Aalberts N.V. (AMS:AALB)

Earnings Call: H2 2019

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Feb 27, 2020

Welcome, people in the room and people joining our webcast. The agenda for today is that we go through our full year results, but also we want to touch a little bit about Alberts first. So Alberts is Alberts actually what is very important is the first sentence, and it is that you will find Alberts where technology really matters and where we can really make progress. It sounds like a simple sentence, but there is a lot in it because everywhere where we can make an innovation or can really make progress humanly, environmentally or financially, we want to be there in our selective end markets. The essential thing of ours is that we engineer mission critical technologies for several selected industries, combined with a culture where good is never good enough and also where we continuously try to exchange knowledge because greatness is made of shared knowledge. Continuously we are pursuing that excellence. Our way of value creation is based on these three pillars, so that we strive for leading niche technology positions, high entry barriers in our markets, pricing power and also high added value margins and sustainable profitable growth, continuously looking for uniqueness. Good is never good enough. Operational excellence, a continuous driver of results and our success, continuously working on improving our EBITDA margins, focusing on cash conversion and allocate our capital on the best disciplined way where we can get the highest returns. Greatness is made of shared knowledge, continuously technology exchange, innovation speed, fast learning and adaptation to the market changes, because there is a lot of change at the moment in the world and I think our business model is very, very suitable for that. The Albers playbook, we look to how can we create a compelling competitive advantage? What are the growth drivers? So every time trying to leverage operationally our companies, but also our businesses and look for margin expansion. When we look for margin expansion, we continue to strive for a better cash flow, for a better margin and also the investments we do, we try to do on a disciplined way there where we can allocate our money the best. It means also that you have continuously optimized your portfolio, which is a continuing process and by doing that you create long term shareholder value. Compounding returns, investing the money where you have the highest returns, and that's a continuous long term process. Our track record on this, we do that already 40 years of sustainable profitable growth. You can see what is the Albus playbook, a proven sustainable business model. Our shareholder value creation, where you can see the share price over the years and also the earnings per share, dividend per share and also the long term shareholders. Nice to mention that we also did that in December is that our long term shareholders, more than 3% holdings, is more than 50% of our shareholder base. Our relentless pursuit for excellence drives true shareholder value. It's not that you run a company on a quarter, it's not that you run a company on a half year, it's a long term strategy which we have to pursue and that's what we do. Our key strengths are our people, mission critical people. The Alberts Way, winning with people, is the biggest asset we have. Being an entrepreneur, take ownership, go for excellence, share and learn, act with integrity, winning with people. Our strategic objectives, as again explained how we want to reach them in December last year, are here also presented. Important is that these financial objectives are presented in 2017 before the IFRS 16. So to be very clear, it's before IFRS 16. So also when you look to return on capital, all the other objectives is before IFRS 16. Innovation is driving our organic growth. Innovation takes time. Innovation is very important to create uniqueness in your markets. The moment you don't innovate, the moment you don't invest anymore in your markets, you can better step out. So innovation for us is a key thing to become mission critical, but also to create unique market positions where you have pricing power. So we will continue with doing that. The situation now is that more than 4% of our total revenue is invested in R and D, which is more than €120,000,000 I think when we look 4, 5 years ago, it was roughly between 2% 3% or close to 3%. Megatrends are shaping our future. Rapid urbanization, climate change and also Internet of Things are very important for the future markets because these markets will also adapt these kind of trends as also presented during our Capital Markets Day. There are two things which are very important to be successful in these changes, which in our opinion is globalization and co development and connectivity and integration. So we have to adapt our organization and company to these two very important drivers for growth. We made choices the last years to focus ourselves on 5, you could say, niche technologies and 4, selective end markets, embracing the SDGs, the sustainable development goals, which we support. By doing that, we see more and more an Alberts growing to less activities and we also want to allocate the capital to these lesser activities, achieving unique market position with sustainable impact. The highlights of 2019, we reached a revenue which was 3% higher than last year of €2,800,000,000 very important and also my colleague will come back to that, is our added value stayed roughly in the same base as 2018 despite lower activity in especially material technology. As you probably know, we have a high added value. Organically, we were still able to grow despite more difficult market circumstances. As I also said last year, especially after summer, is that also ours is not immune for the developments in certain markets. Also we have to send an invoice to our customer and in the end when a customer has lesser volume we will also see that in certain businesses. Despite, we were able, in our opinion, to deliver a solid and resilient performance in a more difficult market. Operating profit was €363,000,000 with a margin of 12.8 percent net profit $267,400,000 with an earnings per share of $2.42 where it's important that only the tax rate and the IFRS impact was already $0.05 compared to 2018. When we also see the operating profit where we had not the benefit of 2018 of roughly 10.6 percent, then you could say that operationally the company did even better than 2018. In the CapEx, I think it's very important to notice that roughly €10,000,000 or €15,000,000 of the CapEx of material technology was used to replace the equipment because of the fire. So when you get a real picture you should also look really like for like. The return on capital before IFRS is 15.1% and of course is affected by a lower performance of our existing business, especially in material technology and of course a higher capital employed because we did also 2 acquisitions by your goodwill. But don't forget that material technology business will come back because also we had this period on a slightly different way in the past and we have a strong position and we think this business will recover gradually during this year. Operational Development, and it's a nice sheet because it gives the total overview of let's say all these segments, what has really happened within hours. You could say and that's only important for the background that when you look to the right side of the sheet to the markets that 44% of the business of Alberts was in some way affected by the situation in the market environment. Eco friendly buildings was not affected, it was very good level. But the other markets, industrial niches, but also sustainable transportation, but also semicon efficiency faced all inventory reductions. They faced all postponement of orders. They faced all uncertainty. Do not forget that the fantastic market of semicon efficiency, we had a few years where we grew almost 20% and last year we also grew where it was roughly 4%. And of course, it's still not so bad, but it's less than 20%. So in the eco friendly buildings market, we saw nice growth also in climate, also in industrial technology, despite the developments which were also taking place in that market. I must say, and that's also what I tried to say at midyear, most of the growth were driven by own initiatives. New products, better sales, because also in certain markets in installation technology. America, we also saw a softening after the summer, which we did not expect as it came. Organic revenue declined in Material Technology Europe. As I said already, market uncertainty, postponement of orders, inventory reduction. Important is that it also stabilized after a certain period. So we see now a stabilized situation in that business. We initiated efficiency and restructuring actions. Additional costs we made roughly, but also my colleague will guide it a little bit more. We made roughly €3,000,000 maybe a little bit more, a little bit less of restructuring costs in material technology, which is included in the bridge. And North American aerospace did very well. So they compensated partly the downturn we faced in Europe, which was mainly in Germany and France, but also in Benelux and it has to do with the uncertainty in the markets, people reduce their inventories, postpone ordering, but there is in the end also inventory reduction and postponement you cannot do forever. We reached a solid and resilient EBITDA performance. It showed therefore a mixed picture. 3 business segments we were able to grow organically in EBIT and our European service technology activity, we saw an organic EBIT decline. As said, more in Europe, partly compensated in service technology in the U. S. With our aerospace activities. The less incidental benefits compared to 2018 was a difference of roughly EUR 10,500,000 compared to the EBIT of 2018. As always, we have a roughly holding correction between €10,000,000 and €12,000,000 last year we had 0, now we have again a small 12. CapEx increased to €148,000,000 You should include here or exclude however you want to calculate the €10,000,000 to €15,000,000 of fire CapEx related to the equipment which we install to replace and that is then a real number. So roughly SEK 133,000,000 which we added to that. We facilitated mainly with the CapEx organic growth and innovations, also a lot of efficiency because it goes mostly hand in hand, But also we launched more than 15 new product lines. Most of them were in climate technology, but also industrial technology. We launched some very nice full flow valves, also other valves, regulators. And in installation technology we launched some nice connection systems in combination with valves. Only to have the right service for a new product line, and there's only one product line, an installation technology which we launched or launched in a bigger way, costed us or was an investment also of $10,000,000 in stock. So also that is important to know when we look to the financial numbers. In the end, our opinion is that we made a solid and resilient performance in a more difficult market environment, which was actually in the course of the year deteriorated further through uncertainty. I said here in the same room that we expect for example that the American industrial markets had a good quote offering and we expected the second half that when these quotes could become orderly, it could be a nice half year. What happened in August, we saw a lot of uncertainty through the China and the U. S. Trade disputes and a lot of orders were postponed. Okay. We did not see that And that was also one of the things where you saw that we saw more deterioration than we expected. What we also try to guide in September, but also during our Capital Markets Day where we said that we can also have a dip or you have also a market environment which is maybe