Marel hf

ICEX:MAREL

Earnings Call Transcript 2018-Q2

[Tinna Jónsdóttir Molphy, Manager of Investor Relations]

Okay. So hello, everybody, and welcome to Marel headquarters here today. As usual, we have 2 speakers today. We're going to have Marel CEO, Arni Oddur Thordarson, go over the key figures and some business highlights. Then, CFO, Linda Jonsdottir, will go into more detail in the quarterly results. We're also going to finish the session with some -- a Q&A session. And in the interest of our online viewers, I'd like to ask you to state your name, your company and then your question into the microphone. Okay. Thank you.

[Arni Oddur Thordarson, Chief Executive Officer]

So I guess, you were welcome me?

[Tinna Jónsdóttir Molphy, Manager of Investor Relations]

Yes.

[Arni Oddur Thordarson, Chief Executive Officer]

So good morning here in Iceland, mid-summer holidays, second quarter 2018 results. It's as well our first half year results. I have to say, I'm personally very pleased with the results, and I'm very proud of the passion I see in the 5,500 employees working in one harmony, but delivering 15% organic growth in beginning of the first 6 months. 18% growth, it's not only our employees. It's our harmony with our suppliers, it's a partnership with our customers from innovation and as well in installation. 18% increase in revenues. 18% increase in EBIT in first 6 months of the year. Strong quarter book foundation for the future, and as well, cash flow enabling us to invest. So EUR 297 million, and I'm, yes, walking, they have put a table here so I don't walk too far, so I will stand in front of the camera. EUR 297 million in revenues, 20% increase in revenues this quarter compared to previous quarter same year, 2017. EUR 43 million in EBIT. Substantial increase in EBIT between years but stable profit margin.We are seeing now poultry at more normalized level at 17% and 18% EBIT. It was 20%, 21% for a very short period last year. We are very more used to 17%, 18% EBIT in poultry. Poultry is delivering those good results again and again based on their honoring our strategy. They are most developed of our industry. Full lines, once again. Standard equipment. Part of the full-line or to extend our existing plants of our customers and maintain this business, fabulous in -- both for our customers and for poultry.In all of the industry, we are playing the game as well overarching software. That is differentiating us from the rest of the industry. We are slightly improving in meat between years. Orders received are good in the quarter, 12.8% EBIT. Short-term actions to increase this EBIT is to sell more, cross-sell more in secondary meat and further processing meat with the full-line offering. We changed a little bit the organization in meat in second quarter. We have one management team now in meat, focusing, managing and viewing primary, secondary and further processing day in, day out. It's essential that we play the game all the way in full-line offering like we do in poultry. And of course, it takes time when we are combining companies together in this in the front-end. We start with educating them out there, but managing and viewing day-to-day is essence here, the full-line offering. Long term, what will differentiate us from the rest of the industry in meat is standardization and modelization. It's both ourself and to educate the rest of the -- educate our customers.We are taking an important step here as well. It's not a huge strategic move. It's more a logical move to combine our business with MAJA. We know MAJA very well. It's our partner in Latin America for many years. It's partner for Sulmaq for many years. We acquired Sulmaq 2 years ago. And we are, as well, ourselves in the skinning business that we are acquiring in MAJA and getting some new items as well. We have been acquiring a lot of companies in the primary and secondary processing. We started the secondary processing but acquiring, for instance, Stork and MPS in primary processing. Now we are strengthening the proto teams that go across the business units, poultry, meat and fish. We have only signed the agreement. The closing is expected to take place in -- before year-end, most likely third quarter.As you see, fish is gradually improving. It's a good increase in revenues. The gross margins are a bit lower than we are used to. However, EBIT gradually improving. We are still going out of the noncore business in Seattle. We are nearly there. So we will go in similar route, strengthen the overall view in fish, in primary and secondary processing of fish. Managing and viewing the business as one team. We are doing that, but I'm very pleased with how the project execution is going in fish and improvement in operation, gradual improvement, although we are well below our long-term targets in profitability, like everybody can see. But there are gradual steps taken. And I can tell you as well that innovation cost in fish is a bit higher than our 6% average innovation cost in the company. The reason is simple. We have standardized nearly everything now in fish. So that's not the problem. We need to go for a full-line solution offering in the fish sector. You can do that with innovation or you can do it with acquisition. And in acquisition, it's always the same. There needs 2 for tango and we are now closing the application gaps with innovation in fish. So let's -- slightly on this, order received.Order book. It was my biggest surprise when I started in this industry, how underdeveloped some parameters were. How low, for instance, service revenues were compared to the total revenues. How low the order book was compared to total revenues as well. It was not a Marel specific, it was all over the place. Coming into capital goods business and seeing 15% of revenues in order book, you cannot plan the business. You cannot deliver, therefore, best quality for your customers at the right time. We are very satisfied with the level of the order book now, around 0.5 -- 50% of annual revenues, taking into account our product mix of 40% service revenues and so on. It's okay if this equation goes down on average, 40%, 60%. We don't want to have it much higher than 60% of annual revenue, then we are too late delivery. And we don't want to have it much lower than 40%. Temporarily, it could go slightly below that. But having only 20%, 25% as we were used to. One of the reasons why we are moving from 7% to 15% EBIT is actually this. Planning and scheduling according to the order book, convincing our customers that maybe it's better to get a very good solution 12 months later than 9 months later.So over to you, Linda.

