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Good afternoon, ladies and gentlemen, and welcome to the earnings call for the results of the first 9 months of 2021 of TAKKT AG, hosted by CEO, Maria Zesch; and CFO, Claude Tomaszewski. [Operator Instructions]Let me now turn the floor over to your host, Maria Zesch. Please go ahead.
Thank you, and hello, everyone. It's great to be here with you for the first time. But before we dive into details of Q3, I would like to take the opportunity to introduce myself, and maybe also give you a first overview about my first impression. So I joined TAKKT more or less 90 days ago on August 1. The last years I worked in the telco industry, first in B2C, then in B2B, but always with a focus on customers and always with a focus on digitalization. And I believe also that what I can bring to TAKKT, the focus on customers, and using digital opportunities, also to core TAKKT.Maybe my first impressions, maybe let me give you also an overview about that one. So my focus for the first 100 days was to get a detailed understanding of TAKKT, its market, its customers, but also how -- what are the competitive landscape is. I visited all business units around the globe, met many people, and tried to understand the spirit of the company and the culture. I talked to many colleagues, but also to customers and also to our suppliers.What I have experienced is that we have a very, very broad positioning. So we're leading -- we have a leading market position as a B2B distance seller, both in Europe and the U.S. We have great customer relations. So I got very good feedback from our customers on our reliability and also on what we have achieved so far on sustainability, but also from our suppliers. I got to know a lot of enthusiastic and motivated employees with a great team spirit.Last but not least, I think we have a very, very strong financial position which we can rely on. So looking ahead, I have the impression that there is still a lot of untapped potential within TAKKT. We have started our way towards a more integrated company, but still there is room for more, for more collaboration, for more synergies between the different business units and also for the headquarter, the TAKKT AG, that we bring even more and more value to the operating unit by, for example, shared services around supply chain management or data analytics.I think what is most important is that we understand the needs of our customers and help customers to become even more successful. So I'm convinced that we can do that and that we can achieve a lot more growth in our market. So together with my team, we want to unleash the potential we see. So what we did is, we initiated a strategic review together with the top leaders across the group on a global level, and we are currently identifying growth levers and enabling levers we want to focus on in the next month and years.My most important message to you is, there will be no major changes to the strategic direction. That means we will continue our transformation towards a more integrated B2B company. We will continue our focus on growth, and we will continue to differentiate via sustainable solutions. Now it's the time to discuss where to focus and how can we focus even more to unlock our potential. I will definitely update you on the strategic review as soon as possible, and looking forward to discuss that with you.But now let's talk about our Q3 results. Looking at the business in the last quarter overall, we are very well on track. Demand is good. And if there wouldn't have been the supply chain constraint on a global scale, we would have done even better.I will now hand over to Claude, our CFO, who will give you a detailed view on our financial performance in Q3 and our expectation for the rest of the year. Claude, may I hand over?
Thank you, Maria. A very warm welcome to everybody in the call. Let me give you some more details on the figures we have published this morning.Let's start to look at the TAKKT Group quarter 3 2021. We have seen a sales increase of 12%, and without any currency effects also, our organic sales growth has come in on a level of 12%. And as Maria already has indicated, we would have done even better if we have not seen these continued constraints on the supply chain being able to get the product in early enough to then be able to ship it to the customer.To give you a flavor of what that has meant for us in the third quarter, roughly we have seen our orders in hand increasing by EUR 80 million, which means we are missing this EUR 80 million here in the sales figure, of course, if we have been able then to shift these orders which we have generated from the customers into revenues. And so that's something we should bear in mind when we look at the sales figure here in the third quarter.Also a very good news that it is the first time since the start of pandemic that we have been able to see growth rates in all our major business units, and that's the first time for Displays2Go as well as Hubert, which we have reported on since a while as the kind of proven channels because of the markets they're in, because of the fact that they are waiting for the trade shows to open up in the case of Displays2Go and in the case of Hubert, that they can -- teams are opening up in this space. And so it's good to see that now in the third quarter, although this hasn't happened yet fully, we