less where you are not immune for. When we look to installation technology, we have here a nice example of a new distribution center in Belgium, which we are now it's not standing there yet because this is a drawing, but we are expanding in Belgium, fantastic business we have there. And also there you see a lot of growth potential. It's just one example. So we are actually expanding a lot of buildings at the moment. So it will also mean that this year we will have a pretty high CapEx, I think probably in the range of this year of last year, because we see a lot of growth potential, especially organically. So despite some headwinds, you still have a good future. Installation technology, good organic growth. Europe, America, commercial, good level. UK, America, industrial, challenging. UK, very volatile. Building up stocks, reducing stocks. Building up stocks, reducing stocks. Why? Don't ask me, because the customers ordered and then they don't order. It had to do something like Brexit. The portfolio, we further optimized, we improved the quality of the inventory, and I think we made very big steps also in cash generation with a new management, which we installed in America and successful launch of innovation in the press portfolio and new innovations are coming to be launched this year. We gained several larger key accounts and I must say that we are really positive about the future effects of all these changes we made. I think we get really the business together. A big headache, as I told you many half years years was our distribution setup in America, but it's really streamlined. We could now, as we also promised in 2019, streamline also the setup. We could reduce inventories and costs because we knew now what the customer need is and which reason, and we will, of course, continue that. As said, our American organization streamlined the organization. Overhead was reduced, but also we made there additional redundancy costs, which we did of course on purpose because we want to improve the business. Our new European assembly and distribution center is constructed. We are now implementing the operational, let's say, phase. We think we have to move equipment around that we have all the equipment end of Q1. We really start up second quarter and hopefully, we have it fully operational in second half of twenty twenty. And as said, we will integrate roughly 7 to 8 warehouses in that period also to streamline the complete setup in Europe, what we did already in America. Efficiency improvements in manufacturing combined with capacity expansion, especially in one specific product line, we really expanded heavily. We can't even fulfill completely the demand, so we had to invest heavily to facilitate the growth in combination with efficiency. As said, U. K, we streamlined the organization because we had a volatile situation. It's also that we want to invest more in our local manufacturing because we really think U. K. Made is an advantage, but we want to, of course, also to streamline the organization, reduce the cost to be in line with the market developments. And also, we have further plans to optimize the factory in combination with other locations in Europe. Further consolidation, we will initiate the coming periods. Capital allocation and installation technology. We increased the capacity of the fast growing product lines combined with higher efficiency. Our European assembly and distribution centers, we yes, one is already constructed, the other one we are constructing now in Belgium Operational excellence and our innovation projects, we spend a lot of money on and we will continue in doing that. And as we already said and as already my colleague, Andre Innenfeld said in December, we have a huge potential in growth and operational leverage and excellence in this business segment. Material Technology, a nice example of new technology we added. It's related to additive manufacturing. It's a specialized thermal processing equipment, which we added in accurate brazing in our company there, a very nice business. And also here you first have to invest and then you get the revenue. Material Technology, organic growth, innovation, the European business deteriorated gradually. We saw that a little bit in summer, but it's really graduated further after summer. I already said what was the reason for that uncertainty, postponement of orders. Also what you see is that due to the new emission ruling that companies, the OEMs are looking more what is the right portfolio for their automotive. What we also saw and also what we said in July, yes, there comes maybe a little bit of tick up at the end of the year. We saw this tick up also because the inventory stabilized, so that really happened. But the tick up was at a smaller rate, let's say, than we hoped for or expected. But I'm sure it will come, the ticker will come and we think it will come already during this year, probably in the second half, but it's very difficult to predict the speed of this recovery. But one thing is for sure, that business will recover, because we have a fantastic position. Last month, our order intake and inventory is already stabilized, but overall over the year we faced an organic decline, especially in the second half, mostly in the second half I should say. Revenue partly compensated as already said. Many new developments in service treatment, that's very good to see. In electrification of vehicles, we have very, very nice offers where we are in the process to come to quotes and to start up productions. What you see in our opinion is that the automotive industry in Germany is more and more making the new models, electrical models close to their base and also shifting production to other countries where we will follow and also precision extrusion in combination with the service treatment did a very nice job. Good progress of the integration of the previous acquisitions and we acquired PPC and Applied. Important that we also said we should really now leverage also the acquisitions and the business plans, which we made for all these companies and also for North America. So that's also why we were in December a little bit more cautious with acquisitions for the coming 3 years because we have so much to gain with our existing business. Eastern Europe performed well and operational excellence and leverage. We took really a lot of actions to reduce the cost already during the year in service locations, but you can only compensate in this business the low volume partly because when you have a furnace or a surface treatment line, you still have the energy cost and you still have the personal expense even when the furnace or the surface treatment facility is working for 60% or 70%. So you need volume and then of course you can reduce costs, but you can only compensate partly. But a very nice business as I said and it will recover. Additional actions to restructure and streamline the overhead in the group We completely streamlined that. We took out a lot of overhead. And also based on the merger of the former two companies and the acquisition of Impeglon, we took additional steps to do that. In the end, still, we made a margin of 12.6%, which I think in these kind of circumstances is actually pretty good when you look what happened in the market. Capital allocation is invested mainly in growth areas, Eastern Europe and America, new technologies at its manufacturing. And again, it's also fire related CapEx of €10,000,000 to €15,000,000 let's say close to €15,000,000 And of course, you always have your maintenance. And we are looking also based on what we said in December to further optimize our service network and footprint because we still have some businesses where we maybe can better say we should divest, but that's part of our strategic plan. A solid performance in our opinion despite lower order level in Europe. Climate Technology, a very nice example again of a new digital light product, which we also developed together with our digital hubs in the Netherlands and France, realizing a saving of 30% on energy. Climate Technology, good level in all regions. Many new product lines, in the end, maybe you could say, maybe even a little bit too many product lines, because when you launch a product line in the beginning, you have a minor sales impact, but you have a lot of costs because you have to manufacture it for the first time, you have to put it on stock, you have service issues. And we had in the beginning of the year 2019 really some service issues because we were overwhelmed also with the orders we got and we didn't have the equipment in time and you that is also what manufacturing is. But we solved it towards the end of the year. So we could have reached also the high organic growth when we wouldn't have faced these issues. But that is also part of launching new products. The point is you have to solve it as quick as possible, what we try to do. Connected products, gaining data, new business models, we are it's starting, it's coming more and more. Talking to the building owner, how can you reduce the efficiency, how can you increase the efficiency of your energy use, How can you connect products to regain data? It will become a nice business model more and more combined with the products we have. That's what we want to do. We have products, we are a manufacturer, we are an innovator, but you have to combine it with digital models. That is our thinking about the future. Additional costs in sales marketing, as already said, and we have to streamline further also our manufacturing footprint and supply chain in this segment. And there are also possibilities for that also after the transformation to go to 1 cluster in this segment. Capital allocation. We started the construction of the new facility Almirall, where we will have a production plant for 1 of our product lines because we need to expand in capacity, and we will combine that also with a distribution center where we will again integrate existing centers which we have in Europe. It will not be 7 or 8, but probably it will be 4 or 5. And of course, we can also grow there. So it will also be an efficiency improvement in distribution. It will become our new head office of climate technology, of Hydronic Flow Control with a fantastic demonstration center and we hope it will be ready end of this year. We had to facilitate several product lines, and we optimized the portfolio by divesting the company's stock. We did that in the last quarter in actually the last month. It is a manufacturing location in Germany, which was a non core location. But we need further portfolio optimization here because a big part of our business is doing very in high margins and other part is doing low margins, where we think it's also not our core business, but also we think it's we can better focus on the smaller portfolio as already presented last year. Good organic growth, many new product lines, further portfolio optimization is the key thing here, but a nice business. Then Industrial Technology. We launched a new dispensing bargain, and we can say now we are almost 2 months in the year 2020 that is successful. It's a new bargain, which we redesigned. It is compatible also with other products, retrofitable and it looks like a nice success. Industrial Technology, organic growth, innovation, semicon efficiency, solid organic growth. Semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semiconductor, semic at a lower level than the years before. But we are ready because we use the time to streamline our organization, we are ready for the next strong ramp up, which will come in 2020 2021 and let's see how it goes after that. Fluid control, market uncertainty, postponement of orders in the industrial area and inventory reductions in the same end markets as already mentioned. Last month of the year, we saw that the inventory reductions stabilized in the order intake. And also for this year, it's still an uncertain situation, but