Lindt & Sprungli AG (OTCPK:LDSVF) Q4 2021 Earnings Conference Call March 8, 2022 4:00 AM ET
Dieter Weisskopf - Group CEO
Martin Hug - Group CFO
Patrik Schwendimann - Zurcher Kantonalbank
Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.
00:04 Ladies and gentlemen, good morning, and thank you for coming again to our head office. And it's a great pleasure, because last year, we were alone sitting here, me and Mr. Hug. Now, I have again the group that we are used to for 25 years. Now it's not only you here, I think as well we went into a new mode, that is a hybrid mode. So, I welcome as well the online participants that we have today. And as you can imagine not only you but as well as the online participants will be able to ask and to participate in the question-and-answer session at the end of that meeting.
00:53 Now, we have again good results this year that are slightly above the guidance and as well expectations and very happy about that as well, but let me say one word at the beginning of my presentation, I think that is not because we did a great job and Martin did a great job and the group management. Behind us are 14,000 employees and these employees last year, I can tell you, mainly factory health and as well health issues, very big ones and I think -- I thank mainly as well all those employees that were producing our products, so that we at the end could sell it, same as well for administration. You know we had huge hurdles to get across that we can produce, we can operate in view of all the difficulties that we had with the health situation.
01:55 Now let me go. Now I have to check, yes, here it is. Let me go into the agenda for today. Now, I will take over the Part 1 and 2 financials and as well market insights, then I will hand over to Martin with financial results and sustainability, last then I get back with outlook and the question-and-answer session. Here are the key figures we have announced this morning.
02:27 Now the first line -- I go by line. The first line is sales. Now these sales, we have announced already in January. It's 13.3% organic and it is close to CHF4.6 billion. Now the second line is a new line for you. Second line we have an EBIT of 14.1%, CHF645 million. We have an EBIT margin -- net income margin of 10.7% close to CHF500 million and I think that is mainly for the financial analysts and as well for us a good result. We have a cash flow, free cash flow, margin of close to CHF600 million. And that brings us then to an equity ratio of full 58%.
03:15 Now the next line you see other KPIs, we are very happy and very proud on, that is the market share. In all markets basically, we were gaining shares. We have online trade that was again doubling and not doubling, that was growing very fast, double-digit. And then what we did as well in the organization, we had a chance that we could, number one, acquire the minority share in Brazil from our joint venture partner.
03:47 Second as well, we were splitting from our distributor in Brazil, so we take over now wholesale distribution ourselves. And last, but not least, and as well, the integrated Caffarel in Lindt & Spruengli Italy and as well had an opportunity to acquire our franchise partner in Italy. Now, the last line, you see here we made commitments for climate change. We made commitments for packaging improvements and as well for more sustainable packaging. And then as well what we did is an increase in the dividend of 9% to a total of CHF1,200 per share.
04:38 Coming to the global chocolate markets, just giving you an umbrella overview where are we active and what happens in our main focus of chocolates around the world, I think I have good news for all of you. Number one, the chocolate market on a global basis is growing. It's growing roughly 3% in ‘21. It's forecast to grow further as well in ‘22 and ongoing years. And another point that is important, the premium segment is growing faster than the overall segment.
05:24 Now, why this premium segment is above average? Because we see a clear trend to less but higher quality and that goes as well in line with income per capita that is growing on a global basis. So that means we are well positioned. Looking then as well at Lindt, we had a strong comeback last year, mainly because in 2020, as you all know, we had lockdowns, we were suffering from the lockdowns in our store, we had tourism that was missing and we had clearly as well lockdowns of even some wholesale customers and clearly duty-free.
06:12 Now, we were fighting still last year with this ongoing pandemic related issues, but I can tell you those happened mainly in the first half. Now happening in the first half, you see kind of this year now we expect as well for the first half always assuming no big lockdowns again that we assume a good first-six months.
06:39 Now coming to the trends. I mentioned already the premium chocolate. The premium chocolate clearly as well is a trend we see very strongly so. What we see as well, a second one that is more and more awareness of sustainability. If we were talking -- when I came in here 20 years ago, we were talking raw materials, we were talking human rights, in the meantime traceability was a big word for raw materials.
07:10 In the meantime, we have three main areas: It's raw materials; human rights linked to that and traceability; it is packaging, looking at packaging a recyclable packaging, very important demand from the consumers; and last, but not least as well, and I even put that at the beginning that is climate, climate greenhouse gas emissions from our activities we have today and as well for the next years a big, big demand and as well a big, big job to do that we are reducing greenhouse gas emissions in our activities.
07:57 Now the last one or the last two ones what we see as well is a consumer that is becoming more and more demanding for individual needs of consumption. As you see, these two are mentioned here. Plant-based is one of them, sugar-free/sugar-reduced is another one that we are clearly as well going and investigating and making sure that we get the best product in that area. And the online trades, another important trend that we are facing and we as well could use over the last two years in order to sell to consumers with maybe some hurdles getting the products.
08:51 Now market insights and highlights. The split of our overall sales you see here. The biggest market Europe, second is North America, and the third is our rest of the world. Good news clearly, rest of the world growing close to 20%. A year ago, rest of the world was 11.7% of the wholesales, now growing to 12.4% and I can tell you already now, before I go to the details that will continue in the next years. Point is that we started over the last years to go into huge chocolate markets, that is China, that is Japan, that is Brazil, including as well South Africa. And those markets when you start, you start at a small base. Now, in the meantime, those markets become more and more a sizable -- to a sizable scale and that of course will help us in the next years as well to bring that segment that is an important one to more growth. Now North America growing 10.7% details later and as well as Europe a very good 13.8%.
10:17 If I get now to Europe, I think I go to Europe then afterwards North America and finally we get to the rest of the world. The market split in Europe you see here. Germany still the absolute biggest market. And not only in Europe, but in our whole group Germany is the most important market and they take 16.3% of the whole markets that we have and the whole sales we have at Lindt & Spruengli. That is then directly followed by France. And then other good news is, the UK is already number three.
10:58 Why do I say that? Because if you look at Europe and you look at the size of the markets, the German market and the UK market, they have about same size of CHF4 billion to CHF5 billion in total. So that means there is nothing against that. We continued growing nicely as well in the UK.
