Ladies and gentlemen, thank you for standing by. I'm Hailey, your Chorus Call operator. Welcome, and thank you for joining the Schouw & Co. Conference Call 2021 Q1 Report. 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 touch-tone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Mr. Jens Bjerg Sørensen, CEO. Please go ahead. Thank you very much for the kind introduction and also from our side, welcome to this presentation. Overall, we had a very satisfactory quarter. Our revenue was up 2% to DKK 4.9 billion. General, we experienced a lot better activity during the quarter than expected. We saw strong demand from many of our markets and segments. At group level, EBITDA increased 12% to DKK 486 million. In general, we saw very strong margin developments, and we were more or less able to offset pressure from what we call exploding raw materials around the world. Cash flow from our operations affected by strong end of 2020. We had a CapEx during the quarter of DKK 130 million, but we have also announced a major investment program or initiated a major investment program of around DKK 1 billion. Our net interest-bearing debt was significantly reduced and to a leverage of one times EBITDA and our return on invested capital was 15.9%, well above our group target of 15%. Guidance for 2021 in general will be increased due to a strong Q1 and also very attractive backlog in some of our companies. Turnover is now expected around DKK 22.5 billion and EBITDA now foreseen at a level of DKK 2.105 billion-DKK 2.315 billion. Full-year CapEx, as I mentioned, still expected to be around DKK 1 billion at group level. Turning on to BioMar. BioMar Q1 revenue was down 5% to DKK 2.27 billion. Volume, however, was only slightly down 1% to 266,000 tons. Also, we have to bear in mind that first quarter is a low season for BioMar. The turnover revenue was negatively affected from currency. EBITDA was also down from DKK 159 million-DKK 140 million. Here, currency had an effect of around DKK 7 million. We saw some effects from different countries, but mainly from low sales in Chile. During the quarter, we had less sales of functional feeds than the previous quarter or the first quarter in 2020. We had slight impact from climate, among other things, very hot summer in Tasmania. Few highlights from Q1. We decided on a new feed factory in Vietnam in partnership with Viet-Uc, a new feed factory in our shrimp segment. We are going ahead with our yearly contract negotiations in the salmon market. They're being prepared. So far it's going as expected. Good to see over the quarter that the salmon prices now seem to have recovered both in Norway and Chile. Guidance for 2021 maintained turnover around DKK 12 billion, EBITDA at a level of DKK 950 million-DKK 1.02 billion. Our associated companies will be down mainly because of impact from our Chilean farming operations and Salmones Austral, associated companies will be down from DKK 40 million-DKK 25 million expected now. Turning on to Fibertex Personal Care. They had a flat revenue of DKK 530 million, nonwovens volume was up 10%, we also show a good development in our print volume. EBITDA at DKK 80 million compared to DKK 101 million last year. Looking at the EBITDA, you should think that it was a very weak quarter, in fact, it was a strong quarter with a huge volume increase with high efficiency, we experienced a huge negative impact from raw materials of about DKK 30 million. Our operations were running at full capacity with high efficiency. During Q1, we decided on establishing a new production facility in Malaysia. We also are setting up a new printing line in U.S., and both lines, our new facilities are well on the way and going according to plan. Guidance for Fibertex Personal Care is maintained. Revenue unchanged, about DKK 2.2 billion. EBITDA is expected in a range of DKK 320 million-DKK 360 million. However, we also have to say that the raw material situation continues to be a concern, and we expect negative impact also in Q2. Fibertex Nonwovens had a very strong momentum and it continues also into Q1, and they delivered the best Q1 ever. Revenue increased to impressive 17% to DKK 521 million. Our U.S. operations continued strong momentum and delivered growth of 35% in that quarter. That gave a very solid EBITDA development, EBITDA up from DKK 54 million to DKK 96 million, nearly a doubling of the EBITDA in the quarter. We saw positive impact from good raw material positions, effect from having raw material in inventories. We also experienced continued strong development in what we call our strategic high-value segments. Also part of strategic decisions we took some years ago. In Q1, we decided to initiate a very large investment program in new spunlace capacity. The investment program is of around DKK 600 million, and is expected to deliver a turnover of DKK 500 million when they are fully utilized. We also had a continued focus on the innovation of our specialty product program. Fibertex Nonwovens are lifting their guidance. It's coming from the strong Q1, also from a continued good market demands. Turnover now around DKK 1.9 billion-DKK 2 billion. EBITDA expected in a range of DKK 245 million-DKK 265 million. Also here, raw material situation is a concern. Again, we could expect a negative impact over the coming quarters, but still we expect to be able to offset some of it. GPV also had very strong development in the quarter. Revenue up with 9% to DKK 741 million. We saw strong sales in nearly all our