Smurfit Kappa Group Plc (OTCPK:SMFTF) Q4 2021 Earnings Conference Call February 9, 2022 4:00 AM ET
Tony Smurfit – Group Chief Executive Officer & Executive Director
Saverio Mayer – Chief Executive Officer, Europe
Laurent Sellier – Chief Executive Officer, Americas
Ken Bowles – Group Chief Financial Officer & Executive Director
Lars Kjellberg – Crédit Suisse
Justin Jordan – Exane BNP Paribas
Hello, and welcome to the Smurfit Kappa Group 2021 Full Year Results. Throughout the call, all participants will be in listen-only mode and afterwards there'll be a question-and-answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Tony Smurfit. Please go ahead with your meeting.
Thank you, Operator. Good morning, ladies and gentlemen, and thank you for joining us today. As usual, I refer to the disclaimer concerning future expectations. I'm delighted that Ken Bowles, our CFO, joins me as usual today. Also with us today and joining us from Amsterdam is our CEO of Europe, Saverio Mayer. Together with our newly appointed CEO of the Americas, Laurent Sellier, who is joining us from Miami.
Both of their biographies are in the appendix. Equally. I'm also delighted to be joined again here in the room by Paul Regan, our Group Treasurer. Paul has been with the company for 27 years and will retire later this year. And so this will be his last results presentation for Smurfit Kappa Group. Both Ken and myself have work closely with Paul for many years, and we've both like to pay tribute to the tremendous work he has done on behalf of the company and shareholders over decades.
Today, you will have seen our results and we'll go through them shortly, but I would like for now to focus on what makes this company truly different. 6 years ago, we set out a new vision to take this company forward in an evolved but accelerated manner. Today, that vision has evolved further to be a globally admired business, dynamically and sustainably delivering secure and superior returns for all stakeholders.
This vision, which is the foundation for all that we're accomplishing through the company is bringing the business forward and ensuring that our performance is improving on a continual basis. Accomplishing our vision means better results for all stakeholders. To accomplish our vision, we put people at the heart of everything we do. I'm really happy with the way we've continued to develop our people, reward and motivate our people and attract and retain our people.
At the end of the day, it is our people who are innovating and the ones that are going the extra mile for customers. Smurfit Kappa is recognized as progressive, growth orientated, customer - centric, and resilient by our stakeholders. And while our vision is a journey and not a destination we are progressively realizing that vision by delivering secure and superior returns. We're delivering these returns because we have great people. In this room -- virtual room of five with 160 years of experience within the sector. And I'm proud that all of us are spent the vast majority of our professional careers within Smurfit Kappa.
I'm delighted to say that this kind of loyalty is embedded at all levels throughout the organization. We are far from unique in this room. With experience like the Smurfit Kappa has adapted quickly as our industry has changed radically over the last number of years. Our product, being biodegradable, renewable, and recyclable, is now a must-have for consumers who are demanding more sustainable packaging.
Governments are following suit by legislating more and more against non-recyclable, non-renewable, and less-sustainable packaging. The pandemic has accelerated trends that were already very apparent. E-commerce is a way of life for all of us, and the protection that corrugated gives us a transport medium is the preferred choice for mobile and sustainable world. Our products have evolved also from being a selling tool for our customers due to the highly graphic-orientated packaging that we produce, and shelf-ready packaging which facilitates and drives customer sales.
Further strength of our product is the versatility of corrugated, helping customers reduce their packaging and transport costs, which makes our product the facilitator of efficiency in supply chains. In Smurfit Kappa, we're particularly proud of being the leader. With a number one in craft line and recycled container board in Europe, we're also the number one corrugated box producer in Europe, primarily being number one or number two in every country in which we operate. And we're also the number one producer of the fast-growing Bag-in-Box business in the European sphere. But of course, not just about size and scale, but what it brings.
It's our ability to serve our customers throughout Europe, giving them security of supply and supporting their need for resilience. The scale of the company offers unrivaled applications, which I'll touch on in later. Increasingly, customers demand resilience, which Smurfit Kappa is uniquely positioned to provide through our scale, reach, and quality. In the Americas, our strength and positioning cannot be overstated. The vast region of over a billion people packaging from a very relatively low base is becoming more sophisticated needing a company like Smurfit Kappa to supply the knowledge and expertise to meet changing supply chains.
With very strong barriers to entry in many markets and leading market positions across Smurfit Kappa's unrivaled Pan America network. Smurfit Kappa offers customers the complete package. We've been present on this continent since 1986, and this has allowed us to build an experienced and strong local management team who are totally aligned with the Smurfit Kappa culture and values. We've continued to make successful acquisitions in this region and continued to develop strongly growing our regional footprint and expanding our product offering. Our journey of transformation with quality as our guiding principle, we're very proud of the progress in Smurfit Kappa over many years.
While there will be some bumps in the road, of course, this slide demonstrates our clear progress. Growing return on capital employed with a substantially increased capital base close to our target this year of 17% with significant benefits to come. EBITDA and margin growth show a strong upward trend over the years, and we anticipate this positive situation continuing. We're also proud of our progressive dividend stream, which Ken will allude to later. As you can see from this slide, following the progressive -- progressive delivery of our vision, together with the benefits of our initial Medium-Term Plan, we have seen a significant level of total shareholder return.
And every aspect of our business we have so much more to do and so many more opportunities. This is rooted in Smurfit Kappa's performance-led culture, which is built on delivery. Our people, as I say, go the extra mile. Our culture allows us to develop and innovate and put the experience and expertise that exists within this company to work for our customers. We built 29 development centers across the world that are continuously innovating, developing new ways to package products for our customers to allow them to be winners in their industries and markets.
I'm delighted that this continues to be recognized with 69 awards last year at considerable growth. Together with our strong sustainability credentials and investment programs over the years, this is and has proven to deliver for shareholders. In Smurfit Kappa, a key component of our success as a company over the years has been our integrated model. This model ensures that we remain resilient and can give guarantee of supply and keep close to our customers. It ensures that we retain quality profitability in our systems, we squeeze our costs in the supply chain, and we insure we're able to optimize our paper machines and costs through the supply chain.
The integrated model of supplying ourselves has always worked for Smurfit Kappa. And will always continue to work for us into the future. 2021 was really a great year of achievement for Smurfit Kappa. The new investment program, which we have embarked on is establishing foundation for durable growth. These investments will give us its distinct Medium-Term competitive advantage. They are guarantee to our customers with Smurfit Kappa's resilience, commitment, and ability to get our customers products to the market.
