Full Year 2021 Danone SA Earnings Call
[music].
Good day and thank you for standing by welcome to the 2021 annual results conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded.
Florida any further assistance. Please press star two I would now like to hand, the conference over to your speaker today much either.
Head.
Of Investor Relations. Please go ahead.
Good morning, everyone, making it a investor relation I had gone on from Q4 being with US. This morning for our tenants when you have 2021 visual presentation.
I'm here with our CEO and when there's not that he kind of careful you'll goodness there.
We'll go through some prepared remarks before taking your question in a second step.
And before we start I draw your attention on the disclaimer on page two related to forward looking statements and definition of financial indicators that people like to during the presentation and with that let me hand, it over to Antoine.
Thank you <unk> good morning, everyone and welcome to our full year 'twenty one cool.
Delighted to be back with a number of you and I'm certainly looking forward to me.
We see many of you in person.
Not too long.
Before we turn to the presentation that reflects two things firstly, we will be focusing to the truly on our reported results for 'twenty one.
We'll be speaking to you again.
Less than two weeks, but our future strategy and our guidance at our shipping, which I hope most of you will be attending.
Really or in person.
Secondly.
You will see that we have changed the format of our presentation. It is simpler and hopefully to read and understand giving more rooms to our brands our innovations and our products. It is still work in progress and we will keep improving on it but I'm sure you'll get a sense of what I am saying.
This is obviously my first set of results as that one for you and I want to be clear from the start.
We always aim to be approached transparent and clear those of you who know me, we know someone who wants together team.
Such a plan and then focus and lastly on execution and delivery. So we will celebrate the wins, but we will tell it also from outlining where we need to perform better.
Since September we have done a lot of leasing as a company.
And we have done a lot of internal assessment. We have also completed assembling a strong leadership team that will ensure that the right capabilities and conversation can happen at comex level.
We have been spending time together to then work through what the plan for the company should be for the next cycle, but all of this is for when we meet again.
On March eight.
Now back to the results.
As you will have seen from the press release this morning, Dino and delivered in 'twenty. One what is a good set of results.
Text that could hardly have been more challenging.
Challenging externally with the COVID-19 crisis, continuing to impact People's thoughts mobility, but also supply chain in almost all geographies.
Internally, we have a very public governance crisis in the first half of the year and was a significant say organization local first touching almost all quarters organization.
So against this backdrop, we saw true leadership and dedication from our management team.
I want to start thinking three people in particular.
Rick Shane and yoga.
Well the way to lead the company through the storm and together with the team managed to deliver in line with what we had promised this is if anything a proof of the residents of Danone and of the quality of talent, we have within the company.
Now moving to page four.
We delivered a solid top line performance in 'twenty, one at plus three 4% and we closed the year with a very strong fourth quarter up.
Six 7% on a like for like basis.
Beyond the number itself I am, particularly pleased with the composition of this quarter for performance with volumes back to growth at plus 4%, while mixed remain the main contributor and pricing stepped up to plus two point harsh person.
I'm also happy that all categories, all contributing to the full year of solid performance.
<unk> delivered broad based growth and sustained solid momentum in Europe , and know them, resulting in a plus three seven like for like sales growth in 'twenty one.
<unk> produced a 1% like for like growth was a sequential improvement quarter after quarter.
At plus six 4% in quarter four.
This reflects notably the Pogo stick recovery of our Chinese business.
As for waters, we saw an acceleration at the end of the year to reach a total of plus seven 2% like for like for the year.
This confirms our continued recovery in Europe and at that time. In addition to return to positive growth in China and Southeast Asia in the last quarter.
Now moving to page five.
Over the last five months since I've joined I've been digging into what works and what needs to change and I will give my unscripted you own booth at the upcoming shim.
And already tell you that there are a few things we can be proud of in 'twenty one.
Joe again will come back later and more details on the performance by category.
But let me say that I'm very pleased with the performance of our dairy business.
We delivered sequential improvement quarter after quarter in 'twenty one.
Notably by strong performance in neuron.
This clearly demonstrates the potential of the category.
What is also pleasing was this performance is that it comes with a mix of factors.
Firstly.
We have been developing our core brands, which is like actually mail, which maintain a strong leadership position and deliver low double digit growth in 'twenty one.
Secondly, we have been catching up to where we were late and there I'm pleased with the very strong performance of our Greek platform in the U S with.
We successfully restaged the Arco's brands, we drove real innovation at scale with 14 brands, you'll pull and high pool delivered another great year of performance.
Thirdly.
Another source of fraud is the continued strength of our IMF brand globally.
Globally.
This is especially true in China were up 10 million market shares remains resilience in both domestic and international labels and we are the brands ranked the number one in the IMF category jewelry.
During the 11 11 on lung cells, the bonds, they cognition and strengths its ability to innovate and innovate based on our distinct chief research and development capabilities in that field.
One of our major offsets on the Chinese market.
Last but not least waters as well delivered a stronger recovery, especially in Europe , where Q4 was ahead of our 2019 levels and where all countries registered another year of market share gains.
We delivered a strong performance in 'twenty, one driven by small format recovery.
It's also by a strong pipeline of renovation and innovation and.
There is more to come.
I'm now on slide six.
As I mentioned in my opening remarks, 21 was also for US a year of major transformation, whereas the rollouts of our local trust Hogan let.
Let me start with something I've said to the teams the day I joined the company.
Something which has been a guiding principle as we execute our transformation with discipline, but also with pragmatism.
Local first doesn't mean local only.
As we deploy local first we have been looking for the right balance between more co centuries, which gives us agility and speed of execution, but also cost efficiency.
And global scale and expertise we are leverage gives us a benefit.
Social consultations now have been closed and local first is our in place North America was the frustration to switch in April 'twenty, one and we are already seeing the benefits of it the new organization enabled us to put in place a consumer and customer focused culture.
And the team there and the change leadership to deploy across category growth strategy, which is starting to deliver.
North American platform group, plus four 7% in 'twenty one.
We switched Europe progressively over quarter, four two and with friends at the very beginning of this year.
In parallel to what is happening in the countries. We have also started strengthening functional expertise on some core capabilities such as a chore research and innovation and operations, where you are seeing new comex appointments over the last five months.
So things are moving.
And there are a number of things done on us should be proud of starting with a solid set of numbers, especially challenging context.
But it doesn't end there and there is also a lot where he most steel improve all moving to slide seven.
