Marel hf

ICEX:MAREL

Earnings Call Transcript

[Audbjorg Olafsdottir]

Good morning, ladies and gentlemen, and welcome to Marel's headquarters, Garðabær, Iceland, on this cold winter day. And a very warm welcome to those of you who are with us on the webcast. Today, we are proudly presenting our Q4 and full year 2018 results that are colored by strong organic growth and solid operational performance.Our agenda here today will be familiar to you, at least to our regular guests. We will start with Árni Oddur Thórdarson, who will go over the key business developments during the year and the quarter. Then, Linda Jónsdóttir, CFO, will cover the financials for the same period. And then, Árni will be back to discuss in more detail some business highlights as well as to give update on our dual-listing project and to discuss the outlook going forward.Finally, we will have our Q&A session. And I kindly ask you to state your name and company before asking your question. And for those of you who are with us online on the webcast, I would like to bring your attention to that you also can submit questions in the right side of the window -- webcast window. There is a speech bubble that you can click on to submit your questions. So let's get to it.Árni Oddur, the floor is yours.

[Árni Oddur Thórdarson, Chief Executive Officer]

Thank you, Audbjorg, and welcome, everybody. We are very proud to report our result last year. Last year was a 15% growth, 12.5% organic growth. We have solid 14.6% EBIT. Our cash flow remains strong as well. And I think, we can say dedicated team, passionate team, good partnership with customer, good partnership with suppliers that was maybe our biggest challenge last year to ramp up with suppliers to be able to deliver this high organic growth is resulting in this.Looking back, however, it's constant investment in innovation and the infrastructure and global reach that is creating the spinning wheel of growth, organic growth, acquisition complemented, high cash flow reinvested in infrastructure and innovation. This is the spinning wheel. The opportunities are immense. Our market consumer value EUR 1,200 billion and the market leader, Marel, only EUR 1,200 million in annual revenues. However, nice to see EUR 1,200 million revenues increasing between years, the good growth in recent decades.Hockey stick this quarter as last year. However, there is no seasonality in Marel. This is due to timing of orders, [ 12% ] from the great quarter last year. Order received improving compared to previous quarters as well, and last year and third quarter EBIT margin same as throughout the year. And you see the cash flow that was unusually low in third quarter. There is a catch-up, though, with the cost of the year pretty even. This is timing of payment, this is timing of the business and et cetera.The full story is year-on-year very strong cash flow. And we have to bear in mind that this is free cash flow, operational cash flow that we invest in infrastructure, innovation, et cetera. Very high-scale investments since 2016 throughout this year, and we could see it on a more normalized level going forward.We acquired MAJA, EUR 36 million. We acquired treasury shares, EUR 70 million. We paid dividend, EUR 30 million, and the leverage remains at 2x EBITDA. Of course, it's the uptick in EBITDA, we have a little bit higher borrowing in years, but this is our targeted capital structure. We are in the lower end.Based on quality of earnings, we believe 2.5 is acceptable level or 2 to 3. So now we are at 2. And remember, we are heading for a dual listing process that is including issuance of shares. I have to be careful what I say because now we are in a listing process, and I'm not allowed to talk about offering or anything like that. However, we are now in a list -- dual listing track. We have declared before that our aim is then to issue 50% share -- up to 50%, but we will go in detail in that in our AGM. Our proposals will be next week.This is very important. It's our spread of the revenues, the quality of the revenues. If we start on the left side, recurring revenues from [ aftercare ] 35% of Marel business. 35%. Now we are defining installation with greenfields, 35%. And it is very interesting to see 35% because we have been increasing the greenfield sales so much and revenues this year. And this indicates that we are staying at the cost of 35%. But the growth driver in proactive service that is creating recurring revenues is we have even more opportunities there with the largest installed base out there on proactive mindset.Geographical split, pretty similar as in recent years. North America; Western Europe, what we will properly define more and more as North Europe and then other growth market. Rest of the world though a little bit lower last year than in previous years in revenues. That's not according to order intake as we see it now because now it's shifting due to trade constraints and other geopolitical issues.We are seeing a high need and, unfortunately, high food inflation in some of the countries now. And we are seeing pressure from government. We are seeing willingness from customers as well as processors to invest, and we are seeing that in beginning of this year. China and other emerging market coming pretty fast in, in that. However, there is as well turbulence in the primary processing at the same time in U.S., and the game there is to take the customers up the value chain, deliver clean labels, deliver more variant in the secondary processing.However, the story of this is the balanced business model. And that's why we are so resilient throughout turbulences in global economic slowdown and et cetera. And this is our comparable advantage. 