Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Schouw & Co conference call 2021 Q3 report conference call. 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 telephone keypad. 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, and welcome to the presentation of our Q3 report. Overall, Q3 turned out to be a really challenging quarter, but we still saw high demand in most of our segments. We continued to have a strong market positions and customer relations was confirmed. We had a huge negative impact from raw material prices and costs that unexpectedly continued to increase at a very high pace during the quarter. We expect the present market volatility to continue well into 2022. Revenue was up 14% to DKK 6.9 billion. However, EBITDA was reduced 9% to DKK 614 million. Our results from associated companies increased with DKK 80 million to DKK 36 million. Main effect was coming from our farming operations, Salmones Austral. Cash flow from operations was at DKK 489 million. As I mentioned already, we saw effect from increased transport and energy costs of at least DKK 40 million during the quarter. We also had a huge negative effect from not compensated raw material prices of around DKK 50 million during the quarter. We had lower sales of high-margin products and different country mix. Our net working capital was increasing due to a strategic decision on being able to deliver, and also we had an effect from high raw material prices. Guidance for 2021 is slightly reduced due to these increasing costs. Turnover expected now around DKK 23.7 billion. EBITDA now at a level of between DKK 2.095 billion and DKK 2.205 billion. Full year CapEx still expected a little bit lower than previously guided of around DKK 1 billion. We now expect that some DKK 150 million of this will be postponed to 2022. Starting with BioMar Q3. Here we continued to see a very good volume development, but increasing negative impact from costs. Revenue was up 17% to DKK 4.1 billion. Volume up 11% to 453,000 tons. However, EBITDA was reduced 14% to DKK 282 million. We had a very solid development in our associated joint venture companies, and we profit before tax ending DKK 25 million higher than Q3 2020, despite the decline in EBITDA. Volumes in Norway were very strong, whereas Chile struggles due to the effect from lower BioMar. We saw continued pressure on our margins due to difficulties in getting full compensation on raw materials. We see an effect of around DKK 40 million-DKK 50 million on this. We had high prices, and lack of availability of raw material means that recipe changes too often, which lowers efficiency in our factories. Freight and energy costs continues to increase and impact profitability in the quarter. We launched DKK 125 million investment program in new extruder capacity in our important Ecuadorian shrimp market. Our JV in China is in a positive development. As mentioned already, we saw strong profitability in our Chilean salmon farmer, Salmones Austral, where we have a 23% ownership. Guidance for 2021 will be reduced. Activity is still very high, and long-term expectations still very attractive. Turnover 13%. EBITDA now in the range between DKK 890 million and DKK 920 million, only due to cost on raw materials and energy. We have difficulties in getting full compensation in these costs, and we also continue to see negative impact from energy and freight. Fibertex Personal Care had supply chain challenges. They continue to impact Fibertex Personal Care. Revenue was up 16% to DKK 593 million due to very high raw material prices. EBITDA, as expected, flat or at around DKK 94 million, and our return on invested capital now around 12.5%. Very high transport costs creates new and challenging dynamics in Asia. It's too expensive to move materials out of the region, meaning also we see increasing competition from Asian producers that normally used to export out of the region. We are still going ahead with investment or installment of our new and advanced polyolefin fiber line in Malaysia, which we expect to operate in mid-2022. Overall, we have seen very good production performance and increasing efficiency in Fibertex Personal Care throughout the year and also in the quarter. We didn't have any negative or positive raw material effect in this quarter as we expected. Guidance for 2021 is slightly reduced. Revenue now DKK 2.2 billion. EBITDA in the range of DKK 310 million-DKK 330 million only because of raw material prices not decreasing as we expected earlier. Fibertex Personal Care, sorry, Fibertex Nonwovens had an unexpected and very challenging quarter. We would call it the perfect storm. From full capacity utilization to reduced demand and stop and go production at several of our sites. Revenue was down 13% to DKK 417 million, and EBITDA decreased from 80 to 38 million. We saw a very huge impact from lower demands during the quarter. The important automotive segment is really struggling because our customers have supply chain problems. Our U.S. specialty wipes market was reduced