alexLadies and gentlemen, thank you for standing by. Welcome to the presentation of Chr. Hansen Interim Report and Conference Call Q3 2022-2023. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please limit yourself to two questions only. Press the star key followed by zero for operator assistance. I would now like to hand the conference over to your speaker today, Chr. Hansen's CEO, Mauricio Graber. Please go ahead, sir. Thank you. Good morning, everyone, and welcome to the presentation of Chr. Hansen's Q3 2022- 2023 results. I am here with our CFO, Lise Mortensen, we will, as usual, walk you through the highlights of our third quarter and outlook for the year. As we communicated in the Q2 results, we will also provide commentary on the outlook for the calendar year, covering the period from the 31st up to 31st of December 2023. Before opening up for Q&A, I will also provide an update on the proposed merger with Novozymes. Before moving on, please take notice of the Safe Harbor statement. Please turn to slide three, please. As the organization remained focused on business execution, Chr. Hansen ended the third quarter of the financial year with a solid result, delivering 9% organic growth for the group. As expected, the positive contribution from pricing continued in both Food Cultures & Enzymes, and Health & Nutrition. While volumes were more modest, the positive impact from EUR-based pricing was higher, predominantly in Food Cultures & Enzymes. Looking at the year- to- date, the group organic growth was strong at 10%. Food Cultures & Enzymes delivered strong growth, mainly driven by price, while volume growth was softer. Health & Nutrition delivered solid growth, mainly driven by price, which contributed more compared to the previous quarter, but also by volume growth. EBIT margin, before special items, was stronger in the third quarter compared to last year, reaching 27.5%. This was 0.8 percentage points above last year, as the margin was supported by strong sales development and scalability effects, which was partly offset by a negative impact from higher input costs, a change in product mix, and exchange rates. Year- to- date, the EBIT margin before special items was 26.4%, which is 0.1 percentage points above last year. Free cash flow, before acquisition and special items, reached EUR 76 million in the third quarter. Year- to- date, the cash flow amounted to EUR 133 million, up from EUR 116 million the prior year. The higher cash flow was due to higher cash flow from operating activities and a positive impact from taxes paid. Please turn to slide four for an overview of the strategic and operational highlights of the third quarter. Starting with price, it's great to see the results we continue to deliver from the efforts of our teams on pricing initiatives. In the third quarter, we saw continued pricing impact in Food Cultures & Enzymes, while the impact in Health & Nutrition increased from the previous quarter. We still expect pricing to contribute positively for the rest of the year, but at a lower level than in Q3, due to annualizations of the price adjustments from last year. As we continue to see increased pressure across part of our cost base, we will work diligently with our customers to ensure these cost increases are reflected in future price increases. Continued with the organic growth, our core business remains stable, with 8% organic growth in the third quarter. We saw solid volume growth in cheese, demand driven by projects related to productivity improvements and yield optimizations, while it was also focused on sustainability impact. With our CHY-MAX Supreme solution, faster and more precise coagulation enables cheese producers to produce more cheese faster, which leads to not only improve productivity, but also reduce cheese carbon footprint. In addition to this, CHY-MAX Supreme helps make the cheese firmer, meaning that the process of slicing, cutting, and shredding the cheese at industrial converters who provide the cheese to food service is improved and thus results in less waste. Within meat and prepared foods, we inaugurated a new customer and application center with a microbial laboratory and a meat processing pilot plant in Pohlheim, Germany. This new center will strengthen customer collaborations, both in the fermented meat product segment and in applications such as seafood, hot dogs, and plant-based products. Year- to- date, our core business delivered 9% organic growth. Organic growth in the Lighthouses combined reached 15% in the third quarter, and looking at the year- to- date, they deliver very strong growth of 19%. All the Lighthouses delivered double-digit growth in the first nine months of the year. As usual, please note that it's important not to look at the Lighthouses on a quarterly basis, but on an annual basis. Instead, since the businesses combined account only for approximately 10% of group sales. Looking at each of the Lighthouses