11:22 And going now into the highlights of Europe. Here, you see Europe's 13.3% market share gains and you see the growth by company and of course, I just highlight two or three of them. Number one, Germany 11%, clearly, they benefited from the fact less closures of stores, record Easter in 2021, but nevertheless it's a great growth we have here. Then I highlight as well the UK. Now UK 18% growth last year, benefiting online, benefiting from less lockdowns, but benefiting as well just kind of a big demand from the consumers for our products, mainly LINDOR and EXCELLENCE.
12:09 Italy benefiting as well. Easter kind of closures in ‘20. Easter was open again in ‘21 and at the same time as well we were then acquiring, as I said, the franchise partner in retailing. To mentioned as well, we have Spain, Portugal, Austria and the Nordics, all of them with good and great growth. Now that all is possible, thanks to marketing activities, that is possible to more investments into the market, and clearly as well our new products that we brought to the market. I -- of course the most important one double chocolate and you will see it just afterwards in LINDOR.
13:00 But at the same time as well, we are going to service the individual demands of consumers, becoming more and more demanding. So, we have launched a HELLO Vegan in the meantime as well a vegan product and at the same time in Switzerland we have launched a 30% sugar-reduced bar, milk bar. There will be attempts and as well, not attempts, maybe the wrong word here, there will be initiatives in that area. And I have to say, they will remain small, because what we realized is the consumer is always going, I say, now 40 original, because if you decide to eat a piece of chocolate then you say I know what I'm doing, I deserve the best and I eat the original. So, our goal really is to make as well the alternative as close to taste and texture of the original and I think that will be a winning formula as well for the future.
14:10 Now another points that I'm sure you know and you have seen is Lindt Switzerland entered for the first-time as well into Migros in distribution. I think that was as well a very big step for us here. And if we then highlight as well the investments we make in Switzerland, I think here as well it's a clear commitment to Switzerland as a production location. We will invest over the next three years in Olten, a total of CHF70 million or over CHF70 million in the new factory or additional factory to cocoa bean treatment and I think that Olten factory will then as well service and supply Germany, Italy, and partly France.
15:04 With that, I get now to a spot that, now to North America, sorry. North America is the market split we have here is 31% is the U.S. alone, 5% of North America is Canada and as you see Mexico is still a little part of this whole market. When you look at this split, I just say very important is that U.S. is representing on a worldwide basis roughly 20% of whole consumption of chocolate. And you will understand now as well while we were 25 years ago, we were mainly a European company, to conquer the U.S. was the main goal we had at that point and we dedicated lot of efforts and as well management time and cash in order to develop the U.S. and I think having 37% in total is now, I think, a good share and I can tell you there is still a lot of potential given our market share by brand that we can further grow in that market.
16:26 Going into the highlights in the North American market, we have a total sales of 11%, that is misleading to some point because if we go into the individual growth rates of the companies, we will see here Lindt USA 16%; Ghirardelli, 15%; Russell Stover, unfortunately, was losing in sales, but I get to that just in the following chart in detail. Canada as well, nicely 11%. Growth drivers clearly LINDOR, Ghirardelli. We made retail. We could open again, that was mainly important as well for Ghirardelli. For instance, Ghirardelli SQUARES, we talk about San Francisco icons here and as well at the same time we are in Disney World. Disney World was closed over a big long period in ‘20, opened step by step in ‘21. I would like to highlight as well the success of Ghirardelli in foodservice, a big, big segment and division within Ghirardelli.
17:45 And then we have the Canadian company that as well made big progress last year and I think as well they are well-established in order to make that again in this year. Now, Russell Stover, I'm sure you're interested what happened here, minus 5%. Now, if I go back, we acquired the company in 2014. We looked at the company. We made the right decisions. We upgraded marketing. It's mainly in an assorted for Lindt where we went with new boxes, new products, we as well on top of that have a very strong sugar-free business and clearly, as well we are very strong if not the market leader in Valentine's and in some Easter products. We strengthened from a marketing point of view all those areas. Now job basically done.
18:47 The second thing we did is, we closed because we had to automate production. We closed one factory. We're now back to three factories. So as well we did that during 2020. The third thing we did is, we replaced a very old IT system coming from the ‘90s with a new SAP system. We did that during ‘21. And last, but not least, as well, what we had to do is making sure that the logistic is fully integrated into the Lindt logistic, including Ghirardelli and the Lindt USA. Now, all done, so we were really high in expectations for ‘21. You know what happened. What happened as well on foreseeable, we entered into a huge issue in the supply chain.
19:49 The Russell Stover factories are in mostly isolated areas, the workers' pool is not big, it's reduced. As you know there was a big support from the government for the workers in the USA. So, we had a total of 2,200 employees in Russell Stover. We had times where we were missing up to 600 employees that were not coming or no more coming to work. At the same time, we had packaging material that was missing. We had even the raw materials that was missing, so we couldn't supply at the end the way we wanted to our trade partners and all that ended up in minus 5%.
20:43 The good news is that the trade partners we want to keep, we could service but less than we thought, so -- and I think that is the result we enter into. We have taken the measures. Good news is workers are back. The second news is that all the measures we have taken now are starting to basically have an effect and we are looking positively into 2022, so that we are improving rapidly in that area.
21:19 Now -- coming now to the rest of the world and the market split in the rest of the world. I mentioned already we were 11.7%, we go now to 12.4% and that will continue to grow and mainly because in here we have huge markets. I mentioned shortly, if we talk consumer value, the U.S. market consumer value is close to CHF20 billion. Now Germany, UK consumer value is CHF5 billion, CHF6 billion to give you an idea here. Now if we are talking about the markets here, we have Brazil CHF2 billion to CHF2.5 billion. We have Japan close to CHF4 billion. We have as well the China growing nicely CHF3 billion, CHF4 billion. So, we have here good markets, growth markets for us where we still have a relatively slow low scale and I think that will lead to the point that we, in the future, will increase the size of these slice here in the chart.
22:30 Going to the rest of the world and the highlights, close to 20%. You see again the same companies I mentioned before: Japan, 23%; China, 37%; South Africa, 15%; and Brazil, 55.7%. I think those are the markets that you know in the role of growing when you go back in the history of Lindt stabilizing Europe, entering the USA and in a third row now we are entering and we're entering those markets that now for the future definitely will have a good growth potential. Now stores in some of those countries are important, because coming in brand awareness, brand equity that are points that we still have to bring to those markets and stores are an ideal vehicle that we can get to a higher brand awareness and know-how knowledge of the consumers, so we have 70 shops in Japan, 58 in Brazil.