[Linda Jonsdottir, Chief Financial Officer]

Thank you, Arni. So good to see you all here today. I'm going to take you through the highlights of Q2 2018. It's another good quarter for Marel. We are seeing solid order intake on the back of a very strong order intake in Q1. We are now at a level of EUR 291 million. Revenues were strong in the quarter, EUR 297 million. If you compare it to same quarter last year, that's 22% higher.EBIT was at a level of 14.6%, which is EUR 43 million. Again, a substantial increase in absolute terms compared to last year. Cash flow is strong in the quarter, EUR 56 million, similar levels as Q1 2018. If you compare that for this -- the first half of 2018 compared to first half of 2017, it's around 13% improvement.Leverage is going down. We are now at a level of 1.8x net debt EBITDA, and then principal then outside of our targeted capital structure. And as you saw in our announcement, we are now taking the next step in terms of acquisitions. And this underpins our financial capacity to support further growth.Looking at the order book, which is at a very strong level and 46% of trailing 12 months' revenues, I would say, overall, we are in a very good position for the future.So a bit more details around the numbers. As you can see here, we have been delivering around 15% EBIT since the beginning of 2016. As we have highlighted, this can fluctuate from quarter-to-quarter. Now we are at a level of 14.6% for Q2 2018. Year-to-date, 14.9%. We are expecting the full year of 2018 to be strong, and the third quarter is expected to be softer than other quarters in 2018 because of seasonality and also because of product mix.Looking at the income statement. Revenues at a level of EUR 297 million compared to EUR 244 million, Q2 2017, 22% increase. Gross profit is around 39%, so around similar levels as last year and stays strong.On the cost side, we are seeing SG&A around 18.5% of revenues this quarter compared to 18.9% in the same period last year. So in terms of percentage, it's going slightly down, but revenues have been increasing. So in absolute terms, SG&A is going up.We specifically wanted to mention also like this quarter, we are seeing some nonrecurring costs within G&A. And those are mostly related to advisory costs. We are running a few projects. We have announced recently, for example, organizational changes. And we are in relation to strengthening our global sales and service platform. We are also working on the listing alternative projects, and we have M&A activities ongoing that are creating nonrecurring cost within G&A.You can see here also, amortization of PPA is going down from last year. So it's now EUR 2.3 million per quarter. Net finance cost is going down. Leverage is going down in principle, so we are paying lower margins on lower absolute amount. And that results EUR 29.5 million compared to EUR 18.6 million in Q2 2017. So substantial improvements there.If we look at the order book, we aren't at a very strong level now in Q2 2018, EUR 523 million. Order intake in the quarter was EUR 291 million. Orders booked off slightly higher, EUR 297 million, so the order book is going slightly down in the quarter, but again, at a very strong level.Balance sheet. There is very limited things to highlight here. So I will go relatively briefly through the balance sheet slides. Property, plant and equipment is going up, as we have stated before. We continue investing in our facilities, also our own equipments. So that is increasing the property, plant and equipment. Right of use assets was added to the balance sheet now in Q1 because of IFRS 16, so those are the lease -- leases. Working capital, in general, is affected by the volume. Volume has, of course, been growing substantially. But at the same time, overall working capital is decreasing compared to year-end 2017, mostly because of down payments from our customers into projects.On the liability side, borrowings are going down and leverage is going down as they did before. Leverage, including lease level, this is now at a level of 1.8%. And contract liabilities, that's the part that I mentioned about the working capital, the down payments from our customers into projects.Looking at the cash flow. Cash flow remains very strong and solid, EUR 56 million from operating activities. We are investing, as we said, in the business, both in tangible and intangible assets. Tangible is actually a bit higher than normally this quarter. Free cash flow at a level of EUR 35 million. Other items, more or less, what you're used to seeing, but dividend paid this -- the tax part of the dividend payment for this year. So a decrease in net debt of EUR 27.5 million.If we look at the earnings per share, which is now EUR 0.1652, if you look at the trailing 12 months, and has increased 21% from the months of last year. So excellent development here. We are -- also, we paid 30% of net profit in dividend now this year, and we also have still the authorization of purchasing further treasuries here, EUR 10 million still unused.If we look at the total picture, revenues are going up, like very strong double-digit growth now from same period last year. Orders received are at a solid level. Order book is -- continues -- or compared to last year, continues to go up, but decreases slightly between quarters. Adjusted EBIT margin, it has been around 15% and is now 14.6%, slightly lower. Free cash flow remains strong, and leverage continues to go down. And as I said in the beginning, it underpins our capacity to support further growth. So overall, very strong results now in end Q2.So I'll give the word back to Arni.

