© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to Huhtamäki's Q3 2020 Results Presentation. My name is Calle Loikkanen, and I'm Head of Investor Relations. Huhtamäki's President and CEO, Charles Héaulmé, together with CFO, Thomas Geust, will today walk us through the highlights and results of the quarter. And after the presentation, we will, as always, end with a Q&A session.But without any further ado, let's begin the presentation. So let me hand over to Charles.
Thank you, Calle. Good morning to all of you, and thank you for joining us this morning. I'm very pleased to present to you, together with Thomas, the interim report for the third quarter of Huhtamäki. And the first part that I would like to highlight is the operating environment in which we've been working during the third quarter in this very special year, 2020.And if I start with a few words, and I'm on Page 3 for the ones who are following up on the presentation. I would say that consistently with what we have said since the beginning of this crisis early in 2020, our priority has been obviously on our employees and on our business continuity. We have been very stringent in making sure that we have everything what it takes in place to set ground the hygiene, the health and safety of our employees.We have seen -- if I'm now specifically speaking about quarter 3, we have seen a slowdown in the number of cases that we had within the company. In quarter 2, we had more linked to particularly one factory in UAE, much less in quarter 3. At the same time, we are maintaining, as I said, a very stringent governance when it comes to hygiene, health and safety for obvious reasons. And another highlight of Q3 is that now, all our manufacturing premises have been running during this quarter without any interruption.When it comes to way of working, we are trying as much as possible to transition to a new normal with a little bit of more people joining and collaborating in the offices, even though the current evolution of the situation in different regions of the world do not allow yet to come back to what used to be the normal way of working before. But we accommodate like everyone.Moving on to the next page, Page 4, and thinking a little bit more now from a business perspective what has been happening. You probably remember that in July, we said that we were seeing already back in end of May, June and early July quite a fast recovery trend. So I'm not saying a recovery up or back to the '19 level but quite a fast recovery trend.However, this has kind of reached a plateau during Q3, if I may say it like this, during the summer with -- in the foodservice business that globally has been the business affected for us, remaining below the level -- the normal level that we used to have last year. At the same time, the demand for packaging for food-on-the-shelf, so whether it is for Flexible Packaging, like for Fiber Packaging, in our 2 different technologies, that has remained pretty strong.There are, beyond the pandemic crisis, other factors that are impacting our business on the short to midterm. One is obviously to manage the capacity against the continued uncertainty on foodservice. Second point, which is important, is that we see a very clear acceleration of -- linked to digitalization, we see a very strong acceleration of the online shopping, the e-commerce and consequently as well, the food delivery business.Thirdly, we see an acceleration, particularly in the EU, of the sustainability regulatory agenda. I remember that it was one of the questions some of you had previously, whether during the crisis sustainability would be kind of put on hold. And actually, we always say it as a company, we do not put that on hold. It's a top priority for us, but we see from the regulations that this is taking traction. And that brings both challenges but as well opportunity -- opportunities in terms of innovation when we think about sustainable solutions.So moving on now to our business performance for the third quarter and year-to-date. So jumping to the Page 6, with our sales for the third quarter reaching EUR 847 million. As you see, it's almost the same level as the third quarter of 2019. It's a small minus 1% in reported net sales. The comparable net sales is actually a growth of 2%, whilst we are still suffering in the emerging markets with a comparable net sales growth -- or decline, sorry, of minus 2%. Then we have, in our reported sales, a 2% positive impact from the acquisitions that we've done back in 2019 and a minus 5% negative impact from the currency evolution. This impact was basically 0 at the end of the first semester, and there has been quite some strong evolutions in the third quarter. Thomas will come back to that in more details.That brings me to the year-to-date sales on Page 7, reaching almost EUR 2.5 billion. And again, that's basically almost in line with the first 9 months of 2019, a small 1% reduction. The comparable net sales growth is minus 1%. Then we have, again, 2% plus from acquisitions. And then the 5% negative impact on Q3 from currencies converts to being a minus 2% on the year-to-date.This -- in the next slide, Slide 8, this converted -- or broken down, better said, by the 4 business segments means that in Q3, we have the Foodservice Europe-Asia-Oceania with a sales decline of minus 1%. I'm talking about comparable net sales growth now, minus 1% in quarter 3 for Foodservice, whilst year-to-date, it's actually a minus 11%. Obviously, impacted much more during the second quarter, explaining this difference between quarter 3 and quarter -- and the first 9 months.In North America, the quarter 3 has been pretty strong with comparable net sales growth of 4% and year-to-date, 2%. Flexible Packaging is a modest 1% growth, and we will come back to that in a moment, and year-to-date, 2%. And the Fiber Packaging is growing very strongly with 7% in Q3 and 9% year-to-date. That's