23:39 Now I mentioned the joint venture and we go further, Australia. The biggest market still in that segment. They were still struggling with COVID. They had Melbourne, Sydney store closures. We were struggling with that, nevertheless at the end we came out with a positive 4% and the distributor markets, they recovered well. Duty-free, one word to that one. We were falling back from, let's say, 100% in ‘19 to 20% of sales in 2020. We recovered from the 20% against ‘19 back to about a little bit over 30% in the 2021. Now, this year, we will find out the hope and expectation is that we can get up a little bit more than this.
24:44 Now, rest of the world, I would like now to show you [Video Presentation] Now I'm sure you will ask yourself, why do I show this TV spot. First, we are a marketing company. So, I think you should get as well a little bit into the mood. But the second thing is, it's an important one because you see the product, it's Lindt SQUARES and I'm sure you know as well that we have Ghirardelli, Ghirardelli SQUARES. So, it is a test we have now ongoing. A very decision -- the test we have taken. We try in Australia, but as well I'm sure you have seen as well the product that is back there in Switzerland on shelf. So, we just say why don't we try out on how a Lindt SQUARES in Australia and as well in Switzerland, and on how we can establish the product that is a differentiated product to our leader products, that is LINDOR.
26:18 Now my last chart before I hand over is global retail and e-commerce, a very, very important pillar for us, mainly as regards to brand awareness and as well the consumer attachment to the brand. And last year, as you can imagine, they had a huge sales growth against ‘20 with the lockdowns of course we had and the whole growth, roughly one quarter of our growth, last year was due to the recovery of global retail.
26:55 Now the shop design we improved and mainly I think what comes in here, we have now e-shops operating in most of our countries and they have a very important job within our whole setup. E-sales is not kind of just the branded sales or, let's say, lindt.com or ghirardelli.com, that is one thing. We have then click to mortar, that is our retail partners that have as well their own retail shops. We have the platform. Those are the Amazons and the Ocado's of the world, and as well in Japan and in China very strong.
27:46 And I think these stores and wholesale that has to work as one piece, as one umbrella, because we have to make sure that the consumer -- we welcome the consumer on all those sales channels the same way and we make as well the access across all those channels as easy as possible with the same message. And I think that is something that you will see even further in the future and as well that is a big part of our future activities.
28:23 Now, with that, I basically come to the end of my part and I ask Martin to lead you and guide you through the financial figures. Thank you.
28:40 Thank you, Dieter. Welcome as well from my side. I can tell you it really feels great to have so many people here in the room again and be able after two years of online meetings to present in person and hopefully receive lots of interesting questions as well at the end of the meeting from you here in the room and then of course, everyone online as well, I think, it's one of the good things we also got used to this hybrid meetings, so we have lots of guests as well online who can participate live, so really good news.
29:11 In terms of the financial numbers as well, lots of good news, Dieter already elaborated on it. I think organic sales growth we came in at 13.3%, which is in line with our guidance. You may remember in July we guided for the low double-digit -- about low double-digit number, so we came in at 13.3%. I think that's good. We published that already in January as well. Then EBIT, we came in slightly above the guidance. One year ago, we guided for 13% to 14%, then in July at half year we brought this up and we said, okay, it's going to be at the higher end of 13% to 14% and now we came in at 14.1%, despite all the supply chain costs, additional costs we basically had, especially in the U.S. where we slightly overachieved the guidance. So, I think that's also good news.
30:04 Net income margin, no big surprise here. From a tax rate perspective, we were in line with the guidance and we see expectation 21%. So net income margin of 10.7%. I think one key highlight of today for sure is the free cash flow. The free cash flow came in at almost CHF600 million, so that's 12.8%, so that's basically third year in a row where we've free cash flow ratio to sales of around 13%. So, I will talk about this a bit later, but I think that's definitely higher than probably most of you have expected and net debt, as a consequence, came in at CHF295 million, despite the fact that actually we are working on the share buyback and we've bought back more than CHF400 million at the end of 2021. So, we're well on track with the share buyback. I think we will actually finish it even a bit earlier. The term is till the end of 2022, but at the current pace we will actually finish it by end of June, end of July already. So, considering that I think also thanks as well to the free cash flow, really a very good position on the net debt.
31:13 Shareholder return, Dieter mentioned it, CHF1,200 is what we're going to propose to the AGM. I think what is worth mentioning is, this is basically 27 time in a row that we are increasing the dividend. So, since 1994 we have increased the dividend each single year. That -- share price at the end of 2021, the dividend yield was 1%, now at the current share price it's a bit higher, about 1.2%. Payout ratio is a bit higher than, let's say, two, three years ago, prior to the pandemic we are at 60%, in the past typically we were at 50%, but if you can actually achieve the financial goals in the next years, this payout ratio most likely will come down gradually again towards 50% in the next years.
32:06 Share buyback, has mentioned already, CHF445 million was the value that we had purchased back. The market cap at the end of last year was CHF30 billion for the first time, so we added CHF9 billion to the market cap, but of course with what happened in last few weeks this came down. This is now about 20% lower, but still, I think really good development to sell from a market cap point of view in the last 12 months.
32:30 Organic sales growth, I mentioned, if we compare actually the sales number in 2021 versus 2019, growth is 6.4%. So, this gives us an average growth of slightly more than 3%. So, you can see that we are tracking slightly behind where we would be result of pandemic. We have some areas where we are still below our 2019 numbers or still, let's say, it's a growth rate slightly less than without the pandemic mainly travel retail, which of course came to standstill in 2020. We are recovering in 2021, but we are not back yet to ‘19. Then also at our retail stores, we are currently at an index of about 90 compared to 2019. So, these are just a couple of examples where we have still opportunity for the future growth to achieve 6% to 8% growth targets for the future.
33:23 In Swiss francs, typically Swiss francs growth is actually below organic growth, because the Swiss franc typically in the last years strengthened against the main currencies. This was not the case last year to Swiss franc, actually weakened slightly against the euro, against pound sterling, against Canadian dollar and also the Australian dollar. It strengthened against the U.S. dollar, but net-net we had a positive impact of 0.4 points. And in total, in Swiss francs, we grew CHF570 million, so we added quite a considerable amount of sales to the topline.