[Arni Oddur Thordarson, Chief Executive Officer]

So thanks, Linda. It's -- just to recap and understand how we are running the business. We are having geographical -- the largest geographical reach in our industry. We are playing in all continents. We are seeing more and more balance in order received and revenues as well there. Standard equipment, services and space reaching close to 40% on greenfields.A little bit to explain the word, seasonality. I know I would be myself fatter if some company would explain results with seasonality. We have, in recent quarters, not -- in third quarter last year, not seen the dip in seasonality. The reason was timing of equipment and solutions were such that we needed to add tabs in the holiday season in the summer to deliver on right time, the right quality. We have been pretty successful year to date to have the organization and the suppliers working in one harmony. So the revenues are up 18%. If we look further throughout the year and take into account our order book, even though it's 0.5% of annual revenues, there is not the same need to pump in temporary workers in third quarter to finalize delivery dates on right time. However, that means that we have to have a pretty high volume in the fourth quarter. So all in all, strong revenue and revenues booked when we deliver throughout our system and then in standard equipment, when we deliver it to the customers. But in the big projects, how it goes through our own system. So this is a little bit explaining our forward-looking expectation. Expectations are never facts beforehand, but this is our expectation of the year. I think we have been pretty solid in our expectation in recent 10 quarters. But of course, it can fluctuate year by year. And now we are as well having different product mix in the third quarter. That is because greenfields, if we are going to deliver the right quality on right time based on delivery dates, then we have unusually high greenfields going through the system in third quarter compared to the standard equipment and so on.However, remember as well, greenfields deliver spare parts and service revenues later on. And it's just how it's the timing throughout the quarter. Maybe it means as well that standard equipment and et cetera will be higher proportion than we have seen in all the quarters that will come. So this is just -- we have never had as much insight in our operation, and we are trying to reflect that in this meeting what we think that the quarters will return. Maybe a little bit explicit, but I think it's good to go through it step by step.So big projects, big risk. Yes, it used to be like that. Project execution, partnership with customers, this is essential. In Capital Markets Day, we talked about Leroy. We have got a lot of, lot of question on how big risk is it. Once again, a big project in the fish industry by Marel. Will it not be a disaster? And so on. I don't know. Our track record now in recent years and over decades, we are delivering high-quality solution. When we have had our equipment projects, it's not a hiccup for customers. We deliver what we promise. Sometimes, it has been, in the past, hiccups in Marel results. However, the combinations, the balance of large greenfield standard equipment services and results for ourselves, our shareholders in large equipment and large project has been delivering. Margins are expected and fully in line with our targets.Leroy, our transformational salmon project in -- with our customer that we told you about last year delivered May this year. More to come with Leroy, important partner in the field. Costco. New interview with Walt Shafer, and you can read it yourself, the quotes. It's reflecting same vision, same values and a true partnership.We have much more of customers in large greenfield, but this is because sometimes we highlight, yes, we made the transaction. Here is a highlight how the development are of those -- the big greenfields that we were talking about 1 year ago.To explain a little bit the -- how we work, this is not the most beautiful picture I've seen. But it starts all with partnership with customers and innovation. Then it goes from lead to order, engineering, manufacturing and procurement. It has been an interesting to see now when the economy is so good. That has challenges as well. It's not only ourself that are growing. Our many suppliers, many of them are small, others are big, are as well facing that their factory output possibilities is facing the roof. PMI Indexes have been skyrocketing, meaning that product management indexing are very high. This means cooperation within us and our suppliers need to be in partnership. We have managed through that. But however, as you have seen, there are many indicators in the economy that the fast-running economy worldwide is slowing a bit due to various reasons, such as quotas and et cetera. And maybe that is the best thing that can happen for high-quality capital goods companies that we slow down a little bit the 15% organic growth, and get more productivity out of our people. We have been adding 70 people per month since August last year. Now the focus is on more productivity, more harmony. We aim towards growth. We are going to grow faster than the market. Once every, every year