While we delivered solid growth with a good mix contribution.
Growth model remains somewhat unbalanced as our volume were down again this year at minus zero six person.
While short term market shares are looking better we continue to lose market shares in too. Many places in other words, we do not fully capture the potential of our markets.
As for quality of execution, we are not yet where we should be.
Context, where global supply chain are disrupted.
We had assured overall business function, but we have suffered from service level issues that prevented us from serving customers in consumer demand in key geographies and categories translating into all the new laws and sometimes market share erosion.
With higher inflation, we shouldnt pricing power and we managed to kroger's cheaply step of productivity. During two months you want to reach more than 5% in H two.
And you'll go into will dwell of insurance in a few minutes on margins from our passion is down one bps in 'twenty one.
Finally, when it comes to ANP, we maintained our absolute level of spending we were more selective in the allocation. We put on asked some really good campaigns, but as a percentage of sales we were down 22 basis points versus last year, which means that even if we stopped the bleeding recapped underfunding.
<unk>.
We are not spending what we should we keep notes reporting all brands have deliver needed and there are growth opportunities. We all know the sheathing.
So all in all a solid set of numbers and plenty to be proud of.
And progress on a number of fronts, but still a lot of improvement opportunities and as I said.
Updating you on our plans to address these gaps holds for the opportunities.
The upcoming CME in a few weeks' time so.
So for now let me hand, it over to your guns for the 'twenty, One financial review Yoga and I'll, let you.
Thank you Anton and good morning to all of you I hope, you're all safe and well.
Let me start the finishes I view as our net sales of bleach on slide number nine.
As I'm fond of saying we are very pleased with the convenience of the year 'twenty, one very pleased with the plus six 7% like for like net sales growth in Q4.
Looking at the building blocks of this Q4 volumes have been contributing positively to 0.4% notes.
Notably led by positive volumes for ETP in Europe , and North America.
Continued volume recovery in both us as well as by positive volume dynamics, especially institution in China.
Having said that <unk> was obviously the main contributor to growth was plus six 3%.
Afflicting, a step up of our pricing initiatives to around two 5% in Q4.
Maybe they're benefiting from a continuously solid geographic and product mix something I will come back to later on.
Yeah.
Outside of the like for like currency and others had a positive impact of plus <unk>, 2%.
Mostly driven by a plus two 6% tailwind from currency effects.
Selecting the appreciation of several currencies.
Including the U S dollar and the British pound.
Hyper inflation geographies also had a positive organic contribution to growth of 1% in this quarter. All in all reported growth stood at plus 10, 9% for the quarter, bringing our quarterly net sales to six 2 billion up from $5 6 billion last year.
On next page page 10 gives us a bit more perspective on the quarterly sequence.
But just because they're getting into our plus three 4% unit sales growth.
Minding.
That you are indeed back to solid growth since Q2 of last year.
Being back to growth is obviously important for us.
Especially the fact that you have been back to like for like was also versus the peak Covid 2019 base for.
For each of the last three quarters.
Looking at the drivers of our full year performance, we want to recognize that our growth was driven by important mix effects of plus two 4%.
The majority coming from product mix that was benefiting from a premium premium innovations in specialized nutrition.
But also from the recovery of small cell lots in the waters Division.
As well as some of our premium most functional dairy ranges.
And on the other side, the geographical mix, especially driven by the relative outperformance of our China business in this Q4.
Pricing contributed by adding plus one 6% to the full year numbers.
With the shift for the year from a rather selective to more broad based pricing actions.
This price increases and revenue growth management initiatives across all geographies.
Notably to manage the impact of an accelerated inflation in the second semester.
And finally.
And despite the recovery in the first quarter, we need to recognize that although volumes were negative for another year.
In year 2021 was minus <unk>, 6%.
They have been down, especially in more developing market and the rest of the word labeling.
Positive in Europe , it's been as North America.
Let's go a bit deeper into the performance by Division and it was started on the next page page 11, with essential dairy and plant based.
Our edp business closed the year with revenue is up plus three 7% on the like for like basis recurring operating margin slightly down at nine 8% in a very challenging.
<unk> cost environment.
Zooming into the fourth quarter Edp maintained its solid momentum growing at plus 3% with a similar growth composition as in the previous quarter first.
The debt is part of our portfolio, which has delivered sustained solid growth led by probiotics protein and indulgent platforms.
Even if there is still a lot to do.
It demonstrates the visual related activity of this category the relevance of our brands and platforms also in the post COVID-19 context.
And secondly.
Land based the just a solid mid single digit growth like in Q3.
Our operating here and are continuously dynamic, even though momentarily slower category context that is recycling the consumption peaks of year 2020.
This segment is exposed to is totally challenged supply chain or not.
Particularly in North America, but recently also in Europe , which has prevented us in some instances from servicing customer and consumer demands.
Looking at geographies, Europe , and North America posted another quarter of solid sales growth was positive Williams.
In Europe , let me highlight particularly the performance of our key matter.
Delivered another quarter of double digit growth.
Translating into market share gains while active yet pursued is good momentum in the UK and Germany with resilient market yes.
Also to mention the high potency in part of our portfolio with <unk> and high Port that posted both again, a stellar performance thanks to an impactful rollout across geographies incentives and finally ipod.
The posted high single digit growth in Q4, protecting its leading market share position in Europe .
In North America.
We delivered another record quarter of net states sustaining mid mid single digit top line growth momentum and accelerating competitiveness.
Sales were driven by a stellar performance of yogurt led by our Iqos. The enchant one was mentioning it before but also by Activision and too good.
Leveraging the winning positions in the push and pull Biotics statements.
Our coffee Creamers brands International delight posted another quarter of very solid growth and share gains.
Plant based save the started to sequentially recover from previous quarter.
This recovery was enabled by a conscious prioritization of core values.
Meaning that we still have some catching up to do before fully recovering from supply and logistic disruptions.
Platform and the rest of the world posted strong sales growth led by price and mix.
Volumes were down the CIA is region grew low single digit and title driven by price and mix in the macroeconomic context that continues to be challenging.
Well, let in America and Africa continued to show further sales recovery.
Moving to specialized nutrition on page two of.
Especially at nutrition closed the year was organic growth up 1% on a like for like basis recurring operating margin decreased by 105 bps to 23, 5%.
You will remember that H, one was totally penalized by negative country mix and lower volumes.
Two margins sequentially improved notably led by strong product NGL mix as well as volume recovery in the last quarter.