also innovations will bring us further. And I think when the situation stabilize more, especially also in niches, then we also see a recovery here probably during this year. Operational leverage and excellence. We streamlined advanced mechatronics, so we took advantage of a little bit lower growth year. Actually, you could say it's also good that that maybe sometimes happens because you can really optimize your organization, be ready for the next ramp up. And flow control, food control, we aligned the cost structure in organization. We did it very thorough, click and of course, you have to add on also the full year sales effect of the Pfaff acquisition. All in all, we made a nice EBIT improvement. We went to 16.7 percent EBIT and we had the same capital expenditure. The capital was spent on the new R and D center in Graz, Austria for our company, Vinterex. We further expanded capacity in Semicon. We're also looking for a plan now for this year again to further expand also this year for the coming years. And our innovations and related manufacturing assembly equipment for our new innovations, therefore also we spend capital besides the operational actions initiative. So that is roughly industrial technology, where innovation is driving our growth, and we also took advantage of early investments, especially 1 or 2 years ago in our advanced mechatronics business, but also in certain fluid control parts. So I give now the word to my colleague, Mr. Mannings. Thank you, Wim, and welcome everybody, also from my side, also the people in the webcast. And I want to take you through the revenue bridge that we presented, where we explained the improvement of €83,000,000 from 2018 to 2019 in different items of course. First of all, the acquisitions caused a positive revenue effect of €78,000,000 The divestments that we did in 2018 2019 caused a negative revenue effect of €59,000,000 Then the currency impact of, yes, the translation of foreign exchange, caused an impact of €34,500,000 positive this year instead of negative last year. The organic growth of €29,100,000 for Abert's total can be split off as Wim already explained in 2 parts. Important that we focus on that big difference because as said we faced a stronger organic decline in our European Surface Technology businesses, causing a negative revenue effect of €21,200,000 And in all the other Alberts businesses together, we realized an organic revenue growth of €50,000,000 positive. And also in that area, of course, there were markets like already touched the industrial markets that were not running full speed. At the end, we ended the revenue line with €2,841,000,000,000 in 2019. Now the related EBITA bridge from 2018, euros 365,000,000 65,000,000. Of course, the first step is to make to take you back in the memories of the presentation of last year where we explained that we faced, yes, an incidental benefit of CHF 10,600,000 of which one of the bigger items was for instance the property insurance claim that was compensated by the insurance companies to ours and where you make a book profit. So that is really not operational, but it is that came into our P and L and that's also the reason why this holding elimination line for full year 2018 was suddenly around 0, minus €400,000,000 where the first half year was still the normal level of around minus €6,000,000 I will come back to that later in the segment reporting to give you also some more, let's say, insight in the half year 1, half year 2 situation. But for the full year comparison, it's very important that everybody understands that this is yes in our numbers and that is something that should bring the starting point at a lower level. Now the acquisitions EBITA, the acquisition of 2018 2019 they drove the EBITA with $14,800,000 The divestments of 2018 2019 that caused a negative impact in EBITA of $6,300,000 the currency translation differences for EBITA, 2.8% positive. And then again, the organic impact of our revenue in relation to the EBITA negative for Surface Technologies Europe, euros 17,100,000 euros and part of that as a part of that, of course, also some restructuring costs because we took a lot of actions also to adapt to the market situation. So about €3,000,000 of 1 off costs is included into that. And on the other side, the organic growth of the other Alberts business together that caused a positive EBITA impact of €13,500,000 which is more than 26% drop through, which looks quite normal and as expected from our businesses. As we also presented in the Capital Markets Day, how we see that with the future organic growth, what the possible impact will be. At the end, we ended up the year with an EBITA of 362,000,000 dollars 600,000 The condensed consolidated income statement. First of course the revenue line already explained, then the operating profit. What is not mentioned here, but what I would like to also to stipulate a little bit is the added value that took that grew from 62.6% to 62.8% and that is quite I think a good performance because first of all maybe you can remember from the first half year figures we built up let's say much more stocks in 2018 than we did in 2019. At the end, we ended 2019 with let's say €63,000,000 less stock built as we did in 2018. So the positive added value impact of that, we did not have that advantage this year. And secondly, as you know and also Wim explained that the decline the organic revenue decline of Service Technologies Europe is a high margin business with a very high added value, actually in the highest area of our business. So also that decline is going through the added value of Auer's total. And despite these two big effects, the total added value increased with 0.2%, which proves that the portfolio is further improving and getting stronger and also the pricing position of the business that we have with the innovation that we bring to the market is of course stimulating that. Now IFRS impact also here through depreciation for instance, but also for the net finance cost there you also have an IFRS impact. The income tax expense also already touched an ETR going up from 21.4% as expected, because that is also what we guided last year that we expect an ETR of between 24% 25%, but it was a little bit less than expected, but it went up already to 22.9%, 1.5% and as said also that impacted our EPS with about 0.04 dollars not with about, with exactly 0.04 dollars The non controlling interest a little bit higher and that at the end comes to a net profit before amortization of $267,400,000 versus let's say 2 $174,900,000 last year. EPS as said $2.42 versus $2.49 of which $0.04 the ETR impact and another $0.01 for IFRS. So the total, let's say, operational decline of EPS is €0.02 We believe it's a very solid and resilient performance in more difficult market environment. The condensed consolidated balance sheet, yes, there you see some small changes, for instance, in the working capital. Sorry, I'm on the wrong page. The balance sheet, where we see that the equity is remaining strong with 53% and that the net debt is going up quite large here with SEK 167,000,000 sorry with SEK 165,000,000 but a big part of that is IFRS as already mentioned also by Wim. And the net debt excluding the IFRS went up with only €2,000,000 dollars despite 2 acquisitions, despite the increased CapEx that is of course also into that number. And the leverage ratio net debt divided by EBITDA from 1.3 it went up to 1.5 including IFRS. Excluding IFRS it remained on the same level. Our net working capital increased, but also there we believe that the balance is much better than last year and that is also what we already saw in the first half year. We built up much less stocks, which of course had a positive impact on the cash. But on the other side, we also received more receivables in the same period and we paid more to our suppliers. So the net effect of the mutation of working capital is quite small, but the balance we believe is much better than last year. Days working capital went up with one day at the end. And yes, the big takeaway I believe also from this slide is that IFRS 16 has a big impact mainly on net debt and ROCE of course, which is a very important KPI for us. The condensed cash flow statements, consolidated cash flow statements, where we see, yes, the differences in the working capital, I already mentioned only 0.9, let's say, difference between 2018 2019, but in a very different substance. We paid less income tax than last year because we had to take a compensation with an tax obligation in 20 2018 and 2019. So that was an advantage for us in this year. The acquisition, the disposal of subsidiaries is €110,000,000 versus €131,000,000 last year. At the end the net increase in cash or decrease in cash is €9,500,000 And yes, it's a strong cash flow from ops with net working capital more in balance like I said. Revenue and CapEx. Now the segment reporting as you are used to that from our side and also here you see course, the different developments per segment again like already also was taken care of by a whim per segment. I believe that what is interesting to see is that you see that we are really investing in our organic growth plans and the equipment that we need to realize that. And as you of course also see a big one, a big plus in material technology, although the market was of course lower. But yes, for a big part about €50,000,000 that has to do with the replacement of lost equipment from the fires of last year. Total CapEx $148,000,000 versus $133,900,000 last year, an increase of 11%. Operating profit and EBITA margin. Here's the split. You can see the split per, let's say, per segment, where you can see the yes of course the increase of the 3 segments that are also growing organically and the decrease in material technology. Now that is I think what we already have discussed. But what is very important in this overview is the holding elimination line because there you see what happened last year. We had a 0.4 full year holding elimination line where a normal level as we have already always guided is between 11,000,000 12,000,000 negative because that is the holding cost and some other costs that are booked into that line. And last year in 2018, the first half year showed a normal picture. And then we yes, we had these fires and we have a lot of incidental topics. And at the end, full year effect was €400,000,000 negative. And that meant that, yes, we had about €11,000,000 incidental benefit what was booked in that line. Now for a big part, again, that was done because we had this property insurance return which caused a book profit. So we had to we had to administer that in that line. Now if you see going a little bit more into the depth also maybe later for the questions, What impact it has on the second half year, there's also quite a big impact because the first half year as said was minus 6.1 percent a normal level, but the second half of twenty eighteen it was booked as a positive of 5.7 percent. In this year we presented already to you the holding elimination line of the first half year twenty nineteen as a minus of 3.9 because we had some benefit from the divestment, the smaller divestment. The full year is minus 11.7, so the second half year correction is minus 7.8. Percent. Now the minus 7.8 percent in relation to the plus 5.7 percent of 2018 is a difference of 13,500,000 dollars entering in our second half year numbers. So you should take that into account when you look into our performance of 2019 and in particular second half year. At the end, the main takeaway, of course, is that we increased the EBITA margin in 3 segments and that we faced a decline in Material Technology. Now here we have a complete table as also in the press announcements with the adaptation impact of IFRS 16, which is we are also not really happy with it, of course. It's confusing a lot. But at the end, we have to deal with it. So this is the table. And for next