Effective acquisitions have been a part of Smurfit Kappa's DNA throughout its history and will continue when they make sense for all stakeholders. They're part of our continuing growth and development in 2021. We continue to be the recognized leader by our customers and the industry for innovation design and awards. These do not happen by accident, they happen because of our people. And our people feel proud to be part of Smurfit Kappa, not only because we invest in our business, we invest in them and we invest in the communities in which we operate. A key achievement for us in 2021 was to further enhance our sustainability and credentials.
During the year, we had 2,700 customers and attendees at our virtual Better Planet Packaging day. And this will be followed on in May this year when we will talk about the Green Agenda for Europe. I would like to take us a few seconds to focus on the Italian acquisition that we concluded in October of last year. Prime Verzuolo has given us a pivotal platform for growth. The paper mill will generate significant profitability on its own as we evolve it into our system and bring our knowledge and learnings into the mill.
With our investments that have been made in our converting operations, this now ensures that we have the paper to supply our customers. This is a key strategic advantage. If one takes the principle that our customers are demanding security, our customers are demanding resilience from suppliers, and our customers are demanding certainty, than having Brazil or in our system is a lever for growth, for our conversion, especially as we're investing so much in that area. Also, I want to highlight the very strategic location of this mill, which is able to serve our growing Italian, French, and Spanish business.
And if needed, our America's operations due to its proximity to the Savona port. Let's say Smurfit Kappa -- in Smurfit Kappa, we're investing very significantly in our business in the coming years to capture growth. One should not underestimate and investing in seven car gators, 82 pieces of converting equipments, paper assets that are already optimized, and developing our sustainability leadership position, gives Smurfit Kappa a clear competitive advantage.
You're all aware that supply chains remain challenged, so having this equipment arriving as a first mover give our customers further certainty and continuity. In Europe, we're building four mega plants. We are also creating guaranteed added value by installing specialist graphic equipment, developing our digital offering, developing our Bag-in-Box business, and our lighter lamination areas, which are higher added-value, niche-orientated products within our sector. These are all guarantees of future profitability. We're also focusing on automation and debottlenecking to ensure labor efficiency.
And investments are also being made to reduce our carbon footprint, water discharge on waste-to-landfill on a continuing basis. In the Americas, we continue to invest across the region with new plants and new products in all areas. Paper corrugated, and also in cartons and sack paper. Indeed in -- in the sack business with its integration into sack paper in Colombia, it is growing rapidly due to legislation and a move away from plastics.
An additional benefit remains that our multinational customers can be served across our Pan America network. I want to dwell on the next couple of slides, but I do want to refocus you on what makes Smurfit Kappa difference. The scientific and data assembled applications that are shown here are unique to this company. They're not replicable and bring together the expertise of our total company, effectively linking our Europe and the America's business through the continuous transfer of best practice in innovation capabilities.
This data is truly unique, offering our -- offering for our 65,000 customers and one which is valued by them and which is a real competitive advantage for us. With our innovation centers and new ideas being continually populated by our people, our big data continues to grow with the new ideas and benefits that we are getting for our customers. The vast database we have allows us to produce products that our customers need, whether it's for better product packaging initiative, and here you can see a few examples, where we've replaced plastic, styrofoam, and unsustainable packaging products, all of these comes from our innovation strategy within the company.
Equally, innovation plays a huge part in the e-commerce development that we're doing on a day-by-day basis. You'll just see from this slide just a few examples that our knowledge and our people bring something that no other company can do in the scale that we're doing in our sector. And of course, as I've said, our awards are continually being recognized by industry, customers and organizations. Here on this slide, you can see a snapshot of the 69 awards we received last year from NGOs, customers, industry, and communities in which we operate. We're very proud of this, and this is something that we continue to focus on and develop.
Finally, before I hand you over to Ken, I wish to reemphasize the opportunities for plastic substitution. It is of course difficult to pin a number on this and there are varying estimates from different competitors, from 1 million tons to 5 million tons to 10 million tons over a given period. In Smurfit Kappa, we're not in the business of forecasting this because there's so many different variables, that will expect -- affect the speed and timing of this opportunity.
These variables include supply chain constraints, availability of materials, and the time-frame involved in switching machinery around, as well as the marketing and branding support that our customers need to put behind us. All of that said, very few of our 65,000 customers are not working on or thinking about projects that require our innovation to move them away from non-sustainable packaging. The opportunity is truly immense, whether we're talking about replacing billions of plastic pallets, removing stretch wrap and plastic films, replacing Styrofoam as protection, or indeed for wet packaging such as fish boxes, or replacing Hi-Cone plastic with recyclable corrugated. Equally.
Think about all the plastic tubs in supermarkets across the world, and the fact that the same job can be done effectively with sustainable packaging. Indeed, we are already working strongly on a child safe pack for detergent took pods, which is growing very quickly with a particular customer. All of this opportunity is presenting our products with what we call, a high-class problem, of having sufficient resources and materials to be able to do the job. And with that, I'll now hand you over to Ken, who will take you through the financials.
Thank you, Tony. And good morning, everybody. And thank you all for taking the time to join us. As Tony mentioned, this has been another fantastic year of continued delivery for the group, both strategic and indeed operational. What may not be obvious though, are the challenges we overcame to deliver those results. Ensure our customers reserve and continue to grow and expand our business. We were very proud in SKG that we remain fully operational, or be under difficult circumstances at times, to ensure our products to where they're needed for over 65,000 customers.
The growth we have seen in the demand for our sustainable products resulted in unprecedented tightness in the container-board markets. Our unique integrated model, with the strength that brings in terms of security supply, has proved itself once again to be distinct competitive advantage. The group absorbed significant raw material headwinds in 2021, over 670 million in recovered fiber and energy costs alone. And in the case of energy, particularly during the last few months of the year.
So against that set of challenges, how have we managed to deliver that performance? Through the integrated model, our geographic diversity asset base, and the investments in it to support the integrated model, expand capacity, or ensure we can meet the needs of our customers through our converting business and are considered disciplined and effective allocation of capital. Not just in 2021, but over a number of years.
Ultimately though, the key to our success has always been our people, and in another year marked by COVID, it was their dedication and expertise that was the true enabler of our delivery. Looking to those results and that delivery in a little bit more detail. This performance again illustrates the benefits of everything we do from both an investments and indeed a culture perspective. A performance-led culture, working on the foundations of a quality asset base, and a focus on innovation and sustainability.