due to earlier stock building. Several of our high margin customers with lower demand due to market constraints. We still have very good demand and backlog from our industrial segment, and we are working with a very interesting pipeline of high value projects based on co-development with some very large international customers. Guidance is reduced due to market volatility and uncertainties. Turnover now expected to be between DKK 1.8 billion-DKK 1.9 billion. EBITDA reduced DKK 50 million, now in a range of DKK 220 million-DKK 240 million. Also because we expect negative raw material effect also in Q4. We expect volatility to continue, but the long-term market potential remains intact. From the Fibertex companies to GPV, where we really saw strong market demand continue and our order intake was at a record high level. Revenue was reduced 4% to DKK 799 million, but that was due to a lack of one-off MedTech order we had in 2020. EBITDA, however, increased 22% to DKK 102 million, and return on invested capital now at very satisfactory 60% and above our 50% target. Supply chain volatility continues and we see huge efforts from our organization to handle a very difficult situation. We have a very strong efficiency and high capacity utilization, and it really drives our profitability at GPV. Our customers are placing orders for future to secure deliveries. And as I already said, we have a record high order backlog. We also initiated a DKK 200 million investment program to expand our facility in Thailand and Sri Lanka. Strong Q3 and the very solid backlog is background for guidance uplift in GPV. Turnover expected at around DKK 3 billion-DKK 3.1 billion and EBITDA uplift of DKK 40 million to a level of DKK 300 million-DKK 320 million with quite good comfort. The high activity level is expected to continue, but uncertainties on our 2020 supply chain will be seen as a challenge. Order book for 2022 already more or less full. HydraSpecma had also high activity in their commercial vehicle segment, and it really drives the strong growth. Revenue up 11% to DKK 526 million. EBITDA increased to DKK 65 million. We have also experienced or seen increase in net working capital due to stock builds to secure our ability to deliver. We have more or less full capacity utilization also throughout Q3, and we see efficiency gain from our new Gothenburg factory that really impact our profitability positive. As expected, we have seen a minor slowdown in our wind segment, but still a very important and attractive segment. We are building a future by extending capacity at several of our locations and also reframing our Nordic DC setup. Supply chain also for HydraSpecma continue to be problematic with the increase in prices and very long delivery times. HydraSpecma can give a guidance uplift due to the strong demand and also here solid backlog. Turnover now expected between DKK 2.2 billion-DKK 2.3 billion and EBITDA in a range of DKK 265 million-DKK 275 million. Last but not least, Borg Automotive continues good demand. Also we saw effect from acquired SBS. Revenue up from DKK 192 million to DKK 434 million. Here we had an impact from acquired SBS of DKK 430 million. EBITDA increased DKK 40 million- DKK 43 million. However, we also had a negative effect on EBITDA from SBS on purchase price allocation of DKK 4 million. Return on invested capital still very satisfactory at 20.6%. The integration of SBS with 135 new employees well underway. We are developing our customer base and start cross-selling to both TMI and SBS customers. We see new customers in our pipeline. Net working capital increased significantly, but that was due to the impact from SBS and also very low inventory levels in the old Powerhouse in March of last year. Our guidance will be narrowed. Turnover still around DKK 1.3 billion. EBITDA between DKK 150 and DKK 160 million. Here we included the expected PPA effect on EBITDA from SBS of DKK 10 million. Wrapping up, we see our companies as relevant as ever. Activity level high, but volatility creates uncertainties in handling efficiency and planning. Many opportunities to enter new markets and also to continue to develop long-term partnerships with customers. Overall, the long-term potential and opportunities have not changed. We'll soon be out of 2021, and we are preparing for 2022. We expect volatility to continue yet a while, but we have strong contingency plans and actions in place in all our companies, so we are also well prepared to take opportunities. With these closing remarks, I would like to open up for questions. Ladies and gentlemen, 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selection. 