33:58 So what are the sales growth factors? Actually, one year ago, we already guided more or less when we were asked, okay, if growth rate -- how much is coming from volume? How much is coming from price mix? More or less half is coming from volume and the other half is coming from price mix. So, 7% volume, 6.2% price mix. I think what is very positive to note is that actually price is positive as well. So, we had some positive price actions in markets, in important markets like the U.S., like Germany, like Canada, like Australia, so it's not only mix, it's also mix, but it's also price.
34:32 I mentioned already the acquisition. The ForEx impact, which growth were slightly positive 0.5%. Dieter has already talked a lot about the segments, so I'm going to be brief here. As in Europe, the highlights for sure are Germany with double-digit growth, the UK with double-digit growth, Italy with double-digit growth, so big markets where we were able to grow double-digit. I think the other highlight is surely also Switzerland, our home market, where we were able to go into Migros and which is actually quite a large portfolio. So, we also achieved double-digit growth in Switzerland.
35:04 Key driver of this growth in Europe, I would say, from a category point of view was mainly LINDOR and also some innovation. North America, a mixed bag as Dieter mentioned, but still, I think a good achievement. We should also bear in mind that couple of years ago, we announced closure of 50 retail stores. That closure program we announced it to happen between 2020 and 2022, so we executed the share that was part of ‘21 -- in ‘21. We're definitely very positive performance in Ghirardelli and in Lindt, Dieter talked about Russell Stover.
35:42 Within Russell Stover, we had actually a fantastic double-digit growth with sugar-free, so some areas in the Russell Stover business which actually performed despite of the fact that we had these issues in the supply chain. Online was another big highlight, I think, in North America where we grew double-digit as well. Then rest of world around 20% growth. Highlights here surely are the key markets Brazil, Japan, China and South Africa. I think also it was right to notice Australia and New Zealand, which was quite impacted by the pandemic and there we were also able to grow mid-single digit.
36:21 So that was a short overview about our sales performance. I think we should now move to the costs, material costs. Quite a nice improvement here. We came from 35% ratio to 33% despite of the fact that we have of course as well higher packaging material costs. We have some higher raw material costs as well, like in milk, like in non-cocoa fat. On the cocoa side, which is our most important raw material, I think, we made early decisions to hedge at good levels. So, we were able to hedge actually cocoa beans at good levels early on and we were also able to buy cocoa butter, cocoa butter ratio early on at very good prices. So that basically led to the fact that material costs overall came down by 200 basis points.
37:09 Going forward, there is some pressure here, of course, packaging, especially milk, non-cocoa fats, then we have some which are a bit bigger like hazelnuts, almonds and cocoa, where I will talk about in the next chart. I'm expecting material costs to go slightly up in the 2022 numbers, but nothing dramatic as we -- I think we are well positioned -- well positioned again with the cocoa. You see that here actually cocoa, we saw a surplus in the 2020-2021 crop. Then in the 2021-2022 crop, we will see a deficit actually with supply/demand of about 200,000 tons.
37:56 So you can see here that the market was a bit nervous in the recent weeks as well driven of course by inflation, so it's not really clear. Okay, inflation is coming also on the chocolate, so what does that mean actually for the volumes and for the demand. So different factors as you can see. I mean, the cocoa futures were trading between GBP1,650 and GBP1,850 in the last two years and currently we are at around GBP1,750. So, this, I think, is a level which is not that different from where we were one year ago. So, I'm expecting cocoa -- future cocoa bean prices only to go up slightly for us in ‘22, but on the other side cocoa butter has come down even more. We are now roughly 2.20% versus 2.30% one year ago. So, you can see, let's say, if you now add cocoa beans and cocoa butter, I'm expecting a very similar cost for cocoa in 2022 compared to 2021. So that's good news considering all the inflationary trends in general in the market.
38:53 Personnel expenses came in higher, CHF100 million higher. The main driver here is really the retail. It's good news. Most of our stores were opened in ‘21 during the entire year, so that's good news. I think, for once, as a CFO to say the costs are going up, it's good news, because that also drove sales. So, the ratio came down. That's also good news, 21.5% versus the 22%. I'm also expecting this number to go further up a bit, but ratio to come down, right. Absolutely, we will see higher numbers in ‘22, but I'm expecting the 21.5%, the ratio to be lower in ‘22 as we will have some economies of scale. Number of employees came up by about 600, Dieter mentioned it. We had actually not enough labor in our -- in some of our factories, 600 during sometimes, so I'm also expecting this number to go up, because the situation has normalized and that business is growing.
39:53 Operating expenses, the key numbers in here are, on the one side, advertising and then, on the other side also logistics costs. From an advertising point of view, we were able again to invest more money behind our brands. I mean, we actually had this strategy already two years ago. We announced it as well during the pandemic. Our goal is clearly to invest, to have the up on investment behind our brand, to drive growth and as you can see in the numbers, I think, this strategy is paying dividends. So, we did actually the same in ‘21. So, we definitely have it up advertising once more. At the same time, we also -- as everybody else, we had additional logistics costs in the U.S., particularly in the U.S., but also in other markets. So that rate is increasing cost of about CHF150 million in this cost category here and the ratio also remained flat compared to 2020 and is higher than in ‘19, now we are 26%.
40:52 I think in the next few months, we will see here also an increase in costs, logistics, especially if you will, as you obviously know we see a big increase in fuel costs. We will again invest behind the brand. So, the cost ratio may go slightly up or remain roughly at the same level. I'm not expecting a massive increase here overall, but the percent may go up slightly in 2022.
41:19 Depreciation, in here, we actually also have the depreciation from the leasing asset since 2019, that's between CHF70 million and CHF77 million. Here, you can see in ‘21 it was CHF77 million. So, if you exclude that, our depreciation in total was at CHF200 million, which is more or less at the same level in the last three years. In 2019, we also had an extraordinary impairment in there of CHF52 million. So, we should also reduce tax, so ‘19 was actually -- also the base depreciation was at CHF200 million. And it remained at that same level in the last couple of years. When we compare versus ‘18, we increased the depreciation by CHF20 million and the driver of that is really our CapEx programs in our factories to, on the one side increase, efficiency; on the other side also, to create capacity for our future growth.
42:14 Okay. Operating profit, I'm not going to talk about that too much in detail. You have seen on pricing. I think, of course, it's a good development, CHF220 million additional EBIT, that's growth of more than 50%; 14.1% I think it's really nice landing -- exactly spot landing where we wanted to be at 14%, 14.1%, really good achievement here. When we break this down and I think especially analysts in here and also online, I'm sure you have looked at the different segment EBIT ratios.