year, at least in the comparison, it becomes a little bit more easier. But for EBITDA, it has quite a substantial impact. EBITA only a little 700,000 euros You know the table. Of course, big impact in net debt, capital employed and that has impact again on the ROCE. So that is what we should take into account analyzing our figures. The dividend proposal, as it was also communicated, we propose a cash dividend of €0.80 per share, which is a 7% increase. And also there we believe we invest a lot in our organic growth plans. And that brings us to the it's a nice increase of course, a 7% increase. And it brings us to the review of the financial objectives 2018, 2022 and that is all presented if applicable before IFRS 16 because that is where we set our goals at and that is also where we are focusing on. Now the organic revenue growth overview of an average of 5 years, you see that of 2,009 and it is then including the 4 years before 2,009 2014 including the 4 years before 2014 etcetera and 2019 where you see that including the 4 years before 2019, we are on an average now of 3%. And our objective is for the full period of 2018 to 2022, these 5 years, more than 3%. EBITA margin in the same way let's say in 2019 it was 7% in 2014 it was 11.2 percent in 2019 12.8 percent and there the objective is as communicated also many, many times of course, but also confirmed in the Capital Markets Day more than 40%. And in the Capital Markets Day, I think we have already shown where we believe the improvements can be made and where we believe yes, how we believe we can realize these goals. ROCE, return on capital employed also increased over the last years. You see a nice, let's say, trend. Of course, it's now impacted this year. When you have a lower performance, that's logic and also you keep on investing and also acquiring companies, It has impact, but we still see a lot of potential to improve that. We have already announced our divestment program that we will accelerate and that will also support it. But of course, especially the self help of our internal business, but also the organic growth plans to create more profit for the future. And at the end, we should realize this objective of more than 80% in 2022. Now the free cash flow conversion ratio at this moment 60.5 percent, the leverage ratio of 1.3% at the same level of last year and the solvability percentage of over 53%. And that is already above of course the goals that we have set. ABBES accelerates and we will achieve our strategic objectives as set in the Capital Markets Day. Wayne? Yes. Albert, looking forward, I think what you see here is the key takeaways on the next slide. That's what we said in December. So of course, 3 months later, it's only 3 months later than beginning December. We still have the same key takeaways. We allocate our capital in the most efficient way. We further narrow our focus, so we are very busy with that. Achieving unique leading market position with sustainable impact building an even stronger and better Alberts accelerate organic revenue growth, so we are doing that. And our goal is to realize an operational leverage drop through 25% and accelerate the portfolio optimization with the €300,000,000 to €350,000,000 of, let's say, revenue, where we now did the first thing in December, small thing, roughly €20,000,000 And further focus on clustering and simplification of the organization where we already made a lot of actions the last months and the last 6 months. The driver of the EBITA percentage increase is the operational leverage and excellence, mainly and an efficient capital allocation drives the return on capital employed increase to evolve into a stronger and better harvest. And of course, when you have a dip or some headwinds during a certain period, it doesn't mean that you're also going to change your strategy. We will pursue and be relentless in our execution. Albers looking forward in the segments. We try to give you here a little bit guidance about our thoughts. Of course, it's not in numbers. We will not do that in 2020 as we do that not in any year. We give guidance over our strategic objectives on the long term, but installation technologies in technology, many sales innovation and efficiency initiatives. We did change the management 1.5 years ago. We have strong put a strong team in. We see the efforts of that also in 2019 where we have really better inventory position, much better. We generated much more cash and we're also improving despite these cash initiatives our margins. We have a great sales force in Europe and America, which gets more and more traction and that all will have a positive effect. We see that every day now, we feel that it's only very difficult to predict when everything comes together more and more, but it is coming together more and more. There is so much to gain here as you also put here in December. Material Technology, The European business will recover. Cars will be sold. Machines will be built. Planes will be built, I think 40,000 in the coming 10 or 15 years. Gentlemen and ladies, this will not stop. So when people are uncertain, look to yourself, you stop investing a little bit, you are a little bit more careful, but it doesn't mean that the world will going to stop. It will recover. And let's see. First half, let's see. 2nd half could be a little bit better and then it will continue. That's our expectation based on our management, but also based on what we learned from the past. In the meantime, we take the initiative to streamline our organization in a very rigorous way to be much more lean and also realize the business plans of the acquisitions we did in the past. So we will continue and we will pursue mainly here organic growth and optimization. Also here, acquisition will be on a lower pace for the coming 3 years, as already mentioned in December. We guided there between €100,000,000 €200,000,000 over this 3 year period and that is also what we are doing. We are focusing on improvements, leverage, excellence, organic revenue growth, creating unique positions with innovations. We are exactly doing what we say. Climate Technology leveraged the newly launched product lines. It's nice to launch product lines at least 15 or more, but in the end, we need sales, we need margin. So we have to pursue all these investments and get the returns out of these investments. We have to get the leverage of all the things we did and accelerate that revenue growth. In the meantime, especially climate technology needs portfolio improvement. We need to divest certain activities as quick as possible, as already mentioned earlier. Industrial Technology, strong growth in semicon efficiency. We are preparing ourselves at the moment. I am very happy that we did the investments 2 years ago because otherwise we could never have gained that position which we are now. So we did it again last year and we do it again this year because we believe in this business. We are able to double this business in semiconductor efficiency as we said, but you need to invest and you need to be ready to deliver. Further capacity and footprint expansions, Europe, Asia we're working on and a very, very nice position we have there with unique IPs, unique patents, where we are a pretty unique player in that industry. Fluid control innovations will accelerate organic growth. The full flow valves, the regulators, compressors, high pressure valves. A lot is going on in Germany in our company. A lot is going on in Denmark. And we will see there some nice innovations coming in the market more and more. On the other hand, there's still also some uncertainty, especially in automotive. You still see that here and there, yes, what is going to be developed, is it hydrogen, is it LNG for trucks, but we are there, we are talking to the OEMs. It is a very interesting time because a lot of new developments are in the things, in the thoughts of the OEMs and also the automotive will recover and also there will be combustion engines also in 10 years. It is impossible to have all electrical cars on the road for 100%. It's impossible. That's our opinion. You still need hybrids, you still need combustion engines. So we have the whole portfolio and we are alert in investing and also innovating in the new segments like hydrogen, like LNG, like CNG, but also fuel reductions for marine due legislation. So this is how we see the segments. Our outlook, our Albert's outlook is the Albert's outlook. We do what we said in December. We will accelerate our actions as presented and we remain confident in all these plans and all these plans need investments and we achieve our strategic objectives. That's our goal on the long term and as we always said, as soon as possible. One remark I want to make, when you look to our material technology business, when you have lesser volume in your factories, you get hit hard, as we could see. What is also there, you have a lack of costs reductions that always goes slower than when the revenue goes down. The same effect, but then the opposite you get when the business goes up. So and when the business goes up, you have the same effect, but then on the positive side. So don't forget that we have roughly 90 locations in the world. We have a number one position in service treatment with fantastic projects in electrification of cars, aerospace, but also in heat treatment we have great positions in America, Europe where and it's not so easy to copy that business because you need a lot of capital as you know. So we are confident in the recovery and then you will probably also see another picture. So thank you very much for listening to me and my colleague. And I hope we have a lot of questions because we are very anxious and motivated to answer them to get a live picture of our performance of 2019. No need actually for this Pingray. Okay. No, I want your microphone. Otherwise, the Okay. My name is Dave for ABN AMRO. To start off with Installation Technology, I actually need a bit of your help. The reported growth is 0.3%. I think you've had some tailwind from the U. S. Dollar and the British pound. By my calculations, given the proportion of the U. K. And the U. S. Business, some 1.6%, there was no M and A impact. So I come to a negative organic growth while you're saying that it's positive and actually it's good. So maybe you can help me out here. Insulation technology. Then if the organic growth is good, I don't know exactly what that means, 1%, 3%, but you may allow you may actually provide some color there. I was wondering given what you said last year also what you said during the year the finalization of the DCs, global alignment of integrated piping, many optimization and efficiency initiatives, growing sales from innovations, isn't the 20 basis points margin improvement and a little meager? That's the second question on installation. And then the third one on installation is, what was the fast selling product line? And then Which was that? Which was that? Which was that you mentioned in your presentation that The installation technology? Yes. Okay. No one would like to know which one was the fast selling product line. Then on Material Technology, you have said now several occasions that you expect a gradual recovery during the year. Is that based on RFQs, RFPs, orders, just discussions or maybe a little bit of color on that? And then a second question, I'm almost finished here. Even if you adjust the CapEx in material technology $40,000,000 to $50,000,000 from the fire, it's still high. What have you invested that in? And then my final one, if you look at the cash out from acquisitions, how much of that was actually earn outs, so we can calculate roughly what you actually paid for those acquisitions? Okay. Now starting with your first question on, let's say, the organic growth of Industrial Technology because you said there is no impact of acquisition and divestments. Now there is still because we divested our retail business