It is also important to remember that these results have been delivered against the backdrop of a continued global pandemic, a significant operational challenge that the group continues to work hard to overcome. The lessons learned and the practices implemented have been a demonstration of the best in our people, who adopted and delivered for one another and most importantly for our customers. Group revenue was $10.1 billion per year, 18% on 2020. And the rise represents primarily the impact of our volume growth of 8% and box pricing. Group EBITDA was up 13% to $1.7 billion.
The group EBITDA margin decreased from 17.7% in 2020 to 16.8% in 2021. The margin reflects a lower margin year-on-year in both Europe and the Americas. Box prices have increased sequentially quarter-on-quarter since the second quarter of 2021 with some margin compression in the fourth quarter, large down to a spike in energy prices. As mentioned earlier, that increase has been reflected in the paper price. And we will continue to see that pass through our box price.
Free cash flow was €455 million compared to €675 million in 2020. EBITDA growth of €192 million, combined with lower outflows for cash interest and the absence of an exceptional outflow in '21, were more than offset by higher outflows for CAPEX, higher tax payments, a higher FO for the change in employee benefits and other provisions, and a negative swing in working capital from an inflow in 2020 to an outflow in 2021.
As you know, the management of working capital remains a key focus for us, and the working capital as a percentage of sales is 5.7% of December 2021, broadly in line with the 2020 number of 5.6%. Our cash interest reduced year-on-year, largely as a result of lower average levels of borrowing. We were also pleased that early in 2021, both Moody's and Standard & Poor's upgraded the group's long-term issue rating to be AA3 and BBB minus respectively.
With a strong business profile and our ability to consistently deliver substantial free cash flow the group is aiming to maintain investment-grade credit ratings and a leverage in the 1.5 to 2 times range. And finally, reflecting the resilience of the cash flows and our future prospects, we are pleased to announce a 10% increase in the final dividend to $96.1 per share. Turning now to our European operations and their performance in 2021. EBITDA increased by 10% to €1.3 billion primarily as a result of strong volume growth and progress on box price increase as I mentioned earlier.
The EBITDA margin was 16.6% down from 17.8% in 2020. But we do expect that to improve as we move through 2022. Corrugated demand was up approximately 8% on 2020. European pricing for testliner and kraftliner has increased by €350 per tonne and €330 per tonne respectively, from the low of September 2020 to December '21. And as we begin 2021, demand remains strong and we remain in a sold-out position. We continue to see an acceleration in the demand for our Better Planet packaging products as a result of changing consumer trends and our customer's desire for ever more sustainable packaging.
And finally, as Tony mentioned earlier, we continue to make progress on our European capital investment plans in '21 with the commencement of a number of significant projects across our Corrugated and Paper divisions. We also completed the acquisition of the Verzuolo mill in Italy bringing 600,000 tons of container-board into our integrated system, ensuring we continue to meet our customers needs and capture future growth.
The allocation of capital to both internal and external projects will enable us to not only continue to supply our customers with ever more sustainable products, but also reduce costs through other system and ensure that the group continues to be at the forefront of innovation in our sector, with unique applications delivering sustainable packaging solutions for our customers. And turning to the Americas. As you know, we've operated the Americas for about 40 years. It's always been a region of high-growth, strong free cash flow generation, and significant opportunity.
In the Americas, EBITDA increased by 19% on 2020 to $441 million. The EBITDA margin was margin lower from 19.7% in 2020 to 19.5% in 2021, delivered though against the backdrop of, among other things, rising input costs and those well-documented supply chain issues we all know about. Colombia, Mexico, and the U.S. accounted for almost 80% of the region's earnings with strong performances in all 3 countries. Corrugated demand for the year was up 9% on 2020. The growth in Pan America sales at 13%, is again an indication of the benefits of the approach taken by us in this region.
As in Europe, the group continued to build on its operating platform with significant capacity and sustainability related to investments in the corrugated container board and specialty businesses across the region. And as Tony mentioned, in June and July, we announced the expansion of our America's business with acquisitions in Peru and Mexico respectively, adding to our geographic diversity and enhancing our customer offering in these high-growth regions.
Our Pan-American sales offering, integrated with our experience center network, the acceleration of the adoption of e-commerce, and the continued promotion and awareness around our Better Planet Packaging initiative, coupled with the benefits derived for our investment in the region recent years, continue to deliver growth for ourselves, and more importantly, for our customers in the region.
Tony referred to some of the key operation and strategic achievements of 2021. And I want to mention some of the key financial and sustainability achievements. Achieving investment grade with all three agencies was an early milestone this year, and recognition of the work that we've done over a number of years. The validation by the SBTi of our carbon reduction targets was another endorsement of our ambition on climate.
The issuance of €1 billion in Green bonds, the launch of the Green finance framework and the issuing at the lowest coupons for corporate, our rating was a significant achievement by Paul and his team. And we were recently recognized as a strong performer by Sustainalytics with their -- their award of regional top rated batch. And finally, the group has been contributing to making the U.N. 2030 Sustainable Development goals a reality since 2015.
This contribution was recognized with the support the Goals Movement in 2021 when the group became the first Fortune 100 company to receive a five star rating. Alongside those achievements, we continue to make significant progress on achieving our other sustainability targets. A point to outline at the half year following the publication of our 14th Sustainable Development Report. I don't propose to go through the slide in detail, but would remind you of the key points.
We were the first in our industry to target at least net 0 by 2050. We have had our emissions reduction targets approved by the SVTI as consistent with levels required to meet the goals of the Paris agreement and well below 2 degree centigrade. And we continue to make progress on our other key sustainability targets, Water discharge and processing, waste-to-landfill, chain across these certification, and a detail for safety.
And in addition to our Green bond, we've also lined up sustainability ambitions and targets into our financing by embedding it into our existing $1.35 billion RCF, creating a sustainability-linked RCF. By committing to our sustainability targets, the group's Better Planet Packaging portfolio of products of sustainable products, will continue to help our customers deliver on their own sustainability goals. And finally, our usual reminder in how we see capital allocation as a framework.
And while the framework has remained consistent, how we apply it, adapt it, and deploy it has changed over the last number of years. There is a fundamental underpin though, which is that all capital allocators most support the group's ambition around growth, returns, and value creation. Our balance sheet remains strong and with a net debt to EBITDA of 1.7 times gives us a lot of flexibility. In recent years, the speed at which we have deployed internal capital has greatly increased as we see the opportunities that, Tony, talked about begin to gain real momentum.