are at least seeing some growth in both businesses compared to the previous year quarter, and so all our business units have been able to achieve growth compared to the previous year quarter.Now let's have a look at the profit EBITDA, the operational profit. We are nicely here reporting an increase to EUR 30.3 million coming from EUR 11 million of EUR 22.5 million, but we have to admit that if we look into previous year's quarter, at that time, we had one-time cost of roughly EUR 5 million. So I think it's fair to adjust that EUR 5 million. And then if you look at the development on profit, we can state that we have seen an operational EBITDA increase in line with our sales growth.Now why have we not seen more? That's a fair question. And that's the fact that, of course, we have worked for all the orders coming in, on marketing costs as well as personnel, but as we haven't been able yet -- and that's EUR 18 million figure, not yet been able to turn it into revenues. Of course, we have seen the cost in the P&L, but not yet, unfortunately, revenue. So that's why we have not seen more leverage you would normally expect in that recovery period.If we were -- and that's just possible theoretic thought, but if we were to correct the sales in order -- from these orders, additional orders, and if we were to conclude that that's roughly EUR 5 million more profit in our P&L, we could conclude, and as it could -- we could conclude that our profit would come on up by almost 30%, and that would be the leverage you would expect from the business. But of course, we need to first see these orders being turned into sales before we can see more leverage in the P&L.Now having said this, let's have a look at the different segments. Let's start with the omnichannel commerce segment which has seen a growth rate of 16% in the third quarter. All business units contributing to that double-digit figure. So every business has seen a double-digit growth rate, ratioform, KAISER+KRAFT as well as NBF, and especially ratioform has shown, again, a strong performance here in the third quarter already -- after we've already seen a strong performance of ratioform in the second as well as the first quarter. So a very good year for ratioform in our group.Looking at profit, operational EBITDA, we can see here that the profit has increased in line with the sales figure. And of course, also here, the same what we have said for the group is true for omnichannel. Of course, you would have seen here more leverage on the P&L and on the profit figure if it hadn't been for the supply chain constraints, and hence, for the missing sales in our P&L, the orders coming in and not having been able to convert all these orders into their revenue figure.Talking about web-focused commerce. On the next page, you can see here that the business has grown with organically 6%. There have been slightly currency fluctuations. So we report a figure of plus almost 9%, and that growth comes from our Newport division with a mid-single-digit as well as I said, it's a [indiscernible] for the first time now since the start of the pandemic, having been able to show a growth rate at mid- single-digit growth rate. So that's really good news for us. The business is still suffering from the trade shows having not come back fully, and so we still expect a much higher recovery. But we see now the first kind of start of growth rates at this pace to come.Now if you look at the profit figure, that's slightly disappointed, we have to admit. We're going backwards here from, you could say, roughly EUR 3 million to EUR 2 million profit, and the reasons here are manyfold. One is definitely we have seen a negative impact on earnings from difficulties we have seen in the supply chain in the U.K. That is true for warehousing as well as for logistics costs that we see here, at the moment we face here. Some operational challenges we have to fix in the U.K., and that's one bigger drain here on the profit, why we have seen, although we are growing that decline in profit in the third quarter at the web-focused commerce segment.Let's move on to the foodservice equipment and supply segment. Here, we are able to report an organic sales increase of almost 7%. Now the dollar has become weaker. So we reported sales increase of only 5%. As I said, Hubert, first half was mid-single digit organic growth. And even if we look at order intake, Central has been very, very strong. They have seen -- they have demonstrated a sales figure with a high single-digit growth. And on top, we have seen even a much strong order intake here for Central.So what we observe in the U.S. American foodservice market is that restaurants are doing good, and that's helpful for Central, smaller restaurants, whereas canteens pick up, greater canteens, greater food places, of course, have not fully opened up. And so that's why this is not so helpful for Hubert and why it took a bit of time for also that business to get into gross margin again.Profit, I guess in line with sales, even a bit better. We see some leverage here going from EUR 6 million to EUR 7 million profit. So that is promising for the future that we are also here now starting into the recovery period and into the right direction.With all these remarks on the quarter 3, let's move on to the 9 months figures. Year-to-date, on the TAKKT group here, you can see we have a sales increase of 8% that was