Swedish Match AB (publ) (OTCPK:SWMAF) Q2 2022 Earnings Conference Call July 22, 2022 8:00 AM ET
Company Representatives
Lars Dahlgren – President, Chief Executive Officer
Anders Larsson – Chief Financial Officer
Emmett Harrison – Senior Vice President of Investor Relations
Conference Call Participants
Rashad Kawan – Morgan Stanley
Gaurav Jain – Barclays
Andreas Lundberg – SEB
Jared Dinges – J.P. Morgan
Operator
Welcome to the Swedish Match Q2 Report 2022. For the first half of the call all participants will be in listen-only mode, so there is no need to mute your own individual lines, and afterwards there will be a question-and-answer session.
I’ll now hand the floor to Emmett Harrison, Senior Vice President of Investor Relations. Please begin your meeting.
Emmett Harrison
This is the Swedish Match Q2, 2022 telephone conference, and those presenting today are Lars Dahlgren, the President and CEO; and Anders Larsson, the CFO. In the Investors Section of our www.swedishmatch.com website, you will find the Q2 investor presentation. You are encouraged to have the Q2, 2022 investor presentation at hand as you listen to the prepared commentary for this call.
Several of the slides in the investor presentation repeat key messages from the interim report that were published this morning. The commentary will therefore focus on a smaller number of slides that have been selected, and while doing so there will be referenced to the applicable page number in the presentation.
Unless otherwise stated, all comparisons are versus the prior year’s corresponding period. For U.S. smokefree and cigars, comments on financial developments are made based on results achieved in local currency measured in U.S. dollars, and when we refer to market share, unless indicated differently, we refer to MSA data that measure shipment volumes from distributors to the trade. After the prepared commentary, speakers will be taking questions.
During today’s call there may be certain comments that constitute forward-looking statements and are subject to risks and uncertainties. Management believes that these statements are based on reasonable assumptions, but can give no assurance that expectations will be achieved. Risk factors are outlined in today’s interim report, as well as the annual report, both of which are available on the Swedish Match website. Swedish Match assumes no obligation to update information concerning its expectations. A recording of this call will be made available on the Swedish Match website.
The call will now be turned over to Lars Dahlgren.
Lars Dahlgren
Thank you, Emmett, and good afternoon everyone. I would start by highlighting a number of encouraging factors described in our second quarter reports that we issued this morning. From a financial perspective, our reported operating profit from product segments of 2.271 billion MSEK is an all-time high, and for the first time ever our quarterly revenues exceeded 5 billion MSEK.
What is particularly encouraging is the fact that the strong growth was principally sourced from our smokefree segment, reflected continued progress towards our vision of a world without cigarettes.
While our financial performance benefited from currency development, especially the stronger U.S. dollar, growth in local currencies was respectable at 11%. And for our smokefree segment revenue growth across all markets aggregate 17% in local currencies.
In the second quarter smokefree represented more than 70% of sales from product segment and more than 80% of operating profit from product segments. This is despite the significant market related investments and support for further growth opportunities that were made cross markets in our smokefree business.
The strong quality of revenues was further accentuated and that the key driver for growth within smokefree across markets was nicotine pouches, reflecting not only the outstanding potential for the nicotine pouch category, but all of their own progress in this attractive category. In the first six months of 2022, nicotine pouches represented more than 30% of group sales from product segment up from 20% two years ago.
Once again, in ZYN in the U.S. was the largest contributor to revenue and earnings growth. But also just ZYN continued to increase in both the rest and expansion markets and our market share continued to demonstrate resilience despite the continued aggressive consumer price promotions from a large competitor. According to IRI, ZYN accounted for more than three quarters of total U.S. Nicotine Pouch retail sales in the quarter.
In Scandinavia, smokefree markets continued to demonstrate strong market growth, and while our Scandinavian smokefree earnings were lower than in the prior year quarter reflecting our ambitious launch plans and brand building activities, adverse channel mix effects and the higher cost level, we remain excited about the prospects of more actively participating in this market growth given our marketing and new product development investments.
Our cigar business has faced operational challenges for some time, and we now see a category that has retrenched somewhat from the elevated levels denoted during the pandemic. Financially cigar has delivered a weak performance during the quarter, caused by the lower volumes, cost inflation, as well as increased consumer loyalty investments. However, consumer demand remains higher than pre-COVID levels and we are pleased to report that thanks to progress and increasing production output for natural leaf varieties, we grew share both sequentially and year-on-year within this strategically important segment, resulting in Swedish Match regaining the Number 2 position within the U.S. Match Market cigar category in volume terms according to MSA.