separately. Bioprotection continued solid progress, driven by upselling and new businesses. Fermented Plant-Based grew from a small base, driven by dairy alternative, where the focus remains on improving the taste and texture profile of plant-based products. In HMO, we reached an important milestone during the quarter. Chr. Hansen received the EU approval of the final HMO, 6'-SL, in our five HMO mix for higher use levels in infant formula. This is an important step, since now we are able to offer our customers with a mix of five HMOs, bringing infant nutrition products closer to human breast milk. Product registration in China are ongoing. We still expect the approval at the end of 2023 or the beginning of 2024. Lastly, in Plant Health, we saw strong growth both in the third quarter and year- to- date. Now, please turn to slide five. In terms of top-line performance, the group in the third quarter was mainly driven by price in both Food Cultures & Enzymes and Health & Nutrition. In Health & Nutrition, the impact from pricing stepped up compared to the previous quarter. The total pricing impact on the group was 7% in Q3 and 6% year- to- date. The impact from EUR-based pricing was significant in the quarter, mainly impacting Food Cultures & Enzymes. Organic growth in Food Cultures & Enzymes reached a strong 10% in the third quarter, and also year- to- date. This was mainly driven by price, which contributed 9% in the quarter, but we also saw slight volume growth. Dairy growth was strong, supported by pricing initiative and strong momentum in cheese, while fresh dairy was solid, except for probiotics, which continued to decline. Bioprotection and Fermented Plant-Based also supported the growth in Food Cultures & Enzymes. Food and beverage performed well, driven by pricing, while volume declines due to market softness within meat and prepared foods categories. Moving on to Health & Nutrition, that delivered 7% organic growth in Q3, mainly driven by price, but also by volume, leading to 9% year- to- date. We saw increased pricing impact in the business in Q3. The contribution of pricing was 5%. In Human Health and HMO delivered good growth, driven by pricing. Volumes declined as they were negatively impacted by the timing of orders in HMO. In general, the market outlook is slightly more positive compared to the previous quarter, and the sector growth of probiotic Human Health products is in line with the midterm outlook of 4%-6%, with some recent improvements in North America consumption after a period of very soft growth and despite softness in the South Korean market for dietary supplements. Markets across EMEA and in China have continued to show resilient growth in this segment. Animal and Plant Health delivered strong growth, supported by both pricing and volume growth. Let's turn to slide six for the performance by region. All regions, except Asia Pacific, drove the growth in the third quarter. Looking at the year-to-date, all regions contributed positively to the group organic growth. Starting with Europe, Middle East and Africa, the region grew 10% organically in Q3, leading to a 15% year-to-date growth. Organic growth was driven by both Health & Nutrition and Food Cultures & Enzymes. Food Cultures & Enzymes was supported by pricing, including EUR-based pricing, as well as slight volume growth, while Health & Nutrition was supported by pricing initiatives and good volume growth. North America further improved from the previous quarter and reached 9% organic growth in Q3 and 4% year- to- date. Organic growth was driven by both Health & Nutrition and Food Cultures & Enzymes. Food Cultures & Enzymes was driven by solid volume growth across categories, except for probiotics and meat and prepared foods, which declined in the quarter. Health & Nutrition was supported by pricing initiatives and good volume growth across categories, except for HMO. As mentioned, volume in HMO declined due to negative impact from timing of orders. Asia Pacific reported a decline of 2% in Q3. Year-to-date, the region, however, grew 3% organically. Organic growth in Food Cultures & Enzymes declined due to lower volumes in China and India, while a decline in Health & Nutrition was driven by softening market conditions in South Korea. Food Cultures & Enzymes was impacted by a tough comparable from the year before in India, while in China, the business saw less favorable conditions, which the country is still recovering from the pandemic lockdowns. Notably, the project pipeline continues to strengthen as our interaction with customers in China increases. Organic growth was also supported by pricing. Latin America continued with strong growth and delivered 23% organic growth in Q3, resulting in very strong growth year-to-date at 20%. Organic growth was driven by both pricing initiatives, including EUR-based pricing and volume growth in Food Cultures & Enzymes, while volume in Health & Nutrition declined, driven by