6,000 employees working in more than 30 countries. Once again, poultry 20% EBIT delivering best-in-class results. Full line offering, last year, 15,000 birds per hour. It doesn't sound a lot of improvement from 13,500 birds per hour. However, it's 10% less people in the factories.Every single processing steps need to be advanced, adjusted and overarching, and no one needs to be best -- fully linked to the whole. So when you go up the ladder in the exponential 15,000 instead of 13,000, you have to be more and more precise, barrier to entry increase and increase, and we are serving our customers better. So here we highlight that the shift, U.S.A., is primarily a poultry building up inventories due to trade constraints, customers moving up the value chain, China.And if you talk about U.K. for instance, that has not been in high investments for 2 year. Regardless of hard or soft Brexit, clarity will mean ramp-up in investments. And U.K., like many other countries, import more food than they make. And every region is now trying to become self-sustainable. 34% of net imported in U.K. of food. The fastest way to make your own proteins is poultry than pork and so on.So let's move into meat, 11% EBIT. Very good order intake over the course of the year, a little bit softer in fourth quarter. However, on average, throughout the year, very good. We want to see now going forward more cross-selling and up-selling, taking our customers up the value chain. We are ramping up the front end. We are learning -- cross-learning and et cetera. The opportunity is now there. And the prices from -- for primary pork is pretty low, and the value-added opportunities are immense.We have upcoming every 3 years the IFFA show. That's 2019 now in March. We will introduce quite many new solution that we have been working hard on in recent years to take, for instance, minced beef, premium burgers and et cetera on a totally new level in this, based on cooperation inside Garðabær [indiscernible], software and all over the globe here in Marel. So we are going to show our full strengths here in 2019 in meat. We are not trying to go for overnight success. Remember, compared to 2 years ago, the innovation cost is 2 percentage higher in meat last year than 3 years ago.Same applies to fish. We have standardized and modularizing in meat. We are closing the application gaps in fish, although disappointing 3% quarter. Last quarter in fish, it's a good improvement over the course of the years from 4% to 8% EBIT. We are steadily on the right track. Increase in volumes between years -- and there is no reason that meat and fish cannot deliver the same as poultry long term. It's all about comparable advantage in the industries at how we are playing the field. However, poultry is exceptionally high this year with 20%, but there is no reason that we cannot, let's say, after 5 to 10 years, deliver equal level at all industries. This takes time. Overnight, we could do it, but then it's not a sustained pressure. And one of the interesting things is that fish and meat are growing very fast now in spares and services, copying the business model from poultry.I have to always stop a little bit when I watch this picture. We are extremely proud when we see earnings per share. We have said we want to grow faster than the market. The market is growing 4% to 6% a year. We invest more in innovation, more in infrastructure and global reach. That's the spinning wheel. And we are increasing earnings this year, 30% this year on top of 30% the year before, on top of 30% the year before that. So it's a nice improvement.There is one-off in fourth quarter. Holland or the Netherlands are becoming more competitive in taxes, so they are lowering the corporate tax rate from 25% to 20.5%. And consequently, we lower our tax obligation. You know in businesses you calculate taxes and few years later you pay the taxes. So our tax obligations are going down in Holland, but that's a minor part of the improvements. The earnings per share are improving. And based on our threshold, they said, "Please underpin this as an adjusted EPS."If you look at other companies, they adjust both the EBIT and the EPS. We don't adjust the EBIT, only for PPA. We take through our book all operating items as many other companies says are one-offs. We say, of course, they can be nonrecurring. Some of the items, they are unusually high at the moment. But it is ordinary course of business to rebuild the ship while you're sailing and while you're even fishing at the boats.So we are now strengthening our global reach, Latin America, China, et cetera, regionalizing the structure, getting closer to the customers, IT infrastructure investments and et cetera. Business people are occupied in the implementation, and it's going very well throughout the life cycle management system last year. It's not an easy -- you're eating the spoon with the left hand instead of the right hand when you're implementing. But afterwards, it's very good to be able to use both hands.So earnings per share, underlying growth. Day-to-day, we watch the results. Customer satisfaction and our cash flow that is our main, main focus point day-to-day.So Linda?

