Aalberts N.V. (AMS:AALB)

Earnings Call: H1 2020

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Jul 23, 2020

Hello, and welcome to the Alberts Interim Results 2020. My name is Jess, and I'll be your coordinator for today's presentation. For the duration, your lines will be on listen only. However, there will be the opportunity to ask questions. I will now hand you over to your host, Mr. Wim Pelsner, CEO to begin today's presentation. Thank you. Yes. Good morning. Welcome everyone joining our webcast for the interim results. First of all, we go to the contents of our presentation. First, we're going to tell you something about Albert, then the operational development, the financial development, and then we will say something about the outlook. And after that, we hope at 10 o'clock to have a question and answer session. So going to Alberts. As you know, our essential part of Alberts is that we engineer mission critical technologies for groundbreaking industries. We do that on a way that good is never good enough. I think that's part of our culture. Our mission critical people make the difference, and that's also why we believe in our real value, which is the Albert's Way, winning with people. And a very essential part, which is also has proven itself, again, I think the last 6 months, is that sharing knowledge also in crisis times is a real important thing because you learn in many parts of the world what happens and you can evaluate these actions in other parts of the world. So for us, being a specialist in technologies with a very continuous improvement culture with very good people and that combined with sharing knowledge is the basis of our success. Our way of value creation is that we from this essential three things, we create shareholder value by building leading niche technology positions, which we defined also last year in our Capital Markets Day presentation that we have 5 leading niche technologies, which we want to build further with high entry barriers, high pricing power and generating high added value margins and creating sustainable profitable growth over a long term period. You can also only do that when you are unique in your markets and when you combine the uniqueness of your technologies with a selective end market. So we're looking for combinations of the technologies which are leading and unique with the selective end market, and we're building these positions step by step further out. This can be organically, it can be inorganically. Then good is never good enough. It's really our culture to improve every day. We do that through operational excellence, continuously improving our EBIT margins. Even in crisis times, difficult times, we look for improvements all the time. And I think also the actions we will explain later in the presentation about our strategic restructuring costs based on the Capital Markets Day and the presentation we did in December again shows that we react very quickly to improve our operations continuously. We aim for a very strong conversion from operational excellence to cash generation. I think also we see that the last 6 months where we generated good cash flow from operations, a little bit lower than last year but with a much lower revenue and also with a reduction of our inventories of €30,000,000 which is, of course, affecting the absorption in your factories. But despite that, we generated good cash flow. The cash we generate out of that operational excellence, we allocate very disciplined. That means that we continuously look where we allocate our money because capital allocation is one of the most important things, especially for me because it actually says something about the profit and the position you're going to generate in a few years because the capital reinvest this year will generate revenues and results in the years in 2021, 2022. So it's very important where you allocate your capital on a disciplined way. And then technology exchange, very important. It catalyzes innovation speed. It catalyzes fast learning adaptation quickly to the new situation. And it really helped us also the last months to adapt very quickly to this specific circumstance. We do that on a long term basis. So relentlessly, we create long term shareholder value. We have a playbook for that and you can see how we do that. We're continuously looking to the competitive advantage we have in the market to the growth drivers. We explained these growth drivers in our strategy. It's also on our website, very well explained. From that point, we leverage our activities by gaining organic growth, by adding more volume in our factories, combined with excellence, efficiency actions and projects, we drive margin expansion. With this margin expansion, we create a strong free cash flow, which we allocate very disciplined in our 5 core technologies where we optimize our portfolio continuously and this goes on and on and on. This is how we create compounding returns and on a very disciplined long term way to create shareholder value. Our track record over the almost now, it's now 45 years that we have done this, and we will not stop with this even when we have a corona crisis. It's not stopping us from, let's say, executing this strategy. And you can also see that in our earnings per share, dividend per share over the last 10 years, our return on incremental capital employed for us is a very important one. And of course, we look to a long term period, and we are sure that we will overcome also this corona period. Our long term shareholders are growing. So we have more than 50% now more than 3% holdings with a long term view. They are supporting also our sustainable business model. Our key strength and I can't say enough about that. Also again in these times, your people are the most important. You win with the people. It means also that the business teams we have in our company are the most important, and they make the difference. Also they take the actions, of course, with intensive discussions with us as a Board, but also with the head office. And it means that we have 5 drivers: be an entrepreneur, be creative, think in solutions, take ownership, don't wait, proactive, try to be better and quicker than your competition all the time, take your own decisions in the values we have. And of course, we go for excellence all every day. Every day, we challenge ourselves to become better, share and learn information. And a very good example also the last 6 months was we were very early warned in our activity in Italy about the COVID-nineteen experience and disaster, what happened there. So we could immediately act already beginning March, also in the United States to take preventive health and safety measures to be earlier with our measures. And of course, act with integrity, very important. And our greatness with our people is also made by sharing knowledge and winning together. The strategy and objectives not changed. These are before IFRS 16, and we are still in very active to realize these strategic objectives. We started and we updated our strategy last year, and we are aiming still for these objectives to hit them in the coming years. Very important innovation. It drives organic revenue growth. And important is also to mention that we did not stop any innovation project during the last 6 months. Actually, we accelerated certain projects like digitalization in climate technology. We accelerated our investments in our press manufacturing where we see a lot of potential, especially in North America. We accelerated our investments in cleaning and machining and advanced magnetronics. And so I can we also mentioned in our press release more examples. So we have to continue with innovation because it makes us only stronger going in the future. We were also able to do that because we had a very solid balance sheet, a good cash generation. So we didn't have to stop things. We could also postpone things to generate more cash or, let's say, spend less cash out on our investments. And that's what we actually did. But innovation is very important. It is driven by 3 megatrends, as we also explained. And what we see is that our innovation rate where we have a target to go from 10% to 20%, it's really improving. We are measuring that every 3 to 4 months. And of course, now it's we have a lot of other actions we do, but this is still on the radar very intensively. And the same is for our key account management rate. You see more and more that through focus element and delivering more solutions and systems and more complete package that our key account management rate is growing. So this is yes, it's really we see that the strategy is really taking place. But also important is that by having a lean structure that you always keep ahead of the game. So that our entrepreneurial spirit, our entrepreneurial organization, which we also see more and more as sustainable entrepreneurship, is that you can react very quickly with your innovation to changing market circumstances. I think we all saw the last 6 months how important that is. Coming to the megatrends, shaping our future. Again reflecting to our strategy, very important. We these are three trends which are not changed at all. Rapid urbanization will continue. Climate change and resource scarcity will continue and especially the Internet of Things, connectivity and integration, more homework, people now we saw that all with our Microsoft Teams experience or Zoom or whatever we used. We also intensively use that and you see that a lot of things accelerate by doing that. A very nice trends we also see is more and more digital services in our business, remote control questions, data information, which we give more and more to our customers where they pay for. And that in combination with our, let's say, our products, our hardware is a unique combination. So we focus the company much more through 5 niche technologies, hydronic flow control, piping systems, service technologies, advanced magnetronics, fluid control, and we combine that where we make actually a match with the selected end markets, eco friendly buildings, industrial niches, sustainable transportation and semi common efficiency. We embrace our sustainable development goals in this strategy, where 64% of our revenue is already embraced by SDGs, which I mentioned. And by doing this, we achieved a unique market position with sustainable impact. Sustainable entrepreneurship, we went a step further. It's not only that we embrace the sustainable development goals, but we also have integrated them completely in our strategy. I think that's pretty unique. We made very big progress there. It's because we believe that we have to take our