segments and also experienced continued positive order intake, very strong backlog as our customers are planning ahead. EBITDA increase is very satisfying, 65% to DKK 76 million. Of course, a very positive impact from sales growth, but also strong cost control and high efficiency at all our production sites. In Q1, we have decided to streamline our factory footprint, we are closing down the factory in China and moving production to our two other Asian factories, Sri Lanka and Thailand. We experienced also continued pressure on supply of critical parts, something we are working a lot to offset. Guidance will see an uplift due to the strong Q1 and also our very solid backlog. Turnover expected now around DKK 2.9 billion-DKK 3 billion and EBITDA at a level of DKK 250 million-DKK 290 million. HydraSpecma also saw quite strong demand over the quarter and revenue up 8% to DKK 575 million. Especially our global OEM customers are driving this sales growth. EBITDA increased 12% to DKK 65 million, and here we are benefiting from strong sales and efficiency gains. Also in HydraSpecma, we saw a negative effect from increasing components and especially transportation of freight costs. In Q1, we decided to establish a new production facility in Chennai, India, to accommodate our global wind customers. HydraSpecma also deliver a guidance uplift due to the strong demand and the solid backlog. Turnover now expected at more than DKK 2.2 billion. EBITDA in the range of DKK 230 million-DKK 250 million. Global pressure on raw material and prices and shortage of component continues. Again, we think HydraSpecma is in a good situation to handle these issues. BORG Automotive had revenue up with 70% to DKK 272 million. Demand and sales normalized. Last year, we saw in Q1 sales starting to decline due to the COVID-19 situation. Also we had positive effect from our recent acquisition of TMI in Spain. EBITDA increased 66% to DKK 40 million, coming from a very high efficiency and tight cost control across all the BORG units. BORG, they are pursuing a very ambitious growth plan, also meaning looking for acquisition and yesterday they could announce their second acquisition this year of SBS Automotive, a Danish-based trading company selling a broad assortment of parts, but main product is brake discs. SBS, they're having a very strong market position, 130 employees, expected turnover of around DKK 500 million and EBITDA in the area of DKK 30 million in 2022. Guidance uplift from BORG due to two things, positive demand and of course also the SBS effect. Turnover now around DKK 1.25 billion. EBITDA DKK 150 million-DKK 170 million before PPA. We haven't got the overview of the PPA effect yet. Also worth to remark that what we call the old BORG, in fact, it's a guidance uplift of DKK 10 million on EBITDA for them. SBS adds some DKK 200 million to sales and DKK 10 million to EBITDA in 2021. Just to wrap it up very fast. As mentioned, good and strong Q1 development. Our conglomerate, once again, showed strengths because of the diversification. Our financial position is very good and with potential for seeking opportunities. We have a guidance uplift due to strong performance and good demand. As I mentioned before, concern on raw material prices and shortage of critical components and our guidance uplift. Our guidance now is also based on a normalization in the second half of 2021. With this closing remarks, I'll open up for questions. One moment for the first question, please. The first question comes from the line of Ulrik Bagge of SEB. Please go ahead. Hi, Jens and Kasper. A few questions from my side. You comment in the report a lot about the scarcity and the increasing input materials prices in several of your portfolio companies. You state that there's a lot of uncertainty related to that, but still you managed to increase the overall guidance based on the strong demand that you're currently seeing. Can you maybe provide some more color on how critical you consider this challenge related to scarcity of raw materials to be currently and what the potential downside from it could be? Yeah. Ulrik, thank you very much for this question. You could say, in some of our companies, as you also know, we have escalating mechanisms, meaning we can pass on raw material increases the next quarter. Our guidance is of course also based on that, whereas in other companies, we need to fight for price compensation from house to house, let's say. We have been rather successful in passing on the prices, both because of the mechanisms but also because of driving price increases through a lot of our customers. We have taken out a lot of risk on that. Of course, if raw materials continues to increase, we have to get to the market again. We see a slightly downward trend on some of the raw materials now. What also is a concern is critical components, electronics, and things like that. There, we still see a lot of uncertainties. We have done a lot to secure as much as possible, and we don't see a very big risk as it is now. Of course, we need to continue to work on compensations and work around our supply chain to secure critical components. Okay. Based on the inventory the different companies have, should you be able to reach minimum the lower end of your guidance range in the different portfolio companies? Yeah, we don't see. Absolutely. Also, I think you will see our net working capital might increase slightly because of we are really saying we need to be able to supply and deliver. If the