negatively impacted from currency fluctuation, a weaker dollar of 2.4%. So we can conclude that organically, the business was growing with a 10.4%. And also here, similar remark as we have done for the third quarter now for the full 9 months. We, at the moment, at an order intake exceeding the realized sales by around EUR 50 million. And if you would try to kind of get an answer to what does that mean for profit? The EUR 50 million order intake would normally generate an incremental profit of EUR 15 million in our P&L, EUR 15 million. And of course, that also is missing in our P&L when we look at the P&L structure and the leverage you might expect.And that's also when you look at our operational EBITDA, you can see here that our profit is going from EUR 74 million to EUR 82 million. If we even then correct for the onetime expenses we have seen this year of EUR 3 million, the ones we have seen last year of a bit more than EUR 8 million, then you can see, of course, that the profit increase is a much lower one. And as I said, mainly due to the fact that we have worked hard to get all that -- all these orders. There's a strong demand out there. But of course, we need them to be able and be patient to the moment where we are also able to convert these into revenues.Let's have a quick look at the 3 segments also, omnichannel commerce has grown the business first 9 months by a figure of 14%, some negative currency effect. So organically, they are even growing the business by 16%. And also here, all the 3 divisions are contributing to that double-digit growth. KAISER+KRAFT, ratioform as well as NBF have a good run here this year in that recovery mode.Looking at profit, profit is increased from EUR 59 million to a figure of EUR 76 million. Here, we have, of course, to adjust for the previous year figure, a onetime expense of EUR 8 million at the time, following a reorganization to implement TAKKT 4.0, especially at KAISER+KRAFT. And so if you then adjust for these onetime effects, we can conclude that profit is growing in line with sales in that segment.Web-focused commerce first 9 months. The organic sales growth has been 3.4%. We have seen some negative effect from currency fluctuations, reported at 2.5%. And here, for the first 9 months, we see that huge differentiation between the Newport business growing double-digits, whereas Displays2Go has been in decline double-digit. And that's why also we are, of course, quite happy to see that now in the third quarter Displays2Go has come back to a growth mode.Profit significantly lower due to that huge sales decline at Displays2Go, which we cannot compensate in the P&L to lower costs. And on top of that, we have seen a negative onetime effect of roughly EUR 3 million at Displays2Go for a sales tax challenge we faced here, and we have explained that in length the last time in the quarter. So I'm sure you know what we have. [Technical Difficulty] the figure as I said growing nicely, being focused on restaurants [Technical Difficulty].
Dear participants, we just lost the connection to one of the speakers. We will be back in just a minute. Thank you very much.
Sorry, we had some technical difficulties. Sorry about that. So we will, yes, go back to the call now and repeat the information about the 9 month figures for the foodservice equipment and supplies segment.Okay. Let's have a look at the food service equipment supply segment. The business has in the first 9 months been growing by almost 3%. We have seen some negative currency effects from a weaker dollar, and so we reported sales decrease of 3% here in the top line. Central, with a very nice low double-digit growth, in top even with a -- even much stronger order intake in the first 9 months, whereas we've seen Hubert with a single-digit organic decline. And as we have reported earlier on the third quarter with the good news that they have come back to growth on the third quarter, but overall, in the 9 months, an organic decline.Profit, there is a reported decline from EUR 18 million to a figure of EUR 11.7 million, EUR 18.5 million to EUR 11.7 million on EBITDA. Here, of course, we should cite that we have seen a onetime positive gain last year of around EUR 4 million. So of course, then the decline is not as much. And the reason for the decline is, of course, due to the sales figures we have seen at Hubert. We couldn't fully compensate with lower costs, and we have here also to wait for the full recovery of that business, then also to see increases again, which we have seen in the third quarter as, remember, a few minutes ago we are starting to see, again, increased profits also in this segment.Leaving revenues and EBITDA, let's talk about cash, going to the TAKKT cash flow. TAKKT cash flow main message is increased in line with the EBITDA figure. You can see on that slide on the bottom right that we have, of course, a few more taxes to pay because we're doing a bit more profit. At the same time, we have seen, of course, different noncash expenses happening, whereas the previous year, we had, of course, a lot of valuation impact here from receivables and inventories. These are much lower this year. And on the contrary, we have this year, lower interest expense to pay. So overall, these effects are kind of compensating each other so that we can conclude that the TAKKT cash flow increases in line with our EBITDA figures.Now if we then look at our full