Scandi Standard AB (publ)

Welcome to this presentation of Scandi Standard's result for Q3 2024. My name is Jonas Thunestad, and I'm the CEO and Managing Director of Scandi Standard. By my side, I have Fredrik Sylvan, our CFO, and I'm pleased to have him by my side today. I'm also glad to report a significant volume of profit and growth in the quarter. So next slide, please. Next slide, please. We see strong demand and profit growth, and we have increased the volumes with 3% in the quarter. We have increased our EBIT with 11% to 153 million SEK compared to 139 last year. And our EBIT margin improved from 4.2 to 4.6 in the quarter. And if we look at our adjusted EBIT, it's an increase with 18%. And the improvement was driven by a strong progress in both ready to cook and ready to eat. And that is supported by a strong demand. And we also see our country improvement programs are progressing well. And then there's a continued normalization in the rendering prices. And rendering business is an important part of our total ingredients business. So we have a strong balance sheet and a positive OCF and net cash flow. So next slide, please. And the reason why we see a strong demand, it's related to these three value drivers for chicken, responsible, safe and nutritious. And it's convenience, versatile and tasteful. and affordable because it's sustainable. Next slide, please. And here you can see the strong historical and ongoing consumer trend for chicken. And on top of increased consumption, chicken is also benefiting from a long-term substitution from other proteins. Then we can move to next slide, please. And one of the major reasons why it's benefiting from other proteins is because it's sustainable and affordable. So price has always been important for consumers and customers, and the focus has increased even more in the current environment of high food prices. So chicken is affordable in all segments, and it gives us further opportunities to drive long-term value and volume. So we see further opportunities to drive more value out of the chicken due to its affordability. Next slide, please. And this is an important slide. On this slide, we want to present our AB per kilo measure. So AB per kilo is a good measurement of value creation for our business. And as you can see in the figure to the right, our momentum is positive. Our Q3 AB per kilo is 2.15, and it's an increase of 8% compared to Q3 2023. And in the different colors in the diagram, you can see the development in the different segments. We see strong performance in ready-to-cook and rolling 12, and a decline in ready-to-eat rolling 12 due to the missed contract last year. But the progress since it bottomed out in December is very positive. This means that when we are now ramping up volume in Farre, and when we see effects from our action taken in Farmfood, and Farmfood is the company that take large volumes of ingredients from Sweden and Denmark, we should expect to continue the positive development towards 2027 and our targets of three sec per kilo and above. To move into next slide, please. And this slide is to remind you on our strong market position in all our five home markets, and the countries are highly consolidated. So these markets have large hurdles for new entrants. They can individually be regarded as semi-closed markets due to its strong consumer preference for domestic produce. And due to our strong market position, our own supply decisions have a meaningful impact on market balance, which has helped us in the recovery process from inflation. But note that each market, however, also includes consumer segments less sensitive to provenance, which leads us into the rationale for acquisition presented on next slide. So with that, we can move into the next slide. This is an important slide as well, our acquisition in Lithuania. So to fully utilize the potential in our existing markets and clients, it's important to include a low-cost hub into Skandi standard. So after a long period of searching, we now found the, what we think is the ideal target in Lithuania, and it will produce about 20, 25,000 ton real weight. And it's a state of the art processing plant and in one shift with the best in class cost position. So it is right scaled facility for our current needs, but it's also have a potential to scale up and we have the ability to put in double shifts if we see that the demand is as expected. So the intention is to build a fully integrated hub that will allow us cost control. It will allow us animal welfare control and food safety control. And so it will meet our high Scandi standards. And those standards we have in the group, but also it's important for our existing clients and new clients that we're onboarding. So as an example of where we can produce this or send these products to, it's the segment in our existing markets, we're already told. But it's also an important raw material provider into our ready-to-eat factory, mainly in Farre. And then, of course, our value-adding export clients, both existing ones, but also new ones that we have and will add on to this business. And I can also proudly present that the plant produced is already sold. And we will commence in production from idle state in Q4 2024. And our medium target will be well above three sec per kilo. So then we move into next slide, please. And here you can see our production plants, our ready-to-cook plants. We have three major plants, one in Sweden in Valla, another one in Sjökåk in Ireland, and the third one in Ås in Denmark. And then we have our Norwegian plant and also our Finnish plant in Lietu. And now we have also included our Lithuanian plant, the Jöniskis, And as you can see on the volumes beneath the picture, it's in the same size as our finished business. So we can move into the next slide, please. And this table shows the reconciliation of our segments. We