negative impact as well on the timing of orders. I would like to hand over to Lise for the financials. Thank you, Mauricio. Good morning, everyone. Please turn to slide seven for profitability. The absolute EBIT before special items for the group increased by 9% in Q3 compared to last year, amounting to EUR 92 million. The increase was driven by a positive contribution from pricing initiatives, volume growth, and stable operating expenses, which was partly offset by a negative impact from higher input cost and exchange rates. The Q3 EBIT margin before special items reached 27.5%, which was an increase of 0.8 percentage point compared to the year before. The positive development in the margin was due to the strong sales development and scalability effects, which was partly offset by a negative impact from higher input costs, a change in product mix, and exchange rates. Looking at year-to-date, the absolute EBIT before special items increased by 11% compared to last year, to EUR 260 million. The year-to-date EBIT margin before special items was 26.4%, compared to 26.3% last year. The Food Cultures & Enzymes profitability in Q3 improved versus last year. The EBIT margin before special items reached 30.7%, compared to 28.4% the year before. The margin improvement was due to pricing increases and scalability, which was partly offset by higher input costs and a change in the product mix. Profitability in Health & Nutrition declined in Q3 versus last year. The EBIT margin before special items amounting to 22.4%, compared to 23.9% the year before. The negative development was due to a negative impact from product mix, exchange rates, and higher input costs, which was partly offset by pricing initiatives and positive impact from scalability. Let's look at the free cash flow. Please turn to slide eight. We saw an improvement in the free cash flow year-to-date compared to last year. The year-to-date free cash flow before acquisitions and special items reached EUR 133 million, up from EUR 116 million last year. The increase was due to improvement in operating profit and lower taxes paid, despite cash flow from operating activities being impacted by a negative change in working capital, driven by increased inventories and trade receivables. The lower taxes paid were due to a one-off tax payment in FY 2022 related to acquisitions. The higher inventory level we have experienced over the past few quarters is partly driven by our strategic decision to secure our supply chains due to higher volatility in the end market demand. We expect the inventory level to start decreasing towards the end of the calendar year. For the rest of the year, we expect a change in phasing of operational investing activities, which will improve the free cash flow for the full calendar year. Return on invested capital, excluding goodwill, was 23.4% year-to-date, which is slightly higher than the amount year before at 23.3%. The slight increase was supported by strong sales development in Health & Nutrition, while Food Cultures & Enzymes was impacted by the high inflation and operational results. Let's move to the outlook for the year. Please turn to slide nine. We acknowledge that the underlying market growth expectations for the remainder of 2023 remain modest, given the current uncertain geopolitical and macroeconomic environment. In light of the solid performance for the first nine months of the financial year, we adjust our outlook for organic growth covering the period September 1st, 2022 to August 31st, 2023, to 9%-11%, previously 8%-11%. The expected growth is composed of price adjustments, including EUR-based pricing, combined with growth in Lighthouses and successful execution of the project pipeline in the core businesses. The EBIT margin before special items covering the period September 1st, 2022 to August 31st, 2023, is still expected to be in the range of 26%-27%. As a positive impact from operational efficiencies and pricing initiatives is expected to be partly offset by continued pressure from the inflationary environment and continuing actions to protect against supply chain disruptions. The free cash flow before special items covering the period September 1st, 2022 to August 31st, 2023, is now expected to be in the range of EUR 200 million-EUR 230 million. Previously, it was EUR 180 million-EUR 220 million, reflecting a change in the phasing of operational investing activities and a positive impact from lower taxes paid. Please turn to slide 10 for the supporting outlook for the 2023 calendar year. For the period January first to December 31st, 2023, organic growth is expected to be 9%-12%, while the impact from exchange rates on revenue is expected to be negative, estimated to be around 4%-5%. The EBIT margin before special items for the period January 1st to December 31st, 2023, is expected to be in the range of 26%-27%, compared to 26.3% in the same period last year. The EBIT margin before special items