Regarding Lights, the reported operating profit development has not adequately conveyed the underlying performance, most notably due to the significant income of temporary nature reported in the prior year period. In fact, for both Matches and Lighters volume declines and inflationary cost pressure were efficiently addressed through active price and portfolio management, resulting in underlying earnings growth. Looking forward however, the suspension of Russian deliveries and softer demand from some industrial clients imply that the earnings level reported in the second half of 2021 could be challenging to meet.
On the regulatory front, we are pleased to note that the Swedish Parliament has now approved the marketing regulations for nicotine pouches, something that Swedish Match has been advocating for quite some time. Same with Sweden, we do expect a notable excise tax increase on snus by year end due to the indexation to the unusually high inflation from June 2021 to June 2022, plus an indicated extra 3%.
In the U.S., while there has been a steady regulatory news flow relating to other products, there have not been any significant developments since the April announcement on the proposed product stand down [ph] relating to characterizing flavors in cigars, and the commentary period is still ongoing.
Regarding the NSEs that Swedish Match received on a limited part of our cigar assortment, those products are still allowed to be sold in the market and there is no conclusion for now on the administrative appeal that we have filed. There will be no approvals, nor deficiencies on SE applications pertaining to the balance of our cigar assortment.
Following these introductory remarks, we will now continue with some more detailed comments on our smokefree product segment and starting with ZYN in the U.S. and turning to slide nine. With shipments up by 38% to close to 59 million cans, the second quarter marked yet another record period for ZYN. For the rolling 12 month period ZYN shipment volumes amounted to 203 million cans. The strong volume growth for ZYN was mainly a result from higher velocities, but also from an expansion of the store base.
At the end of the second quarter, distribution for ZYN had reached 134,000 stores, an increase of 15% versus the same period in 2021. It is worth noting that while the promotional intensity for ZYN during the second quarter of 2022 was less than in the first quarter of this year, certain distributors purchased extra high volumes towards the end of the second quarter in anticipation of the communicated third quarter promotions.
The consistent trend of growing velocities for ZYN continued during the quarter, both in the western region where ZYN was initially launched in 2016, as well as in regions outside the west where the brand was marketed in a broader scale from April 2019.
Nicotine pouches continue to demonstrate not only exciting commercial prospects, but also their potential to significantly contribute to improve public health. As slide 10 illustrates, the nicotine pouch category is rapidly growing relative to cigarette. Measured by volume and according to IRI data and we make one can of nicotine pouches equivalent to one pack of cigarettes, nicotine pouch volume for the year-to-date period was well above the 10% benchmark in the west and exceeded 4% on a national level.
Based on indications of average weekly consumption levels for consumer ranging from two to three cans, our estimate of the number of ZYN users related to the number of cigarette smokers on a national level is in the range of 5% to 7%, and we expect the number of nicotine pouch users to continue to grow. We also expect that weekly consumption rates per adult consumer will increase as adult consumers adopt nicotine pouches more fully.
Another source of growth for the nicotine pouch category in the U.S. are consumers, a more traditional smokefree product such as moist snuff. On slide 11 we compare nicotine pouches with the moist snuff category based on MSA data. In the western region, distributor shipments of nicotine pouches in the quarter represented close to three-quarters of the shipments for traditional moist snuff product. In regions outside of the west, a milestone was passed during the second quarter when nicotine pouches grew to become larger than the moist snuff pouch data.
Turning to quarterly market shares for ZYN and category volumes based on MSA data on slide 12, you will note minor restatements of the market shares for historic periods compared to the slides that we presented after Q1, of course by updated MSA data sets, but the historical trends are the same as previously published data.
As the dotted line depicts, ZYNs market share declined by around 1 percentage point in the second quarter relative to the first quarter. However, this should be viewed in light of continued broad based and deep promotional activities from a large competitor and a lighter promotional schedule for ZYN during the second quarter compared to the first. Compared to the second quarter of the prior year, the market share for ZYN increased by close to 1 percentage point, to a large extent driven by the strong performance in regions outside of the west.