Looking at the fourth quarter sales sequentially improved versus the previous quarter, reaching plus six 4% on a like for like basis slightly positive volumes.
Going through the segments infant nutrition posted very strong growth this quarter, driven by China and the rest of the world.
China delivered mid teens growth with resilient market shifts, our domestic and international labels, which we just saw it controlled cost border platforms.
Maintained their growth and market share momentum.
I would like to emphasize again the outstanding performance of our ophthalmic brands during the 11 11 Chinese online event.
We were ranking again the number one brand in both leading e-commerce platforms.
Our sales of International Davis.
So through indirect noncontrolling caused waterflood comps were slightly negative.
Against the low base of last year with Trevor as well as plant activity still very limited with mainland China.
In Europe growth was slightly negative in the categories, the panelized by decreasing birthrates and working from home.
We saw recently some first encouraging signs of stabilization.
And finally in the rest of the world, you'll remember that Q3 was negatively impacted by some phasing effects as expected growth was back to strong mid single digits in Q4 led by both volume and value as well as global market share gains.
Moving towards agitation sales were weak in the first quarter due to some inventory management.
Our supply challenges, while demand and sellout dynamics remain very solid and it will be back to the user growth dynamics.
As soon as from the first quarter of this year.
Finally on page 13 of our waters Division sales.
Sales increased by plus seven 2% in the full year 2021 by our recurring operating margin was up plus 194 bps to $8 9%.
These margin recovery was driven by operating leverage as well as a strong product mix improvement.
Combined with record high productivity.
Looking at the fourth quarter more specifically sales were up plus 17, 3% on a like for like basis.
This great performance was led by the sequential recovery of small formats as.
As well as a good continued momentum of large format for in home consumption.
Also worth, noting that Oh, Gee, where fees contributed to this growth.
In Europe .
<unk> reached mid teens growth on a like for like basis clothing, the quarter above 2019 levels.
In addition to the sequential recovery of mobility, we are very happy to report that we are consistently winning market share across all key markets, including of course, the UK, Germany, Spain and Poland.
Moving to the rest of the World Latin America registered another quarter of recovery led by plane bottled water as well as our home and office delivery business.
And in China, Meson was back to positive growth with stable market shares.
Finally, southeast Asia posted low single digit growth <unk>.
Sequentially, improving compared to Q3 was mobility showing first signs of recovery.
Yes.
Before diving into our margin bridge, let me quickly come back on slide 14 on the current supply and cost environment.
2021 has been clearly a year of strong inflationary pressure for our sector.
We experienced in the second half of 'twenty, one an acceleration which was exactly in line with the expectations. We shared with you a few months ago.
We mentioned back in October that we expected input cost inflation to sequentially accelerate.
From 7% in H, 1% to 9% in.
The second half of 'twenty, one consult indeed, those assumptions is that fair.
Further increase of raw materials logistics and transportation cost.
As well as an increasing challenge to some parts of our supply chain, especially North America and Europe .
This finding led our input cost inflation to reach around 8% on a full year basis.
In that very challenging context, we put a greater focus in the second half of the year and the delivery of additional productivity and pricing.
On productivity, we accelerated the already initiated cost cutting really synergy programs.
Delivering another record of more than 5% productivity in HD and.
And on pricing, we sequentially move from a rather selective pricing and it's running too much of a broad based pricing and revenue growth management, leading to a full year impact of plus one 6%, while we posted as mentioned earlier.
<unk> increased in Q4 of as much as two 5%.
Let's now move on to the margin bridge on slide 15 them.
Closed the year 'twenty, one with the recurring operating margin at 13, 7% in 'twenty one.
Looking at the building blocks of the year was mostly impacted by the decrease in margin from operations down minus 81 bps.
And then we come back to the drivers of the decrease in the next slides.
This decline in margin from operations was partially offset by a positive contribution from investments in overhead by.
<unk> also benefited from a reversal of some of the COVID-19 related costs, which were incurred last year.
The plus 31 bps from overheads are reflecting both the strong discipline and fixed cost management.
The first benefit from Deluca first implementation.
<unk>, which is fully on track and delivering the expected savings over the next two years.
The plus 22 bps from investments reflect the fact that we spend in 'twenty one the same absolute A&P as in previous year.
Translating into a positive relative contribution.
We're more selective in our allocations increased support behind our winning brands and segments, which indeed translated into market share expansion in those areas.
While this means that we stopped the bleeding we kept under funding our brands something we can't be happy about.
Let me now zoom a little further on the building blocks are in a margin from operations onstage number 16.
As you saw on the previous chart decreased by minus 81 bps in 'twenty one the top line acceleration in 'twenty, one had a significantly positive impact of plus 130 bps led by mix and price.
However, despite the very agile management by our teams around the world. This could not totally offset the incremental net inflation, which we had to face on the raw materials manufacturing and logistics throughout the year and cost inflation had a negative impact of as much as minus 480 bps of our margin.
Representing a gross negative impact of minus one 2 billion.
Unit.
This was partially offset by a new record in Cogs per activities, which had a positive impact of around plus 280 bps representing around $700 million.
Now looking forward to year 2022, we see another year of challenge and disruptions.
And we expect input cost inflation to sequentially accelerate in the low to mid teens range.
<unk> to the 8% we experienced in 2021.
To navigate these headwinds we will further step up our productivity.
And we will leverage broad based pricing.
Moving now onto the EPS bridge on slide 17.
Regarding EPS reached <unk> 31, slightly down by one 1% versus last year the improvement of our operational performance had a positive impact of plus four 3% on EPS.
Notably offset by a negative effect of minus three 1% from scope.
Mainly due to the disposal of our stakes in menu and the accrued and the negative impact of minus <unk>, 1% from currencies.
It's worth noting here the positive contribution of the financing books with plus <unk>, 7%, reflecting.
Reflecting the continued decrease of our net debt position.
And finally reported EPS decreased by minus one 7% to <unk> 94, and let's move to the next page page 18 to dive into the key explanation sectors.
Evolution of our reported EPS has been impacted by two important nonrecurring events on one hand, the one off costs related to the implementation of Luca first which impacted our earnings with minus <unk> 7 billion in 2021.
As Antoine was already sharing this project is on track and the metrics in terms of costs and savings are confirmed.
Whereas some of the bookings and cash outs moved from Q4 'twenty one into early this year.