in 2018 per the 1st July. So there's still half a year of impact in 2019, negative, plus we shifted some business. And we shifted some business between installation technology and climate technology. No, I seem to recall that you also explained to me you sold the business, but you kept on selling to the actual buyer. So it shouldn't have a sales impact. That's correct. That's the let's say the sales that we have to the outside world we don't have. So the sales to the retail customer is out. But the total impact was €40,000,000 on annual revenue. We did it the 1st July, so it's a €20,000,000 impact. And I think the organic growth of roughly the segments was of course in material technology was minus, but actually minus 2, minus 3, you could say minus 3 because it was compensated by U. S. And also aerospace. Installation climate we did pretty well in our opinion because don't forget in insulation technology we're both in industrial components in America, which is pretty big where we that is actually the only thing what I had expected it would be better. But due to the uncertainty which happened in August, we saw that a lot of courts were postponed. So there also we did roughly 3, Installation client we did 3 plus and then you have roughly, yes, so and in Industrial Technology, we did also small organic growth despite the much lower semicon, despite all the headwinds we had there also. So yes, that's roughly the picture. Then your question, yes. I believe the second question was about the margin of independent stage technology that you expected that to improve bigger, faster or higher. As I said, we had we have really a big difference with last year where we built up a lot of stocks and mainly also in the area of insulation technology where this year we did not have that effect. So that is really a big, let's say, impact in the for the added value. And nevertheless, we improved the added value. So there is margin improvement, but we are convinced also therefore that in the next years there's further margin improvement possible because that has that will come out at the end because you don't have that effect then. We focus in America mainly on the stock reduction. Yes. And partly it will also be this year. And that has to do at the moment you have the distribution setup ready, yes, but it's just a setup ready. And the reason why it took, in our opinion, not so long, but let's agree, we also want to have margin up as soon as possible, is that you first have the setup, then we had the inventory there, but we didn't know what was the regional need of every SKU. We didn't have that knowledge. So in the beginning, we put a lot of inventory and I tried to explain it also 1 year ago or 2 years ago. So now we have this information more and more so we can optimize the stock. So we looked really we focus mainly on cash and on cost reductions streamlining, where we are not done yet. It's in the press release you read there as a first step. We see more cost optimizations possibilities. We see also better inventories possibilities. And I fully agree, we should be able to increase further the EBIT margin and that has also to do with the leverage of your factories. For the moment, of course, lesser absorption, which we had because we reduced the production. Yes, you already start negative. But I think we are in a better and better position. We are now in Europe actually busy with also the centers are there since Iveolden. So we are now moving the equipment from Amersfoort to Iveolden at the moment. I started my also there the warehouse that we will integrate the other warehouses should be operational second half. And so also there we made big progress, but yes, we do a lot to optimize the business still in that segment. U. K. Didn't help. Don't forget the U. K. Not that the business was so bad, that was not even the projects were there. They were at a lower level and they will also be at a lower level coming years. So our expectation, maybe the government can help. But we're also winning market share. So that was but what didn't help is that end of March, everybody ordered to have very high stocks, our wholesalers. And so you have to produce, you have to take in people and then they don't need to you can stop your production again. Yes, and that is so bad for a factory. So that did really not help. Difficult situation for TAV, but we managed that and that it didn't help. So and that's roughly installation technology. Fast growing product line. It's a very nice product line. We are very happy with it and it has a certain color. But I don't want to say too much about it and that's also we write it like we write it in the press release. But when you read well this book, then you can it has to do with an integrating piping system where you try to get the connections on the valves and on the product we also make in the Hofer So the connections with the valves and there we see a really attraction in the market. We also gained some very nice big key accounts in Europe, but also in America, where we actually have the hands full to produce everything. And so that's but we have to get it more efficient also. So that's the situation. But I fully agree the potential of that segment is still the same as we always said. That also had some headwinds there in Industrial. CapEx, material technology? Yes, material technology, why do you think it will recover? Do you have signs for that? Now the signs for us are, of course, are possible orders and possible orders our customers, but also our experience and also our management. So the opinion is based on that. So what is the order intake of the last months? What is the what do the customers say? And what is normally happening when inventory reduction is over? And there you have then also some differences per region, but that's why we also guided in the sheet, it's difficult to predict the speed of the recovery. So I'm also careful. So for the first half, let's say it will stay a little bit like it stays, but it could be that going to the second half, you see some improvements. But it's difficult to predict but it will recover. And we see already some signs for that, but also some nice projects. High CapEx, where did we invest in? I tried to explain that. They went the most CapEx went to Eastern Europe and North America. And we on purpose because that we were in quarter 3, 4, especially quarter 3, we already said to each other, should we cut CapEx because you can easily cut things when you want. But we see opportunity in Eastern Europe and North America, and we think it's a dip which will not last forever. So when you cut off investments, then it's very difficult to start them up again. So we believe in investing. And also because Eastern Europe and North America we have very nice positions to grow. So there the CapEx went. The other thing went in new technology. We invested in North America in additional technology for additive manufacturing. That's a certain process where you under pressure and also high temperature, treat the parts. And yes, actually there's almost no competition besides one company. So we see a big opportunity somewhere in the South Carolina, North Carolina. And what we get now back from the market looks very promising. So we will even go more invest in that area. We should not stop. That is actually what we said, because we will overcome this. It's and I think we will even come better out of it because we also streamlined the whole organization. And based on the Capital Markets Day, we also look to the portfolio of the locations where we will and it's part of the divestment program, yes, but we also cash out of the acquisition was the question. Arnaud? Yes. Let's say, yes, we did 2 acquisitions there. We had some deferred payments and we had some earn out payments that we had to do. So at the end that total number is included all in this line. So it's about 6, 7 items. And would you be able to provide the components for the deferred payments and the earn out so we can get to the underlying cash out for the acquisitions? No. Okay. We don't disclose that. Next question? Luke from Bank of Health, Petercam. Well, first on you mentioned that towards the end of the year, the markets that were under some pressure stabilized, but obviously after that, the world continues with Brexit, the coronavirus and other elements. So do you see that pattern continuing in the 1st 2 months of this year? Yes. These are 2 things. I think when you talk to the U. K, look to the U. K, I think the U. K, we took a decision to really take cost reduction actions last year already, which will continue. We also wrote that a little bit more in the press release, but it will continue this year and it will have effect probably end of this year, but also next year. The second thing we're going to do in the U. K. In Installation Technology is we're going to we have accelerated our innovations, but we do it already last year to get more market share because U. K. Maint becomes really an asset that was already the last year. So we're really accelerating that, but also the innovations we have now more and more globally launched, as also explained in the press release. We have a much more efficient way of launching the product lines because of our global management structure, which is really getting more and more traction, which we changed 2 or 3 years ago. And we will do further consolidations in Europe. That means that in the U. K. We will probably consolidate some locations inside the U. K. So we get more added value. That are the actions we're going to do in the U. K. The total market had a lot of time uncertainty. I think we coped well with it, but the volatility hurt us. Hopefully, we get now more a less volatile situation because there is now a decision. I'm very happy with that, that there is a decision. And now you can really become also more efficient in your manufacturing. So that's you can almost say every week unforeseen circumstances. I'm not accountable for it because tomorrow is corona and the day after tomorrow it is trade wars. And so I don't know what happens in the political environment. We do our thing, and we focus on our business and we're going to execute our strategy. Regarding corona, it seems to be a virus, corona. And it's in China. We have not a big direct impact because we are not so we have a very small position in China. We've owned 3, 4 factories. And the factories we have there are for half roughly based in the south. And there you see that roughly yes, maybe now at the moment it's already increased again. But the last weeks because we did some tracking of course with our people is that 60%, 70% of the people are booking again. And in the neighborhood in the area of Shanghai, it was more like 50%, which was working again. But I think more and more people are regaining work. So I think directly it will hit us a little bit, but it's very small numbers. What is more the thing, but I think then the whole world as an issue is when of course this situation in corona takes longer than in our opinion 8 to 10 weeks longer. And the supply chains of our customers especially in the industrial arena, where they can't deliver their own OEM products anymore, then of course their sales will go down and then they also will need us lesser. So that's a sort of indirect effect. It's very difficult to predict. At the moment it's not the case. So we have not real issues at the moment. I think the coming 6 to 8 weeks I think is also okay. But when it takes longer, when it takes 3 months still then but then we will be we will not be the only one. But our sales in China in that area is very small. So the other thing is ours is, as always said, is producing their products very local. In America, we make almost 95% of our sales for the local market and also in Europe, so and also in the U. K. So that can also be an advantage. We see here and there some advantages already that they want to our products