is expected to be negatively impacted by exchange rates, estimated to be around 0.4 percentage points. The free cash flow before special items for the period January 1st to December 31st, 2023, is expected to be EUR 200 million-EUR 250 million, compared to EUR 152 million for the same period last year. Due to the change of our financial year to calendar year, we have included financial highlights and key figures that has been restated to reflect calendar year quarters in the Q3 interim report. I would like to hand over to Mauricio for an update on the proposed merger with Novozymes. Thank you, Lise. Let me say a few words on the proposed, on the progress of the proposed merger with Novozymes. Together with Novozymes, we are continuing the work with additional regulatory filings and are progressing well with the relevant authorities. We have added financial information in order to align with Novozymes calendar year reporting. Regarding the timeline for the closing of the deal, this is unchanged, and the closing is still expected in the fourth quarter of the 2023 calendar year or the first quarter of the 2024 calendar year. In connection with the merger agreement, Novozymes and Chr. Hansen have agreed on certain specific restrictions in respect of distributions to their shareholders until completion of the proposed merger. As part of this, it has been agreed that Chr. Hansen can make a dividend payout in respect of its earnings for the period September 1st, 2022 to August 31st, 2023, up to an amount corresponding to a dividend payout ratio of 55%. The board of directors intends to announce such a dividend in connection with the 12-month report on October 12, 2023, which is subject to closing of the proposed merger, not taking place prior to the payout date. To sum up, the solid third quarter proves the strength of Chr. Hansen organization, whilst the ongoing progress with Novozymes to complete the proposed merger, we continue to deliver fresh dairy products and innovative solutions to our customers around the world. To reflect the performance of Q3, we updated our outlook for organic growth and free cash flow, while the outlook for EBIT margin is unchanged. Thank you very much for your attention, and we're now ready to open up and move on to Q&A. Ladies and gentlemen, all this, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star, followed by one on their touchtone telephone. Please limit yourself to two questions only. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please leave the handset before making your selections. Anyone who has a question may press star, followed by one at this time. One moment for the first question, please. The first question is from Alex Sloane with Barclays. Please go ahead. Yeah, hi. Morning, all. Thanks for taking the questions. Two from me, please. Just the first one, in terms of the updated guidance, obviously, for the calendar year, you're guiding to a slightly higher range than for the fiscal. Can we infer from this that you are incrementally confident in volume acceleration, into September to December? If so, I guess what are the key drivers of that? Is that guidance difference more about pricing tailwinds? That's the first one. Second one, energy costs have obviously fallen a long way, from the start of the fiscal year when you set margin guidance. Do you need to pass back any of that potential benefit to customers in pricing, or should we assume that it drops to the bottom line? I guess if so, when should we be expecting that tailwind? Thanks. Yes, good morning. Let me make just a few general comments, and I'll pass it on to Lise on the specifics. I think just taking the your second question is, you know, it's true that energy is declining. There are some other parts of the supply chain where we still continue to see cost, input cost increases. I think consistent with what we have said in the past, you know, our pricing negotiations with customers have taken, you know, a long period, but they're based on the, you know, value that we bring. We do not expect that these reductions in energy will translate into pricing givebacks, as the pricing have been negotiated and included in our contractual agreements with our customers. Lise, I'll pass it to you to comment on the financial year and calendar year, guidance, growth. Yes. Yes, Alex, the outlook on organic growth, for 9%-10%, you should see that as a result out of pricing and also EUR-based pricing, playing stronger in the calendar year view than in the fiscal year view. The volume, part, I mean, still we are at 4%, year- to- date, but the volume part of our outlook is where we are. We need to be, you know, cautious, and we see, the biggest risk. We're still outperforming underlying markets, but it is a very uncertain macroeconomic environment that we operate in, and that's also taken into consideration for the outlook for the calendar year. Absolutely. I think, Alex, we will only start to