see a strong positive contribution in both ready to cook and ready to eat. We see the decline in others as expected compared to Q3 2023. And when we look at development of net sales per country, that's a general underlying growth with the exception of ready to eat Denmark, which I will revert to. But sales has also been impacted by price reductions driven by lower costs for feed and currency headwinds. But we want to remind you of that the category other includes both ingredients business and corporate costs. So next slide, please. And then when we look into our ready-to-cook segments, we have an increase in net sales of 4% and a volume growth of 3%. We presented an EBIT of 111 million sick compared to 105 last year. And that's a strong improvement driven by increasing demand in several markets and with improved product and channel mix. And also due to that, our country improvement programs are progressing well. We also see improvement in our animal welfare metrics, mainly driven by Ireland. But we see a negative development in personal injuries, also in the quarter, mainly driven by deviations in Denmark. It's isolated to one business unit, and we will have full focus to recover the numbers. So next slide, please. And here you can see the historic track record of strong growth and stable margins. We see a solid recovery in ready to cook with an Q3 EBIT per kilo of 1.56 compared to 1.39 per kilo last year. And as explained before, its forceful action has secured a successful turnaround and we have a clear roadmap to significant EBIT per kilo increase. So I'm pleased by the strong improvement, but I'm also confident in our ability to extract additional potential, which is required to reach our financial targets. So then we can move into next slide, please. And here you can see our realized export prices. They're almost flat in Q3 compared to the same period last year. And we are focusing on building more solid export business with value added international retail and food service customers. And the aim is to be less exposed to the commodity market, which has and will have a positive impact on our export business. And if we look in the future, we see a positive trend in the export prices, even though the uncertainty is still high due to the macro factors. Then we can move into next slide, please. And here we can see after a long period of increase in feed prices, we now see more normalized markets. There are still uncertainties and we need to be prepared for further volatility. But our model has most of the input cost linked to our top line. That's also why you can see correction in our top line when the feed prices fall back. But now when feed prices have been stable for a couple of quarters, we once again see the top line growth in our business. Even though the feed price is slightly lower, we have been able to mitigate that by higher, better sales mix. We also want to highlight that the feed cost is one third of our cost base. That's important. It's a huge impact to our business. And the short production cycle compared to other proteins enable us to be more agile in our supply chain. And when we look at other costs, as packaging, energy, and so on, we see the cost on a more stable level. So we're hedging a majority part of our electricity exposure. But also there, where there are uncertainties and we need to be prepared for further volatility. Next slide, please. And on this slide, you can see the channel development more in detail. And through these details, you can notice that the increase in all channels in the quarters, we see a slightly decrease in net sales in Ireland, and that's due to FX and lower sales price linked to feed, which is mostly mitigated by better sales mix. So in general, we have been seeing a strong demand growth in several of our markets in the quarter. So next slide, please. When we look at ready-to-eat, net sales is down 8% due to loss of contract in Central Europe, but we present an EBIT of 44 million SEC compared to 32 million SEC last year. We are still impacted by lower plant utilization, but due to our cost control and sales improvement, we have been able to increase the EBIT, both the total EBIT and the margins, compared both to last quarter and quarter three, 2023. We don't see an adverse development in lost time injuries for the second quarter and corrective action is taken to prevent reoccurrence. So next slide, please. And here we continue to rebuild our ready-to-eat order book after loss of credit contract. The high volume and low margin business phased out and the volume and EBIT has bottomed out in Q4 2023. The lost business has made room for new opportunities with a more long-term, diversified and profitable portfolio. We have a good traction in replacing lost business. Retail sale is the main contributor so far, and we have historically seen a strong but uneven demand, and we expect continuous growth over time. The growth of this segment comes in sequences, and we have a lot of potential customers in the pipeline. So we are prepared to take on a significant growth opportunities here in this segment. So next slide, please. And this slide is a reminder of the strong historic organic growth and short, I'm confident that we will continue that trend going forward. So we can move into next slide, please. And here you can see it in figures. It's, of course, very encouraging to see continuous growth in retail ready to eat. However, the development in food service channels is declining due to the recent mention in former slides. But ready to eat will be an important long-term tool for us to develop a bit per kilo, i.e. increasing the value of our protein. So that is an important part to reach our targets. And an important part of our strategic pillar, increase the value of our product. So with that, I hand over to Fredrik for more deep dive in the financials.