The reported EPS was on the other side positively impacted by the capital gain of around <unk> 6 billion arising from the disposal of our stake in China major dairy.
Finalized in Q2 last year.
And those two elements.
Offsetting each other which leads to a reported EPS of $2 94 relatively close to the to the recurring EPS of three years and 31.
Let's now move on to the next page Slide 19.
Free cash flow reached $2 5 billion in 2021, reflecting a disciplined capital allocation.
As well as our reinforced focus on cash generation.
Also as mentioned before Luca first did slightly impact our free cash flow 2021 to a lesser extent than initially foreseen or moving some of the cash outs into early this year without changing the phasing of the P&L savings.
Working capital stood at minus <unk>, 8% of net sales showing great progress in the context of sequential normalization of channel mix and payment terms.
Capex stood at 1 billion youll be presenting around four 3% of the tests.
Moving to the next page is <unk>.
Noting that our net debt closed at $10 5 billion, you wrote down $1 4 billion from the end of 2020. Thanks.
Thanks to our strong cash flow generation. This translates into a healthy three types of depth on the EBITDA ratio.
At the same moment, we are reporting our IC at eight 7% a slight improvement versus the eight 5% reported end of year 2020.
Certainly not the level, where we want it to be.
And finally, we will propose a dividend of $1 94 per share in cash at the next AGM on April 22.
Which means a stable dividend compared to last year in absolute value.
Before handling the mic back to Antoine.
Let me remind some of the highlights of our ESG achievements in year 2021 and.
Yeah, Let me start with our health and nutrition ambition as we are ranking number one in the product profile assessment According to <unk>.
Rewarding that 90% of all volumes are solid and healthy categories in this for the <unk>.
83% of all volumes so as a result.
Added sugar.
Well the environment, we are proud to have been awarded for the 30 <unk>.
A scoring by the CVP highlighting our continued progress on the fight against climate change.
Preserving our forests and driving water security, we reduced our full scope carbon emissions by around 3% in 'twenty one.
0.8 million tons of Q2 equivalent on a like for like basis.
Which results into our carbon adjusted EPS cleaned by 2% versus year ago.
And our social ambition Donlin has been recognized for the first time in the world by the Bloomberg gender equality index.
Which distinguishes companies committed to transparency in gender reporting and advancing women's equality.
And we're also very proud of having fully deployed our future skills program.
Which aims to better prepare our employees will be quite a new skus for the jobs of tomorrow.
Last but not least we are making great progress on our <unk> journey with.
It is now 62% of our revenues covered by the B Corp certification full.
Fully on track towards our 2025 ambition to become a global vehicle.
This is concluding the financial section of our full year presentation, and I'm now handing it back to Anton for the conclusion. Thank you yogurt before we open the lines to questions. Let me conclude with.
A few key messages.
The first one and I hope you share all of US is that there is a lot to be happy with this 'twenty one performance.
We delivered better gross dynamic we reached our productivity targets and delivered a good level of cash.
The second and we are clear about this is is that there is still plenty we can improve.
Our growth model to the quality of our execution and investment model.
This will require a greater discipline on the basics greater focus on execution.
Strengthening step by step some of our capabilities.
And driving what's done on was known for.
Consumer centric in our brands and innovation driven model I look forward to developing more on the topic drawing off Jamie in a few days time.
Moving to the next chart and are on chart 23, having said that and.
And I'm sure all of you noticed we have not been standing still in the last months and have already moved interaction.
I have been out with the executive committee hitting the ground.
Visiting many countries, despite COVID-19 and meeting with hundreds of down owners with customers and with consumers.
We intend to keep this rhythm with an executive committee that who spend much more time on the ground close to the markets and the teams and less in the headquarter.
As I told you earlier, we closed the social consultation process and implemented looking first the new organization is now in place.
At a board level.
We have seen the appointment of veterinary chaparral, Flotek, who brings with her extensive and undisputed FMC G and fewer expertise.
There is obviously more to come and you will address the topic at the CME.
At a company level, we have been focusing at strengthening core capabilities, bringing to the team a number of internationally recognized leaders late last year, we split the rules of General Secretary and Chief HR Officer.
And recruited a hobbyist towards you Bernardini top class professional to become our new chief Human Resource Officer.
No other top class professional become a golf ball joined Danone in January .
As Chief Operation Officer, and will help us raise the performance of downloads operation and make it future ready.
As I've said Danone is about brands and innovation.
We decided to bring innovation back at the core of what we do creating a position of Chief research innovation quality and food safety officer that is a better sale will assume starting from April .
We're also interested the sustainability functions to a business person.
With strong experience in denim all LIBOR itself has become our new chief sustainability and strategic business development officer, whereas the objective to bring sustainability back to the heart of downloads daily business delivery and performance.
So as you see from this and from the results.
We are moving forward with space and we do intend to keep doing so.
And with that let me hand over back to <unk>, who will introduce our questions and answer materials over to you.
Thank you Antoine Thank you if he wants to theyre not opening the floor for your questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Come to your request. Please press the pound of Husky once again, please press star.
One if you wish to ask a question.
Thank you for the first question comes from here on the left.
UBS.
Thank you Betsy.
Good morning, I'll try then you're arguing.
Two questions for me. Please the first one is on your volume in EVP in the fourth quarter.
It seems the volume decline was entirely driven by emerging markets.
Probably I'm getting two volumes down mid single digits in the quarter for emerging markets.
My question is what is the price elasticity there higher than you anticipated.
In the quarter or not and how should we think I guess more importantly about volume development going forward.
We'll probably have to implement additional pricing action.
Over the coming months there.
And then my second question is on the base.
Based on our second consecutive quarter of mid single digit like for like sales growth seems to imply flat to low single digit like for like in North America at the time of your Q3 trading update.
You sounded relatively upbeat about the supply chain issues been resolved so wondering.
It wasn't the case.
Are these issues are there lingering are these issues also affecting your shelf space market shares and if so how long do you think it will take before you can get back all your shelf space there. Thank you.
Thank you Jim we will do it we'll do it.
Rich.
With yoga in on that.
<unk> in Q4 it is in some ways a tale of two cities I mean, as we said we are very happy with our premium Rangers. That's all are growing pretty fast.
On the R Moore.
More commoditized wrenches.
We went on full price and making clear tradeoffs between.
Profitability and.
Volumes.
This is partly what sure are seeing moving forward. Obviously, all we will have to go for a broader pricing I mean, given what you can say about the.
