Thank you for joining the call today, which is for JP Morgan Equity High Touch clients or research advisor or MiFID out-of-scope clients. The call is for institutional investors only, therefore, if you're a corporate client or a member of the press, please kindly disconnect from the call. I will now pass you over to JP Morgan host for this event, Celine Pannuti. Thank you. Good afternoon. Good morning. Thank you everyone for joining me today. I am Celine Pannuti, and I head the equity research at staples equity research at JP Morgan. I am pleased today, as part of our fireside chat series, to host Magnus Groth, CEO of Essity. Magnus, thank you so much for joining. It's a pleasure. Magnus, we will be, it, over the next hour, looking at long-term questions as well as short-term regarding Essity. You do not provide a financial outlook, but you had a strong start to the year, and you have guided, so to speak, to restore its profitability throughout 2023. My first question, really, following on that, is trying to understand where we are in terms of pricing implementation. We've seen pricing as being strong across the board and even health and medical as they have caught up recently in terms of pricing. Are you done now in pricing, if I think about consumer goods and the professional hygiene division? If I think about health and medical, how much longer and how much more pricing should we expect? In professional hygiene and in consumer goods, we are mostly down. There are still, of course, individual markets or subcategories where there might be some more work to be done, especially in continence care, retail, and in FemCare, in personal care, in the consumer goods area, we still have some more work to be done. Broadly, we are now focusing more on price management, so to work to improve our margins rather than to just raise prices at any cost, so to say. Then in health and medical, we have good pricing, but we need more. Expect us to continue raising prices the next three, four quarters before we see kind of the recovery where we want it to be. This is because of the fact that we are, in many cases, on three-year contracts here, so it just takes time to work through that backlog of existing contracts. We're halfway through, approximately. All right, thanks. I would like to come back to that price management that you were talking about. Clearly, we've seen many costs have started to roll over from a commodity standpoint, as well, energy and distribution costs have come down quite a lot. How do you expect your competition to behave across markets, as we see the input cost easing coming through? Should we expect promotion to rise, as I think smaller competitors may try to win back market share? We also see usually that private label are probably a bit quicker to pass on any changes in prices. Yeah, I would be really interested to understand that dynamic that's been the focus on the market. We haven't seen too much of a promotional pressure yet. In the last 18, 24 months, I think the kind of pricing landscape has been quite disciplined across the board. Of course, I can't talk about competition specifically. Very difficult to say. What we have seen, of course, now with the last couple of quarters, is downtrading. That's more from a consumer perspective, that they are moving from kind of the middle-tier products to lower-tier products and to private label. That's a stronger trend that we're seeing then. That has, of course, to do with inflation rather than competitive pressure. Just to come back on that, because we've seen some politicians and retailers talking about price cuts. Is that something that you are, as well confronted to, or as not yet a discussion that you are having with your customers? We've had discussions with our customers now every quarter for the last 18 months or two years, and of course, that's still ongoing. For us, the key is the margin development, that we can continue to expand our margin because we are on the path to a return on capital employed above 17% by 2025, which is just around the corner. We need to continue to get our overall adjusted EBITA margins up to above 13% until then. That's our clear focus. Of course, now also taking into account that we want to balance with, you know, not losing market share or too much volume, but clearly focus is still on the margin recovery. Right. Maybe, if I also, come into the cost outlook, at, looking into Q2, you have guided for lower raw material and lower energy costs for all the businesses sequentially. Should we expect the cost to turn already into a tailwind in Q2? Then maybe. Yeah. I can also ask you about pulp prices, that have been coming down year to date across geographies. We've seen recently a tick in China. Can you talk about what you've seen in terms of price negotiation for pulp across regions? Sure. When it comes to raw materials, energy, and also distribution costs, we did forecast lower costs in the second quarter than in the first quarter, so sequentially. However, year-over-year, we still see stable or slightly higher costs than the second quarter of last year. Specifically in energy, we expect to have higher cost than last year because of higher prices in our in the hedged part of our energy purchasing. Then, of course, with the price declines that we're seeing in the market, global market prices, this will then turn positive in the second half of the year. I tried to look here recently at China. Actually, since the beginning of the year, both hardwood and softwood is down significantly. With the recent new capacity coming into the market, now