and for decades, it's always the aim to grow faster than the market, and therefore, we are investing in innovation and market penetration. We have proven that in recent 20 years, and we aim to continue that in next 20 years at least.What is the nonrecurring cost in our company? Why are you spending so much with advisors when everything is going fine?We have said that after 10 years, 1 year ago, we said that we want to grow the company from EUR 1 billion to EUR 3 billion. Not for the sake of the revenues. It is to keep the leadership in the market, keep transforming the way food is processed. So going from EUR 1 billion to EUR 3 billion mean -- does the means that we take employees from 5,000 to 15,000? No, not at all. Internet of Things is running fast. Connectivity is running fast. So we have to assume that we will be 12,000 to 13,000 instead of 6,000. That doesn't meant that you double the profitability in percentages. All -- our competition will as well improve. However, is it an easy task to take employees from 5,000, 6000 to 12,000, 13,000 instead of 15,000? On paper, yes. However, the composition of the workforce will as well change. Instead of being 75% in U.S. and Europe, it will be 50-50 U.S., Europe and the rest of the world. So underneath diversity as well and so on of the workforce [indiscernible] and so on. So what we are doing now, we have been focusing on strengthening further the provident. Remember when the industry average in spares and services is around 20% of revenues, we are having around 40%. So we are pretty good, but we can improve. We can strengthen out, get closer to the customers out in the field. That's what we are doing. Most companies says, "Think global, act local." We agree, but it needs to be the other way around as well.That's what globalization, and we see instead of be, it's about the Marel at the moment, we are strengthening the front-end, getting closer to the customers. And remember, in today's economy where the free trade is the pendulum is swinging a bit. We are as well having manufacturing sites in U.S., Latin America, Asia, China, Eastern Europe and Western Europe. I'm not saying that trade wars are good. It's one of the most stupid things that human man can think of and the economic prospects is that, I charge you EUR 1 or $1, then you'll charge me EUR 1 or $1. It's cost around charging and slowing down the economies in general. The only thing I'm saying is, taking into account our business, then we are best prepared to deal with such circumstances in our competitive advantages in our industry.Global markets, services our new functions that we are establishing in Marel. And before, we had it under one commercial. We need always to be dynamic. We can change organization from time-to-time. I was giving you insight what we are aiming to do in coming years, getting closer to the customers. Latin America. We have 650 employees. Doing the same in Asia, China, Africa, Western Africa, Central Africa and so on. Taking into the magnitude of the dynamic in the world and the changes that we want to lead in our industry, we believe that we needed to add senior management capacity into those 2 fields and split a bit the service that is more of the product management and service offering and utilization and so on. Learning and development of our people is essential as well. And then running and steering the global markets in general.This one is a nice picture though. Starting with Einar Einarsson that we know very well from Marel throughout the years. He has been 15 years running in U.S.A. It has been a remarkable success in U.S. by Marel. I'm not only talking about the revenue increase and profitability increase, I'm talking about the customer feedback. Our reference plants, feedback, like you saw by Costco and et cetera, systematic buildup of our organization in U.S., combining a lot of companies. Stork, Marel, Thompson and so on. The fish unit from Iceland and Seattle and et cetera, and of course, as a service for the business units as poultry, meat and fish. Running the U.S.A. operation for 15 years now. It's a logical step that we built on the success in U.S.A. and appointed Einar as the Head of Global Markets to run the globalization, regionalization in Marel going forward.Ulrika Lindberg, highly experienced, good to get as well outside-in view now when we are changing the approach and synchronizing better our service offering in the field. Ulrika is coming from Alfa Laval and Tetra Pak with a huge experience. Those companies are a bit larger than Marel. Similar strategy, globalization, service as an important factor and customer satisfaction, very good to get outside-in view on how we do this, how we run it and a new person to lead it. I welcome to the board Ulrika and Einar.At the same time, Petur Gudjonsson is stepping down as an executive team member. He has been 34 years with Marel now, and he is not leaving Marel. He will go into other roles. I can't -- it's maybe easiest to tell you what other people and the -- especially the youngest people in Marel tell of Marel -- of Petur. "He is one of the most motivated guy in Marel." "It's good to listen to him, and he probably is one of the best mentors I have ever had." This is just quotes from the people. Now after 34 years in the