For market shares stated in retail value terms or in dollar terms, we are using AI data which captures consumer uptick data rather than shipments to the trades. Our estimate based on IRI is as I already mentioned, that ZYN represented more than three-quarters of the nicotine patch category retail sales during the second quarter.
And with that, I will hand over the word to Anders.
Anders Larsson
Thank you, Lars. Turning to slide 13 and the traditional Moist Snuff, based on MSA distributor data the category for Moist Snuff saw declining volumes in the second quarter compared to the prior year, while Swedish Match volumes were virtually flat.
Our Q2 Moist Snuff shipments grew by close to 1% versus the same period in the prior year, and our value priced Longhorn brand continued to demonstrate strength. And similar to the rest of the category, we benefited from meaningful year-on-year pricing effects across our Moist Snuff portfolio.
Moving on to U.S. Chewing Tobacco on page 14, the longstanding trend of category contraction continues along with the migration towards lower priced offerings. This follows the pandemic period when the secular volume trends took a temporary pause.
Our own volumes also declined with modest volume growth for our value price selection, partially offsetting the declines for our premium brands. The favorable effect from price adjustment for this quarter only matched the negative impacts from portfolio mix, which along with lower volumes resulted in reduced operating profits.
Turning to smokefree Scandinavia on slide 15, as the slide clearly depicts, smokefree products in Scandinavia continued to show robust growth, supported by strong growth in all three countries: Sweden, Norway and Denmark. While nicotine pouches have contributed the most to this growth, the consumption of snus has also increased.
On slide 16, we zoom in on the snus market in Scandinavia. As measured by Nielsen, snus is still the dominant form of smokefree products in Scandinavia and is estimated to represent approximately three-quarters of the total smokefree category. As the line in the growth to the left depicts, our share within the overall Scandinavian snus market has been holding at a fairly consistent level.
On the sequential basis, from the first quarter Swedish Match’s market share on the snus market in Scandinavia declined only marginal. Our Q2 snus shipment volumes grew by 3% on a year-on-year basis, supported by the recovery of the border trade and travel retail classes of trade.
On slide 17, we looked up the nicotine pouch market in Scandinavia. The Scandinavian nicotine pouch market remarks dynamic and intensely competitive, both in terms of new launches of brands and varieties and in terms of promotional offerings. While marketing practices in Sweden need to change beginning of August to comply with the new regulations, we expect a continued high level of competitive activity.
Swedish Match’s share with their nicotine pouches as measured by Nielsen remained stable on a sequential basis for the first quarter, aided by the introduction of several innovative product offerings and enhancements during the quarter. With much of the market activity relating to new product offerings having occurred in channels not covered by Nielsen Swedish Match estimates, that its true market share within nicotine pouches grows slightly on a sequential basis during the quarter.
On slide 18, we show the wide array of new products that were launched during the second quarter, for both snus and nicotine pouches. These include products for the Swedish domestic market, for Norway, as well as products with a pay to consumers and shop at travel retail stores and buy online.
In our first quarter presentation, we mentioned a few of these, noting that products such as VOLT PEARLS, an enhanced quality and sensory upgrade of the rest of the VOLT range, as well as expansion to our moist mini varieties, would be phased in during the quarter and into the summer in Sweden. This ambitious launch schedule was accompanied by impact from marketing programs and early trade and consumer indications are positive, helping to support our volume share growth ambitions for nicotine pouches.
VOLT PEARLS with its patent pending technology offers clearly different set of sensory and functional properties, not – the least of which is they’ll be lifted to manage release properties for both flavors and nicotine delivery. This truly unique assortment further demonstrates our leadership in innovation tied to consumer needs.
Our brand transitioning from [inaudible] and the launch of RUSH, the RUSH brand in Norway is continuing and despite facing the communication challenges or plain packaging, the RUSH concept is demonstrating clear interest among our customers and about customers.
Turning to slide 20 on cigars, Swedish Match achieved market share gains within the cigar category in both the second quarter and for the first six months. While our factory shipments were down, including a decline also for Natural Leaf cigars in the second quarter, MSA reported higher shipments for Swedish Match’s Natural Leaf cigars from distributors to the trade, both for the quarter and the year-to-date period, which resulted in the share gains despite softer performance for HTL cigars.
For HTL, the shortage in certain raw materials has continued to constrain production, while for Natural Leaf as Lars mentioned in his introductory remarks, we have made good progress in aligning output to demand. While overall market volumes for both Natural Leaf and HTL segments have declined, Natural Leafs can be attributable to the positive impacts from consumer behavior and purchasing power during COVID, and a bit of unbinding of these positive impacts during the current year.