responsibility as a company. But the second thing is we also see a lot of money flowing in these directions where we can take advantage of, for example, energy savings in buildings, energy savings in fuel reduction in combustion engines, but also going to hydrogen applications. We are all there active in fluid control. In piping systems, we look for hygienic distribution of water. And very important is that more and more the applications in transportation look for lightweight materials where, for example, steel is replaced, aluminum meets the same strength as in, for example, steel and that you solve with specialized coatings, specialized service technology. So this will be also be in the future, you extend lifetime of the materials and you make them stronger and more specified to the use you do. Our segment reporting structure to make clearance, our 5 niche technologies as mentioned here are reported in 4 business segments, which you can find in our press release. Operational development, yes, the highlights, where you can call them like that highlights, of course, I think there are not many people who are expected to have a 1st 6 months like this. I must say the 1st 2 months of the year, we started very well. We saw also a pickup of the industrial markets in the 1st 2 months. We had a very good record order book in the end of February, which I've never seen before, not only in Advanced Mechatronics, but also in other parts of the group. And actually, you could say that the recovery in the industrial markets, which was really taking place, was a little bit broken by the COVID-nineteen situation, which, of course, started end of February, beginning March. And we took immediately action. So also due to the fact that we were warning already in China, but especially due to the experience we faced in Italy, we took actions in all our locations in the world. That really helped because our limited we had a limited amount of infections. It's also till now on our, let's say, 100 roughly, it's now lower than 150 sites. We only had to close probably 4 or 5 for certain periods, mainly in France and Italy. And that really helps to continue our production because we have to produce, we have to supply our products and our services, which is very important to keep also our revenue running. So we were able to do that. Thanks to a lot of people, which were really reactive in taking the actions. And I want to give a big compliment to all the business teams. So but of course, we were affected, especially in the month April May, where we saw a decline in our revenue. In June, we saw a real good pickup. And yes, we also see a further increase of our order intake. But the effect of that was that we had a revenue of €1,287,000,000 Organically, we had a decline of 11.1%. Our operating profit amounted to €121,700,000 with an EBIT margin of 9.5%. This is including a €4,500,000 with a strategic restructuring charge, which we will explain further in the presentation. So when we will take out the restructuring charge operationally, we did a little bit below 10% EBITA margin. I think it's 9.8% and 9.7%. So I think we came through it pretty well, but we focused on cash generation. That's the first thing we did, cash generation, cost optimization because the moment we started to go in this COVID situation beginning March, nobody knew what would happen in April May, how deep it was, when would it recover. So what you have to do is to manage your cash very thoroughly. So we did that. And so our we generated solid cash flow from operations of $68,000,000 roughly 8%, 9% less than last year, but with a much lower revenue and also a much lower production absorption because we also reduced our inventories to 30,000,000 dollars and that is a big number because we start reducing the inventories from the month of March. So that means in 3 months, 3 to 4 months, we were able to do that. That means you really have to reduce your production pretty heavily. Otherwise, you never reach this number. And that, of course, hits also your EBIT margin. A net profit of €85,600,000 per share, dollars 0.70 And important is to mention that we continued our investments and innovation initiatives. The CapEx we spent was roughly 54,000,000 dollars but the CapEx cash out was $72,000,000 And we kept that floating because we believe it's very important to keep on innovating also to stimulate allocating your capital to the growing product lines and technologies and also the new products which we launched last year that we keep on pushing that in the market. So we become stronger out of it and we evolve in a better and stronger out what we have also explained in our strategy. And we were also able to do that because we generated the cash mainly due to working capital improvement. And then we also look to our strategy, which we were implementing further. And actually, the decision we took is that we want to accelerate the action plan, which we presented last year. And so a lot of actions, which we planned in 2020 until 2022, we have accelerated. So we already knew which locations we had wanted to reduce. We already knew what kind of overhead we wanted to reduce. So we designed roughly 30 projects in the whole company in all the segments, and we will take a 1 off full year strategic restructuring cost of approximately $40,000,000 because these projects give us a clear picture but could differ a little bit. So that's why we say approximately. And it will give us an annual benefit of approximately $45,000,000 So we think that we can really structurally improve the costs by really consolidating locations, reducing locations, divesting locations, but especially also and that's we did a lot already reducing the overhead and making the company and the organization much more simple because there we still can gain a lot. So Alberts accelerates strategy focused acceleration. Operational Development, as said, an organic revenue decline totally of 11%, Order book end of June higher than last year. I think that's important. We started also with a very good order book before the whole COVID situation affected us. And in addition to the recently published trading update where we already give some guidance in the different areas of our company is that we saw a further increase in our order intake in Piping Systems and Hydronic Flow Control. We also saw and that is additional information and that's actually good news is that in service technologies, we see a slight recovery customers are producing when there is more customer activity, that means our customers are producing more, we will also get the business. We know that because we will coat the parts, we will treat the parts and that's why that is actually good news. Advanced Megatronics, very strong growth. In semicon efficiency, we grew there 19%, which we already guided at the beginning of the year that 2020 would be again a good year, and our order book is on a record level. So also the second half will be good. Fluid Control, increase of order intake and sales also, especially also in sustainable transportation end markets and we saw a slight recovery in order intake in beverage dispense. Beverage dispense was hit pretty hard, but also here, we see a recovery in our order intake. Now overall, when you look to our 4 end markets, semicon efficiency at plus 19 and in our eco friendly buildings market end markets, we had a decline of 8% in the first half and compared to last year. And Industrial Niches, minus 15%. I think that's pretty good. It shows something about the positions we have in several markets that we are pretty sustainable there and sustainable transportation also due to the closures of customers in the period, let's say, end of April and beginning May till mid May end of May, that was the biggest reason that sustainable transportation had a decline of 23%. But the main message of order intake and sales is further increasing. Then when we look to our organic growth and innovation initiatives, and we have some nice examples in pictures to show you that we continued with a lot of projects in our company. And we even strengthened and expanded our R and D and engineering force. Now some examples, we strengthened our engineering in our press production area to extend the product ranges and to develop a new range where we acted with an additional range, you could say, in another material. We expanded the R and D efforts in our digital services in we are busy with that with digital service also in climate technology but also in piping systems where we offer more and more drawing services to our customers to specify the projects. We added engineers in our valve lines for fluid control. We are developing some very nice new patent in valve lines for district heating and gas. We got some nice projects at the beginning of the year advanced mechatronics for new co development, so we had to add engineers. So this is a lesson at least I learned and we learned, but also I learned from 11 years ago when we also had a crisis, we were forced a little bit to cut In our engineering force, we did not do that at all in this crisis because it takes you years before you get the right people back. So we will not do that. And we will continue our R and D efforts and innovations on the highest level because it will bring very good growth to the future. Now Piping Systems, I mentioned already what kind of examples we did in innovations. Of course, we have an organic decline, but we still kept on innovating to reach again organic growth in the coming years because we will do that. It is we expanded our fresh product ranges in materials, in SKUs because we see a good growth in that area also in North America. Our full flow valve line, which we it's a patented product, which we launched the last years, is doing very well. We have a big growth. We even are a little bit out of our capacity. So we have now installed additional lines to serve our customers, but also there we expanded the portfolio to other connection types. And we go to other materials. We do that we are still in development also to extend that portfolio further. We launched a patented balancing valve started in the U. K. And a composite gate valve for below ground applications for water and gas. It is a composite. It means plastic combined with glass fiber. We are unique in that market with this kind of gate valves. We have already the connections for that now. We have over the gate valve. We launched it in April and good order intake for that. And we are busy with and in development of new plastic manifold systems and also new connection systems in our plastic piping business. And so a lot of activity there. Service