opportunities are there, we are buying and building up inventories to secure a delivery situation in future. All right. Thank you. Very clear. A question on these increasing raw material prices. You mentioned that it had a negative effect of DKK 30 million on Fibertex Personal Care during Q1, but you also mentioned that it had a positive effect on Fibertex Nonwovens based on inventory. Can you quantify that, how big the positive effect was for Fibertex Nonwovens? It's a double-digit DKK million, as we would say. I think we could say between DKK 15 million and DKK 20 million. It's more difficult to quantify because it's positions we have taken. Of course, if you should go in the market and buy at the present prices, but we have a different sourcing strategy in Fibertex Nonwovens due to also we use a broader platform of raw materials, polyester, polypropylene, recycled polyester, virgin polyester, et cetera. It's coming from old positions and also from inventories around the globe. Okay. For Q2, you said that this effect would linger. Yeah. What kind of effect would we see from Fibertex Personal Care in terms of these increasing raw material prices? If Q1 was DKK 30 million, would it be a higher or lower number for Q2? I think it could be around the same number for Q2, and then we expect it to even off in the second half. The guidance is based on that, and that's also what we see now. Okay. For Fibertex Nonwovens in Q2? We don't have an exact figure on it because it's also a matter of price compensations, raw materials. It's much more complicated to give an exact figure on Fibertex Nonwovens, but of course, we expect raw materials to kick in with a higher effect in Q2 than we saw in Q1. Our guidance is based on that also. You will also see that our guidance in Fibertex Nonwovens, if you take in the last three quarters last year in 2020, and then looking at our guidance for the coming three quarters in 2021, there will be a, I think it's a 15% under last year, something like that. That's due to this effect. That's very clear. Also a question related to the Fibertex companies. You've previously mentioned that you're currently running at full capacity in Fibertex Personal Care and will continue to do that for the rest of the year. Does that mean that any earnings volatility should come from the raw material prices and FX effects? Is there room for some mix effect which could potentially increase earnings? I think it's a very good question because there are two things in it. Raw materials, set that aside because we can't control that, but full capacity utilization also means productivity, more efficient runs, and also we are working on pruning products with low margins, innovation, and so on. We expect, of course, effect from high capacity utilization, but also from product mixes as well. Okay. For Fibertex Nonwovens, what utilization level are you currently running at? If you could put it in perspective compared to last year, maybe. More or less full also. That's also why we have announced a very big investment program, DKK 600 million, two new lines, upgrade of a line in Turkey. We are running at full steam, more or less. There might be a little bit on our geotextiles in Aalborg, a little bit in a few segments, but overall, more or less full capacity. U.S., totally full. Yeah. Okay. That sounds reassuring. A question on this new investment in Fibertex Nonwovens. What kind of return on invested capital do you expect from this investment? You said it would generate a revenue of DKK 500 million, but at what margin? Would it be margin similar to what we've seen during the past few quarters, or is it lower than that? You could say there are two things in it. Of course, we have our general return on invested capital of 15%. From a starting point, of course it will be lower, and it will also affect our overall return on invested capital, these huge investments. Over a few years, they are expected to deliver plus 15%. Also, we are building capacity into high-value segments, meaning that it's capacity that we expect to deliver attractive margins compared to where we're coming from. It's part of our new, or not new any longer, but the strategy we took on Fibertex Nonwovens a few years ago, building capacity into advanced products segments. Okay. Very clear. Final question on the CapEx level. You mentioned the DKK 1 billion CapEx guidance for 2021. Some of these investments, will they go into 2022 as well? What can you give any indication about the level for 2022 CapEx? Some of them will, Ulrik. I cannot give a full effect on that on the CapEx level. Some of them will go into 2022. Our normalized CapEx as a maintenance CapEx, and so on, maybe looking at 2020 where we had, I think it was at around DKK 480 million or something in CapEx without any capacity investments. Anything on top of that, and some of these will run into that. We have not decided other new capacity investments. There's a long time to 2022, so let's see what happens. Okay. Thank you so much. No further questions from me. Thank you, Ulrik. As a reminder, if you wish to ask a question, please press star and one on your telephone keypad. The next question comes from the line of Claus Kjeldgaard of Nykredit. Please go ahead. Yes, hello. A couple of questions from my side. First of all, could you elaborate a bit on what's going on in Fibertex Nonwovens? It seems like it's a completely new company, to be honest. At least you must have done something quite right in the strategic changes