and also later this year, we don't expect kind of an uptick overall in pulp prices. We expect them to remain low. I mean, they're not low today from a historic level, but that they should continue to decline kind of in the short to medium term. It's always difficult to say. Right now, we can see stocks building up in many places, pulp stocks and the new capacity coming in. We're not expecting pulp prices to increase again, rather the opposite. Okay. Right. Thank you. One other point has been volume. You've been quite vocal, I mean, we are mentioning that earlier, that you don't want to lose too much volume. Yet we've seen volume being negative in Q1. Do you expect volume to come back to positive territory this year? Can you talk about the competitive context? Because over the past years, SCT was better able than its competitor to supply customers, is that a help because of the relationship you built, or is proving to be maybe a high comp base, as some of your competitors are trying to get back their fair share of volumes? Volume is important for us because volume growth is always helpful for cost coverage, of course, in our asset base. Our ambition for this year is to continue to grow volumes. Last year, we had positive volumes. Not many other FMCG companies had that, even though we actually did see a decline also in the fourth quarter, and then followed by the first quarter of this year. The first quarter of this year, it wasn't that much. It was around 2.5%, and half of that was due to actions that we have taken with a focus on enhancing margins, which, well, part of it was actually Russia, but half of it was also stepping out of baby diapers in Latin America, which is one a cure kill initiatives. This could still be the case going forward, that we take initiatives that actually has a negative impact on our margins in order to improve long-term profitability. Of course, we will clearly guide to that. When we look back historically at recessions, we've never seen a big impact on underlying volumes in our categories. They are very resilient. It's the necessities and essentials, the products that we sell. That's why we have an ambition to have positive volumes by year-round, even though, of course, this could also vary between quarters. Right. Then maybe, coming back to what you said earlier about downtrading, I would like to understand a bit. Yes, it's a necessity, but how is the consumer looking at their purchasing in your categories? You mentioned some downtrading, so if you could talk about what you've seen in Latin America, and specifically, can we touch upon Europe? Are you seeing this accelerating, and how are you going to play around that? I think, you know, in the past, if I think about your innovation that you were talking about, they were more trying to push up the premiumization. How are you looking at your pipeline in that context, as far as innovation is concerned? What we're seeing so far is downtrading in Latin America and in certain geographies in Europe, and it's in two categories in the consumer goods area. It's in consumer tissue and in baby care. We see it in Latin America, I already mentioned in Europe, for instance, in the U.K., but actually also now in a few other countries. The way we manage this is to always be where the consumer is. Especially in Europe, we also have a strong offering, both in the value tier of our branded products and also in private labels. From a volume perspective, this is something that we should be able to manage. Of course, from a kind of value creation point of view, we prefer and continue to focus with innovation in the premium segment. What we see specifically from a kind of innovation perspective is that the premium segment seem to be holding up quite well, while those who are buying kind of middle tier products are downtrading to basic products or value products. So if you look at it from a good, better, best perspective, the best part of the categories holding up, but there's a downtrading from better to good, so to say. That we manage with a focus, focusing our claim on the value that we bring with our products. you know, more product in, more sheets on the toilet roll, for instance, more products. so different, more value-related claims than we have typically had. It's important for us to try to catch consumers who are used and enjoy our brands, so they don't move to private label, so that we can catch them in the value tier of the branded assortment. That's our thinking and our strategy. Well, which other countries you say in Europe are as well now, besides the U.K., showing downtrading? We see that in some other markets. I think U.K. is the country we've mentioned so far. We're seeing it in some other European countries also. Right. Now, another short-term question around your savings. So the fact that we saw increased inflation that had a negative headwind on your savings, do you still see the scope delivering this SEK 0.5 billion-SEK 1 billion saving in 2024 to support profitability? You know, what opportunity do you see in terms of efficiency savings throughout the year, be it in production or in materialization or in a different part of your supply chain? Yeah. For quite a few years, maybe the five years running up to 2020, we saw savings of about SEK half to SEK 1 billion per year in cost of goods sold. Those were quite visible also in the P&L because we didn't have any inflation. We had the years here of great disruption, of course, with volume declines during the pandemic, and then the supply chain issues last year and bottlenecks and so on. During