Technologies, we allocate our capital, you could say, in Service Technologies by investing less in capacity expansion because, of course, we had a decline in our revenue, but we reallocated the capital to faster invest in our facilities for the treatments for additive manufacturing parts. It's a growing market. So we opened our hip facility in Greenville, North America, which will expand further because we refurbished the building. We put a facility in the first hip vessel, and we will expand it further. It's a big investment, but with a very good profitability. So we didn't stop that, but we even accelerated that. We integrated our stampering and realtor replating activities acquired last year, Applied Process and EPC in Chicago did it well. Of course, also they had their downturn in the last 6 months, but good companies aligned with Arbor's values and culture. And we are in process to strengthen and bundle our R and D forces within Service Technologies in our location, which we already had in Switzerland. So we have different R and D locations, which we bundle. In Switzerland, also there we invested in so that we can offer new coatings, new treatments, having also yes, having other heat treatments in the future. So that's concentrated now in Switzerland. And we continued our initiatives to expand our footprint in Eastern Europe. I think this is a growing area for service technologies, especially also what you see now in trends of in the automotive, where you see that the more the electrical vehicles in our OEMs are more and more produced in the home countries, that's the strategy where it goes to. And that combustion engines where they try to get a higher margin also go more to other countries like Eastern Europe, and we follow that trend. So we develop service technologies to a more specialized more and more specialized technology company. And we also move in the right regions to follow our customers, which was already this process already started last year after summer. Innovation is driving our organic revenue growth. So we are pushing that all the time. Some nice examples, as already explained, our press product range, we expanded to eco friendly buildings and also in industrial applications and niches, others, piping systems. With different materials, we are very unique. We can also connect, let's say, we have not only the connections, but we have also the valves. We have also the pipes, so we can offer a complete system. Now press, pressing is one technology. We also have the technology of groove. We have the technology of screw. We can do that with all materials for pipes, which there are copper, steel, stainless, plastic, a unique position that we have in piping systems in the world. And there is so much to gain, not only in growth in all over the world, but also in our operational efficiency. And that's why we also pulled forward a lot of projects in piping systems to become more efficient in the coming years. Another example, the full flow line, which we launched last year, did very well. I said we already we have some issues with producing what we can offer to the customer. So we combine that with the connection of the press fittings with the valve, so it's a fantastic package. And we expanded the portfolio further. And as said, we are also developing other materials to be launched in Europe and North America and Asia. We launched a newly developed patented balancing valve, really a unique product. We developed it in the U. K. It was a great job of these people in the U. K. And we brought it on the market. We are in the process to bring it further on the market in Europe, a great product. It's it is an example of integrating different functionalities in one valve. It is pressure control. It's balancing. It's a very good valve for maintenance. You win a lot of time as installer. It's uniquely developed. So we expect a lot of it to roll that out in the coming periods. New composite gate valve for below ground water and gas applications. And so company and our brand EZflow, fantastic brand. We already had the composite EZflow Sprint connection range. Now we combine it with a gate valve, produced ourselves and assembled ourselves, a great product, which also we expect a lot of it. And then we are in the process for our plastic piping systems We have to develop a new manifold range and also new connection systems, not only press application, but also other connection types to expand our portfolio. We did very well in this area, especially also in Belgium. We did great. And also activities in North America in different niches, we do there in our activity in North America in industrial and pool and spa and Gulf Irrigation, we did a great job. Opening our hip facility, we announced already earlier that we were busy with that. We opened it. The installation is working. We have the first orders, very interesting, very complex additive manufactured parts. And you cannot do only additive manufacturing without the post processing. The post processing is very important to come to the specification of a complex part. So this is a unique technology where only a few players in the world can do that. And this is a very specialized technology, which will expand further in the coming years, not only in North America, but hopefully also further. Then continue to hydronic flow control. As we already mentioned earlier, we launched a lot of new products and services the last years. We mentioned that time 15 product lines with a lot of growth potential. And of course, also the business team of Hydronic Flow Control had to manage the existing situation in the last months but we did not stop giving attention to these product lines. We will continue with that. Still, there's a lot of growth potential. What we see is a strong increase in offering digital solution and services to heating and cooling systems. We are really exploring that field because it's new for us but also for the market. You must imagine that, for example, you have a boiler room and where our products are made connectable. They give data information. We are able now to collect all these data information. We are able to give our customers on their mobile phones all kind of information about their boiler room, about the performance. And we give them advice how to use our systems. And this will going to grow. We see more and more traction there. It's for us a fantastic opportunity. And also remote control is the next step. So the digital platform we built the last 3 years, we put a lot of money in, is really working. So we have a digital platform where we can communicate through mobile with our customers. And yes, this is the result of the investments of the last 3, 4 years we did in that area. With a separate team, a lot of R and D people where we spend all the money already and now you see step by step the first successes. It's still a small amount of revenue, but this is fast growing. And we really believe the combination of the products in combination with the digital service that, that is the route to go. So we further strengthened that department. We're also looking for people from outside to give us more knowledge that we can think, let's say, more creativity about these services. And so we added people and capacity. Advanced Mechatronics, managing a record order book, several new co development programs, great performance in the 1st 6 months that will continue also in the second half. And we follow our customers there. And yes, we have to serve our customers there. Even in COVID times, we were able to with the 1.5 meter distance in the clean rooms that was not easy in the beginning, but we found a way to keep our efficiency on a pretty high level. It deserves a complement to the whole group because that's not easy to gain the same service to your customers. But they are fighting hard and working hard to do that. Fluid control, as already mentioned, valve lines and innovation in sustainable transportation. Some examples. This is the FlexComp Premium. It's one of the most sustainable expansion vessels in the world because we storage the heat and the warmth through salt crystals, patented, fantastic product. And we've seen more and more projects coming where they use this system as a big potential in the coming years. But it takes time, of course. Last year, it was launched, and now we see the projects coming. Digital solutions, as we see here, I talked already about that goes through the mobiles of the customers. We talk to the technical people in the border room installations, in hotels, in offices. This will really will grow in the coming years. We have a fantastic position here. Advanced Mechatronics, record order book. And we are developing a patented new valve range, valve line for diesel heating and gas. It's a more bigger range, we call it the mid range, a great product, which is based on the full flow valve and that's for district heating and gas. District heating is growing. Also the gas market was good. And as you know already in auto market, we have a very low position. It's because already 4 years ago, we said we should go to other markets. Then operational leverage and excellence. We as explained, we accelerate our action plans presented during our Capital Markets Day and this is exactly what we presented there. So we further focused, clustered and simplified the organization. So we concentrated all Arbes Group activities in our lean head office. We reduced our staff also here in Utrecht. We reduced our costs. We reduce also the staff in the different niche technology clusters, the business teams. Because of this clustering, you can also optimize your overheads in all business segments. So we did a lot and we're going to do a lot. And we divested already some smaller locations. Recently also one in Italy, we end of the year, 1 in Germany. We closed several sites, but we are really in process of executing the plan to go from 154 sites to 122, which we explained. So we will do that much quicker than we earlier said in our presentation. And a lot we will already do this year and probably in the first half next year. So that's why we have a one off restructuring strategic restructuring cost of $40,000,000 We take that in 2020, dollars 4,500,000 we took in the first half, so $35,000,000 we will take in the second half roughly and an annual benefit of approximately $45,000,000 partly in 2020 and fully in 2021. So Alberts is accelerating the strategy. We are not stopping because we think that COVID is a temporary thing, but we always think long term. And we will come stronger out of this crisis, and we see it also as a momentum to accelerate our strategy. Allocation of capital, of