Many thanks, Jonas. And good morning, everyone. Next slide, please. As Jonas mentioned, Q3 was strong. Actually, our strongest third quarter ever with improved profitability and strengthened margins. Net sales is above last year, and the increase is mainly driven by higher volume and improved product mix, though the overall result has been partly offset by unfavorable foreign exchange movements. But adjusting for currency, top line is up 4%. EBIT has increased with 11% from 139 million SEK last year, which indicates improved operational efficiencies. This is also reflected in the strength and margin, which is up 40 basis points. Last year, there was a one-time positive impact of 8 million SEK from the divestiture of Rokkidal. With this, the underlying EBIT improvement would be even more apparent, up 18%. Finance costs have risen due to the timing of depreciation related to the upfront fee from the previous financing arrangement. A more solid financing solution is now in place during Q3, which gives us comfort to fuel the momentum further and fund both organic and inorganic growth. Tax expenses are up due to Ireland and Sweden mainly. Sweden is updriven by earnings, Ireland as well, but on top there is a higher corporate tax rate. Feed efficiency, which is a key performance indicator in animal protein industries, remain at a strong and stable level, reflecting operational stability. Jonas mentioned adverse incidents linked to employee safety, and this is and will remain a focus area for improving workplace safety going forward. Next slide, please. Our return on capital employed and return on equity continue the positive trend, and we have significantly improved versus last year. The main drivers are increased profitability and increased equity. At the same time, our solidity or equity ratio has improved further. Next slide, please. We continue to see strong operating cash flow, which underscores the robustness of our core business. This healthy cash flow allows us to comfortably reduce our net interest bearing debt. Our capital expenditures came in lower than expected for this period, primarily due to timing. This does not reflect the reduction in the long-term ambition, but rather a shift in execution. We have experienced an increase in finance costs directly related to the new financing structure we implemented. While this has increased cash outflows temporarily, the strategic move strengthens our long-term financial position by providing more stable and favorable terms. As mentioned, our tax payments have risen primarily due to higher taxable income in Sweden and Ireland, on top of higher corporate tax rate in the latter. This is reflective of our improved performance in that region and the increased profitability we're seeing in key markets. We're pleased to report a reduction of 100 million SEK of net interest bearing debt during the quarter. Despite paying a dividend of 75 million SEK, we managed to reduce our debt burden, which speaks to our effective cash management and solid financial discipline. It's important to notice that the lower CAPEX also helped the reduction during the period, which gave us more flexibility to reduce debt. As mentioned earlier, our CAPEX this year is below last year, which again is a result of timing. These investments are not canceled, but rather postponed, aligning better with our strategic growth plans. And lastly, we are committed to returning value to our shareholders, as demonstrated by the 75 million dividend paid during the quarter. And this dividend reflects the confidence in the company's financial strength and long-term growth potential. Next slide, please. We made significant progress in reducing inventory levels compared to year-end. This reflects our focus on optimizing stop levels and improving efficiency in our supply chain. aligning inventory levels with current demand. We still have work to be done going forward. Our receivables have increased compared to year-end, and this rise is directly linked to the strong sales performance. The growth in sales has naturally led to higher receivables, but we're confident our ability to manage these and maintain a healthy cash conversion cycle. There has been a slight increase in payables and other liabilities versus year-end, which is consistent with the overall growth in operations. This also reflects increased spend to support sales. Our target for working capital in relation to sales over the last 12 months adjusted for financing remains at 6%. And this target helps us to ensure that we're managing our capital efficiently, particularly in growth business environments. I'm pleased to report that for Q3, our working capital as a percentage of