[Linda Jónsdóttir]

Thank you, Arni. Good morning. So good to see you here today. I'm going to take you through the highlights of Q4 and the full year of 2018. If we start looking at the order intake, it was a -- we saw a solid order intake in 2018 on top of a very strong 2017. The growth was 3.5%. Revenues are growing 15%, organically 12.5%. And we are delivering 14.6% EBIT, both in the quarter and in the full year of 2018.Cash flow is strong. We continue using part of it to invest in the future and in the business. Leverage is at 2x net debt/EBITDA, similar to what we had at the end of 2017. So even though we acquired MAJA, we paid our dividend and we purchased shares, we are still at similar levels as end of last year. And the order book is, at the end of the year, at a level of EUR 476 million, which is roughly 40% of last 12 months' revenues. So overall, like 2018 is a yet another very strong year for Marel. And I'm going to take you through a bit more details on the financials.If we start with the orders received, you can see that, in Q4, we had orders received at a level of EUR 296 million. Revenues at record level, EUR 331 million. So order intake lower than revenues. The same applies for the year, where we had orders received of EUR 1,184 million and revenues of EUR 1,198 million. You can see if you look at the picture, like at the end of the year, we were ramping up. And we did deliver record revenues, EUR 331 million.It also relieves us a bit in terms of not driving on the same capacity now in the beginning of 2019. It is, like, effort to ramp up to this level. And I would say, like, with very successful execution of our people, we managed to do that. But this is a high level for us, EUR 330 million, even though it's obvious that we can do it.If you look at order intake Q4 compared to the same quarter last year and look at the book-to-bill ratio for the full year, it's at a level of 0.99, coming from a level of 1.10. This is level we are very comfortable with. And you can see also looking at the trend on order intake, we started the year off on a very strong note, went down a bit and then coming up again in the end of Q4 2018.Greenfields and the larger projects with longer lead times are the vast majority of the order book as it stands now. It's also the way, like, we operate because the standard equipment and spare parts run in much shorter cycles through the order book.Looking at the EBIT and EBIT as a percentage of revenues. We are delivering 14.6% in Q4 2018 and also for the full year 14.6%, which is good results. Looking back, you can see we are coming from a lower level. Like, in 2014, we were at a level of 6%. We went up to a level of 12% and have now, for 3 consecutive years, been delivering around 15% EBIT, which is a very strong and steady performance.If you look at the revenues in the quarter compared to the same quarter in 2017, it's growing by 12%, and EBIT is improving by 4.3% quarter on -- or year-on-year, quarter-on-quarter. We are still investing in innovation now at a level of 6.2% compared to 5.7% in 2017. So we continue our focus on innovation. We are even stepping up from the 2017 levels. And while delivering 15% EBIT, we continue investing in our business. We are -- that is partly affecting our results. Like if you are implementing an IT system, you will need to add additional resources, et cetera, that are taken through the P&L.If we look at the income statement for the full year 2018, and I'll take you through the main numbers. Revenues, EUR 1,198 million compared to EUR 1,038 million in 2017, so growth of 15.4%, 12.5% organically. Gross profit is at the level of 39%, at similar levels as last year, but improving in absolute terms by around 15%. Selling and marketing, around 11% for both years, but stepping up in absolute terms by around 11%. R&D, 6.2% compared to a level of 5.6% last year. So we are continuing investing in innovation and stepping up.General and admin expense at a level of 7% for the year, similar levels as last year, which was 6.8%. We are having nonrecurring costs there that we don't specifically show. That is affecting the results, but we also see that will continue and even though in the long run, of course, we have a business to read some optimization on the cost line.Adjusted results from operations at a level of EUR 175 million or 14.6% compared to EUR 157 million in 2017. This is only adjusted for PPA-related costs and nothing else. Net finance costs now at a level of EUR 14.9 million compared to EUR 20 million in 2017. We are having very good terms on our loans, and interest rates has been going down and margins. And that's reflected in the net finance costs. There is a small increase in the finance cost because of implementation of IFRS 9, but, otherwise, it's trending down.Income tax has similar absolute amounts as last year, but it is affected in Q4 by the