in this area, we will have that negative volume impact. So just bear in mind that is something we've done. We are not planning any other measures like this. So this is basically history. And as is the case also with consumer goods, we expect higher raw material cost. And this is, of course, pulp and recycled. So with those words, I'll lead back to you, Magnus. Thanks.

So that was an overview of the fourth quarter and all the numbers now excluding Vinda and it's worthwhile to look at also how how the actual businesses are progressing. Our different priorities are progressing. And now also that... And these are the key priorities we set up for 2023. And to summarize now looking back very strong progress in all these areas price management with 8.9 percent in price year over year 0.6% in mixed improvement on the back of the product launches and innovations for the group as a whole. As I mentioned before, cost efficiency very much towards the second half of the year and with good momentum going into 2020. 24 433 millions you have some examples there of the really hands-on bottom line improvements that we're working with now, operational efficiency, digitalization, raw material rationalization, fiber mix improvements, sourcing negotiations, energy savings, and so on.

So hundreds and hundreds of initiatives. And again, just... to come back to our strategy and our strategic intent to grow faster in the highest margin, less capital intensive parts of our business. And here are some great examples from IncoRetail, Feminincare that Fredrik mentioned, but also some of the acquisitions, how they have grown over the last year. E-commerce is now a smaller part of sales after discontinuing Vinda. So this is a new number. It grew by 10% to 99% of overall sales.

in 2023 and also on the sustainability area we remain committed and this is a good example of how we are getting close to 2030 science-based targets on greenhouse gas emissions. We were also again the third time voted one of the world's hundred most sustainable companies by corporate nights very, very proud of, of course. So our employees and our customers innovations it was a very innovation intense quarter I will not dwell on these just to say that we saw important innovations in many different categories, medical solutions, family care. consumer tissue adapting to the local needs and market conditions. frederick stated especially in professional a lot of new important innovations

with the high margins that we are looking now to grow over the next years and years and decades here. Also several of them with a strong sustainability profile. And why are we doing this? Of course, just to get back to that, with product superiority, we can achieve higher margins, grow our market shares, get high capacity utilization in our factories. You end up in a virtuous circle.

and this is what we're aiming to do going forward and especially now after a year of a lot of restructuring and changes when we expect to have very little of that in 2024 and instead build on these strong market positions, strong brands, innovations. that we have in a more steady state. And I'm talking a bit extra on this picture on this slide. slide because it's a nice picture of this little baby here so I thought that was nice this slide that you've seen many times before is now also without Vinda and happily we are still number one or number two in our branded positions to over 90%. When it comes to number one positions, about 60% of our sales also without Vinda. Our market shares were higher in 60% of our brand category. or category country combinations of the last years so summary record profit A lot of work in the different business areas, just to mention it again.

Health and medical, decisive pricing leading to huge improvement in margins, but to some extent, with a lower starting base on volumes, but we will work very much to grow this year consumer goods, very positive momentum in feminine care and in retail, the turnaround of baby care that's continuing and looking very positive, and successful price management in consumer tissue with high and stable margins. and professional hygiene where we did major restructuring in the first and the second quarter that adds structurally 200 basis points of operating margin to the professional hygiene business area.

a lot of effort and looking forward then as I stated several times, we see that we will be doing less restructuring, less big changes to the business and now we're set to draw from the platform that we have, and that sums up our strategic priorities for 2024. Strong platform for growth, volume growth, growth in high yielding segments, innovation, brands, and market shares. Price management, of course, continues. efficiency and digitalization, which is very much back on the agenda again and continues progress on sustainability and ESG. So with that, thank you for listening what happens now Sandra yes thank you very much for taking us through the presentation uh Fredrik please join on stage as well for your questions. Kindly remind you one question per call. So please, operator, give us the questions.

Thank you. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. We'll take now our first question from Celine Tanuti from JP Morgan. Your line is open now.

Yes, good morning. Thank you for taking my question. So my one question, I'm going to start probably with pricing outlook. Can you talk about consumer tissue? I mean, we've seen that there was negative pricing. How are negotiations happening at the moment?