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 the line of Per Asmussen from Private Investors. Please go ahead. Yes. Hi, Jens. I would like to understand how sensitive Schouw Company is toward inflation. To be more specific, to what extent and on what horizon and what delay do you expect to recover the increasing raw material costs through increasing prices? Hi, Per. Thank you very much for your question. Yes, of course, we will also see effects from inflation. We cannot avoid that. We are working always on trying to pass on raw material prices and so on to our customers. In some of our companies, we have these cost-plus or pass-on clauses. There's always a lag. Even if you have contracts in place and so on, it's still a fight to get price increases. We have had a lot of price increases going on over the year now, and some of our customers, they are really struggling now to continue to take or accept further price increases. We have a strong program running in all companies on doing that. We will always lag when we get a price increase on our raw material or energy, et cetera, then we are lagging a little bit. We work hard on it, and it's part of our initiatives. Do you have any idea about how much lag there will be? How much delay will there be until you have the cost fully recovered by price increases towards your customer? How many months? It's very difficult to say, Per, but you could say in some companies, if you take Fibertex Personal Care, there's a quarterly review on prices. Meaning there'll be one quarter where you could struggle, and then you will look at the new price for the next quarter and so on. Other companies, you really need to fight from house to house to get the price increases up. It really differs. In some places it's difficult to compensate 100% or impossible more or less to compensate 100%. We need to look into optimization, efficiency gains and things like that. Okay. Thank you. Thank you, Per. The next question is from the line of Ulrik Bak from SEB. Please go ahead. Hi, Jens. Yeah, just a couple of questions from my side. Firstly, can you just repeat what the total headwinds from supply chain transportation and raw material costs have been on EBITDA during the quarter, please? Yeah. It's between DKK 80 million-DKK 100 million in the quarter. What we call the net negative effect on raw material prices not being able to pass on. Transportation, and especially also freight. Sorry, energy. Energy has increased incredibly. Yeah. Okay. To BioMar, how much was the impact there? Around on the raw materials, around DKK 40+ million at least. Okay. Maybe I didn't underline that enough. We also had some effect on lacking raw materials, meaning there are raw materials we couldn't get, and then we had to change recipes and so on. We have not calculated that effect 100%, but it has also had an impact on we have to reshuffle and do a lot of recipe things and so on, so. We have been quite hard hit in Q3. Yes, understood. To BioMar maybe on the same theme. Can you just explain the major factors and maybe also the magnitude of each factor causing the decline in earnings versus last year? Because as you say, you'd grow volumes by 11% but despite that you decline earnings. Also considering you wrote in the report that you had a tailwind of DKK 70 million from FX during Q3. Is that accurate? Yeah. Yeah. That's a top line effect. That's not an EBITDA effect on BioMar. It just is as I said, the raw material DKK 40 million-DKK 50 million net negative effect on raw materials. Typically passed on to 100% on energy and other costs, but also quite important effect. We have a mix as we have seen that over the period that we have a segment mix or market mix impacting. As I also said, we have lower volume in Chile than we have in other markets. We have picked up that volume in other markets where we see lower margins but maybe also lower risk. Chile is a good margin market. That's one thing. We have seen also less sales of functional feed during the quarter than we saw last year. It's a mix of a lot of things. We are really very satisfied with our volume development because it underlines our market position and our relation with customers. We have had these really headwind on raw materials, recipes things, and costs and so on. We also have to look at the market mix. Okay. Now you decrease the guidance compared to August. Which of these factors was the most negative surprise to you compared to now? Yeah. You could say a negative surprise has been that raw materials continue to increase as they did. Also the struggle of getting some raw materials that has meant that we need to change raw materials, increasing costs on recipes. The efficiency in the factories you can run when you have to change and do a lot of, I don't know what it's called in, a lot of magic. So that has really surprised us. Also, I have to say energy continues to increase. We are using a lot of gas in some of our facilities to dry the products and so on. So we have experienced a lot of headwind coming quite suddenly actually. Okay. When looking ahead in Q4 and 2022, what's the status then? Is it? Do you expect the same, to see some of the same factors influencing the business? We expect still raw material volatility, but we also we have seen we've had a sensible good start on Q4. Expect to continue to see volatility. Maybe we have a better opportunities to handle it now because we have