that you have made there. Just elaborate a bit on what has changed compared to, let's say, two or three years ago. Yeah. Thank you for the question. As you rightly know, we took this strategic review of Fibertex Nonwovens a few years ago and said, okay, either we see a future where they can deliver on our long-term 15% return on invested capital, or we might exit this business. The strategic review came out very promising, and we thought there's good opportunities. We also saw in this review that our positions in the market in general, in fact, were much stronger than we might have thought. We saw there was a room for adding value to a lot of products. We have moved into different new segments. We have changed the product mix. Of course, we are still big in automotive, but now we are also moving up a lot into what we call added value for filtration, advanced filtration products with nano into face mask, advanced face mask, advanced specialty wipes for disinfection for hospitals, et cetera. We took this strategy, and then we had the courage to invest in sufficient capacity to also meet the market demand. We also need some luck. We had a factory coming for sale in the U.S., our Greenville operations in spunlace, a Turkish company that went more or less bankrupt and we were considering it a lot. We thought it as a courageous move, but it has shown to be exactly the right thing to do because we could take our advanced product system into this company and then really start penetrating the U.S. market. You're right, it looks like a new company, but it is part of a very stringent and clear strategy plan we did two, three years ago. How much of the current demand is due to COVID-19? It's very difficult to say, and of course we have elaborated a lot on that also ourselves, how sticky is this. As we don't supply any material for what we call basic face masks or anything. When we are talking about face masks, we are supplying very advanced materials to respiratory face masks, to some global accounts, et cetera. We are supplying advanced materials to filtration. It's a move up in value. Of course, we have had positive effect also that some of our competitors have been sold out in the low margin area. Maybe let's just say maybe 10% effect or something like that. It's not as big as one might think, and it also underlines our new capacity investments in these spunlacing lines in U.S. and in Czech Republic. Okay, great. On GPV, did you say that you had a very strong backlog and a solid visibility? The what, sorry? Yeah. I'm not sure I understood what you said about GPV, but did you say that you had a very strong backlog and a solid visibility for this company? Exactly. That was what I said. Yeah. We have a very strong backlog and we have book-to-bill more or less on the expected 2021 turnover. We have the supply of critical components as a critical issue we are working on. Okay. My question would be, are you winning a lot of new customers or are you gaining market share among your current clients? We are winning new customers. We have also implemented a new sales strategy, working on much larger customers, where we have been quite successful. You should know that most of our large global or international OEM customers, they are also experiencing a strong demand. We are just following their strong demand. It's a two-sided thing. The market in general, our customers, they are asking for more products because they have strong demand, and then we have also won new customers. Okay, great. Just on group level, did you say that overall you have reduced the risk profile for the rest of the year due to already implemented price hikes and also inventory buildup of critical components, meaning that the risk profile for the remaining nine months has gone down compared to, let's say, two or three months ago? I think it's important also to underline that we have four companies that we lift our guidance on. We also say there are still some uncertainties on raw material prices because we expect to go to the market and compensate most of it. We have compensated a lot. There's still a way to go. I also said we are starting to build inventories on critical components. You will see our net working capital increase. We are not there yet. We are working hard on that. We have really said, okay, even it's my personal KPI, the net working capital and so on. We are offsetting this this year because it's more important to be able to supply our customers than looking at net working capital. That's it. Then we have two companies where, Fibertex Personal Care, where raw materials have been very, very uncertain. We have had more or less shortage of supply close to stopping our production and so on, and we did not lift guidance there. Then we have a BioMar on a positive move but still uncertainties on especially Chile because of U.S. market and biological conditions. That's as it is. If you ask me if I'm more comfortable than in March, I would say a little bit more. Okay. My final question is that already at the Q4 report, you mentioned that you had a quite solid order intake in Q4, and it continued at least in January and February. Could you tell us, what does it look like in April and May? Yeah, just to get a feeling for what's going on in the real world. Was it general order intake? Sorry. Yeah. Generally speaking. We have seen a positive order intake, and I think also that's the background for our guidance. The demand from large, very solid customers is very solid and order