We fundamentally believe that this capital given our expertise and implemented projects, is still the lowest risk and highest quality allocation of capital. We're not only creating the opportunity, but also more importantly value, as you can see to our margin and return on capital. The acquisitions during 2021 are clear indicators of how we see M&A as a group. As always, we have a number of projects in the pipeline focused on building out our strong geographic network or further enhancing our product portfolio. We remain of course, disciplined around M&A, and as always, benchmark them against other capital allocation alternatives. The dividend is key pillar of capital allocation.
It is an input rather than an output. And the increase in the final dividend is yet another illustration of our belief in the future prospects and cash-generation ability of SKG. Our ability to keep our capital allocation framework flexible and agile has been a key pillar to the success that both Tony and I have spoken about so far today. The multiyear delivery and the success we had to-date, has given SKG the broadest strategic and financial opportunity set. I'll now hand you back to Tony for some concluding remarks.
Thank you, Ken. When we look to our future, while always conscious of course of risk, we see nothing but opportunities at Smurfit Kappa to develop the company going forward. You all in the investment community always use the tagline that future success is not guaranteed by past successes, but I'm sure you also know, that it sure helps. Our strong balance sheet and investment program, which has been endorsed by so many of our shareholders, is going to allow us, if you will, to continue to back to our packaging strengths.
The first of those, of course, is the unique culture within Smurfit Kappa, which is the management team and organization that has a culture of operational excellence, a culture of performance, and a culture that devolves profit center responsibility to the operating unit. Our market positions and positioning with our customers is truly unique and truly irreplaceable. Over the years, Smurfit Kappa has repositioned its asset base to be in amongst the lowest cost, the most efficient, and the most innovative company, both in conversion and in mills, thereby ensuring that the integrated model that we talked so much about continues to deliver for the company and its stakeholders.
We've also developed, within the company, a suite of specialized products that continue to grow strongly and one of those being, as an example, the fast-growing Bag-in-Box business. A capital development plan, which of course is always returns-focused, will continue to demonstrate to our customers the resilience that we have and the commitment of Smurfit Kappa to serve our customers. That commitments is giving us the growth that we need to continue to drive future returns.
I said at the beginning of this presentation that we've evolved the company significantly over the last number of years. It is our intention to continue to evolve the company, to improve, to be even more efficient, to have a larger geographic footprint, and to demonstrate our resilience to customers, and of course, to continue to innovate, to be even more sustainable. Accomplishing this will meet our vision objectives of being a globally admired business, dynamically and sustainably delivering secure and superior turns for all stakeholders.
As we've always done, we will keep a strong eye on the market and will acquire things that makes sense. We will continue to invest in and motivate our employees who are supporting our objectives as they are the key assets that differentiates us. In Smurfit Kappa, we have a lot of drivers for growth in the years ahead, with our strong investment plans are integrated model, our focus on quality, innovation and sustainability. This gives our customers great confidence that Smurfit Kappa will be the long-term supplier of choice and partner for their future growth.
Our best-known plans will inevitably lead to higher margins and higher ROSI growth as Ken has alluded to. As I stated in the release, the year has started strongly with most of our businesses effectively sold out. And recognizing the support of our shareholders the board has again announced a 10% dividend hike. I would like to thank you all for your support, for myself and the team, and we look forward to taking any questions that you might have as we finish up this presentation. Operator, I will hand it over to you to take questions from the audience. And just to remind everybody, that we do have Saverio. We do have Laurent and we do have Paul with us as well to take any questions specifically in their areas.
[Operator Instructions] Our first question is for Lars Kjellberg Credit Suisse. Please go ahead.
Good morning. Tony and Ken, you of course had a very strong track record of accretive organic Capex. And you're talking about and Rocky sell that you -- this is propelling growth and higher returns. Can you share with us what you're seeing in terms of this sort of momentum and particularly sustainable packaging is delivering? You talk about that in the press release this morning as the choice of customer and it's consumer versus best sustainable alternatives. It would be very helpful if you can share how this is getting traction and how this is just driving your very strong growth of 8% in the current year -- in the past year, I should say.
And also, Ken, if you can talk a bit about how we should think about costs in the context of your statement on improving the margins this year, and is the target somewhere around the 18% trend? Is that really what you're telling us? And finally then how should we think about the contribution from the investments that you made to close to $700 million you spent last year plus the [Indiscernible] CAPEX in '22. And finally, what did the Medium-Term Plan deliver in '21?
I'll take all those, Lars. If I can remember them all, if I forget any that you remind me. I'll start from the bottom up, maybe. The Medium-Term Plan probably would've delivered about 60 in 2021, if memory serves me correctly. Looking forward to '22, take into account that we also disposed of some businesses in '21. The net contribution we see from the acquisitions in '22 would be about €25 million. And then going back to your question on costs, clearly costs remain particularly volatile on energy, so any number I give you now, I will update you as they go through the
year. Clearly, it will move, move and shape as, as kind of winter ends and hopefully gassed off, get replenished, etc. I think OCC continues to hang out to that kind of high levels of the one our levels now, than even highs normalized as at 190, 196. So we will still see OCC as a little bit of a headwind coming into 2022. And at the moment, when we look across the year that's probably something in the order of about $50 million. Normally, our cost takeout program would offset inflation, on labor particularly. Well clearly, you know why labor may not have come through necessarily as a big driver of inflation, just yet. I think we can fully expect that to happen to the backend of '22 and '23, more importantly. But I think for this
year, we probably won't see the cost ACO program necessarily completely cover inflation, so we probably see slight inflationary headwinds and labor to the tune again of about 50 million. Clearly the knock-on effect of energy into kind of the indirect cost of around distribution and things like that, probably also hit you to the tune of about 50. And then look, we're seeing wood pulp starch, take your pick on a [Indiscernible] with costs going up, I think in the round, they probably come to somewhere between call it 100 to 120 million of a headwind.
And then the big one really Lars is kind of energy and I think as we sit here today and as you know, on Paul Saverio and rom, which would be actively involved and how we do it. It's -- we have we do hedge your energy. So at this point we would, I do would normally be, we're probably hedged about 50% for 2022, so we currently probably see you headwind in 2022 over '21 on energy of about $250 million. But as was the net point there is, you bundle all of that together and it's a lot of headwind. But clearly, we've made a lot of progress.