cash flow generation, operationally, we have generated, before net working capital, a cash inflow of EUR 71 million, which is slightly higher than previous year. And then you can see here the huge swing in different direction when we -- if we compare periods, the previous year period. Last year, we have almost generated a cash in at EUR 40 million in the first 9 months due to the fact that our business was shrinking, due to the fact that we were lowering our inventory, due to the fact that our receivables and other receivables were, of course, also in heavy decline, which was producing cash in.And this year, now that we are going to the recovery, we have absorbed cash figure of EUR 12 million, which was invested into trade receivables as well as inventories. So that's, of course, a normal development which we see in our business model. When we go downwards, we are generating cash in the net working capital area. When we go upwards, we are absorbing cash. And here, of course, now due to the pandemic, which is a quite severe swing, which then shows cash from operating activities of EUR 58 million, which is, of course, totally different to the figure of EUR 103 million we have generated the 9 months last year.CapEx has come in almost similar. Now we have spent EUR 12 million, whereas last year we have spent a figure of EUR 9.5 million. The proceeds from disposal of noncurrent assets has been different previous year. We have sold a building and a warehouse from Hubert. We have done a sale and leaseback and generated a EUR 22 million cash in from that sale.This year we have sold 2 investments, minority investments that's generating EUR 13 million. And so all in all, we were able, after the CapEx figure and the proceeds from that -- these disposals, to generate a free tax cash flow of EUR 60 million, which was available, of course, to pay back loans, for dividends and acquisitions which we haven't done. So what we can do with the EUR 60 million, basically, we were paying with the EUR 60 million cash, the dividend which we have paid in May. And as the dividend has been slightly higher than the cash I was just reporting, the EUR 60 million, that means our net financial liability goes up a little bit.So the main reason for now a net debt figure of EUR 94 million compared to the EUR 75 million before is due to the fact that we have paid out in May a dividend of EUR 72 million. The equity amount -- not the ratio, the equity amount is almost unchanged because of the dividend paid out and the profit made for the period and some currency and investment valuation effects compensating each other and with a slightly larger balance sheet, the equity ratio, of course, with a similar equity amount, goes down and stands now at 62%, still a very solid financial structure, 62% equity ratio at the moment for the TAKKT group.If we look at the different dynamics, in the top line, we can conclude that after, of course, a quite severe pandemic period of, yes, almost now 15 months, we have seen huge growth in the second quarter with a figure of 25%. We have now seen an organic growth of 12%, as expected. Of course, as expected in the strong order intake, it's slightly slower -- lower in the [indiscernible] with 12%. We are not unhappy. Not at all.We have seen even slightly good and strong demand. But as already now a few times said, of course, the supply chain issues we are facing as similar companies, of course, has here a impact, which then is also leading to the guidance we are doing for the full year 2021. So we are not expecting any more -- any significant improvement of the supply chain bottlenecks until year-end.We were hoping for these. If we go back, in 3 months, but now what we are seeing is that this is not improving. And I think that's in line with also what we hear, hear from economists and other peers that also, of course, due to the supply chain and freight capacities global economic forecasts have been reduced for this year, and that we have to be yes, hoping for a better supply chain next year.As said, Management Board is currently working on a strategic review. Maria has explained that. And this is, of course, all about identifying the topics with the greatest potential for TAKKT in order, of course, then to focus on the specific strategic priorities. What does that mean for our figures? Year-end, we have now concluded that we are able to grow organically. So that's excluding currency impacts.So on constant exchange rates, we are concluding that we can grow the business on sales this year at 10% to 13%. That's lower to the 12% to 17%, and that's simply due to the fact that we have before forecasted that we would be able to convert more orders coming in into sales, into the revenues, into the P&L. Our order intake forecast hasn't changed, and we are still seeing the top line coming in, the orders coming in as we've seen it 3 months ago, but of course the revenues will be lower due to that global impact.And the profit, we have narrowed to a range of EUR 105 million to EUR 150 million, whereas before we have guided the market in the range of EUR 100 million to EUR 120 million. So that is our latest, yes, news, our latest conclusion on what we believe at the moment we are able to generate on EBITDA at year-end.And with that last comment, I'm happy to hand over to the moderator, and we are happy to answer any questions which you may have. Thank you.