42:48 And I think I'm going to start here in the middle, North America. We came in at 7.7%. Of course, the Russell Stover performance had an impact of the additional logistics costs, additional labor costs, the lack of labor, of course, had meant we had to pay more for labor in general to get labor in. So that had an impact on the North American EBIT margin. So, we came in at 7.7%, that's below our own internal ambitions. And going forward as the situation has normalized and thus, we are in general very positive about the North American business, topline and bottom line, I'm expecting in ‘22 an improvement here. I think we will be somewhere in the range of 9% to 10% EBIT margin in 2022.
43:34 Europe and rest of the world, I think a very good development. You can see Europe came from 14.4% to 18% more or less and rest of world from around 9% to 16% EBIT margin. So good development in those two segments. And I think we will also see continuous improvements here. Small steps also in Europe and rest of the world in the next years to come.
44:01 EBITDA, also record number here, CHF920 million, that's 20% EBITDA margin in line with ‘19. But in ‘19, we had the extraordinary impairment in there also in the EBITDA number, so I think it was really a very good year with regards to the EBITDA with a growth of more than 30%.
44:19 Free cash flow, definitely one of the key highlights, I think. We have been able to generate very positive operating cash flow, driven of course, by the profit and a positive net income development. We have also been able to manage quite successfully the net working capital again after 2020, again in 2021 and CapEx came in below our own guidance and below our own, let's say, project list if you want to put it that way. We came in at about CHF240 million versus the guidance of CHF300 million. Of course, we also are focusing the labor more on the production volume and making sure we get those tons out of the doors compared to doing every project. I mean, there some projects were getting delayed.
45:04 Now, going forward, we expect that to basically be higher, this number. For 2022, we expect CapEx definitely to come in somewhere in the CHF280 million to CHF300 million range. A lot of course is driven by Olten, by our cocoa liquor plant and its extension and then also North America, right. I mean, we have talked in the past many times about Stratham and the build out of Stratham, our Lindt factory there on the East Coast and yes, we will definitely continue with that project and we'll see CapEx for that increase in 2022.
45:42 The tax rate came in at 21%, right spot on and as guided. 2019 and 2020 was higher. We had some extraordinary one-off impacts there, especially ‘19, we had quite a high one-off impact, but also in 2020. Both impacts came really from the Swiss Tax Reform, right, which came into play. And now going forward, I'm expecting taxes in Switzerland to go up related to or linked to this Tax Reform and then I'm also expecting the U.S. taxes to go up or let's say taxes to go up too by the U.S., because the U.S. is growing over proportionately and the tax rate in the U.S. is actually higher than our average tax rate. So, over the next years that will also drive the tax rate slightly up. So, in the next years expect something in the range of 22% to 23%.
46:32 Net income, no big surprise here, right. We had a very nice development of about 50% growth in the EBIT margin. We had a tax rate as expected, so net income came in as expected at CHF490 million, 10.7%, I think a very nice performance here with more than 50% growth. The net financial position, I think, in that actually better than expected as I mentioned. On the one side, we had this very positive free cash flow, close to CHF600 million, driven by the very good operating cash flow and then a little -- slightly lower CapEx as I mentioned, then shareholder return was actually almost CHF700 million and we had a dividend of CHF260 million and then we also had the share buyback of CHF430 million, CHF440 million.
47:30 And therefore, we ended up at this CHF295 million. And if you actually exclude the lease asset, which is -- or the lease liability, which is about CHF500 million, we would be even net cash positive CHF200 million. So, definitely, again a good situation to be in and this one coupled with the fact that also the equity ratio is quite healthy with 58%. I think in uncertain times, it's really good to have a healthy equity ratio and it's very good to have a sound liquidity. So, definitely, we do have those two KPIs at good levels and we are quite happy with that actually.
48:11 So that was my summary on the financials. So, if you just -- if I just summarize once more the highlights, I think, on the one side, very good performance on the topline to 13.3%, then on the EBIT margin, I think, we came in slightly above guidance at 14.1%. In there, we have a few moving pieces, especially North America, because of the supply chain costs came in slightly below. Then Europe and rest of world came in slightly higher. We are very positive about the North American EBIT margin going forward, where we think, we will get to 9% to 10% in ‘22 and then for sure one killer highlight was the free cash flow, which came in at almost CHF600 million or close to 13% of sales. So, overall, I think really a good set of numbers and I'm really happy, as I mentioned, to be able to present this to you here in person.
49:06 Sustainability, I mean Dieter already elaborated a bit on it. Sustainability is becoming more important and we were just talking about this the other day. In recent weeks, Dieter and I, we're spending hours and hours with our teams on this very important topic and this is a financial presentation today, so I'm not going to talk -- to cover this topic to the same extent as I have just covered our financials, but I just wanted to make sure you are aware that we take this topic very seriously. We spend a lot of time on it and I'm just going to give you now a very short update on where we are on certain aspects. So, this is not the full coverage of the sustainability topic.
49:47 On the right hand side here you can see the -- our sustainability plan and behind the sustainability plan you have lots of commitments. Behind each of these areas, we have commitments and projects and we are publishing quite a big booklet actually where we talk about sustainability once in a year and that's going to be published in June again and in there, we will give you the update on all the commitments and on the projects, what we are doing, et cetera. So, I'm not going to talk about that today.
50:17 What I'm going to do today, I'm giving you quick update actually on the new environmental commitments, because in 2020 we had achieved our former commitments on the environment. So, what are those new environmental commitments? So, the first one is really that we basically said, okay, we are not just looking at Scope 1 or Scope 2 in our supply chain. We are looking at the entire value chain and we are defining measurable targets for Scope 1, 2 and 3 with a goal to reach net zero in the long term with regards to the emissions, right and we will actually announce the exact target in 2023.
51:01 And together is the target, we not only talk about the target we actually -- I will also say, okay, how are we going to achieve these targets or what are the projects, what is really the roadmap to get there, so that's something that we will publish in ‘23. We are working on it. It's a lot of work in the background. And yes, Dieter and myself, we are heavily involved ourselves as it's very, very important for us and for the company. In the meanwhile, we're also continuing to improve the greenhouse emissions to reduce the greenhouse emissions in the production facilities by 2% by production, by volume produced.