those two last years, it's been much more difficult to work with efficiency savings. We had more of a focus than on service levels and just keeping the machines running. Having said that, we have had savings, but they have been visibly in our P&L, of kind of. The inflationary effect has been bigger than the savings. Looking forward now from this year, it's much easier to work with the types of savings that we do in getting rebates from suppliers, material rationalization, finding more suppliers, strong focus on energy savings, machine efficiency improvements, because things are getting back to normal in the factories for the first time in several years. It's much easier to work again in a structured way with these types of efficiencies. Yes, the answer is yes. We expect to have savings in the range of one half to SEK 1 billion. However, we still have inflation in maintenance, in salary costs and so on, which will partly eat into this. We. It's difficult to state the number kind of visible in the P&L, but underlying, we expect to have really good savings this year in cost of goods sold, from a gross perspective. Mm-hmm. Good. Maybe moving now to more a midterm discussion. I would like to start with your midterm growth ambition, which is around 5% growth per annum. That includes around 3% in organic growth. Obviously, we have seen several years of you clearly delivering well ahead of that. As well, helped by a lot of pricing that has been quite extraordinary for you, but for as well, the rest of the industry. My question is more about looking forward after those huge price increases, we could be looking at years of not of pricing or even price deflation. Mm. How should we look? I mean, what's your confidence level around this 3%? Should we expect that on a year-by-year basis, or do you think it's more on average that we should be looking at? Yeah, I would probably look at it on average. I mean, there is underlying volume growth in our categories, and we're focusing, of course, in the parts of our business where we see the highest growth. We have had a positive mix now for many, many quarters and many years overall in our business, and we aim to continue that. We had huge pricing, and that could, of course, reverse, depending on how quickly and how dramatically the raw materials, energy, and distribution and other costs decline or how they develop. It's really difficult to predict that in the medium term. I'm very convinced about the 5% and the 3% organic, on average, but how it develops over the next quarters and years will depend very much on those underlying costs. I can't really say. All right. Well, thank you for that. Yes, I think, right to mention the depth and the rapidity of the cost is yet not very visible. Okay, maybe another target that you already alluded to is the return on invested capital, to hit 17%, above 17% by 2025. First of all, we're gonna discuss Vinda and the private label, which are both under strategic review. What will happen to this target, if these were to be disposed of? If I think about the return on capital target, you said that it will be equivalent of hitting a 13% EBITA margin by 2025. This is a number that you only achieved in 2020 when there was a strong COVID-led benefit. Obviously, lower costs could help along with your prices, but from a structural standpoint, what do you think you have achieved that could help you effectively to narrow that gap and get to that 13% margin? Yeah. Absolutely, we're completely committed to that 13% margin, that then would translate to 17% ROCE by 2025, which is just around the corner. It's less than two years away. Yeah. Actually, to put this in perspective, in 2020, we didn't really have a COVID-led benefit. We had a big benefit from low raw materials and energy costs, which of course, may be willing to COVID. We actually had a negative impact overall in the year from volumes when we started to see lockdowns. Of course, early in the year, there were all these big swings due to panic buying and so on. I mean, that also created some trouble for us. Later in the year, we started to seeing actually a negative impact. Then in the following year, we had huge negative impact from the low volumes during the pandemic when people were in lockdown, in professional hygiene and actually in the medical categories, in all the categories. In 2022, the cost tsunami. If you look at that in 2020, I think we made around SEK 17.5 billion in adjusted EBITA, and then the following year, SEK 13.5 billion, and then last year, SEK 13.2 billion or something like that. We managed cost headwinds of well over SEK 20 billion, I think it's SEK 26 billion in this period, and these big negative impacts on volumes also. It's not been normal years since we did the 13%. For sure, it's been incredibly tough, and I'm convinced since we have continued to invest in our plants, in efficiencies, doing cure kill initiatives, in our brands and launching new products, that underlying structurally, we have continued to improve our competitiveness and our so to say, structural margins, which have kind of been hidden behind all of this upheaval over the last couple of years, that's what makes me confident. To close the gap from where we are today, where we need to find another three, I don't know, 3.5% or something, 3%, a large part of that will come from price management now over the next year or so. just the fact that we are continuing to work with efficiencies, with innovation, and with taking out underperforming parts of the business. That's how it builds up. it's been interesting times, when