especially in certain piping systems. We see that at the moment. But I'm careful and therefore, I don't know exactly. It's too early. And therefore, we didn't wrote anything in our press release. But of course, we're living in the world we live in. We have to be alert. We have to react. We also react now on the new electrification of vehicles, but there's also a lot of opportunities. So that would be my answer. Okay. And then last year you had quite some positive on This year you had restructuring costs. Would you consider them to You mean 2018? Yes. Last year was that So yes, I mean 2018 2019. Okay. So the restructuring costs in 2019, do you consider them to be at a, say, a normal level that we show also Pentalymph going forward? Or should there be a positive comparison base effect? So we have always said that between €11,000,000 €12,000,000 holding elimination line is a normal level. And that's also what we foresee for the coming year, unless we will do a divestment because as we also always explain is that we of course when we do a divestment and when we make some money on it, is of course also our goal and when you do a divestment that you really try to do the best possible deal and that you can finance with that money the further improvements of the company. And that is how we always have worked. And that's very important. And let's say that is different. Therefore, the difference in 2018 was really that we had, of course, also there we did divestments and also there we did restructurings and these kind of things. But we had one big thing that was really exceptional related to the fires and it was this property insurance claim. And that's the reason that this line shows a different picture in 2018 With rights, I would say, it was the right way to show it because it was an incident. And that's also what we try to explain to everybody. But But maybe not always too clear. What we are doing is we have a divestment portfolio of €300,000,000 to 3.50 €1,000,000 We're going to divest that in the coming 3 years. We try to do it at the best way. So you optimize what you can and then try to divest it. But of course, when you can make money on it, we are not in a hurry, we're going to do that. When you have that money, you sometimes use it for restructuring or other things, as we always did in the last years to optimize our core. Now when you look to the amount of operational actions and leverage things, we still can do. Yes, that depends on if you are successful with that investment or not. We know exactly what we want to do internal. So it's very difficult to guide what is the exact number. You have in the holding corrections. But in principle, we have always said also in the past is between €11,000,000, €12,000,000 €10,000,000 and twelve €1,000,000 because we have holding costs of €8,000,000 €9,000,000 and we have always €2,000,000 to €3,000,000 redundancy costs. So then you come to the $10,000,000 to $12,000,000 That's a normal level. That's a normal level. But when we do additional things, yes, you read that that we have a lot of thoughts to improve further. Yes, we try partly also to finance that with our divestments to optimize, to narrow the focus of the portfolio. So that's we're just continuing what we already do for the last 4, 5 years. And we are going to reduce the number of locations, that's what we also said in Tax rate is the same. Tax rate is by my former colleague always guided between 24% 25%, that we are now 22.9%. Percent. Yes, that is you could say, yes, it came out better than we thought. But please, it is between 24%, 25 Yes. There's also expectations for 2020. Yes. So in your spreadsheet, you should put that in. And when it's better, it's better. But it's also difficult to guide the exact number. It's impossible. And then my final question for now is on the dropdown. With the Capital Markets Day, you guided for a number of 25%. Just drop through. Yes, drop through. But if I now zoom in into Service Technology where you give the revenues and the EBITA impact, then they get to 67%. At the same time, you mentioned that it's obviously a lagging impact of the cost reductions. Is it when revenues go down, also fair to expect, but sometime lag to have 25% drop down? Or is it asymmetrical or is it typical for this to be this instead of this higher percentage? Let's say the number of 25% we gave for the total of Alberts, So that is what we gave the direction. And what we see in the organic growth of the other Alberts business that see that at least a better number than 25%. And you may expect with all the approvals that we make in the company coming years that also that number will go up. But in the decrease of this specific area of service technology within, let's say a very high added value because they don't they make a surface treatment or an heat treatment, there's no raw material in many cases involved or only a little. So the added value is very big. So when you go down in that particular area, of course, your drop down is higher. You compensate that with costs, but you cannot compensate everything in the same pace. And besides that, yes, when we face the situation as we have today, yes, we also make some extra costs to further decrease the cost. Roughly on the €21,000,000 which was mainly happened in the second half mainly, we lost an EBIT of roughly €40,000,000 where you have €3,000,000 roughly. Then you have €3,000,000 redundancy. So that means when we have SEK 21,000,000 going up again, yes, you have also a higher drop through than the average. That's how that business works. And the reason why that business worked like that, that is that you have an installed base of equipment, which you have to fill with volume, a certain volume, you have a certain breakeven point, what is relatively high. So because you still have to function these equipment. So when this equipment is not fully full, still the energy cost and the personal cost, Yet you can't save more money, so your leverage goes down. But the other way around is the same story, when you go up again. So what is very important here is recovery of the volume. In the meantime, what we do immediately and we did that very quickly, we reduced the costs where possible. We have tanks, we have streamlined, we further optimized. And what we did additionally and that is really new is that we changed the whole group structure and we really took out a lot of overhead because we merged AADSE and in Peclon, we merged the 2 companies after the acquisition in 2018. So it was really one organization now. So we could also now take the step to reduce further our overheads. So these things will have an effect also in the coming years. And when the business comes back, you have a nice leverage going the other way around. And that is higher than the 25, that's correct. But in average, our goal is to have a drop through of 25 percent for all the businesses. Thank you, Stefan. Kempen and Co. My first two questions are also on Material Technology. Still trying to wrap my head around the operational leverage in the second half of the year. According to my calculations, minus 5 percent organic sales growth and about minus 15% to 20% organic EBITA decline. What do you mean from material technology or Yes, material technology in the second half of the year. Could you maybe could you also give these graphs? And I think the drop through as you make it visible is almost like it's very significant, as my colleague mentioned. That's how the decisions work. Yes, exactly. If you include these restructuring efforts you did, like how would the drop should look like? Can you maybe give us a little bit of a guidance? For Materials Technology. Yes. About $3,000,000 we already said. Sorry? €3,000,000 €3,000,000 So you should have so the business when the business goes down €21,000,000 which is this, and that's in the bridge. Yes. The bridge, which is mainly has taken place in the second half, then we lost there roughly €40,000,000 of EBIT because the other €3,000,000 is restructured. That's in the service technology activity in Europe. Okay. That's what is standing on the bridge. Okay. And I think secondly related to that, regarding your CapEx spending in the division, I think if you I mean, it's one of the most capital intensive businesses. If the market would remain a bit muted in the upcoming years as some people expect What is the muted? Well, low growth to no growth. Would you consider, let's say, delaying your investments in that division? Because I think this is also the main strategy, return on capital KPI, because you spent most of the CapEx here. And if you have to take into account operational leverage in case the business declines, you could It's not only CapEx, it's also goodwill of acquisitions. No, but okay, in general, the comment on material technology, it is a high CapEx business. It is we did also acquisitions there the last years, yes, pretty amount of acquisitions where we also paid goodwill. And of course, when then your existing business in Europe has a lesser EBIT, but you still spend the CapEx and also the 2 acquisitions, PPC and Applied, Yes, it's a simple net, then the return on capital goes down pretty quick. So that's the case where we are in. What we say this business will recover, it will recover. So we are very happy with that business also to be clear there. I'm very happy with that business. It's a great business, but it has also its own characteristics and it will recover. And so you get the other side up again, which you see now where it goes down. When of course the market, it is as simple as that, will mute for the coming years, low or no growth. Yes, of course, when we see no opportunities for growth and there comes no return out of it, we will also reduce the CapEx. Therefore also, we have reallocated the CapEx mid year and when you read the press release thoroughly, be reallocated to Eastern Europe and America mainly and America mainly to this new technology because there we can be pretty unique. But also here you first have to have the equipment, then it can take 2 years before you have these furnaces filled. And we invested much less in Europe, So there we already acted very quickly in the mid year. But what I try to say that of course that it's our opinion is we must not become nervous due to this dip in material technology due to very, very clear reasons. The reasons are very clear. The automotive was in Turmar because of all the emission things, because of the lack of capacity for testing, which is all solved, the emission ruling is more and more clear. And when they are insecure and they need cash, they're going to reduce the inventories. And parallel, what we see is they also move certain factories away to low cost countries. What we do, that's Albers, we follow them and we change also and we invest in the right technology. But the total business is not gone. We are coating and treating 1,000,000,000 parts a year. That is not gone. It is a little bit less, so that will recover. That is what we say. And then also, return on capital will improve. Of course, you are right. We have to be careful with investing in our capital when there is not growth. And I'm the first one I can tell you when I don't see the return or the growth I will immediately allocate my money somewhere else. That is also part of the strategy When I want to bring new product lines and we did now 15, I first have to develop them. So I need R and D people, then I need to buy the equipment, then I need to produce, then I need to build stock. And I still have no zero, not €1 revenue. That's what you see in Albers the last years. That's also why we go to focus on R and D. Yes, and we have now headwinds in certain industrial markets, yes, but it doesn't say anything about our strategic goal, yes, because, yes, let's see. Let's see. Okay. That's But that's of course, we will take action when there's no growth and maybe more action than just only reducing