see, you know, stronger volume growth as I think the inflationary pressures, reduces. I've always viewed those as, relatively connected. To your question on when we see the benefit in our cost, you know, we are definitely seeing, you know, the clear signs of our price up having effect. We don't foresee any more, you know, input cost tsunamis. Through this calendar year, the lines will cross, if everything is continuing the way we are looking at now. Very helpful. Thank you. The next question is from Charles Eden with UBS. Please go ahead. Hi, good morning. Thanks for taking my questions. Two for me also, please. My first one is that we've heard from some of your ingredient peers discuss the deterioration in volume trends in recent months, specifically May and early June. I wonder if this is a dynamic you've also seen. Maybe you could talk about how volumes trended through your fiscal Q3 and the outlook for the early weeks of Q4, and if there's any product areas or geographies in particular that you would call out as slowing materially or, I guess, accelerating, for that matter, in recent weeks, could you touch on that? My second question's on China volumes in FC&E, which were lower once again year-on-year. Can you give a little more detail here, please? I get the negative impact that the pandemic had on the fermented dairy business, but with restrictions lifted and on some presumably relatively undemanding prior comps, volumes are still declining. Have you looked at where volumes are in this market for FC&E versus pre-pandemic? Because just taking the three years of volume declines, I would think it's probably double digits below the pre-pandemic levels. Is that correct? If so, are you confident this is simply a market dynamic effect rather than loss of market share in this market? Thank you. Excellent. thanks, Charles. Good morning. On your views around, on your question around volumes first, you know, as Lise Mortensen mentioned, we are 4% volume year- to- date. We have 2% volume growth in the quarter. We expected Q3 to have a softer volume. I think as I mentioned before, we will need to, you know, overcome the current high level of price inflation to see stronger volumes. We have not seen a stronger volume deterioration. Just to give a little bit more color, I mentioned that in Food Cultures & Enzymes, we see good volume in cheese, driven in part because of our innovation in relation to CHY-MAX Supreme. In Health & Nutrition, we have seen, you know, the segment, the underlying segment, trending back to the expected normalized growth of, like, 4%-6%, and our ability to outgrow the underlying market. The pipeline I particularly mentioned in North America for Human Health is strengthening, so we expect that to be a net positive. Now moving on to China, just to comment about China. China Health & Nutrition, our Human Health has remained strong. We have seen a very dynamic business in Human Health in China, and it's actually, it was dynamic pre-pandemic, and it has come out as very dynamic after the lockdowns. A lot of innovations, a lot of focus on bringing probiotic solutions to consumers and really good growth for us. I think the other side of the coin is what you mentioned, which is, and we indicated that in Q2, which is after the last range of lockdowns, it really had a negative impact on volume and our ability to also connect with customers. While the positive news in China is that our interactions with customers have now really normalized, we have seen a very rich inflow of projects, a strong pipeline, I do not expect this to be translated into any improvement in China volumes until 2024. Thank you very much. Am I right in thinking that volumes in that market would be double digits below where they were before? Absolutely. Well, deep into the double digits. That's great. Thank you both. The next question is from Søren Samsøe with SEB. Please go ahead. Yes, thank you, good morning. First question is, again, also on the Health & Nutrition part. I mean, the comparables were quite easy in Q3, easier than in first half, but still weak growth. If you can comment a bit on, you know, you mentioned South Korea, is not going well, but I mean, it must be going really bad if it should pull down growth to that level. Also, seems like your outlook for the North American probiotics markets looks a bit better. Maybe you can give a comment on that. Thank you. Absolutely. Søren, let me take it, and Lise, please complement if I miss anything. Yeah, I think 7% for Health & Nutrition was good. It's still, you know, against reasonably high comparables of last year, you are right that, you know, softer than in the first half. I think the positive trend, as mentioned, is we see signs in North America, definitely on the market strengthening, both in the pipeline and in our open order books. You know, South Korea is an important market in the sense that it drives a lot of innovation. You know, we always