Inflation and the elasticity will depend also from what everybody around us.
Is doing but maybe you want to complement on that yes. Good morning, good morning.
As you were saying we have been doing broad based pricing across all geographies.
And what we have been observing in 2021, including in the last quarter is that.
For example, in North America with the vast majority of our portfolio has seen pricing a lot volumes.
Very well.
To the point of Antoine and other more emerging geographies with a more mixed picture, Russia was describing I shall give in growing in Q4.
They have licenses were down.
Victor <unk> is where our modern dairy.
The portfolio has been holding very very good volumes, but we have a lot more low priced tradition.
Dairy portfolio has seen shot to short term volume impact, which has not been a surprise to us and so moving forward as <unk> was saying is we are going to more broad based pricing.
In Europe .
We can see here in the outlets with some volume elasticity is in the short term.
So all of them.
On plant based we see a number of things as we see them.
A number of things that works, we've seen our markets are slowing down and probably a bit too balancing between 10 based in dairy based.
And this is by the way playing on two legs.
Good news because we offer the choice we offer the choice to the consumer so that's one dimension, we kept having all we kept having service issues.
And I think we will keep seeing some of it.
In the coming quarters, so are not totally out of the out of the woods. If you talk of service in general and not only on our plan based on what Youre seeing is a number of dynamics at.
At work.
Sure No more gas you mentioned that remains on everything that has to do with our ship transportation.
Issues, obviously in the in the China harbors with issue in particular in North American Augers, where are they are not enough dockers. So you have people that are queuing to load the containers youre seeing.
Huge pressure on trucking or in the U S. In the UK and are to some extent in <unk>.
In Europe or in <unk>.
As a result of that as a result of an increased demand.
Quite a bit of our.
Pressure on.
On the supply chain I was in the U S. A couple of weeks ago.
You see holes in the shelves from about everybody as there is pressure on our transportation and availability of raw materials.
Many thanks.
Thank you very much. The next question comes from Wuhan, That's one bucket.
Good morning, Antoine Yoga Masuda side Warren here at Barclays. I also got two questions. The first one is can we perhaps sneak into the strong performance of China infant formula and market share are apt to mill.
Interested in the Q4 growth by channel. If you are able to give it to us between direct and direct and cross border that would be useful and was there any kind of stocking benefit. So one off distribution gains that benefited the quarter I'm just trying to get a sense of what you think the Chinese infant formula growth could do when youre budgeting for 2022.
Last question and the second one is just on this topic of inflation versus productivity I know, you'll give us more at the C. M D. But I think you guys and you said that you expect low to mid teens inflation for 'twenty two if I heard that correctly I was wondering whether you can get some of the components of that maybe between dairy and packaging.
And maybe some what visibility do you have on that in terms of hedging cover.
And related on the productivity side. It does seem like the productivity is did actually slow a little bit in the second half versus the first half I'm just trying to understand the phasing of design for delivery might be rolling off and local first savings coming in that would that would be helpful. Thank you.
Well they wanted to Georgia.
We'll check that.
Bulk of the uncertainty I mean, just to start to move.
There was no stocking benefit in <unk>.
<unk> should be ought to be on it and we.
Actually.
We are seeing good performance overall in China, I mean, we saw its always consumer offtake on the 11 11.
We see it.
Yes.
Thank goodness of our branch will talk.
Little bit.
About the addition of the <unk>.
China team.
Actually at the forefront of good practices when it comes to our direct to consumer digital marketing in those kind of things. So there is a real pockets of excellence that have discovered the last couple of months really impressive, but Julian go for it.
Good morning, Ryan.
Ryan I think stellar performance of our China business.
Mid teens in Q4.
Of course important to remember that last year Q4 significantly down.
We are running on a relatively low base, but when you step back and look more at the fundamentals is probably a few they mentioned I mentioned number one get the casino in the moment is slow as you already know.
Impacted by birth rates in the baby pool decrease.
However, the good news within the Novo difficult context is that we see continuous deeper capital consumption and premium amortization continue here, which is not totally offsetting the birth rate pressure, but to do the hedging a little bit to mitigate part of it you've.
You were talking about China performance, wherein you're absolutely right.
What we are calling our control tenants, which is for Chinese labor as much as four international Navy is now making up a slightly more than 80%.
And here, we are seeing very good competitive growth, we are winning share on the China and everybody everything shale on the initiatives. Besides <unk> was mentioning the outstanding performance of <unk>. During the 11 11 E. Commerce event. So I think we are well set from a competitive.
Our uncontrolled <unk> Uno below trend represent now below 20% of our Chinese business. So it is getting smaller and smaller it has been declining also in Q4 and as we have been discussing at different moments already we believe that this is a structurally declining and.
And so we are putting all our faces under control, which I think where we are seeing very good progress.
Last but not least to mention that we saw in Q4, a good momentum of our core mix, but even greater momentum of our special pediatrics.
There has been outperforming mainly product mix in specialized nutrition is not only about the premium wedges, but it's really about is especially pediatrics.
On LNG, but also increasingly on the unchanged. So overall I would say a good set of reside but let's remember that Q4 was also in the room base.
On the second point on.
Inflation, yes, I confirm we expect inflation to be in the low to mid teens or so quite upbeat.
Rich.
8%, which we saw in $2000 in Q1, we do expect broad based inflation on various dimensions first we see a high level of inflation in the <unk> with either a little bit more in emerging markets, but there.
There is an impact in the developed markets in North America and Europe .
We see.
Inflation also broad based when we talk materials logistics or manufacturing, having said that.
We have the strongest impact coming from a materials and here, especially from packaging, including plastics and paper, but also make and make ingredients.
We have still.
This is Tony inflation, which we have seen on logistics for all the reasons and one was describing on the CN blend transport.
Specific tier shortages and the manufacturing energy prices.
Continuing to increase so really a broad based set no visibility is low and this is why we are today to discussing that range of low to mid teens.
And probably the extra inflation will be a function of the duration of global supply chain disruptions, especially on the before mentioned latency transport as well as on the evolution of the cost of the barrels of oil which has been recently very very volatile.
And maybe not.
And maybe Bob you were saying on hedging yes, we have been hedging in 2021 part of our package.
We're continuing to do hedging, but obviously it will have.
Impact lesser protection than in 2021, and finally on productivity.
I want to confirm that productivity in the second half of the year. Thank.