Indeed the guys made a lot of progress on '21 about box price recovery. And clearly that will continue into '22, and we'll see the full effect of full-year run rate. So that's why we sort of feel confident around that statement, around recovery in deals back on the margin to where we were. But hopefully that gives you a no for your bridge, Lars. I think that was most bids. That was the last take. Let me just comment on Verzuolo. I mean, Verzuolo was bought as you know, in October and effectively didn't contribute anything in Q4 because it was an unhedged energy situation.
But everything that we've seen in Verzuolo, we remain incredibly excited about the mill with vast potential into our system, not only as a profit center, Lars, but as a feeder of paper into our system which we urgently need, and that really helped us in Q4 with our customer base. We foresee Verzuolo going up to 600,000 tons in a couple of years. It's currently doing right up to around 500,000 tonnes. And as I say, it's everything that we've seen thus far. We really remain very excited about its profitability potential when energy would be normalized a little bit, I'm going to ask Saverio, and Laurent you can jump in as well, but more specifically, Saverio, to address your plastics question.
What he's seen with customers with regard to plastic substitution then Laurent if you can jump in, if you want to after Saverio is finished.
So thanks, Tony. And good morning to everybody. I think, this is a clear, clear trend on the market. And as we are exposed to all the major brands, we're seeing this accelerating. We proudly launched our -- in 2017, our Better Planet Packaging initiative. And since then, we've been, let's say, starting to work in all aspects with all the major brands in order to help them to achieve their reduction targets that they have publicly declared. So if possible, the pandemic has even highlighted even more the needs for this evolution. And we are supporting with all different kind of solutions in this Green transformation.
I think each of our customer is trying to reach in the time they have declared their targets. And we have specifically developed several lines of product portfolio in order to satisfy. And then you go into the specifics of each of their production beat the EPS replacement for buffering and protection of products, or be the new sustainable packaging for detergent parts that are all kind of solution or clips to keep the drink -- the beers together. As we are producing them. Or departments for fresh fruit or berries. This is all the things that you already see on the market. And it's coming and accelerating more and more. So we are adapting our solution and trying to our network of design centers to everyday proposed new solutions, including the machinery, which goes together with that, in order to fix the line in the production of our customers.
And Laurent do you want to just give a sense of what you're seeing in the Americas now, just bear in mind Laurent has been there for less than six months, but maybe just in Americas, what are you seeing?
Yes. Good morning, everyone. And pretty much the same situation because many of the customers that we're serving on this side of the Atlantic are similar to the one we have in Europe. And for those, the trends would tend to be very similar to what Saverio has described. There is also which is very interesting, more or less across the geography, a growing interest for sustainable packaging. And the same big building blocks that have been referred to, whether it's single-use plastic that our customers are trying to replace, or whether it's the EPS for larger clients, manufacturers, in particular on the border side of the U.S. where massive industrial platform is being utilized to service the U.S. markets.
In all those areas, EPS is also looked at and we are trying to offer alternative solution. And typically with Honeycomb solutions and molded [Indiscernible] together, we offer very convincing solutions. Same for many other aspects like looking at the dimensioning of packaging, reducing logistics, reducing the amount of CO2 produced by transportation. And all those dimensions that are extremely valuable to our customers and help us position ourselves, but there is a great deal of similarity just on local customers, sustainability agenda is still something that is growing. But for sure, very similar situation on the one Saverio just referred to.
Okay. That get you your answer, Lars?
Pretty much. I appreciate it's difficult give [Indiscernible] contributing, but I guess I'll take that another day.
Thank you. Our next question is from David O'Brien of Goodbody Stockbrokers. Please go ahead.
Good morning, folks. Thanks for taking my questions. First one is just on demand. You're talking about, I suppose still remaining an effectively sold out position. What does that mean for the outlook for volume growth for 2022 for Smurfit Kappa? And generally what do you see for market led growth specifically. If I turn to the Americas, I'm just trying to look at the margin performance. First half margin is up nicely, and I know we've got energy costs kicking in the second half but it doesn't seem like the Americas margin was quite as resilient as maybe it wasn't Europe.
What is driving that much we expect into 2022 there? And then finally, just in terms of you've talked about the corrugators -- 7 corrugators, 80 converters. Can you give us some context of what that means in terms of adding to your existing system, in terms of volume capabilities, or what it means in reality? And finally, congratulations to Paul, an exceptional contribution to tight spreads were into Green financing probably a testament to all that work well fair. All the very best.
Thank you for that, David. Let me just take the demand, and then I'll ask Ken to talk about the other points. And I'll -- sorry, I will take the corrugators. Basically, what we would say when we say we are sold out, we have put in investments in the last year and they are -- effectively every -- our customers are demanding more from us because as I said in the speech -- in the discourse that I had that they see Smurfit Kappa has been extremely resilient and a strong supplier, so we can basically do the business that we want to do at the moment. So as we are putting in all of this investment, corrugators, converting machines, we effectively expect to sell that out relatively quickly as those investments come in.
There is some degree of delay on those investments because our suppliers are suffering with the same issues that you will read about with regard to chips, labor issues like that, but overall, I would say that that's going to put us in a very very strong position to meet customers ' needs and grow our volume. And that would -- we're effectively saying that this year we will grow somewhere between 3% and 4%, assuming there's nothing bad happened in the world. And that would be our target for the year across both regions. With regard to the Americas and the margin contraction in Q4, it certainly not any worse, but let me ask Ken about that --
I suppose, you know, it's my initial comment, David. It's -- we're talking about the resilience of the margin at 19.5%. Let's put that in context. Energy is not a key feature of our Americas business, in the sense of the volatility that you see in Europe. So energy in the Americas will be broadly flat year-on-year. That volatility is clearly a European feature. I think what you're seeing though is more a function of what you see, because we're short paper. That the reality is that as paper prices have increased in the Americas, it just takes a little bit of different kind of pace and cadence to get those kind of box price increases back into the system.
And I suppose it's just the inevitability of a calendar year-end versus if we took this over slightly longer-term, I think margins will clearly get back to where they were. And indeed the investments that all around is making into the region, in terms of building into more paper capabilities, brings more of that profitability and margin resilience inside the group rather than kind of to third parties. So I think it's just a natural path back to where they were. It's just a bit of timing. There's nothing fundamental within that, but I think the key point is just to keep in your head that when we talked with volatility in the energy market, that's actually a European phenomenon. We don't see that in the Americas.
Just as we've got Laurent and Saverio here, maybe just very briefly, Laurent, just comment on, with the exception of Brazil, as we said, we're sold out, maybe just give us a flavor of the markets and then Saverio follow up, follow that.
