Good day and thank you for standing by, and welcome to the Scandinavian Tobacco Group Q2 Results 2021. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. If you wish to ask a question, please press star one on your telephone keypad. For your information, this conference is being recorded. I would like to hand the conference over to your speaker, Torben Sand. Please go ahead. Yes. Thank you, and good morning, everybody. My name is Torben Sand, Head of Investor Relations of Scandinavian Tobacco Group, and I'm, as usual, joined by our CEO, Niels Frederiksen, and CFO, Marianne Rørslev Bock. The agenda for this webcasted conference call is the highlights for the second quarter of 2021, an overview of the performance in our three commercial divisions, as well as for the group, including an update on key financial developments. Finally, we will take you through the outlook for 2021, followed by the usual Q&A session. Before we start, I ask you to pay attention to our disclaimer on forward-looking statements in the back of this slide presentation pack. Now, please turn to slide number three, and I will leave the word to Niels. Thank you, Torben, and a warm welcome and good morning to everyone on the call. Thursday evening last week, we released the full interim report for the second quarter of 2021, almost a week before the scheduled release date. At that time, it became apparent that we needed to upgrade our expectations for the full year, and hence we informed the market to comply with market rules. With this, let me now turn to the highlights of the second quarter. In the second quarter, Scandinavian Tobacco Group delivered another strong financial performance, driven by continued strong demand for handmade cigars, as well as a favorable market and product mix. Synergies relating to the Agio integration also continue to support the financial results. The key financial highlights are net sales grew organically by 7.5% to DKK 2.2 billion. The EBITDA before special items was DKK 606 million, being at 21% organic growth versus last year. Adjusted earnings per share increased by more than one third to DKK 4.1. Free cash flow before acquisitions was DKK 434 million, more or less in line with last year, and return on invested capital improved to 12.3% for the six months ending in June, against 7.6% last year. The increase in demand for our products continue to be driven by changes in consumer behavior impacted by the COVID-19 pandemic. Higher tobacco consumption across many product categories and markets have turned out to sustain for a longer period than originally anticipated, and we have been able to successfully exploit this opportunity. We've been able to keep factories running. We've continued with a high degree of innovations in the handmade cigars category, and we've seen value from the many professionalization initiatives implemented in the U.S. online business. I'm very proud and pleased to see that the entire organization has stepped up to the challenges provided by COVID-19 delivered. The integration of Agio Cigars is also progressing according to plan with cost savings on target to deliver DKK 100 million in 2021, on top of the DKK 80 million impact in 2020. The total net synergies to be achieved by the end of 2022 is maintained at DKK 250 million. As part of the Agio integration, we are, in the course of 2021, closing down three of our factories, two in the Netherlands and one in the Dominican Republic. At the same time, we are expanding other of our facilities in both the Dominican Republic as well as in Sri Lanka. Based on the strong quarter and improved outlook for the second half of the year, we are raising our full year guidance. At the end of this presentation, we will give you more details on the revised guidance for 2021. The headlines are organic EBITDA growth in the range of 16%-20% versus 12%-18% previously. Free cash flow before acquisitions is maintained in the range of DKK 1 billion-DKK 1.3 billion, and adjusted earnings per share growth is revised up to more than 35% from previously more than 25%. Based on this overview, I will leave the word to Marianne, who will talk into the recent developments by division and give you a financial overview. Next slide, please. Thank you, Niels. The current high consumption of handmade cigars continues to benefit our company, but compared with previous quarters to a lesser extent for the division North America Online & Retail. The division reported net sales of DKK 703 million in the second quarter, a decrease of 11% versus the same quarter last year, composed by 2% negative organic net sales growth and a negative exchange rate effect of 9%. The dynamics behind the performance in net sales started to change in the second quarter compared with previous quarters as the consumers returned to physical trade. Since the outbreak of the COVID-19 pandemic, demand of handmade cigars has increased, and demand has remained strong. The number of active customers took off during the second quarter of last year with physical retail being broadly closed, so expected comparisons would be tough. As a consequence, the