expect, you know, Health & Nutrition to come back to double digit growth and, you know, the being a net contributor to our good growth for the group, and that is expected to where we want to see this coming in the quarters ahead. Lise, anything that I missed? Well, I maybe say South Korea, we see as cyclical, not as a structural dip, but impacted by the macroeconomic. Then maybe one more thing, Soren, and that was that we, H&N in Q3 is impacted by timing of orders. You remember Q2 was quite strong, and there was some timing of orders there between Q2 and Q3. Yeah, that's right. Yeah. I just had a second question relating to CapEx and investments. You're talking about phasing of investments, and you, we're also seeing a higher guidance for free cash flow, also for the calendar year. Yeah ... 2023. How should that be seen some kind of CapEx synergy with Novozymes, i.e., are there some of the investments you had planned that you now see that Novozymes have already covered in what they have, and therefore you don't need to make as many investments? It's completely business as usual, that, you know, the projects that we've been running have had a little bit higher ambitions, and acceleration, than than they are able to do simply in the market that we are playing in. Processing in equipment can be delayed, stuff like that. We have not started comparing notes with Novozymes on on these projects yet. That will come on day one. Okay, thank you. The next question is from Joan Lim with BNP Paribas Exane. Please go ahead. Hello. Just going back to the drivers of your outlook, maybe just what will get you to the upper end of the guidance, and what gives you the confidence regarding pricing, considering the slower end markets? That's my first question. I guess, on the second one, you also talked about pricing. Last quarter, you said EUR-based pricing was about 1%. Can you give us an estimate of how much you're expecting it to be for the outlook? Thank you. Maybe I can start with that. Yes, we did say that we expected EUR-based pricing for the fiscal to be around 1%, now we're looking at above 1%. At the quarter, we have, we have realized around 2% of EUR-based pricing, a little bit stronger than anticipated when we went into the quarter. Getting to the upper end of our guidance will take volume. Our pricing as such, we are actually pretty confident on. Remember, we have not implemented new price ups. The pricing impact we are seeing now is contracts that have already been signed, so on and so forth. We will say that pricing as such, as it from a year-over-year perspective in Q4 will not be as strong as Q3, because we are getting to the annualized impact of our, in particular, our Food Cultures & Enzymes price up initiatives from last year. Okay, thank you. The next question is from André Thormann, with Danske Bank. Please go ahead. Yes, thanks for taking my questions. Just two from here, please. First of all, on free cash flow, I just wonder whether the improvement is not at all related to better operations. You mentioned tax and phasing of investments, but is there nothing of this improvement that is reflected in your upgraded guidance on top line? That's the first one. The second is just related to the other questions, question on EUR-based pricing. You say above one percentage point now. Does that mean that this upgrade is actually just related to higher EUR-based pricing, improve contribution? That's my second question. Thanks. Maybe starting with the second, André. You know, the adjustment we did to the guidance, a quarterback was caused by EUR-based pricing. It is true that where we are standing now, the full year impact, quarterback, we said 1%, now we say above 1%, but it's really decimal points. You know, the adjustment we made to the outlook this quarter is simply just because we are nine months in, and the risk that we see for the remaining year is more, you know, manageable, so to say. On the free cash flow, I mean, it's ups and downs, but the primary factor is, you know, the delay of some of our investment into some of the CapEx projects and some timing of tax paid. That's the largest components playing in. Can I just follow up? What offsets the better operations that you see on free cash flow? André, it's really, it's really minor. It's small ups and downs in what is the outlook for, you know, inventories for networking capital in general, stuff like that. Okay, thank you. Ladies and gentlemen, if you'd like to ask a question, please press star followed by one on your telephone. There are no more- Doesn't look like we have any further questions, or do we? No, there are no more questions registered at this time. Thank you. This concludes our conference call then, and the QA session. Thank you all for joining this morning, and we look forward to continuing the dialogue with you virtually over the next few days. Thank you, everybody. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.