really the highlights of -- by the different segments, and then we will go in a minute to the different highlights and challenges by business segments.So I'm turning now to the Page 9, looking at consolidated picture from a profit and loss perspective. Looking at particularly Q3 2020 and then year-to-date, where we see that the net sales, again, as said, is at previous year's level, but again, with variations between the different portfolios.Remarkable is the increase of our EBIT in quarter 3 by 18% in absolute terms, in euro terms, and by 1.5 -- 1.6 percentage points from 8.5% to 10.1% in adjusted EBIT level. And year-to-date, this is an increase of 0.5 points from 8.7% to 9.2%.The increase in the profitability is driven by many different aspects. The most prominent one would be the mix impact between -- within the different portfolio linked to the evolution of the different portfolios. And second, the cost management and cost environment, I would say, more globally, where we are benefiting from actions we have taken linked to the crisis, whether temporary or structural, but as well cost environment in a sense of raw materials being at a pretty low level this year as well as the cost environment of energy, for instance. Distribution costs have been fairly lower this year in -- across the regions, particularly, for instance, in the U.S.The adjusted EPS is improving in line with the adjusted EBIT, both in quarter 3 as well as in year-to-date. You see in our capital expenditures that year-to-date, we are at minus 10% and in Q3 at minus 26% versus last year. I think the most relevant number to consider is the year-to-date because the Q3 difference or gap is very much more a timing aspect than any decisions to stop investing. We are not stopping investing because we have faith in the future, we strongly believe in the future of our different businesses and we are investing in CapEx for growth. The gap of 10% year-to-date is very much linked to the actions we have taken at the beginning of the crisis when we didn't really know clearly how long this crisis would take, and therefore, we want it to be slightly prudent.Then moving on to Slide 11, looking at the more granularity by business segment, starting Slide 11 with Foodservice Europe-Asia-Oceania, where we have a continued pandemic crisis impact in our sales and earnings. The demand has improved gradually, as I said before, during the quarter, but it remains lower than we would have expected before the crisis.Our net sales decreased in most markets, and I would be tempted to say, consistently across the different regions. However, it has been partly compensated during the third quarter by customers restocking. Very difficult to put an exact value on this, but it's a very clear fact that during the peak of the crisis in Q2, customers have lowered to the bare minimum the orders, lowering the stocks, and there has been some restocking in Q3 as well as an impact from the PPE, the personal protective equipment that we have been starting to produce in Q2 and very much in Q3 and delivering face shields and face masks as well.We are continuously taking actions to address the cost, either temporarily or more structurally, in order to, as much as we can, compensate for the activity decline in this segment.Moving on to Slide 12 on North America, where we can say without any risk that we have a strong performance throughout the year. There has been a continued strong growth in retail tableware and home consumption, particularly impacting our tableware but as well our ice cream containers. At the same time, the foodservice packaging, like in the rest of the world, is still impacted pretty much by the crisis.There is something that is probably very important to mention is this high demand of -- particularly of the retail tableware has created a strain on our capacity to deliver on the demand. And in Q2 as well as in Q3, we have basically eaten up our inventories of finished goods, which means that when thinking what does that mean for the very short term, so specifically for Q4, then we are entering in Q4 with different aspects to consider.Number one, we have basically no inventory of finished goods in North America. Second, as we see it in the calendar, this year's fourth quarter will be slightly shorter at least by 1 day in -- which counts, of course, everything counts in terms of the seasonal sales of Q4 versus 2019. And then there is a big uncertainty -- versus a very strong Q4 last year, there will be an uncertainty about how the festive season is going to play and is going to be organized in that market compared to last year because that is driving a lot the -- our sales in that region. And we believe that North America in Q4, therefore, will not see such a very positive trend like it used to be last year.The earnings, I think I have mentioned already before, have been increasing very well on the back of basically all variables going in the right direction. First, still benefiting from the actions taken end of 2019, favorable mix impact from the sales mix that we have mentioned already, this was the case in Q2, and then all actions to manage our costs down as well.Moving on to the Flexible Packaging. As said before, a fairly modest growth from a comparable perspective. The growth of net sales, the reported growth year-to-date is 5%. So that's quite good, but we have the impact of acquisitions. The comparable net sales growth is a bit lower, and that's linked particularly to -- year-to-date to the issues we have in -- we have had in Q2 in India and UAE, particularly. And we have to say that in the emerging markets, the crisis is impacting the middle class quite a lot, which bring a bit of a slowness in the recovery of the consumption.The earnings, however, have been increasing very much according to our plan due to cost management and actions to prioritize a more profitable portfolio as well as