front line in the executive team, some people say the executive team worked in the global companies may be not the most suitable. Going forward, but it's a 60 -- at the age of 60, Petur has decided to focus on different areas with us in Marel, and we are getting Einar Einarsson and Ulrika on board as well. So very good changes, dynamic world, and the aim of the changes is increasing our management capacity to get closer to the customers.MAJA. I have to be careful because we are only signing. Closing is expected to take place later this year. Family-run company, like many other very good German companies, they are pretty good in this field. Typical German company that is focusing on more meats than we. We go with the full-line offering. But doing it very, very well. 200 employees. It's founded around 1955, like most of the good German players, founded just after the second World War. 10 years later, maybe, building up a very, very good foundations of companies here. 200 employees, like I said, and you can -- when you walk around there, you can feel the quality. You can see it, and it's standard equipment and the difference is maybe the employee base is mainly in 3 countries, when, in Marel, we have a much more global reach in 32 countries. Combining the innovation effort and getting a scale and drive is the aim here. But let's wait of more information until we go into closing, as it's expected later this year.What to say? Here, we are bounded of saying not too much. You know that we are in the journey of alternative listing of shares in market. Shareholders will decide on the final outcome, and theoretically, there are still 3 possibilities. It's remaining listed in Iceland. It is dual listing of the shares, and it is delisting and relisting. It is very unlikely that the management of Marel will recommend the first options to remain listed in Iceland. The reason is that we are a global company proud of being headquartered in Iceland, proud of our heritage, but we are a global company that is gaining more and more attention from the global investor base. And it's simply too much hurdle to open up accounts in small countries. I'm not criticizing Iceland, I'm just in yet another market for investors. We need to go to a larger global stock exchange, in my view. Shareholders will decide. But we will recommend either to dual list the shares or delist and relist the shares. We are still in analyzing phases. And it's very important to analyze this well. We have hired STJ as an advisor as well in it. Complicating us in the route, if you choose the dual listing and although [indiscernible] we have not chosen to either/or are quite many. Some companies choose to then list DRs instead of shares. That's a little bit easier process than dual listing shares. We are focusing on dual listing shares or delisting and relisting. And it's a -- the analyzing phase now. It can take a bit more time. However, it's important to remember the real execution phase takes 6 to 9 months. 6 to 12 months we say here. But it's 6 to 9 months if you execute it correctly step by step by step. Otherwise, you get delays in it. So we are now in the analyzing phase, and then we hope for flawless execution 6 to 9 months following that. Everything is on track. Even though we will take a little bit more time for analyzing phase maybe than you expected, and we are just talking about 2, 3, 4 months in that. And then it's the execution phase that is 6 to 9 months. Then it's the decision of shareholders, and of course, taking into account the situation in financial markets. But it's an interesting journey. We are passionate about it. And there is a choice between 2 options from management. But of course, theoretically, there are 3 options. I hope I didn't say too much here.Once again, let's stop. I think we have explained what we expect for the rest of the year. You saw as well that we still expect 4% to 6% organic growth on average per year despite we had 15% organic growth this year. We said in 2006 that we expect, in next 10 years, 4% to 6% growth when others were expecting 2% to 3% growth. I see quite many are expecting more than 4% to 6% growth for -- but average compounded -- average for an industry, let's say, 5% growth for 20 years, that's a pretty good growth. Taking into account as well that you are always aiming to deliver more for less. So it's more volume growth as well. Of course, there is some [indiscernible] taxation and so on. Technicality, bit behind that. We have been growing faster than that, and we believe we grow faster than that. 50% organic growth is good. We still expect growth in the short term in -- then, of course, we are not talking about next quarter because it's obvious we will have growth due to the order book. I'm talking about rather order received and then where we are heading.So overall, no change in the forward outlook and the market condition long term. No change in our 10-year plan. Going fully according to schedule. And we are pretty firm on continue investing in innovation to drive the growth. And you heard that we are investing and spending to strengthen the market penetration with a pretty high nonrecurring cost in this quarter that we are not earmarking especially, and despite that we are reporting 14.6% EBIT.So Q&A.