amount of active customers during the past 12 months declined in the second quarter, and with volume sold also declining compared to last year, the organic net sales growth was negative by 2%. Our retail superstores have performed better than expected and has offset some of the lower net sales in our online business. Net sales has increased by a high double-digit percentage. The strong performance in retail is partly driven by the channel shift back to retail, and more importantly, the expansion of our own retail network. We are convinced that a substantial part of the strong online performance is a result of our intensified focus on improving customer service. For example, by upgrading our website platforms, extended consumer profiling, introduction of a club model, and many other initiatives to professionalize the division further. EBITDA before special items decreased by 20% to DKK 132 million, with an EBITDA margin before special items of 18.8% versus 20.9% in the second quarter of 2020. The margin decline was driven by a higher OpEx ratio as the gross margin was broadly unchanged. The increase in OpEx ratio reflects higher sales-related costs and the ongoing retail expansion. As we mentioned in Q1, the competitive pressure amongst the online distributors has intensified compared to last year, and we have equally seen an increase in our promotional spending versus last year. Please turn to slide number five. Looking ahead, we expect that the high consumption of handmade cigars will continue, but with growth rates reflecting that consumption has started to accelerate during the second quarter of 2020, and thus creating difficult comparisons onwards. We expect the organic net sales growth to slow down in the second half compared to the first half of the year. Volumes in the online business remain well above the level from 2019. We do expect to see permanently stronger level as compared to the pre-COVID-19 level, reflecting a structural shift in consumer behavior. Promotional activities have continued to be high in the online business throughout the summer after unusually low activity throughout most of 2020. We maintain our expectation that marketing expenses will increase compared to last year. We expect to open a new superstore in San Antonio, Texas early next year. For the second quarter of 2021, the development was driven by the continued strong demand in handmade cigars and Smoking Tobacco. The global travel retail business remains negatively impacted by travel restrictions. EBITDA before special items increased by 35% to DKK 311 million, with an EBITDA margin before special items of 40.9% versus 36.7% last year. The profit increase and the margin improvement was realized with an improved gross margin driven by product and market mix, price increases, and an improved OpEx ratio which decreased due to general efficiency improvements. The mix impact is driven by an exceptionally good performance in high-margin markets such as Canada, the U.S., and Norway. As an example, demand for pipe tobacco has increased in the U.S. since the outbreak of the COVID-19, and the travel restrictions and border closures has benefited the Smoking Tobacco business in Norway. Please turn to slide seven. North America Branded owns the largest brand portfolio in the U.S., and the increased consumption of handmade cigars will benefit the division for the remainder of the year. The division is expected to deliver positive organic net sales growth driven by the same dynamics mentioned for the Online & Retail division. We are maintaining a higher inventory position than normal to ensure stable supply during the uncertain demand situation we are in. This is impacting our cash flow position for the year. This brings us to the update for the last division, Europe Branded. Please turn to slide number eight. During the second quarter, the total market recovered further and increased by almost 2% for our top seven markets. The market growth has been impacted by COVID-19 dynamics as the second quarter last year was negatively impacted by closedowns and restrictions. The integration of Agio continued to perform well, and we are on target to deliver the expected savings for the year of DKK 100 million. The volume market share in key markets has declined from 33.3% to 32.5% in Q2 2021 versus last year. We gained share in Belgium, Spain, and Italy, whereas we lost share in the U.K. and in France. The development in the U.K. is driven by our focus on pricing and margins. We remain, by a distance, the number one in the U.K. The decline in France has been driven by an out-of-stock issue of one of our key brands. The issue relates directly to a shortage of temporary workers, which has been an issue across industries. The out-of-stock issue is expected to be fully solved during the second half of the year. For the division Europe Branded, both the reported and organic net sales increased by 2%. The termination of a low-margin distribution agreement impacted negatively in the second quarter, but was more than offset by the overall volume development in the market and positive pricing impacts. EBITDA