we are benefiting from lower raw material prices. So that's about flexible, a modest growth, but very good improvement when it comes to the profitability level.And then Fiber Packaging, which is a very successful year, successful both in growth but as well in profitability. There has been nothing new in Q3. It's the same as we said for the first semester, very strong demand across most markets, especially in eggs packaging, but as well driven not only by the eggs consumption linked to much more home consumption linked to the crisis, but as well following the continued plastic substitution trend that is a very structural movement that we see in the market.The earnings have been improving, of course, linked to the volume growth but as well because the fiber material prices were lower than 2019, particularly in the first quarter, but overall, in average, in the first 9 months of the year. So that's the way we are ending the first 9 months with a comfortable plus 1 point in adjusted EBIT margin.With this, I will hand over to Thomas now to give you a bit more granularity on the financials.
Thank you, Charles. So I will highlight mainly changes on the year-to-date performance versus the Q3 performance and also some of the items not yet covered by Charles.So Charles already highlighted very much the fact that we have a step-up in both margins as well as absolute improvement on profit. And that is, as highlighted, very much driven by the mix elements, but also from the fact that as we have now learned to live with the lower volumes in some of the businesses, we have also been able to partly stabilize then the under-absorption in those factories. So therefore, it's a combination of a better mix as well as some improvement in conversion versus the very disturbed Q2 element.Other things to highlight from this one is net financial items. You will see in the IAC items that we have a reversal of consideration related to an acquisition. So in the reported numbers, the year-to-date financial numbers are higher. And then we have an element of the tax, which is now at 23% year-to-date for both 2019 and 2020. So last year, in Q3, we adjusted the tax rate to 23%, and that has now remained stable.And as Charles already highlighted, the flow-through all the way down to EPS is visible. So EPS improving 25%, while the EBIT improved 18%. And that to be compared against EPS improvement year-to-date of 5%, adjusted.Turning to the currencies. Currencies, very negative in the quarter. And the main currencies driving that is really the USD as well as the ruble. But the main deviation versus Q2 comes from the USD. And obviously, if this one continues as the current state, we had an average rate in 2019 of 1.12, so the average rate will, with current USD rates, move in the wrong direction from a translation point of view for us also in Q4.But that's, of course, difficult to say in what direction the currencies will be moving. But from this table, you will have the details on both the year-to-date numbers as well as the -- so year-to-date average numbers as well as then the closing rate, which gives some indication on in what direction the currencies might be going forward. So as you see, many of the currencies now with a minus rate of it when it comes to comparison to previous year.Turning to the debt slide. So net debt/adjusted EBITDA, now we're fully comparable to previous year. You might recall that in Q2, I said that we had a bit of a distortion from the fact that we did not pay the dividend in the quarter as we usually do. Now we have paid the dividend, and despite that, we are on a very good net debt-to-EBITDA ratio of 1.9, also the gearing at 0.65 on a good level and net debt decreasing both versus year-end situation as well as compared to previous year. And that's obviously, to a great extent, then contributed by the cash flow, which I will return to a bit later on in the presentation.So going to the maturity slide, loan maturities. The main deviation to previous quarter, we have now the Schuldschein in the last part of the graph. You will also see that we have still plenty of things maturing within 12 months. And for that reason, we still sit on a pretty liquid situation and have the capability to take care of those loan obligations. You will also see in this slide that the RCF, so revolving credit facilities, is maturing in 2022.On the cash flow side, as already indicated, a clear improvement versus previous year. So EUR 150 million of free cash flow driven by EBITDA. Again, the Laminor gain is booked as a positive in EBITDA but then as a reversal in Other. Then other main drivers are lower CapEx, but as highlighted by Charles here earlier, it's not a question of -- it's more a timing-related issue than a real drop in our investment agenda; and then working capital, mainly the ratios between receivables and payables turning favorable and thereby helping the cash flow.Turning to the financial position slide. And here, you can see the main movements, obviously, equity mainly related to the profit. But obviously, the other elements now taking it down is currency. So currency really impacting the equity also. And then we now have in -- then, of course, the payment of the dividend. So those are the main single items in comparability to previous year with regards to the equity.And then when it comes to the return elements here, the one segment, as you saw from the detailed slides, the one segment really performing well is North America on the return numbers.The progress towards our long-term ambition that we have now still a drop in sales. However, the margin development is quite good at the moment. Then we did pay the dividend, and we have the net debt/EBITDA at a level below our corridor.The outlook remains unchanged. I will not read through this. So we updated it in Q2, and it remains unchanged. And then the short-term risks and uncertainties also remain unchanged.