Yes, Tony, with pleasure. The term you've just used which is sold out, and it's pretty much what defines the situation today. And I've been visiting most of the facilities and this is what comes out every time you talk. And this is truly generally across the geography. And if you talk about the two main markets where we operate, being Mexico and Colombia, in different ways, but very strong ways. A combination of excellent, outstanding domestic demand, but also infatuation of U.S. demand and which particularly affects the border area of Mexico serving the U.S. where we are clearly seeing at enormous pace the intensity of capital reallocation back to the U.S. area, even if it's located in Mexico.
But then all across the region, it's pretty much the story. Brazil, as you rightly indicated, and -- has somewhat of them a slower pace. Let's call it like this. And albeit in a place where we can use our knowledge and transfer also the knowledge from Europe to offer to our customers a different approach, where despite volume situation, we're capable of aggregating very significant value in this company, but pretty much, Tony, the impression and the feeling that we get from the plants at this moment in time is just sold-out.
I basically can just report the same situation for what concerns Europe where we are sold out in Germany, which is the largest European market. We are sold out in Italy, which is the second largest. In France, in Spain, and there is even a in additional acceleration in the Eastern Europe, which is experience where we have very good assets and where we are investing to even take additional growth over there. So this is the situation as it is at the start of the year. And as it is normally follows, what is their forecasted growth for the European economy, which is above 4.3% in general.
So the situation looks exactly as or even in a clear way, like, like the Americas. So we have -- we are pushing as much as we can, without effective productivity and supporting our customers ' need. And getting -- if you want some competitive advantage from our integrated system, which is providing the security of supplies to our customers. And in our customer's mind, security of supply is now, is priority number one and our resilience has proved to be a key subject to achieve our growth.
Thank you, Saverio. Thanks, Dave.
Thank you. Our next question is from Allan Smylie of Davy. Please go ahead.
Good morning, gentlemen. It's Allan of Davy. Congrats on an excellent set of results. Two questions, please. Saverio just referenced how the resilience of your integrated model is really resonating with customers. And I think we clearly get that. But do you have any sense how the smaller non-integrated players are coping? It was clearly a very tight paper market, had an increasing input cost in environment. And not to get into the realm of forecasting, but do you think that acts as a constraint on the European industry's ability to add container board capacity over the near term.
And then just as a follow-up question. Given the strength of volume growth in the market last year, but also the addition of Verzuolo, it would be helpful to get an updated number on your current level of integration in the European system. And then on a forward-look basis, how are you thinking about future paper requirements, including timing around the Parenco white paper machine conversion? Thank you.
Well, let me take the second one first and then I'll hand it over to Saverio. I mean, with regard to integration, when we bought Verzuolo, they were -- we were buying a small amount of tons from them. We obviously increased that in Q4 and we will increase that in Q1, but I would say that we're pretty balanced with maybe a small amount that were selling outside on a European basis. I haven't done the exact numbers and obviously we will look at it as we go through the year, but we intend to keep some outside customers around the mill in Verzuolo, we intend to continue to buy some product in other parts of Europe that suit us, whether it's different grades or different widths.
But you could effectively say, Allan, that -- let's say back-end of next year, we will be fully integrated again, if you put everything against each other. And I'd say that with regard to the Parenco switch-over, that's something that we will decide at the appropriate time. It may not ever happen. We may get other opportunities to buy some things because while Parenco mill last year was a big loser for us. We don't expect it to be a big loser this year, because the price of white papers has risen substantially because of closures and increased demand. So we'll keep an eye on that. We are going to go ahead anyway with the permitting process which will take a good 18 months to get in the Netherlands.
But once we get there, we're not sure that we'll do it. We'll just keep an eye on what the market looks like, and it may make more sense for us to buy somebody else rather than convert that. But we will, as I say, that's minimum 18 months away before we announce, which will be another 18 months after that. And so best scenario I would say that 2.5 to 3 years would be when we would convert over. But again, no certainty on that. Saverio, do you want to take the first question?
Yes. With pleasure. I mean, I think the question was referring to pressure on smaller competitors or new integrated companies and yes, this is the case. And this proves to be a big opportunity for us, which we are trying to exploit at best because we are dealing with customers and potentially gaining market share with them in certain case. So for 2022, there are no substantial capacity increase forecasted in the paper production, which assuming the growth, will remain as forecasted and the forecast is a much more normalized growth than what we experienced last year. This will mean that the market will remain under tension and that we still will have even more interesting opportunities to enter into certain market segments that we're targeting.
As long as we have the capacity, Allan, which obviously we are as well delayed with some machines that we've ordered but not too much, but something -- we're talking one month to four months, and clearly we would love to have those machines in. But as I mentioned in my script, having those machines, coming at least gives us real first-mover advantage because a lot of our suppliers are machinery are also in a sold-out manner. So I think the fact that we booked the slots that we've got some coming in, that we are such a big buyer and an important customer to these equipment suppliers. And there are not that many of them gives us a massive competitive advantage. When we get those machines in against some of the people who haven't made that leap.
That was very clear and very helpful. Thanks, Tony. Thanks. Saverio.
Thank you. Our next question is from Justin Jordan of Exane. Please go ahead.
Thank you, and good morning, everyone. I have two separate questions. Firstly, Ken you've talked a lot about cost inflation. I suppose can we speak a little bit about the other side of that, which is price increases. From memory when you launched a basis at the Q3 results in October, you were speaking about, I think. It was 12% box price increases by the end of September. Can you update this is where that is at the end of December 2021 in Europe. And then clearly, when you speak about your confidence in margins improving as we progress through 2022, are there any early indications you can give us on current volumes in the early days of 2022. And clearly your hopes and aspirations for further box price increases in 2022.
Second question I suppose is just around the big theme of supply chain disruption that we've heard this in many industrial companies, not just in Europe but globally. Can you give us some sort of anecdotal war stories, almost, Tony just in terms of just the real challenges in the real world that the business is encountering and getting dealing with on a day-to-day basis in terms of serving customers and how the integrated model is helping that. And thirdly, I just want to echo real, real note of appreciation on behalf [Indiscernible] the pool break and where we've been incredibly patient and very helpful to the analyst. I would like to have extra disclosure and information of the year, so I wish you all the very best for the next stage.
Thank you very much, Justin. It's appreciated. Thank you.
Justin, I can only help them as happen Tony have the same thing on the way.