tax rate change that Arni addressed, that the corporate tax rate is going down from a level of 25%. And we need to reevaluate our deferred tax liabilities. Net result, EUR 122 million compared to EUR 96.9 million in 2017.Looking at the quarter, very high revenues, 12.2% compared to the same quarter 2017. Gross profit, 39%. So we are delivering good gross profit in the quarter. Cost items are high, and, therefore, we are delivering 14.6% EBIT. Net results, EUR 38 million and compared to EUR 33.8 million in Q4 2017. And here, you can see the effects from the tax rate changes, which is where we end with income tax of 0 in the quarter. So it's -- it evens out.On the order book where we started the year on a level of EUR 472 million. We did adjust for IFRS in the order book, EUR 16 million in the beginning of the year. We saw a delay of revenues because of IFRS 16 of around EUR 1 million, which is minor amount. And at year-end, because orders received were lower than revenues, we ended up at a level of EUR 476 million, including the acquired order book of MAJA of EUR 2 million.Some more highlights on the cash flow. You can see here both the operating cash flow and the free cash flow. In 2018, operating cash flow is EUR 206 million, which is very strong cash flow. If you compare it to 2017, it's going down, but 2017 was a very strong year in terms of order intake, and we got a lot of down payments on new projects. So 2018 is strong. We still keep on investing part of our cash flow in intangible assets and tangible assets. In 2018, that's EUR 54 million. And you can see the difference between the operating cash flow and the free cash flow is the investment in intangibles and tangibles and the taxes that we are paying. So free cash flow of EUR 121 million in 2018.And as explained before, we continue investing in the business to support the future growth. You can see we have been at like a relatively high level now for 2 years. And we are growing double digits. It's -- it is costing us, of course, to grow, and we really want to advance our facilities, our infrastructure. We want to invest in innovation, et cetera. So we are very committed in making sure we are ready to take on further growth. And as mentioned like even though this is only highlighting the CapEx part, if you are implementing systems, you will need extra resources. That is affecting then the bottom line there in the end, and we are not adjusting for that.Leverage remains at the lower end of the target at a level of 2x net debt/EBITDA. We have been around that leverage now for quite some time. We should not forget that, like, we still, during this period in 2018, have taken several actions like the acquisition, like the dividend payments and the purchase of shares. In 2018, we also finished our first Schuldschein in the market. It was a very successful transaction.We ended up with an oversubscription and at a level of EUR 140 million, even though we went out in the beginning with EUR 100 million. And we -- it was a mixture of floating and fixed transactions, 5 and 7 years. Maturity came into the 5-year tranche, but we are very pleased with the rates we got, 110 to 130 in margin. And the bookrunners around the transactions were ABN AMRO, Bayerische, Landesbank and UniCredit. I mean, I think it's also clear from this picture that like we have taken steps where the leverage went up a bit like the acquisition of MPS. And we can relatively quickly deleverage with our strong cash flow.If we look at the balance sheet, just a few points here like property, plant and equipment is increasing. We are investing in our facilities. MAJA is also added to the numbers. That's increasing that line as well. Right of use assets is new this year because of the lease and also affects the liability side. Operating working capital is increasing in 2018. When you're growing at this level, you also need to think about what's the right level of inventory, so you can make sure you can support the growth and that you can take out all bottlenecks. So for critical parts, we took the decision to make sure we did not have bottlenecks. So that's also impacted in the inventory number.Liabilities, quite straightforward. I don't think there's anything really to highlight here. IFRS, so it's the last time you'll see this slide, but just to highlight that we, in the beginning of the year, implemented 3 new standards, and that went successfully. This is just to explain to you that, more or less, we are fully in line with what we stated in the beginning of the year, and it's having a minor impact on the results of Marel.So it's a bit of a boring slide, but, I think, overall, very strong results. And I'm also -- when I think about the operations and I think we've taken very good and solid steps in 2018. So I thank to our team. We should also -- they've done a great job.Okay. So Arni, over to you again.