All right. Thank you, Thomas, and thank you, Charles, for the presentation.Here on Slide 26, the financial calendar, I just want to highlight that we have an exciting upcoming event in November. In November, actually, it will be 100 years since Heikki Huhtamäki founded Huhtamäki. And to celebrate this anniversary, we are hosting events for different stakeholders during that week in November, and we will actually kick off the -- what we call the Founder's Week with an investor event where we will be focusing on sustainability.This will be on the 9th of November. The presentations will start at 3 p.m. Finnish time and last for about 90 minutes. And this is, of course, a virtual event with all the links and calling details being available closer to the event at the investor website. But please note that the date and the content of the day has changed from what we had previously talked about.But enough of marketing, let's jump back into the Q3 results and the Q&A session. The operator will give more detailed instructions on how to ask the questions. [Operator Instructions]So let me hand over to the operator for more instructions. So operator, please go ahead.
[Operator Instructions] Our first question comes from the line of Robin Santavirta from Carnegie.
Yes. Now the question I would like to ask is the quite strong recovery of the on-the-go business. When I look at Foodservice and North America divisions, the comparable growth is impressive and especially Foodservice being only organic growth, down by 1% despite of still lockdowns globally. First, can you just sort of comment a little bit more about that recovery of the sort of on-the-go, the McDonald's, Starbucks, et cetera, business? What has sort of happened there during Q3 compared to Q2?And then related to that, you said there's been a recovery, but it has plateaued a little bit. How should we now look upon Q4? And what's the most reason? Because we're seeing a bit of more lockdowns now. Is that also affecting your customers in the on-the-go business? Or are those now more unaffected by the lockdowns as I can see more Starbucks and some McDonald's opened at the moment compared to April? So on the on-the-go business development my question is.
Thank you. Thank you for the question. The -- let's say, the Foodservice -- and I will, of course, answer globally but as well try to give a little bit of granularity because it's not exactly the same thing everywhere. You're right, it's only a minus 1% for the quarter. What we need to understand is the demand was still, overall in the quarter, approximately a low double-digit, below what would be a normal level, so if we compare Q3 2019, okay? So that doesn't answer to why minus 1% only.The demand, however, improved towards the end of the quarter with some markets which were already at previous year's level in September. One is consistent with last year that -- sorry, Q2, that's China, that recovered -- China Mainland recovered back quickly to last year's level, but it's kind of a unique case worldwide. Then there is another market that has been strong in September, that's in the U.K., but that's very much linked to incentives, which have been given to consumers, incentives to go back to consumer food on-the-go, order food delivery, and that's very much a temporary action, which has had an impact but it's not a structural action changing the trend. So those are 2 aspects which impact our Q3 positively.Then North America in Foodservice is relatively better than the rest of the world. And that's very much linked to the culture of convenience way of consuming, which means that restaurants being closed doesn't matter, consumers are -- it's food delivery, it is drive-through, and that brings the food service demand almost at a normal level.There has been another aspect which is very much temporary in Q3. This is the restocking. I mentioned this in the presentation, the restocking of our customers. And that's very much -- there -- with stocks, there are 2 aspects which I think we need to highlight happening in the crisis. Consumers immediately start buying more because consumers are afraid of what the crisis is going to mean for them, and therefore, they are overconsuming to stock.However, at the same time, customers or the industry is destocking in order to manage the cash flow in the most prudent way. Therefore, after 3 months of Q2, what has happened in Q3, then consumers have been destocking, but customers have been restocking, okay? And that plays a role in Q3, which will not -- it's a little bit the tree that hides the forest, okay? And therefore, the Q3 is not completely, let's say, representative of what's happening in terms of demand.Last point, we have, as you know, launched some products to use our idle capacity, which are called personal protective equipment, particularly the face shields, and that has a minimal impact on our sales. But still, it's, let's say, a mitigating factor, let's say, on our sales, and that's very much a temporary patch or a temporary mitigating factor.Then when projecting towards Q4, as I tried to say during the presentation, it's -- we have to be very careful. There is no strict lockdown anymore, but there are restrictions being strengthened in basically most of the geographies that's going to hamper the recovery of consumption. And therefore, based on all the aspects mentioned, we have to be slightly careful about not extrapolating Q3 too quickly to Q4.