sales adjusting for financing elements was 5.3%, which is below our target. And this is partly driven by timing where receivables came in stronger than expected, which will impact Q4. Next slide, please. This slide shows some inventory development, and you can see that it's under control. But of course, this remains a clear focus area going forward. And we are, for example, working on optimizing the sales and operations planning to make sure we produce right products. And we use the export channel for surplus sales not to interfere with the domestic pricing. Next slide, please. Capex is estimated to be around 500 million SEK full year. And priorities are, for example, the RTE expansion in Norway to meet the demand with an approximately 30% capacity increase. We also increased the deboning capacity in Ireland and Denmark, as well as Finland, to climb further up the value ladder. We also invest in product differentiation in Ireland, as well as increase in efficiency. And We also have our ERP implementation where we successfully went live with our first country in Q2 this year. And we're pleased to announce the successful completion of the Lithuanian acquisition occurring beginning of this month. And this acquisition represents a significant step in expanding our footprint in the region. And we're excited about the opportunities it brings for further growth. The purchase price was 23.5 million euros on a debt and cash-free basis. And this ensures that the acquired entity comes with a clean balance sheet, allowing us to immediately focus on operational ramp-up, integration and growth. A deferred payment of 1.5 million euros is expected to be settled in the beginning of next year. This structure gives us some flexibility in managing the financial outlay while facilitating the ramp up of the business. In terms of startup investments and working capital, we're planning an initial amount of around between five to seven million euros. And these funds will be used to bring the acquired operations up to full capacity and ensure the necessary resources are in place for a time efficient integration. The blended effective tax rate going forward is expected to be around 19%, which reflects a favorable tax position that we will continue positively to our consolidated forecast. We also paid a 2.3 SEAC dividend equating to 150 million split over two installments in second and third quarter. This reflects our ongoing commitment to delivering value to the shareholders while maintaining the financial flexibility to pursue strategic opportunities like this acquisition. I also want to take the opportunity to remind you that our dividend policy is to return about 60% of our net profit to the shareholders. And looking at our financial targets, we aim to deliver a substantial increase to the shareholders during the coming years. The interest rate on bank financing is approximately 5% per annum. But if we add on the IFRS interest cost components, like leasing and factoring as well, and vendor financing, the paid financing cost is estimated to be around 8% of our net interest being debt. Next slide, please. We're pleased to have a highly competent bank group supporting our financial strategy. Their expertise and partnership have been instrumental in securing favorable terms in our new financing arrangement. And this comes with a five-year tenor, providing us the long-term stability and flexibility to execute on our growth plans without the immediate pressure of refinancing. The size and structure of the financing package gives us the flexibility we need to support both organic growth as well as strategic initiatives. And this will allow us to invest in key areas of the business and seize opportunities as they arise. We have increased the total financing by more than 50%, bringing it up to approximately 3.2 billion SEK. This significant uplift ensures we have the necessary resources to fund our ambitious growth plans. Additionally, we have negotiated an accordion option up to 1.5 billion SEK, which provides further flexibility to expand the facility as needed, giving us the room to maneuver for future acquisitions or major projects. Our main covenants remain unchanged, so net interest bearing debt over EBITDA shall be below four times, and we have our internal target of 2.5 times. and interest coverage should be above 3.5. What's particularly noteworthy is that this financing arrangement includes a strengthened link to our ambitious sustainability targets. We are aligning our financial strategy with our commitment to sustainability, ensuring that we grow and we continue to drive the environmental and social progress. Next slide, please. And back to you, Jonas.