[Árni Oddur Thórdarson, Chief Executive Officer]

Yes. Thanks, Linda. So you in the overview, in my view, the cash flow is exceptional last year like it has been, but the book-to-bill was 1 due to the ramp-up in revenues in especially fourth quarter. We needed to deliver on right time, right quality. We have upcoming quite many approaches.When the book-to-bill is higher 1.10, then we get prepayment. And exceptional strong cash flow shows our cash flow model is great. Order intake only growing by 3%, 4% last year. We say only. Quite many companies would be proud of that, but then we aim for at least 6% growth on average annually when the -- our market is growing 4% to 6%.When I invest in industries that I have not done for 10 years because I've been in Marel, focusing on that, but, in general, when you look into industries, companies, you start to look at industry. What is the situation in the industry? What is the outlook in the industry? We have got quite many questions from investors. Is the growth slowing? We are seeing your peers reporting decline in order intake.It's correct that our listed peers have been reporting decline in order intake. We have been showing marginal improvements on top of our very strong 2017. 2017 is 13% increase in order intake, last year 3%, 4%, on average 8%. There is a shift now due to trade constraints and et cetera. We have comparable advantage working in all continents with being product pioneer and et cetera. So we are seeing the opportunities, and there are, I'd say, more and more opportunities in this situation.However, looking at the rest of the industry, we are as well in quite many M&A discussion. And on average, to remind you, it takes more than 3 years because before we found out with those family-run companies whether we fit, whether we have same vision and so on for the future. So we have pretty good pools on our industry, and it seems like quite many small and medium-sized, very focused, very good companies are growing, are growing even faster than we in the last year. So -- but at the same time, we think that we see that we are taking some market share, but there are as well very many good focused players in the industry that are growing.Why are they then discussing with Marel to joining forces? There are generation shifts and so on. But moreover, they don't have the global reach that we are having. And the market is shifting, especially now, to new markets, but it's as well the trend when the new consumers are coming into the equation in the new markets. And the second factor is, interconnectivity or Internet of Things that is in the DNA of Marel, and we have the courage to invest every single year in our infrastructure that will determine who will be the winners in 5 to 10 years' time or not.So interesting discussion, take a long time, but I have to say that's okay, because I enjoy them so much. Those people have been in the industry for 3 generations, lot of experienced insights and et cetera, and I simply just love those discussion like with the customers and like with the innovation people and other employees in Marel. So this is our playing field that we are transforming.Last year, we officially moved the barrier from slaughtering to dispatch into post farm to dispatch. So live bird handling system in poultry we introduced. Why am I putting this picture up once again? We have a clear vision to transform the way food is processed, more sustainability, more affordability. Affordability, for instance, now, China, U.K., Reykjavik, to make food affordable and prevent the inflation. This playing field, one of our biggest fortune in Marel, is we gradually expanded. We don't go overnight and change our business model.Started in fish Iceland. Now fish, poultry, meat global. We started in the secondary processing. Now we have post farm to dispatch. We have overarching INNOVA that is connecting the dots. Last year, we are stepping up innovation in INNOVA from 40 people to 80 people. This year, we will increase by another 40 people. Most of this innovation cost we are taking straight through the P&L because it's a softer game. It's a softer business. We have not done all the feasibility studies and we've swallowed it. You can see it in our accounts that capitalization is lower. Depreciation that is pretty strange when you're growing and you have this accounting rules. However, stepping up, software, interconnectivity, innovation within the game and I would not be surprised that we gradually expand even faster the software game from source to self or even to the fore of the consumers. Whether we will go into vegetables? I think it's not question. That we will be there gradually in 10 years' time, however, not tomorrow. Our strength is to focus on gradually expanding. And remember, we have lot of application gaps to close in the fish sector, even though we are the global leader competing with a very strong partner in Germany and all the smallest but we are a global leader in fish, poultry and meat.And we standardized the meat, closed the application gap in fish and then always getting more and more precise in the poultry. Very proud of the innovation announcement last year. It's always a little bit difficult for me to go through this because this is free for sale overview. My head is in the prototype overview. So my head is a little bit in what we are going to announce in salmon show, how yesterday robot parts are taking the FleXicut on next level. I believe it's not in