before special items increased by 79% to DKK 191 million, with an EBITDA margin before special items of 27.6% versus 15.7% last year. In the second quarter last year, EBITDA before special items was negatively impacted by a fair value adjustment of Agio inventories of DKK 23 million. Excluding this fair value adjustment, the EBITDA margin was 19.3% in the second quarter of last year. The strong underlying improvement in the margin is a result of the savings from Agio integration, fueling the growth and improved pricing. Please turn to slide number nine. Our focus in Machine-Rolled Cigars remain to improve our volume market share positions and optimizing the value share further through effective price management. Overall, the division is, for the full year, expected to realize a slight decrease in organic net sales due to the loss of the mentioned low-margin European distribution contract. Furthermore, the next steps of the integration of Agio Cigars remain key priorities. With the announced about DKK 100 million in expected synergies in 2021, where most will impact division Europe Branded, profit margins are expected to improve further from the level seen in 2020. Please move to slide number 10, where I'll give you selected financial highlights for the group. For the second quarter 2021, net sales increased by 2.8% to DKK 2. 156 billion. Gross profit before special items increased by 14%, and EBITDA before special items increased by 24% to DKK 606 million. The increase in net sales was composed by 7.5% organic net sales growth and a 4.7% negative contribution from exchange rate developments. The increase in gross profit was driven by the organic growth in net sales as well as mix. The gross margin increased by 4.9 percentage points to 49.7%, with 1.1 percentage points of this improvement relating to the fair value adjustment of inventories in Agio Cigars in the second quarter last year of DKK 23 million. All three commercial divisions delivered improved gross margins, although North America Online & Retail only did so marginally. The EBITDA margin before special items was 28.1% in the second quarter versus 23.3% last year. Excluding the fair value adjustment, the margin improved by 3.6 percentage points, driven by the gross margin improvement, Agio integration synergies, and the underlying cost efficiencies across our operations. Special items was negative by DKK 24 million, with DKK 18 million expensed in relation to the integration of Agio Cigars and DKK 6 million expensed in relation to changes in our manufacturing footprint. Special items was negative by DKK 78 million in the second quarter of 2020, primarily impacted by Agio integration costs. Adjusted earnings per share was DKK 4.1 per share compared with DKK 3 per share. The increase was driven by the operational performance, partially offset by higher taxes. Finally, the free cash flow before acquisitions increased by DKK 9 million to DKK 434 million for the quarter. Working capital had a positive impact of DKK 59 million for the quarter, although the cash impact was somewhat lower than in the second quarter of last year, as we remain observant to have sufficient supplies to meet customer demands. Please turn to slide 11. During the second quarter, the net interest-bearing debt increased by almost DKK 350 million to DKK 3,732 million. The net interest-bearing debt increased by DKK 458 million versus the end of last year, despite the strong financial results we delivered with a free cash flow generation of more than DKK 500 million in the first six months of the year. The increase in the net debt is attributable to our capital distributions of more than DKK 900 million during the first six months of 2021, which I'll come back to in a minute. The leverage ratio declined to 1.7 x by the end of the second quarter, compared with 1.8 x at the end of 2020. The decline is driven by the increase in EBITDA. Please turn to slide 12. Our financial policy states that any excess capital, taking into account potential acquisitions and other liquidity needs, will be returned to shareholders. As part of this commitment, we initiated a new share buyback program in March with a total value of DKK 600 million. As of end of the second quarter 2021, we had purchased almost 1.6 billion shares at a total value of DKK 197 million in this program. Including repurchases relating to the first program, which was concluded during the first quarter of this year, we have repurchased shares at a total value of DKK 295 million during the first half of 2021. Following approval by the annual general meeting held in April 2021, 2.5 million shares was canceled in May, reducing the amount of shares by 2.5% to 97.5 million shares. At the annual general meeting, the Board of Directors also approved a DKK 6.5 ordinary dividend payment per share, an increase of 6.6% versus last year. The increase reflects both our ambition to increase the ordinary dividend annually, but also that our underlying cash flow capacity has increased with the acquisition of Agio Cigars. Including share buybacks and dividend payments, we have, since the listing