Thank you, Fredrik. Next, I would like to talk about one of our cornerstones and license for us to operate. And there are these three key areas that we come back to when it comes to creating trust for what we do. It is responsible animal welfare. It is safety for consumers and employees. And it is nutritious products. And this has a close link to our sustainability scorecard. So if we move into next slide, please. And here you can see continuous improvements in antibiotic results in Q3. So I'm proud of the progress that has been made during the year, including meaningful reduction of antibiotics use and our main animal welfare indicator of the foot pad score. We have seen a setback in LTI, as mentioned before, the latest two quarters. It's mainly isolated to Denmark, and some of it is isolated to a single accident. But we have a strong focus to get back on track. And during 2024, we will continue refining our roadmap towards 2030, including development of our climate transition plan, as well as implementing the EU Corporate Sustainability Reporting Directive, it's CSRD. The implementation of CSRD will further strengthen the integration of sustainability in our strategy, value chain and operations and facilitate comparability and further transparency. So it is an important part for us in our strategy. So if we move into next slide and we have presented This before, so some of you will recognize these pillars. And these are four strategic pillars, and they are really important for us. And the four pillars will support us achieving our goals. And it is the first one is increasing the value of our protein. The second one is ramp up efficiency end to end. And all of this we need to do with sustainable means in every step of the way and as one company. that make us constantly better together. So those four things is super important, and that amplifies the collective effort to shared goals and team cooperation, and that leads to improved performance and outcomes. So this is a fundamental base for what we do in Scandi standard. So next slide, please. And here at the right hand side, you can see our 2027 targets. We are expecting strong growth over the coming Yes, we have set the target for 2027 of 5% to 7% net sales growth annually. In the short term, however, our top line remain impacted by inflation retraction, which is also stimulating demand. But we've talked about that before, the link between the feed and the top line. We target an EBIT margin in excess of 6% by 2027. We're also measuring the progress in terms of EBIT per kilo. for which we have a supporting target, that is three secs per kilo. And we want to reach above that. But we have talked about that in former slides as well. So if we move into the next slide, please. We also want to remember about this slide. Here you can see our structured efforts in resulting recognition in forms of improved ESG ratings. And as an example, we have an A minus in our CDP rating and an A rating that it's only a few companies within the food industry that have obtained that. So once again, sustainability is an important part of our business and we want to look at it in a structured way. And that's why these measurements are so important for us. But if we move into next slide, this is also an important slide. And in order to reach our target for EBIT margin, we need to increase our EBIT per kilo from our current 1.82 sec to above 3 sec per kilo. And if we look into this specific quarter, it's 2.15. But here are some examples of actions to accomplish this. One other thing, we talked about it before, is our ERP system. That will give us a common scalable cloud platform to utilize best practice in Scandi standard. And it also enables us to take in new sites as the one that we have done in Lithuania. And we have started that process. We have finished the implementation in Sweden and now we're moving into Norway and we will take it step by step, country by country. And we also have a strong focus on hunting new business and ready to eat. And that has yielded surprisingly good results in retail sales. But it illustrates really much our capability in convenience products and that they can be utilized. So we will have an important super focus on building more RTE business. Then we have the investment in Stokke to support the local growth in our Norwegian RTE segment. And the new capacity will be in production during Q4. And that allows us to increase the sales and margins in the Norwegian business, i.e. climb the value ladder. But that's also investment in our ready-to-eat business. For example, we've talked about before our leg-to-bone capacity. We have that in several countries, but we're investing in more countries. So we have invested in Ireland and Denmark. And we are now optimizing the sales and the efficiency in that process. And that will be yielded in 2025. So that's just a few examples of what we do to reach our goals in 2027. So if we move into next slide, please. And this is also important to achieve our goals. We're building a robust vehicle to serve our home markets and beyond. And we are launching this 2 billion investment program in the period. And the investment program aims to support, first, ready-to-cook investment to support the 2% increase in throughput in our plants, but also to support a better utilization in our facilities. It will support the ramp-up in our ingredients business. It will prepare for significant growth in ready-to-eat. And as a part of this as well, we have earmarked investment of more than 200 million SEK for meet our sustainability goals. And as you all know, sustainability and efficiency is linked together. It's only different measures of how you can use resources in a more efficient way. So if we move into the last slide and summarize it all. So we have had an 18% increase in adjusted EBIT compared to last year. It is another clear step towards reaching our financial targets. We see strong consumer trends in favor for chicken production or chicken products. And we see that our country improvement program are progressing well. We have management resources and systems available to integrate new entities. We see a large potential in our acquired Lithuanian business and we have a new robust financing in place. So all in all, we summarize a strong quarter and we have good ideas and traction going forward. So with that, we will open up for Q&A.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch zone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Our first question comes from Daniel Smith in Danske Bank. Please go ahead.