51:36 We have also the goal to reduce the water consumption between 2019 and 2025 by 10% by volume produced and we have published new packaging commitments and I talked about that actually when we published half year results in July and as I'm not sure if everybody has seen that presentation, I thought it's good if you can once more hear what those packaging commitments are and going to read them out there actually for 2025. So, one, it's really sourcing 100% of our pulp and paper based packaging from certified sustainable supply chains.
52:17 Then, two, it's to make at least 50% of all our packaging from recycled material. Three, we continuously and proactively challenge our entire packaging portfolio and strive to reduce packaging materials used. Four, it's eliminating 100% of non-recyclable plastic and reduce total virgin plastic use by 20%. And five, make all our packaging 100% recyclable and reusable. So, whenever we have a product innovation, this is one important aspect together with things like how can we improve cost or efficiency, how can we make sure food safety and quality will still be there. So, it's one important aspect of other aspects as well.
53:06 So this was the summary on the commitments, on the new environmental commitments and I'm now going to give you a short update as well on the Farming Program. We kicked off the Farming Program almost 15 years ago in 2008 and we really has the goal to improve the livelihoods of our -- of the farmers of our suppliers in the different origins and in 2020, we achieved the first important milestone. I think this was really a great milestone we achieved. We achieved 100% of cocoa bean sourcing out of our lead Farming Program. So, it's all a traceable and also verified by a third-party.
53:48 At the same time, we also have the goal now going forward to achieve by 2025 the same on cocoa butter and cocoa powder. So, by 2025, we will also source 100% of our cocoa butter and of our cocoa powder out of Lindt Farming Programs and it will be traceable and also verified.
54:13 So, with that, I'm showing you another short film as well on the sustainability program. [Video Presentation] So the Lindt & Spruengli Farming Program, I think, in a nutshell really working on the improvement of the livelihoods of the farmers. It's based on four pillars and we work with more than 80,000 farmers in the different origins and also local partners. So, what is it about? First pillar is really about traceability. So, we are actually registering the farmers. We are then mapping all the farms. We know exactly where the farms are and the size of the farms, et cetera, and then we are tracing really each single bean from their farm to our chocolate manufacturing sites and that helps us really to understand the farmers, the families, the communities better and we can have a better impact there.
55:54 Then secondly, it's about training and knowledge transfer. We really work together with the farmers on the farming practices, which enables the farmers to become more efficient to use more sustainable practices and to have a better output at the end of the day in their farms, which again helps living income of course. Thirdly, really, it's about farmer investments. We are investing in the -- with the farmers, with the families, with the communities in the areas of -- we are distributing tools, we are distributing seedlings for trees. We are giving -- handing out cash premiums for the cocoa beans. We are giving access to clean water and also important, of course, to avoid child labor we are building schools in the origins and do everything possible, so the kids can go to the schools.
56:44 And then the fourth pillar is really about verification. So, we have a third-party that looks at the farming programs and looks at the traceability, et cetera, again giving us feedbacks, so where can we even get better, it's important to have a benchmark also with programs of third parties. So that's basically, in a nutshell, our Lindt & Spruengli Farming Program, that was, as I said, a very short update on sustainability. It was not the goal to give you a full update. As I mentioned, during June, we are publishing the Sustainability Report where you will get the full update on all the projects and all the commitments we are working on -- in sustainability. So, thanks a lot for your attention from my side.
57:26 And, with that, I'm handing over to Dieter Weisskopf again, who will talk you through the growth agenda.
57:33 Thank you very much, Martin. And I already thank you now for your attention and patience. It took an hour, but allow us when you are already here, we give you really an update of what's going on in our company here. Now, I get to the growth agenda and outlook. There are three charts left and I think then we get to the question-and-answers.
58:00 Now talking about growth today in today’s geopolitical environment, I'm sure that you will ask yourself what is Lindt & Spruengli doing that makes them confident that growth in the future will be there for the shareholders. Now I think I have two charts for that. Now, look at the left side. Now, the left side is, we made the ‘20 year – ‘21 financial year, yes, but what can we rely on? We can rely on, number one, and I think don't forget that in today's environment more and more important, most dedicated people. You can ask everybody you want within Lindt, it's a great product, it's a high quality and the, I think, people like working for Lindt and I think, as I said at the beginning, they are standing behind us and I think that is the most important one we rely on here.
59:08 The second one is clearly the brand. Brand established over 175 years and even more. The third one is the highest quality product we have. We have an organization set up now across the globe and you have seen over the last two years, the resilience of our business model that is there. We have a very strong balance sheet with 58% equity to balance sheet and total and all that is there, but nevertheless if you look at the environment, is that enough? What do we have to do? And, I think, what is critical is, as a company, we have to adapt on our -- on an ongoing continuous basis that we can approach that market and as well adapt to the changes and the big changes that are ongoing in order to reach 6% to 8% growth.
60:14 Now, here again, it has been commented this morning, we were at 5% to 7% growth. We now lift our expectation to 6.8%. Now, what is the reason? The reason behind this basically the same one that led us to reduce from 6% to 8% to 5% to 7%, that is inflation. Now as you can remember from 2014, 2015 to 2021, inflation was something nobody really talked about, because it wasn't existing. So, if you went into the trade partners and said, hey, I want to increase. They say why. And if you had no reason and there was no reason, you couldn't increase. So that means when we talk growth, there is always a part and was a part inflation. Definitely looking into the future, at least the next two or three years, we think that we will have some adjustments in the prices. As Martin before said, we are -- we will be hit and are hit in a lot of areas, be it logistics, be it as well wages clearly and be it as raw materials. Now that is one reason.
61:32 The other reason is clearly the point that we now as well see further growth and growth impact from countries that we entered the markets, we entered only over the last 10 years. Now, that -- having said that, that is still not enough, because what I said and mentioned just before, it is a continuous adaptation of our growth and model, our growth model. Now, having said that, we decided about one and a half, two years to embark on a journey where we just said we need a structured approach on recon on an ongoing basis just and focused basis as well and in a structured way approach the challenges that are ahead of us and that we are not basically losing time and losing as well a lot of energy management time in basically diverting into not so strategic projects.
62:41 Having said that, if we want to grow 6% to 8% and that is now the target for the next years, if we want to improve our operating profit by 20 basis points to 40 basis points, if we want to attract as well the talents, we need in order to get into the project here, then of course we need to be structured. We have six pillars. The one is the organization. The organization has to stay agile. We have seen companies that the bigger they got, they were becoming a little bit administrative and as well slow. We have to make sure that we are set up in an organization that remains alert, goes ahead even if we grow that and that percentage as you can calculate yourself where we get at in about five to eight years, so that's a certain risk. We have to make sure that the organization follows pace. Delight, that's another one.