The average exchange price per cigar was up by 3%, but operating profit development for cigars was burdened by the lower sales inflationary cost pressure and increased marketing investments behind our gain in light to our consumer loyalty programs. Both programs have generated very high interest across the country and provide testimony to the strong engagement with our brands among our adult consumes.
On slide 22 we have summarized relevant financial metrics from our interim report. Net finance costs during the quarter improved slightly versus prior year, reflecting higher financial returns on surplus cash and decreased average debt levels. The weighted average interest rate of our loan portfolio at June 30 was 2.1, with 98% of the portfolio subject to fixed interest rates, and there are no debt maturities during the remainder of this year.
Our net debt to EBITDA for the 12 month period ending June 30 was 1.5. While we remain committed to returning cash not only in operations to shareholders, share repurchases have been suspended in view of the current public cash offer by PMI.
Slide 23 restates our updated full year 2022 outlook from the interim report. With the strong growth of our U.S. smokefree business coupled with the strong U.S. dollar rates versus the SEK, we now expect a slightly higher corporate income tax rate of close to 24%, excluding associated companies. The outlook has also been updated as regards to suspension of share buybacks.
And finally as always, fluctuations in currency rates will impact our future reported results and you may want to take note of some of the more important average exchange rates versus the SEK. The average exchange rate in the third quarter of 2021 for the U.S. dollar was 8.66, the NOK 4.99 and the Brazilian real 1.66. In other words, should current spot rates largely prevail, one should expect continued significant currency translation tailwind in the upcoming third quarter for sales and earnings.
And with that, I will hand over to Lars.
Lars Dahlgren
Yes, and before we open up the floor to questions-and-answers, I would like all of you to join me in providing a very heartfelt thank you Emmett Harrison, our Senior Vice President of Investor Relations, who has decided to retire by the end of August. And Emmett joined Swiss Match in 1990 and started on the commercial side and he has actually been heading the IR function since the previous century and this is his 92nd quarter, which I believe is truly impressive.
And as you all know, he has provided the investor relation community with great insight, product knowledge and very engaged dialogue in helping you all to assess both the opportunities and the challenges of our company, and all the rankings throughout the years for which you have been helpful speak for themselves, so we’ve been very fortunate to have such a valued colleague as Emmett with us on the IR side.
And I’m also pleased to note that we have a very competent successor to Emmett. Johan Levén is Investor Relations manager and business analysis manager working for Emmett and also has a commercial and data insight and market insight background from the smokefree side, so. He has a very strong knowledge about the core of our business on a global scale.
With that operator, we can open up the floor to questions-and-answers.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from the line of Rashad Kawan of Morgan Stanley. Please go ahead, your line is open.
Rashad Kawan
Hey! Good afternoon, Lars and Anders, and Emmett wishing you the best going forward and congrats to Johan as well. A couple of questions gentlemen; the first one, can you talk about the dynamics your seeing in the U.S. I mean you mentioned moist snuff growing sales and earnings, particularly with Longhorn while chewing tobacco saw some pretty big volume declines, particularly on the premium end, which suggests that you know you’re seeing some acceleration and down trading in tobacco. I mean is that a trend that you expect will accelerate over the coming quarters given where kind of gas prices are and the U.S. consumer continuing to be under pressure.
And then my second question on ZYN, very strong performance again. You mentioned there were high purchases by certain distributors towards the end of the quarter. How much of the growth was attributable to that versus you know higher velocities and kind of increasing store comp that you talked about. Just trying to get a sense for, you know how much of the growth is a timing issue versus just underlying strength in the overall business. Thanks gentlemen.
Anders Larsson
Yeah, Andres here. I can start and Lars can fill in. I do believe that we see some impact of the trends with the inflationary environment and higher gas prices in the U.S. and we are well positioned with our Longhorn offering in particular for moist snuff. So that’s – I believe that’s helpful and will be helpful going forward if circumstances stay this way.
And then on ZYN, as always we cannot try to or choose to look at the longer term trend, but with that said, we did have some extra shipments all around that’s say a couple of million accounts that impact that flavor based shipments in the second quarter. And then we also had some timing effects between Q4 and Q1 as well. So I believe the growth in MSA shipments which was around 10% I believe, is probably about the reflection of the underlying growth if you call it that way for one isolated quarter. But again, the longer term trend is more important to look at.