in 2017, returned almost DKK 4.3 billion to our shareholders. Now, please turn to slide 13. I will now leave the word back to Niels for a word on our revised financial guidance. Thank you, Marianne. Let me now turn to the expectations for the full year and the revised financial guidance. For the second time this year, we have revised our full year guidance upwards. The second quarter financial performance was broadly in line with our expectations, whereas the outlook for the second half is now set to be stronger as the increased demand for handmade cigars seems more persistent than originally anticipated. The organic growth in EBITDA is now expected to be close to flat in the third quarter versus the previous expectation of a decline. Organic growth in EBITDA is still expected to be positive in the fourth quarter of 2021. I would like to emphasize once again that the general risk level remains higher than normal as COVID-19 continues to influence the business and consumer behavior. Additionally, we are in the supply chain seeing increasing issues with costs going up and lead times being longer. Given this, our revised guidance is organic growth in EBITDA in the range of 16%-20% from previously 12%-18%. Free cash flow before acquisitions in the range unchanged of DKK 1 billion-DKK 1.3 billion, and adjusted EPS of more than 35%, up from more than 25% previously. The synergies from the integration of Agio Cigars are maintained of about DKK 100 million in 2021, and the guidance range for free cash flow before acquisitions is also maintained despite the increase in EBITDA, as the stronger than anticipated activity levels requires more inventories to secure supply. Total CapEx is still seen at DKK 370 million. For the full year, the expectations for total CapEx and working capital movements can be impacted by decisions to delay investments and to change inventory positions should COVID-19 or the development in consumer demand across our product categories necessitate this. The guidance of an adjusted EPS has, as a consequence of the stronger EBITDA, been revised up to an increase of more than 35% compared with previously an increase of 25%, and as always, the guidance and assumptions are based on current exchange rates. This concludes our presentation for today's call. I'll hand the word back to the operator, and we are ready to take questions. Thank you. Thank you. If you wish to ask a question, please press star one and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, star one if you wish to ask a question. We are taking our first question from the line of Niklas Ekman at Carnegie. Please go ahead. Thank you. Yes, a few questions, if I may. Firstly, if there's any way you could comment on the COVID-19 impact, the lasting impact from COVID-19 here. How much higher is the cigars consumption, particularly in the U.S. market? If you can draw any conclusions there. It sounds like what you're seeing now is growth rates basically slowing or even stopping, but you're landing at a much higher level in terms of consumption versus 2019. I'm just curious if you have any input there on the market and also your relative performance. That's my first question. Yes. Thank you, Niklas. Again, the handmade cigars market in the U.S. is a niche market with not a lot of data to support it, we're not super eager to put a percentage on the growth we've seen in consumption. I think it's fair to say that it is of a reasonable size, and we are actually investing some resources at the moment into trying to understand the exact size of the market more precisely. I'm hoping we can come back with this in the future, where we have tried to establish a more firm tracking of this. There is no doubt that consumption level has gone up. It's also true, as you say, that as we lap the full year impact, we see a flattening, and we see the dynamics between the Retail and the Online side. Certainly at a higher level, and I think that we are seeing in the quarter a decline also as expected in the Online business. The business there remains well above the 2019 level, suggesting, let's call it a permanent and structural improvement of our Online business. Of course, COVID-19 hasn't normalized yet, but we currently see that to be something we can retain to a very large degree. Very good, thanks. Can you remind us what is the approximate share of online sales in the U.S. market and also your share of those online sales? What we are estimating is that the Online channel probably represent around 60% of volume and around 50% of value. Again, these are numbers that should be seen as round numbers because you can say that the Online channel moves a lot of boxes and also tend to move less expensive cigars. When you look at the Retail, you have a much higher proportion of cigars being consumed, one, two, three, four cigars at a time, and also generally at higher prices because it's often consumed, let's say, in our particular stores in a social context, where people are willing to spend more. We can add that our share of the online market is about 50%. Very clear. Thanks. I know we've touched upon this