Depends on where you cite your questions. But.
This is true too. I suppose sequential box pricing, you are right. We said Q2 over Q1 was 5%, and Q3 over Q2 was 7%. Q4 over Q3 was another 6%. So that where we ended up the year as in broad strokes, quarter-for-the-quarter 4 looked like about 19% in total. So I think that gives you enough of an impetus into where you think 2022 might go. Early indications are from Tony’s statement, really. We remain in the stronger position. Demand remains strong. I don't think anybody is necessarily forecasting, and Saverio touched on it there, another year of 8%.
But who knows. Clearly demand remains decent shape. You think about the paper capacity is coming on. It's only about 800,000 tons. Clearly, even reasonable levels of demand will keep attention in that particular market. So all of that's set fair for 2022. And clearly the paper prices that went open, say, late November, early December, are in the process of being recovered as we work through the early part of the year. And indeed, as you know, January tends to be one of those months where we tend to get resets, whether applicable on index contracts. So certainly, as we start off the year, everything is kind of set fair.
Yes. With regards to supply chain disruptions, Justin, I think you know, we've managed pretty well, obviously, last quarter of 2020 was horrendous for us because we were short of paper and couldn't get it.This year was better because we did have Brazil, so we were able to service our customers. And again, as I continually said, through this process, that the resilience that we've shown has been really appreciated. And we have had many, many different issues through the year.
I mean, we've got 1 right now on Bag-in-Box where we're -- we have a film supplier who has just said that they're cutting our allocation. We have issues with starch during the year. That's where we had to -- because of our network, we were able to find solutions. But if we didn't have the network we had, we wouldn't -- we would have run out of starch in our paper mills. And we're having to use much more expensive potato starch instead of wheat starch because the demand levels were such.
And so we've been able to manage through the supply chain disruptions. The transportation, our expert on transportation did a fabulous job ensuring that we got all of our product to the market, despite lack of trucking. And so I mean, we've managed through it. It continues to be an issue. And obviously, with that is cost inflation, but at the same time, because the main potential disruptor being paper, I think we've pretty well solved due to the acquisition of Brazil, at least in the short-term.
Our next question is from Cole Hathorn of Jefferies. Please go ahead.
Good morning. Thanks for taking my questions. I'd just like to go back on your capital deployments over the years. I mean, if you go back to end of 2020, the acceleration of capital deployment is, seems to be very well timed. And if I think about your view on where growth was going, and I think about Smurfit Kappa, getting your corrugated investments in for the machine orders, etc. do you think that puts you in a good spot versus some of your competitors that are probably going to have to place those same machine orders to meet that growth.
And they are going to be extra lead times to get those machines back and probably higher costs. I am just wanting to how are you feeling and any color around that corrugated Capex spend that you've done. And then linking onto this question on the paper capacity. Do you have any feel around lead times for that paper capacity? Are you seeing a push-out of when supply may come into the market, because there's been a history of supply delays in the market? I'd just like to hear your thoughts, firstly on that Capex bend and how you see the supply chain. Thank you.
Okay. I think, Cole, as I was saying earlier, I do think actually we do have a bit of a first-mover on this. When we did the capital raise, we identified the opportunity. We didn't quite identify that the growth would be at 8% or 9%, frankly. I mean, we were expecting growth, but we didn't, and for the reasons you'd know about which is, of course, sustainability, e-commerce. All of that was in our minds, but I think we've really taken 3 years ' growth in one -- or 2.5 years ' growth in one year.
And that -- thankfully we've accelerated our conversion plans as well to have that first-mover advantage with our suppliers who are delayed and who are having issues. So yes, I think it's fair to say that if you come to the party now and you're looking for equipment, you're going to wait longer. And again, it goes back to the resilience points that we talked about with our customers, and the customers talk to us about, is that they want to see companies that are able to supply them and meet their growth across all the regions in which we operate.
So that's what we're doing. And it's key for us to make sure we get a return on those investments. And so just because we've got the demand, we just want to make sure we get paid for it, too. So that's obviously something that is any capital that comes through must have the correct crux of financials behind it. So clearly, we haven't lost our focus in that area. And with regard to the paper side, is that the second question?
Yeah. I think as was where we sit in 2022, it's kind of continued ramp-up of existing machine and we haven't seen -- our new machines are supposed to start this year. I think in general, you still end up with from announcement to a point where you may get a machine starting is at least three years. So that from the supply side, if you take in, it's always kind of efficiency creep and everything else that comes into it that lad to turn to the system. But there's no big announcements beyond those that are currently in the market. And certainly add color 800,000 tons for Europe coming in 2022, that should leave the market in terms of supply demand fairly well balanced as we going to move forward.
And then Bag-in-Box, it's a strong top position for Smurfit Kappa and Tony, if I remember correctly, that used to be the one you laid for, for quite a while before you took on the CEO mantle. But, could you give a little bit of color there with one of the competitors, Charlotte being acquired by, say, Combi-Block? How is that environment -- does that acquisition change any dynamics for you? Just any color there would be helpful. Thank you.
It was one of the businesses I led there Cole. It was the business which we developed within Smurfit Kappa to be this substantial business it is today. It's obviously never substantial enough when we continue to drive growth. We've now operations in Mexico, Canada, Argentina, Russia, and a number of selling agent, and of course, Spain, Italy, and France, and with a number of operations and selling offices around the world. So it's a fast-growing business.
It didn't have a great year last year frankly, because we got caught out by massive raw material price increases that we didn't expect and so therefore, we have to absorb those costs as we worked through the contracts, we expect a much better year this year. It's fast-growing, it's very sustainable, it fits well and in our business, we're continuing to develop box business alongside our, alongside our bag business. And so we just see this as part of the total offering of Smurfit Kappa. Whether that's lighter lamination or digital print, this is another specialist product that continues to have longevity and decent, very decent returns.
And with regard to somebody else paying 16 times of maybe if you want, you can put the Smurfit Kappa Group on 16 times multiple as well, that's okay. No but I think that's up to SIG to decide whether or not that makes value for them and it's shortly was the originator of Bag-in-Box solutions so they are well established in many markets, and there are certainly a good company. We would say that we're as good or better than them, but clearly that will be -- we continue to grow. And I don't know if you want to add anything, Saverio.
No, I think the appreciation of seeing of SIG that is an expert in liquid packaging. It's one additional proof of how successful is the bag-in-box. In Europe, they are not so big players as we lead the market strongly. They are basically U.K. and the Netherlands. And we believe that a good competition will announce as the values of our products, so there we are. We -- I think with our system, we are ready to compete with anybody.