CapEx. Okay. That's clear. Question to Mr. Monex. Could you maybe explain why D and A has been stable for the last 4 years despite quite a sharp increase in total assets on your balance sheet as well as obviously driven by the high CapEx? So it has to do with the time that you discounted assets. I would say the D and A for this year was impacted by, let's say a correction in depreciation in a building, yes. So that is an impact of a few million. So normally, the depreciation would be higher for €3,000,000 €3,500,000 but besides that, the picture is normal. So you're saying a €3,500,000 €4,000,000 positive impact on your DNA plan? Yes. And the rest is normal. So we still expect that also for next year because we continue to invest of course And also for next year the depreciation will go up. So actually So just let it down of course. Actually this year it was already expected to go up, but we there was one correction which brought it more or less equal to the previous year. And then next year we expect that mutation at least plus of course, new CapEx that start to depreciate also to come up. So it will we expect it to increase. So just to be clear, there's been no changes in the lifetime of the No, no, no. No, no. No, no. Okay. No, but it will go up, of course. But in the Vismore, it will go up. That's clear. Thank you. But we and when we don't grow, we have an issue of growth. But we do not do any we do not do investments. When we don't have plans behind it. Peter? Yes. Peter Rolles, Kepler Cheuvreux. To come back on the holding costs. You still get it clear in H2. So you booked EUR 3,000,000 restructuring in material technology and there was the That was not in the holding cost. No, no, no, in material and then in the holding, you had a typical small cost as well? In the holding, like Wim also said, we have a normal picture of, let's say, EUR 8,000,000, EUR 8,500,000 holding costs and about $3,000,000 of let's say restructuring costs that we more or less have every year. These are plans that we always work on, execute. That's the normal picture. So we always have between CHF 11,000,000 CHF 12,000,000 negative line in the holding elimination line because we say that we take the yes, let's say these expectations we take in the holding line. The thing in material technology has nothing to do with the holding line because these costs are booked in material technology EBIT. But the cost that you booked in holding, these are actually measures that you take in the core segments? Yes. But that's more than only these material technology things. There are more cost booked there. So let's say it's we haven't let's say a normal stable, let's say recurring it's not recurring but we have we are planning our plans like that that we have a stable recurring holding element let's say restructuring cost of about €3,000,000 every year. But why then usually booking these costs in the holding, but then this time booking the €3,000,000 in material I don't But we have also redundancy costs in Installation Technology in North America. When you lay off people or you streamline, yes, but it is very difficult to give there an amount for. So you have business related costs, which are probably there, but we always have €2,000,000 or €3,000,000 We had it in the past all the time. So when the holding elimination line is between NOK 10,000,000 and NOK 12,000,000 that's a normal thing. But you have always small things on the head office, whatever you have. On a company of SEK 3,000,000,000 there's always something. That's more how you should see that. But to me it sounds like a little bit you can play around with it where Play around. It's difficult with accounts. We don't play around with numbers, Peter. No, because you book some costs in the holding, well, these are measures that you take in the segment. And then for the material technology, you book the amount in the segment. No, but also installation technology we have it is not booked. You just have cost which you make because you lay off people. You use something that happens every day. We may be lay off people now at the moment. So you we will just try to give you some color on the number of 17. Yes, that's why I said it is roughly 3,000,000. And then in the holding costs in H2? Because we laid off hundreds of people in the service treatment, service technology locations in Germany and France. Maybe we laid off hundreds of people during 2019. So that costs you some money. I don't know. That's also why I give you a roughly figure because we don't have these numbers completely ourselves. But that also happens in when you streamline the organization in America with the distribution setup and the overhead, we change tens of people in the organization. We changed management. Yes, we just give some guidance that our additional redundancy costs in North America, yes, which you we also have this year a little bit, but it will be lower and that we are working on operational actions and leverage. But the normal pattern in the head office is always between 10% and 12%. Yes. And there are some things, yes, which you have also in the head office. Yes. But almost most of all these things, yes, you book in, of course, in the business. But we also don't know this in detail. We don't follow them in detail because then we have control these people every day. Then maybe to clarify on divestment. So you had HFI, which was already done in the first half. And then I think it's called STAK, which was done in December. STAK was really in December, fairly late. And is it correct that this business has something like CHF 18,000,000 in annual sales? [SPEAKER JACQUES VAN DEN BROEK:] Yes, probably, yes. But it has no impact in the correction of M and A revenue this year. But for next year, it has. So basically it was back to the very end of La Opusheme. Very late in December. It's in Climate Technology. And was there then a cash proceed that was included in this minus €110,000,000 M and A, which we see in the cash? Okay. So that's already done. It's all concluded. And was there then a bouquet in the holding costs in H2? In H2, there was also a Bougain, yes. It's a small it's a very small company, yes. Yes. Okay. And then maybe on pricing It's part of Flambco. Yes. Yes. It's not Flambco. And then maybe on pricing, what was the contribution to the top line growth for the full year? I think it was somewhere between 50, 100 bps in the first half. Was it something similar organic to? Same. Yes, raw material was pretty stable. So there I think what we already said much earlier is that really the personal costs There were a lot of people who had the idea there are no personal or the salaries are not going up, but that you see really in the second half, but especially in 2020, not only in Holland, but also in Eastern Europe and a lot of countries. So I think the main price increases were based on that topic. I think raw materials we didn't have the big swings we have which we had also last year. So I think the effect on 2019 is not so big actually, probably the same as what we guided in mid year. I think that could be for the whole year. And it's mainly related to personnel. But we really pushed the management also in the budget meetings to in November to take more actions for 'twenty. And because this personal expense due to, yes, all kind of increases, That is a sort of when you don't take action it can be nasty, but we took our actions. Our raw material was flat. Okay. And then on portfolio optimization, which is something you touched on for the for more than one segment. Was it debt material, debt product pruning had a noticeable impact on your organic growth in the year? Or is there is it something that happens each year and it's not really something to that stood out this year compared to earlier years? In Capital Markets Day, we gave a clear guidance for this for the coming 3 years. That's on not only divestments, this is optimization of your portfolio. I think we still have a lot to gain there, especially in Installation Technology because we have a lot of SKUs, which we can optimize. And in material technology also in locations, that's also why we guided in December, we go from 155 to 122,000,000 EUR 154,000,000 EUR124,000,000 EUR 122,000,000 EUR122,000,000 So that's all portfolio optimizations, yes? It's difficult to put a number on, but that's ongoing. It means also that when you have all the product lines and you earn lesser EBIT, then you say now I rather have a lesser revenue, but more margin. So I reduce the amount of SKU, which we for example did in the U. S. And the U. K. So it's a continuous operation where we still have a lot to gain. Yes, but it's not something that had a much bigger impact in the earnings. Not much bigger, yes. But all small things help. Especially, it focuses the intention of the management to the right When you see the big picture and you see service technology how that business works then actually the what is in the bridge of my colleague mentioned as Airbus Aver. When you do the €50,000,000 and you do there this, organic EBIT growth, that's a very good performance. So that's also why we believe, okay, we have this market environment. We don't know what happens with all the corona and the future of course, but it says also something about resilience of the company. When we are able to have even less benefits of 2018 to have almost the same operating profit. And of course, your percentage is going down, which we don't like, but there's a very good explanation for it. And it's a very solid and resilient performance mainly. And for me, it also says that our management acted very quickly also to reduce costs, to optimize, but it says also something about a much stronger portfolio we have compared, in my opinion compared to the last years despite the fact that service technology going down, yes, we know that, We know that business. It also happened, but then much deeper in 2,008 2009. Now it's much more going gradually, but it's longer, but it's a little bit the same situation, much less deep. But I also know you come out of that. It's how it is because everybody needs parts in the end. So it's a temporary thing. And when you look to that whole situation, it's a solid and resilient performance, but that's our opinion. Also due to all these small things portfolio, better pricing, management gets stronger. And yes, that is exactly why we believe that we reach our strategic objectives. But it's a long term thing, yes? It's not a short term thing. It's a long term thing. Then my final question on the setup of your distribution in North America. Yes. When you were still streamlining that setup, you had somewhat higher stock levels, so inefficiencies and some additional costs. You still have. You still have. Okay. It's not that in H2 that was already at the What we did is we tried to it's a big MAMU tanker and we try to turn that. I think, let's say, the buildup of stocks has stopped. That is what we see here. So of course, the inventory is a little bit higher. It's only €12,000,000 or so. And let's say, at the end, we built up €63,000,000 less stocks within our core business. So that has been done and we have Very big part was American. A big part was installation technology, the biggest part. And also a big part of that was North America. And we have made, as we also said, a plan to further optimize our inventories over the next 3 years, so 2020 to 2022, which we are executing with our business teams, yes, who have an opportunity to improve. And all these investments that we make, but as with all investments, like Wim already said, with distribution centers, etcetera, that we all do at the end to come to a better level also of our inventories because we have a better and smoother supply chain. That is of course what you need to optimize. You can just cut stock and kill your business, but that's not what we want. We want to have a more efficient usage of the inventories that we use for our