before, but I still kind of moving out of COVID-19 here. I'm just curious if you could elaborate a bit more on the quite significant difference here in consumption in COVID-19 impact between the U.S. cigars business and the European business, where the U.S. is up significantly while Europe appears to be down in consumption. Can you just elaborate on this and whether you expect Europe moving out of COVID-19? Is that something that could boost sales volumes going forward or not? Yeah. If we look at the handmade cigars category, we are also increasingly confident that consumption outside the U.S. has gone up. What we can see is that those more time-consuming, more occasion-driven consumption of large cigars seems also outside the U.S. to be going up. Here we'll be watching that as we are doing in the U.S. When you look at the Machine-Rolled Cigars markets, remember, we are not really active in the U.S. Machine-Rolled Cigars market. We do see a higher consumption in the U.S. of Machine-Rolled Cigars. We are not seeing it in the same degree in Europe. We believe that one of the reasons is that consumers have really been locked down in a different way. In many countries, we've seen specific channels also being closed down if they were not deemed to be essential. Getting your hand on a cigar with the same ease as in the U.S. has actually been more difficult. We don't actually have a strong anticipation of a sales rebound in Europe. What we see in Europe is actually, and what we are pleased to see is a lot more stability and also higher predictability from our side and, let's call it just an altogether better control of the business when it comes to taking price increases, maintaining cost under control, and so on. There's good stability in that business today, but we are not necessarily seeing consumption moving either up or down in any particular way. Okay, thanks. That's very clear. Thirdly here, if I can ask a little bit about your guidance, 16%-20% organic growth in EBITDA. In H1 here, you had growth of 35%. If you look at the low end of your guidance, you are basically expecting zero growth in H2. Is that a deliberately conservative assumption? I realize that Q3 here particularly faces tough comps, but is there anything you see that suggests that earnings growth could be zero in the second half? Well, I think you are spot on. We are seeing the second half to be more flattish. You can say the third quarter is the critical quarter where we had the most difficult comps versus last year. We just see increased risk. We mentioned in the report some of the disturbances in the supply chain. We see increasing incidences in the U.S. of COVID-19 still in certain states. We also talked about the out-of-stock situation we had in France. Remember that while we are trying to deal with COVID-19, and I think doing a good job, we are also restructuring our entire factory footprint. We really have a lot of, let's say, important things to balance off against each other in the second half of the year. That is the sum of the parts. It is up against higher comparison numbers altogether. I can add, Niklas, that originally we were expecting Q3 to be lower than last year, especially because last year was a very high Q3. Today, we see that we will come in more or less on par of Q3, which is also part of raising the guidance. Thank you. That's very clear. Can you update us a little bit on the cost savings programs here and the synergies? If we start with the Agio synergies, how much is left for you to deliver in the rest of 2021 and then 2022? This rolling towards 2025 and then the factory closures that you're doing now, what kind of savings have you mapped in already that you expect both for the coming quarters and coming years? For 2021, we've said that we will do an additional synergy saving in the level of DKK 100 million. You should think about it like this, that the main part of those DKK 100 million has been realized in the first half of 2021, and a minor part is coming in in the second half. That is, of course, also because in the second half of 2020, we did already start realizing a large part of the synergies. For the factories that we are closing down in the end of 2021, there will come some synergies in during 2022, but it will be in a lower level than the DKK 100 million that we have realized this year. I hope that answers your question. Absolutely. Thank you so much for taking my question. Thank you. We are now taking our next question from the line of Gaurav Jain at Barclays. Please go ahead. Good morning. It's Mandeep Sangha on behalf of Gaurav. A couple of questions, if I may. You mentioned that your second half outlook for the U.S. cigar market is more positive than you previously anticipated. With stimulus checks due to end in September or the second half, if they are extended, do you have any feeling to how this could potentially impact the underlying demand, given it has been so strong over the last 12 months? That's my first question. Yeah. I think this is an issue we are all debating, what is the impact of the government subsidies? For sure they matter. There's