we achieved over 13%. That meant that we achieved a return on capital employed, about 15%. Of course, it was based on lower overall sales. It wasn't really from any massive one-time benefits. It felt as a kind of steady state number at the time or performance at the time. Just to put it. Um- -in perspective. You just mentioned, Magnus, that part of it would be, in, you know, including, taking out some underperforming part of your portfolio. Just coming back to my, the first part of my question... Yeah. how would the target looks like? Yes. If you have to sell those two assets? Yeah, of course. if it is-. yeah, of course, it's what we announced is a strategic review, not that we're going to sell them, but. Mm-hmm. We're committed to the 17% ROCE target, with the business as is, so including in the private label division, since we set that ambition and target. Mm-hmm a long time ago, you know? Rough kind of back of the envelope calculation based on the assumption that, the private label division and Vinda would not be included anymore in Essity, add over 1% of return on capital and employed, in that case. That's, again, hypothetical. Yeah. you know, then we have to discuss targets, once we get to such a situation. Now we're completely focused on the 17% as the businesses today. When I mentioned taking out maybe some capacities and businesses, I was referring more to initiatives like what we announced in the first quarter, when we were announcing Professional Hygiene, taking out some sales and assets in Professional Hygiene, the lowest margin part, which was, to some extent, almost like a private label type, very commoditized part of the Professional Hygiene. So more kind of smaller activities. Right. Maybe, just following up the strategic review, if I start with private label in consumer tissue, I think this accounts for about a third of your European consumer tissue operation. Mm-hmm. I think the business is already independent from a legal standpoint. Mm-hmm. Where are you in terms of running it on its own from an operational standpoint? How is its margin comparing with the rest of your branded Western European consumer tissue? Then, my overall question on that, if I think about the scale that you achieve, by combining private label and branded, those scale benefits, how are you going to think about potential dyssynergy or from a cost standpoint, but as well from a bargaining power standpoint with your customer, if you were not the owner at some point of that asset? Yes, thanks. Many questions. The private label division is running completely separately from an organizational, operational, and legal point of view, and a clearly separate business, and that means that we have had time most of the last year to manage the stranded costs that actually came out of this separation, which I think has shown us that when you set up such a business only focused on private label, the... You know, it might be that you're allocating some cost that doesn't have to be there, and of course, those stranded costs end up in the rest of Essity, and we worked hard to flush out those costs. There shouldn't be any kind of negative synergies from that perspective. What we still have is that we have the private label division includes seven plants. There are still some machines producing branded products in those plants, and vice versa. We have some private label tissue being produced in the Essity plants. We are moving those machines now and moving those volumes, and this will take until first quarter next year. That's ongoing. In the meantime, we're managing that with service level agreements, which works well. That's all ongoing, and it's a lot of work, but quite straightforward. By the first quarter next year, also that will be completely sorted out. Then, of course, it's about purchasing, procurement, negotiating with the pulp suppliers. Considering, you know, all the other tissue business we have in Latin America, but also in professional hygiene, we are still a major pulp buyer and a major player when it comes to also working with suppliers of machinery and maintenance and so on. We don't see any disadvantages of scale from that perspective. Also maybe important to note, of course, is that most of the customers of the private label division mostly buy private label consumer tissue. They are typically not a big buyer of our branded personal care assortment or personal care in general from us. That's a difference, of course, from the customers where we work with our branded assortment, which those customers, those retailers, typically buy all our categories, and the same with what we call our retail brand partners, that they, in many cases, buy both our branded assortment, but also we develop their retail brand together with them, and we've done that for decades. It's a different type of relationship. We don't miss that synergy either by sorting, by putting this separating out the private label division. Okay. Moving on, the other one that is under strategic review, Vinda. You own a majority stake in that company, which is run in China independently, but as well, you assimilated your Asian business into that, and you have invested into growing the personal care business in Asia- Mm ... and especially in China. In the event that you are looking at disposing your stake in Vinda, I just want to understand a bit the strategy from an Asian standpoint. You know, because clearly, China has been a nice contributor to growth, and to the makeup of your 3% organic target. Mm. You don't have a big business in the US either. Just want to understand