[Stefán Broddi Guðjónsson, Head of Research]

It's Stefán Broddi Guðjónsson from Arion Bank. Two questions. First, the nonrecurring costs you mentioned in the statement and now in your presentation, can you discuss the amount of these sort of nonrecurring costs? And the second question is regarding trade wars and new tariffs being introduced globally. We're seeing inventory being built up in the U.S. meat industry, for example. How is it affecting Marel? Are you seeing delay in order intake, for example?

[Linda Jonsdottir, Chief Financial Officer]

So if I start with the first one about cost, we didn't highlight exactly the amount, but I would say, to give you some guidance there, like the underlying profitability this quarter is at similar levels as it has been in last quarters.

[Arni Oddur Thordarson, Chief Executive Officer]

Yes. The pendulum that is swinging with the free trade to back to a little bit different situation. We started to talk about it 1.5 year ago. Quite a lot that the feeling was that the pendulum was swinging a bit. It's very important for a company like ours then to prepare yourself for whatever situation you are in. We are serving the basic needs, the food consumption. So we are seeing this happening not at this magnitude before. We are the best prepared, looking at our industry, and remember, if we start with this, many companies are now announcing steel prices. Our company is -- has changed a lot. 40% of revenue close to a service. More and more on know-how and software revenues and so on, not the steel. So the steel impact is -- can be up to, without mitigation effects, 0.5% of revenues, we believe, not more than that. So then you take mitigation actions. And then you as well, long term, are located in all the continent where your competition is not. So making Marel U.S. for U.S. market, Marel China for China market and so on, we can do that easily. It's more efficient, though, for the whole world that we are a global business, all of us. But minimal impact in comparison with others, the steel price changes. However, for our customers, some of our customers, it's more serious, the trade ban on meat and poultry between countries. Lean hog prices, for instance, have been going -- were pretty low for 3, 4 years at the level 60, 70 and now below 50. It's unlikely in that situation that we will see huge investment in primary pork production in U.S. for the coming months. However, remember as well, when did the ice cream makers make the biggest money? It was when it was a trouble in the milk industry or dairy industry. The ingredients went down, and at least my children continued to scream for the ice creams in the shops at the same price. So what happens? There is a difference between revenue and cost. So if we are prepared, our sales team, our commercial team and ourself, to focus on primary, secondary and further processing, and what would you do if you were primary processor? You would move further on the value chain as well to secondary process, trade in the pack and bring more value to the customers that are still paying the same price in the restaurants for the meal. So there is opportunity in this. But there is more opportunities in this. Of course, there are challenges, no doubt. But there are more opportunities in this situation for a global leader that are -- is playing on all axis than others. So as well, arising opportunities in the M&A. Yes, most likely. So -- but I'm not saying that trade wars are good. Definitely not. It's not good at all. Overall, we believe and we sum it up that it's unrealistic to rely on the super growth we are seeing in the last 2, 3 years. So we are going to normalized level if we handle the game correctly. Will we temporarily see some quarters of lower growth? Yes, maybe. But then it's as well very good to have 50% of your revenues in the order book. But more important, we have seen it in the salmon business, for instance, secondary processing salmon investments stop when the prices of the salmon is high. Then you go into primary processing. When the salmon of price -- salmon goes down, you go into secondary processing. So opportunities in all situations. We have been doing a very great business in Russia for recent 3, 4 years, just to mention one example. More questions?