I think for sure you asked to maybe roll back. And then there's a question on personal hygiene. quite positive but I wonder whether there is as well going to be more questions on okay starting with consuming tissue it's business as usual there is no we are close to finalizing the last negotiations for this year which are typically in France so I think that's very much under control and we're feeling in good shape when it comes to consumer history margins for 2024. And your second question was regarding Thanks. And here... Okay. Yes. Because in person care, we've actually

been increasing some prices even recently, supporting our margins very much. In professional hygiene, I think we will see some more kind of promotional pressure in order to grow the high margin areas that we've spoken about several times. But since we are now focusing on, we're talking about peak serve, express snap, the smart one systems and so on, these inherently have very high gross margins. So here we can add some more promotional pressure in order to balance growth versus margin. And typically, of course, this is a category where we are very, very strong and have good relations with growth.

our distributors so I feel that we are very much in control here as well when it comes to marketing development. Just to say, you said at the first point that you're feeling good about the machine consumer tissue. that the levels you have reached or you think We don't give any forecasts on margins... ...and profitability of different categories. it's not that there's any I mean what I refer to was that there's not any drama that we see any massive price pressure Actually, the market is quite balanced, the supply and demand. We have very, very strong brands and strong relations to our retailers, I think. It feels quite good here. Our next question from Charles Adams from UBS. Your line is open now. Good morning. Thanks for taking my question.

It's on the ROC. And specifically, is the greater than 17% ROC target the primary factor you're considering when determining which business S&T should exit? I ask because obviously these volume exits are positive for the ROC, but I assume not positive for absolute profits or cash, unless you're going to tell me these contracts you're exiting are actually loss-making. So I guess my question is, What gives you confidence that this strategy is the correct approach if you're not able to offset the volume losses or volume exits, I should call them, with additional volumes?

Higher margins. Elsewhere. And then just... When you sort of talk about some of them being temporary in nature what exactly they are. So I'm working yeah it's it's it's just thanks first question very very important because we have been very focused on of course get the structural underlying margin of the distance stuff because that has the biggest impact on ROSE. That means that now we have not really discontinued any loss-making contracts, but we have uh discontinued contracts and also some businesses in professional hygiene with very low margins because these contracts and they still require resources investments and so on and we've done that to achieve a basis, a structure, a footprint that we can build on for the future.

And why it's so important you ask that question is that We're pretty much done with that now. If you compare to seven years ago when Essity was created, we've done a lot of these changes. And now we believe we have a very, very efficient plant structure, the supply chain structure, organizations go to market, R&D innovation pipeline and so on. So actually going into 2024, and this is something we have spoken about very much internally also, we are now going to leverage these efficient, modern assets, brands, products,

processes that we have in order to focus on profitable growth. So there is a switch here. And don't expect any major restructurings here in the next couple of years. done with that it's esthetic is in better shape than it ever has been before i would say today so That sounded nice, but it's... It's true. So with that, over to housekeeping. Fredrik. Yeah, and maybe just to add, Charles, I think you just emphasized what Magnus said. It's a great question. So what we do actually when we look at specific could be units or country presence or it could be contracts, we look at actually Actually, the net present value. And if we think the net present value... ...value in continuing with businesses... is negative then we actually exit and this is it's been the method for us in a long period of time and

None of the business we actually have at this point of time have those characteristics anymore and therefore we are not planning any further exits. So when it comes to SG&APH, I mentioned that some of them were a more temporary nature. Just before commenting on that, just generally, 23 for most companies and us included, has been really inflationary for many aspects. So if you take personnel, cost has increased quite a lot. We haven't actually added a lot of personnel. We've added some. But in reality, it's been driven by fairly high inflation in many areas, and we expect

I expect that to be lower in 2024, just from a more general standpoint. This is not just personnel. This would include things like travel costs or whatever that's just from a price level increase so this is of course the explanation to the overall development when it comes to to gna and other investments that we have done in of course It's obviously AMPG, but also IT structure and things. If I talk specifically on PH, and it was quite... quite visible in Q4. There we had a bit of specific items. We had as an example inflationary compensation to employees in Germany as an example we have a similar thing in the United States states we had a very small corrections and many many different smaller items As Magnus alluded to, we will see a lower number for the group.

but also for pH in Q1. So part of the increase was temporary.