Rashad Kawan
Got it. Thank you.
Operator
Thank you. Our next question comes from the line of Gaurav Jain of Barclays. Please go ahead, your line is open.
Gaurav Jain
Hi! Good afternoon! And Emmett, congratulations and a very deserved retirement and thanks a lot for all your help over the years and congratulations to Johan as well.
So you know, just following up on the question on ZYN’s trend, is there any benefit you are seeing from all these pressures on the e-cigarette manufacturers and you know the flavor bans which have happened and then being pulled back. So, is that helping you in any way, and if the synthetic nicotine e-cigarette market comes under pressure in 2H, do you think that can benefit ZYN a lot?
Lars Dahlgren
Yeah, I mean as Anders mentioned, when we look at the deliveries towards the end of the quarter, we estimate roughly 2 million cans. And these are various distributors who increased their purchases and it’s a little bit difficult exactly to know the reason. But we know from previous experience that once we’ve opened up certain promotions, that some of them have run out of stock. So we definitely think that a good part of the estimated extra 2 million are attributable to advanced practices to make sure that their distributors are not out of stock, I mean for the promotional period.
But then we did note also that the regulatory news around certain of the vaping products there seem to have impacted order patterns a bit. Yes, to some extent we believe at least there was a temporary effect where distributors wanted to get ready to make sure that they have products in lieu of some products that they thought might not – might go off their market, and it remains to be seen how the regulatory situation pays out. But as a general comment I would answer yes to your question, that you know if other alternatives – if FDA is enforcing the jurisdiction over other products, which by the way to our understanding has certainly happen to have a very limited scale regarding synthetic products at this stage, but the deadline was July 13.
But I think it’s a fair assumption to say that if some products go off the market, it will benefit those that stay in the market.
Gaurav Jain
Sure, that’s very helpful. And in that sort of market context, do you think now you have more opportunity to take pricing than has been the case in the last three years.
Lars Dahlgren
I mean there are a lot of things coming into play when we talk pricing, and I mean you know we have these nicotine pouches. We did take pricing this year on ZYN and then from time-to-time we have some promotional programs as well, but nowhere near in depth to our not just competitors.
Now, over time we believe that there are pricing opportunities also in nicotine pouches, but the competitive situation is very intense in this state of extreme growth in the category.
Gaurav Jain
Sure. And last question, I didn’t really catch the comment on excise tax hike in Sweden which is linked to inflation. Could you just help us understand what it is on that context?
Lars Dahlgren
Yeah. No, it’s good to be aware of that now that the world is entering into a different inflation environment. Since long, actually on the tobacco side the excise taxes in Sweden are indexed based on the inflation, the official inflation number between June of the current year and June of the previous year. But historic in the recent years, that number has been very close to zero, so there has been only very small adjustments on the excise taxes. But now that I’m looking at on this, it was seven point…
Anders Larsson
Yeah, in the range of seven.
Lars Dahlgren
Yeah, it was in the range of 7%, the Swedish of course CPI June-to-June. So the tax will automatically go up with that, and then on top of that the government has announced their intention of a three percentage point extra tax increase across tobacco products.
Gaurav Jain
That’s very helpful. Thanks a lot.
Operator
Thank you. And we currently have one further question in the queue. [Operator Instructions]. The next question is from Andreas Lundberg of SEB. Please go ahead, your line is open.
Andreas Lundberg
Thank you, and good afternoon everyone! And once again congratulations, and thank you Emmett for a very, very good job during the years. If I could start with going back to one of the previous questions on the pre-purchasing, you talk about 2 million cans, but correct me if I’m wrong, but it was some 2.5 million cans in the prior year quarter as well due to pipeline volumes; is that correct?
Anders Larsson
I don’t recall exactly the prior year number.
Andreas Lundberg
Okay, I have a note here, but yeah we can talk about that.
Anders Larsson
And that’s always – I mean there are things happening in isolated quarters and you have delivery days as well. So you have – you had one extra delivery day also in the second quarter versus, that’s on a sequential basis versus the first quarter.
Andreas Lundberg
Yeah, cool. And over to investments or if you talk about the same in the U.S., when it comes CapEx and factories and so forth, what investments do you foresee in the coming few years besides marketing and branding types of investments?