no doubt about that. In our particular case, we think they probably matter more for our mass market business in the U.S., which is the pipe tobacco and fine-cut tobacco business, which is more, let's call it, economically driven. Whereas we think that the demand for handmade is driven by a combination of people working from home, having more time. What we can see here as COVID-19 is beginning to normalize and people can go out again, is we are seeing a very strong return to the retail outlets, reflecting also that people want to go out. This is part of our consumers' social life. We are watching the stores very closely because we think they are good indication of whether demand will continue at a high level or whether people will start to adapt their consumption as they are returning to work and doing other things. It's a mixed picture for us, but we are watching the subsidies closely. Excellent. Just a follow-on question. You mentioned, obviously, the retail stores reopening, and you're seeing that channel really accelerate as lockdowns end. In the Q1 call, I remember you mentioning that at the time, you weren't seeing that consumers were going into retail stores and actually staying at retail stores in terms of actually using the bars and sort of sitting in a store consuming the cigars and the alcohol that you offer, which is obviously a higher margin business for you. How have you seen that change sequentially as lockdowns have ended and accelerated? Yeah, they have certainly come back. We've seen that acceleration in the course of Q2. Also you can say that it's part of the indications that we've used to, let's say, raise our expectation of demand in the U.S. in the second half of the year. They're coming back. They're spending. We are actually seeing that we have the stores in Texas and in Florida, which are two of the high incident states in the U.S. We are seeing no indications that people are returning, let's say, or staying more online in these particular areas versus others. To me, it kind of proves also that the stores play a role. People may buy the bulk of their cigars online. They still want to go into retail stores. Remember, for us, retail stores is also an important way for us to contribute to the long-term health of the category. This is where consumers go when they start engaging with the category, and we think they need something better than what they're being offered today, and we can see that they appreciate that in our stores. Excellent. That's very helpful. Just last question from me, if that's okay. Obviously, again, on the retail stores, you're opening your seventh one in San Antonio early next year. How should we start to think about the long-term opportunity in stores? I know it seems that you still see it as a proof of concept stage, but when do you think you'll have a better idea? Is it that once you have seven stores, that is your proof of concept stage, and then that's really where the investment ends in the near term, or do you think you're going to continuously be investing? How should we think about that in terms of, obviously, a CapEx exposure as well? We originally had four test stores, let's say, slated for helping us make the longer term decision. The first one in Texas, The Colony, opened on time, but the three others were really delayed and only opened in the second half of 2020. We feel we are a bit behind on the data on the three remaining stores. I can be very open and say that The Colony store is doing very well, and it's really the remaining stores that needs to show that they are also part of the concept. The reason we opened San Antonio is that we feel that they're confident enough not to stop totally, but just move ahead when we get the right locations in a slow fashion. I can't tell you exactly when we're ready to come back and give you more, let's say, color on this, but I think still in the overall context of capital that would be needed for this, it shouldn't be a concern versus what we're generating altogether, in my view. Excellent. Thank you very much. Thank you. We're taking our next question from the line of Magnus Jensen at SEB. Please go ahead. Thank you very much, and thank you for taking my questions. I have a couple. First is to your gross margin. It's been extremely strong for the first half year compared to what you've seen in previous years. Is there anything that we should take notice of here? Is there any one-offs in this, or is it a level that is actually repeatable if sort of the mix is maintained as it was in the first half? Thank you, Magnus. A good question. It's absolutely right that we have seen increased gross margins in the first half, and there is a couple of reasons for that. We mentioned in our call here that we do see both the market and product mix. We have seen very favorable mix towards the Smoking Tobacco, where we have higher margins, and also in those countries where we have higher margins, mentioning both Canada, Norway, and U.S. with the Smoking Tobacco. It's also important to say that on pricing, it's one of our focus areas to focus on pricing and be more disciplined