63:47 I mentioned that media environment is changing. Not only the media environment, but as well we have the consumers becoming more demanding. The consumer demands are more individual. We have to satisfy it. We have to strengthen product innovation. We have to make sure we do the right things for the consumer and we have to make sure as well that we never ever give up quality and as well our pace of innovation. Second one, Seamless. I mentioned that as well already. It is not enough that we sell in wholesale, we have to make sure we play on all areas of the channels and that is online, that is business to business, that is area of our own stores and as well that is something that at the end, I mentioned that, has to be an umbrella and that the consumer is facing wherever they are shopping the same brand and the same equity of this brand and as well -- and the easy access wherever they want to buy, they get linked.
65:02 Sustainability, that is again areas of raw material, areas of raw material within a raw material, it's traceability and the human rights issues. We have the second one, packaging; and we have the third one, greenhouse gas. I can tell you that mainly the last one, the greenhouse gas, will occupy us a lot over the next years and even decades, so there will be a lot of efforts in that area as you, I'm sure, have heard already from other companies in the food sector and as well will absorb a lot of management time and we have to act very focused here. Advance goes into the growth agenda that we have internally and as well you see already the results with the emerging markets, big markets income per capita growing and really ready as well for our Lindt products. We need a structured approach which new countries, when and to what extent and in what form, we are going to enter.
66:21 Now all those programs to the left, they of course have to be financed, mainly of course advertising, media, but last, but not least, as well, very importantly, sustain and sustainability will cost us more cash and efforts in the future. So, we have to make sure that we get lean, we get efficient in production and as well, we do everything that we can free up cash in order to do the programs in the first five pillars. Now all that is not possible without the fundament and the fundament is people and people means attracting best talents and we have to be become and keep our position as an employer of choice. That is just a very small insight into the growth agenda in order as well to give you kind of a quick overview what can you expect from Lindt and as well what is Lindt doing in order to be now getting to such an outlook.
67:40 Now standing here and giving you an outlook for the coming year, I can tell you that is not an easy one, because looking at all the geopolitical environment we are now in standing here in March and giving you an outlook for the year, that's a very bold exercise, I can tell you. And as well, I don't want to say now always subject to A, B, C, D, E and at the end you will say subject to what are you going to make here a forecast. I'd just say assuming from what we see today, we are expecting for this year organic growth rate of 6% to 8% in all likelihood at the upper end of that range here and as well we will see a relatively strong first half as well. Now the operating profit margin again here subject to a lot of things, but we stand here and say, yes, we are confident we can reach this 15%.
68:47 Medium to long term as well we maintain, as said already before, for the growth agenda the 6% to 8%. We will see more inflation in here in that figure and we will have a continuous improvement of the operating profit margin of 20 basis points to 40 basis points. And that's basically my part on the growth agenda. And, with that, we get over now to the question-and-answer session and I ask Martin, please join us again. And if we talk about the question-and-answer session, yes, we want to enchant the world of chocolate. But before I go now and to take question-and-answer session, now let me say one word to our actual really dangerous, I don't say situation, but I'd say the dangerous war at the border and doorsteps of Europe. Because I'm sure that that question will come up from you, because we are all affected and even more affected are the people that are fleeing, the refugees in Ukraine.
70:12 So I would like to give you kind of our position. I would like to give you our situation of our employees in the area. Now, number one, we clearly as a company we condemn war. I think that is not the right thing to resolve the problems that we have in the world. It's disastrous and we just ask all the parties involved, one party mainly kind of to come back to negotiations and to find a solution to that really disaster. Now latest news from our employees. I think that's always the main point we have in our organization. We have one employee in Ukraine. What we hear is, he is safe, but still in the country. We work in Ukraine via a third-party distributor and, of course, there is no more supplies to the country is possible. We have a total of 121 -- 125 employees in Russia, we have eight stores in Russia. Those employees are as well, of course, concerned about the situation. But as well here we care for those employees and of course what the government is doing, what the employees are doing, that's a difference, we make that difference clearly. Now they are safe as well and of course we are concerned as they are.
71:52 We are continuously looking at the situation. We still supply as far as we can supply the market as all other food companies as well committed to do so far. I think, there is not one food company having withdrawn from the market in Russia. Of course, we consider and look at the situation on a daily basis as for our supplies or -- at all possible and clearly, we do that all within the sanctions that are there. We clearly follow all the sanctions that have been imposed on the country. But now leaving the business apart and I have to tell you, I think our good results today are impaired by the suffering of all those people, of the refugees that are really fleeing to Europe. Our thoughts are with them. And so, what can we do now? I think with the Board of Directors, the Chairman and Management, we have decided as well, and that is not a kind of a marketing exercise please, just announced today here it is mainly as well to show our commitment and as well our responsibility we have decided to -- CHF1 million that we will grant to the International Red Cross in order to support in our refugees at the borders and that's basically what we can do as well as a responsible company.
73:32 With that, I conclude my introduction to Q&A and I would like now to open the Q&A for the group here in the room and then depending on demand and questions, we will then after roughly 25 minutes, we will hand over to the online participants for questions.
74:03 Silke Koltrowitz from Reuters. And thanks a lot for taking my question. And yes, I was going to ask about the situation in Russia. So, you say you keep supplying, so I assume all your stores are open in the country then and so you're going to stay that way with stores opened, you keep supplying as long as you can? That's my first question. And related to that, I wanted to ask, so you're very positive on your outlook. I mean, you just said that all these uncertainties, so this whole geopolitical situation at the moment, it is included in your outlook, because I mean that you're not concerned that there could be a major economic downturn affecting also other markets. I know that Russia is maybe not so important for you, so I was wondering about that? Yeah. Thank you.
74:51 So first question, yes, we are supplying as far as we can. I think, as I said, it's in line with all other food companies. Now stores are open, yes. And the second question is, yes, in the 6% to 8% again, yes, it's included. Russia, Ukraine actually are making less than 1% of our total sales. Now, again, I don't want to start again subject to a lot of other points, but I think the way it looks like now, yes, it is included, 6% to 8% should be done.