course, focus on cash management and customer optimizations, especially cash, costs, working capital, but also innovations. The CapEx continued. I'm very happy we did that. We continued that. We were we said we're going to do that in growing product lines, future technologies, innovations, but we postponed mainly capacity expansions in the different segments and also building expansion. We were adding building plans in 3 places in the world. And these projects we postponed, so we could also, yes, let's say, spend less cash this year. And the CapEx cash out, but also my colleague will tell more about that, you see that the CapEx cash out was still $72,000,000 a little bit lower than last year. But as you can imagine, yes, that it takes time to reduce your CapEx. So the main effect will be seen in the second half in the CapEx cash out where we that will be lower than last year. The capital is allocated, and it's in line with our innovation and our organic growth areas, fresh product ranges in Piping Systems, vessels that are pressing the hip in additive manufacturing, digital solution and services in hydronic, machining and cleaning capacity in advanced mechatronics because believe we will grow further. We will add an additional cleaning investment in the second half of the year to follow the volumes of our customers, and we are developing new and existing new valve lines, but also had to expand the capacity in existing valve lines in fluid control. And so the tagline focus on cash management and costs, but we continued CapEx and innovations. I give now the word to my colleague, Arnaud Malmachs. Yes. Good morning. Also welcome from my side to everybody in the webcast. And I would like to take you through the financials of the first half year twenty twenty. First of all, the bridge, the revenue bridge, the explanation of our organic revenue decline in this first half year, we came from EUR 1,436,000,000 last year in the first half year, where we had this year a gain inorganically from our acquisitions we made last year. We had a loss of our from our divestments we did in the first half year last year. And then of course, there's a currency impact mainly U. S. Dollars of €3,900,000 and that leads to an inorganic revenue decline of €157,600,000 And the EBITA bridge, the same. We came from €187,500,000 last year. We had a gain this first half year from our acquisitions we did last year PPC and Applied of €2,000,000,000 We lost EBITA because of the divestments we did last year of €1,800,000 Then we had a very small impact of only €100,000 from currency. And then that leads to the organic, yes, let's say EBITA decline of €66,700,000 to end up with €121,700,000 over the 1st 6 months. The condensed consolidated income statements, where you see the difference between the this year and last year. Of course, the revenue decline and what is not mentioned here, but also I would like to still connect again is that the added value we made this year was 62.3%, 1% less than last year despite the fact that we had to really break of course production from the end of March until the end of June with a much lower sales level, We managed to even reduce the inventories with €30,000,000 which of course has a big impact on the absorption. So despite that, still 62.3% added value, which also says something about the portfolio of our services becoming stronger and stronger. Operating profit, EBITDA $59,800,000 less than last year. Depreciation is a little bit higher. Operating profit already explained. That finance cost is a little bit higher than last year also because of, let's say, the acquisitions we did last year of Applied to PPC, U. S. Dollars, which is a little bit more expensive to finance. And then there is a higher tax ETR tax impact in our numbers this year of 0.7%, which leads to an at the end to net profit before amortization of $85,600,000 versus last year $137,800,000 or $0.77 compared to $1.25 last year. And organic revenue decline, as already mentioned, of 11.1%. The consolidated balance sheet over, let's say, first half year twenty nineteen, full year twenty nineteen and first half year twenty twenty where you can see the variances and limitations. What you see clearly is that the net debt, it's also what we communicated already also in our press release in June, the net debt reduced with 17% net debt before IFRS 16 to €648,000,000 which was 50% at the end of May. So it was even a little bit better in the last month. That leads to a leverage ratio of 1.6 versus 1.7 last year. So we managed to improve that despite the lower results, but because we also could bring the net debts in line with the loan results, we could still improve this leverage ratio. Net working capital reduction, I think a good performance, but also necessary to manage the cash. I will explain later, but ended up at 598,000,000 dollars versus $640,000,000 last year. And then the days working capital, 2 days improvement despite the fact again that the revenue of course declined substantially. So also there you see that we write actions. Equity percentage increased to 51.8% and the return on capital employed before IFRS, a decrease to 11.7 percent, of course, driven by the lower results. The condensed cash flow statement, I think what you can clearly see here is that we could the reduction of EBITDA about EUR 60,000,000 we could almost compensate by improving our net working capital in the same period. So we could compensate $52,000,000 out of the $60,000,000 of EBITDA losses by managing the working capital. Reduction of inventories was a main driver for that of course. But also the other elements were improving. That leads to a cash flow from ops, which is only $6,000,000 lower than last year. And that we could compensate or set off how you want to say with net capital expenditures, cash out that was also $6,000,000 lower than last year. So that leaves us to an almost equal free cash flow over the first half year versus last year. Now further, we see that, of course, there are also some other big elements that we could change. We of course, we did no acquisition this year. So there we have a big advantage shift in the net debt. We paid less income taxes because of the lower results, but also because of the expectations. Let's say the number that we paid last year, Change of lease payments a little bit increased and an important element here is of course also the delay of dividends that is now paid in July instead of the first half year last year. And the free cash flow, we ended on the same level as last year. Revenue per segment, in Space Technology, we decreased 7% of revenue, Material Technology 15%, like same like Climate Technology and Industrial Technology, we lost 6% of revenues. And then the CapEx, we continued as Wim also explained, we really continue to invest in new technologies, in growing product lines and we try to postpone as much as possible capacity investments and building investments and that leads to a reduction of 9% of the CapEx in Installation Technology, 26% in Material Technology, a reduction of 15% in the Climate Technology and a reduction of 57% in Industrial Technology. Again, we continue our investments in growing product lines, technologies and innovations. Operating profit. Installation Technology declined with 24%. Material Technology declined with 56% to €23,700,000 Climate Technology declined 23% to €25,600,000 and Additional Technology declined also 23% to €26,400,000 That leaves us to the holding elimination line where as you know, we always take the extraordinary costs in so that we keep the segment reporting as clean as possible. And also in this $7,200,000 that we are reporting for the first half year of twenty twenty, which is including the strategic restructuring cost of $4,500,000 as we have guided in the press release. The EBITA margin for Installation Technology 7%, 2.2% lower than last year Material Technology 7.1%, which is 6.7% lower than last year. Of course, ambitions with a very high NS value, so relatively more impacted into EBITA. Climate Technology, 10.9%, which is 1.1% lower than last year and Industrial Technology, 13%, EBITA margin, which is 2.9% lower than last year, which brings the total of our EBITA margin to 9.5% or 3.6% lower than last year, and again, also given the strong decrease of our inventories. Hence, including a restructuring cost of 1,500,000. Yes. Albert's looking forward. So we have an outlook. And of course, it's very difficult to predict what will happen because I think we have to be cautious. So we will continue to operation in a safe way. And of course, the most important is that we keep on serving our customers, that we keep our people safe. That is the most important. And that's a real challenge. I think we found a way in our production sites to do that, in our service sites. But looking to the outbreaks, which you will see now in the world happening in different countries, I think we have to be very careful and be prepared for a possible second wave and especially in certain regions. Besides that, you see that people are sometimes a little bit afraid to work or they are sick or whatever. So you have to manage that very carefully. But we were able to do that and that deserves a big compliment to all the people in ours. And our focus continues to be on cash because we have to be cautious, cash, cost of optimizations, but also innovations and CapEx that will continue in growing product lines, future technologies and innovations. And as we said, we will continue by postponing capacity expansions and also our buildings, which we were aiming to build. We will keep on building but postpone it. So therefore, we expect a lower CapEx cash out in the second half because we took all the actions in the first half and we saw now a small effect in cash out of 5,500,000 euros in the first half, but we see a much more bigger effect in the second half. And that we keep on investing, but also allocate the capital on the right way. Most important maybe here that we will accelerate the strategy as already explained and to evolve faster into stronger and better harvest realizing our strategic objectives, which we presented last year. So thank you for this presentation. I think we go now to the questions and answers. Thank you. We are now about to start the live And we do have a couple of questions in the queue. The first question comes from the line of Henk Wiermann from Kempen and Co. Please go ahead. Hi, good morning, Wim. Good morning, Arnaud. A couple of questions from my side. Firstly, 2 on your restructuring plans. So firstly, you already mentioned that the restructuring plans look very similar to the plans already