on the pricing, and we have seen good effect of that in the first half year. I think those are the main reasons for that good gross margin. While that is sustainable, part of the mix is coming from the COVID-19, for example, on border trading in Norway, where the border between Sweden and Norway has been closed down. There will be some effect that will be difficult to maintain fully. Okay. Is it fair to assume that, compared to historical levels, that we should see a higher level, not necessarily on the level that we see this year, but in this first half, but in general, when we look ahead compared to previous year, given one of the things you say is good discipline on pricing? Yes, there will be several impacts. There will, of course, also be impacts on our plant closures that go in and impact the gross margins. The focus on pricing also will ongoing have a positive impact. Okay. Thank you. Then a kind of related question, actually, because go further down the P&L to the EBITDA margin. You did 28% margin for Q2, which is rather impressive given the fact that at least when I look back, I can see that Q2 is, in terms of revenue, a fairly good quarter. In terms of margin, it has never been a particularly good quarter. Very impressive with the 28%. Actually the question is a long line item for the gross margin. Is there any one-offs aside from what you just mentioned on gross margin that we should be aware of, or is this just the impact of Agio fueling the growth and the other good initiatives that you're making to get you to these kind of levels? That is correct. The only one you should be aware of is the fair value adjustment in last year's quarter. If you're comparing to last year, there was a fair value adjustment inventories in Agio. Otherwise, it is the Agio, it is increasing gross margin with the impact from prices and mix and then our efficient programs, including the synergies from Agio. If you look at it on the OpEx ratio level, it is more or less unchanged. It is primarily driven by the gross margin. Okay. That's great. That sounds promising for the future. The next question, I actually have two more. Second half, you said Q3 is going to be a more difficult comp, which I of course agree with, but let's talk a bit about Q4 because Q4 last year you flagged some cost use for preparing for 2022, which didn't end up having exactly the impact that you expected, but it did have some impact on your margins in Q4. Also there was a timing impact in North America where some of the products were shipped in Q1 instead of Q4. A couple of things making Q4 seemingly a easy comp. Is that correctly assumed? I think if you look at Q4, correct that there were kind of some one-offs in Q4 last year. I think on a high level, you should expect in Q4 to see our online business slightly below last year, especially because we will incur increasing costs, both on expanding on the retail side, but also on sales and marketing. We do expect North America Branded to come in with a strong Q4 where Europe Branded will be slightly positive versus last year. I think that's sort of the direction I can give you on Q4. Yeah. Of course you should be aware that the third quarter of the year is from a number perspective, much bigger than the fourth quarter. Yeah, of course. Thank you, Torben. Last question, actually sort of a follow-up to the retail, so the physical retail question asked earlier. I understand that it's too early to sort of make a decision in terms of how much to roll out, but have you sort of mapped U.S. looking at what kind of potential is there really? You now have seven stores, but is the potential 100 stores or is it 50 stores? At this point in time, are you able to sort of give any thoughts on how big this could be? I mean, 50 stores isn't that much anyways, it's just one per state, I guess. Could you give some thoughts on this? Yeah, I think what we can say for now is that the way we think about the superstores is that they will not necessarily be suitable for every single state. Like today we've got two in Texas, two in Florida. These are two states that we believe are high potential states and we probably think that because you need a high traffic flow and you need a certain income level and stuff like that. What we have said before, and which is still the case, is that we're probably looking for 20, 25 stores more than what we have today if they, of course, all meet the hurdle rates. That's still where we are, in terms of thinking. Okay. Thank you, Niels. That's helpful. That's all my questions for today. Thank you very much. You're welcome. Thank you. We are taking our next question from the line of Martin Brenøe at Nordea. Please go ahead. Hi. Thank you very much. Just three questions, if I may. First of all, can you maybe elaborate a bit on the situation with the employee shortages in France? Sort of what is driving this shortage situation and when should we expect you to be out? I hear that it's in the second half, but should we expect you to keep losing market shares in Q3, or is this going to be resolved sooner rather than later? That's the first