[Unknown Analyst]

[indiscernible]. So since you've answered most of my questions with your presentations, I only have 3 small ones. So first of all, I wanted to ask you about the economic expectations of your largest clients if you'd listen to them a bit about their expectations on the economy for the coming years. Then I wanted to ask about if you have any more specifications on the countries that you are considering as -- when you, like, delist or do a dual listing? And my third question relates the bit for MAJA. Were there any other bidders for that specific German company?

[Arni Oddur Thordarson, Chief Executive Officer]

So let's take it reverse. We were in a very good, pretty short dialogue, though, counted in months and -- with MAJA. So we believe, no, there was not other bidders for MAJA. We know them pretty well through Sulmaq and the cooperation there. And Sulmaq is, of course, as you know, owned by Marel, focusing on the meat. Sulmaq was an agent for MAJA in Latin America, and we were, of course, with [indiscernible] in the skinning business and so on. But it's a very, very good company. But let's not say more until we go further in the process. But we are excited about the combination, and we believe those -- if those 2 companies go together, that we have more scale for innovation, and that will benefit the end consumer and our customers as well, very important to take into consideration when we are in this process now. So the economic prospects, I think I answered it pretty well here overall. You can see a different fluctuation in the share price of many of our customers as well. Is it too much volatility? Yes probably. The -- many of them are executing par excellence in this situation. They have shown before that dealing with circumstances like this is that they move up the value chain. They invest and move up the value chain. So this is -- of course, now U.S. particular in the lean hog prices and so on. But in general, we are comparing with super, super good conditions in recent 6 to 36 months, I would say. It's so long, that there's the supernormal conditions, but remember as well, this business will continue to grow. The other side of the coin of those economic prospects, just to add to the previous question is as well. There has never been as much shortage of labor, and need for optimization has never been as much as currently. So that's the outlook indicated of our business. But recapping our customers, they are most of them in a pretty, pretty good shape, I would say. The third question was?

[Linda Jonsdottir, Chief Financial Officer]

Listing locations.

[Arni Oddur Thordarson, Chief Executive Officer]

Yes, we have said Europe we're not going to go to in more detail there.More questions?

[Unknown Analyst]

[indiscernible]. Just one short question regarding the fish industry. I think it was over 50% growth in Q2. I -- is it -- I guess, Leroy was booked off in Q2 for the most part. And related to that, just a little bit more guidance on forward-looking on the fish. Could we expect the last 2 quarters to be kind of, what -- forward-looking? Or is the fish industry just too volatile to give any good guidance?

[Arni Oddur Thordarson, Chief Executive Officer]

So we have never -- we are gradually, of course, building up the portfolio in the fish industry. I've never seen our customers as excited to invest as now in recent months and going forward as well. So based on that, the outlook in the fish industry is good. We are as well setting up, for instance, in the -- if we talk first about the salmon, the Leroy project that was an innovation through partnership. Some of those items are replicable as standard equipment into the field. So overall, yes, I can say the ambitions of the team is pretty high. I might be myself a little bit more cautious about the growth, but even though very optimistic about the growth of the fish industry, but can be see as well that we are strategically putting more innovation cost than 6% of revenues into the fish industry because we believe that we can drive the growth. But quarter-over-quarter, we don't want to be a specific one per industry. But the outlook, in general, is good in fish.

[Linda Jonsdottir, Chief Financial Officer]

Okay.

[Arni Oddur Thordarson, Chief Executive Officer]

Okay. Thanks.

[Linda Jonsdottir, Chief Financial Officer]

Thank you.