[Operator Instructions] And the first question comes from Craig Abbott.
A couple of questions, please, to start with. I just -- regarding your supply chain constraints, I wondered, first of all, if you would be able to elaborate a little bit on which sort of product categories, in particular, facing these disruptions? And also, I mean, I realize you don't expect these problems to be fully resolved by year-end, but I just wondered, as you're looking at the progression of your order backlog versus conversion rate into sales, I mean, should we expect this like to continue until the year-end?Or should we expect some normalization to already begin in Q4 and maybe be completed in early part of next year? That's on that one side. And the second, a couple -- 2 questions is based on web focus. We saw that Newport organic sales slowed again in Q3, and you gave us some reasons for why the margin was lower. But I just wonder why do you believe growth has slowed again? I mean, are you going to have to invest quite a bit in marketing spend again to reaccelerate that organic sales growth? And how might we think about the margin then over the next couple of quarters in that division?
Thanks, Craig. Thanks for your questions. Let me start with the supply chain. And your -- first aspect of your question was in which categories we see kind of these issues. So if we look at our divisions, it is fair to say that the majority of the supply chain issues are -- we observe in the businesses which are the most in the equipment sector. So we can see that predominantly at KAISER+KRAFT, we can see that predominantly at National Business Furniture, with the office furniture, we can see that predominantly at Central Restaurants with the fridges and ovens.And so the more is really equipment, core equipment, we see the highest kind of orders in hand and where we are not able so easily to convert these orders into revenues. And that means on the contrary, the more -- it's more small ware. The more it is packaging, the more it is -- becomes a bit smaller-ish, there in these businesses, we've got also -- everybody has got supply chain issues. I think that's fair to say. But we can see a lower magnitude for these type of businesses which deal with, as I say, small wares, display smaller items.Normalization. That was your second question, and that's a big question, Craig, because, at the moment, we are not expecting anything different till year-end. And we have to admit, at the moment, also we are looking into the next year that that might continue for a while. Of course, that's all depending on that global supply chain, on the containers coming from Asia, for example, just to mention one big topic here.And when does that normalize, that's something we have to admit we would hope for that we're going to see some improvement next year. But at the moment, we are not able to forecast when that will be resolved and when we are going back into a more normalized global supply chain happening on this planet. So we are cautious here to assume we are going to see quickly a normalization or a big improvement which it needs to get back to normalization.
Can I just -- quickly, just -- you mentioned in your Q3 statement this morning that you've not seen an increase in customer order cancellations. Of course, obviously very reassuring. But have you seen any change in customer order behavior, i.e., are they just simply accepting that they're just going to have to wait longer to get delivery? Or do you get any sense that they might have to be holding off until the situation improves?
Yes. The way we observe it, and as you know, we are operating in large markets, very fragmented. So it's always very difficult to really get your arms around it. But the way we observe it is, it's not a -- we are kind of in a similar situation to most of our peers. So basically, the customers will have to accept this because they will not be better off with someone else. So everybody is kind of in that situation and trying to kind of get a container. That's the first big challenge to really get hold of that container, and second, to get the product. So that's a market situation we face here. And that's also, I guess, the best assumption for why we are not seeing any huge cancellations. They have to wait anyhow, unfortunately. It's not a great situation, but it is what it is at the moment on these markets.Your second question was about the web-focused segment and how this is developing, and when do we see some different margins, or you could ask differently, when do we see more leverage in the P&L and some different profits. And I think that's different when we look at Displays2Go compared to Newport. Displays2Go really is about the moment when trade shows come back, we're going to see, of course, a different level of business. At the moment we have to run that business without the bigger trade shows to happen.So the level of volume we see there at the moment is without these trade shows. And then, of course, we try to manage the cost accordingly to the sales, which we're doing. Business doing quite well there to adjust the marketing costs and also the personnel costs in line with the sales figure. But we need, of course, more volume, we need to leverage coming back from some soft magnets which haven't opened yet and which -- the way we look at it, we might be, yes, wonder similar to -- possibly also travel and leisure activities might be more at the end of the opening, let me say, of businesses in the economy. And so that's just what we're facing at Displays2Go.Good -- as I said, good news is that now we, for the first time, have seen the third quarter, increasing sales and increasing profits compared to previous year quarter. Newport, a bit different, a bit different story. Newport had some excellent growth for a few quarters now. They have come down slightly now in the third quarter, still growing, but at a different pace. And here, it's a combination, of course, we need to scale. We need to invest. We need to find the right solutions for the next growth.I think that's also a capacity kind of issue when it comes to warehousing, when it comes to -- well, maybe warehousing and shipment and so on. So we need to, of course, organize in a way that most of these businesses have come to a stage where we need to now invest for the next growth. And then we are facing a specific situation in the U.K. with a driver shortage, where we have some operational channels at the moment that we have landed containers in the ports to get them out of the port, to get them from -- if we are able to get them out of the port, to find the drivers to get them to the warehouse and to organize properly. So we -- I think, possibly, to conclude Newport, as the European web-focused divisions also need a setup in order to go for the next growth, and that's why we also see a few more costs here in the P&L. And we don't see yet the leverage out of the growth we've seen in the recent period. Is that answering your question, Craig?