<unk> has been higher than in the first half of the year and.
And we are targeting to increase our level of productivity also in year 'twenty two going for a new record. So basically leveraging all the good works, which the team have started in 'twenty one.
Leveraging the cost cutting synergies taking benefit of the carry over of the SKU rationalization.
Perhaps utilization program.
Are you, saying that you want to get 20% of our <unk> that is where we are today, but also maximizing the synergies we see on cost cutting really procurement of services and goods as much as driving our digital supply chain programs to the mix.
Okay.
We will double down on productivity, all we will do what it takes on.
The pricing goes through really the reason because we will have to manage the balance.
Between the competitiveness and our <unk>.
Processing and.
We intend to keep supporting our brands, who are not at the expense of investing behind our brands, which is important.
I mean, if it quickly the reason for the question was productivity the 320 bps in H, one, but I need to AC four years. They look like in the second half of the productivity was lower in basis points compared to H. One that was that was why I was asking the question.
No no.
The correct reading relative productivity is on cost of goods soil is indeed, as we add almost 5% in each one in more than 5% in <unk>, we saw a sequential exploration development.
And we do expect a good step up in the in 2022 of course not at the amplitude of the step up we are seeing in the level of inflation as it goes from 8% to well into the teens.
Thank you.
Thank you next question.
Keith from Jpmorgan.
Yes. Thank you good morning, Antoine Yoga and Mckinsey that first of all I wanted to thank you for the added disclosure on volume mix and pricing and I do hope that this will be a recurring.
Uh huh.
My first question is on.
Your point about.
And the funding of your brands.
That may be you typically have this handy, but I just wanted to know.
You see that you are understanding maybe by divisions all brands. If you can't say that then why is it that you have not yet started to correct that in 2021.
My second question is on the water.
I was a bit surprised that the southeast Asia does that rebound more in HQ.
And I said that we're not flattish, but Ian can you talk about.
What do you expect what is the situation.
As we look into 2022 and would it be fair to.
Did you say that you have an easy comparison in the first half in the first quarter.
We think that you can tell us about how the quarter Istar keyed for the call.
For the group as a whole thank you.
Thank you Susan.
Youre going to take the question on Walter's I'll take the one on the I'll take the one on brands.
Just a reminder.
They are putting in a whole muscle four and a half months in.
In 'twenty one.
I'm trying to move as fast as possible, but you're going to you're going to change the brand plants in.
In the last minute so in the last moment.
Sure.
The reality is at the heart of your question.
Sure.
Our share of voice versus share of market I know you don't youre going to exercise.
We are.
We are structurally under funding our brands are.
Sure.
<unk>. We are currently doing is also off to nature to nature.
First thing that was down actually.
All of these show in <unk> was to make choices.
And to invest where we thought we have strong assets from a brand standpoint strong assessed from a communication standpoint, and therefore shooting the shooting.
Shooting the photo and Youre seeing us in a number of instances are in.
In Europe , you've seen that on the Walter as you have seen that in some instance on.
On a cumulative for instance, so I mean, we started making some selective choice and making sure we invest where we think we have.
Yes, it's in the dynamic and potential for Ya.
The second thing is obviously, making sure that we have reports of assets on which to me is built on advertising.
On innovation.
And they all work.
In a discipline way.
And we will share a bit more of it's our intent based on with regard to disappear and you don't invest in the same way when you're all trying to push or windows, when you're all trying to protect your core and we need to do more on the core by the way while all the other things that needs to be fixed and the fixed.
It's not necessarily all doesn't stop necessarily.
Advertisers can start to use the mix it can start with the distribution and smaller.
A number of things so.
Under investors culturally.
<unk> made in the in the short term will show choices in the long term and raising the floor in the all whats keeping the good discipline between working nonworking, but also focus on the places we're going to we're going to invest.
Good morning Saline.
First thank you for your comment on disclosure.
Sure.
For us being volcker.
The mix component, we see as a product mix component of it is important an important to share with you guys. Because you have seen it.
<unk> has been delivering very well in Q4, but in Q4. It has been consistently over the four quarters and looking forward obviously it also.
It's an element of our two books.
<unk> of the very important inflationary pressure we see.
When it comes to waters.
First on my zone.
Let's take amazing and fixed is.
That we have seen a good growth in my zone in Q4.
As Carl noted in his opening in Q4, but you also noted.
This is true for volume and value.
With these market shares which continued to be stabilized which is very good news.
Knowing that Q4 is.
This is a smaller quarter, but still I think it's a reassuring.
Poland Hill, which confirms what we have seen over the last two quarters when it comes to southeast Asia.
The reality is that.
The teams are just as we speak coming back to office. So many of the Lockdowns implemented, especially in Indonesia, and just about to be released.
So in that sense OLED over the last two weeks, we saw a rebound in terms of mobility and so.
We are seeing quite a bit of.
Stop and go over the last couple of months, we are carefully this year. The outlook I think what is important in this data as soon as mobility is coming back and I think that Europe is a very good example of that is year to date consumption of pharma discounting that goes with the rest of the visibility is and is remaining.
Thank you Celine. So next question is from Glenn I'm, a bank from bathroom.
Hi, good morning.
My question is sort of coming back to your low to mid <unk>.
Mid teens cost inflation and sort of what's offsetting that.
Already in 2021, you had 31 basis points of the local first benefit could you just quantify in basis points, how much more local first you would expect in 2022 is the first button and the second one is coming back on the productivity.
I remember from H, one you made it clear that the productivity seem to have gone faster than expected. The SKU you did exit when Boston you have an impressive 5% productivity gain this year and I hear you, saying youre going to do more with clearly given the sort of early quick wins, you would expect the additional rate of productivity to slow down I mean, if you did continued as well.
You would have 10% productivity by 2022, and a right to expect that the additional level of productivity gains won't be of the order of another 5%, possibly still an impressive due to 3%.
Thank you.
I would wish that our teams had the capability to double the level of productivity. So I confirm you are reading that we did 5% of productivity in 2021, which was a record in our company. We will continue to post a rate case.
So in 2020 twos, we make the next step in the journey, but I think doubling doubling it would appear.
The possible Unfortunately.
What do we put in front of this I would say unprecedented inflationary context, we see in 2022 is not only the cost productivity.
So what we have been describing in terms of price.
We want to be ambitious but at the same moment.
Second metric, which means yes for important.
Nice increases.