intake still picking up. That's what we see. We have, as I said, a strong backlog also for the coming months. GPV is special because we have such a large backlog, but that's due to the component situation. Other companies, we do not have backlog covering the whole year because there's another momentum in how our customers are ordering. Okay, great. Thank you very much. Thank you. A final reminder. If you wish to ask a question, please press star and one on your telephone keypad. The next question comes from the line of Claus Almer of Nordea. Please go ahead. Thank you. Yeah. Also a few questions on my side. Jens, the strong performance in Q1, do you have an insight into, to what degree this has been a restocking effect? That'll be the first question. Yeah. We have also looked a lot into that, and we think the only way where we really were fearing restocking was in GPV. We have really scrutinized the orders and everything, and we don't really see it. Of course, the order intake is maybe not restocking, but security order they are placing. We haven't really seen any restocking. Also, looking at HydraSpecma, it's very large OEMs, and they do not have the space for stocks, et cetera. Sometimes it's more or less you have to deliver on time online. Yeah, we haven't seen it now. Okay. Set aside raw materials effects and all of this. Given the strong demand, do you see an opportunity to raise prices? Yeah, we are working on it, and in some segments we see more opportunities than others. Of course, it's a balance because if you go out in the market and are too aggressive, you also know it's customers, it pays back. It's a balance. I think some of our customers, they really understand where we had with some of our customers, especially Fibertex Personal Care to be open on that, where we had to go to the spot market and buy raw materials at crazy prices to be able to run our lines. Their customers have said, "Okay, we understand and we accept also that we maybe share it or whatever." There's a good understanding in the market. Of course, customers don't like price increases and we work hard on it, but it's a balance. You need to really balance it and don't be too aggressive, but also take the opportunity when it's there. Sure. Okay. About your guidance, looking at the, let's say mid-range and the upper end of the guidance range, what have you assumed when it comes to raw materials and transportation costs and so on? Is it as it is today and then it will continue throughout the year or yeah? We expect the freight or transportation cost to be at a high level throughout the year. I also said that we expect a normalization, especially in second half in BioMar, meaning also the U.S. market open more up for salmon, going out entertainment and these things. If you look at Fibertex Personal Care, we do not disclose figures and say, okay, what is expected in Q2 and so on, but Q2 will not look nice. That's also part of our guidance on that, meaning that expected second half improvement on that and we can see it. It's with that in mind Fibertex Nonwovens they were flying. I have to say I could see April already also flying but now, the raw material sourcing, we see the new prices coming in, et cetera. It's with that in mind. Just to be sure. The high end of the guidance range is still including an unchanged headwind from input cost and transportation and so on. Was that correctly understood? Yeah, it's I would say 80% correct. As I said, we also try to compensate on pricing in the market. We also maybe look at a product mix, something we could try to avoid to deliver and things like that. There's a lot of things going on but still with headwind, yeah. 80% correctly understood and the remaining 20% is that the Schouw way of guiding or communicating? To me, we are guiding what we are seeing right now. Also if somebody has, like, you have also been looking into polypropylene prices and things like that and it has really been crazy. Also looking at transportation cost as of the transportation cost, they are up a lot. I think looking at the transportation cost at our side it's really a big issue. That's those things. Okay. Just the final question is a more housekeeping question, net working capital, Jens. Yes, you addressed it in one of your replies, but you must be really dissatisfied by the Q1 performance. Although I know it's obviously a smart move to build your inventories given the situation. I guess it's two step forward and then two step backwards. Yeah. To fight you a little bit Claus I call it a two step forwards, one step back. Some of it is deliberate as where we really have said, okay, we need to source these products. There's different things. It's Q1, it's a small quarter. I agree with you, of course there's still something to do and we'll keep a close eye on it and let's discuss it after Q2. I know you will scrutinize me on it and all our CEOs there listening now will also. Perfect. Just a final, a big thank you to BioMar and the extra segment details. Very welcomed and we are looking forward for the next steps to more disclosure. Yeah. Oh, thanks for that Claus because that's good. We will look into it. We also know that you need information, thank you for that. Thanks. There are no more questions at this time. I would like to come back to the speaker for closing comments. Yeah. No further comments only thank you for listening and we'll listen to each other after the summer. Thank you for that. Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.