from a geographical standpoint, how you envision the presence or the development of the group. If I think about the personal care brands that are now fully into the joint venture with Vinda, should we think about licensing going forward? Mm. What could be the outcome of that? Absolutely. Yeah, important, again, just to underline why we are doing this strategic review, that has nothing to do with the geography. It's all about the categories that, in spite of all our efforts over the last 10 years, fantastic work done by Vinda management, I mean, having very strong brands, very strong market position, a great team. 83% of Vinda sales is still consumer tissue, so only 17% is personal care. This tissue business is consuming about 25% of our capital expenditure in the group, even though it's around 14% of our sales. It's quite competitive, we see new capacities coming in. Just as an experiment, assuming that this, you know, had been other categories, that had been less capital-intensive, higher margin, then we wouldn't have been doing this strategic review today. It's all about reducing Essity's share of sales in consumer tissue. I think that's important to note. Of course, what's happening is, since it's a listed company, also including our personal care categories in this region, of course, that goes as well. That means that we, yes, we do not take part directly in assuming that we would no longer be owners of Vinda in the market growth either. To get back to the second part of your question, to the personal care part of that business, but also actually Tork and Tempo, the tissue brand, are under license from us, and these licenses terminate in 2025. That's also part of the strategic review. Of course, it's an opportunity to remain in major growing markets like China, but from instead, you know, with a licensing agreement, rather than being there as a fully invested producer and so on. That's part of the strategic view and very important for us, but because of course, we want to take part in that growth. I think you implied also at where you find to compensate for that growth, we would like to have a stronger presence in the U.S., also in the consumer categories. Not that easy, of course, it's highly consolidated and very competitive, but still very, very good margins in many cases. Something that we're looking at. Through the licenses, as I said, to continue to have a position in China and Southeast Asia. Still talking hypothetically, I mean, if you were to sell those two businesses, and that would be the outcome of your review, I would like to understand the priority for cash usage. I think the market has been concluding that you would use cash towards a reinvestment in M&A, but that could be at a higher multiple than the group average. Can you talk about your focus in terms of M&A, and how you would address the concern of value creation in buying higher multiple assets? Yeah. Yeah, in this hypothetical scenario, 22% of SCA sales would leave the company then. It would be a smaller company. Just to give the picture what the company would look like without Vinda and the Private Label division, approximately half of sales would then be consumer goods, of which half personal care and half consumer tissue, a quarter each of the group. Professional hygiene and health and medical would also be one quarter each of the group. Much less focus on consumer tissue, which is the most volatile, most capital-intensive part of our business. And we would almost, we would reduce our sales of consumer tissue by 45% of the overall consumer tissue business, just to give some other numbers of that. Of course, it's- Yeah It's a big change. Actually, it's a bigger part that we would move out of SCT than when we did the split from SCA. Actually, I think SCA at the time was 18% or something. Having said that, of course, you have to look at every acquisition opportunity by itself on its own merits and make sure that it's value-creating. If you're moving into categories that are more value-creating, typically the multiples are higher, but every acquisition needs to make sense by its own, and then, of course, to the extent it also contributes with the synergies and so on. It's not our intention to sell cheap and buy expensive. We're in no rush here with the strategic view, and we look carefully at different acquisition opportunities and, you know, assess them case by case. I think looking back at all the acquisitions we made over the last couple of years, they have been quite value-creating, but of course, with different logics, where some have been at quite high multiples and others at lower multiples. Maybe, good, can we spend a bit of time talking about this acquisition? You've made quite a few in the past two to three years in different segments. In consumer groups, Asaleo and Familia, in personal care, Modibodi and Knix, and in medical- Mm-hmm ... you added ABIGO and Idoferra. Can we just spend a bit of time to understand how those transactions have gone and, you know, your ambition and the value creation you think you've already delivered? Sure, we can go through them in turn because they're quite different characteristics. The two biggest ones were Familia and Asaleo, where we acquired the outstanding shares in companies we were already part-owning. Familia has been a tremendous success, fantastic development in Latin America from a growth and margin perspective. Very value-creating, and of course, big synergies with our existing Latin American business also. Really happy about that. Asaleo, very well-managed company with, you know, a strong