better contracts in place. We have also our cost plus contracts. We can get a little improvement from that. And also expect development in Chile to become a little bit better. Looking into 2022, we are not guiding on that yet, but still I think BioMar in general are a little bit more optimistic on 2022 than on what we are seeing now. I have to stress like raw material volatility is crazy. Just as an example, we saw the price of soy more or less doubling and then at an unseen high level. Okay. In terms of your contract base, you say you are in a good position. Is that volume in terms of volume, so in terms of margins, or is it a combination of those? Yeah, it's, of course, in terms of volume. As you also know, we have cost-plus contracts, meaning that at a certain point you will also get compensation for the raw material prices. As I always say, we are always lagging a little bit behind. We have the cost-plus contracts in place and then we will get compensation. All right. It's just you also comment that competition is fierce and it seems as if competition has increased over the past few quarters. Given that you have a good position contract-wise and good volumes, does that mean that profitability will decrease compared to maybe one year ago, two years ago? I think we need to sell or handle more volume, more tons. We are not saying that profitability will decline. When we are saying the fierce competition we see, it's obvious that if you look at Chile, where the volume is down because of lower biomass and so on, there's excess capacity. We know what happens in the market and we have to look into how to address that. It's not always that we participate in this fierce competition. We have a clear margin strategy in BioMar, which we have worked on over several years now. Okay. Thank you, Jens. No further questions. Thank you. Next question is from the line of Claus Almer from Nordea. Please go ahead. Thank you, hi, Jens. I will first apologize for this question, so don't take it the wrong way. No. You reported Q2 in August, well into Q3, and all these questions regarding electricity, freight cost, input cost, inflation was definitely asked at that time, and you sounded and seemed more relaxed at that time. Either, you know, you underestimate obviously the headwinds or everything happened very late in Q3. Maybe you can update us on what is actually happening these couple of months. That'll be the first question. Yeah. I think that you're fair and completely right to ask this question because I think it's a combination of two things, Claus. One is that we underestimated that, and then we were also surprised by the impact and the magnitude of what really happened. It's a combination of several things. In some of the companies where we did the guidance, we had a lot of discussions on what do we see, where are we? I have to say also, some of the companies, we say, "Okay, you are too pessimistic if we look at what you have been doing so up to now." It's a combination of several things. I think the question is very fair. Also we have been surprised by the impact and the magnitude. Absolutely. As to hedging of electricity, natural gas, and the likes, what is your policy and have you changed the policy given what has happened this year? Not yet, but we have not different policies, but some, to be honest, some companies are much more on it than others also because they are huge energy consumers. We don't have a very strict policy on energy, to be very honest also because it hasn't fluctuated that much. We have also in some companies been surprised by these huge fluctuation. In other companies we have good contracts. Of course, we work on contracts also, but we have been surprised by it. Absolutely. I also have to say that what also surprised us, Claus, was the sales volume. If you take the automotive segment that was doing quite well, and all by a sudden we had a stop, go, stop, go in our very important automotive segments, and it just more or less came overnight. That has really surprised us. Yeah. It has not been an easy quarter. That's for sure. Coming back to BioMar and pricing pressure or, you know, you're dropping profitability. Of course, you have some externally driven headwinds, but this is an old topic. 11% volume growth, and I know we can't split it up between the different species or the markets, but at the same time you are seeing negative profitability trends. That could indicate at least that you are returning or you are at least contributing to a fierce pricing discipline or lack of discipline, which we have seen so many times over the years. Can you just give an update on how you're thinking about pricing and maybe you should put a foot on your volume speed and then go for the profitability? Yeah. It's a valid point once again, Claus. I think also you raised the question a little bit last time, and we have been quite firm on that we are not fighting like hell, especially in Norway, and we have had quite a good volume uplift in Norway. Again, there is a difference that we are