That one, I think what Charles said earlier about Q4, we will not be -- just to remind on that one, we will not be seeing the same peak in North America that we normally see in Q4 for several reasons, both our own capacity but then also the expectation on how the season will develop all in all.
And the next question comes from the line of Maria Wikstrom from Danske Bank.
I actually have a few of them, but I limit myself now for one, which is on the 20 -- about EUR 21 million one-off charge that you took in the Q3. I mean you were referring that related to the New Zealand and the factory closure, but it seems, I mean, quite a high figure for one factory in New Zealand. So if you could a little bit enlighten this -- I mean where does this figure come from? And if this will be a policy going forward that we are going to see these one-off more in the upcoming quarters because I think it's -- I mean we had some -- I mean had some -- I think it was, say, probably, I mean, 1.5 years ago, but it hasn't really been a trend in Huhtamäki despite having all of factories all around the world to take these extraordinary charges relating to the improving the efficiency. So if you a little bit could enlighten, I mean, why this was taken in this quarter and if this will be a policy going forward as well that we're going to see more of these in the future.
Okay. So I will take this question. And it is true that the majority out of this EUR 21 million is definitely out of New Zealand. So nothing hidden in that one. Closure -- closedown has both the elements of write-off of assets as well as, unfortunately, also the redundancy of the people in the market. So nothing specific to that one -- nothing more on that specific one. On top of that, we have the more normal type of efficiency improvements that you are used to seeing from our side.I would also highlight the fact that if you look on the year-to-date numbers, we had the significant gain in -- from the Laminor uptick. And obviously, we already -- or you might recall that we already then indicated that we will be looking for items to offset against that gain. So from that perspective, nothing unexpected.However, obviously, when we are in a situation where both competition and some of categories are under pressure, we will continuously be looking at -- if we are overinvested or need to do some changes. But I think the principle of Huhtamäki is pretty constant in the sense of how we have been taking care of these ones.
[Operator Instructions] The next question comes from the line of Carl-Oscar Bredengen from Berenberg.
So impressive results this morning. It was good to see that there was still another -- a very strong Q3 following also an impressive Q2. I just have a question on distribution costs in North America. We have seen quite a sharp rise in trucker rates in North America recently. Can you just elaborate a little bit on what we should expect in terms of possible headwinds going forward and how you could possibly offset this? Or just talk about really the outlook around the rise in trucker rates.
The demand is -- has been raising in North America -- overall in the -- not just in Huhtamäki, in -- not just in the packaging industry but overall and particularly linked to the boom of the e-commerce. And therefore, whilst the demand for freight and logistics was very low in Q2 for obvious reasons, bringing the distribution costs to probably historic low level, this has increased again in Q3. You're talking about headwind. If we compare to 2019, we still have room for being, in average, over 12 months rolling below or in par with the prior year. However, we see clearly an increase in Q3, and we should not expect anything different in Q4. That's the structural evolution of the market in North America.
And we have a follow-up question from the line of Robin Santavirta from Carnegie.
So I was wondering about the sales margin you have now had in Q2 and Q3. Seems as that has been quite good given the input cost situation you have described and then the selling price increases you received at the end of last year. Could you just describe a little bit what kind of sales margin compared to sort of an average level you have at the moment? And how should we view upon these now going into Q4 and early next year if you combine then the development of input costs and selling prices? Should we expect the sales margin to decline or normalize? Or will it remain roughly at this level throughout the year and early next year?