overall portfolio, 40% professional hygiene, and then mostly feminine care, incontinence care, and just a little bit of consumer tissue. They were struggling a little bit here last year due to freight costs. Like many of our competitors, there were a big part of volumes imported to the country, and freight costs, as you know, were 10x higher last year than they were two, three years ago, and it's all normalizing now. We're really moving forward on strengthening the brand equities and the market positions and expecting margins to come back to where they should be in the short term. Also happy about that acquisition, but quite impacted by the pandemic. When it comes to Modibodi and Knix... completely different logic. These are companies that are fast growers, kind of tech or new economy to some extent, and where we wanted to grab an opportunity to become the leaders in the fastest growing part of intimate hygiene, which is leakproof apparel or washable, absorbent underwear, whatever you want to call them. These were two market-leading companies that were up for sale. Of course, from a multiple standpoint, it looks quite expensive, but this is because a very good gross margin is completely reinvested, more or less in growth. This is something we will continue for a while, and that's part of our business plan. In the first quarter this year, especially Knix did really well, and Modibodi is also performing according to plan. Of course, here we need to see significant growth going forward, and then eventually that we benefits then from a margin standpoint, also, once we've kind of grown in this fast-growing segment of intimate hygiene. That's a different logic. Then both ABIGO and Hydrofera are doing really, really well. I mean, I think the margins were, I mean, what we paid was quite reasonable, and they are performing as or better than our business plans, and I think on reasonable multiples, because these were quite profitable companies already before, where we can then leverage and get scale also. Very happy about those. Of course, in medical, and especially in wound care, we need to get better. I'd really like to see some maybe more mid-sized opportunities going forward in advanced wound care and wound care. Let's see how that develops over the next couple of years. Okay. In, yeah, I mean, in when it comes to the leakproof washable part of the business, we now have 20% global market share, approximately. This is our estimate, also, including our own washable, leakproof products under our own brands. That's a very, very good starting point in this fast-growing sub-segment. I wanted to transition to divisions and starting with medical, which you just alluded to, which also was built through a M&A, a quite sizable M&A. We've seen that the division has continued to grow in the past eight quarters, with pricing as improving as well, that also has been impacted the long-term tender process. Mm. Do you expect the business to recover its prior peak margin of more than 20%? Now that the dust is settling on COVID and we are into normalization, what is your assessment of the growth opportunity for the medical categories? Definitely our assumptions, we did already know almost six years ago, to the margin over 20% and a growth of 3%-5% still applies in these businesses. Still very attractive and an area where we look to grow, both organically and through acquisitions. Actually with the enormous cost impacts that we had last year, even these businesses that have a very high gross margins, were significantly impacted. Also with a delay, because the cost increases flowed through the different materials that we buy to use in our wound care, our compression, and our orthopedic soft goods products, kind of flowed through with a bigger lag. We're actually still in the last quarter, we saw higher costs in medical than we saw in the fourth quarter sequentially. That was actually an exception to the group. Again, we are raising prices, we still have growing volumes, and we expect also here, costs to eventually, you know, turn in the next couple of quarters. That's why I'm still committed to about 20% margin in the longer term. The Inco healthcare part of health and medical has been really negatively impacted. Again, we're working our way when it comes to raw material costs, primarily. We're working our way through that as we negotiate the three-year contracts. Also as... A substantial part of the volumes there are based on also reimbursements, where we are putting pressure on authorities and healthcare authorities to raise those reimbursements and to be able to provide, of course, the amount of products and services that our consumers and customers need. Maybe just to round up on medical. You mentioned that you would be interested in a potential, you know, M&A, and looking to maybe increase your sales in advanced wound care and wound care. I wanted to understand whether, you know, there was as well, a more specific categories or skill set knowledge that you need to acquire in that market. Last year, also, the CMD, you talked about expanding your offering across the care continuum. What are the agencies or new categories that you are looking at? When from a overall kind of category perspective, I think we have a good set of categories now. Incontinence care, healthcare, wound care, compression, and orthopedic soft goods. We need to scale up, especially in wound care and advanced wound care, and especially in the U.S. That's a clear focus. Overall, we see that we can add more value than by adding adjacent offerings. For instance, the TENA