announced during the CMD last year. But have there been any changes as a result of COVID-nineteen? Maybe there are some businesses that you do not expect to recover so rapidly post COVID where you decided to restructure as well? So have there been any changes? And then secondly, on restructuring, you have accelerated the plans. You announced that the benefit is €45,000,000 on an annualized basis. But how much of restructuring will be done in 2021? And what will be the total benefit of the restructuring also beyond 2021? So that's EUR 45,000,000, How much will that be for the total restructuring plans? Because you already mentioned, for example, you will decline the number of sites by about 70 locations? Thanks. Yes. Thanks, Hen, for this question. I'll take the first one. Your question was, is it changed? The plan we had in December, is it changed due to COVID from a business perspective, let's say, the restructuring. No, I think it's in principle, it's not changed because we I think the evaluation of our strategy last year where we took, let's say, the second half of twenty nineteen for that, We evaluated already very carefully what is the market doing. And in all areas, we we try to align already with these market trends. I think so from that point of view, we are accelerating that plan. Of course, what you see here and there is that, for example, in a business like Aerospace, I think that's, of course, something really changed. Fortunately, we have a small percentage in that very small percentage. But there, yes, we will realign our capacity there and focus on other markets. I think trends like electrical vehicles or hybrid vehicles and that will continue as we already thought. So we were already in the process, especially in material technology, to align our organization already to very specialized technologies in that field and to reduce our sites also there but also in other areas. So yes, you could say aerospace is maybe a change, but for us, it's a very small change. And for the rest, we're mainly accelerating. What you see is more and more interest in digital solutions. I think that's really what we see. That's why I explained also why we expanded our R and D there, especially in climate but also in piping, but also in fluids. It's all over the place. But it's still on a low level, so that will develop further, which we already saw last year, but it's I think it will accelerate, which is logic. So yes, the answer actually is not big changes, some small ones. And we are accelerating the plan. And yes, we used also the momentum now to accelerate and to become much more efficient to hit our targets in the future. And the second question was about the The annual impact. Let's say the full annual benefit, we believe will be in 2021. Yes, let's say 2021 and beyond, of course. And yes, we also can we'll expect some of these benefit in the second half of 2020, let's say, approximately 20% of it. Okay. That's clear. And so how much like so because you pulled the restructuring you mentioned you want to decline you mentioned you want to decline the number of locations worldwide from 156 156 locations to 122 locations during the CMD last year. So how many locations will be closed by year end? And how much do you plan to close beyond that? And just to get a feeling, what is the total cost saving of those plants because we now have the €45,000,000 but what will be the total number of the total million for the group? I think it's look, Arnaud, just to be clear, the one off cost is $40,000,000 and the complete annual benefit on full year basis is $45,000,000 Of this $45,000,000 we will realize 20% in 2020 in the second half and 80% in 2021. So I think that's very clear. And after that, you get, of course, a full benefit of approximately €45,000,000 continued in 2022. Yes, so it's roughly a little bit less than 1 year payback. The second question is about locations. I think it's very clear. But the second question is about the locations. We had a plan of 156 to 122 of 100 and so we aim for that for 3 years. Now yes, it's a little bit difficult to say where are we exactly end of the year because, of course, this is all people work. And so I don't going to mention a number there. But we will make already a big step this year. But it can be that certain activities will roll over to quarter 1. So I don't want to commit myself completely on the number. But let's say, we do this year a big part and then next year, the remaining, especially in the first half. So that is a little bit the plans which we have now. But it could also be that it's that it belongs a little bit in the second half of next year, but then we should be pretty fast. Otherwise, we don't realize also the $45,000,000 benefit. The next question comes from the line of Peter Olofsen from Kepler Cheuvreux. Please go ahead. Yes, good morning, Wim and Anno. Yes, maybe to follow-up on Henk's questions on these action plans. So the €40,000,000 restructuring, will that all be cash out? Or is there some cash element in there, for instance, linked to restructuring? And on the €45,000,000 in benefit, could you provide a breakdown by segment? Let's say the first question, I think we can say that the majority of these plans is cash out, but not everything in 2020. And that there are some there will be some overshoot in 2021. And we don't give an breakout per segment. Okay. What we could say because, yes, these projects are all people work. So but what we could say is that we are it's roughly 30 projects we have, but it could also be a little bit more or less, which we really intensively discussed with our executive team and business teams. And the major of the projects are in material technology and in installation technology. There we have the biggest gains, which we already presented also last year, by the way. I think in Installation Technology, we have still a lot of operational leverage and excellence to execute by closing factories, consolidating factories And by material technologies, of course, also by site closures and further consolidation and specializing in specialized technologies and reducing overheads a lot. So there is the main but we also have 2 big projects in climate. And we really integrate some locations and some activity in dispense that we further integrate actually the dispense organization. And that's roughly we don't have a breakout in money. At least we don't want to disclose it at the moment. Okay. That's helpful. Then maybe on CapEx. So in the second half, it will be lower than what you had in the second half of last year. Should we then think of several tens of 1,000,000 lower? Or is that too ambitious? No, I think what's for example, what happens, of course, that came a little bit by the quickness of the crisis. We saw it in February, beginning March. So we reacted immediately then. So then it takes time to reduce your CapEx. First, you have to talk to every business team, yes, where do we allocate the money? Should we allocate it there? Should we allocate it in another place or and then of course, you want to reduce to keep the money in your pocket. So it takes time. So we did it all very quickly in the 1st 2, 3 weeks of March actually. But then, of course, you have to implement. So what we will see is that we did now roughly $6,000,000 lesser cash out in the first half of 2020 compared to 2019. And that you will see a much more bigger cash out reduction in second half. And I think we aim for a number approximately around $100,000,000 So that could be a little bit higher, could also be a little bit lower, but let's put it like that. So I think the year before, I don't know it completely from my head, we had something like $145,000,000 cash out. So it will be around $100,000,000 So let's say roughly $40,000,000 less than the year before. So that will be shown in the second half. Okay. And important is to know that our innovations and our fast growing product lines will continue because organic growth is not gone. So when it comes back and it is already coming back the business that we are still aiming for organic growth in the situation, yes, when business comes back. And if we then look for the coming years, I think you previously talked about annual CapEx of $140,000,000 Is that still valid then for the coming years? We have all the plans for that. So but we also postpone now. So that postponement will mean that we will have the cash out in 2021. So the moment we see and we are we have to be less cautious or there is a vaccine and things open again completely, yes, we will execute all these plans. But yes, you can expect, of course, that will maybe have a delay effect. So yes, I don't know exactly. I'm not going to talk about the 2021 at the moment, but the plans are there. But it could be that it has a delay effect. And we also, of course, when we don't need capacity expansions because of the still lower market environment, which nobody knows in the coming 6 to 12 months. Nobody knows how that really happens due to, yes, all the breakout you see now again. And then, of course, we also will not approve the cash out for further expansions. You may expect that we will adapt to the situation. Yes. So I think I can't I don't think we will spend $150,000,000 on CapEx cash out next year. I don't think that because you also have a ramp up of that. But the plans are there. Yes. Okay. And then maybe on your top line. So you did minus 12% in the 1st 5 months and then minus 11% for the first half organically. So that suggests that June was in the mid single digits decline, if my math is correct. But then in terms of order book, you're saying it's up versus last year. How should we read that statement? Does it mean that going into Q3, we may actually positive growth then? Or how should we treat that statement on the order book? Let's say the order book is higher, which is a factual situation. But of course, there is also a long and let's say, there are long term orders also in debt, because as you know, one of our fast growing businesses is Advanced Electronics where we have the order book let's say for a longer time ahead. So that does not say anything about the Q3 versus last year from that perspective. So, yes, I'd say, we believe that as we said that orders are improving and sales is improving every other week actually, although it's still not there where we should where we would like to be, of course. But also to add a few things, For example, when you look to the building markets, yes, what we see now is that people work through in the summer. So there's less holidays in the eco friendly building end markets. So that means because people want to still get the projects