But we will be extremely carefully to make sure it doesn't hurt our level of competitiveness and if we maintain the necessary flexibility to promote bake whenever we see that our competitiveness is at risk of NBC that inflation should plateau at a certain moment as we go through the year 2022.
Beyond price and productivity MDF mixing of us talking about <unk> and to continue the journey on product mix.
Momentum is across all of our.
Categories and geographies.
Luca first vehicles computer in 2022 definitely a confirmed what we have said consistently since the launch of the program is that the majority of these savings will come into the P&L of 2022.
But we have also said that we want to use part of those savings to reinvest into our brands.
As you can imagine exactly the topic of the CMC discussions and the midterm guidance, let's look at the way we want to set the strategy for the next years to come.
Think that's probably the main the main components of the.
Maybe go to treat the inflationary context.
Thank you.
Thank you. The next question comes from Scott Berg from Keith.
Yeah.
Yes, good morning, Antoine and European My first question touches on Russia in 2020, Danone generated roughly 6% in the country and it's important Florida Edp business.
What risks do you see there.
<unk>.
More or less produced locally and sell locally or do you also export import what are the risks there and then my second question's on market shares you mentioned some of the products that one market shares.
What our product categories, where we can have.
Finding market shares and what percentage of total portfolio some market share gains in 2021. Thank you.
Thank you Pascal.
Let me start with <unk>.
As shown on shares.
The address on the on Russia.
As you said, Russia is slightly above 5% of our of our sales.
The vast majority of the of the business is local for local.
It's dairy business, we source locally we make locally.
We sell locally.
So.
We will be on the vast majority of our business impacted as any other Russian company.
But there are no. Thanks, that's all going cross borders we have been obviously are.
Managing the thing for quite a while taking care of our team is making sure that the people are safe, making sure that.
I mean, all the measures in place.
So that's we can.
<unk>.
Our choices, but once again, it's very much where the majority of the business is local for local.
In.
In the local setup.
All of our market shares we have seen.
So a number of good news I mean, certainly good news in all in waters.
We are gaining shares are in the in Europe , where we have stabilized our shares.
In China.
Sure.
So a dynamic there that she is a dynamic there that she is overall positive.
We saw as certainly also in the.
In the last quarter or a good dynamic.
In Essen.
I think all shares in our in <unk> I think one of those Powerpoint is.
Spend based where we have been.
Losing shares.
You remember that.
We were late on the ball on <unk>, we are gaining but it's all mix is playing.
Playing against US. So if you look at the last.
Three months all together those.
Sure picture is heading.
In the right.
Sure.
Or is it.
I would like to distribute no.
Will we be looking internally at the market shows yes.
<unk>, obviously, you look at it externally.
Leave it to you.
Okay. Thank you best guess the next question from Matthew.
Hum.
Yes, good morning, everybody market from Jefferies I wanted to come back to specialized nutrition complementing some of Warren's question, but this time more from a bottom line point of view.
You delivered 23% margins for the year I think 24% in H two big improvements in H, two and obviously you don't need me to tell you that there was extremely.
Bearish sentiment playing out in the market in the second half about your ability to sustain.
These margins, which are the cornerstones of the profit of the whole company. So I'd just like to take a step back maybe al.
Maybe yoga in gist.
Are you confident you can sustain it well into 20% margins in specialized nutrition as a division secondly, why are you why do you have that confidence what sets you apart from a rec and running mid teens margins in their residual.
Infant formula business and just a very specific one can you just explain to me by the reported margin changes a lot bigger than their like for like I assume it has something to do with FX in China that warehouse, but if you could just clarify that yet and that would be helpful. Thank you.
Yes. Good morning, Good morning, Martin you, obviously, you're right our margins, we're holding well in it.
And for the year down a bit more than 100 bps, but in like for like 25 bps and you're absolutely right.
GAAP is explained by currency. So the teams are doing a stellar job you have also seen that.
While it is too with very different dynamics were significantly down in the S. One which was a consequence of the volumes which were down in the S. One but also the geographical mix and we now have seen exactly as expected is reverse of.
These were up by about 250 bps in age group to come to what you were describing which is a quite solid margins here when it comes to.
Sure that's a margin situations, including of our China business I can just repeat what I've said over the last couple of months, which is that we are continuously managing our prices in China across the chain is a very high level of discipline.
And this is extremely important in the context.
Probably some of our competitors see some cross channel price.
Disruptions, especially with very strong shift quarter by quarter between E Commerce, and offline specialty mom and baby stores in lower tier cities. So I think the fact that we have our proprietary.
B to B platform in China, our existing directly to mom and baby stores into tier cities for us is really to make sure that the conflict places in the past, but also in the future and this was is a big asset moving forward. The second asset that is not neutral as you can imagine in the fact that we are drilling.
And so defending our margins.
He is easier in the context, well, we are doing a very solid job in the in the competitive setting and this is also what we were discussing the CME and how we can make sure that also in 2022 and beyond we defend and expand our competitive competitive setting.
China.
Yeah.
Thank you for that.
Okay.
Okay for the next question is coming from <unk> <unk> from HSBC.
Hi morning, Jeremy Salta HSBC had a couple of questions from my side could you just.
Just elaborate on the adult nutrition business give a bit more detail.
Some of the supply challenges that.
Is that something that is quite temporary to this quarter.
What was the the hits on sales with what might come back.
The early part of next year and then just one other parts on the P&L you mentioned in the bridge that some of the Covid costs.
Back in 'twenty one.
What are the remaining COVID-19 costs that might come back during the course of 'twenty two.
Maybe starting with the Covid related cost Jeremy.
Jeremy Good morning, Yes, you saw that we had a rebound of something like 18, Gibson remember well in 2021 from a COVID-19 related cost look I mean.
We are continuing to implement very important hygiene measures, especially in everything which is our supply chain I would not expect.
The big improvement.
Extra cost in 2022, I think we are now operating in this new context, but it is probably a new reality.
Need to we need to accept.
On the second question on the diet, you're absolutely right I mean, we have been posting quarter by quarter very decent performance of our business.
And you know that our <unk> business, we speak menu, but our Chinese and our European business.
In Q4.
We have been basically managing our inventory.
To make sure that we are maintaining a healthy inventory said emits yes, some supply chain disruptions.
As you can imagine that.
Whenever you have a delay in the material sourcing.
Quotation in the fast growing segment and it is a very fast growing segment for us as much as 10 days.
Create disruption in the supply chain, so yes Q4.