SmartCare, which is the sensor that we use to monitor the product usage in healthcare settings, but now also increasingly in home care settings. Moving away just from treating to also kind of monitoring, and then the Novioscan product, which is a sensor that you put on the outside of your bladder to actually avoid the, even having to use, INCO products. I think it's also prevention. Those are smaller types of acquisitions, add-ons, to increase the strength of our market positions. I think at that CMD, we also spoke about another adjacent product that's been very, very successful, which is the Cutimed Wound Navigator, where you can use your phone to take a picture of a chronic wound to see how it's developing, if it's healing, or if it's getting worse, and also you have a recommendation on product usage. Which is very valuable in these times when staff turnover is very high in healthcare settings, and it's kind of increases efficiency also in those types of settings. Those are the typical types of acquisitions or developments that we're doing to kind of cover more of the continuum of care than we have done from just treating the current condition. Maybe turning to consumer goods. With that, we have the consumer tissue and the personal care side of it. Focusing on Europe, can you talk about, you know, maybe some of the latest innovations or premiumization opportunity that you see in this segment? In an environment where you discussed earlier, there could be a bit more budget constraint from your customers, how are you looking at the rise of private label in those categories or competition in these categories? Then maybe also, looking at feminine care and including more specifically, we'd like to understand, I think you mentioned earlier, your ambition to grow this business higher. I just want, like, you mentioned the U.S., is that where you see an organic opportunity for these two businesses? Yeah, exactly. We covered consumer tissue. Let's focus on personal care, and we see a growth of the private label in baby care, but of course, we're also quite present there in Europe and with the retail partners I mentioned earlier. We're happy to be in either brand or the retail brand when it comes to baby care, where we are today, mostly a European business, and in addition, then part of Vinda having a strong position in Malaysia in baby. Turning then to intimate hygiene, the combination of feminine care and INCO care. This is an area where we are still working on price increases, actually, because some of our biggest competitors, like P&G specifically, have not raised prices outside of the U.S. until recently, which is quite surprising. So we still have a way to go here. A strong focus for us has been to think more about this as a whole, so intimate hygiene, and also look at kind of, solutions, maybe also kind of the continuum in the gray zone between kind of the menstruation products and incontinence care products, covering different need states and multi-fluids, as we call it, and having a stronger offering here. Also, again, always based on, products that have a strong, consumer appeal in being very thin, very underwear-like, and then, of course, adding also the washable, products. Typically, intimate hygiene is an area where we've been growing market share over the last many, many years, continuously. So we know this is an area where we are very, very strong and where we continue to invest. We're also looking specifically at certain kind of need states, like menopause, for instance, and looking at offering a wider offering here. We have Issviva, for instance, which is a website where it's possible to get advice on different menopause need states and how they can be managed, for instance. These are examples of efforts we're doing in this area. A strong focus on the intimate hygiene part of consumer goods. Going forward and outside of Europe, in Latin America, we are really continuing to win everywhere, and we are typically the market leader in both these categories in most countries. In the U.S., small positions, less than 5% in incontinence care retail and some small positions in the Hispanic population close to the border of Mexico, since we have, I think, 60% market share with Saba and FemCare in Mexico. Many Hispanic people also in the U.S. prefer to buy these products, but here we would like to do more going forward. It's kind of... Then we have Knix, the leakproof apparel company that we acquired that's strong in the U.S. and Canada, but it's kind of, it's a bit patchy. We would like to do more, and we're reviewing the strategy regarding the U.S. It remains the biggest hygiene and health market in the world, for sure. All right. I mean, it's also one of the reasons we did the reorganization that we did, creating two consumer goods business areas, one that covers both Latin America and North America, or South America and North America, the other one covering Europe, Middle East, Africa. That we get an increased focus on the consumer categories also in North America. In Canada, we're doing great, but that's only 10% of the market of the U.S., so it's a smaller market. Thank you for that, Magnus. I just want to say on that division, just would like to understand the profitability here. I mean, you've done a lot of the cost initiative, reorganization, the Tissue Roadmap, cure kill, Manufacturing Roadmap. Now, if I look at the category, the division of a cycle, I think, you know, we are looking at low teens margin. Obviously, we have spoken earlier about input cost volatility, but structurally, what kind of profitability can we