finished. So I think the minus 8% we showed in the 1st 6 months is actually pretty good because we even had periods that our distribution was closed. So despite this effect, we had minus 8. So June had a good ramp up. We have also there a good order book. It's not only Advanced Mechatronics. And it would not surprise me that we get a catch up effect, for example, also in countries like France and UK. In France, we saw that already in June because of the bigger closures in France and UK. And also in the UK, it would not surprise me. So that are positive things. The second thing you should not forget that is long term is that the industrial markets, including automotive, are already down for 2 years. Yes, this is complete and I said that maybe already 100 times, but this is a complete different situation than we had in 2,009. So you see that also there's much more activity in OEMs. There's much more activity in these industrial markets. And we see already that the orders and intake, especially for the manufacturing parts, are increasing rapidly in June because there's no inventory at all in the supply chain. So that means there comes a moment that yes, that people have to build up inventory again, otherwise the supply chain is not functioning. That's also how automotive becomes a second effect is that people are not flying, people are not going in a train, people are driving in cars, people are driving on a bike. So yes, this is a different situation. So it and the same is building. So there are also some positive effects. People are much more spending money on their house at the moment. So that means also they improve their heating system, improve their cooling system. That's of course, we like it because it stimulates our sales. So yes, it's difficult to predict how that works out, but these are not negative trends. Advanced Mechatronics, we have a fantastic order book. I think also in the building end market, we have a good order book. And in the meantime, we keep on pushing our innovations and then restructuring to accelerate and to actually reduce our breakeven point as total almonds because that's actually what we are doing. So yes. Okay. Maybe then my final question for Arnaud. At the Capital Markets Day in December, you talked about an incremental margin or a drop through from organic growth to the EBITDA of about 25%. Well, 2021 will be somewhat exceptional because of the full benefit of this €45,000,000 But looking beyond 2021, you still think this 25% is a reasonable assumption? Yes, I think so. And let's say the drop through of 20 5% is a valid number. And you're right, 2021 will be an exceptional situation where we have the full benefit of our restructuring plans. But when we have the organic growth, like we have forecasted also in the let's say the calculation we made in the Capital Markets Day, we should be able to make a drop through of that percentage. But we need, of course, organic growth for this. Yes. Okay. Thank you. The next question comes from the line of Martin Linde River from ABN AMRO. Please go ahead. Yes. Good morning, Wim. Good morning, Arnaud. Good morning, Arnaud. Good morning. Two follow ups on the restructuring. One is the remaining part of the restructuring, which comes from the 2019 Capital Markets Day. Could you say something about the savings versus the charges of that of the restructuring that you're still going to do in 2021? Will that have the same ratio in terms of savings versus charges? And you have now EUR 45,000,000 in savings on charges for EUR 40,000,000. Can you give us a bit of an indication of how that ratio will be for the remaining part of your restructuring? That's part 1. And then secondly, we now know a bit more about the impact on costs. But can you also clarify or provide a bit more clarity or guidance or color upon the impact on working capital from this restructuring exercise? That would be my first question. Okay. Let's say the first one. The EUR 40,000,000 approximately EUR 40,000,000 of restructuring costs given the approximately EUR 45,000,000 of benefits, let's say, that's the balance that we have given. And that is also the balance that is applicable for, let's say, the program when it's executing. Again, we foresee that we can start most of the program in the second half of twenty twenty, but we could also still have some of the program to do in the first half of twenty twenty one. But as Wim said earlier, it's a little bit difficult to predict. It's work in progress. Teams are very busy with it. So we cannot give more guidance than that. We can only give you the guidance that we gave. Then the working capital, as you know and as we also have said, for us, we have on a high priority the inventory reduction plan that we have guided with €100,000,000 to €150,000,000 of reduction calculated in days, we always say, because of course, we know that when the business is growing organically and hopefully on a good level, we also need, of course, inventories for that. So we always say calculating days. That means that especially, let's say, the less efficient inventories we have to optimize. And we are also busy with all the teams to do that in these same periods. So over the next years, we will further improve step by step the €100,000,000 to €150,000,000 of inventories. So that is what we are aiming for. But it wouldn't be possible for you to say of the €100,000,000 to €150,000,000 target, this round of restructurings will be roughly 50% or 25%. So we have a bit more clarity on that on this specific part of your restructuring program. Let's say some of the improvements, of course, take some more time. So this is really yes, this is really a big effort and that takes also structural plans that we are making with all the teams. Actually, we make that really and we're driving that really for the next 3 years. So 2022, we are continuing to do that. And yes, so you should see every year, you should see some result of that. Evenly spread, I guess, then over the next 3 years. Yes. Yes. Okay. Well, continuing on this the inventory part, you seem pretty happy with the €13,000,000 Most of your inventory is related to installation climate and industrial technology. And if I look at the decline in sales organic for those 3 divisions, in fact, the inventory reduction is more or less in line with the decline in sales. While as you already pointed out, inventory is a key focus for your working capital. So please explain to me again why you're so happy with this number because it doesn't seem that special to be honest. But would it be nice that if your revenue declines with these percentages that you could immediately decline in the same base your inventories. That is not how it works Martijn. Let's say, when we were all more or less confronted with the sharp decline in sales, of course, before you are able to reduce production machinery in the same trends that cost you some time. And at the same time, your revenue is declining. So that is really a big delay effect in that. And to be honest, I was positively surprised that we could at least reduce the inventories with €30,000,000 for the group, given the short time frame of the end of March until the end of June that this event was happening. Okay. We expect further improvements for the second half of the year because all the actions have started. So there's a big focus on it. And of course, when the revenue comes up again, it will help. It will help a lot, because then you get growing revenue and then hopefully a declining trends in inventories. So that will give a big impact. But for the time being, yes, we have to work really on our own inventory levels. So that is what the teams are busy with. Okay. Then with regards to Material Technology, the minus 15%, at least that's the top line, That still seems relatively modest given at least that's what I think, given developments in automotive aerospace and industry. When did you actually see clients starting to materially lower orders? Was that immediately in March or was that somewhat later? Can you give us a bit of a sense when that really started to decline materially or whether there was a bit of a lagging element there? Actually, there was the end of March, it started really to decline. And then it picked up again, although from a low level in May, June? Yes, June. June, we saw in the pickup, yes. All right. Thank you for that. And then with regards to the holding costs and the unallocated costs, normally, you would say that if you've given that information in the past that roughly it's €12,000,000 on an annual basis, €9,000,000 for the actual headquarters and then €3,000,000 for M and A and restructuring and M and A plus and say minus sometimes. So that would mean roughly $4,500,000 for the first half year, and remember $1,500,000 for M and A and restructurings. You now have $4,500,000 So is that the way the correct way to think about this? Or has the whole centralization impacted those two elements? Let's say, you are right. We have always said between 10,000,000 and 12,000,000 and holding costs were around $8,000,000 to $8,500,000 that's what we have always said in the past. So taking from that starting point, we have the let's say the $4,000,000 $4,500,000 of normal holding costs. We have the restructuring costs of $4,500,000 Then of course, we made also our savings of the total holding structure, and that ends up then as a total of $7,200,000 Okay. Got it. And then a final question. You've talked about reductions of overheads in the technology clusters. That also means that leadership has changed, I would say, or that has already changed in the past. You're also more centralizing leadership on the business lines or the technology lines. And this is more a question for Wim. Aren't you afraid that or how do you manage the impact on the entrepreneurial spirit? Because the more you centralize, the more you provide leadership on the central location with the ability to steer and manage the organization that will automatically lead to a reduction in entrepreneurial spirit, I would say? No, that is not the case. I think your assumption of centralizing, I think that this is not completely correct. I think what we did the last, let's say, 7, 8 years, because there's not a process of the last 6 months, maybe even the last 8 to 10 years, we looked continuously to our portfolio and trusted activities which belong to each other. Maybe you can remember 10 years ago, we had a regional organization, which was not working in my opinion. So we clustered it to, yes, let's say, a business to end market organization, which is working well. So we further clustered that. But I think the entrepreneurial spirit is