It does. If I may just, on that last point, I mean, do you have any kind of time frame? Or is that part of your strategic review? On necessary infrastructure for Newport going on?
Yes. The messages I was talking about is not so much about the strategic -- it's really about the operational business where we just -- we have bought these businesses equipped for work from the founders 3 years ago. We have put big TAKKT at the point from the founders. And they are all a standalone setup, so we need to find how the group is set up where we can put them possibly on a similar web shop platform where we could put them in a joint warehousing. They kind of come to that level where they cannot easily grow on their own anymore, coming from entrepreneurial business at the time.I think that's possibly the easiest conclusion on when we look at the standalone. Of course, strategic review will, of course, include these businesses, but that's, again, a different topic, and then we are happy to talk about that when we already, how we would love to also help in the bigger strategic view of these type of businesses.
And the next question comes from Catharina Claes.
I have a couple of questions. So the first one would be, what do you see right now heading into Q4 in terms of -- well, obviously, the situation with the order backlog and the translation into sales, but basically, I think I'm asking is where the demand is keeping optimized still. And then if I look at your guidance and the implications for the fourth quarter, I was wondering what kind of dynamic you have in mind when thinking about Q4? Because it looks like the upper end of the guidance would imply, obviously, with organic sales growth to increase versus Q3, how likely do you think this is? And then one on the 2021 guidance, I remember that you increased the guidance back at Q2 results because of price increases. So would it mean -- or would I understand correctly if I'd say the organic guidance, excluding price increases, would be 5% to 8% year-on-year growth for 2021 now? Yes, these will be my questions.
Let me start to answer your questions. And please, Catharina, help me if I forgot one or the other aspect, and please help me getting to the next aspect you were interested in. I think I heard the first aspect was about how are we doing in Q4? What are first impressions of Q4? And how do we think about the speed there? How do we think about the orders in hand and the backlog? I think that was I heard of the first question.Now if we look at October, we can report that we are doing similar in speed. We are even slightly a bit ahead compared to Q3. That's what we are seeing. And that's also possibly answering your question on when you look at the year-end's guidance, how that fits together, we are seeing a slightly -- not a lot, but a slight acceleration of our growth rate in quarter 4. We are not forecasting any difference of backlog. Also we possibly have to assume that also our orders in hand, our backlog might slightly increase because the situation with especially the equipment I was explaining, will not dramatically change.So if -- and that's what we're expecting, the demand stays quite good, quite strong, I think a natural consequence would be that, of course, our backlog might in line with that development, possibly also increase as at least what at the moment we are slightly predicting all things being equal. Having said that, I have to put one dilution into that statement because normally at year-end on one or the other business, you see seasonality kind of going down of the orders in hand. And that's, of course, then other development which kicks into our figures as a seasonality impact, not what I was talking before, in general, all things equal, we are not expecting that the backlog would massively change with the exception of possible seasonal effects.Price inflation, that was another aspect of your question which I heard. I think it's fair to say that we were, at the moment, at a level of 3%-ish, 4% price inflation in our growth rate in recent trade. So that's more true for the second half of the year. That's possibly less the assumption we should make for the beginning of the year. So if you look at the second half, yes, there is a 3% to 4% price inflation happening in our growth rate, yes, a bit lower in the first half. So we cannot take that figure for the full year figures, but there is an impact like that. Yes. Have I answered all your specific question? Or have I possibly missed one?