aspire at for this division? Yeah, we decided not to provide kind of margin targets per division, you know, at this point. Of course, they need to be higher than they are to achieve the 13%. We need to continue to improve margins in all the categories, in baby, in tissue still, and in feminine and INCO. We still have a gap in margin in all these areas. Right. In some areas, I mean, in consumer tissue, it's now more about price management, while in intimate hygiene, we even still need to increase prices to some extent. Right. Let's turn to the, the third division, Professional Hygiene. Throughout the pandemic, you spoke a lot about, you know, the agencies you were going into... Mm-hmm. If you think about skin cleansing, wipes, surface cleaning, even digital. Can you talk about how resilient this initiative have been, now that these businesses- Mm. now that COVID has, normalized? What is your aim, to do in this channel in terms of, expanding, the offering? Yes. First of all, I want to underline the fantastic recovery of Professional Hygiene. In spite of. This is the only of our businesses or divisions where volumes are not significantly higher than before the pandemic. In this area, volumes are still only at 95%. The simple reason is that people are working from home still. In hotels, restaurants, catering, in industrial use, in healthcare use, we still see high volumes, but not in commercial buildings and public buildings. It's still lower and will probably remain lower, but still, we had a really, really good margin recovery here. We expect to see great opportunities. We see opportunities in the U.S. now that we operate this globally and also in Latin America. When it comes to these sub-segments that we spoke about a lot, definitely opportunities very much still in industrial use. There's a higher usage of wipers to wipe down equipment, to wipe down control rooms and so on, between shifts in different industries, because there are new hygiene routines. We also see a higher consumption of soap in general, which is typically a high-margin business for us. Hand sanitizers is difficult. There's been so much new capacity coming in to the market that it's not as obvious as maybe it looked at the time. Even though there's still a higher consumption of hand sanitizers than before the pandemic, there is also a bigger supply. It was easier to kind of build supply here. Looking forward, don't expect us to make acquisitions kind of in the core tissue part of Professional Hygiene. Yeah. If it's specialist wipes from nonwovens, like the acquisition we did last year, Legacy Converting, for instance, I mean, I think that's a perfect example of what we would like to do, or venturing more into soap, for instance, and something we're doing both organically and potentially through acquisitions. As we stated, we would like to do more of what you find on a cleaning cart in your office. I think, an interesting example is that currently we are working together with Reckitt Benckiser, and we have launched surface cleaning chemicals under co-branded Dettol and Tork, because Reckitt Benckiser are a pure consumer brand today, and they would like to get into the commercial space, and for us, we're not experts in cleaning chemicals. An interesting opportunity and just an example of what we're looking at for the future. Let's see how that develops. Yeah. Interesting, yes. Maybe to finish off on this division, I would like to understand the profitability, not that you're gonna give me a target, but, is there any reason why we should not see this category go back to mid-teens or high teens margin like it did in the past? Talking about the additions that you were just discussing, do they come with better margin, because it's a bit more service-oriented to your customers? Then maybe lastly, I think when you think about that, you really think about U.S., Europe, where you are very strong in this business. Mm-hmm. How should we think about the emerging market, part of Professional Hygiene? ... I see so many opportunities in this business area because we are the global number one, and the Tork is so strong, and it carries more than just tissue, and we have the sensor-enabled solutions. There's still some opportunity for what we call Curakle, and what we announced in the first quarter, I think I mentioned that in the call, will have a positive impact on the overall professional hygiene business area of around 1% margin uptick, just that Curakle exercise. Of course, if that's 20% of SCT sales, that would equate to 0.2%, just that initiative there as an example, while also adding other initiatives as I mentioned. There's a lot to be done here, and we're reviewing also overall the kind of dispenser costs, which is a big cost item for us. We mount about six million dispensers every year to see what we can do there to improve efficiencies. Continuing to grow in Latin America quite aggressively, and since a few years, actually, also in Brazil, where we have added some converting equipment in our plant, our incontinence care plant in Brazil. That's of course, a big and important market. Really excited overall about professional hygiene. It's a very good business area for us. Well, Magnus, thank you so much for this discussion. Lots and lots is going on in the organization, from the projects you have just mentioned. Thank you for sharing these insights and for the time with us this afternoon. We look forward for your next checkpoint in H1. Thank you so much. Thank you very much, Celine. Thanks, everyone, for listening. Yeah. Thank you, everyone. Have a good weekend.