I can take this one. So first of all, I would say that the best way for you to have an understanding of how the mix effect plays in is obviously to look at the gross margin development and -- gross margin development, as you understand, and as I highlighted, we have now improved on the conversion side in Q3. But up till Q3, we were burdened on conversion. So the main part of the margin development on gross margin comes from the mix side of the story.
All right. Can I just ask you, when I look at the gross margin, now you have some one-offs in the P&L, is anything about the gross profit line? Or is this at the reported gross margin, reflecting the underlying performance?
So 2/3 are approximately in the gross profit of the [ ISS ].
And we have another follow-up question from the line of Jutta Rahikainen from SEB.
Sorry, I was thrown out for a while, so apologies if this question now was asked already. On the North America side, I think you commented quite clearly on the Q4 elements, but I would be interested in understanding the really good profitability you have now for the first 2 quarters and particularly, of course, this in Q2. So how much would you say of that is due to, shall we call them, extraordinary circumstances with COVID-19? So is it -- I mean, is this an extraordinary good year for North America? Or would you, at the same time, say that the new factory and maybe taking market share, stuff like that, has meant that this is a -- maybe not a sustainable level but it's not completely off level versus normal profitabilities in the coming years?So really, it would be interesting to understand the dynamics here. What should we take with us for the coming years and what is perhaps most likely just for this year? And this is mainly now for the -- only for the North America division.
Thank you, Jutta. I mean, I think in your question, you brought all the elements of the answer. So -- but let me put myself into maybe my words. So yes, the margins and the profitability in North America this year is, you call it, extraordinary, I mean, is excellent, particularly if we compare to the previous years. This is the result of all variables, all elements playing favorably to the exception of probably the USD now evolution when we convert to euro.You mentioned utilization. Clearly, the utilization of our last factory that has been launched end of 2018, Goodyear in Arizona, is driving a strong improvement in '20 versus '19. We are not yet at full utilization. Because of the crisis, we should be at a higher -- even higher utilization at this point. So there is -- so to your question, will this continue? Yes, it will still continue probably going forward, at least for the next, let's say, foreseeable year.Then a second aspect that is extremely important to understand is the mix impact, particularly between the retail packaging that is boosted this year versus the foodservice that is likely our lowest profitability category that is in decline this year, that creates a mix impact that will -- when I say will not continue, question mark. Likely, at least we are sure they will not continue in the same strength as it has been in 2020. So it would be very difficult at this point to say for how long can we maintain this mix, but it will not continue.Then 2020, fairly low raw materials linked to -- the oil price was, in average, down this year as well as we said it on a previous question, there was a previous question about the distribution costs in the U.S., the distribution costs, in average -- I don't know if you were off at that time in the call, the distribution costs have been historically low in Q2 for obvious reasons. Higher in Q3 because the demand is -- has restarted, particularly with the strong e-commerce, but still, in average, not at the same level as seen in '19. What will it be going forward, it can be same or a little bit up.So all in all, what we're saying is we have structural improvements in North America that will -- that gives us strong confidence in normal conditions to continue well above 10% in terms of adjusted EBIT. However, the level that we are reaching this year, year-to-date at least in North America, is -- which is at -- year-to-date at a high level, above 11%, is maybe slightly extraordinary.
Okay. So if I mirror this to the mini Capital Markets Day targets you've provided in March, right, was it April, but nevertheless, so the North America profit level you indicated then, over the cycle, would you say that's still what you think you will achieve? Or is it so that you actually were too conservative?
Maybe we are -- at this point with what we have been implementing and how we see things evolving, we believe that we can reasonably be on the high part of our midterm -- or how do we call it, midterm or long-term ambition, okay?
So you need to remember again, now we are in the better part of the investment cycle.
Yes, I do know so. Whenever you maybe do something big again, then it will be reflected in profitability. So all right.
As there are no further questions, I'll hand it back to the speakers for closing remarks.
All right. Thank you, operator. This then concludes the event for today. Thank you very much for participating. I hope that you all will be joining the sustainability deep dive in November. So thank you for attending, and have a really good rest of the day.
Thank you.
Thank you.