selling less functional feeds, which is a quite important margin driver. We have had a lot of negative net effect from raw material, especially in the summer. If you look at the Salmon division and you look at feeds, that's where we're really struggling with EBITDA. Other divisions more or less in line. You can also see that Chile is down on volume. You have a good volume development in Norway at reasonable prices, but lower functional sales. We have had a quarter where we have been struggling on a lot of costs that we couldn't pass on. To answer very short, no, we are not in a crazy price competition, but of course we have to defend positions also. That we have discussed another time, Jens, but defense, you know, has at least in the past, been a very costly strategy. I guess that's for a different time to have that discussion. Just to follow up. Yeah. Looking at your implicit guidance on profitability for nonwovens and GPV, it sounds- Yeah. Looks pretty depressing even versus Q3 if you're just looking at the mid-range. Yeah. If you take non-owned, why would your profitability I think is being cut in half versus Q3, which was already 50% down or something like that since Q2? Yeah. Maybe a few words on that one. In Fibertex Nonwovens, we expect raw materials to increase, difficulties in getting short-term compensation on that. We have, as I said, very important automotive segment, very volatile. We expect a much lower volume in that segment. If we can't run full capacity or not, but run at very high capacity in some of our factories, it really hurts us. We have this specialty wipes segment that has really been low, maybe starting out a little bit again. We had last year, I think also we mentioned that we had some very attractive sales to kind of MedTech business, filtration business for- I mean, yeah, yes. I'm just comparing for the last couple of quarters. We are executing this MedTech order. No, but I was not discussing. Oh, sorry. I was, yeah. Oh, sure. I was saying that nonwovens, there we didn't have. I just say we had some attractive customers with high margins. Where we don't sell anything for the time being, and we don't expect to do that in Q4, but that's the reason also. Okay. Yeah. Okay. And then if- Yeah. Yeah. If you take EBIT, then we have very good profitability so far. We have a very high backlog, but we are also struggling on components and prices and doing a lot of matching in production and so on. Still expect to grow GPV in Q4. There- But- Sorry? Just continuance. No. What are you? When I do the math at least, the EBITDA Q4 over Q3 is more or less cut in half, if I done the math right, mid-range of the guidance. I know Q3 was an extremely strong quarter, but why wouldn't it sort of be the same if you are more or less sold out? Yeah. As I said also because we are starting to suffer from components and prices increasing, et cetera, so that's part of the gain. I think also I said that we have this range 300-320 with quite good comfort. Meaning that if we can keep efficiency, et cetera, then we feel very comfortable on that. We are uncertain still on supply chain and so on. Of course, we are well into November now and we have had a quite good start on the quarter. Still, things changes week by week. Sure. Okay. Okay. That's our Just my final thing I forgot to mention, the nonwovens, all this headwind from raw materials. Is there a- Yeah going into next year a reversal, or do we have to wait for cost deflation before that will turn up? There's no clauses that you will... No, we will see that from a quarter to quarter, so that it can fluctuate on a quarterly basis. Meaning if we go in to Q1 2022 with high prices, that's the level we start at. We will see what happens over the year. We will adjust on a quarterly basis. Yeah. Okay. Thank you so much. That's all for me. Thank you, Claus. The next question is from the line of Laurits Louis Kjærgaard from ABG. Please go ahead. Good afternoon, Jens. Can you hear me? Loud and clear, Laurits, yes. Perfect. So, a few questions here. First of all, I echo what Claus was saying about, you know, your comments around Q2 when you were giving guidance. It seems that this has been extremely fast in terms of how much deterioration seems to be and how fast prices seem to increase, et cetera. My question is more the next time you're going to guide on a full year next year. Yeah. There's obviously quite a lot of volatility in the market. How do you intend on doing that? I think we will comment on that when we are closer on 2022. We don't have an overview at all for the time being. As Claus said, we expect volatility to continue well into 2022, and then we have to work a lot on contingencies and be prepared for this volatility. We have been in storms before and also working with volatility. It's more let's look into our contingency plans and we are also slower in brackets on doing the budgeting than we used to be because we need to get much closer to the end before we really finalize our budgeting and so on. Okay. I think still we