No, that's very great. I have one follow-up question. In terms of your profitability, is there anything -- any dynamics we should be aware of in Q4 that you may be already seeing? Or do you think that that should grow, continue to your orders in Q3?
I am and we are not aware of any, let me say, material impact. Of course, we have one or the other operational challenge. We have one or the other decision to be -- which we make. But I, at the moment, have nothing in mind which would materially change the profitability we normally see in our business. Please bear in mind that there's a seasonality impact, which, of course, you can take from our previous years. But other than that, there's nothing which comes into my mind which would significantly change the pattern.
The next question comes from Thilo Kleibauer.
Most of the questions now have been answered. I've -- yes, 2 remaining questions. One is a follow-up on the supply chain situation. So what is your reaction on the procurement side? Do you plan to build up further inventories over the coming quarters to secure the ability to deliver? Do you see necessary changes in the mixture, drop shipment, stock shipment? Anything where you implement structural changes for your supply chain side?And the second question on ratioform. Maybe you can give us a little bit more insight into the growth drivers of ratioform. Is it coming from existing customers? Or do you use the opportunity to gain a higher number of new customers for ratioform? Or can you maybe increase regional market shares with this business? This would be helpful.
Thanks, Thilo, for your questions. Let me start with the procurement and what are our type of reactions there. I guess one of our major countermeasures is that we are starting to purchase earlier. So the lead times are, of course, much longer now, and we have to adjust our procurement behavior, our processes to these new lead times, until the product is landing on our docks. So yes, that's definitely something all our businesses are doing to raise the purchasing order quite a bit earlier, so that we are able to stop the product in time.We are also expecting, as a consequence, our inventory goes up a bit. Now if you ask me exactly how much, that would be difficult. But I think it's fair to expect -- we have seen some of that across the quarters that our inventory at the moment, for obvious reasons and by purpose, is increasing a bit. So we are absorbing here consciously a bit of cash in order to serve our customers.When it comes to stock and drop shipments, with the exception, if possibly, one or the other SKU where you try to find an alternative, where you try to do something when you're not able to serve the customers, there is not a major movement in our business to change the pattern of stock and drop shipment following these supply chain issues. And that's also answering the question about structure changes. We, yes, are also looking into new warehouse locations, but that's more for the next growth.That's more for the kind of, let me say, what's the future setup and less as a trigger coming out of supply chain issues. The moment you think about that, of course, you think about the experience you make. Now what does that really mean for the future locations, but the trigger is not the supply chain issues, and so I'm not expecting any major structural changes in our business. Now following these global supply chain uses, but of course, with all the strategic review we're doing, we might also enter into a analysis of how to set up our locations of our warehouses for the future.Ratioform growth drivers, I think it's fair to say that the market we are in, that packaging market is doing really great, especially if you are able to fulfill the demand. So I think we are, at the moment, benefiting from the fact that we have a lot of products on stock, and that we are able to serve the customers. Then, of course, our team -- local team is doing great job there, being able to also then run the company with such a higher growth rate.And yes, we are also getting some new customers at the moment due to the fact that possibly other people are not able to deliver. So when it comes to market share, I guess it's fair to say that as a general comment we are gaining market share compared to people who are not able to deliver. And the people who are able to deliver in that market, are all benefiting from that situation and are kind of, yes, able to get one or the other customer more on board from that development. But all in all, the biggest growth driver at ratioform in a moment, although we are gaining new customers, is coming from previous customers, from customers who are coming back, from regular customers, is more the growth driver at the moment compared to the new customers.
There seem to be no further questions at the moment. [Operator Instructions]
Well, there seem to be no other questions. So thank you all very much for attending the call. And sorry for the technical difficulties. If -- well, anything you didn't hear or if you have any other questions, so please don't hesitate, just get in touch with us. And yes, we will publish the preliminary results for 2021 mid-February, TAKKT group. Have a good day. Bye.