question. Yeah. Again, we are seeing multiple points of pressure on the supply chain. I think it's very important for everyone to remind themselves that especially for those of us operating in more geographies, COVID-19 is not over. We continue to be managing access, distance control, sanitary issues across all our factories on a permanent basis. We've got increasing lead times, we've got increasing cost of certain materials, and we've got the full restructuring of our factory network. We are in control. I'm not saying we're not in control, but it does mean that we are running some trade-offs from time to time. What we found up to this summer was that the inability for us to get temporary labor reduced our capacity for a while. We can see that catching up to this with the restrictions we have is providing some challenges. What we are also saying is we've got a solution and what we are doing is we are really prioritizing by value. Right? In fact, you can say that France is unfortunately not the place we should have run into the problem, and we are trying to manage that as best as we can. We are currently seeing these problems resolve in the course of the second half. Will they have a potential to our market share? They could have, but I also want to say that some of the market share data is not necessarily consumer buying. It is based on data access, and some of it is based on our sales to retail. Here, an out-of-stock situation will hurt us more than if we were measuring to retail. We are watching this carefully, but we are not super concerned about it. When did it start, the out-of-stock situation? Was it by the beginning of the Q2, or was it more towards the end of Q2? As I recall it right now, it started in May. Mid quarter. Okay. Yeah. Thank you very much. My second question would be just to understand the level of competition that you're seeing right now. If we take pre-COVID-19 as sort of the index 100 and the normalized level, where's the competition and the promotional activity now versus pre-COVID levels, and where do you see it going? Do you see it going back to normal, back to the pre-COVID levels, or should we expect still lower promotional activities going forward? I'm assuming you refer to the Online business in the U.S. Here, I would say that we are certainly expecting the promotion prices to go up. We also, in parallel, have been working on what we call the professionalization of the Online business, which is all initiatives that should help us protect margin. We are also, on an ongoing basis, increasing prices to help protect margin. What I'm basically saying is we're doing as much as we can to sustain the margin improvements we've seen, but it's also clear that if we think we need to increase it from a competitive point of view to protect our market share, we will do so. I think when we report the third quarter, we'll have a good indication of how it's evolving. I think we need more quarters to figure out whether it'll go back to the original levels or whether we can actually, let's say, reduce it altogether by building on what we've seen in COVID-19. Maybe one can just add that, remember that this business was highly competitive before COVID-19, but then due to the very dramatic increase in volume and demand, it suddenly almost disappeared during the first quarters of COVID. It's probably more a return back to some sort of normalization. Okay. That makes sense. Thank you. Just the last question, which is sort of more broad question, but you have clearly de-leveraged quite a bit, and from a financing perspective, you seem to be ready for another acquisition. How does it look internally? Would you have the capacity and the capabilities to absorb another company after the Agio integration has succeeded? You're right that financially it looks positive if there are possibilities on the acquisition side. Internally on Agio, I would say we have to close down the three plants end of the year. When doing that, from the beginning of next year, we will be good to get a new acquisition. Okay. Thank you. Congrats with the strong quarter. Thank you. Thank you. Thank you. Thank you. We're taking our next question from the line of Niklas Ekman at Carnegie. Please go ahead. Thank you. It's just a quick follow-up, a small detail here. You provide a lot of details here on your buyback program, but it's difficult to monitor still exactly how many shares are outstanding. I think you have 97.5 million shares, and then you have 2.75 million shares in treasury, right? If I look at the actual number of externally held shares, it's just below 95 million. Is that the way to look at it? I think you can put it that way. Yes. Great. Since you give so much detail, it would be great if you could be more detailed in the quarterly results as well on the number of shares going forward. Noted. Yes. Thank you. Thank you so much. Bye. Thank you. There are no more questions on the line. Please continue. From our side, I think we will thank everyone for their participation and wish you all a good day. That concludes our call for today. Thank you for participating. You may all disconnect.