this overview, IFFA, IPPE and so on.However, once again, 15,000 poultry per hour instead of 13,500. Sounds simple, but the preciseness in every single step are interconnected. Better handling of the SALMON DEHEADER than the ROBOT PALLETIZER coming in. The DEBOFLEX where we are mirroring the technology from poultry over to the pork. We are always adding, adding, adding to advance the question and cutting and deboning in meat and so on. This is across the industries, that is the most important. And more and more we are utilizing the same technology across the industry.What we don't see here is all the new versions in INNOVA that is the interconnection in the software. And -- but we see it step-by-step and it's always as a device control. Sometimes, it's interconnecting the devices and then it's the overarching software that we are working on the new version very hardly now to make it easier to install, easier to use, easier to upgrade and even in the future automatic upgrade. That is a normal request for everybody that know Windows 10 and Android and et cetera. We are not yet there, but we will be there.Alternative listings. So sorry how late we announced our numbers yesterday. I believe the press release is very good. However, that's not the reason. There are quite many adviser now in the process telling me and Linda what is allowed to say and what is not allowed to say. I have to say I told them a story that I started skiing very early, maybe 4, 5 years old, and I went to a ski instruction 30 years old, and the day after I was always falling. So I'm a little bit afraid when someone tells me what to say and what not. But let's try to keep you within the disclosure guidelines.Maybe the big news here is that we have been working very hard in connecting the back end. That's name plumbing, plumbing in the security market. I'm a little bit surprised how much plumbing works need to be done. I used to be in this market, and I've not seen a lot of developments in the recent 2 decades in the plumbing part. The big news is, though, that we believe it's fully doable, and our counterparts that are the stock exchanges and the banks tell us it's fully doable to dual list, yes, both in Amsterdam and Copenhagen. We are not talking about the [ ICE ]. We are not talking about any other kinds. It's the same constitution. One class of shares that we aim to dual list, either in Copenhagen or in Amsterdam. Both of those market are great. It's our home markets. It's 1,500 people in the Nordic in Marel, and it's 2,000 people in the Netherlands.Based on discussion, we believe the global demand, that is mainly long-term U.S.A. and around the globe, will be similar in both markets. And then it's just a choice between the 2 very good markets. We expect that, that will be clear on our AGM, and we expect as well that all the proposals for the AGM will be out beginning of next week. And then shareholders will have the opportunity or not the opportunity, the right -- shareholders own the company -- to discuss the future of the setup of the shares and dual listing process, and we decide together where to head.You hear, though, that we are on the final stage on the analyzing and preparation stage. Some could say that we are in some part of the execution stage. However, we have to stay within the formalities, and we are -- everything is going according to plan. Plumbing part, a lot of work, but we are seeing now most of that work is done, and now we are choosing between 2 very good locations.Timing, we cannot be detailed on that, what is the execution phase after the AGM. As always, you try to do that as easy and as fast as you can. But remember, we are having a [ fortune neck ] in our hands, and we are going to think more about what is the shareholder journey after listing from the listing process itself. IPO itself is just an exercise where you are telling the story, et cetera. What really matters is how tradable are the shares, what is the -- and so on after 3, 4, 5 years in the market day-to-day.So I've said everything that is here. We have a story to tell. I'm not allowed to market a lot Marel in here in this open webcast, but this is our story. 20% annual growth since listing. We are very grateful for the support from shareholders from the very beginning, cooperation with customers and leading to this remarkable growth. Also, we are remarkable small global leader in a very big market of poultry, meat and fish.Outlook. There is no change in our view that the growth of the market is 4% to 6%. I answered that a little bit about how are the focused, small players growing, how are we growing, what are our listed peers doing and so on. There is, on the surface, the growth you can calculate that is much higher than 4% to 6% than EUR 2 billion up to EUR 5 billion are coming into the equation. However, we see it as well that the whole value chains request more for less. And 4% to 6% growth is a good growth, and we will continue to grow faster.At the moment, it's harder than usually to predict timing of orders. But what is very, very important, 35% recurring revenues, standard equipment as well coming in, in good and bad times. And then the greenfield is the biggest differentiator factor. What I'm very pleased with order intake last year is we are comparing with 13% growth 2017 with 1 exceptional big order, more balanced order intake towards the '18. So overall, cautiously optimistic short term and very upbeat near term and long term. So thanks.