75:35 Patrik Schwendimann, Zurcher Kantonalbank. Price mix, more than 6.2% last year. What was the price component of it and what's your best guess expectations for the current year in terms of price mix and also separately the price? And maybe also in the longer term, you've just have raised the organic growth to 6% to 8%. What have you in mind in terms of inflation? And second topic, raw materials, good outlook for the current year. I guess, you’re -- at least a lot -- already have a lot of coverage for the current year, what about ‘23 and what's your -- I know it's just more than one year down the road, but what's your best guess there? And should we expect there a stronger increase then? And last question, Russell Stover down 5% last year. You just have mentioned a better outlook for the current year, what does this mean? What's your best guess here in terms of growth for Russell Stover and maybe also the mid-term growth for Russell Stover? Thank you.
76:43 I can start maybe with your question on the price. So, last year, it was around 1%. For this year, I'm expecting something between 2% and 3% for price out of the 6% to 8%, let's say, higher end of 8% -- higher end of 6% to 8% to around 8%. And so, we should -- you take there around 2%, 2.5% to 3% you're probably more or less correct on price mix. And then your other question was on raw material 2023. I think that's quite volatile right now, of course. Cocoa is okay, right. I mean we've shown you, it's GBP1,750 more or less, so in the cocoa side we should be okay. But there are some areas where we can really see costs going up quite steeply, like in packaging, like in milk, like in sugar, these are few areas, but look I'm not expecting a massive increase in 2023, because cocoa, which is such an important part for us, is actually at the good level, right, still and therefore I would say a slight increase in ‘22, a slight increase then also in ‘23, a slight increase.
78:00 And your last question on Russell Stover. I mean, your question was on growth of Russell Stover for ‘22 and beyond, right? Look, the overall picture has not changed. As I mentioned, we have some very healthy parts in the portfolio there with sugar-free, which was growing double-digit, which is now, of course -- the rest of the business is not growing and sugar-free is growing double-digit. The sugar-free share is becoming more important of the total portfolio, so that helps a bit. Last year, we said it was really under pressure because of the supply chain situation in the factories, which now I think we are in a much better pathway to improve that. So, for this year, I'm expecting a low single-digit growth and then for next year and into the years to come, I'm expecting small growth as well, somewhere at 2%, 3%, 4%.
78:56 Maybe inflation for long-term [Technical Difficulty]
79:00 Yeah. In the past 10 years, normally price mix was around 1%, right. So, in our new assumption, I would say 1.5% to 2%, because we are also implementing price increases, right. We have done a big price increase this year already in the U.S. of 7% to 8% and if the inflation remains high, we will do another price increase in the future most likely. So, we view, of course, with the higher packaging material cost, et cetera, we have to offset that with higher prices. Therefore, I think we will see in the next few [Technical Difficulty]
82:05 [Technical Difficulty] how profitability varies by different channels like online and stores retail? Thank you.
82:18 The first one is to easiest one, that is the buybacks. And now you will see -- I cannot give you an answer on that one, because at the end that will be a decision by the Board of Directors and not mine. We will be ending in all likelihood the existing buyback by end of June, maybe July depending on the markets and so for that reason the Board of Directors will look at that question in view of free cash flow, in view of future dividends and our internal and external plans. That's all I can say for the time being. Now the second one is sales split. Yeah.
83:00 Profitability. I think the question was on profitability in online and in retail. Online in general is accretive to our profitability. We can actually -- of course, when you look at online, you have different online channels like Amazon, like the platforms, right, that's more or less in line and then we have also like the click to mortar, which is like the tesco.com that's also in line with our wholesale P&L and then our own online lindt.com in general tends to be more profitable, because we have -- of course, we have the entire margin a little bit similar to retail and we don't have the cost for the rent of the stores, so online is for us a good thing, the growth there that we are achieving also from a profitability point of view.
83:50 Okay. I think, there is another one.
83:55Yes. Hello. It's Jorn speaking from UBS. Dieter, Martin, can you hear me?
84:01 Thank you. Thanks for taking my questions. The first, I would be pleased on your margin in North America and can you give us a hint where Lindt and Ghirardelli spending in terms of the profit margins and is it already close to the group average? The second question would be, please, on your emerging market strategy and just to double check, are you planning here your own production site in emerging markets in Asia, I mean, in the next three to five years? And the last question, if I may, Dieter to you, we all want you to stay another 10 to 15 years and maybe just if you give us an update what is your plan? Thanks a lot.
84:48 Okay. So, Martin, maybe you start first off.
84:54 So your first question on profitability. North America, we are not disclosing the numbers actually by brand. It's even -- we have now really one segment and we report as anyways one segment in the US, right, because it's so interlinked with logistics, with procurement, et cetera, that's even difficult to exactly break down the profit on the brand level. So therefore, we have the entire profit for the U.S. and, as I mentioned, we want to increase that from where we are today to 9% to 10% and from there actually, which I probably didn't mention it, we are quite confident that we can continue to improve the EBIT margin also by 50 basis points to 70 basis points per year going forward. Yes.
85:36 I think the other one, if I understood it well, is Asia and as well our plans and growth plans. I think you have China, you have Japan as the big ones, we are already well established and we will grow. Then next one in the row that is probably the most imminent one is clearly South Korea we have to look at and a little bit more distance is a huge market, that is Indonesia, but still kind of -- as regards logistics, as regards temperature, as regards distribution a very challenging one. That's the second one. And, now, please can you repeat the third -- what was it? I think, I just saw everybody laughing here. That's even better. Okay.
86:32 It's about your future. How long -- how much longer you are planning to stay.
86:36 That's the reaction out in here. Once I will really decide, you will hear it not in a press conference as that one, but I think that's all I can say to that. Okay. No more question online. That leaves me the question here again. Any upcoming new question in the room? If not, then I -- there is one. So, the last online, let's see.
87:33 Hello. It's Gail Kover (ph) FrontAd Media (ph). Can you hear me?
87:35 Yes. Hello? We hear you -- oh, heard you.
87:49 Hello. Can you hear me?
87:53 Yes. Yes. Everything okay on our side.
88:06 Hello. Can you hear me?
88:13 Yes. Okay. I think, I don't want to keep you waiting here. It seems to be a connection issue. I think, new technique, we are still training in that area. Now, thank you very much for coming. I think, it was a pleasure having you here really in the room again and please help yourself, as always. You know it. Try the products. You will see as well outside, you will see some products that you might not have seen in the stores already. So, I'm really interested to know what you're tasting session will be at home. Thank you very much, and see you again latest in a year's time.