absolutely in the niche technologies. So but of course, companies who belong to each other, and that's why we acquired them in the past, should also be integrated in a sophisticated way. So this we did already. So the structure was already in place, let's say, in 2019. And even the presentations you were also attending in December were made by these people. So when you look, for example, electronic flow control, is that we were 7, 8 companies in the past. And including Comap, it's maybe 10 companies, but we have one strategy. So that whole integration process this is something of the last 5, 6, 7 years. Now what is the difference? And that's also why we can accelerate the optimizations is that the structure is standing. So that means you add 1 business team. You have the strategy aligned in that business team. You know exactly the way to go. So then the next step is you look to your locations internally and obviously your operator and your sales force and everything. And you say, how can I optimize that? These brands we already had and the moment we presented in December. So what we said, let's use the time now and accelerate it, that means that we will go faster. So for example, we closed the factory in Germany much faster than we planned. It's already in process. We go to one head office in Hydronic Flow Control, which will be in Almere, which we are now building because we had 2 or 3 head office. We had 2 digital apps. We will make one approach for that. So I think the entrepreneurial spirit is still there, but it's maybe on a higher level. That's what you could say. But it's a process of the last 7, 8 years. And what I and that's also why the question, for example, how can it be that you believe now that you reduce your inventory? This question came also in December because we talked about it a long time. Now that is because you have now a very strong structure, which is much more simpler than it was, by far simpler. Everybody is behind that strategy. So now you're going to optimize that structure, including the working capital. And we have very good CFOs also everywhere because these clusters are $400,000,000 or $500,000,000 or sometimes even higher in revenue. So also the senior management is of a much higher level than it was in the past. So we don't have a bunch of small companies now. Now we have one company who drives a strategy that's a complete difference. So that's also why we believe we can generate now these savings and these optimizations. All right. Thank you, guys. And the ferrochrome is still there, but it's that's maybe you're correct, it's on a high level. All right. Thank you for those explanations. No further questions. Thank you. Thank you. The next question comes from the line of Luc Van Meeck from Degroof Petercam. Please go ahead. Yes, good morning. A few questions for me left. One is on the impact of government support measures. Can you indicate to what extent you benefited from those regarding costs and working capital in H1, for example, the later payment of VAT? So let's say the last remark I can I have to object because we did not pay later VAT? We did pay everything in time. So that is not the topic. And on the first one, we did let's say, we had some programs locally in some countries, mainly on the puts Arbeit and I think that is about €9,000,000 obviously in our numbers. But let's say that is really a number that you should interpret as follows, because when we would not have that program, we would have done restructuring in these areas so that you did not have the cost either. Do you understand? Yes. So it's not a net benefit. It's really in a it's in a situation where you make use of course of that situation so that you can still keep the people on the payroll. But if not, yes, then we would have reduced people from the payroll. And we did not take any regulation of the NLW in the Netherlands. It's only in the foreign countries, some foreign countries. And then on Climate Control, if I calculate the drop through of the revenue decline, then it's quite low. It's well below the 25% that you typically mention. So were there any special cost savings there or other effects why this was so low? Yes. I think two reasons. Good question, Luc. Two reasons. I think one is that we you see there much less further integration in your production. So when you have, of course, installation technology, we produce the valves, we produce the fittings, you even sometimes report the valves. So when you reduce their production, that it takes much more time. In Climate Technology, we assemble a lot. So that's also why you have lesser CapEx there because we do a lot of assembly. Assembly, you can act much quicker. And that's the kind of the addition. So you have a lot of engineering and a lot of assembly. The second part is, yes, you're right. We took already a lot of actions in costs already. Last year, we started. So you see already some effects of that. And but we will continue that with the integration because as you know, in Climate Technology, yes, the potential there is to earn a margin of 15%, which we do already in certain areas. But we have to further integrate and we have to optimize the portfolio there because we have still some parts, which we have to optimize or divest. That's actually the two reasons. Okay. And then on the typically, you were streamlining your portfolio by divesting business lines or exiting them. I can imagine that especially divesting is at the moment more difficult. Will you go more slowly about the streamlining process? Or is this a moment where you maybe more quickly exit business lines that do not contribute enough? Let's say, first, of course, we always go for the optimum value, also for the assessment. So if the price that we can achieve is not correct or not right, then we will postpone. So but we are let's say, we are still preparing these processes because you have to prepare anyway. So let's say, there's not a big difference with the Capital Markets Day. We take the 3 years' time for that. But then maybe to add, Luc, I think there were 2 months, but of a little bit lesser activity in M and A. You see in June already a lot of interest again. So this market has recovered, in my opinion. So we are busy with several projects. But of course, you want to do it with the right price and the right partner and we continue. And of course, in certain areas, maybe it's better at first to optimize the business further also looking to COVID. We have some activities in certain areas that may be optimizing at the moment is a little bit better. So you wait a little bit. So that's why we take 3 years. Yes. And I have a bit of difficulty to how to interpret your comments on the backlog because historically I was always used to not pay attention to the backlog because it was relatively short. Well, that has changed. Obviously, one of the most extreme examples is against mechatronics where you have a very long backlog and I think all industrial technology has a much longer backlog. That's the change of the portfolio. We changed a little bit in the last years. So for example, in Distributed and Gas, we have a very good portfolio. It's in fluid control in that area. And so Advanced Mechatronics is the same. I mean, we grew very fast in Advanced Mechatronics. There you have a much higher order book. But also in climate technology, we see much more projects for longer term. But how should I see that? Is that a fixed level that will be delivered over a longer period? Or does the customer have a lot of flexibility in the timing of those deliveries? I think what we guided earlier, I can imagine that you asked it. I think what we guided earlier that in installation technology, mostly you have the order book is 4 to 6 weeks, you could say, and that's also not changed. Installation technology and sometimes a little bit longer, but also there is a difference because we do more and more with the same customers. So our key account management becomes more important. So you get also forecast, etcetera, but not real orders. Material technology, it is short term. I must say the projects we do, especially in electrical vehicles, are 10 times bigger than we had ever in the past. So that means you get a order for maybe $10,000,000 where in the past we had only 1,000,000 dollars So also that is changing because we do more with key towns. So it's a small amount. But what is I think when you look to industrial technology, sometimes we have 6 months we can 6 months look ahead. In this case, I think for industrial technology, that's the case. And for climate, I think it's more than 6 weeks as insulation. It's maybe more going to 2 months or 3 months in some cases. But that's maybe the best answer to give. Okay. That provides some more clarity on how to interpret this. Thank you. The next question comes from the line of Thijs Hollisterla from ING. Please go ahead. Morning, gentlemen. I've got 15 questions left. No, that's a joke. Yes, my first question was about the inventory levels of the customers, but I think Wim already answered that quite clearly. There is no excess inventory at your because I'm also picking it up from other industrial companies. And that is indeed quite different from the situation back in 2009. And it's quite important that for Alberts because direct and occupancy net immediately leads to replacement order for your business. Is it correct? Carefully. The 1st 2 months of the year were very good because the industrial markets were recovering after 1.5 year lower revenue, yes? And that was broken actually in the beginning. So COVID broke that trend. But and so what has happened then in that growth, industrial, automotive, machine build, yes, which are markets also in the industrial area is that also there were closures of customers. So in these closures, yes, they also didn't produce. In the meantime, the sales was also much lower. But before you ramp up a factory, a mass production factory, that takes a lot of time. In the meantime, the sales is recovering because in June, for example, there are much more car sales than in April and May, but the production is not on that level yet. So what you can guess, and that is my guess, is that yes, the supply chain is empty. The sales is increased, step by step, stimulated by more car travel because of not train travel, not flying. And nobody dares to build inventory at the moment, but then there comes a moment, it will explode because you have no inventory at all. You can't even deliver a car. You can't deliver a machine. Yes? And yes, that's it. Of course, let's see how that goes because the last 2 years, it was already on a low level. Now in 2,008 and 2009, I was