[Árni Oddur Thórdarson, Chief Executive Officer]

Any questions?

[Stefán Broddi Guðjónsson, Head of Research]

My name is Stefán Broddi Guðjónsson from Arion Bank. A couple of questions. The first one is you mentioned that there is a particular growth in spare parts and services in both fish and the meat segment. Sales or the margins were sort of unimpressive compared to previous quarters in both fish and meat. And does it mean that you're seeing margin levels in those 2 sectors coming closer to what it is in poultry in a shorter period of time than you previously had expected? The second question has to do with the new products. You...

[Árni Oddur Thórdarson, Chief Executive Officer]

Maybe we'll just take this one first because it's an interesting question. It's about the profit level of the industries and can we expect it to come quicker than we expected. The short answer, no, we don't expect it quicker. We are working very hard on standardization, modularization in meat. Even though meat is getting very close, it maintain as revenues towards poultry as a percentage of total revenues, then it's much harder to service, customize portfolio and standardize portfolio that you have been tracking all the time. What are we doing to be able to do that? We are standardizing, modularizing the portfolio. We have crossed over the company putting one product life cycle management platform across over the company putting one ERP system on top of ServiceMax and Salesforce and so on. So this takes gradual time. However, short-term wins in the meat is the cross-selling and up-selling, take -- and it's a short-term win for customers and us, taking the customer up the value chain. For instance, premium burger. It's -- premium burgers is 14% to 16% fat, barbecued too nicely. You buy it out in over 12% to 14%. If you buy 12% to 14% burger out in a shop, you should get 13.9%. You should not get 12% to 14%. The price of the fat is 20%. The quality of the burger is more at 13.9% and 12% and et cetera. And only a fraction of the total animal in beef is getting the value -- the premium value. So we are a tipping point both in the white fish and red meat as well with the overarching INNOVA to match and produce the demand out there instead of making and trying to sell. For instance, in Grindavík here in Iceland, you make the fish through the FleXicut, not we, but our customer, on Wednesday, Thursday morning. It's already on high-end restaurant on Friday in New York. However, it was not made and sold. It was made to fill the order. So this is a huge game changing, and those are the short-term wins that are gradually coming in, but closing the application gap in fish is as well. So innovation cost will remain a little bit higher in meat and fish for the time being. And time being can be 3, 4 years. So gradual improvement, 4% to 8%, for instance, in fish last year. 11%, we are not satisfied with that in meat, to make that absolutely clear. We believe we can cross-sell and up-sell more than we did last year, and the request is simple for this year, step it up. The need of the customers are there, and we are here to transform the way food is processed. So make it clear, we are not evenly satisfied with the results and very satisfied with order intake in meat. It was a little bit lower the year before, and that gives us optimistic going in, but we will gradually improve it. So not overnight same profitability in all the industry. Long answer.

[Stefán Broddi Guðjónsson, Head of Research]

The second question then. It has to do with the new products being put into the market. Can you discuss how large part of either sales or order intake new products that MAJA brought to the market last year, for example? How large portion are those of total sales or total order intake?

[Árni Oddur Thórdarson, Chief Executive Officer]

We are not -- how much is innovated in recent 3 years is -- we have not given it up and we have to do it at the same time. We are seeing it increasing and increasing. But it's tricky. What is revenue, well, and what is completely new and et cetera? We are constantly renewing the portfolio. So can we be better in product life cycle? Yes. We hold on too long on the old portfolio and so on because we care for every single customer. But in the end, it's better that we revamp it faster. So we are satisfied with the movement, how much is coming from new innovation. To mention one live bird handling system is just the blockbuster. We need to ramp even faster our production like we need to hunter down amongst totally different than we did in the past the value chain, and it's getting more and more attention, the live bird handling system from us. Just one example of new innovation coming in last year. We are now outsourcing the majority of it with customers -- with companies that are larger than Marel to ramp very faster. Those companies are building factories next to our factories in U.S.A., and even in Slovakia. So the trick now is to ramp up the production there. So just to give you one indication. And I don't like when salespeople say that something is sold out. It's just a matter of execution to make it. So...Any more questions? So thank you. Looking forward to see you as well on the AGM. It's where we decide next steps. Thank you.