will guide in a range as we used to do and really scrutinize it as hard as we always scrutinize our guidance a lot. The word contingency is also the last word that you mentioned in your opening statement, that we are soon out of 2021, and you have strong- Yeah Contingency plans across your businesses. Yeah to take opportunities. Yeah. I was just wondering about, you know, take opportunities, what could that mean? Could you maybe walk us through a few scenarios of what you can potentially do? Because obviously when we talked in Q2, you said that you are engaging in a lot of long-term relationship with your customers. We're just- Yeah. I'm just a little bit wondering that if any of, you know, if you start, you know, really forcefully increasing prices, that could potentially, you know, damage customer relationships, and that wouldn't, you know, necessarily be a good thing in the long term. No idea. Of course, we need to act as reasonable and then also protect our long-term promises. There are a lot of things you can move because customers have the same intention as us to reduce cost, and so we can work on innovation, we can work on optimizing recipes, downgauging weights, a lot of different things we can do. Then also, of course, when we say we're prepared to look for opportunities, there'll always be a lot of opportunities when things are difficult. We have good muscles to take these opportunities, both from a financial perspective, but also from an operational point of view because we have capacity, we are well positioned in many markets. That's what we are meaning by that. Another thing also, of course, also looking into could there be attractive M&A opportunities coming up, small and large, and so on. That's part of our thinking. Of course, we understand very much, we also need to protect customer relations. At a point, we also need to protect our margin. In terms of capacity, can you, without guiding for next year, obviously, could you give some sort of flavor on how much capacity you have? You know, if the market can take it, how much can Schouw & Co as a whole deliver for next year? Because obviously, your CapEx program has been quite high. For Fibertex Personal Care, there's some production lines up and running in the mid-next year. Can you give some flavor on sort of volume, you know, how much volume you have next year, which you don't necessarily have this year? I would say let's take half a year on Fibertex, but maybe 10% up on Fibertex Personal Care next year. Fibertex Nonwovens, it's difficult to say now because we have had a very difficult Q3, but we were sold out the first half. So we have a potential to increase, as also Fibertex. You know, I think in all our companies we have potential to increase. Maybe only place where we can't increase volume will be Norway in the salmon market. I don't think we'll be able to increase volume more. Very little. Of course, you'll always be able to debottleneck and things like that, but we have opportunities in most places not to increase our And this- Cost, yeah. This negative geographical mix that you mentioned for BioMar with Chile having a little bit lower volume, more in Norway, et cetera, you know, can that turn around next year? If you're saying that there's not so much more volume in Norway, can you grow more in Chile and then get a margin appreciation? We can grow more in Chile. Yes, we have quite a lot capacity, excess capacity in Chile, so we can grow more in Chile. We have very good relation to customers and very good contracts in place. Meaning if our customers grow and farm more, then we will grow also. We can do that. That's very clear. Thank you very much for taking my questions. Super, Laurits. Thank you. As a reminder, if you wish to ask a question, please press star followed by one on your telephone. The next question is from the line of Ulrik Bak from SEB. Please go ahead. Yes. Hello Jens again. Just a follow-up question on BioMar. So this functional feed, you say that sales has been lower than usual. What is the reason for that? Any particular reason for that? Sometimes, yeah, there are several reasons. Of course, if the biological situation is good, then we are selling less functional feed, and it has been quite good in Norway, and Chile used to be a very big functional feed market. Volume in general is much lower in Chile, so there we obviously are selling less. Then we also see customers if they don't need to grow their biomass as fast because of prices and so on, then we'll reduce on what we call high energy feeds and things like that. It's a combination of different things. It's not because we think that customers are turning away from functional feeds. It's more a short-term situation. Okay. Thank you. you. That's all for me. Thank you. There are no more questions at this time. I hand back to Mr. Jens Bjerg Sørensen for closing comments. Thank you very much, and thank you for everyone listening, and also thanks for the questions. Goodbye from here. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.