there. I was at I was in the board season. I had to reduce all the people. In the 3rd week of October, it looked like we fall off the cliff certainly. So the 1st 6, 7 months after the 3rd week of October, people didn't order anything because there was so much inventory in the chain because it's stopped very output in the industrial markets. Great question, Liam. Let's see. See. You put the price I also got a question about the pricing climate because that is also quite important for Albers. And then specifically about the pricing climate in June and let's say, the 1st weeks of July. I mean, it's never easy for you guys, but is it really difficult to protect your margins? Or is it a business as usual in these, let's say, last 6 to 7 weeks? No. It's I think on pricing, it's pretty business as usual. I think we, of course, we are very busy with pricing always also to get our position better to keep our pricing. In some areas, we could also take advantage in the market because we were open longer than competition. And so we could take market share. I think that's also important to mention even with a good price. What could be in the future, but it's not at the moment, is that yes, maybe in the building markets, you get a little bit more price pressure because there are little bit lesser projects. But also that is not really new. So it's pretty business as usual. And actually, what we want to do is that with this year, we do a lot of restructuring. So the next year, we are ready to also attack in market shares and bring our innovations to the market much more strength. So you take also market share the market recovers. But pricing is on a good level. It also shown at its value, that this value went down only 1%. You must imagine that we also reduced inventory of $30,000,000 Much less absorption. Yes. So that says something about the margin that is not really affected. Okay. And then We also did our price increases in the first half. And also the second half, we will do price increases. It's good to hear. Yes, one final remark. I believe you have scheduled your full year numbers for the 3rd week of February, and it feels like 100 years away. So I think that the external market consensus change, because of the second wave of the COVID-nineteen outbreak or any specific things that you will update the financial markets, in the fee trading of that like you did earlier this year with the COVID-nineteen. Yes, very good, Thijs. That's actually the case. We always said, we don't have let's say, we don't update any more fixed on a certain date. But in these kind of circumstances, we will update the market regularly. But we think it's time to do that. And I fully agree, we will absolutely update earlier than February. Yes. And let's see how often we do that. It depends on the situation, but we will do that, yes. Okay. Thank you. The next question comes from the line of Henk Wirman from Kempen and Co. Please go ahead. Yes. Thanks. I don't know why I was cut off before, but I have one question left. In the press release, you talk about a CapEx of about €54,000,000 whereas if I look at the cash flow statement, there's purchase of PP and intangibles equaling €72,000,000 So what does explain the difference? The difference is cash out. So let's say there's always some overshoot, for instance, of the CapEx that we did in the last quarter of last year, where the cash out is in the Q1 of this year. So the payment and the moment that you get the CapEx on your balance sheet is not always equal. And that is let's say, that's every year like that. Okay. Yes, normally it's only a couple of million, I think, but now it's almost €20,000,000 So It's very let's say, but that is very it's also depending on what kind of CapEx we are doing, buildings or machines, it's of course always different. Okay. Thank you. It's depending on the nature of the projects, if there's a bigger gap or not. But now we are postponing, of course. That's clear. Thanks. It appears that the host line has disconnected. Hello? Thank you very much for standing by. We now have the hosts back on the line. So I will hand back over to them. Thank you. Okay. Is Henk still there? No, we now Henk has now finished with his question. So the next question comes from the line of Peter Olofsen from Kepler Cheuvreux. Please go ahead. Okay, Peter. Yes. I had one follow-up question, which is related to acquisitions. In December, you talked about the ambition to acquire EUR 100,000,000 to EUR 200,000,000 in revenues. Is that still your ambition? Or have priorities changed with the COVID-nineteen crisis? No, no. We of course, during COVID, we did not do we were careful with acquisitions. But still the when we can add our positions with organically or inorganically, we will do it. And I think personally that these times can give us also some nice opportunities in certain areas because, yes, people maybe get in trouble. So let's see. And that are the same focus point as we had earlier. So when we can strengthen the 5 core technologies, maybe in advanced mechatronics or in certain areas in climate for digital, for example, or in fluid control, then we will do it. But of course, we're also a little bit cautious in looking how the second half is evolving, but we have a strong balance sheet to do that. So that's still the aim. Yes. Okay. Thank you. That's clear. The next question comes from the line of Martin Verbeek from D. I. D. A A couple of questions. Earlier in the call has already been made the calculations for the revenue development in June and also I more arrived at a mid single digit decline. First of all, could you confirm that? And could you also make some statements about the 1st week of July? Have you crossed the mark into positive territory? You mean the 1st week of July? No, 1st day. No, but again, we are already in the at the end of July. So maybe some thoughts about the development in this month. Let's say we see improvement and this will continue hopefully, But we can also look at for a very long period of course. With respect to Advanced and Mechatronics, a very solid performance, much like you're benefiting off the transfer of 5 gs artificial intelligence in the APC. Has this been established by your current customer base? Or have you also been able to win new clients to new parties? It is mainly our existing customer base. And but we have also additional co development projects. I think that's also important to mention. So it's a combination of that. Okay. And in the past couple of months with the due to COVID-nineteen with the lockdowns, have you experienced any disruption of the supply chain, particularly out of Asia into Europe? And will this rethink your thoughts about your sourcing policy? We had almost no disruption, a little bit in the 1st week of March, but we could solve it pretty quickly. And yes, as you know, we already produce a lot in the country where we sell. So actually that's actually a real strength. And you see that is also one of the things which will change in my opinion that especially in North America, but also in Europe that people will say, yes, I like to produce it more locally. So we for example, we started campaigns like U. K. Made, like U. S. Made last year already. And yes, 90% to 95% is made already locally for the local market. Okay. Thank you. Do we have more questions, Mark? More questions? We currently have no questions in the queue. Yes. We have a question here on the screen. It is from Michael Hylkens. And he asked, would you provide an update regarding your U. S. Operations in light of the increasing amount of COVID-nineteen cases? Yes, we can give some guidance on that. Yes, actually the U. S. Operations what we saw is that we saw a nice recovery. We still see that nice recovery in order intake, especially in the commercial building market. We also saw a recovery in our industrial and automotive markets, which, of course, were down like in Europe in mainly April May. And in Industrial, we saw an improvement in beginning June and in the building markets already in May. Yes, of course, it's we talk regularly to our people, of course, and it's the situation, which is there now, is not very comforting. So yes, it would not surprise me when it in the end would affect our businesses again. But at the moment, it's going in the right direction. So we have a good order intake. It's increasing. I think also there, on the building plots, which were in the beginning, some were closed, they found a way to work on 1.5 meter distance with the mouth caps on the building plots in America. So when we keep that, then the business could continue. In our factories, we had the situation handled pretty well in our factory. In Tennessee, it's a little bit more difficult because there you see people also a little bit afraid. So we had to change people there because people stayed at home. We try to manage that as good as possible. But yes, when these infections continue in America like they do now, yes, then it could bring that you have some regional lockdowns. But the other thing is that the building plots and the building in the installers, for example, are used to the new situation. So let's hope that it continues like this, but it's uncertain. Another question, can you give more insight into current state of M and A market, both for bolt on acquisitions as well as intended divestments? Now divestments, we are busy with. As we already explained, we will we have our program. And of course, 2 months it was very low appetite, but now the appetite is increasing again. So in the meantime, we optimized our to be divested businesses further. And so yes, we will continue executing that. And when we have something to publish, we will do that immediately. So we are different busy with different projects. From an M and A point of view, yes, we keep on looking strengthening our positions. It would not surprise me that we get some more opportunities due to also companies, which are coming in maybe some difficulty and we could take advantage of that. And so let's see. So also there we when we can grow inorganically at a good price with a good business plan, then we will do it. We have the cash flow to do that and also in the second half of this year. We have no questions on the phone lines. So I'll hand back over to your host for any closing remarks. Yes. So we have no questions anymore. So I thank you for the questions and answer and to listen to the presentation. And yes, thank you very much and for attending this webcast. Also from my side, thank you. Bye bye. Thank you very much for joining today's presentation. You may now disconnect your lines.

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