business. So America's situation, we set up the distribution centers through the countries roughly 3 years ago. We step by step did that. Then we put in too much stock, we knew that. Then we saw, now we learned from the regions. So we last year also after the change of the management, we get more insight in the real stock we need. In the meantime, we did an acquisition, it's called Surejoint, which we had to integrate in 2018, which is now 2017, 2018, which is 1 or 2 years ago, which also had 2 warehouses, but we closed and we integrate them also. It was maybe not the right timing, but a very nice product line. So now that was all ready, so the physical thing was ready. And last year, we streamlined as a first step, it's written also in the press release, we streamlined the inventories, but also the cost structure. It's a first step. So we can still we see still we can optimize further the amount of SKUs, the service rate, In the meantime, also the overheads, but it's made a nice way. In the meantime, we built up much lesser of stock in our factories, which of course hurt your added value. And so that's the situation. So it goes in the right direction, get more and more traction, but further improvements to gain. It's not ready yet. And again, the impact the negative impact on the added value for 2019, you should not underestimate that. It's a big number, €63,000,000 And on top of that, the high value business of Service Technologies Europe that declined. So then still performing with an added value that is even a little bit better than last year. That gives us at least the confirmation that the business that we have is very resilient and also with a very strong price position. What we do now, for example, in the factory is the next step. Some of you have seen the technology we have in Hilversum and insulation technology. Now we have roughly 3 or 4 factories who make the same products. So we're copying now this technology to America and to other places in Europe. That's also why we spend this CapEx, because we can reduce the cost price heavily, really heavily and take out a lot of people. So that will be a next step, for example, in insulation technology. For the distribution in Europe, also to guide that a little bit, because it's a different situation than America. In America, we had to change the whole sales structure. In Europe, we just need to integrate the warehouse because we have already our external sales. So it's a much easier process. Building is built. It's in our field. And then the other warehouses will be integrated and we hopefully to be fully operational the second half of twenty twenty. So yes, that is all part of improving to come to, as I always said, this segment has the potential to do at least 14% EBIT, maybe even more, but let's first stand there. But you have to get it structured and integrated. And actually, yes, that is getting more and more shape also with the name of Albert's Piping Systems. And therefore, it was also good that in December, I think you, yes, that presentation was given with the persons who really are in charge to get it also realized together with us of course. Yes, maybe a follow-up on the earlier question on the muted growth outlook. Assuming that car production would be stable, but the mix shifts from internal combustion engines towards EVs. It will shift. It will shift. But assuming that the overall volumes are stable, how will your business then develop? Will it also be stable? Will it grow? Or could it even constricts a bit because you're maybe more exposed to interopresseling? [SPEAKER JEAN LOUIS SERVRANCKX:] This is a very good question. And this is exactly what we also did in the preparation of the Capital Markets Day. And our and also during our budget period of course. Our expectation is that that's what you hear from the most of our customers and also when you look to the studies is that in 10 years, but okay, that's an assumption, roughly 30% of the population of the cars will be driven electrically. 30% will still be fully combustion, because some cars they think for long distances they need power, for example, SUVs they could drive with a diesel engine. But then you still have 40%, which will probably be hybrid because hybrid is a combination. You have electrical and you have combustion. Now when you look to that situation, it is nothing new because I explained it many times, is that 70% still have a combustion engine, yes, 70%. The other trend is, in our opinion, that the amount of cars will grow because we get more people. So they expect that the amount of cars to be produced will go from roughly €100,000,000 to €130,000,000 in this 10 year period. So when you take in the 70% of the €130,000,000 you come almost at the same amount that you have €90,000,000 cars which still need a combustion engine. But it could be that you have different cars, could be small cars, could be bigger cars and then hey, maybe you have more smaller electric cars in China than you would have in Europe or in U. S. So there's also differences in the uses of the cars. Now what we so you have to look very carefully what is what do you really need in the countries where you're active. So what we see, and that's due to talks with customers also, is that, for example, in Germany, yes, that combustion related production is also step by step, but that goes gradually moved to other places. So what we are doing, we are adapting our model to that situation. What is the situation? Eastern Europe is growing, so that's why we're investing there. And North America goes more to own fabricated products like the bigger trucks, SUVs. So also you have to put your technologies like Royal Metafinish, for example, where we do all the brake systems, you have to, let's say, adapt your position to that new market trend. So we did that. So to answer your question, yes, it could be that here and there volumes change. We still think that service technologies will be a big needed technology because and that's the other trend you see, big OEMs have a difficulty to develop all the new models and they are looking for partners who are on a global scale active, who can also help them with co development. And then there are not so many parties who can do that. So we think we are in pole position there to also and we see that in the amount of projects we get, especially in surface treatment and aligned coatings, that we have there a very nice position. So these technologies will be needed. But it could be that they are needed a little bit different way, but also in a little bit different region. So we are adapting to that. So it could be, for example, that we yeah, maybe get rid of certain countries, we get smaller in certain regions, we add certain technologies in certain regions to adapt to the situation. Of course, that's why you are an entrepreneur. But in general, that still the market is very interesting in my opinion, especially for us. Because the biggest part will be is foreseen to be hybrid. There's a lot of But you have to move. A lot of different parts related to that end with hybrid cars. So But it could be that certain treatments are going down. That will happen. So then you have to reduce your volume there or don't invest in anymore what we do and that other treatments come up and there you invest in. So it's not only a question of the market, it's also what happens within the market. But still we make 12.6%. I can remember the time I was even in the board shortly as we made much lesser margins in 2,009 and 'eighteen. Martijn Baker, the idea. Firstly, in your cash flow statement in the past, you always used to make a split between acquisitions of subsidiaries and disposals of subsidiaries. Now you have combined this number to one number. Could you still break it out? Because could you give a little bit more transparency about what you have paid for acquisition? Yes. It's also about It's more asking about earn outs, but this is more on excluding those. But we did in this line, I can tell you, our 2 acquisitions, 2 divestments and 2 disposals and 1 earn out sorry, 2 deferred payments and 1 earn out. That's what they did. So it's 7 items calculated together to this CHF 110,600,000. Okay. If you would just break it out into 2, I think everybody would be helpful. But okay. Then going forward and looking into 2020, could you provide what at this moment what you do know and what have communicated the spillover impact will be of acquisitions and of divestments? It's in the press release. Spillover, you mean what is the actual effect? What is still the impact will be in 2020? On trade transitions and of divestments. Revenue wise, let's say not so much and actually EBIT wise also not so much. It's more or less in balance as it looks like now. Okay. And then when looking at the European service technology, you have provided the absolute numbers, but could you also give some indication about the total revenue of that business because it can also relate it to materials technology as such that it is 3% and I can imagine that there are other businesses within Alberts on which also might have a 3% downturn. So could you provide a bit more color on what size we are talking about this European Service Technology business? You mean on the organic decline? Decline or the absolute sales level of that business more or less? No, I will not tell that because I think it's pretty confidential. The second thing is what I can tell you is that the service technology decline, which is of course a higher decline than in other areas. So when I say it's minus 3, minus 2 for total material technology, then it will be higher in service technology Europe what we said. That means mainly Germany and France. But that answer I can give, but not more. More questions. Yes. Martijn Deyff, ABN AMRO. On Page 3 of the press release, you mentioned closures. Which page? Page 3. You mentioned closures, 3. What has been the impact of those closures in terms of sales EBITDA? A bit more color there. And then a clarification on the CapEx guidance. You said, I think, Arnaud, 2020 would be similar to 20 19, but that included the $15,000,000 from the fire. So should we take out the $15,000,000 and then that number should be applicable to 2020? And then my final question, again I need a bit more help. In the cash flow statement, you show change in trade and other payables, a cash outflow of €51,200,000,000 You've already mentioned that you've paid your suppliers a bit faster than normal, which you already guided for the half year figures. However, the delta in your balance sheet for those exact lines is just 14.2%. Now normally, I wouldn't bother you with a small difference, but the difference between the delta and the balance sheet and what you report in the cash flow is quite significant. So a bit more clarity there, please. I can let's say starting with that one, I think that has to do with acquisitions because the delta is organic, the organic cash development between the 2 years. The CapEx for 2020, we guide the same as we did in the like Wim said for the capital margin by €240,000,000 160,000,000 that's including everything. And what was the third one? And the one on the closures, the free And it's material technology. Yes. That is material technology. Yes. So we closed some smaller locations integrated them already. Yes, we took action you could say. But not a material amount of revenue or EBITDA that got impacted because of closures? Yes. What you also do when you have some customers, you move it in our location. So it will not have a major impact now from a revenue point of view. Just optimization. More questions. No questions anymore. Are there questions from the webcast? There are no questions via webcast. So yes, then I would like to thank you, the people in the room for all the questions and all the attention and also people joining the webcast. So thank you very much. Thank you.

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