Yes, good morning. I hope you can hear me. Just a couple of questions from me then. Starting with ready to eat, I think you wrote and maybe also said it, Jonas, that you should grow from here. And I guess we're also annualizing the lost contract situation, so that makes it easier. But could you shed some more light on what what kind of volumes that you have been able to replace the lost contract with? You mentioned higher profitability, but what kind of pace are we coming into Q4 when you're sort of more comparing apples to apples? And yeah, what do you see basically in terms of growth and profitability from here on?

We will see a continuous growth in the Maybe in the same pace as we've seen before in terms of how we put on volumes. But I must remember that Q3 is a strong quarter for us always, seasonally. But going on forward, we will onboard more customers and have a lot of things in the pipeline for 2025. But it will come in steps, as I said before. It's not easy to say exactly what will come in in Q4, but we will see the trend continue. But what I can add in this is that we see also in the ready-to-eat with high feed prices, we see some differences is what type of products we're onboarding and what type of raw material that we have in the products. So that's why we sometimes can see a better volume growth and also good margin growth. But the top line growth is a little bit more flattish due to a different raw material in the products. But that will also come in sequences and the trend will change a little bit from time to time. So to summarize it, we will see the growth. It will come in steps. Quarter four is always a little bit weaker than quarter three, but we will see the continuous growth going forward and we'll have a good pipeline into 2025.

Okay, but could you say anything about sort of what you've been able to build up? If you lost... I think you started to lose volumes already in Q3 last year, right? And then it was completely gone, correct me if I'm wrong, as we entered Q4. And that's a year ago. With those volumes out, let's assume that was 100. How much of that 100 have you been able to build up again coming into the last quarter of this year? I appreciate that the mix might be a bit different. And not everything is just a straight line. It's a bit lumpy. I understand that.

Yeah. But let's... Let's put it like this. If you say 100 and the volumes are replaced by maybe 30 or 40, but it's different compared to what we... It was one customer that left us with some different... in different quarters. And then we'll replace that with other type of customers. As we said, more retail customers, a little bit more products with sliced products and whole muscles. That will take volumes a little bit down, so it's not that comparable. But there are plenty of room to fill up to have our total R2E business filled up.

Okay. I'm just thinking you lost that entire contract and now of course we're analyzing that and we're going into the last quarter of this year with new volumes not as much as you lost but better quality it sounds like. Is that a fair assessment?

Yeah.

And does that higher quality of volumes that you've been able to build up, is that taking on more resources in terms of capacity than the volumes that you lost?

it changes a little bit the production type. And we have, as you know, four different lines in Farre. And they are producing a little bit different things. So you cannot compare it in total. But if you put it like this, the volume that we're in now is a little bit less volume, a little bit more margins out of them than before. before it was more formed products to be more technical in what we are doing.

And you think that more will come given what you see in terms of customers that you are currently working to bring to onboard?

Absolutely. But I must say it comes in steps and it can be some quarters where it gets more flattish and then there comes a step up. But the trend, both in medium term and long term, is the same trend as is seen in the slides that we present. Okay.

Then maybe jumping to the acquisition in Lithuania, and I think you said that you've already filled planned production for this year with orders. Did I get that right? Yeah, that's right. And of course, that's good, but this year there's not that many days left. So it has to be a fairly modest amount of produced check-ins compared to what you want to get to. And how's the pipeline looking like when you look into 2025 or the start of 2025?

Yeah, we see a sign of demand going forward as well. And it's more about that when we're now done this acquisition, we put customers in place. And of course, it's always the most work in the beginning to get our customers up and running with a new plant and new certificates and so on that needs to be set in place. But as we said, we... We have prepared it well, and even though we start the 12th of November, we have the product sold, and we see a good continuous pipeline going forward as well. We will use this, as explained, both for our internal use to Farre and our growth there, but also to our... more value-adding export customers and customers within our already existing markets, where the domestic preference or the provenance is not that high. So it's a good fit for a standard Lithuanian business.

Is it normal that you only sign up for a month ahead in terms of production, or the commitment is not longer than that?

Pardon, one more time, Daniel.

I'm just trying to get to your saying that that's good, of course, that the planned production for this year is already sold. But is it normal that you only sign up for the coming weeks of planned production? Sounds like a very short period. I would have thought that it would have stretched into next year.

All ready-to-cook business is... it's a huge difference between ready-to-eat business and ready-to-cook business. Ready-to-eat business typically assign contracts for longer term. All ready-to-cook business in all countries is the fast on moving flow where you have continuous discussions with your customers and the change of demand and adjust as we have talked about the caucus balance between the customers and so on. So the thing with ready-to-cook is is that you have your customers, you work together with them, and then you optimize the flow of that because it's a really fast-moving flow where the volumes is different compared to the demand and which type of products that they buy. So it's more about the commitment together with the customers. So it is in all ready-to-cook business in all our companies.