Thank you. Our next question is from Mikael Doepel of UBS. Please go ahead.
Thank you. Two questions here. Firstly, on e-commerce, we've seen quite significant growth there in 2020, 2021 also, of course, supported corrugated volumes. Are you able to quantify the level of growth you saw in 2021 and also how big of a share of your volumes goes towards the segment today? And also what you expect in terms of growth going forward in e-commerce? That would be my first question. Then secondly, could you talk a bit about the current container-board market dynamics?
I mean, I see that you mentioned in the report that you see tight markets for the next couple of months, but if you could give a bit of a more color on how you see the inventory situation. For example, the container board producers currently, as well as the downstream converters. We have seen the U.S. price increase going out there, but also on the other hand, OCC prices coming down. What does that mean for the European market? What do you see in terms of exporting port dynamics? And so I guess the punch line is pretty much to do see scope for further price increase in Europe as well?
Okay. Well, with regard to the containerboard markets. I mean, containerboard markets remain strong. I think that obviously, January and February are generally the slower month of the year. So there's a little bit more stock than there was at the end of last year. So I would say that the increases that we got in November and December are well implemented. Whether or not we see further increases, I think will depend -- I mean, they're sold out. It will depend on what the producers feel about cost inflation and energy costs, especially -- and OCC costs. I mean, because it -- actually OCC has moved down a little bit in the Americas, but it's not moving down at all in Europe.
In fact, quite the contrary, I'd say that as the markets are picking up -- the export markets picking up, there's probably more OCC pressure than we've seen in the last six months in Europe. So it'll depend, I think, Mikael, about what happens on the whole area of cost inflation, cost inflation, and a market tightness in the next 2 to 3, four weeks. But is there scope, yes, of course there is, but we will wait and see. And, yes, the U.S. markets have gone up for their own reasons. And we will, ourselves in the United States, be following suit there, so clearly the markets are strong and there's high cost inflation in America that's driving that. Ken, do you want to take the first question?
Sure. Hey, Mikael, I suppose on the supply side too, just like I said the [Indiscernible], really the supply side remains fairly tight, given what's coming in this year. So with the level of growth we're forecasting should be no change in terms of the supply-demand balance on containerboards. And on the segmentation piece, it's ever more increasingly difficult to carve out e-commerce in everything we do, but I suppose we've always said it's high-single-digits in the context of all the volume to do.
But clearly growing quite strongly particularly across the last two years as people adapted to new ways of working and the new ways of buying and that's going to continue. I don't think anybody is necessarily going to go back to pure bricks-and-mortar retail type shopping experience, I think they're going to make their choices and pick the best of what they want to do be it e-commerce or not. And I suppose, the other side of that equation is, we've had a lot of customers who probably didn't have an e-commerce offering before 2020 and found during the early course of the pandemic that they have to build on fairly quickly at a cost.
And they're not going to give up that particular channel once economies kind of reopen. So [Indiscernible] the fundamental point there too is, I mean, e-commerce just isn't as mature a market as it would be say in North America, so clearly to Latin America. And for Europe, there's still is a lot of room for e-commerce to become a much bigger part of everybody's portfolio I think, so -- clearly so is the growth alongside as Tony has mentioned and the guys too that move towards more sustainable packaging away from that sustainable packaging ultimate.
Okay. Thank you very much.
Thank you. Our last question is from Kevin [Indiscernible] of [Indiscernible]. Please go ahead.
Morning, gents. Thanks for taking my questions. Two, please. One was really on the capacity as we look forward. You've obviously provided a bit of guide as to what that might look like this year. But I just wondered, is there any change in the timing for the ramp up of Verzuolo, i.e. could you possibly bring that forward at all, or is there constraints around that? And then just secondly, given the tight markets, supply and demand dynamics, I just wondered if there's been any change in customer behavior, if they're responding to these dynamics or does it give you any greater visibility over volumes or are they happy to deal with these -- the dynamics of a tighter market place?
I'll ask, Saverio, to deal with the second question there. But with regard to Verzuolo, Kevin, I think we've got a lot of little projects to do to really reduce a lot of costs, frankly. So our timing on adding the 100,000 tons will probably be sometime 2024, '25 probably '24. But because we've got a lot of things that we can reduce costs and energy, we can reduce costs and warehousing in transport. That as it comes into our system, it makes more sense for us to put that capital to that aspect of the business in the short-term to get all the levers working well, but irrespective anyway, if we were to bring it up to an extra hundred.
Actually, we think it might be even a little bit more than 100,000 tons. I think what I would say is that we want to put everything, all the house in order. So it's totally efficient and ready to move up. Having all the things that are under our control in our control. And I think that's -- it's a huge opportunity for cost reduction on the small stuff, as well as bringing extra tons into the business. Saverio, you want to take the other question?
On the -- I think you're referring now to the consumer behaviors. How is this impacting? I think again, here we go into an opportunity area, because consumer behavior, apart from the clear trend is we just mentioned it several times of e-commerce. The Z and X generation. I mean, they're all -- and whatever analysis you look at and market report you look at, this is going to push more and more towards the sustainable packaging.
And once again, we are very well-positioned by nature in terms of achieving the target and the choice that they are going to make in terms of selecting products which are appearing on the market and entering the market in a sustainable way. So once again, I see big opportunities there from the new-generation, will drive this in a more aggressive way, which is going to oblige our brand owners to go for packaging, which is going to disappear from the planet or not on the planet at the end of use. And this is what corrugated is about.
Okay. Well, thank you very much, Kevin. And again, to everyone that has been on this call, thank you very much for your attendance on the call, of course, but also for your support during the year and for your understanding about what's Smurfit Kappa has been doing during the last number of years, but also what we're going to do in the future. We remain very, very excited about it, 2021 was a great year for us, but we anticipate a much better year and in years ahead, assuming the world stays round.
I would say that a special thanks to my colleagues, Ken of course, for his leadership in the whole financial area, which is giving a tremendous stability to the company. To Saverio in Europe, which is running a huge company in its own right. And to Lauren t, who had just taken over our Americas business, good luck to him. And obviously of course, especially to Paul on his retirement in a few months time. We of course, Ken and myself, wish him well. But again, thank you all for your attendance. And thanks for your support. And we look forward to talking to you during the year. Hopefully, we will continue to see a good performance going forward. So thank you, all. And have a nice day.