Thank you very much.

Yeah, and actually, Charles, you got me going a little bit there. And we have time for more questions, of course. But seven, eight years ago, we spoke about sometimes the margin gap to the obvious kind of comparable Kimberly Clark that reported yesterday and we typically don't talk about competitors but at that time the margin gap was I think around 7-8% and maybe some of you noted that now in the fourth quarter the margin gap was much much smaller it was maybe 1

or two percent or even less than that depending on which numbers you look at and the same when it comes to gross margin and at the time seven eight years ago we stated that approximately half of the gap could be fixed by continuous improvements just working very hard improving every day and half would need structural changes and that's very much what we did last year. Both the MPH has mentioned, but with the divestment of Vinda, for instance. And actually, the separation of the private label division that's much more efficient now in how they run their business so all of this has really actually close that gap substantially to be now maybe one or two percent depending again on what you look And of course, this is also been... Back of our minds over this period. Okay, next question.

Yeah, we'll take now our next question from Niklas Ekman from Carnegie. Your line is open now.

Thank you. Yes, I have a question on your margin outlook here. You talk about this now being kind of business as usual. You talk about structural margin improvements now in the last few quarters and an ambition to grow in 2024. And I'm just curious now when top prices have risen more than 20% in the last six months, How feasible is this? How much of a risk do you see of actually margins trending lower in 2024? Do you think that you can offset this with the resumed price spikes?

Of course, we don't provide them. outlook on margin developments for the year to come. But what we did last year is, for instance, you have a broad portfolio of high and low margin products And this is now not really possible. because for instance, we're focusing on patents. In professional hygiene, we're focusing on the high margin strategic We are not going to come back to just selling standard materials. napkins or selling standard basic open diapers, for instance, in incontinence care. So I think that gives a lot of discipline to the organization. This is something that we're following in a very, very decentralized fashion now. everywhere in the business.

Profitable growth now on a higher margin level is definitely what we're aiming for.

Can I add maybe one thing, Niklas, if I may here? If you look back historically a bit, you have seen that when we got kind of major raw material movements, then, of course, our margins are sometimes a bit lower for a few quarters. But then we compensate through pricing. And I think we have actually, hopefully by now you have seen that we have proven that we are able to fully compensate by price. There is a lagging impact. And if you recall several years ago, that lagging impact was quite long.

It was several quarters. And over the last couple of years, of course, things have changed. We've become a lot more agile, a lot faster. So needless to say, where this all ends up, if you have major movements in input costs, yes, you may see a kind of a reduction of margin that we will then after a couple of quarters comment And then, of course, it's symmetric, so we will have a higher cost. So when you talk about 24... I think that's a much longer horizon. Over a couple of quarters, you can see an impact. But if you take the longer perspective, I think we have proven that we are able to compensate all raw material with pricing. Super. And I can imagine Are you seeing this already now? Are you seeing that price? So I started to move upward again after having lowered a little bit. We don't provide that level of detailed information. I don't think it's useful.

What we have stated, I think, in Q3 also is that our ambition is to adjust pricing on a quarterly basis now so that we should be able to adjust prices with one quarter lag instead of, you know, three, four, five quarters that we had historically. So to give you some indications.

Super, very clear. Can I also just ask, when are you aiming to come back on your new ROSI target and also maybe what you aim to use the Vinda proceeds for, whether that's M&A or buybacks? Can you just give a timeline here on your thinking?

Yeah, I think this will be very much the first half of the year because this is very much in line with

the closing of the vendor transaction that's aimed for the first half of the year. We will come back here during the first