We are impacted by it you will see that as soon as Q1 to be back to the user growth pattern.
We are seeing is that the underlying demand from consumers is extremely strong and we are so confident that we have been reserving but at the moment.
<unk> changed changes.
Okay. Thank you.
Thank you. The next question from John any Goldman Sachs.
Yes. Good morning, everyone. My first question is on infant Formula there have been reports from the World Health organization talking about potential come down on marketing practices for these products I guess my question is what do you make of these reports in and do you see that as a risk or an opportunity if the marketing.
Assets become more level between international and local players and then my second question comes back to the supply chain disruption point I think you said a few times that this.
This resulted in some market share erosion, which implies that you've been I guess more heavily impacted the pace in certain places I mean, why do you think that is the case.
And Tom as you look at the supply chain to note what are your key learnings so far when you compare and contrast, with some of the best practices you've implemented at Barrick Alibi I appreciate that's very different businesses, but interested in your thoughts. Thank you.
So I'll go for the first and the last I'm sure you're going to manage the middle one.
On IMF as you may recall as far to which we do our in sustainability.
Have been actually at the forefront of our taking commitments.
We are supporting a breastfeeding.
The most important option and we were extraordinarily clear about that.
We have a strict policy, where we do not advertise or promote.
For children, aged zero to.
<unk> and.
We extend the restriction to our 12 months in countries with high rates of our coupon nutrition.
So making sure I mean legislation.
Now to the line.
Everybody through all of the good practices that we have.
Would be rather good news than bad news, if I may say.
And this is by the way one of the places where you see that our.
Issue or leverage sustainability in the proper way.
It becomes a competitive advantage because we are better prepared than older people on basketball.
Basketball, so ought to be followed but we feel quite comfortable.
We feel quite comfortable with that and we'd be happy to see.
A level playing field across all geographies.
Your last question I'll leave the middle.
What's really going on.
On supply chain.
Yes.
I think one of the thing off.
All of our mantra on not only in value.
Especially.
And by kind of boat.
As our union attributed absolutely obsessed with a few things are warm as the quality of your products day in day out and.
And we are not bad at all at all.
Quality, but competitive quality, making sure that our reliability piece gotcha, because youre better than competition and average.
Literally in your genes and something we will put more focus on the second thing is customer service.
Don't deliver day in day out too.
Our customers are you are simply not competitors. Your recent opportunities led down customers and you get into a productive discussion and they attribute.
We are not where we should.
Should.
And then it's a game of permanent improvements are factoid after a factoid.
<unk>.
It's not only metal network virtual so what should you all from the start so from the from the planning through the source to the mic to the deliver which is why I brought in zircon.
And which is why all we're going to have a significant drive for our capabilities.
This part of the business.
If we are not all bad.
We are not the best in town Biodefense.
And so.
<unk> was already describing the extra 10 moving forward when it comes to the situation of the lost.
Two quarters, it's true that on the plant based segment and especially in North America in some instances we have been seeing some sales.
And here in Dallas, so a bit of share.
As a result of that.
The reality is that we have a very large portfolio of plant based especially in U S in order to get that.
Do you have a mic.
Ice cream and other.
And so what we have been doing in order to mitigate the situation. We are having is really to prioritize.
Here with us so the lodge at the largest product skus, which our tasting the most of the shape to make sure that we are limiting the disruption factor in our supply chain and that the share if that starts to show the first good signs there.
And so we will continue to do so but I don't expect it will take us another couple of weeks before we're back to business as usual situation because we still see.
That chain disruptions on both on some of the material availability and give you spoke with speaking really about packaging and particularly paper.
Especially in the U S on some of the trucking capacity availability. So we are not yet out of the woods.
Okay. Thank you.
Thank you Jonathan next question Glenn.
<unk> from Morgan Stanley .
Good morning. Thank you are you seeing any signs of down trading as youre pricing accelerates and what are some of the actions you are taking to preserve volume momentum in the quarters to come given the relatively high private label presence in some of your categories like yogurt. Thank you.
<unk>.
The answer to that is.
I mean, it depends no in a number of categories, we don't see down trading we've seen actually.
Relatively little impact in places like North America.
Sure.
And it goes back to our differentiation of products. It goes back to a unique feature of the product. It goes back to the strength of the other Brian on some things that are more commoditized.
We grew much stronger on price through.
Preserve as much as possible of our.
Margin and they are you see a volume impact and in some cases a.
Down trading, but once again.
So far what we're seeing in EMEA is no down trading and I think I was a bit.
Ahead of the curve.
Reducing.
<unk> volume impact on things that are more commoditized, but it is also a choice that we are making.
Thanks, Okay. Thank you.
Next question from distance that makes sense.
Hey, Good morning, just a question for you again I realize that you are.
I'm not giving guidance for 'twenty two at this juncture.
Sure.
Your view on <unk>.
It was materially addressed the same since you would have as sort of the regulatory clarity to come to the market at this point.
Good.
So what is true and good morning today, we are not giving a guidance 2002 through four as we said previously which is that we will be together in two weeks from now and I hope physically in two weeks from now.
As you do the mid term strategy and of course 2020.
Within this.
Media strategy.
And so this is why today, we are refraining from giving a clear.
Luke.
I think what is very clear is that in.
In the end when you talk 2022, and you can get the key variables as are the elements, we have been discussing languages input cost inflation.
<unk>. This is productivity, which is going to step up versus $2000 in Q1, which is about pricing we will continue to accelerate.
The days of the two 5% in Q4, and frankly volumes isn't one was discussing itself.
Then there is a big deal.
Topic of how we are going to drive the portfolio and the reinvestment. Thanks to the savings of local first in all of this basically will be the discussion point.
Two weeks from now.
We have patients on the on this one.
Okay. Thank you.
Okay. Okay. Thank you very much so I think it comes to the end of the Q&A.
Thanks, Thanks, everyone. Thanks for a good set of.
A question and.
From all your interaction are very much looking forward to our senor hopefully as many as you as possible.
Sure.
In less than two weeks time.
Sure.
And looking forward to our well to fruitful discussion was also.
Looking forward to a zoom meeting a large chunk of the management team. The other thing that's very important steps are you as analysts or get a sense.
Of all the people that are on the table and will drive their business to the next stage on that behave very good day to everyone and we'll talk soon.
So guys bye.
Yes.
That does conclude our conference for today. Thank you for participating you may all disconnect.
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