And could you say anything about, I hear you when you say that part of it is sort of internal demand and part of it is external demand. And if you look at the external side, is that several customers or is it one customer? Can you say anything about that sort of the customer base that you've been able to build up so far?

Yeah, I would say it's several customers. I would say that most of them is customers that we already know and that already buy this type of products from other clients, maybe. But it's also new customers because we haven't been in this segment before that we're entering. But I would say that... There's several customers, but a couple of customers that are the anchors in this business. And that is important for us. We have a clear strategy of how to move into different customer segments during this ramp up. So the customer base will change a little bit in some of the production during time.

Okay. And sort of is it a 50-50 split when you look at the very short term, what you have now been committed until year end between internal and external?

In broad terms, yes.

Yeah. And should we expect, given what you see in the pipeline and... And what you have done so far and what you aim to do in terms of approaching new customers in the coming weeks and months, should we see sort of a fairly good ramp up of this at the start of next year?

We are confident in the ramp up, but it is... We'll explain it like this. We have a clear plan how to ramp up, and it will start with low volumes in Q4, and then we will ramp up the volumes. So for us, it's more about having control of the production process, both in terms out in the sheds and in our own production and with our external suppliers. And that's why we have put up this ramp-up process. And then we want to onboard some new suppliers along the time. And then when we're up at full capacity, we will see the business turn profitable. And that is why we have put this, as we said, six-month ramp-up period. So it's more about a controlled ramp-up for us than it is about getting the products sold. okay but beyond six months from the third of november you think that you will reach break even basically yeah we have said in in in at the run rate and of course that once again it's it's uh it's hard to to be precise on the exact month but we have a clear plan to to do that ramp up and uh and we are expecting that the run rate will be positive.

And medium-term then, if you are able to fill that factory with the capacity that you think is ideal, was it 25,000 tons or something like that, Is there any reason to believe that this entity will have lower profitability or higher? What do you envision?

As we said in the presentation, medium term, with the fill-up factory, we have the ambition that this will contribute to our EBIT per kilo above 3 SEC per kilo. Okay.

Thank you. Thank you.

As a reminder, if you wish to register for a question, you can press star and one. There are no more questions over the phone. I would now like to turn the conference back over to Jonas to install for any closing. Ah, excuse me. We have a last minute registration from Olin Michel from TPI Cup. Please go ahead.

Good morning. Thank you for the presentation. I have three questions from my side. So the first one is, can we have some details, some more details on the client in Lithuania regarding countries and type of clients? Is it for service retail clients? And The second one is, what price effects can we expect in Q4? And can we expect growth in Q4 on ready-to-eat business in Denmark?

Thank you. If I start with the first one, about what type of clients, it is both retail and food service clients. And it is... I would say European and Nordic clients. And of course, some part of it is exported outside Europe as well for the parts that's not valuable in Europe. That was the first question. And the second question about the growth in RTE and ready to eat. And as I said, Quarter three is our strongest quarter, and we always seasonally have a little bit slower quarter four. But compared to last year, we are expecting to continue the journey that we're on. But I also must say once again that the growth in our Reddit Eat segment comes in sequences. So it can be one quarter where we onboard a couple of customers, another quarter where we are Well, we're not onboarding to onboard new ones the third quarter. So it will come in sequences, the growth. And it's hard to exactly predict. That's why we're not guiding on that one. But we are aiming for continuous growth in Farre. And we have a positive momentum. And we have a lot of things in the pipeline for 2025. Okay, thank you. answer or miss I missed I did I miss some question maybe the one in in Denmark regarding Denmark regarding Denmark in in total and we yeah If it's about, we're not coming country by country. We have our segments ready to eat and ready to cook. But talking about Denmark ready to cook, now we have had the historical challenges. We said that we are taking this one out because we are are at a break-even level, and we are working according to plan to take it above that level. And that also goes a little bit from quarter to quarter. But we have our firm plan to increase the value and the EBIT in Denmark as well going forward.

Thank you. Thank you.

As there are no more questions, Mr. Tunstall, back over to you.

Thank you very much, and thank you for listening, and thank you for good questions to make everything even more clear. So thank you for everyone that participated.