Lars Dahlgren
I mean as we’ve been explaining, you know we have an ongoing investment program and we have taken several investment decisions where we now feel that we are, to stay ahead of the curve. So the production capacity is not the limiting factory and we intend it to stay that way and therefore continue to invest going forward as we project that the growth will continue. So we are adding production capacity, but we refrain from disclosing exact details on those amounts, because it’s more of an ongoing thing now.
Andreas Lundberg
Generally speaking, what kind of fixed capital or working capital you think are needed for your growth plans in the coming years?
Lars Dahlgren
I mean if you take the fixed capital it’s mostly related to the production lines and the process equipment. We have expanded deals for our facility quite a bit, so the kind of income lines that we have decided to invest in are – they will largely fit within the premises. We may actually do a little bit of building work, rearrange between storage areas and machine areas and so forth. But then from time-to-time, you know when growth is continues, then of course we will come to a point where we also need to invest in buildings and on the working capital side generally it’s a very capital efficient business that we are running.
Andreas Lundberg
Cool. And lastly regarding the ongoing bid situation, what would you say are the major advantages for your company or what can you not do on your own? Thank you.
Lars Dahlgren
I mean we, I level it to the Board to – the Board has provided their recommendation to shareholders, so I refrain from any comments regarding the value. But on the industrial logic wise, there is a strong fit between our two companies where we envision that we could further enhance our efforts in international markets in our, what we call other markets, where we could come out via the commercial network of VMI. And then it’s exciting to see how our very successfully commercial set back in the U.S. could be potentially leveraged with additional reduced risk products in that market as well.
Andreas Lundberg
Cool! Thank you so much.
Lars Dahlgren
Thank you.
Operator
Thank you and we’ve had two people join the queue. The first is Jared Dinges of J.P. Morgan. Please go ahead, your line is open.
Jared Dinges
Hi guys! Can you just give an updated on the supply chain constraints that you’re seeing in cigars. Like I know volumes were still down a bit in the second quarter, but how should we think about how that’s going to evolve in the second half and going forward. Are you – you know did you exit the quarter in a better place and could we get back to kind of a more normalized, let’s say volume growth rate? Thanks.
Lars Dahlgren
Yes. I would say we exited definitely the quarter in a better place when it comes to Natural Leaf varieties. And there our current assessment is that we should be able to meet demand and then the category is a little bit softer compared to the COVID levels.
But on HTL, that’s where we have some limitations on input material. But we are trying to work around that as much as possible and it would take some time before that resources are in constraint. But we see a little bit light in the tunnel and our prediction is that we should be able to increase also output, a bit of HTL and then hopefully that demand stays, because at least for historic periods that has still been a constraining factor on our shipments.
Jared Dinges
Got it. Thank you, guys. And thank you very much Emmitt and good luck to you Johan.
Lars Dahlgren
Thank you. As a follow up to the prior question, your right. In the second quarter of 2021 and in addition to velocity growth, we also had some store expansion and menthol and chill varieties were also broadened on a national scale in the second quarter of 2021. So there was some effect from that…
Anders Larsson
I believe actually you were right though. It was likely in that range of 2.5 million cans.
Operator
Thank you. And we have one further person in the queue. It’s a follow-up from Gaurav Jain of Barclays. Please go ahead, your line is open.
Gaurav Jain
Hi! You know just a question on the Philip Morris offer. If 90% of the shareholders do not tender their shares, then what exactly happens?
Lars Dahlgren
Well, if 90% don’t tender, then only 10% tender then…
Gaurav Jain
Sorry, the other way, sorry the other way. Less than 90%…
Lars Dahlgren
No, but I think that’s a question that you need to ask Philip Morris, how they would intend to act in such a situation.
Gaurav Jain
Okay, thank you.
Operator
Thank you. And currently there are no further questions in the queue. So just one final reminder, [Operator Instructions].
Lars Dahlgren
Okay, well if there are no further questions, I would like to thank you all and also the schedule for our third quarter report is to be published October 28.
Emmett Harrison
And thank you all very much. Thank you Lars for your very kind comments and the team. Swedish Match is an incredible company to work for and I’m very proud to have be working here for 32 years in different parts of the company, and the last 20-plus years here at IR. Johan is doing a fantastic job working with me here and he – I’m sure he will serve the investment community at least as well as you are used to for Swedish Match. So, thank you all for your kind words and we will see one another again, somewhere sometime. Thanks.
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